Labor Relations & Wages Hours Update
January 2015
Hot Topics in LABOR LAW:
Kaiser mental health workers ready to strike in protest of understaffing
The National Union of Healthcare Workers (NUHW) is planning a week-long strike that
is set to begin Monday, January 12. Some 2,600 California mental health clinicians,
psychologists, therapists, and social workers represented by the union will strike to
protest what they call Kaiser Permanente’s “chronic failure to provide its members with
timely, quality mental health care.”
Despite the $14 billion-plus that the union says the non-profit has made since 2009, with
profits up 40 percent this year over last year's record, Kaiser fails to staff its psychiatry
departments with enough clinicians to treat the ever-growing number of patients seeking
care, according to a NUHW release on December 31.
The union also points to the fact that state regulators fined Kaiser $4 million last year for
systemic understaffing that causes lengthy waits for treatment in violation of California
law. Since then, Kaiser has failed to correct the problems and has instead shifted
resources, directing clinicians to see more first-time patients at the expense of returning
patients, according to the NUHW. Purportedly, patients often have to wait 4 to 12 weeks,
making effective, ongoing treatment nearly impossible.
“For patients suffering from depression, anxiety, and other debilitating mental conditions,
these delays can be insurmountable obstacles,” said Clement Papazian, a clinical social
worker at Kaiser in Oakland, Calif. “Kaiser's actions are doing real harm.”
To make matters worse, Kaiser's California enrollment has increased by a quarter million
members this year under the Affordable Care Act, the union said. Staffing levels, already
too low, are not keeping pace with enrollment. “Withholding services while increasing
membership is an effective way to score record profits but it has led to woefully
inadequate care, as well as four class-action lawsuits filed by patients and families who
say Kaiser's violations contributed to tragic outcomes, including suicides,” the union
says.
In December, clinicians offered a “commonsense solution”: clinician–management
committees in each facility that can determine adequate staffing levels and outsourcing
needs. Kaiser’s failure to act on the proposal has triggered the impending statewide
strike.
“With soaring profits and a $30 billion reserve, Kaiser needs to step up and lead the way
in finally making mental health care a priority in this country,” said NUHW President Sal
Rosselli. “The law requires it and Kaiser's ethical obligations as a health care provider
demand it.”
Round 2: NLRB facing another lawsuit over ‘quickie election’ rule
By Pamela Wolf, J.D.
On Monday, January 5, the Society for Human Resource Management (SHRM), the
Chamber of Commerce, the Coalition for a Democratic Workplace, the National
Association of Manufacturers, and the National Retail Federation challenged the NLRB’s
so-called “quickie election” rule by filing a lawsuit against the Board. Filed in the District
of Columbia, the suit asks the court to vacate and set aside the controversial final rule, as
well as to enter declaratory and injunctive relief that would block implementation and
enforcement of the rule. An earlier lawsuit filed in the District of Columbia by the
Chamber of Commerce upended a similar rule based on the NLRB’s lack of a quorum
when it approved the regulatory action.
On May 14, 2012, the earlier rule was set aside by a D.C. District Court decision,
Chamber of Commerce v. NLRB, on the grounds that the Board lacked a quorum when it
promulgated the rules revision. The Board then temporarily suspended implementation of
the amendments adopted in the final rule but nonetheless filed an appeal in the D.C.
Circuit. Ultimately, the Board retreated from its appeal and rescinded the earlier rule.
The last version of the final rule was adopted by the Board on December 12, 2014. It
amends the NLRB’s representation-case procedures to “modernize and streamline” the
process for resolving representation disputes. Published in the Federal Register on
Monday, December 15, the rule will take effect on April 14, 2015.
“Quickie elections.” Those who oppose the final rule note that it changes longstanding
labor policy by shortening the time in which employers are required to hold union
elections to as little as 14 days. Currently, the median time from petition to election is 42
days, according to Nancy Hammer, senior government affairs policy counsel for SHRM.
The final rule unnecessarily reduces the time employees need to make an informed
decision about whether or not to join a union, SHRM said.
Complaint. According to the complaint, the final rule is at odds with the National Labor
Relations Act, exceeds the Board’s statutory authority, and runs afoul of the First and
Fifth Amendments of the U.S. Constitution. Among other things, the complaint alleges
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that the final rule violates employers’ free speech rights because it “impermissibly
curtails an employer’s right to communicate with its employees by substantially
shortening the period between an election petition and the holding of an election, and the
Final Rule impermissibly limits employers’ ability to exercise their rights under Section
8(c) and the First Amendment.” It also violates their free-speech rights by “compelling
employers to engage in certain speech during the election process, specifically a new
mandatory workplace notice to be posted after the filing of a representation petition.”
The plaintiffs also complain that the rule “deprives employers of due process in NLRB
representation case proceedings, in violation of the Fifth Amendment, by preventing
employers from litigating issues of voter eligibility and inclusion at the pre-election
hearing, and then denying the employer the right to seek any Board review of those
issues, whether pre- or post-election, by making all Board review discretionary.”
The complaint also asserts a claim that the Board’s action violates the Administrative
Procedures Act because it is arbitrary and capricious.
SHRM’s opposition to the rule. SHRM outlined several concerns about the rule when it
announced that it would join the lawsuit, including the requirement that employers
provide employees’ personal phone numbers and personal e-mail addresses to unions.
“SHRM is very concerned about the potential for misuse of private employee data, the
burden on employers to collect and submit the information within the time constraints
under the rule, as well as concerns about employer sanctions for unintentional
submissions of inaccurate information. SHRM members have expressed great concern
about this requirement,” Hammer remarked.
“SHRM feels that the rule improperly focuses on speeding up the time to election at the
expense of other important aspects of the National Labor Relations Act, including an
employee’s right to access the information needed to make a full and informed choice
and an employer’s right to express their views,” she added.
The HR society reiterated some of the comments it made about the regulation at the
proposed-rule stage:

The new election rules are arbitrary and capricious under the APA, as they are not
based on any reasoned analysis and fail to identify a reasoned need to change
current board election rules.

The new election rules deprive parties of their due process rights by not providing
for an “appropriate hearing” in which interested parties have a “full and adequate
opportunity” to present evidence on all issues pertaining to a board election.

The new election rules inappropriately defer to a post-election period certain unit
placement issues such as supervisory status, independent contractor status,
managerial status, confidential status, and student versus employee status.
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
Any rule permitting the use of electronic signatures on union authorization cards
and union membership documents should be abandoned given the potential for
fraud and abuse with respect to obtaining such signatures.
SHRM also said that “the continual shortening of the time period between the filing of a
petition for election and the holding of an election shows a clear policy bias favoring the
momentum of labor union organizing at the expense of reasoned and objective dialogue
and debate among all parties regarding the impact of unionization in the workplace.”
This comment was also offered by SHRM: “Unions frequently engage in prolonged
organizing campaigns over many months, if not years, prior to filing a petition for
election with the board. … [The] new election rules would trigger almost instantaneous
elections after such prolonged organizing periods. … Such [a] shortened time frame
would provide little or no opportunity for employees to obtain objective information
regarding the impact of unionization in their workplace.”
Chamber of Commerce ready to fight again. This is the second round for the Chamber
of Commerce, which succeeded in its 2011 challenge to an earlier but very similar
version of the election rule. “The NLRB’s rule drastically accelerates the union election
process, depriving employers of their right to explain to employees the impacts of
unionizing,” Randy Johnson, the Chamber’s senior vice president of Labor, Immigration,
and Employee Benefits, said in a statement. “Furthermore, we question the need for the
regulation given that 95 percent of all elections are now conducted within two months
and that unions win more than two-thirds of them.” “The Chamber already won a legal
battle against the NLRB when it issued this rule in 2011, and we will continue to use all
available means to push back against the Board’s overreach,” Johnson said.
National Summit on Raising Wages kicks off campaign
On Wednesday, January 7, the AFL-CIO kicked off its 2015 National Summit on Raising
Wages at Gallaudet University, with major speeches by Sen. Elizabeth Warren (D-Mass.)
and Secretary of Labor Tom Perez, as well as by AFL-CIO President Richard Trumka.
Attended by several hundred union activists, plus many others via streaming video, the
summit outlined what it called “the defining economic fact of the past generation:
Productivity has gone way up and wages have stayed flat.”
From the kickoff today, the campaign said it would focus on two initial projects:
1. First, state federations of labor will hold Raising Wages summits in the first four
presidential primary states—Iowa, Nevada, New Hampshire and South Carolina—
beginning in Iowa this spring. These summits are designed to build out the Raising
Wages platform and establish state-based standards of accountability.
2. Next, the AFL-CIO will take the Raising Wages campaign to seven cities around
the country: Atlanta, Columbus, DC (Metro), St. Louis, Philadelphia, Minneapolis,
and San Diego. These “battleground” cities will be the starting points of a longterm effort to concentrate work where it can have the most impact, says the
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federation.
The summit featured a panel discussion of workers, academics, business owners, and
progressive and political leaders who focused on both multiple state legislative victories
on the minimum wage as well as significant challenges to raising wages in the future.
Said the AFL-CIO’s Trumka, signaling the summit’s political agenda, “for office holders
and candidates it comes down to a basic question: are you satisfied with an America
where the vast majority works harder and harder for less and less, or do you propose to
build an America where we, the people, share in the wealth we create? This is the single
standard by which we will judge leadership.”
GC taps career staffer to oversee Division of Operations-Management
Beth Tursell, currently Assistant to the NLRB General Counsel, has been appointed
Deputy Associate to the General Counsel in the GC office’s Division of OperationsManagement, NLRB General Counsel Richard F. Griffin, Jr., announced Wednesday,
January 7.
Tursell will have oversight responsibility for the operations and management of the
Board’s 50 nationwide field offices. Prior to her promotion, Tursell oversaw a district
that included nine regional offices while also holding the senior management position in
the GC’s compliance unit within the division.
Tursell began her career with the NLRB in 1978 as a student intern in the Detroit regional
office, then joined the Board full-time as a field examiner in the Baltimore regional
office. In 1996, she was promoted to compliance officer. She joined the OperationsManagement staff in 2004 after being promoted to the post of Deputy to the Assistant
General Counsel, and was promoted once again within that division to Assistant to the
General Counsel in 2011.
A Michigan native, Tursell received a B.A. in business administration from Wayne State
University in 1979 and a M.A. degree in Administrative Science from Johns Hopkins
University in 1983.
Lamar Alexander to Chair HELP Committee
Not surprisingly, on Wednesday, January 7, Senate Republicans elected Lamar
Alexander (R-Tenn.) to serve as Chairman of the Senate’s Committee on Health,
Education, Labor and Pensions. Formerly the Ranking Member on the HELP Committee,
Alexander replaces outgoing Chairman Tom Harkin (D-Iowa).
Before his election to the Senate in 2002, Alexander served as governor of Tennessee,
president of the University of Tennessee, U.S. Secretary of Education under President
George H.W. Bush, and professor at Harvard's Kennedy School of Government. His
colleagues have elected him Chairman of the Senate Republican Conference three times.
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Reclassified port truck drivers get card-check agreement
Late last week the Teamsters announced that port truck drivers from Shippers Transport
Express, a wholly-owned subsidiary of SSA Marine, had designated Teamsters Local 848
as their exclusive bargaining representative and would begin the process of negotiating a
collective bargaining agreement with their employer. Prior to January 1, 2015, the drivers
were classified as independent contractors, but in November, all drivers were notified that
the company was transitioning to an employee-based business model as of January 1,
2015, and were invited to apply for employee jobs.
"This historic agreement represents an important step in drivers' efforts to reform the
drayage industry, and demonstrates clearly that labor and management can work together
constructively to find solutions to challenges facing the industry and to the injustices
facing the drivers," said Fred Potter, Director, International Brotherhood of Teamsters
Port Division.
"Shippers' transition to an employee-based business model is a crucial step in the drayage
industry's efforts to modernize, make the ports more efficient, and reduce congestion at
the ports and on our freeways," said Kevin Baddeley, General Manager, Shippers
Transport Express. "On unionization, we took a neutral position because we respect our
drivers' right to form a union. Finally, through our productive dialogue with the
Teamsters, we anticipate we will be able to improve operational efficiencies and stabilize
our driver workforce."
According to the agreement, effective January 1, 2015, Shippers converted from an
independent contractor business model to an employee-based drayage business. (All
drivers were notified of the change on November 24, 2014, and were invited to apply for
employee jobs by December 8, 2014.) Shippers Transport and the Teamsters agreed on a
neutral process for unionization, which included the following provisions:

Shippers Transport agreed not to interfere in the employees' decisions regarding
unionization;

Shippers Transport agreed not to use intimidation, threats of reprisal, promise of
benefits, or other conduct or speech designed to intimidate or coerce drivers to
influence the decision by its employee drivers whether to join or be represented
by the Teamsters;

The Teamsters agreed not to disparage Shippers Transport or disrupt the
workplace through strikes, picketing, or other job actions; and

Shippers Transport agreed to recognize Teamsters Local 848 as the drivers'
official bargaining agent upon verification by a neutral third party that a majority
of the drivers have signed valid union authorization cards.
"This is an historic day not just for port truck drivers, but for workers across America,"
said Rabbi Jonathan Klein, Executive Director, Clergy and Laity United for Economic
Justice. "Too many workers face harassment, intimidation, and retaliation from
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management for exercising their right to form a union. Respecting drivers' right to form a
union is the moral and just thing to do, as taught by religious traditions."
FMCSA green-lights cross-border trucking program
Mexican motor carriers will soon be able to apply for authority to conduct long-haul,
cross-border trucking services in the United States, the Department of Transportation
announced Friday, January 9, with the permanent launch of what had been a pilot crossborder trucking program. The DOT says the move will expand trade opportunities with
Mexico and permanently terminate more than $2 billion in annual retaliatory tariffs on
U.S. goods. But the program has riled the Teamsters union from its inception.
Details of the policy change are set forth in a Federal Register notice.
Pilot program validates safety. The three-year pilot program tested and validated the
safety of Mexican trucking companies to operate long-haul in the U.S., the DOT said.
The agency submitted a report to Congress highlighting those findings. “Data from the
three-year pilot program, and additional analysis on almost 1,000 other Mexican longhaul trucking companies that transport goods into the United States, proved that Mexican
carriers demonstrate a level of safety at least as high as their American and Canadian
counterparts,” said Transportation Secretary Anthony Foxx.
Fifteen trucking companies from Mexico had enrolled in the pilot that concluded in
October 2014, crossing the border more than 28,000 times, traveling more than 1.5
million miles in-country, and undergoing more than 5,500 safety inspections by
American officials. Data collected on the pilot carriers, and an additional 952 Mexicanowned trucking companies that also operated long-haul in the U.S. during the same 36month period under a pre-existing authority, showed that companies from Mexico had
violation, driver, and vehicle out-of-service rates that met the same level of safety as
American and Canadian-domiciled motor carriers.
NAFTA dispute. In 2001, a NAFTA dispute settlement panel ruled the U.S. was not in
compliance with the cross-border trucking provisions of the agreement. American
trucking companies have been able to apply and operate long-haul in Mexico through
NAFTA since 2007. (Currently, five U.S. companies use this authority to transport
international goods into Mexico.)
A NAFTA arbitration panel ruled that the U.S. had to allow Mexico-domiciled trucking
companies to operate throughout the U.S., but they could be required to comply with the
same regulations that apply to American trucking companies. After a 2009 appropriations
bill halted a previous demonstration project, Mexico exercised its option to take
retaliatory measures pursuant to the arbitration panel determination and imposed more
than $2 billion in annual tariffs on exports of U.S. agriculture, personal care products, and
manufacturing goods. In response, Congress authorized the FMCSA to grant permits to
Mexico-domiciled trucking companies so long as they complied with U.S. safety
requirements. After an initial false start, in 2011, the FMCSA instituted the pilot
program. Mexico suspended the tariffs (and had committed to terminate the tariffs
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permanently once U.S.-Mexican trucking operations were normalized). The DOT’s
recent announcement “ends more than two decades of uncertainty.”
Program provisions. Companies from Mexico that apply for long-haul operating
authority will be required to pass a Pre-Authorization Safety Audit to confirm they have
adequate safety management programs in place, including systems for monitoring hours
of service and to conduct drug testing using an HHS-certified lab. Additionally, all
drivers must possess a valid U.S. Commercial Driver’s License or a Mexican Licencia
Federal de Conductor, and must meet the agency’s English language proficiency
requirements.
Like Canadian companies that are granted U.S. operating authority, carriers and drivers
from Mexico must comply with all laws and regulations, including regular border and
random roadside inspections. Once the motor carrier is approved, its vehicles will be
required to undergo a 37-point North American Standard Level 1 inspection every 90
days for at least four years.
In 2002, Congress appropriated funding to the Federal Motor Carrier Safety
Administration, a DOT arm, to hire new staff for additional southern border enforcement
to meet the long-haul trucking provisions in NAFTA. Currently, there are more than 200
inspectors and staff in the region who will continue to oversee the safety of cross-border
operations into the country, the DOT said.
Teamsters opposition. “I am outraged that the Department of Transportation has chosen
to ignore the findings of the DOT Inspector General and is moving forward with a plan to
open the border to Mexican trucks in the coming months,” said Teamsters General
President Jim Hoffa in a prepared statement responding to the news. The union had
waged an unsuccessful court challenge to the FMCSA pilot program, asserting, among
other claims, that it was unlawful because not all Mexico-domiciled trucks were required
to display a decal certifying compliance with American safety standards. The D.C.
Circuit, in July 2013, had denied petitions for review filed by the Teamsters union and
the Owner-Operator Independent Drivers Association opposing the cross-border trucking
program.
“This policy change by the DOT flies in the face of common sense and ignores the
statutory and regulatory requirements of a pilot program. Allowing untested Mexican
trucks to travel our highways is a mistake of the highest order and it’s the driving public
that will be put at risk by the DOT’s rash decision.”
Career employee tapped as Board regional attorney in Manhattan office
Career NLRB employee Leah Z. Jaffe has been appointed to serve as regional attorney
for the NLRB’s Region 2 in New York City, General Counsel Richard F. Griffin, Jr.,
announced on Tuesday, January 13. In her new position, she will assist regional director
Karen Fernbach in enforcing and administering the NLRA in Manhattan, the Bronx, and
several counties north of New York City. She succeeds David E. Leach III, who was
promoted to regional director for Region 22 in Newark.
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Prior to her appointment, Jaffe had been serving as a deputy regional attorney at the New
York office. Previously she served as law clerk at the NLRB’s Division of Judges in New
York and, after a hiatus from law practice to raise her children, she returned to the NLRB
as a field attorney in the regional office in Manhattan. In 2001, she was promoted to
supervisory field attorney and, in 2011, to deputy regional attorney. Jaffe earned her J.D.
from Fordham University in 1983 and graduated from Cornell University in 1980 with a
B.S. in Industrial and Labor Relations.
Quarter century of government oversight of Teamster set to end
By Pamela Wolf, J.D.
In what General President Jim Hoffa called a “new day for our great union,” the
International Brotherhood of Teamsters (IBT) announced an agreement and proposed
final order under which a 25-year-old consent order stemming from Racketeer Influence
and Corrupt Organizations (RICO) Act charges will end, and the United States, via the
U.S. Attorney for the Southern District of New York, will dismiss its action against the
union. It’s not over until it’s over though, because the proposed final order creates a fiveyear transition period during which the government will gradually withdraw its oversight
of the union, while retaining certain rights.
Consent decree did the job. The consent order was entered on March 14, 1989. Its
purpose was to rid the IBT “of any criminal element or organized crime and corruption
and establishing a culture of democracy to maintain the Union for the sole benefit of its
members,” according to new agreement, which is expected to garner court approval.
The consent decree enjoined certain activity and instituted institutional reforms of the
union’s disciplinary and electoral processes—a move that has netted “significant and
positive change in the culture and processes of the IBT,” according to the agreement. The
parties also agree that “there has been significant success in eliminating corruption from
within the IBT and in conducting free, open and democratic elections for its International
Officers and Convention Delegates.”
Great progress, but threat still exists. Despite the substantial progress that has been
made under the consent decree, “the threat posed to the IBT by organized crime and other
corrupting influences, while substantially diminished, persists,” the parties state in the
agreement. Thus, the agreement, if approved by the court, will permanently enjoin all
current and future members, officers, agents, representatives, employees, and persons
holding positions of trust in the IBT and any of its constituent entities from:

committing any act of racketeering activity, as defined in 18 U.S.C. § 1961;

knowingly associating with any member or associate of any Organized Crime
Family of La Cosa Nostra or any other criminal group;

knowingly associating with any person enjoined from participating in union
affairs;
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
obstructing, or otherwise interfering, directly or indirectly, with the work of any
person appointed to effectuate the terms of this Final Order; and

knowingly permitting any member or associate of any criminal group, or any
person otherwise enjoined from participating in union affairs, to exercise any
control or influence, directly or indirectly, in any way or degree, in the affairs of
the IBT or any of its constituent entities.
Transition period. Beginning on the effective date of the proposed final order and for a
period of five years, the government would relinquish its role in the IBT’s affairs, except
as otherwise expressly provided in the proposed final order, including its right under the
consent decree and the IBT Constitution to elect Department of Labor Supervision of IBT
elections and its right to require the maintenance of the Independent Review Board, in
exchange for the IBT’s commitment to establish and maintain effective and independent
supervision of IBT International Union Officer and Convention Delegate elections and an
effective and independent disciplinary mechanism.
Success in driving out corruption. “This is a historic day for our Teamsters, Hoffa said
in a statement on January 14. “After decades of hard work and millions of dollars spent,
we can finally say that corrupt elements have been driven from the Teamsters and that the
government oversight can come to an end.”
The union leader said that when he took office in 1999, he “pledged that we would run a
clean union, that organized crime would never have a place in the Teamsters Union” and
promised “that we would ensure that every rank-and-file Teamster have a direct voice in
electing the Union’s International officers.” Fifteen years later, those goals have been
accomplished, according to Hoffa.
“Today is a new day for our great union, Hoffa declared. “My administration is first and
foremost committed to representing the membership. The members are the heart and soul
of our great union. “And we will remain ever vigilant in protecting our members and our
union from anyone who would try and corrupt our union or do harm to our members,”
Hoffa assured union members.
Not everybody pleased. The news was not taken as a positive development by Mark
Mix, president of the National Right to Work Foundation, who said: “Once again the
Obama Administration is putting the priorities of union bosses who showered the
President with campaign contributions ahead of the rights of rank-and-file workers. Even
by Big Labor's low standards, Teamster union bosses have an unusually ugly record of
corruption and thuggery. Unfortunately, corruption and illegal activities will continue to
be endemic to Organized Labor as long as union bosses continue to fund their activities
by extorting workers for forced dues by threatening to have them fired for refusing to pay
up. Real accountability will only come about when every worker has Right to Work
protections making union dues payments completely voluntary. Until then, more, not
less, oversight is appropriate to stop union corruption which is the direct result of
compulsory unionism.”
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Battle in Kentucky over county right-to-work laws heats up
By Pamela Wolf, J.D.
There is a pitched battle brewing in the State of Kentucky as local units of government
continue to pass so-called “right-to-work” laws that the Kentucky Attorney General says
are unlawful. Right-to-work laws bar unions and employers from agreeing to exclude
individuals from employment based on whether or not they are members of a union. Such
laws also prevent unions from requiring that all employees pay union dues in unionized
workplaces, regardless of whether they have joined the union. Opponents of right-towork laws point to the unfairness of requiring unions to represent and negotiate on behalf
of all employees, including those who opt not to pay union dues.
Attorney General opinion. The Kentucky Attorney General’s office last month issued
an opinion stating that “a local government may not enact a right-to-work ordinance,”
citing Section 14(b) of the National Labor Relations Act, which permits states or
territories to enact right-to-work laws, and a 1965 Kentucky Court of Appeals decision,
Kentucky State AFL-CIO v. Puckett, which narrowly construed the exemption for states
and territories not to include local political subdivisions. Other courts, including in New
Mexico and Ohio, have reached the same conclusion.
County ordinances. The Kentucky Legislature has not passed a right-to-work law, but
several political subdivisions have passed such ordinances, giving rise to a battle within
the state. According to media reports, five counties have passed right-to-work ordinances,
the most recent of which is Ordinance No. 300, enacted in Hardin County on January 13,
2015.
Unions take action. A coalition of nine unions wasted no time in launching a challenge
to the Hardin County ordinance—they filed a lawsuit the day after the ordinance became
law. According to the complaint, with respect to CBAs entered into after its date of
enactment, the ordinance “prohibits the negotiation and application of union security
agreements authorized and regulated by the NLRA, including the union security
agreements that the plaintiffs have entered into that apply to workplaces in Hardin
County, Kentucky.” The ordinance also bars negotiation and application of hiring hall
agreements, as well as payroll deduction of labor organization dues, fees, or assessments,
pursuant to the check-off agreements that the plaintiffs have entered into that apply to
workplaces in Hardin County.
The unions raise a claim that Ordinance No. 300 is not a “State or Territorial law” under
Section 14(b) and thus is preempted by the NLRA insofar as the ordinance bars the
execution or application of union security agreements. They raise a similar claim with
regard to the ordinance’s prohibition against hiring hall agreements. The unions challenge
the ordinance’s bar on check-off provisions on the same basis, as well as on Labor
Management Relations Act grounds.
The complaint asks the court to declare the ordinance invalid under the NLRA and the
LMRA, and seeks injunctive relief barring enforcement of invalid portions of the
ordinance.
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The case, UAW v. Hardin County, Kentucky, was filed in the Western District of
Kentucky at Louisville; the case number is 3:15-cv-00066-DJH.
While federal courts rebuff California high-court ruling, Justices won’t touch
PAGA arbitration waivers
By Pamela Wolf, J.D.
Despite several federal district courts having rebuffed a California Supreme Court ruling,
the highest court in the land will not take up the question of whether arbitration of a
representative action under the Private Attorney General’s Act (PAGA) can be waived.
The petition for cert, filed last September, sought review of the top California court’s
divided ruling that an arbitration agreement requiring an employee as a condition of
employment to give up the right to bring representative PAGA actions in any forum was
contrary to public policy. In Iskanian v. CLS Transportation Los Angeles, LLC, the state
supreme court found that the Federal Arbitration Act’s goal of promoting arbitration as a
means of private dispute resolution did not preclude the California Legislature from
deputizing employees to prosecute Labor Code violations on the state’s behalf. The court
also concluded that its own decision in Gentry v Superior Court has been abrogated by
recent U.S. Supreme Court decisions, so that the state’s refusal to enforce an arbitration
agreement that waived the right to class proceedings was preempted by the FAA.
Federal courts unpersuaded. The ruling has not been entirely embraced by federal
courts, which are not bound the state high court’s interpretation of the FAA. Among
others, a federal court in the Central District of California last October rejected Iskanian
and held that an arbitration pact can waive PAGA claims. At the time, it was the third
federal court to rebuff Iskanian. In Langston v 20/20 Companies, Inc, the district court
found an arbitration agreement was enforceable with respect to all of the employees’
Labor Code claims, including their PAGA claims, granting the employer’s motion to
compel arbitration.
Last month, in December, a Southern District of California court was of a similar mind,
also rebuffing Iskanian and finding an arbitration agreement enforceable as to
representative PAGA claims. In Lucero v. Sears Holdings Management Corp., the district
court found that “the FAA preempts California’s rule against arbitration agreements that
waive an employee’s right to bring representative PAGA claims.” Satisfied that the
arbitration agreement itself was valid and that the agreement encompassed the disputes at
issue here, the court granted the employer’s motion to compel individual arbitration and
to stay the litigation.
New York restaurant fights back against alt-labor group
By Pamela Wolf, J.D.
Liberato Restaurant in New York and two of its employees have filed a federal lawsuit
against alt-labor group Laundry Workers Center United (LWC), some its officials, and
two former and one current restaurant employees. According to the two-part complaint,
LWC, which bills itself as a development and training center for low-wage workers in
New York City, has engaged in a pattern of racketeering activity, including obstructing
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and affecting the restaurant’s engagement in commerce with conduct aimed to extort
money from the restaurant with such tools as extortion threats, trespass, stalking and
harassment. The defendants also purportedly employed threats of property damage,
defamation, and made baseless complaints to the NLRB and local politicians.
In the 52-page complaint, the plaintiffs layout the very aggressive campaign that the
LWC allegedly carried out against the restaurant, referred to on its website as the
“Liberato Restaurant Campaign.” The campaign included the entry of a dozen LWC
members who, initially posing as customers, raised their glasses to toast restaurant
employees and were followed by a very disruptive, noisy “Rude Mechanical Orchestra.”
A LWC cofounder also allegedly entered, carrying a placard and demanding justice and
peace now, accompanied by members who chanted protests and took over the main
entrance and service area of the restaurant and refused to leave when asked to do so by
management.
Although LWC members eventually left the restaurant, they presented management with
an “exorbitant number of violations” allegedly committed against employees with the
threat of suit if not addressed within 10 days, according to the complaint. The plaintiffs
say that prior to this incident, they were unaware of any employee unrest, and not a single
employee had reported any of the problems cited.
Among other things, the plaintiffs complain of a telephone campaign during which the
unpublished cell phone number of restaurant principal, Mr. Liberato, was disseminated to
LWC members, affiliated organization members and the general public to facilitate calls
to demand an end to alleged wage abuses. There were also flyers in Spanish posted all
over the neighborhood, calling Mr. Liberato a criminal and a thief, and accusing him of
stealing wages, the plaintiffs allege.
The complaint seeks damages and injunctive relief under RICO, the LMRA, and common
law, including libel, slander, injurious falsehood, tortious interference with existing and
prospective business relationships, and civil conspiracy.
Alt-labor group. The LWC, according to the Center for Union Facts is backed by the
Workers United and the SEIU, “addresses the need for community-based leadership
development geared toward improving the living and working conditions of workers in
the laundry and food service industries, as well as their families,” according to its
website. “Our work aims to combat abuses such as landlord negligence, wage theft, and
hazardous and exploitative working conditions, all of which are endemic in low-income
communities in New York City and New Jersey.”
According to the complaint, however, LWC actually “presents itself as a labor support
organization that charges low wage, immigrant and illegal workers a fee in return for a
promise to obtain them additional moneys, better working conditions and help with their
immigration status.”
13
Union membership rate remains flat
Nationally, the union participation rate— the percent of wage and salary workers who
were members of unions—declined in 2014 just slightly (0.2 percentage point) from its
2013 rate, coming in at 11.1 percent. Likewise, there was little difference in the number
of workers belonging to unions in 2014—14.6 million—and the year before. Flip back to
1983, the first year for which comparable union data are available, and the very
substantial decline in the union membership rate is readily apparent. Back then, the
participation rate was 20.1 percent and there were 17.7 million union workers, according
to the Bureau of Labor Statistics.
The BLS collects data on union membership as part of the Current Population Survey
(CPS), a monthly sample survey of about 60,000 households that obtains information on
employment and unemployment among the nation's civilian noninstitutional population
age 16 and over. The most recent data, released on Friday, January 23, includes these
2014 findings underscored by the BLS:

The public-sector union membership rate was 35.7 percent—more than five times
higher than that of private-sector workers, whose participation rate was 6.6
percent.

The highest unionization rate was among workers in education, training, and
library occupations, and in protective service occupations at 35.3 percent for each
occupation group.

Men had a higher union membership rate at 11.7 percent, as compared to women
at 10.5 percent.

Black workers were more likely to be union members than were white, Asian, or
Hispanic workers.

Median weekly earnings of nonunion workers, $763, were 79 percent of earnings
for workers who were union members, $970. Here, the BLS noted that the
comparisons of earnings they cited are on a broad level and do not control for
many factors that can be important in explaining earnings differences.

Among states, New York continued to have the highest union membership rate at
24.6 percent, while North Carolina again had the lowest rate at 1.9 percent.
Industry and Occupation. The BLS provided several breakdowns for the data, including
by industry and occupation of union members. In 2014, 7.2 million public-sector
employees belonged to a union versus 7.4 million private-sector workers. The union
membership rate for public-sector workers—35.7 percent—was substantially higher than
the rate for private-sector workers—6.6 percent. Within the public sector, the highest
union membership rate was in local government (41.9 percent), which includes
employees in heavily unionized occupations, such as teachers, police officers, and
firefighters. The highest unionization rates in the private sector included utilities (22.3
percent), transportation and warehousing (19.6 percent), telecommunications (14.8
14
percent), and construction (13.9 percent). The lowest rates were found in agriculture and
related industries (1.1 percent), finance (1.3 percent), professional and technical services
(1.4 percent), and food services and drinking places (1.4 percent).
Looking at occupational groups, the highest unionization rates in 2014 were in education,
training, and library occupations and protective service occupations (35.3 percent each).
The lowest rates were in farming, fishing, and forestry occupations (2.5 percent) and
sales and related occupations.
Selected characteristics. The BLS survey also tracks selected characteristics of union
members. The 2014 data reveal that union membership rate was higher for men than for
women, coming in at 11.7 percent versus 10.5 percent. The gap between rates has
narrowed considerably since 1983, when rates for men and women were 24.7 percent and
14.6 percent, respectively.
As to major race and ethnicity groups, the BLS found that black workers had a higher
union membership rate in 2014 (13.2 percent) than those who were white (10.8 percent),
Asian (10.4 percent), or Hispanic (9.2 percent).
The age data show that the union membership rate was highest among workers ages 45 to
64, with 13.8 percent for the age group 45 to 54 and 14.1 percent for ages 55 to 64.
The union membership rate for full-time workers was more than twice the rate of parttime workers—12.3 versus 5.8 percent.
Union representation. The union representation data revealed that in 2014, 16.2 million
wage and salary workers were represented by a union. This group includes both union
members (14.6 million) and workers who report no union affiliation but whose jobs are
covered by a union contract (1.6 million).
Earnings. The BLS survey also tracked earnings and found that in 2014, among full-time
wage and salary workers, union members had median usual weekly earnings of $970,
while those who were not members of a union had median weekly earnings of $763. The
BLS noted that in addition to coverage by a collective bargaining agreement, this
earnings difference reflects a variety of influences, including variations in the
distributions of union members and nonunion employees by occupation, industry, age,
firm size, or geographic region.
State-by-state data. Slicing the data by state, the BLS survey revealed that in 2014,
union membership rates in 30 states and the District of Columbia fell below that of the
U.S. average of 11.1 percent, 19 states had rates above it, and one state had a rate equal to
that of the nation. As most union watchers would expect, all states in the East South
Central and West South Central divisions show union membership rates below the
national average, while all states in the Middle Atlantic and Pacific divisions had rates
above it. Union membership rates declined over the year in 27 states and the District of
Columbia, rose in 18 states, and remained unchanged in five states.
15
The BLS found that nine states had union membership rates below 5.0 percent in 2014,
with North Carolina registering the lowest rate (1.9 percent). The next lowest rates were
found in South Carolina (2.2 percent) and Mississippi and Utah (3.7 percent each). In
states the union membership rates were over 20.0 percent in 2014: New York (24.6
percent), Alaska (22.8 percent), and Hawaii (21.8 percent).
State union membership levels depend on both the employment level and the union
membership rate, the BLS explained. The largest numbers of union members lived in
California (2.5 million) and New York (2.0 million). Over half of the 14.6 million union
members in the U.S. lived in just seven states: California (2.5 million); New York (2.0
million); Illinois (0.8 million); Pennsylvania (0.7 million); Michigan, New Jersey, and
Ohio (0.6 million each), even though these states accounted for only about one-third of
wage and salary employment nationally.
New Press Secretary at the Board
Jessica Kahanek has been named as Press Secretary at the National Labor Relations
Board. In her new job, Kahanek joins the Congressional and Public Affairs Office to
serve as the primary spokesperson for the agency and work to implement its
communication and outreach policies and objectives. Board Chairman Mark Gaston
Pearce and General Counsel Richard F. Griffin, Jr., made the announcement on
Thursday, January 23.
The new NLRB Press Secretary earned her B.A. from Miami University in Oxford, Ohio.
Before joining the NLRB, Kahanek served as a public relations consultant,
Communications Director for Representative Jim Costa, and as a Congressional Aide for
Representative Gene Green.
Republican lawmakers move to downsize federal workforce
By Pamela Wolf, J.D.
Last week, Republican lawmakers introduced a bill aimed to reduce the federal
workforce in a manner that American Federation of Government Employees National
President J. David Cox Sr. says “would impose an arbitrary cap on the size of the federal
workforce.” The union president also observed that the size of the federal workforce is
already at an all-time low.
Representatives Cynthia Lummis (R-Wyo.) and Mick Mulvaney (R-S.C.) on January 20
introduced the Federal Workforce Reduction Through Attrition Act, H.R. 417, which
limits new federal hires to one employee for every three that retire or leave service.
According to its sponsors, the bill would save a previously estimated $35 billion over five
years without forcing any current federal employees out of a job. In the event that an
agency refuses to comply with the hiring limits, a federal hiring freeze would result.
Lummis and Mulvaney summarized how their proposal would work:
16

The Office of Management and Budget (OMB) would be required to make
ongoing, quarterly determinations of whether new hires exceed the 1-to-3 ratio of
the employees who have retired or left since the bill was enacted.

The bill requires a net 10-percent reduction in the civilian federal workforce,
aided by attrition, by September 30, 2016, after which the 10 percent reduction
must be maintained—postal employees are excluded under the bill.

If the OMB’s quarterly determinations fall short of the attrition ratio or the global
cap instituted in 2016, the bill institutes a hiring freeze until compliance is met.

A presidential waiver is permitted for a state of war, national security, or an
extraordinary emergency threatening life, health, safety, or property.

To ensure positions are not simply backfilled by service contracts, the bill
matches the decrease in federal employment with the procurement of service
contracts.
“We’ve racked up over $18 trillion in debt simply because Washington has no idea when
to stop spending,” Lummis remarked in support or the proposal. “Attrition is a solution
that requires the federal government to do what any business, state, or local government
would do to cut costs—limit new hires. Instead of blindly filling empty desks, this bill
forces agencies to take a step back, consider which positions are crucial, and make
decisions based on necessity rather than luxury. Real, productive job creation takes place
on Main Street America not in the bloated federal government.”
“It’s no secret that the federal government is way too big and spends way too much,”
Mulvaney said. “This bill is a big step in the direction of efficiency, and I’m hopeful this
common-sense approach is something my colleagues across the aisle can agree on as it
was part of the plan written by the President’s Fiscal Commission.”
Union reaction. Cox, who stands at the helm of the largest federal employees’ union,
registered his displeasure with the proposed legislation in a statement on January 23:
“This misguided legislation would arbitrarily slash the size of the federal workforce
without doing away with any of the work, forcing agencies to rely on more expensive
contractors. Rep. Lummis trotted out this bill in the last Congress and it was rejected by
Democrats and Republicans alike.”
According to Cox, the bill would prompt the loss of 200,000 federal employees in a
single year. “We’ve already seen what happens when the number of employees drops
while workloads climb,” Cox warned. “Veterans have to wait too long to get medical
care, seniors are put on hold while seeking Social Security assistance, employees who are
discriminated against at work wait years to get their day in court.”
Cox also pointed to the current size of the federal workforce: “The number of workers
employed by the federal government is currently at an all-time low—less than 2 percent
of the total U.S. workforce.” He said there is currently one federal employee for every
155 residents, much lower than the one for every 102 residents in 1965. “That means the
17
ratio of federal employees providing services to the public has declined by more than 50
percent in just a matter of decades,” he observed.
TWU sues AA over management pushback to maintenance safety concerns
By Pamela Wolf, J.D.
The Transport Workers Union of America (TWU), Local 591, and several union officials
have filed a federal lawsuit against American Airlines, Inc., seeking declaratory and
injunctive relief that would put to an end what they characterized as interference with
their “efforts to represent their members with respect to critical issues related to aviation
maintenance safety.” The union has challenged purported violations of several sections of
the Railway Labor Act.
Maintenance safety practices. In a complaint filed on Thursday, January 22, the union
said that in order to “improperly keep airplanes in revenue service,” aviation mechanic
technicians (AMTs) at the airline have “been subject to ongoing pressure from AA
management representatives to commit maintenance fraud, disregard maintenance
discrepancies, deviate from federally-mandated maintenance procedures, abstain from
required lightning strike and bird strike inspections, and otherwise violate federal aviation
standards.”
The complaint points to an April 2008 finding by the Federal Aviation Administration
that AA engaged in faulty wiring practices that required the grounding of its entire MD80 fleet. It notes a bankruptcy settlement under which FAA-proposed fines were reduced
from $155.5 million to $24 million, based in part on AA’s commitment to comply with
its In Accordance With (IAW) program and industry best practices. The AA IAW
program basically replicates federal aviation regulations requiring that “all persons
performing aircraft maintenance must use the methods, techniques, and practices
prescribed in applicable manufacturer and airline maintenance manuals,” according to the
complaint.
The union alleges that contrary to the requirements of Federal Aviation Regulations
(FAR) and the AA/FAA settlement agreement, and the IAW program, “AA-employed
AMTs have been subject to increasing pressure to engage in unlawful and even
fraudulent maintenance practices in order to keep AA aircraft in revenue service.”
Redress efforts unsuccessful. The complaint outlines the unsuccessful efforts of AMTs
and the union to obtain relief from the improper practices they allege, including
complaints to AA’s HR Hotline, which were purportedly met with non-responsiveness or
referrals back to the representatives accused of harassing the AMTs. When the vice
president of Local 591, Central Region brought the discriminatory assignment practices
to the attention of an AA station manager as a breach of the CBA, he was allegedly met
with the reply, “I don’t care.”
Futility. “AA has refused to make reasonable efforts to resolve disputes at the
intermediate levels of the grievance process, the complaint alleges. “Due to the enormous
backlog of grievances between AA and Local 591, the insufficiency of arbitration hearing
18
dates available to Local 591, and the limitations on arbitral remedial authority, any
attempt to resolve the disputes through the CBA’s grievance and arbitration process
would be futile.”
The union says that AMTs have complained that “they were afraid to come to work, felt
physically ill due to workplace stress, and felt increasing pressure to refrain from
reporting maintenance discrepancies.” Six Chicago-based AMT’s have allegedly filed
whistleblower complaints with the DOL, commonly called AIR 21 complaints. Based on
its investigation, the DOL purportedly intends to expand its investigation to Dallas and
Miami.
Union representation thwarted. Because of concerns about retaliation by AA, and
AA’s representation of FAA hostility, AMTs had requested union representation during
FAA-conducted interviews; the FAA had no objection to the presence of union
representatives provided that there was no interference with the FAA Investigators’ line
of questioning, according to the complaint. However, an AA manager purportedly
advised Local 591 union representatives that if they tried to provide representation for
AMTs during the scheduled FAA interviews, they would be subject to discipline,
including termination. The complaint details other issues related to union representation
of AMTs.
Declaratory and injunctive relief sought. The complaint seeks declaratory and
injunctive relief:

Restraining and enjoining AA, its officers, agents, employees, and all persons
acting on its behalf from engaging in any discipline, threats of discipline, staff
reductions or threats thereof, or other forms of harassment designed to influence
or interfere with its Mechanics and Related Employees' selection of a collective
bargaining representative.

Restraining and enjoining AA, its officers, agents, employees, and all persons
acting on its behalf from disciplining, threatening with discipline, arresting,
threatening with arrest, surveilling, or otherwise threatening or harassing Local
591 union representatives engaged in union representation activities.

Ordering AA, its officers, agents, employees, and all persons acting on its behalf
to treat with Local 591 and its representatives with respect to complaints of
harassment and coercion related to AMT adherence to FAA/IAW maintenance
standards.
The lawsuit also asks the court for punitive damages, among other things.
The TWU filed its lawsuit in the Northern District of Illinois, Eastern Division; the case
number is 1:15-cv-00652.
19
First doctor’s strike in 25 years hits UC student health centers
On Tuesday, January 27, doctors at all 10 University of California (UC) student health
centers held a planned one-day unfair labor practice strike—the first time in 25 years that
fully licensed doctors have gone on strike against a US employer, according to the Union
of American Physicians and Dentists (UAPD). The 150 fully licensed doctors represented
by the UAPD planned picket lines running from 7:30 in the morning until 2:30 in the
afternoon at some of the campuses, where noontime rallies also featured both UC
workers and students as speakers.
Student health doctors at the University of California (UC) unionized in 2013 with the
goal of providing students with the best primary health care and mental health services
possible, according to the union. They've spent a year in negotiations for their first
contract. The union said that during that time, they were forced to file multiple unfair
labor practice charges over UC's illegal behavior at the bargaining table.
This will be the first strike in the union's 43-year history. As UAPD President Dr. Stuart
Bussey purportedly told UC Regents and administrators at a January 22nd meeting:
“Until now, we have never needed to strike to get fair treatment for doctors. The
University, on the other hand, faces strikes on a regular basis. I encourage you, as leaders,
to take a serious look at UC's labor relations departments and the disruptive, anti-union
attitudes I see deeply rooted there.”
The 150 fully licensed doctors represented by the UAPD work at the University of
California student health centers were joined by other UC workers, UC students, and
community supporters.
Republican lawmakers reintroduce legislation to curb NLRB
Republican lawmakers have reintroduced legislation designed to curb what they see as an
aggressive and overreaching National Labor Relations Board. Senate Majority Leader
Mitch McConnell (R-Ky.) and Sen. Lamar Alexander (R-Tenn.), chairman of the Senate
labor committee, on Wednesday, January 28, introduced the NLRB Reform Act, S. 288,
with goal of turning the NLRB “from an advocate to an umpire” and preventing the
Board’s General Counsel from “operating as an activist for one side or the other.”
Similar to the version introduced in the Senate last September (S. 2814) the revived bill
would accomplish the following, according to its sponsors:

End partisan advocacy by increasing the number of board members from five to
six, requiring an even split between Republicans and Democrats; requiring for all
decisions, the agreement of four board members, resulting in consensus from both
sides; syncing the ends of board members’ five-year terms over time so that a
Republican and Democrat seat are up for nomination at the same time.

Reign in the general counsel, who most recently, according to the bill’s sponsors,
“have stretched federal labor law to its limits—and sometimes beyond.” The bill
would give parties 30 days to seek review of a general counsel’s complaint in
20
federal district court and would have new discovery rights to obtain memoranda
and other documents relevant to the complaint within 10 days.

Encourage timely decision-making, because the bill’s sponsors say the NLRB
takes too long to resolve cases. The legislative proposal would permit either party
in a case before the Board to appeal to a federal appeals court if the Board failed
to reach a decision within one year. In what the bill’s sponsors characterize as a
move to “further incentivize speedy decision-making,” the bill would reduce
NLRB funding by 20 percent if the Board is unable to decide 90 percent of its
cases within one year over the first two-year period post-reform.
“The NLRB’s politically motivated decisions and controversial regulations threaten the
jobs of hardworking Americans who just want to provide for their families,” McConnell
said. “So it’s time to restore balance and bipartisanship. The NLRB Reform Act would
help turn the board’s focus from ideological crusades that catch workers in the crossfire
to the kind of common-sense, bipartisan solutions workers deserve.”
Seasoned agency attorneys tapped for Assistant General Counsel spots
NLRB General Counsel Richard F. Griffin, Jr., separately announced on January 27 the
appointment of two seasoned attorneys with the agency to serve as Assistant General
Counsel in the Division of Operations-Management of the Office of the General Counsel
(OGC) in Washington. Deputy Assistant General Counsel Yvette C. Hatfield, one of the
appointees, has served the agency in various capacities since 1988, and the other, Deputy
Assistant General Counsel Aaron Karsh, has been working for the NLRB since 1987.
In their new jobs, Hatfield and Karsh will assist the General Counsel in managing the 26
Regional Offices of the NLRB and providing programmatic support for the national
enforcement and administration of the NLRA. Prior to her promotion, Hatfield served as
a Deputy Assistant General Counsel in the Division of Operations-Management working
in District 1, while Harsh served in the same capacity in District 3; each district currently
covers 8 Regional Offices.
Hatfield began her career at the NLRB in 1988 as a field attorney in the Los Angeles
Regional Office, Region 21. In 1998, she transferred in the Office of Appeals of the OGC
in Washington, D.C., as an attorney-advisor. She joined the Division of OperationsManagement staff when she was promoted to the Deputy Assistant General Counsel
position in 2000. Hatfield was awarded her bachelor’s degree from Pennsylvania State
University in 1974 and her legal degree from the Villanova University School of Law in
1983. She worked as a law clerk in the Philadelphia Municipal Court and the
Philadelphia Court of Common Pleas and was in private practice before she began her
career with the NLRB.
Karsh, a career NLRB attorney, earned a bachelor’s degree from the University of Illinois
in 1983 and a law degree from Boston College Law School in 1987. Later that year, he
joined the NLRB as a staff attorney in the Office of Appeals in Washington and
subsequently served as a field attorney in the NLRB’s Chicago Regional Office. In 1993,
he returned to Washington and joined the Division of Advice, where he moved up the
21
ranks to become briefing supervisor in the Injunction Litigation Branch and Deputy
Branch Chief of the Regional Advice Branch. In 2010, he joined the Division of
Operations-Management as Deputy Assistant General Counsel, where he served prior to
this promotion.
Uninsured workers in airline catering industry hold protests
Uninsured food service workers on Thursday, January 29, held protests in Chicago,
Atlanta, Dallas, and 17 additional cities that are home to United, American Airlines, and
Delta—the big three U.S. airlines. The protesting employees, who are in the airline
catering industry, say their healthcare is too expensive, leaving many uninsured or
underinsured. According to protestors, the airlines could fix the problem for “just a nickel
a ticket.” The protests launched a national campaign aimed at major airlines that is
coordinated by UNITE HERE, a union representing 27,000 workers in the airline food
industry.
Workers visited airline headquarters to deliver a petition to representatives of the three
airlines on behalf of nearly 12,000 airline catering workers at 31 U.S. airports. In
conjunction with the campaign, the union said, more than 1,200 workers came forward to
demand a “nickel a ticket” from airlines via photos released online.
The union pointed to a 2014 analysis of nearly 10,000 contracted airline catering
workers nationally, which found that over 40 percent of these workers make less than
$10.10 per hour. These low wages put the industry workers “between a rock and a hard
place: unable to pay the premiums of so-called ‘minimum value plans,’ but ineligible to
purchase more affordable options from health care exchanges,” according to UNITE
HERE. More than 24 percent of workers surveyed by the union reported that they are
uninsured. In other cases, workers pay annual premiums for company-offered health care
of $1,400-plus for individuals and $5,000 for families—all on top of an additional $5,000
minimum deductible. As a result, many workers struggle to make ends meet; the same
survey found that 25 percent of airline catering workers receive some sort of public
assistance.
The union underscored current profit levels in the U.S. airline industry, which it said “is
booming.” American Airlines reported a record $1.2 billion net profit in third quarter
2014, according to the union. “Yet American, Delta, United and other airlines continue to
squeeze the food workers in their supply chain, paying catering companies an average of
only $2.50 per passenger for food—nearly $2.00 less than 2001 rate for similar services,”
the union said, adding that “as profits soar, catering workers are seeking their fair share.”
In a letter to the CEOs of the three airlines, union officials wrote:
“Quality healthcare is just a pie in the sky for us airline food workers. Most of us make
less than $20,000 a year. We can’t afford the health insurance offered to us by airline
food companies as it costs anywhere between $100 and $500 a month to insure ourselves
and our families! Those of us who do enroll in health care coverage are forced to
purchase the cheapest plans, which have exorbitant out-of-pocket deductibles—up to
$15,000 each year. This means we face huge medical bills before even a cent of coverage
22
kicks in, and we’re often forced to make extremely difficult decisions: Should we pay for
insurance, or rent? Do we have enough to pay for our children’s immunizations? Can we
afford treatment for our injuries or other medical conditions?”
The union officials also noted that those who could not afford insurance would be faced
with fines under the health reform law.
“You, “the Big Three” American airlines, can take the lead in changing this situation,”
wrote the union officials. “This year, your industry made record high profits in addition
to receiving continued public subsidies and tax breaks. Simply by earmarking one nickel
per passenger ticket, you could ensure that we have more affordable and better healthcare
options. Airline food workers could secure the kind of insurance our jobs and families
greatly need. We know you have the power to make this change.”
President’s nominees to FMCS, DOL and FMSHRC advance
On Wednesday, January 28, the Senate Health, Education, Labor, and Pensions (HELP)
Committee gave its stamp of approval to President Obama’s nominees for the jobs of
director of the Federal Mediation and Conciliation Service (FMCS), Assistant Secretary
of Labor, and Member of the Federal Mine Safety and Health Review Commission
(FMSHRC).
Accordingly, the Senate will now take up the president’s nomination of Allison Beck to
serve as Federal Mediation and Conciliation Director, Adri Davin Jayaratne for the job of
Assistant Secretary of Labor, and Mary Lucille Jordan and Michael Young to be
Members of the FMSHRC. Commenting at the executive session in which the
nominations were approved, Ranking Member Sen. Patty Murray (D-Wash.) called them
“a slate of highly qualified nominees.”
Allison Beck. Murray noted that Beck has served for five years as deputy director of the
Federal Mediation and Conciliation Service and is currently the acting director. “Through
that experience, Ms. Beck has successfully brought labor groups and management
together to bring about constructive outcomes for all sides. And her nomination is
especially significant, because, if confirmed, she would be the first woman to hold the
position,” Murray said.
“Having capable leaders to handle arbitrations and mediations is so important to workers,
businesses, and our economy,” according to Murray.
Adri Jayaratne. The Senator also expressed her support for Jayaratne in his nomination
for Assistant Secretary of the Department of Labor, noting that he is currently the Deputy
Assistant Secretary and has been in the Office for Congressional and Intergovernmental
Affairs since 2009.
“In his current post, and since the Assistant Secretary position became vacant last year,
he has worked diligently to improve communications with Congress, to speed up
responses to Congressional inquiries, and to make the Department more accessible and
transparent,” Murray said. “I have had an opportunity to work with him a number of
23
times. My staff works with him almost daily, and I couldn’t be more supportive of his
nomination, and his confirmation.”
Mary Lu Jordan and Michael Young. The Ranking Member was similarly enthusiastic
in her praise of both nominees to the Federal Mine Safety and Health Review
Commission: “I support Mary Lu Jordan and Michael Young’s nominations. The
commission is an independent agency that decides legal disputes that arise under the
Mine Act, and both of these nominees are highly qualified for their posts.”
Murray pointed out that in her more recent term on the Commission, Jordan has served as
the Chairman since 2009 and a member since 2003. “Young has been a member of the
Commission since 2003,” Murray noted.
“The Federal Mine Safety and Health Review Commission plays a critical role in
ensuring workplace safety and worker protections, and I’m confident Ms. Jordan and Mr.
Young will continue to carry out that mission,” said Murray.
LEADING CASE NEWS:
U.S.: Court must apply ordinary contract principles to lifetime contribution-free
retiree health care question
By Ronald Miller, J.D.
Applying ordinary principles of contract law, a unanimous U.S. Supreme Court vacated
the Sixth Circuit’s ruling that provisions in expired collective bargaining agreements
created a right to lifetime contribution-free health care benefits for retirees, their
surviving spouses, and their dependents. In so ruling, the Court disapproved of the
reasoning in the Sixth Circuit’s 1993 decision in International Union, United Auto,
Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man, Inc. (Yard-Man).
Justice Ginsburg filed a separate concurring opinion, in which Justices Breyer,
Sotomayor, and Kagan joined (M & G Polymers USA, LLC v. Tackett, January 26, 2015,
Thomas, C.).
Retirees brought a class action against the employer after it announced that they would be
required to make health care contributions. The retirees contended that the promise of
“full Company contribution towards the cost of [health care] benefits” in collective
bargaining agreements provided them with a vested right to receive lifetime health care
benefits in retirement without any contributions. The employer countered that “cap
letters” entered between itself and the bargaining unit representative limited that promise.
Initially, the district court dismissed the complaint for failure to state a claim. However,
the Sixth Circuit reversed based on the reasoning of Yard-Man.
On remand, the district court conducted a bench trial and found for the retirees on their
claims that the employer violated the labor agreements and violated the employee benefit
plans. It declined to revisit the question whether the agreement created a vested right to
retiree benefits, concluding that the appeals court had definitively resolved that issue. The
trial court issued a permanent injunction to reinstate the retirees’ lifetime contribution-
24
free health care benefits. However, the retirees were only reinstated to the post-2007
versions of the plans. The Sixth Circuit affirmed that decision.
Ordinary principles of contract law. The Supreme Court observed that this case is
about the interpretation of collective-bargaining agreements that define rights to welfare
benefits. Here, the High Court found that the Sixth Circuit’s decision rested on principles
that are incompatible with ordinary principles of contract law. The Court first noted that
while ERISA governs pension and welfare benefits plans, it exempts welfare benefits
plans from rules establishing minimum funding and vesting standards. In essence, ERISA
treats these two types of plans differently. Welfare benefits plans must be “established
and maintained pursuant to a written instrument,” but “[e]mployers or other plan
sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or
terminate welfare plans.”
Citing its recent decision in Heimeshoff v. Hartford Life & Accident Ins. Co., the Court
observed that the rule that contractual “provisions ordinarily should be enforced as
written is especially appropriate when enforcing an ERISA [welfare benefits] plan.” That
is because the “focus on the written terms of the plan is the linchpin of a system that is
not so complex that administrative costs, or litigation expenses, unduly discourage
employers from offering[welfare benefits] plans in the first place.”
Yard-Man inferences. Moreover, the Court reiterated that it interprets CBAs, including
those establishing ERISA plans, according to ordinary principles of contract law, at least
when those principles are not inconsistent with federal labor policy. In this case, the Sixth
Circuit applied the Yard-Man inferences to conclude that, in the absence of extrinsic
evidence to the contrary, the provisions of the contract indicated an intent to vest retirees
with lifetime benefits. But the Court concluded that the inferences applied in Yard-Man
and its progeny do not represent ordinary principles of contract law.
In the instant case, the employer claimed that provisions in the parties’ CBAs, which
allegedly created a right to lifetime contribution-free health care benefits for retirees,
terminated when the agreements expired. The Sixth Circuit has long insisted that its
Yard-Man inferences are drawn from ordinary contract law. From the existence of
provisions terminating active employees’ insurance benefits in the case of layoffs, for
terminating benefits for a retiree’s spouse and dependents in case of the retiree’s death,
and the absence of a termination provision specifically addressing retiree benefits, the
court in Yard-Man court inferred an intent to vest those retiree benefits for life.
Illusory promises. The court in Yard-Man also purported to apply the rule that contracts
should be interpreted to avoid illusory promises. However, the High Court found that the
Sixth Circuit also misapplied the illusory promises doctrine. It construed provisions that
admittedly benefited some class of retirees as “illusory” merely because they did not
benefit all retirees. Although the contract included a general durational clause—meaning
that it would expire at a certain time—the appeals court concluded that contextual clues
outweighed any contrary implications derived from a routine duration clause. Those
contextual clues included that the promise of lifetime health care benefits would be
“completely illusory for many early retirees under age 62” if the retiree benefits
25
terminated when the contract expired; the appeals court’s observation that retiree benefits
are not mandatory subjects of bargaining; and that that “employees are presumably aware
that the union owes no obligation to bargain for continued benefits for retirees.”
Here, the Supreme Court disagreed with the Sixth Circuit’s assessment that the inferences
applied in Yard-Man and its progeny represent ordinary principles of contract law.
Instead, the Court concluded that Yard-Man violates ordinary contract principles by
placing a thumb on the scale in favor of vested retiree benefits in all CBAs. Yard-Man
relied on no record evidence indicating that employers and unions in that industry
customarily vest retiree benefits. Yard-Man also relied on the premise that retiree benefits
are a form of deferred compensation. Further compounding this error, the appeals court
had refused to apply general durational clauses to provisions governing retiree benefits.
As a result, the Supreme Court found that the Sixth Circuit’s refusal to apply general
durational clauses to provisions governing retiree benefits distorted the agreement’s text
and conflicted with the principle that a written agreement is presumed to encompass the
whole agreement of the parties. The Sixth Circuit’s use of this doctrine was particularly
inappropriate in the context of CBAs, which often include provisions inapplicable to
some category of employees.
Traditional contract principles. The Sixth Circuit also failed even to consider other
traditional contract principles, including the rule that courts should not construe
ambiguous writings to create lifetime promises and the rule that “contractual obligations
will cease, in the ordinary course, upon termination of the bargaining agreement.”
Because vesting of welfare plan benefits is not required by law, an employer’s
commitment to vest such benefits is not to be inferred lightly; the intent to vest must be
found in the plan documents and must be stated in clear and express language.” When a
contract is silent as to the duration of retiree benefits, a court may not infer that the
parties intended those benefits to vest for life.
The case number is 13-1010.
Attorneys: Allyson N. Ho (Morgan, Lewis & Bockius) for M&G Polymers USA, LLC.
Julia Penny Clark (Bredhoff & Kaiser), and David M. Cook (Cook & Logothetis) for
Hobert Freel Tackett.
D.C. Cir.: NLRB relied on faulty premise to find banning union insignia on baseball
caps unlawful
By Ronald Miller, J.D.
Because the NLRB relied on a faulty premise in invalidating an employer policy
prohibiting employees from wearing baseball caps except for those bearing the company
logo, the D.C. Circuit granted the employer’s petition for review and remanded the matter
to the Board for reconsideration. The Board’s order was premised on its finding that there
was no dispute concerning whether the hat policy facially prohibited employees from
wearing hats bearing union insignia. This finding had no basis in the record before the
agency, observed the appeals court. The employer, in fact, allowed employees to wear
26
union insignia on the company cap by accessorizing it in an appropriate manner (World
Color (USA) Corp. v. NLRB, January 16, 2015, Wilkins, R.).
The employer operated a printing facility. At issue in this case was its policy prohibiting
employees from wearing baseball caps except for caps bearing the company logo. The
challenged policy was found in a parent company’s corporate safety program. According
to the union representing the affected employees, the policy interfered with, restrained, or
coerced employees in the exercise of their Sec. 7 rights.
As an initial matter, the appeals court observed that it was beyond dispute that Sec. 7
protects an employee’s right to wear union insignia at work unless special circumstances
are present. A law judge determined that the policy violated this right, after finding that
the hat policy was distinct from the parent company’s uniform policy, and that the
company had not substantiated its claims of special circumstances regarding the safety of
press operators, concerns about gang activity, and employee presentation. An NLRB
panel accepted the law judge’s determination that the hat policy was distinct from the
employer’s uniform policy, and concluded that it was “undisputed that the policy on its
face prohibits employees from engaging in the protected activity of wearing caps bearing
union insignia.” However, the employer did dispute that the hat policy facially prohibited
employees from wearing caps bearing union insignia, the appeals court found. The
employer consistently argued that the hat was part of its uniform policy and that its
policies facially allowed employees to adorn their company hat with union insignia.
The NLRB’s determination of whether a policy violates Sec. 8(a)(1) involves a two-step
inquiry, the court noted. “First, the Board examines whether the rule explicitly restricts
section 7 activity; if it does, the rule violates the Act.” If the policy does not explicitly
restrict protected activity, the Board considers whether “(1) employees would reasonably
construe the language to prohibit Section 7 activity; (2) the rule was promulgated in
response to union activity; or (3) the rule has been applied to restrict the exercise of
Section 7 rights.”
The Board short-circuited this inquiry at the first step by concluding there was no dispute
regarding whether the policy facially prohibited employees from wearing caps bearing
union insignia. The court disagreed with that assessment. Although the hat policy
restricted the type of hat that may be worn, it said nothing about whether union insignia
may be attached to the hat. Moreover, the general uniform policy allowed employees to
accessorize “in good taste and in accordance with all safety rules.” Because the Board’s
conclusion that “it is undisputed that the policy on its face prohibits employees from
engaging in the protected activity of wearing caps bearing union insignia” was
contradicted by the record, the appeals court granted the employer’s petition for review.
The case numbers are 14-1028 and 14-1037.
Ronald J. Holland (Sheppard Mullin Richter & Hampton) for World Color (USA) Corp.
David A. Seid for NLRB.
27
7th Cir.: Contempt order affirmed for noncompliance with injunctive order in
action brought by NLRB regional director
By Ronald Miller, J.D.
A contempt order stemming from an employer’s failure to comply with an injunctive
order resulting from its conduct in response to its employees’ union organizing efforts
was affirmed by the Seventh Circuit. Here, the appeals court concurred with a district
court’s findings that the employer did not substantially comply with the injunctive order,
and did not take steps to reasonably and diligently comply with the district court’s
unambiguous command to reinstate two discharged bus drivers and to post a copy of the
contempt order and its translation. Moreover, the appeals court rejected the employer’s
contention that a motion for reconsideration somehow excused its failure to comply with
the injunctive order (Ohr v. Latino Express, Inc., January 12, 2015, Rovner, I.).
The transportation company employer appealed a district court order finding it in civil
contempt of an earlier order granting injunctive relief to an NLRB regional director. That
underlying order sought to address the employer’s violation of the NLRA as its
employees attempted to certify a union. In the underlying case, two bus drivers began
soliciting signatures from other drivers to certify a union as their bargaining
representative. The employees met resistance from the company owners and managers,
who began efforts to undermine the union activities, and the two drivers were terminated.
Interference with organizing activities. The discharged drivers filed claims with the
NLRB alleging that the employer violated the NLRA by interfering with their union
organizing activities. The regional director petitioned for interim injunctive relief under
Sec. 10(j) of the Act. The regional director’s petition alleged that the Board would likely
rule that the employer violated the Act by (1) creating the impression that the employees’
union activities were under surveillance; (2) promising and granting employees improved
benefits in response to a union organizing campaign; (3) instructing employees not to
speak with each other about the company’s accident reimbursement policy; (4)
announcing to its employees that union representation was never going to happen at the
facility; (5) interrogating employees about their union activity and threatening to
discharge them; and (6) soliciting grievances from employees in response to a union
organizing campaign. He also requested reinstatement of the discharged drivers. The
district court agreed and granted preliminary injunctive relief.
Decertification petition pending. Thereafter, the employer moved for an extension of
time in which to file a response to the director’s proposed order. At a hearing on the
matter, the employer explained that its employees had withdrawn their recognition of the
union and that a decertification petition was forthcoming. According to the employer, the
decertification petition would nullify the preliminary injunction issued by the court. The
district court responded that the union’s status at the time of the contempt hearing was
irrelevant. The employer filled a notice of appeal of the district court’s issuance of the
injunction, and later filed a motion asking the district court to reconsider the injunction.
However, the district court denied the employer’s motion, again ruling that the prospect
of decertification was not a basis to reject or revise the injunction.
28
Contempt ruling. Thereafter, the NLRB concluded that the employer was in contempt
for its failure to comply with the injunction, and the regional director filed a motion in the
district court to enter an order to that effect. Subsequently, the district court issued its
memorandum opinion finding the employer in civil contempt for failing to comply with
the injunction.
On appeal, the Seventh Circuit pointed out that the only relevant facts were those
regarding the employer’s actions or lack thereof following issuance of the first order. The
district court based its contempt finding on the factual findings it made that the employer
did not perform any of the actions required by its injunction order before the deadline,
and had no legal defense justifying its failure to do so.
Elements of contempt finding. To prevail in its request for a contempt finding, the
regional director had to establish by clear and convincing evidence that (1) the district
court’s order set forth an unambiguous command; (2) the employer violated that
command; (3) the violation was significant, meaning that the employer did not
substantially comply with the order; and (4) the employer failed to make a reasonable and
diligent effort to comply. Here, the Seventh Circuit agreed with the district court that the
regional director established by clear and convincing evidence each of those elements.
Motion to reconsider. The deadline for compliance with the injunction order came and
went without any action on the part of the employer. Thereafter, the regional director
notified the employer that it had received evidence of this noncompliance. One week
after the deadline had passed, and after the regional director’s notice of noncompliance,
the employer filed a motion to reconsider and stay enforcement of the injunction, without
explanation, and asserted that a decertification petition was pending. Noting that it had
already rejected the employer’s argument that the decertification petition affected the
injunction order and correctly concluding that the NLRA’s protections are not contingent
on the existence of a presently-certified union, the district court denied the motion to
reconsider.
Until a union is actually decertified, the “company’s obligations to it are the same as they
had been before the election and if it spurns those obligations it is guilty of an unfair
labor practice.” Moreover, the injunction did not contain any provisions that affected the
union in any way. In juxtaposing the requirements of the injunctive order against the
employer’s actions, the district court found that it did not offer to reinstate the two
discharged drivers by the deadline, as required. It was not until one day after the district
court denied its motion to reconsider that the employer made any effort to comply at all.
Conditional reinstatement. After the district court denied the motion to reconsider, the
employer mailed letters to the discharged drivers offering conditional reinstatement.
However, both drivers’ permits to operate school buses had expired after they had been
illegally terminated and without the necessary assistance from an employer, they were
unable to renew the permits. The conditional reinstatement letter required the drivers to
report to work the next business day after receipt. When the drivers reported for work
they were immediately asked about their school bus permits and, when they were unable
29
to present them, they were told that they were in violation of the terms of the
reinstatement letter.
The district court found that the drivers could not have renewed or reapplied for a new
permit without the employer’s assistance, and that the employer was not only aware of
this fact, but used it as a means to deny them reinstatement. Customarily, when the
employees’ permit expired, the employer made all the arrangements for them to attend
the required refresher classroom training course, gave them the necessary paperwork for
an updated physical examination, and provided a money order to send along with the
forms to the Secretary of State. But in this instance, it made no offer to help in any way.
Further, there was ample evidence that the employer kept track of permit expiration
dates, so the district court did not err in rejecting the employer’s contention that it was
not aware that the drivers did not have their permits when it sent the offer letters. Thus,
the appeals court agreed with the district court that the reinstatement offers were illusory.
Posting of contempt order. The district court also found that the employer did not
comply with the injunctive order’s requirements to post the contempt order (and a
Spanish translation) by the deadline, in a place where notices to employees are normally
posted. The employer admitted that the order was not posted until more than a week after
the deadline. The district court also determined that the translation contained several
errors and that portions of the order were not translated at all. Again, the employer
admitted that the translation was lacking.
Rejected also was the employer’s contention that its motion for reconsideration somehow
excused its failure to comply with the injunctive order. The district court denied the
motion for a stay the day after it was filed, noting that its arguments were based on
previously rejected arguments. Moreover, a Rule 59 motion is not a forum to relitigate
losing arguments; it may be granted only if the movant can “demonstrate a manifest error
of law or fact or present newly discovered evidence.” Thus, the appeals court agreed with
the district court that the regional director had proven by clear and convincing evidence
that the respondents had failed to take reasonable and diligent steps to comply with the
injunctive order.
Imposition of relief. The appeals court also found no deficiencies in the relief imposed
on the employer. The district court was well within its discretion to order the employer to
pay the NLRB’s costs and expenses, including attorney’s fees. In this instance, the
employer intractably recycled the same baseless argument that a decertification petition
affected the proceedings before the district court in the preliminary injunction hearing, in
a motion to reconsider, in the contempt proceedings, and again before the appeals court.
Moreover, the regional director correctly pointed out that given the employer’s
intransigence, it was necessary to continue to monitor compliance and seek relief before
the court.
The case number is 12-2828.
Attorneys: Elinor L. Merberg, NLRB, for Peter S. Ohr. Andre Ordeanu (Zane D. Smith &
Associates) for Latino Express, Inc.
30
7th Cir..: Magistrate lacked authority to dismiss union member’s pro se motion;
appeals court’s hands tied too
By Lisa Milam-Perez, J.D.
The Seventh Circuit lacked subject matter jurisdiction to reconsider a magistrate judge’s
apparent dismissal of a union member’s pro se “motion to establish court’s jurisdiction,”
filed after he grew disenchanted with a union’s efforts to resolve his grievance pursuant
to a settlement in his underlying lawsuit against the union. Because the magistrate’s
decision dismissing the matter was a nullity, there was no final judgment below for the
appeals court to consider (Jones v. Association of Flight Attendants-CWA, January 30,
2015, Wood, D.).
Suit against union. A 15-year flight attendant for United Airlines sued his union after he
was fired for misconduct, contending that it unfairly sided with his former employer
instead of fairly representing him out of racial animus and his continued complaints of
discrimination. When a settlement appeared imminent, the parties consented to have a
magistrate judge preside over the case. They reached a deal in which the union agreed to
grieve his discharge with the System Board of Adjustment and the union member agreed
to dismiss his suit with prejudice. The settlement did not provide for the court’s
continuing jurisdiction, though, and the parties’ respective lawyers signed a stipulation of
dismissal.
Pro se motions. Unhappy with the subsequent progress of his grievance, the union
member filed a series of pro se motions with the district court, including a motion to
dismiss his attorney; a motion to reinstate the lawsuit and for a “default judgment” to be
entered against the union; and the motion at issue here, filed seven months after the
settlement, “to establish court’s jurisdiction.” The district court clerk sent the document
to the magistrate judge who had presided over the underlying case, and the magistrate
entered a minute order dismissing the motion, as he had with the previous pro se filings,
explaining that the court could not exercise jurisdiction over a case that already had been
dismissed with prejudice. The union member appealed this final blow.
Not a Rule 60(b) motion. Given that the document in question was filed so long after the
lawsuit was dismissed, Rule 60 was the only possible basis for the magistrate’s authority
to act on it in disposing of the case, the appeals court reasoned. But it was clear that the
magistrate hadn’t construed the filing as such. And rightly so, the appeals court found:
The document looked to be more a bid to enforce the settlement (the union wasn’t
grieving this discharge quite to his satisfaction), not to set it aside or alter it. Settlements
are contractual by nature, though, and disagreements over whether the parties met their
commitments thereunder are essentially contract disputes, which arise under state law
(with the notable, but inapplicable, exceptions of judicial orders or consent decrees). And
there was no independent basis for federal jurisdiction here, such as diversity of
citizenship. As such, the magistrate correctly concluded that he lacked subject matter
jurisdiction, the appeals court said.
Now what? At that point, however, the magistrate should have recognized that he was
without authority to issue a dispositive ruling, not even an order of dismissal on
31
jurisdictional grounds. What was really going on, the appeals court concluded, was that
the union member was bringing a new lawsuit at that point, one that hadn’t yet been
assigned to the magistrate by a district judge nor consented to by the parties. And,
because a “purported final decision issued by a magistrate judge acting outside of his
authority is a nullity,” there was no final judgment in the case. Rather, it is technically
still pending before the district court with a de facto recommendation of dismissal from
the magistrate judge. Consequently, the Seventh Circuit also lacked jurisdiction to
address the matter any further, and so dismissed the appeal.
It may have been possible to construe the filing at hand as a new lawsuit alleging the
union failed anew in its fair representation duty, this time before the System Board of
Adjustment, the appeals court theorized. If the district court deems it as such, the appeals
court instructed it to consider whether this federal claim would then provide supplemental
jurisdiction over the union member’s state-law claim for breach of the settlement
contract. That was a matter for the court below to address in the first instance—once the
union member pays a new filing fee, the appeals court said.
The case number is 14-1482.
Attorneys: Vernon T. Jones, pro se. Robert A. Seltzer (Cornfield & Feldman) for
Association of Flight Attendants-CWA.
9th Cir.: ‘Pattern and practice’ allegation not enough to show $5 million at stake
under CAFA
By Lorene D. Park, J.D.
A company facing a putative class action over its alleged failure to pay for off-the-clock
work could not support federal jurisdiction under the Class Action Fairness Act (CAFA)
merely by asserting that more than $5 million was at stake based on the complaint’s
allegation of a “pattern and practice” of labor law violations. Because the complaint did
not allege that the employer in every single shift violated labor laws, and the employer
was relying on assumptions to satisfy the amount in controversy, the Ninth Circuit held
that it had to show its chain of reasoning and the underlying assumptions were grounded
in real evidence. Because the employer had not done so here, the appeals court remanded
for both sides to submit proof on the amount in controversy (Ibarra v. Manheim
Investments, Inc., January 8, 2015, Gould, R.).
The plaintiff filed a putative class action in a state court alleging his former employer
violated the California Labor Code by failing to provide meal and rest periods, failing to
furnish compliant wage statements, and failing to pay timely wages upon discharge. He
also claimed the employer had a “pattern and practice” of failing to pay non-exempt
employees for off-the-clock work. The complaint explicitly stated that “the aggregate
claims of the individual class members do not exceed the $5,000,000 jurisdictional
threshold for federal court” under the CAFA.
Removal and remand. Removing the case to federal court, the employer asserted that
more than $5 million was at stake. The district court found its proof of the amount in
32
controversy inadequate and remanded to state court. The employer appealed and, while
that appeal was pending, the Ninth Circuit decided Rodriguez v. AT&T Mobility Services,
LLC, in which it concluded that the “proper burden of proof imposed upon a defendant to
establish the amount in controversy is the preponderance of the evidence standard.” In
light of Rodriguez, the Ninth Circuit sent the case back to the district court. Once again
the district court remanded to state court, finding the employer did not prove that
CAFA’s amount in controversy threshold was met. This appeal followed.
Defendant’s burden. After discussing the intent behind CAFA and recent cases, the
Ninth Circuit explained that, in determining the amount in controversy, courts first look
to the complaint: “Generally, ‘the sum claimed by the plaintiff controls if the claim is
apparently made in good faith.’” If damages are unstated in a complaint or the defendant
believes they are understated, “the defendant seeking removal bears the burden to show
by a preponderance of the evidence that the aggregate amount in controversy exceeds $5
million when federal jurisdiction is challenged.” A defendant cannot establish jurisdiction
by mere speculation with unreasonable assumptions.
If plaintiffs prefer state court and allege that the amount in controversy does not exceed
$5 million, a defendant must “put forward evidence showing that the amount in
controversy exceeds $5 million, to satisfy other requirements of CAFA, and to persuade
the court that the estimate of damages in controversy is a reasonable one.” And if
plaintiffs challenge removal with a motion to remand, the Supreme Court has said that
both sides submit proof and then the court decides where the preponderance lies. Thus,
explained the Ninth Circuit, “CAFA’s requirements are to be tested by consideration of
real evidence and the reality of what is at stake in the litigation, using reasonable
assumptions underlying the defendant’s theory of damages exposure.”
Calculation based on assumptions. In this case, the employer calculated the amount in
controversy by estimating the amount of meal period penalties to be $5,560,246 (the
average hourly wage of $11.66 multiplied against 476,865, which was the number of
five-hour shifts worked by its non-exempt California employees during the relevant time
period). Using a similar formula, the employer estimated the amount of rest break
penalties to be $6,448,295.
This method of calculation assumed the employer denied each class member a meal
break in each of their 476,865 five-hour shifts and one rest break in the 553,027 threeand-a-half-hour shifts. The employer based its violation-rate assumption on the
complaint’s allegation that it has a “pattern and practice” of failing to pay non-exempt
employees for working off-the-clock and “hide[s] behind written policies that purport to
forbid these unlawful labor practices while at the same time maintaining an
institutionalized unwritten policy that mandates these unlawful practices.”
“Pattern and practice” does not mean “always.” Finding that a remand was necessary,
the Ninth Circuit explained: “a ‘pattern and practice’ of doing something does not
necessarily mean always doing something. The complaint alleges a ‘pattern and practice’
of labor law violations but does not allege that this ‘pattern and practice’ is universally
followed every time the wage and hour violation could arise.” Indeed, the plaintiff
33
allegedly worked without compensation on “multiple occasions,” suggesting that this did
not happen on each and every shift. Because the complaint did not allege a violation on
each and every shift, the employer bore the burden of showing that its estimation of the
amount in controversy relied on reasonable assumptions.
Here, the employer relied on an assumption about the rate of its alleged labor law
violations that was not grounded in real evidence. Accordingly, the case was remanded to
the district court so that both sides could submit evidence on the issue.
The case number is 14-56779.
Attorneys: Raul Cadena (Cadena Churchill) and Paul D. Jackson (JacksonLaw) for Jose
L. Ibarra. Thomas R. Kaufman (Sheppard Mullin Richter & Hampton) for Manheim
Investments, Inc., and Cox Enterprises, Inc.
9th Cir.: Employers properly relied on reasonable chain of logic in establishing
CAFA amount in controversy requirement
By Kathleen Kapusta, J.D.
Finding that in removing a putative class action filed against it to federal court, the
defendants relied on a reasonable chain of logic and presented sufficient evidence to
establish that the amount in controversy exceeded $5 million as required under the Class
Action Fairness Act (CAFA), the Ninth Circuit reversed a district court’s order
remanding the case to state court. In so ruling, the appeals court cited its decision in
Ibarra v Manheim Investments, Inc., filed simultaneously with this opinion (and reported
herein), which held that when a defendant relies on a chain of reasoning that includes
assumptions to satisfy its burden to prove by a preponderance of the evidence that the
amount in controversy exceeds $5 million, the chain of reasoning and its underlying
assumptions must be reasonable (LaCross v. Knight Transportation Inc., January 8, 2015,
Gould, R.).
The defendants, Knight Transportation and Knight Truck and Trailer Sales (Knight),
were sued by three truck drivers in California state court. The named plaintiffs filed a
putative class action alleging, among other things, that Knight misclassified them as
independent contractors. Estimating the amount in controversy for reimbursing the
drivers’ lease-related and fuel costs to be at least $44 million, Knight removed the case to
federal court. The plaintiffs then filed a motion to remand, which the district court
granted, finding that Knight did not meet its burden of proof to establish the amount in
controversy because its calculations relied on a flawed assumption that all drivers worked
50 hours a week.
CAFA’s requirement. On appeal, the sole issue was whether CAFA’s requirement that
the amount in controversy exceed $5 million was met. Although the court applied its
framework of analysis from Ibarra to the evidence here, it first noted an important
distinction: Unlike the complaint in Ibarra, which alleged a “pattern and practice” of
labor law violations but not universal violations, the complaint here clearly defined the
34
class to include only the truck drivers, all of whom allegedly should have been classified
as employees rather than as independent contractors.
Observing that the plaintiffs claimed that as employees they should have been reimbursed
for their business expenses, the court pointed out that if they were to succeed on their
claim, Knight would need to reimburse them for expenditures related to the ownership
and operation of their trucks, including lease related costs and fuel costs. In calculating its
potential liability for the fuel costs, Knight relied on the costs invoiced on its fuel cards
that it provided to its drivers. The total fuel costs invoiced on its cards in the first quarter
of 2014 were $2.3 million. Knight then estimated that if that cost was multiplied by 16
quarters in the four-year class period, the amount in controversy would be $36.8 million.
Pointing out that Knight further extrapolated a more conservative estimate of total fuel
costs by taking into account that the number of drivers varied each year, the appeals court
found that the lower court erred in concluding that “all of Knights calculations rely on the
assumption that . . . the class . . . worked for the entirety of the year.” Contrary to the
district court’s conclusion, Knight’s method of calculation extrapolated fuel costs based
on the actual invoiced fuel costs in the first quarter of 2014 and the actual number of
drivers who signed the independent contractor agreements with it during the relevant
class period, without relying on the assumption that each driver worked the entire year,
the appeals court explained. Thus, the court found, Knight produced sufficient evidence
to establish by a preponderance of the evidence that the amount in controversy exceeded
$5 million.
Chain of reasoning was reasonable. In addition, the appeals court found that the chain
of reasoning and its underlying assumption to extrapolate fuel costs for the entire class
period using the actual invoiced fuel costs of one quarter were reasonable for several
reasons. First, the complaint alleged that the class included only truck drivers, so the fuel
costs were necessary expenses in the discharge of the drivers’ duties. Second, nothing in
the record showed that the drivers worked for another company while working for
Knight. Third, while the number of drivers varied during the class period, even using the
lowest number of drivers in 2010 for all 16 quarters during the class period, the fuel costs
still exceeded $5 million, the court pointed out.
And while the plaintiffs argued that the class might not be able to prove all the elements
for reimbursement under California Labor Code Section 2802, so the amount in
controversy likely would not exceed $5 million, the court explained that the plaintiffs
were conflating the amount in controversy with the amount of damages ultimately
recoverable. As it explained in Ibarra, “Even when defendants have persuaded a court
upon a CAFA removal that the amount in controversy exceeds $5 million, they are still
free to challenge the actual amount of damages in subsequent proceedings and at trial.
This is so because they are not stipulating to damages suffered, but only estimating the
damages that are in controversy.” Thus, the appeals court reversed the district court’s
order and remanded for further proceedings.
The case number is 14-56780.
35
Attorneys: Ellen Rachel Serbin (Perona, Langer, Beck, Serbin, Mendoza & Harrison) and
James Trush (Trush Law Office) for Patrick LaCross. Richard H. Rahm (Littler
Mendelson) for Knight Transportation Inc. and Knight Truck and Trailer Sales, LLC.
NLRB: Division of Advice test-drives GC’s proposed ‘traditional’ joint employer
standard
By Lisa Milam-Perez, J.D.
An entity that operates a performing arts center on the campus of a state university, which
is outside the NLRA’s reach, is not a joint employer with a (covered) touring company
that books productions at the venue, according to an advice memorandum recently
released by the NLRB’s Division of Advice. The entities are not joint employers either
under current Board law or under the General Counsel’s proposed standard—referred to
here by Associate General Counsel Barry J. Kearney as the Board’s “traditional standard”
(Arizona Board of Regents for UApresents and JN Investments of Arizona LLC dba
Broadway in Tucson, Joint Employers, November 14, 2014 [released January 9, 2015]).
Underlying dispute. UApresents (UA) operates Centennial Hall, a performing arts center
on the University of Arizona campus; JN Investments of Arizona dba Broadway in
Tucson (BIT) began to collaborate with UA to book productions at Centennial Hall. The
touring companies that BIT brings to Centennial Hall are unionized and require that stage
crews also be unionized. BIT had a memorandum of understanding in place with an
IATSE local for productions booked at another convention center which set wage rates,
benefits, overtime, and other terms and conditions for the crew.
When technicians were needed for UA productions, UA’s technical director would
contact the IATSE hiring hall directly to request workers. The union didn’t have an MOU
in place with UA because, as an arm of the public university, UA said it wasn’t
authorized to enter into such contracts. (Nonetheless, UA honored the terms of an MOU
that the union had proposed.) A dust-up arose when an IATSE technician working on a
UA event was overheard loudly using salty language to criticize the union secretary, who
had cancelled a scheduled union meeting. A UA media specialist emailed a university
dean complaining about the crew’s “angry, muttering, grumbling, loud and very public
conversation about the business of the union meeting and their evident unhappiness.” The
technician, the charging party here, had “very angrily” complained about “that f*cking
secretary,” and the media specialist urged the dean to take steps to ensure that such
behavior didn’t repeat itself.
A copy of that email eventually made its way to the union’s business agent, who
apologized to the dean, assured that the union would investigate, and then told the
technician he would no longer be referred for Centennial Hall jobs. Meanwhile, UA’s
technical director emailed the union asking that the technician not be referred for any
further jobs at the facility. That email also went to BIT’s general manager—the first BIT
had heard of the incident.
Not joint employers. On these facts, UA and BIT were not joint employers of the
technician, the Division of Advice concluded, because there was no evidence that UA
36
shared or codetermined, along with BIT, any matters governing the terms and conditions
of employment for technicians referred by the union to Centennial Hall. That was true
both under the Board’s current standard and under “the traditional joint employer
standard being urged by the General Counsel,” the advice memorandum stated.
Therefore, BIT didn’t violate NLRA, Section 8(a)(3) based on UA’s request that the
union stop referring the technician to Centennial Hall. And the Board lacked jurisdiction
to consider whether the union in turn violated the Act by honoring that request.
Current standard. Under the current Board standard, there must be a showing that an
entity “meaningfully affects matters relating to the employment relationship such as
hiring, firing, discipline, supervision, and direction” before joint employment can be
found. The memorandum cited the Board’s recent CNN decision to note that the NLRB
and the courts “have also considered other factors in making a joint employer
determination, including an employer’s involvement in decisions relating to wages and
compensation, the number of job vacancies to be filled, work hours, the assignment of
work and equipment, employment tenure, and an employer’s involvement in the
collective bargaining process.”
Here, the evidence did not establish that BIT—the sole entity that fell within the Board’s
jurisdiction—was a joint employer under the standard currently in effect. In its
relationship with UA, BIT was merely a “wholesaler,” according to the Division; it
played no role in UA’s decisions regarding hiring, disciplining, or supervising the
employees involved in the dispute. All that happens here is BIT’s technical director
contacts UA’s technical director to discuss the number and types of union workers the
production requires. UA’s technical director then contacts the union to request that these
employees be referred, and BIT has no other role in the process. Nor does BIT play a role
in setting the workers’ wages or benefits; union members referred for Centennial Hall
jobs are paid through the union’s payroll provider, which invoices UA, and BIT merely
pays the fees for wages and benefits, as the parties’ license agreement requires. Finally,
BIT had no say in any of the other factors that might support a joint employer finding,
such as the number of jobs to be filled or the assignment of work or equipment. Under
current Board law, then, because it exercises no “meaningful control over any essential
terms and conditions” of the workers dispatched by the union, BIT was not a joint
employer with UA.
Proposed standard. Nor was BIT a joint employer under the General Counsel’s desired
approach, “which would return the Board to its traditional joint employer standard.” The
proposed “share or codetermine”/“meaningfully affect” standard considers situations in
which a putative joint employer “wields sufficient influence through direct control,
indirect control, or potential control over the working conditions of the other entity’s
employees such that meaningful bargaining could not occur in its absence.” This
“traditional standard” pays heed to the fact that control over employees’ working
conditions can come not only from “specific contractual provisions” but also arises based
on the “‘industrial realities’ of certain business relationships that make an entity essential
for meaningful bargaining.”
37
The “essential inquiry,” then, is “the influence or potential influence of the putative joint
employer over employees’ working conditions, and thus on the collective-bargaining
process.” When applied by the Board in the past, the analysis has involved consideration
of specific terms and conditions of employment that would make an employer an
essential party to collective bargaining: “wages; employee personnel issues; the number
of employees needed to perform a job or task; establishing employee work hours,
schedules, work week length, and shift hours; employee grievances, including
administration of a collective-bargaining agreement; authorizing overtime; safety rules
and standards; production standards; break and/or lunch periods; assignment of work and
determination of job duties; work instructions relating to the means and manner to
accomplish a job or task; training employees or establishing employee training
requirements; vacation and holiday leave and pay policies; discipline; discharge; and
hiring.”
Proposed standard, applied. Applying the proposed (i.e., “traditional”) joint employer
standard here, the Division of Advice again concluded that BIT was not a joint employer.
There was no evidence that BIT “wields any meaningful influence” over the technicians’
terms and conditions of employment such that it was “an essential party to meaningful
bargaining.” The only contractual relationship between UA and BIT was a commercial
license agreement governing the productions that BIT brings to Centennial Hall; nothing
in that agreement endowed BIT with the right to exercise “any control—direct, indirect,
or potential—over the terms and conditions of employment” of the technicians
dispatched by IATSE. Moreover, the license agreement was silent with respect to labor
management relations. While BIT’s general manager occasionally reports to the union on
issues of concern regarding the union technicians and the performance of their work, any
such reports “are based on information the general manager receives from UA or a
touring company.” And those reports serve only to ensure the productions are running
smoothly; they aren’t meant to influence the technicians’ terms and conditions of
employment.
Additionally, the Division of Advice wrote, the “‘industrial realities’ of the parties’
business relationship do not imbue BIT with any influence or potential influence over
employees’ working conditions so as to make BIT a ‘necessary party to meaningful
collective bargaining.’” Although the license agreement requires BIT to reimburse UA
for wages and other benefits invoiced by the union’s payroll company, BIT does not
negotiate or play any other role in setting wages and benefits. Nor does the licensing
agreement require UA to obtain BIT’s consent before increasing wages and benefits.
“BIT simply pays the fees as a part of doing business with UA.” As such, BIT exercises
no “actual or potential control” over the technicians’ wages and benefits, or any other
essential terms of employment, such that would establish a joint employer relationship.
The case numbers are 28-CA-123308 and 28-CB-119658.
Attorneys: Thomas Kennedy (Sherman and Howard) for Arizona Board of Regents for
UApresents and JN Investments of Arizona LLC. Michael Urban (The Urban Law Firm)
for IATSE Local 415.
38
Nev. Sup. Ct.: Firefighter grievance regarding city’s ability to pay salaries not
arbitrable
By Ronald Miller, J.D.
A trial court erred in enjoining the City of Reno, Nevada, from implementing a decision
to lay off certain firefighters based on its judgment that it lacked money to continue to
pay their salaries and benefits while the firefighters pursued arbitration of a grievance,
ruled the Nevada Supreme Court. The Nevada high court found that the union’s
grievance was not a dispute that the parties agreed to submit to arbitration under the
terms of a collective bargaining agreement. Moreover, with respect to the question of
whether the arbitrator should determine the arbitrability of the dispute, the court observed
that in this instance, the CBA explicitly excluded the matter of budget-related layoffs
from bargaining, so the matter was not subject to arbitration (City of Reno v.
International Association of Firefighters, Local 731, December 31, 2014, Hardesty, J.).
In May 2014, the City of Reno decided to lay off 32 firefighters after learning that its
application to renew a federal grant, which had funded the positions, was denied.
Pursuant to the parties’ collective bargaining agreement, the city based its layoff decision
on a budget shortfall and the need to allocate money to other areas. The CBA provided
that the right to lay off any employee due to lack of work or lack of funds, was not
subject to mandatory bargaining and was reserved to the city without negotiations. Before
the layoffs occurred, the union challenged the city’s decision by filing a grievance under
the CBA, asserting that there was no lack of funds to support the city’s decision. After the
grievance was denied, the union requested that the matter be submitted to arbitration.
Recognizing that the arbitrator lacked the authority to enjoin the layoffs, the union filed
this action seeking, among claims, declaratory and injunctive relief. The complaint
asserted that the layoffs violated the CBA. The trial court granted the union’s request for
injunctive relief and enjoined the city from implementing the layoffs while the
firefighters pursued arbitration of their grievance disputing the lack of money.
Jurisdiction of request for injunctive relief. To resolve this appeal, the Nevada high
court determined that it must address whether the trial court had jurisdiction to grant the
injunctive relief requested by the union. In its order granting injunctive relief, the trial
court focused on the contractual remedies sought by the union and concluded that it had
authority under NRS 38.222 to grant a preliminary injunction while the parties pursued
arbitration of the dispute. The union initiated arbitration under the CBA and contended
that the arbitrator should determine whether the city lacked the funds necessary to retain
the firefighters. Before that question could be addressed, the state high court had to first
determine whether the city’s budget-related layoff decision was actually subject to
arbitration under the terms of the CBA.
Here, the Nevada court concluded that by its language reserving the non-negotiable right,
the CBA exempted the city’s layoff decision due to lack of funds from arbitration. In
cases involving broadly worded arbitration clauses, when there is no express provision
excluding a particular grievance from arbitration, only the “most forceful evidence of a
purpose to exclude the claim from arbitration can prevail.” An arbitrator’s jurisdiction to
39
resolve a dispute concerning the interpretation of a collective bargaining agreement
derives from the parties’ advance agreement to submit the disputed matter to arbitration.
Thus, despite the presumption of arbitrability, the arbitrator’s jurisdiction derives from
contract and the arbitrator is limited to resolving disputes over the terms of that contract.
Reservation of right. Looking to the language of the CBA between the city and the
union to determine whether the dispute here was subject to arbitration, the court observed
that the union asserted that the city violated the agreement when it gave layoff notices to
union members when there was no lack of funds or lack of work. However, the
management rights clause of the CBA included a provision reserving to the local
government employer the “right to reduce in force or lay off any employee because of
lack of work or lack of funds. Thus, the right expressly agreed to by the parties reserving
to the city that right without negotiation was the most forceful evidence that layoffs for
lack of funds was not a decision subject to mandatory bargaining and therefore fell
outside the scope of the CBA.
Statutory provision. Moreover, the court noted that the reduction in force due to lack of
funds was excluded from mandatory bargaining and reserved to the local government
employer without negotiation by law. NRS 288.150(3)(b) reserved to the local
government employer “the right to reduce in force or lay off any employee because of
lack of work or lack of money” subject to mandatory bargaining over the procedures for
reduction in workforce. The high court rejected the union’s contention that by
incorporating the language of the statute in the CBA, the parties subjected the city’s
decision to lay off employees due to a lack of funds to arbitration. Thus, the union’s
grievance was not subject to arbitration under the CBA and the reduction in force due to
lack of funds instead remained within the city’s sole discretion.
As a result, the trial court erroneously rejected the city’s contractual non-negotiable right
to make budget-related reduction-in-force decisions after concluding that such an
interpretation of the CBA “would essentially mean public employees subject to NRS
288.150 have no ability to bargain over the procedures for reduction in the workforce”
because any such bargaining over procedures “would be trumped by the City’s exclusive
ability to determine a lack of work or funds exists.” Moreover, the state high court
rejected the union’s argument that the question of arbitrability should be left to the
arbitrator to decide. Because the language of the CBA contained forceful evidence that
the matter of budget-related layoffs was excluded from bargaining and was therefore not
subject to arbitration, the high court declined to defer to the arbitrator to determine
arbitrability.
The case number is 65934.
Attorneys: John J. Kadlic, City Attorney, and Mark J. Ricciardi (Fisher & Phillips) for
City of Reno. Thomas J. Donaldson (Dyer, Lawrence, Penrose, Flaherty, Donaldson &
Prunty) for International Association of Firefighters, Local 731.
40
Hot Topics in WAGES HOURS & FMLA:
Class action litigation landscape more challenging for employers in 2015
Employers will confront greater challenges in defending against workplace class action
litigation in 2015, according to Seyfarth Shaw’s 11th annual edition of the Workplace
Class Action Litigation Report. In its largest edition to date, the 844-page report is a
research and resource guide for businesses and their corporate counsel facing complex
litigation in the coming year. For this year’s report, Seyfarth analyzed 1,219 class action
rulings on a circuit-by-circuit and state-by-state basis to capture key themes from 2014
and emerging litigation trends facing U.S. companies in 2015.
“In response to recent Supreme Court decisions on class action issues, Rule 23 law is
undergoing a major transformation, and as a result, employers litigated an increased
number of novel defenses in 2014,” said Seyfarth's Gerald L. Maatman, Jr., co-chair of its
Class Action Defense Group and author of the Report. “At the same time, wage and hour
class actions and collective actions also continued their meteoric rise to new record
levels, while the U.S. Department of Labor and U.S. Equal Employment Opportunity
Commission advanced their litigation agendas in an aggressive fashion. All told,
employers face a much more challenging landscape for defending workplace class action
litigation in 2015.”
Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. v. Behrend continued their
prominence in Rule 23 decisions, serving as the most influential “pivot points” for such
rulings in 2014, and having a wide-ranging impact on virtually all class actions pending
in federal and state courts. In the lower federal and state courts in 2014, Wal-Mart was
cited 571 times and Comcast was cited 261 times, which in turn generated a bevy of new
case law, Seyfarth said.
Against this backdrop, the report outlines several key trends for employers in 2015,
including these:

The Wal-Mart and Comcast decisions reshaped settlement strategies: While
employment discrimination and wage and hour class action settlements stayed
flat, governmental enforcement litigation settlements dropped to their lowest
levels in a decade and ERISA settlements spiked nearly tenfold from 2013;

Wage and hour litigation represents the “prime” litigation risk in the workplace,
as case filings increased yet again in 2014;

FLSA collective actions and state law wage and hour class actions produced more
decisions than any other area of complex employment litigation in 2014;

The DOL and the EEOC continued their aggressive litigation approaches in 2014
with mixed results, marked by several high-profile losses in the federal courts and
their lowest aggregate settlement recoveries since 2006; and
41

A bright spot: 2014 was a “transformative” year for CAFA to the benefit of
employers, solidifying defense strategies to secure removal of class actions to
federal courts.
The Seyfarth report is divided into detailed chapters on leading class action settlements,
federal law rulings, and state law rulings. The substantive areas that are examined
include: Title VII; EEOC pattern or practice cases; the ADEA; the FLSA; ERISA; state
law rulings in employment law, wage and hour, and breach of contract cases; key CAFA
rulings, and other class action rulings with significance to Rule 23 and/or workplace
litigation.
The Workplace Class Action Litigation Report is available here.
Collective action wage suit launched against Jimmy John’s
National fast-food sandwich chain Jimmy John’s illegally underpaid its assistant store
managers, according to a putative collective action filed on Monday, January 5. The
complaint, brought on behalf of current and former assistant store managers (ASMs) in
Florida, Alabama, and Illinois, contends the Illinois-based restaurant chain violated the
FLSA by failing to pay overtime to the managers, who regularly worked upwards of 40
hours each week. The suit alleges the managers were improperly classified as executives
under the FLSA’s overtime exemptions—a policy applied uniformly to all of the chain’s
2,000 restaurants nationwide. The complaint also asserts that, under Jimmy John’s
franchise business model, the national company is the ASMs’ joint employer, along with
the individual owner-operators of its shops nationwide.
ASMs spend the majority of their work shifts on the sandwich line, according to the
complaint, performing food preparation and providing customer service as their primary
duty. They play no role in planning long- or short-term business objectives and have no
authority to formulate or implement management policies or to commit the company to
matters that have significant financial impact. As such, they were not “executives” and
should have been classified as nonexempt and paid overtime.
Moreover, the complaint alleges, Jimmy John’s “exercises substantial and nearly
complete control” over all the sandwich shops. It creates and mandates employment
policies and mandatory training that apply across the board, both to company-owned
restaurants and owner-operated branches. And the company retains the “absolute right” to
terminate the franchise relationship—and thus, the employees who work for that
franchise, the suit contends. As such, the national company is a joint employer of the
ASMs and is liable for the allegedly willful FLSA violations.
Rodriguez et al v. Jimmy John's, LLC, No. 3:15-cv-2-J-34PDB, was filed in the federal
district court in the Middle District of Florida. The plaintiffs are represented by New
York plaintiffs’ firms Outten & Golden and Klafter Olsen & Lesser, and the Shavitz Law
Group of Boca Raton, Florida.
Attorneys: Justin M. Swartz (Outten & Golden). Gregg I. Shavitz (Shavitz Law Group).
Seth R. Lesser (Klafter Olsen & Lesser).
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Florida the latest state to team up with feds to police employee misclassification
Officials from the U.S. Department of Labor and the Florida Department of Revenue
signed a memorandum of understanding on Tuesday, January 13, to share information
and coordinate law enforcement with the goal of preventing the misclassification of
employees as independent contractors or other nonemployee statuses. According to the
DOL’s announcement, the MOU “represents a new effort on the part of the agencies to
work together to protect the rights of employees and level the playing field for
responsible employers by reducing the practice of misclassification.”
"Misclassification deprives workers of rightfully earned wages and undercuts law-abiding
businesses," said Dr. David Weil, administrator of the Wage and Hour Division. "This
memorandum of understanding sends a clear message that we are standing together with
the state of Florida to protect workers and responsible employers and ensure everyone
has the opportunity to succeed.”
The Florida Department of Revenue is the latest state agency to partner with the Labor
Department. “Working with the states is an important tool in ending misclassification,”
said Wayne Kotowski, the WHD’s regional administrator for the southeast. “These
collaborations allow us to better coordinate compliance with both federal and state laws
alike.”
The DOL’s formal agreements with state government agencies arose as part of the
agency’s Misclassification Initiative, with its stated goal of preventing, detecting and
remedying employee misclassification. Alabama, California, Colorado, Connecticut,
Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri,
Montana, New York, Utah, and Washington state agencies have signed similar
agreements.
In FY 2013, WHD investigations resulted in more than $83 million in back wages for
more than 108,050 workers in industries such as janitorial, food, construction, day care,
hospitality, and garment. WHD regularly finds large concentrations of misclassified
workers in low-wage industries.
President pushes to give more workers earned sick time, paid leave
By Pamela Wolf, J.D.
Determined to make paid leave available to more workers, President Barack Obama is
calling on Congress to pass an earned sick-time bill and urging states to pass legislation
that would give more workers access to paid leave. And, the president is putting his
money where his mouth is, by proposing funding that would help states and
municipalities figure out how to make earned sick-time and paid leave a reality. Building
on earlier efforts born of last year’s White House Summit on Working Families, the
White House outlined the steps the president plans to take in a fact sheet.
To explain the chief executive’s push for paid leave, the White House pointed to the fact
that in most American families, all parents work and also contribute to caregiving. Across
married and single parent families, all parents are working in more than 60 percent of
43
households with children, up from 40 percent in 1965. Moreover, today, more than 60
percent of women with children under age of 5 participate in the labor force, compared
with around 30 percent in the 1970s. According to the White House, the fundamental
structure of work has not kept pace with the changing American family, leaving many
families in a struggle to balance work and home obligations. The United States is the only
developed country in the world that does not offer paid maternity leave.
Last June, the president took steps that included support for states to design paid leave
programs and a Presidential Memorandum establishing federal workers’ “right to
request” flexible workplace arrangements and that directed federal agencies to expand
flexible workplace policies to the maximum possible extent.
Earned sick days. The White House underscored the 43 million private-sector workers
who lack paid sick leave, many of whom, unable to take the time they need to recover
from illness, continue working, putting their coworkers and customers at risk. There is
also the problem of workers who, although they have paid sick leave for themselves,
cannot use it to care for their sick children. Many parents are forced to choose between
taking an unpaid day off work—losing necessary income and potentially risking job
loss—and sending a sick child to school.
On the employer side, the White House noted that research has shown that offering paid
sick days and paid family leave can benefit employers by reducing turnover and
increasing productivity. Paid sick days also help reduce lost productivity resulting from
the spread of illness in the workplace. These policies can help our economy by fostering a
more productive workforce. “Policies that better support working families can meet the
needs of both employers and employees alike, and strengthen America’s economy,” the
White House said. Pointing to the many businesses that see the benefit of earned sick
days, the fact sheet cites an earned sick day law in Connecticut. Two years after it was
passed, more than three-fourths of employers responding to a survey supported the new
law, and employers reported little or no negative effects of the new law on their bottom
line.
With the goal of expanding access to earned sick time for American workers, the
president is:

Calling on Congress to pass the Healthy Families Act (championed by Rep. Rosa
DeLauro (D-Conn.) and Sen. Patty Murray (D-Wash.), which would permit
millions of workers to earn up to seven days a year of paid sick time that could be
used for themselves or a sick family member, to obtain preventive care, or to
address the impacts of domestic violence.

Call on states and cities to pass similar laws.
The White House noted that in 2006, San Francisco became the first locality to guarantee
access to earned sick days. In 2008, the District of Columbia followed suit, passing a paid
sick days law that also included paid “safe” days for victims of domestic violence, sexual
assault, and stalking. In 2011, Connecticut was the first state to pass a statewide paid sick
44
days law, followed by California, and this year Massachusetts voters supported earned
sick days by an overwhelming majority. Several cities also have recently enacted laws
permitting workers to earn and accrue sick leave, including Seattle, Portland, New York
City, Newark, San Diego, Eugene, and Oakland.
Paid family and medical leave. The FMLA provides up to 12 weeks of unpaid time off
without job loss to care for a new child, recover from a serious illness, or care for an ill
family member—about 60 percent of workers are eligible for these federal statutory
protections. But, as the White House notes, employers are not required to provide paid
leave for these purposes and often choose to not to. Unpaid leave is unaffordable for too
many Americans, and evidence shows that mothers, who do typically take some time off
in order to give birth, will more likely return to their jobs and remain in the workforce
when they have access to take paid maternity leave, according to the fact sheet.
President Obama is taking steps to expand paid leave, including these:

Outlining a new plan to help more states create paid leave programs and including
$2.2 billion in proposed mandatory funding in his fiscal year 2016 budget to
reimburse up to five states for three years for administrative costs and about half
the cost of benefits associated with implementing a program. The budget proposal
will also include $35 million in competitive grants to assist states that are still
building the administrative infrastructure they would need to launch paid leave
programs in the future.

Providing new funding for feasibility studies through the Department of Labor,
which will use existing funds to offer $1 million in new funding for its Paid Leave
Analysis Grant Program to provide competitive grants to six to 10 states or
municipalities to conduct paid leave feasibility studies. The Women’s Bureau will
administer the funds. This step builds on what the White House called “the
tremendous response” to the grant program last year that provided $500,000 to
programs in three states and the District of Columbia.

Proposing legislation that would provide paid family leave to federal workers,
similar to the Federal Employees Paid Parental Leave Act championed by Rep.
Carolyn Maloney (D-N.Y.). The president’s proposal would give federal
employees six weeks of paid administrative leave for the birth, adoption, or foster
placement of a child. It would also permit parents to use sick days to care for a
healthy child after a birth mother’s period of incapacitation or after an adoption.

Take action to modernize federal parental leave policy through a Presidential
Memorandum directing agencies to allow for the advance of six weeks of paid
sick leave for parents with a new child, employees caring for ill family members,
and other sick leave-eligible uses. This directive would give mothers the
opportunity to recuperate after child birth, even if they have not yet accrued
sufficient sick leave. It would also permit spouses and partners to care for mothers
during their recuperation periods and allow both parents to attend proceedings
relating to the adoption of a child. Advanced annual leave will also be made
45
available to employees for placement of a foster child in their home. The
memorandum will also directs agencies to consider a benefit some agencies
already offer—help finding, and in some cases providing, emergency backup care
for children, seniors, and adults with disabilities that parents can use when they
need to go to work but their regular care is not available.
Reactions to the plan. The reactions to the president’s plan were mixed. It’s no surprise
that American Federation of Government Employees National President J. David Cox,
Sr., reacted positively. Referring to the earned sick time and paid leave provisions that
would be given to federal employees, he said: “This proposal helps narrow a gaping hole
in the benefits offered to federal employees, who currently receive no paid leave upon the
birth, adoption or fostering of a child. Instead, federal workers must use their own
vacation or sick days.
“Federal employees are only able to accumulate a maximum of 30 days of annual leave,
which is hardly enough time to provide care to a newborn or newly adopted child.
Because of this, employees are forced to either take off work without pay or return to
work far too soon, robbing their children of early nurturing that’s vital for future
development.
“The federal government already reimburses its contractors for the cost of paid parental
leave. It’s time for government to extend these benefits to its own employees.”
Sen. Lamar Alexander (R-Tenn.), chair of the Senate Health, Education, Labor and
Pensions (HELP) Committee, was displeased with the plan: “Americans have great
freedom when it comes to work—they can choose the career they like and negotiate with
their employer for the things they need, and they can one day become employers, opening
businesses with few restrictions compared to the rest of the world. One more government
mandate, however well-intentioned, will only reduce those freedoms—making it harder
for employees to find jobs, negotiate for the things they need, and open and run
businesses. Washington should do what it can to encourage employers to offer paid sick
leave—not impose a big new mandate that will cost employers $11.4 billion over five
years and make it harder for them to hire new employees.”
Sen. Murray and Rep. Rosa DeLauro, however, applauded the president’s proposal:
“Working families need and deserve the economic security of earning paid sick days so
that moms and dads can care for a sick child without sacrificing a day’s pay or losing
their job altogether. It is a matter of good public health to ensure everyone is able to care
for themselves and their families when an illness or emergency strikes. We applaud
President Obama for his endorsement of our bill, and in the coming months, we’re going
to be fighting hard in Congress for the Healthy Families Act. Look no further than this
season’s worse-than-expected flu outbreak to show why those who are sick should not be
at work. All of our colleagues should join us in this effort to protect public health and
give more parents some much-needed piece of mind.”
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Poll finds 75 percent of Americans support $12.50 minimum wage by 2020
The National Employment Law Project (NELP), one of several advocates that back a
federal minimum wage boost to $12.50 an hour, is pointing to a new poll that it says
“shows overwhelming public support for wages well in excess of proposals being
considered in Congress.”
The poll, conducted by Hart Research Associates, shows that 75 percent of Americans—
53 percent of whom are Republicans—support an increase in the federal minimum wage
to $12.50 by 2020, and that 71 percent of Americans believe the minimum wage for
tipped workers should be increased so that all workers are subject to the same wage floor.
The poll, along with a related memo, also indicates that 63 percent of Americans support
an even greater increase in the minimum wage—to $15.00 by 2020.
“The findings here are very clear: Americans, regardless of region, socioeconomic status,
or demographic distinction, strongly favor a very significant increase in the federal
minimum wage,” said Guy Molyneux of Hart Research Associates.
Call for federal legislation. The National Employment Law Project, along with other
advocacy groups such as the Economic Policy Institute, the National Women’s Law
Center, the National Council of La Raza, and the Leadership Conference on Civil and
Human Rights, are calling for new federal legislation that would increase the national
minimum wage to $12.50 by 2020, index future increases to keep pace with the rise in
overall wages, and gradually phase out the subminimum wage for tipped workers.
NELP pointed to protests over the last two years during which thousands of workers have
taken to the streets to protest their low pay, with fast food workers now being joined by
retail workers, home health care workers, and airport workers in their movement for a
$15 wage. More than 30 states, cities, and counties have now passed minimum wage
increases via legislation or ballot, according to NELP. As a result, 29 states plus the
District of Columbia now have a minimum wage above the current federal minimum of
$7.25. The non-partisan, no-profit said that by 2017, 13 states and DC—nearly one-third
of the U.S. workforce—will have minimum wages of $9 or more, and seven states and
DC will be above the $10 level. At the local level, Seattle and San Francisco have passed
laws that will phase in a $15 minimum wage, and Chicago’s minimum wage is rising to
$13.
Job growth in low industries. As the recovery from the Great Recession continues and
unemployment rates slowly trend downward, new job growth is still disproportionately
concentrated in lower-wage industries such as retail and food services, NELP observed,
making a minimum wage boost “an urgent priority for growing numbers of working
families who rely on low-wage work to make ends meet.” Forty-three percent of new
jobs created from the start of the recovery through July 2014 have been in lower-wage
industries, which employ 2.3 million more workers today than at the beginning of the
recession, NELP said.
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Profits at all-time high. Corporate profits, on the other hand, have reached an all-time
high when measured as a share of the country’s gross domestic product, and corporate
CEOs now earn over 330 times the wage of the average worker, according to NELP.
Stagnant income crisis. “Stagnant income is the crisis of our time, and now is the
moment for Congress to act boldly to address it, using one of the most potent tools at its
disposal,” said NELP Executive Director Christine Owens. “The American people are
way ahead of lawmakers on this issue. They have seen cities and states aggressively raise
pay while continuing to thrive economically, and they want Washington to do the same.
The federal minimum wage was always intended to be a floor on which cities and
states—and workers and employers, through collective bargaining—could build on. It no
longer plays that role, and it is falling so far behind that modest increases are not
enough.”
In line with wage hikes historically. NELP cites two key measures that put an increase
in the minimum wage to $12.50 in line with historical experience. First, a $12.50 wage
represents just over 55 percent of the projected median wage in 2020, a key benchmark
economists use to assess the economic viability of a particular wage. This represents a
return to 1968 levels, a time when national unemployment was below 4 percent, NELP
said. Second, the average annual increase of 11.5 percent under this proposal is
comparable to the average annual increase of 11.7 percent under all previous minimum
wage hikes since 1961.
Wage-hike supporters. The $12.50 proposal is supported by 9to5, National Association
of Working Women Action for the Common Good, Americans United for Change,
Coalition on Human Needs, Economic Policy Institute, Leadership Conference on Civil
and Human Rights, Moms Rising, National Council of La Raza, National Employment
Law Project, National Women’s Law Center, Restaurant Opportunities Center, and
USAction.
About the poll. From January 5 to 7, 2015, Hart Research Associates conducted a
national survey on the issue of the federal minimum wage for NELP. Interviews were
conducted online among a representative national sample of 1,002 adults (including 867
registered voters), with a margin of error of ±3.1 percentage points (and ±3.3 percentage
points for registered voters). NELP is a non-partisan, not-for-profit organization that
conducts research and advocates on issues affecting low-wage and unemployed workers.
President focuses on working families in State of Union Address
By Pamela Wolf, J.D.
President Obama emphasized efforts to help working families via “middle-class
economics” and “expanding opportunity” in his State of the Union Address last night,
January 20. He also separately outlined a series of steps aimed to do just that in a White
House release the same day.
Turning the page. Speaking to the nation, Obama declared, “tonight, we turn the page.”
After what he called “a breakthrough year for America,” he pointed to a growing
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economy that is “creating jobs at the fastest pace since 1999.” The president also cited an
employment rate lower than before the painful financial crisis, and observed that more of
the nation’s children are graduating than ever before, more people are insured than ever
before, and said we are more free from dependence on foreign oil than we’ve been in
almost 30 years.
Veto threat. The president also included a veto threat to measures that would impair his
administration’s progress. After recounting some of his administration’s successes and
the challenges faced along the way, the president declared his verdict: Middle-class
economics and expanding opportunity works. “And these policies will continue to work
as long as politics don’t get in the way,” warned Obama. “We can’t slow down
businesses or put our economy at risk with government shutdowns or fiscal showdowns.
We can’t put the security of families at risk by taking away their health insurance, or
unraveling the new rules on Wall Street, or refighting past battles on immigration when
we’ve got to fix a broken system. And if a bill comes to my desk that tries to do any of
these things, I will veto it. It will have earned my veto.”
Help for working families. What does middle-class economics mean for the United
States today? The president outlined assistance for working families that includes better
access to education, wage hikes, and laws that strengthen unions with the goal of giving
workers a voice:
“First, middle-class economics means helping working families feel more secure in a
world of constant change,” the president said. “That means helping folks afford childcare,
college, health care, a home, retirement. And my budget will address each of these issues,
lowering the taxes of working families and putting thousands of dollars back into their
pockets each year.
“Of course, nothing helps families make ends meet like higher wages. That’s why this
Congress still needs to pass a law that makes sure a woman is paid the same as a man for
doing the same work. It’s 2015. It’s time. We still need to make sure employees get the
overtime they’ve earned. And to everyone in this Congress who still refuses to raise the
minimum wage, I say this: If you truly believe you could work full-time and support a
family on less than $15,000 a year, try it. If not, vote to give millions of the hardestworking people in America a raise. “Now, these ideas won’t make everybody rich, won’t
relieve every hardship. That’s not the job of government. To give working families a fair
shot, we still need more employers to see beyond next quarter’s earnings and recognize
that investing in their workforce is in their company’s long-term interest. We still need
laws that strengthen rather than weaken unions, and give American workers a voice.”
Putting the plan into action. In a separate statement released the same day, President
Obama fleshed out his plans to help working families, including these actions aimed to
make paychecks go further:

Eliminating the trust fund loophole and using the savings to responsibly pay for
measures to help middle class families get ahead
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
Cutting taxes with a $3,000 credit per young child to make child care more
available and affordable, while creating a new second-earner tax credit for
working families

Partnering with states to adopt paid leave and ensure every American can earn
paid sick days so they can take time to care for themselves and their family

Increasing the minimum wage, so some of the “hardest-working Americans” get a
raise

Making a home more affordable for responsible middle class families by cutting
mortgage premiums
The president also outlined several steps designed to help prepare Americans to earn
higher wages:

Making two years of community college free for responsible students, so every
American has access to at least two more years of high-quality schooling

Reducing the burden of student loan debt and expanding a middle class tax cut for
college so hardworking students aren’t priced out of an education

Partnering with businesses to create more on-the-job training and apprenticeship
opportunities so workers can learn the skills they need for better, higher-paying
jobs, and earn wages while they are training

Expanding opportunities for working Americans to make career transitions into
fast-growing, higher-paying fields where employers have good-paying jobs to fill
With the goal of keeping good, high-paying jobs here in America, and presumably,
ending tax incentives to offshore jobs, the president laid out these steps:

Fixing what he characterized as the “broken” business tax code, repairing
crumbling roads and bridges, and modernizing the infrastructure so businesses
create good jobs here at home

Promoting American jobs and American workers by signing new trade deals so
the United States, not China, sets the fair wage, safe workplace, and clean
environment rules of trade

Jumpstarting medical innovation to deliver the right treatment to the right patient

Promoting American leadership in clean energy technologies, as well as
continuing to invest in advanced manufacturing to ensure America’s
manufacturing sector continues to lead the world for years to come

Passing comprehensive immigration reform that strengthens the American
workforce
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
Ensuring entrepreneurs and small business owners have the tools they need to
grow their businesses and create jobs
Republican reaction. Republican leadership had much to say about President Obama’s
State of the Union Address, most of which was unfavorable. Senate HELP Committee
Chairman Lamar Alexander (R-Tenn.) quickly issued a statement: “Unfortunately, much
of what I heard from President Obama tonight are partisan proposals that don’t have any
chance of becoming law—and that he intends to pursue despite the message the
American people sent him in November by electing a Republican Congress.”
Alexander said he wanted to hear about proposals that the Congress and the president
would actually be able to work on, such expanding free trade “so we can sell more
Tennessee products overseas,” simplifying student aid forms so that more community
college students can take advantage of “Tennessee Promise,” preventing cyberattacks,
and fixing No Child Left Behind.
The HELP Committee Chairman also pointed to what he called “21st-century cures,”
such as helping to get treatments, medical devices, and medicines through the FDA more
quickly, which he said would help “virtually all Americans,” and is something that both
Republicans in Congress and the president believe is important.
House Education and the Workforce Committee Chairman John Kline (R-Minn.) also
weighed in: “Tonight the president had an opportunity to present an agenda that would
help us tackle the tough challenges confronting our country, one that would unite us as a
nation and place more faith in the people rather than the government. Unfortunately, the
president missed that opportunity. Instead, the president described the same tired agenda
we’ve heard about countless times before.”
According to Kline, “Working families are being squeezed and more government isn’t
the answer.”
At the same time, though, Kline also pointed to initiatives that would address the same
problems the president targeted in his address: “In the coming weeks and months,
Congress will work to advance bold solutions to help strengthen our nation’s classrooms
and workplaces,” he said. “We need reforms that will improve K-12 education, support
working families, modernize an outdated pension system, and strengthen higher
education. It’s time to get to work and move forward on behalf of the American people.”
Democrats move on paid parental leave for federal workers
By Pamela Wolf, J.D.
Taking the president’s lead, House Democrats on Monday, January 26, introduced
legislation that would provide six weeks’ paid leave to federal employees for the birth,
adoption, or foster placement of a child. The Federal Employees Paid Parental Leave Act
(FEPPLA), H.R. 532, differs from the executive memorandum that President Obama
signed on January 15, which permits all federal employees to receive an advance of sick
and annual leave to be used for leave connected with the birth or adoption of a child or
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for other sick leave-eligible uses. The FEPPLA would amend the law to permit federal
employees to be paid during their approved Family and Medical Leave Act leave; this
time would not count against sick or annual leave.
The lead sponsor of the legislation, Joint Economic Committee Ranking Democrat
Congresswoman Carolyn B. Maloney (D-N.Y.), along with the several other Democratic
sponsors, noted that a separate version of the FEPPLA passed the House in the 111th
Congress with bipartisan support by a vote of 258-154. In 2009, the FEPPLA bill was
determined by the Congressional Budget Office to have no “PAYGO” implications. Its
sponsors underscored that the legislation does not require a “pay-for.”
By failing to provide paid parental leave, the federal government lags behind both the
U.S. private sector and most industrialized nations, according to the sponsors of H.R.
532, who pointed out that 53 percent of U.S. private-sector employers provide some form
of paid parental leave, as do most industrialized nations around the world.
The proposed legislation also applies to all employees of the House and Senate (including
members’ personal offices and Committee Staff), Capitol Guide Service, Capitol Police,
Congressional Budget Office, Office of the Architect of the Capitol, Office of the
Attending Physician, Office of Compliance, the Office of Technology Assessment,
Library of Congress, and the Government Accountability Office.
Paid parental leave good for business. Supporters have argued that paid parental leave
is not just good for workers and their families, it’s also good for business. The Joint
Economic Committee Democratic staff has published a fact sheet on the economic
benefits of paid parental leave. Among other things, the fact sheet argues that offering
paid leave “improves business productivity by boosting employee morale and making it
easier for businesses to retain skilled workers.”
Congresswoman Holmes Norton echoed that sentiment: “Like the majority of Fortune
500 companies, I have found that granting congressional employees paid parental leave
not only retains valued employees, but also saves the inefficiency and cost of turnover,
which according to studies, costs more than parental leave. There is no cost reason and
many other good reasons that benefit children and families that would allow at least the
federal workforce to begin to catch up with the rest of the world on paid family leave.”
Sponsors. In addition to Congresswoman Maloney, the legislative proposal is supported
by Democratic Whip Steny Hoyer (D-Md.), Congresswoman Eleanor Holmes Norton (DD.C.), Education and Workforce Committee Ranking Member Bobby Scott (D-Va.) and
Congressman Don Beyer (D-Va.). Congresswoman Rosa DeLauro (D-Conn.),
Congressman Gerry Connolly (D-Va.) and Congressman Chris Van Hollen (D-Md.) are
also original cosponsors of the bill.
“You can count on one hand the number of countries that don’t provide paid leave for the
birth of a child, and the United States is part of the club,” Maloney said in a statement
introducing the proposal. “I remember being a young mother and asking about the leave
policy when I became pregnant. I was told what leave? You just leave! It is outrageous
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that decades later we still don’t have the same basic right that most of the rest of the
world enjoys. This is not only wrong; it’s bad for our economy. Smart paid leave policies
improve employee retention, boost productivity and more. The Federal Employees Paid
Parental Leave Act won’t require additional spending, but it will make a difference in the
lives of millions of federal employees—including 61,000 New Yorkers—who should not
have to choose between a paycheck and the most important task a human being can take
on: raising a child.”
Union weighs in favorably. Predictably, the move was applauded by the largest union
representing federal employees. American Federation of Government Employees
National President J. David Cox Sr. said, “The federal government already reimburses its
contractors for the cost of paid parental leave. It’s time for government to extend these
benefits to its own employees and serve as a model that all employers should follow.”
According to Cox, parental leave benefits also will help the government recruit and retain
the next generation of workers. He pointed to the most recent government-wide employee
survey finding that workers born after 1980—known as millennials— stay in their jobs
just 3.8 years on average.
“This proposal helps narrow a gaping hole in the benefits offered to federal employees,
who currently receive no paid leave upon the birth, adoption or fostering of a child.
Instead, federal workers must use their own vacation or sick days,” Cox said.
American Airlines pilots approve joint CBA with 23-percent raise
Pilots at American Airlines have approved a joint collective bargaining agreement,
according to the Allied Pilots Association. With 94.6 percent of eligible voters
participating in the ballot, 65.68 percent voted for, and 34.32 percent voted against the
agreement. Voting was concluded on Friday, January 30. The new contract combines
three contracts into a single agreement for pilots of American and U.S. Airways, which
merged about a year ago.
In a message earlier this month, the union pointed to an announcement by American
Airlines President Scott Kirby that new pay rates would be made retroactive to
December 2 if the pilots voted to approve the joint CBA by January 30. The airline
quickly confirmed that the deal with the union representing 15,000 of AA’s pilots was
approved. The new five-year contract gives pilots an immediate 23-percent pay raise and
bumps their pay 3 percent annually for the next five years.
“Today’s results provide immediate and significant pay increases to our pilots, and
represent another step forward in our integration,” Kirby said in a statement. “We are
especially pleased that American is in a position to support pay increases that recognize
the contributions of our pilots this early in our integration. We also acknowledge and
applaud the hard work and leadership of APA Chairman and Captain Keith Wilson, the
APA national officers, the negotiating teams from the APA and the company, as well as
members of the APA Board.”
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“I want to thank our pilots for their participation and engagement, as illustrated by the
strong voter turnout,” APA President CA Keith Wilson said in a statement. “By voting in
favor of the JCBA, our pilots will benefit from higher pay rates. In effect, the pilots of
American Airlines made a business decision. APA will now focus on further engagement
with American Airlines management to address ongoing shortcomings in our contract.
Our total compensation will still trail industry-leader Delta, while work rules affecting
our pilots’ quality of life need meaningful improvement. There’s a lot of work remaining
to achieve the industry-leading contract our pilots deserve.”
LEADING CASE NEWS:
1st Cir.: Cat’s paw theory declawed; employee fired for time theft, not for FMLA
leave
By Kathleen Kapusta, J.D.
Affirming a district court’s grant of summary judgment against an employee’s claim that
he was fired not for the theft of time, as asserted by his employer, but rather in retaliation
for having taken FMLA leave for the birth of his child, the First Circuit found the
employee failed to show retaliatory animus on the part of either the decisionmaker or the
employee who purportedly manipulated the decisionmaker into acting as his cat’s paw.
Judge Kayatta filed a separate concurring opinion (Ameen v. Amphenol Printed Circuits,
Inc., January 26, 2015, Thompson, O.).
Leaves. Prior to taking FMLA leave for the birth of his child, the employee had worked
for the employer and its predecessor for nearly 12 years and had received positive
performance evaluations, several raises, and a promotion. During his three-week leave,
he worked a reduced schedule. When he returned to full-time, he declined requests to
work overtime, citing his wife’s poor postpartum health.
Shortly after his return from leave, he requested a personal leave of three and a half
weeks in order to travel to his native Iraq. Although the operations manager (OM) told
him the timing wasn’t ideal and warned him that he would not be guaranteed a job upon
his return, his leave was approved and the employee agreed to help out with overtime
upon his return.
Warning. Prior to his Iraq trip, the employee failed to follow the proper procedure in
setting up a job on a drill machine and failed to communicate the mechanical issues to his
supervisor or anyone from the next shift, as was required by company policy. Although
he admitted the mistake when confronted, an investigator found that he tried to cover up
his mistake by reworking the job without reporting it, and he was given a written
warning.
Time theft. Upon his return from Iraq, he continued to decline overtime. He was
subsequently accused by a group leader of cheating on his timecard. After investigating,
the OM determined that the employee would punch out of the company’s system at some
point every day for approximately 30 minutes, but would continue working; then, at
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another time, he would leave the property for approximately an hour. As a result, he was
compensated for an additional 15 minutes of time he did not work.
Termination. The OM then met with the operations director (OD) who directed him to
investigate further. After observing the employee engage in this behavior, the OM
reported back to the OD, who then reviewed the employee’s time records, which showed
that he had been maintaining this practice for a two-year period. As a result, the OD
directed the OM to fire the employee. At that time, the OD did not know the employee
had taken FMLA leave or that he had been declining to work overtime.
Lower court proceedings. The employee then sued, alleging that his employer violated
the FMLA by retaliating against him for taking family leave. He characterized this
activity as including both his formal FMLA leave and his decision not to work overtime
upon his return, which he termed "informal FMLA leave." Finding that the employee
failed to show that the OM or the group leader acted in a way that would justify invoking
the cat’s paw theory, and thus that he could not show the company’s reason for his
termination was pretextual, the district court granted summary judgment to the employer.
On appeal, while the employee challenged his employer’s proffered reason for the
termination, he did not dispute the evidence demonstrating that he took an additional 15
minutes or so of paid break time consistently over a two-year period. Instead, he
contended that he had permission to do so as long as he made up the extra time. While
there was evidence indicating his supervisor gave him permission to combine a 30 minute
break with a 15 minute break, it was undisputed that he did not put in additional time to
make up for the extra 15 minutes a day that he took. Thus, the court stated, there was no
question the employer had a legitimate basis to terminate him.
Cat’s paw. The employee next argued that either the group leader or the OM was
motivated by animus when they reported his time card activities to the OD. He contended
that the district court incorrectly applied a "heightened standard" requiring that the
information provided to a decisionmaker must be "inaccurate, misleading or incomplete"
rather than the more liberal standard under Staub v. Proctor Hospital. According to the
employee, Staub does not require the reporting of inaccurate or misleading information;
instead, all that is needed is an act by an employee (i.e. the reporting of even accurate
information) motivated by animus that is intended to cause, and indeed does cause, an
adverse employment action. Observing that both standards “absolutely require a finding
that the person who provided the information was motivated by retaliatory animus,” and
that “on that front, they are but two paths to the same end taking as their first step a
finding of retaliatory animus,” the court explained that it was here the employee’s claim
fell apart.
Animus against group leader. The employee argued that the group leader’s reporting to
the OM the information he received from his subordinates about the employee’s extended
breaks was proof of retaliatory animus because of how differently he dealt with his own
subordinates on this issue. Although the employee contended that the group leader only
chastised his own subordinates for taking additional break time, the group leader testified
that when a member of his crew was "five minutes late" returning from break, he spoke to
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them about it. However, had the behavior been repeated, he stated that he would have
elevated that to the supervisor. Given these facts, the court found that the group leader’s
mere reporting of the employee “up the corporate food chain” was insufficient to
demonstrate animus.
Animus against OM. Alternatively, the employee argued that the OM’s behavior
demonstrated animus when he elevated the break time issue to the OD because he had
never before done so. Noting that the employer argued that it had never before
encountered a case in which an employee consistently combined two breaks and then
took an additional unauthorized quarter hour on top of that, the court found nothing in the
record to contradict this assertion.
Nor did the OM just pass along the tip; rather, he conducted his own investigation, and
only when he had satisfied himself that the alleged practice was actually occurring did he
bring the matter to the OD. “The mere fact of an investigation—particularly one spurred
by a violation of company policy—is not proof of animus and nothing else in the record
suggests that the investigation was motivated by animus,” said the court.
As to the employee’s contention that the OM misled the OD about the warning the
employee received for “covering up” the mechanical issues, the court found that the fact
he was not asked about the error on the night in question was irrelevant if clear company
protocol required that he relay that information when "tying off" with the next shift. Here,
the court found that there was no evidence that the OM misled the OD about the nature of
the event and no evidence that his reporting the information was motivated by animus.
Finally, while the employee claimed that the OM was angry that he wouldn't work
overtime, he “does not tell us the basis for this impression, and does not recount specific
words or any particular behavior that would indicate anger,” the court observed, finding
that he offered only a conclusory allegation. Thus, because the employee failed to offer
evidence of retaliatory animus on anyone’s part sufficient to raise a fact issue, the court
affirmed the grant of summary judgment to the employer.
The case number is 14-1086.
Attorneys: Lauren Simon Irwin (Upton & Hatfield) for Murad Y. Ameen. Jennifer C.
Brown (WilmerHale) for Amphenol Printed Circuits, Inc.
6th Cir.: Casino guards gamble and lose: noncompensable paid meal periods offset
unpaid ‘roll calls’
By Brandi O. Brown, J.D.
Casino guards who sued their employer were not entitled to relief on their overtime claim
because the employer could offset the time the guards spent on paid meal breaks against
the unpaid time they spent in roll-call meetings, the Sixth Circuit held, affirming a district
court ruling. The appeals court also concluded that the meal periods in question were not
compensable. Although the employees had to remain onsite, monitor their radios, and
respond to casino emergencies, there was no evidence they were regularly interrupted.
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Thus, that time was not spent predominantly for the employer’s benefit (Ruffin v.
MotorCity Casino dba Detroit Entertainment, LLC, January 7, 2015, Carr, J.).
District court allows offset. The security guards filed suit in 2012, alleging the employer
violated the overtime provisions of the FLSA by requiring them to work 41.25 hours per
week. The 1.25 hours of overtime resulted from the requirement that they attend a 15minute roll call meeting prior to each shift, without pay for that time. Underlying the
employees’ claim was the contention that their half-hour meal times were working time,
for which they were compensated pursuant to a bargaining agreement. The employees
contended that they spent that time predominantly for the employer’s benefit. The district
court concluded that they did not, however, and that because the periods were
noncompensable, the employer was entitled to offset those hours against the
uncompensated roll-call time. The parties agreed that the time spent in roll-call was
compensable. But with the offset, the lower court held, the employees only worked 38.75
hours per week and were not entitled to overtime relief.
On appeal, the Sixth Circuit affirmed the lower court’s grant of summary judgment in
favor of the employer. To constitute compensable time, the court explained, the meal
time for which the employees were paid had to be used “predominantly” for the benefit
of the employer, a determination that depended “on the totality of the circumstances.”
Relevant to reaching this determination was whether the employees were performing
“substantial duties” during their 30-minute break. The employees contended that they
did.
Monitoring was “de minimis activity.” First, the employees argued that they had to
monitor their two-way radios, which provided a “steady stream” of chatter. However,
many courts, including the Eighth and Eleventh Circuits, have determined that such a
requirement does not transform that time into work time. Two “persuasive cases” from
district courts, which also dealt with security guards required to monitor their radios
during meal breaks, had similar conclusions. The “gist” of those cases, the appeals court
concluded, was that requiring monitoring and availability to respond was “a de minimis
activity, not a substantial job duty.” Although the court was not willing to rule out the
possibility that such monitoring could sometimes result in compensable time, the
evidence in this case was undisputed that the employees had been able to spend that time
in comfort, “eating, reading, socializing and conducting personal business on their
phones,” despite the requirement.
Infrequent interruptions. Moreover, there was no evidence of regular interruption.
Frequency mattered, the court explained. In two prior decisions, the appeals court had
concluded that meal periods were not compensable when such frequency was lacking. On
the flip side, it had also held that such time was compensable in the face of evidence of
regular interruption. That evidence was lacking in this case, however. The employees had
stipulated that interruptions were only occasional, a characterization that “may be an
overstatement,” the court explained, given that the employees’ testimony established that
such interruptions “were essentially unheard of.” One employee was unable to identify a
single instance in her work history; another could recall only one in 10 years’ time; and a
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third reported less than 10 missed meal periods in eight years. This lack of regular
interruption demonstrated that the meal periods “predominantly benefitted the guards.”
On-site requirement not dispositive. The appeals court also considered whether the fact
that the employees were prohibited from leaving the property affected the result. The
Department of Labor has specifically addressed whether employees have to be permitted
to leave their employer’s premises during meal times, concluding that it was not
necessary. And courts have reached a similar conclusion that such a prohibition does not
transform that time into compensable time. This analysis made sense to the court,
because such benefit was determined “not so much” by “the employee’s inability to leave
the premises” but instead by whether the employer was able to “take advantage of the
employee’s presence on the premises by making her work during a nominal meal period.”
Finally, the court pointed to decisions from other courts (a district court opinion and a
Second Circuit opinion) which allowed the claims to progress to a jury as illustrative of
what had not happened in this case. In those cases there were examples of work that
“regularly spilled” into employees’ meal periods, and employees on whom a lot of
restrictions had been placed. As icing on the cake, the court pointed to an advisory
opinion from the Department of Labor that suggested that “a more heavily restricted meal
period than” that enjoyed by the casino security guards was not compensable. “If those
meal periods were not compensable,” the appeals court concluded, neither are the meal
periods in this case.
The case number is 14-1444.
Attorneys: Christopher Patrick Desmond (Johnson Law) for Angelia Ruffin. Eric J.
Pelton (Kienbaum, Opperwall, Hardy & Pelton) for MotorCity Casino.
6th Cir.: EMTs can’t revive FLSA suit over missed lunch breaks
By Lorene D. Park, J.D.
Because emergency medical technicians (EMTs) who filed an FLSA suit could not show
they were required to stay in the truck or perform duties beyond responding to
emergencies (which they did not claim happened frequently) during lunch breaks, the
breaks were not compensable, determined the Sixth Circuit in an unpublished opinion.
Affirming summary judgment for the employer, the appeals court also found that the
employer had a reasonable policy for reporting missed meal periods and did not know
employees were not being compensated for time worked. Because their claims failed, the
employees could not show they were similarly situated to opt-in plaintiffs, and the
decertification of their collective action and denial of a Rule 23 class was also affirmed
(Jones-Turner v. Yellow Enterprise Systems, LLC, January 5, 2015, Cole, R., Jr.).
Lunch breaks. The EMTs’ employer automatically designated a 30-minute slot during
each eight-and-a-half hour shift as an unpaid lunch break. EMTs in the field were not
allotted a specific period but were instructed to use down time between ambulance runs
to eat a meal. The employer’s policy on compensation for missed lunch breaks required
employees to submit a missed lunch slip to an administrative director, who reviewed it to
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determine if there was a 30-minute period between calls at any point during the shift. If
so, it was considered the unpaid lunch break. If not, the employee was paid for the missed
lunch. After the administrator left the company, the employer automatically reimbursed
employees for all missed lunches when they submitted the slips.
The employer’s policy also required employees to radio the dispatch to request
permission to take lunch breaks. Requests were occasionally denied if call volume was
too high. Dispatchers were required to note on crew logs if employees received a lunch
break, but the director of operations testified that the company could not determine they
missed a lunch if they did not turn in slips because the dispatchers did not always fill out
the logs. According to the employees, they often missed lunch breaks but did not always
fill out missed-lunch slips because they believed this would be futile. They also testified
that they sometimes filled out slips for missed lunches and were not paid and that other
employees had complained about the same thing.
Lawsuit. Filing suit, the employees claimed the employer’s failure to compensate them
for lunch breaks violated the FLSA and Kentucky law, and that its failure to guarantee
lunch breaks and rest breaks violated Kentucky law. The district court granted
certification of a collective action under the FLSA and approved a class notice, which
was sent to over 900 current and former EMTs; 77 chose to opt in. The court later
decertified the class and denied the employees’ motion to certify a state wage-and-hour
class. It found that the employees were not similarly situated because the analysis of the
alleged violations would be highly individualized. The court granted summary judgment
for the employer and the employees appealed.
Compensability of meal breaks. First, the employees argued that the lower court erred
by granting summary judgment on the ground that their meal and rest breaks were not
compensable under the FLSA or Kentucky law. Applying the “predominant benefit” test
from its prior decision in Hill v. United States, the Sixth Circuit disagreed. It explained
that “a meal period is not compensable ‘[a]s long as the employee can pursue his or her
mealtime adequately and comfortably, is not engaged in the performance of any
substantial duties, and does not spend time predominantly for the employer’s benefit.’”
Here, while EMTs had to radio the dispatcher to request a lunch break and had to eat
within one mile of the assigned stand-by location and maintain radio contact for
emergencies, there was no policy requiring them to remain in the truck for lunch, nor
evidence that they were told to eat in the truck. Moreover, they cited no evidence that,
while on a lunch break, they were required to perform duties beyond responding to a call,
or that once approved for a lunch break they were frequently interrupted by radio contact.
The appeals court also noted that other circuits have found that meal breaks were not
compensable under the FLSA when employees were subject to emergency calls but could
otherwise use their time for their own purposes. With all of this in mind, it affirmed the
judgment that the meal breaks were not compensable under the FLSA.
Missed-lunch slip policy. The appeals court also found that the employees could not
recover for missed lunch breaks for which they did not submit a missed-lunch slip. It
noted its holding in White v. Baptist Memorial Health Care Corp. that “if an employer
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establishes a reasonable process for an employee to report uncompensated work time the
employer is not liable for non-payment if the employee fails to follow the established
process.” Here, there was no evidence that the employer knew the employees were not
receiving compensation for missed meal breaks, nor that managers regularly reviewed
crew logs at any time other than when a missed-lunch slip was submitted. Moreover,
given that the employees testified that they used the missed-lunch slip procedure several
times and were reimbursed for missed lunches, the court could not say that it was
unreasonable for the employer not to cross-check crew logs with missed-lunch slips to
ensure employees were paid for all missed lunches. Because the employer had a
reasonable process to report missed meal periods and did not know employees were not
being compensated for time worked, the employees’ claims failed.
Certification. In addition, because the district court properly granted summary judgment
on the FLSA claim for missed meal breaks, the employees could not show they were
similarly situated to the opt-in plaintiffs. The appeals court also found no error in the
grant of summary judgment on the state law claims that the employees were not
guaranteed meal and rest breaks. Accordingly, they could not be certified as a class under
Rule 23. The court therefore affirmed decertification of the collective action and denial of
Rule 23 class certification.
The case number is 14-5497.
Attorneys: Lawrence Lee Jones, II (Jones Ward) for Jana Christine Jones-Turner. Edwin
Sharp Hopson, Sr. (Wyatt, Tarrant & Combs) for Yellow Enterprise Systems, LLC, and
Louisville Transportation Co.
6th Cir.: Unambiguous policy statement on FMLA eligibility derails road
commission’s summary win
By Brandi O. Brown, J.D.
By stating in its personnel manual that full-time employees who had “accumulated 1,250
work hours in the previous 12 months” were eligible for FMLA leave, without
qualification that employees would only be covered if they worked “at, or within 75
miles of” a site employing 50 or more employees, a road commission subjected itself to
potential liability for a 59-year-old employee’s FMLA claim, the Sixth Circuit ruled. The
employer’s manual created a material factual dispute over whether its actions constituted
equitable estoppel based on misrepresentation and whether the employee had presented
evidence that he reasonably relied on that manual statement to his detriment. The trial
court’s decision granting summary judgment was reversed in part (Tilley v. Kalamazoo
County Road Commission, January 26, 2015, Leitman, M.).
Two years after he began working under a new superintendent, and 17 years into his
employment with the road commission generally, the employee began experiencing
problems. He was twice reprimanded by the superintendent and thereafter, the
deterioration seemed to escalate, with three main disputes occurring prior to the
employee’s termination. First, the employee allegedly failed to complete an assignment
to draft a revised job description. He alleged that each time he submitted it to the
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superintendent he was told to make revisions. Second, the superintendent was dissatisfied
with the discipline the employee had selected for a safety incident he was instructed to
investigate. Although the superintendent required the employee to draft written
reprimands for his review, as with the job description, the superintendent repeatedly
required the employee to revise the reprimands.
Suspension, warning, and deadlines. The third dispute involved an incident at a job site
where two disgruntled people blocked the employee’s car from leaving the job site and
included a claim, which was never substantiated, that the employee had allegedly bumped
one of them with his car. The superintendent ordered the employee to get a copy of the
police report and prepare a summary of the incident. Ultimately, the employee was
suspended for five days and received a written reprimand for failing to complete all three
assignments. He was given separate deadlines for completing each assignment and told
the reprimand was a “final warning” and that he could be terminated.
Termination after FMLA paperwork. The employee turned the first assignment in on
time, although the employer contended that the submission was deficient. He also alleged
that he met the second deadline, although he did not hand it over to the superintendent
directly, and the go-between was late in handing it over. He missed the deadline for the
third outstanding assignment because while he was completing it, he claimed he began
experiencing what he believed to be symptoms of a heart attack. A coworker drove him
to the hospital and he was admitted for observation. A few days later a representative of
the employer sent FMLA paperwork to the employee, telling him that he was “eligible
for FMLA leave.” Although the form provided to the employee included an option for
checking a box stating that the employee “[did] not work and/or report to a site with 50 or
more employees within 75-miles,” that box was left blank and the box for eligibility was
checked instead. Three days later the employee received a letter formally terminating his
employment.
Summary judgment. The employee filed suit, alleging that he was discriminated against
based on his age and that the employer had interfered with his right to FMLA leave and
retaliated against him for taking such leave. The district court granting summary
judgment for the employer on all claims, holding that the employee failed to establish a
prima facie case of age discrimination because he failed to show that he was replaced by
someone younger or that the employer treated younger employees differently. It also held
that the employee had not established pretext. On the FMLA claim the court held that the
employee was not an “eligible employee” under the FMLA, 29 U.S.C. Sec. 2611(2)(B);
his employer did not employ at least 50 employees at or within 75 miles of his workplace
at the time he sought leave. It also rejected the employee’s equitable estoppel argument.
The employee appealed.
FMLA public employee threshold? The employee mounted two attacks with regards to
his FMLA claim. First, he contended that the FMLA 50/75-employee threshold did not
apply to public employers. The appeals court determined that this argument had been
properly rejected by the lower court because (1) the Code of Federal Regulations had
expressly recognized that the threshold did apply to public employees (29 C.F.R. Sec.
825.108(d)) and (2) the Sixth Circuit had recently applied the threshold to public agency
61
employees in Mendel v. City of Gibraltar. And, in fact, the employee was unable to cite a
decision from a court that adopted a “contrary reading” of that threshold. The employee’s
reliance on the text of the FMLA likewise failed to indicate anything “illogical in
concluding” that Congress had intended to restrict FMLA benefits of public employees in
this way. Likewise, the employee was unable to show that a question of fact existed
regarding whether the employer actually met the threshold.
Equitable estoppel based on personnel manual. However, although the appeals court
agreed with the lower court that the employee did not qualify as an “eligible employee”
under the FMLA as a matter of law, it concluded that a material factual dispute did exist
regarding whether the employer was “equitably estopped from denying” the employee’s
eligibility. In order to prevail on such an argument, the employee had to show a
misrepresentation of material fact, his reasonable reliance on it, and that such reliance
resulted in a detriment to him. He showed that the employer’s personnel manual
contained such a misrepresentation. The manual stated that covered employees were
those who were “full-time employees who have worked for the Road Commission and
accumulated 1,250 work hours in the previous 12 months.” That language was
“unambiguous and unqualified,” the court explained, stating that employees like the
plaintiff who had logged the requisite hours in the year “are covered by the FMLA and
are eligible to apply for FMLA benefits.” While the employer could have qualified that
language, it did not. Thus, the court concluded that the “unqualified statement” of
coverage satisfied “the misrepresentation element of the equitable estoppel test.” The
employer’s response that it was required to provide notice under the federal regulations
was a “misplaced” reliance on those regulations. The regulations did not require
unqualified statements.
Reasonable reliance. Moreover, the employee presented evidence that he had reasonably
relied on that statement in the manual. He submitted a sworn affidavit contending that if
he had known he was not entitled to FMLA leave, he would have made the “brief
finishing touches” to the third assignment in spite of his illness. He also attested that he
relied on the policy in the manual in taking leave and that he believed he was eligible for
leave. That affidavit was “sufficient to create a material factual dispute on the reliance
element,” the court explained.
Even though the employer contended that the employee’s statement that he sought
treatment because he believed he was covered was not credible, and the court agreed that
such an attack was “certainly a fair one,” the credibility of the employee’s statement was
ultimately a question for the jury. The court was “unwilling to conclude as a matter of
law” that the employee had behaved unreasonably in relying on the eligibility statement
in the manual. “Simply put,” the court explained, “a reasonable person in” the
employee’s “position could fairly have believed that he was protected by the FMLA.”
And, in fact, the employer itself had concluded that the employee was eligible and had
“twice communicated that conclusion to” the employee. Finally, there was evidence that
the employee “suffered a detriment” based on that reliance. He was fired, in part, because
he missed that deadline and he had attested that he would have satisfied it had he not
relied on the statement in the manual regarding eligibility.
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Age claim. However, the employee saw no relief with regards to summary judgment on
his age discrimination claim. The employee did not satisfy the fourth element of a prima
facie case of age discrimination, i.e., evidence that he was replaced by a younger worker
or that he was treated differently than younger employees who engaged in the same
conduct (failing to complete assignments by given deadlines). Nor could the appeals
court find any evidence that established a pattern of age discrimination as the employee
contended had existed. Moreover, the court explained, the employee failed to properly
present that purported evidence to the lower court.
The case number is: 14-1679.
Attorneys: William Frank Piper, II (Law Office of William Frank Piper, II) for Terry
Tilley. Robert C. Stone (Smith, Haughey, Rice & Roegge) for Kalamazoo County Road
Commission, and Kalamazoo County Road Commission Board of Commissioners.
11th Cir.: Rejecting blame game, court finds TitleMax knew hours underreported;
OT claim revived
By Kathleen Kapusta, J.D.
Rejecting TitleMax’s argument that because an employee violated several company
policies when he worked off the clock, when he failed to object to his supervisor
changing his time records, and when he failed to report inaccuracies in those records, his
misconduct barred his FLSA overtime claim, the Eleventh Circuit explained that if an
employer knows or has reason to know its employee underreported his hours, it cannot
escape FLSA liability by asserting equitable defenses based on that underreporting. “To
hold otherwise would allow an employer to wield its superior bargaining power to
pressure or even compel its employees to underreport their hours, thus neutering the
FLSA’s purposeful reallocation of that power,” the court stated in reversing a lower
court’s grant of summary judgment in favor of TitleMax (Bailey v. TitleMax of Georgia,
Inc., January 15, 2015, Martin, B.).
The employee worked for a TitleMax store in Georgia for about a year. During that time,
he purportedly underreported his hours by working off the clock, allegedly because his
supervisor told him the company did not allow overtime pay. He also stated that he
clocked in and out when his supervisor told him to, even though that did not match up
with the hours he actually worked and that at times, his supervisor edited his time records
to decrease the number of hours he reported. He ultimately resigned and sued TitleMax,
alleging that it violated the FLSA by failing to pay overtime as required.
It’s his fault. Moving for summary judgment, TitleMax argued that because the
employee violated several of its policies, he was responsible for any unpaid overtime.
Specifically, TitleMax asserted, when he worked off the clock, he violated a policy
requiring accurate reporting of hours. Further, by neither objecting to his supervisor
changing his time records nor reporting inaccuracies in his records, the employee violated
a policy requiring regular verification of time. Finally, by not reporting any of this, he
violated a policy instructing employees who had a problem at work to notify a supervisor,
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or if the supervisor was part of the problem, to inform a higher-level manager or call an
anonymous employee hotline.
The company contended that because the employee bore responsibility, two equitable
defenses—unclean hands and in pari delicto—barred his claim. Agreeing, the district
court granted summary judgment in favor of TitleMax.
FLSA’s “prime purpose.” Noting that nearly 70 years ago, the Supreme Court, in
Brooklyn Sav. Bank v. O’Neil, wrote that the “the prime purpose” of the FLSA is “to aid
the unprotected, unorganized and lowest paid of the nation’s working population; that is,
those employees who lacked sufficient bargaining power to secure for themselves a
minimum subsistence wage,” the appeals court wrote that it has in “the decades since
echoed the same principle: the goal of the FLSA is to counteract the inequality of
bargaining power between employees and employers.”
Observing that an unpaid overtime claim has two elements—an employee worked unpaid
overtime and the employer knew or should have known of the overtime work—the court
found that the employee here satisfied both elements. He worked overtime without pay
and TitleMax knew or should have known he worked overtime because his “supervisor
both encouraged artificially low reporting and squelched truthful timekeeping,” by
instructing the employee to underreport his time and by changing his time records to
show fewer hours worked.
While the court pointed out that this “would ordinarily be the end of the inquiry,” it noted
that TitleMax, advanced a “somewhat novel argument,” that it was nevertheless entitled
to summary judgment based on the two equitable defenses. Although the lower court
accepted the company’s argument that one or both of the defenses may bar an employee’s
FLSA claim, even when the employer knew the employee was underreporting hours, in
doing so, it did not correctly apply the statute, the appeals court stated.
Imputed knowledge. Citing to two earlier Eleventh Circuit decisions, Allen v. Bd. of
Pub. Educ. for Bibb Cnty and Brennan v. Gen. Motors Acceptance Corp., the court noted
that in both cases, it faced similar facts and rejected arguments similar to those made by
TitleMax. In both cases, while the employers nominally required employees to accurately
report their hours, supervisors encouraged them to underreport and they did. While the
employers argued that they could not be responsible for unpaid overtime because they
had neither actual nor constructive knowledge that the employees had worked unpaid
overtime, in both cases, the appeals court panels ruled that knowledge on the part of
supervisors could be imputed to the employers.
Employee’s misconduct. In this case, the court pointed out, TitleMax did not claim that
the supervisor did not know the employee was underreporting his hours. Instead, it
argued that the employee’s misconduct allowed it to assert an equitable defense and that
his misconduct made Allen and Brennan inapposite. Finding this to be a distinction
without a difference, the court explained that TitleMax sought to skirt the clear holdings
of Allen and Brennan by making the same argument under a different name.
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“Whether we consider the employee’s actions in analyzing the knowledge prong of the
FLSA or as an equitable defense, the question is the same: is an employee deprived of his
FLSA claim because he underreported his time, even if knowledge of the underreporting
is imputed to the employer,” the court asked, concluding that “Allen and Brennan say
no.”
Misguided. In additions, not only did TitleMax fail to identify any case in which the
Eleventh Circuit approved the use of equitable defenses as a total bar to an employee’s
FLSA claim when the employer knew the employee underreported his hours, it also
failed to identify any such case from the Supreme Court or any other Circuit. “We are
aware, of course, that the absence of evidence is not necessarily evidence of absence. But
the FLSA has been on the books a long time,” wrote the court. “In the context of such a
well-worn federal statute, the dearth of precedent supporting TitleMax’s novel argument
is persuasive, if not conclusive, evidence that its argument is misguided.”
McKennon. Finally, the court pointed out that its holding was consistent with the
Supreme Court’s reasoning in McKennon v Nashville Banner Publishing Co., a case in
which an employer sought to defeat an ADEA claim by raising a defense based on the
employee’s misconduct. In McKennon, the Court held that while defenses based on
employee misconduct should not act as a total bar, the misconduct may still be relevant to
deciding “the specific remedy to be ordered.” The Court further explained that the ADEA
has a deterrent purpose and that private actions vindicate that deterrent purpose by
disclosing patterns of noncompliance by employers. Totally barring actions based on
employee misconduct “would not accord with [the statutory] scheme.”
Noting that the FLSA, like the ADEA, has a deterrent purpose, the court observed that
barring FLSA actions for wage and overtime violations where the employer is aware that
an employee is underreporting hours would undermine that purpose. Accordingly, the
court reversed the lower court’s grant of summary judgment in favor of TitleMax and
remanded for further proceedings.
The case number is 14-11747.
Attorneys: Victor Severin Roberts (Barrett & Farahany) for Santonias Bailey. Robert
Jason D'Cruz (Morris Manning & Martin) for Title Max of Georgia.
Cal. Sup. Ct.: On-call hours security guards spent at construction sites constituted
hours worked
By Ronald Miller, J.D.
Security guards who spent on-call hours at construction sites were under the control of
their employer and so were entitled to compensation for all on-call hours spent at the
assigned worksite, ruled a unanimous California Supreme Court. The state high court
found that under California Wage Order 4, which covers security guards, the on-call time
constituted hours worked. Moreover, the court concluded that Wage Order 4 did not
permit the exclusion of sleep time from compensable hours worked in 24-hour shifts
(Mendiola v. CPS Security Solutions, Inc., January 8, 2015, Corrigan, C.).
65
There was no dispute here as to the relevant facts: The employer employed on-call guards
to provide security at construction worksites. Part of the guard’s day was spent on active
patrol. Each evening, guards were required to be on call at the worksite and to respond to
disturbances should the need arise. On weekdays, each guard was on patrol for eight
hours, on call for eight hours, and off duty for eight hours. On weekends, each guard was
on patrol for 16 hours and on call for eight hours. By written agreement, on-call guards
were required to reside in trailers provided by the employer. An on-call guard wanting to
leave the worksite had to notify a dispatcher and indicate where he or she would be and
for how long.
On-call compensation policy. Guards were paid for time spent patrolling the worksite,
but received no compensation for on-call time unless circumstances required they
conduct an investigation. If three or more hours of investigation were required during oncall time, the guard was paid for the full eight hours.
Two class-action lawsuits were brought alleging that the on-call compensation policy
violated the minimum wage and overtime obligations imposed by the applicable
Industrial Welfare Commission (IWC) wage order and the California Labor Code. Both
sides sought declaratory relief as to the lawfulness of the on-call compensation policy.
The trial court granted the employees’ motion, concluding that the employer’s policy
violated Wage Order 4. Citing the extent of the employer’s control during on-call hours
and the fact that the guards’ presence on worksites primarily benefitted the employer, the
trial court concluded that the on-call hours constituted compensable “hours worked”
within the meaning of the wage order. The court of appeals affirmed in part and reversed
in part. Both parties petitioned for review.
Compensable hours worked. The California Supreme Court concluded that the
employees’ on-call hours constituted hours worked and, further, that the employer could
not exclude “sleep time” from their 24-hour shifts. Wage Order 4 requires that employers
“pay to each employee … not less than the applicable minimum wage for all hours
worked in the payroll period.” It also requires that employees be paid one and one-half
times their regular rate of pay for “all hours worked over 40 hours in the workweek” and
for “all hours worked in excess of eight (8) hours . . . in any workday.” Resolution of this
case turned, in part, on whether the time spent by the guards on call constituted hours
worked within the meaning of the wage order.
Employer control: relevant factors. California courts considering whether on-call time
constitutes hours worked have primarily focused on the extent of the employer’s control.
Courts have identified various factors bearing on an employer’s control during on-call
time: “(1) whether there was an on-premises living requirement; (2) whether there were
excessive geographical restrictions on employee’s movements; (3) whether the frequency
of calls was unduly restrictive; (4) whether a fixed time limit for response was unduly
restrictive; (5) whether the on-call employee could easily trade on-call responsibilities;
(6) whether use of a pager could ease restrictions; and (7) whether the employee had
actually engaged in personal activities during call-in time.” Courts also take into account
66
whether the “on-call waiting time is spent primarily for the benefit of the employer and
its business.”
Application of factors. Applying these factors, the appeals court had properly concluded
that the “guards’ on-call hours represented hours worked for purposes of Wage Order No.
4,” ruled the state high court. The guards were required to “reside” in their trailers as a
condition of employment and spend on-call hours in their trailers or elsewhere at the
worksite. They were obliged to respond, immediately and in uniform, if they were
contacted by a dispatcher or became aware of suspicious activity. Also, guards could not
easily trade on-call responsibilities. They could only request relief from a dispatcher and
wait to see if a reliever was available. If no relief could be secured, the guards could not
leave the worksite. Additionally, even if relieved, guards had to report where they were
going, were subject to recall, and could be no more than 30 minutes away from the site.
Further restrictions were placed on nonemployee visitors, pets, and alcohol use.
Benefit of the employer. Additionally, the appeals court correctly determined that the
guards’ on-call time was spent primarily for the benefit of the employer. The parties
stipulated that theft and vandalism during the night and weekend hours could be deterred
effectively by the mere presence of a security guard in a residential trailer at the
construction site. Thus, even when not actively responding to disturbances, the guards’
“mere presence” was integral to the employer’s business.
Personal activities. For its part, the employer argued that on-call guards were free to
engage in personal activities, including sleeping, showering, eating, reading, watching
television, and browsing the Internet. However, the high court observed that the fact that
guards could engage in limited personal activities did not lessen the extent of the
employer’s control. It is the extent of employer control here that renders on-call time
compensable hours worked under Wage Order 4.
In arguing against this result, the employer would have the court incorporate 29 C.F.R.
Sec. 785.23 of the federal regulations into Wage Order 4 by implication. Under the
federal provision, “an employee who resides on his employer’s premises on a permanent
basis or for extended periods of time is not considered as working all the time he is on the
premises.” The high court declined to do so, though, noting that while federal regulations
provide a level of employee protection that a state may not derogate, the state was free to
offer greater protection. Absent convincing evidence of the IWC’s intention to adopt the
federal standard, the state high court concluded that the appeals court correctly rejected
this argument.
Exclusion of sleep time. On the other hand, the supreme court reversed the appeals
court’s decision permitting the employer to exclude sleep time from the guards’ 24-hour
shifts. The appeals court had concluded that all industry-specific wage orders implicitly
incorporate a federal regulation that permits the exclusion of eight hours of sleep time
from employees’ 24-hour shifts. However, the high court rejected this analysis as
fundamentally inconsistent with its opinion in Morillion v. Royal Packing Co.
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The absence of language addressing sleep time in Wage Order 4 seriously undermined
the notion that the IWC intended to incorporate Part 785.22 of the federal regulations.
Part 785.22(a) provides that where “an employee is required to be on duty for 24 hours or
more, the employer and the employee may agree to exclude . . . a bona fide regularly
scheduled sleeping period of not more than 8 hours from hours worked, provided
adequate sleeping facilities are furnished by the employer and the employee can usually
enjoy an uninterrupted night’s sleep.” However, because application of Part 785.22
would eliminate substantial protections to employees, the high court declined to import it
into Wage Order 4 by implication. Accordingly, the California Supreme Court concluded
that Wage Order 4 did not permit the exclusion of sleep time from compensable hours
worked in 24-hour shifts covered by its provisions.
Thus, the court affirmed the lower court’s conclusion that on-call time constituted hours
worked within the meaning of Wage Order 4, but reversed the determination that the
employer was permitted to exclude sleep time from the guards’ 24-hour shift.
The case number is S212704.
Attorneys: Miles E. Locker (Locker Folberg), Caesar Santos Natividad (Natividad Law
Firm), and Cathe L. Caraway-Howard (Caraway-Howard Attorneys and Counselors) for
Tim Mendiola. Howard M. Knee (Blank Rome) for CPS Security Solutions, Inc., CPS
Construction Protection Security Plus, Inc., and Construction Protective Services, Inc.
Cal. Sup. Ct.: Court dodges ‘honest belief’ defense, finds no legal error when
arbitrator upheld discharge
By Ronald Miller, J.D.
The California Supreme Court unanimously reversed a court of appeals ruling that an
arbitration award upholding the discharge of an employee based on his employer’s
“honest belief” that the employee misused medical leave by working part-time in a
restaurant that he owned. Although the arbitrator may have committed error in adopting a
defense untested in the state high court, any error that may have occurred did not deprive
the employee of an “unwaivable statutory right”—the right to reinstatement—because the
arbitrator found he was dismissed for violating his employer’s written policy prohibiting
outside employment while he was on medical leave. Finding that the arbitrator did not, in
fact, commit a legal error, the arbitration award was left to stand (Richey v. AutoNation,
Inc., January 29, 2015, Chin, M.).
In 2004, the employee was hired as an automobile salesman, an at-will position. At the
time he received an employment manual noting that outside work while on approved
leave under the Moore–Brown–Roberti Family Rights Act (CFRA) was prohibited.
Additionally, as a condition of his hiring, the employee signed an arbitration agreement
requiring that any employment dispute be settled by arbitration. While still employed by
AutoNation, the employee started a seafood restaurant. Concerned the restaurant was
distracting him from his job, the employee’s superiors met with him in February 2008 to
discuss “performance” and “attendance” issues.
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Outside employment. On March 10, 2008, the employee injured his back while moving
furniture at his home. His physician informed the employer that he was medically unable
to work. On March 21, 2008, the employee applied for and was granted leave under the
CFRA and FMLA. Thereafter, the employer extended the employee’s medical leave on
multiple occasions. While on leave, the employee was sent a letter from a supervisor
advising him that other employment, including self-employment, was barred while he
was on leave. The employee ignored the letter, never called his employer, and thus never
explained how his activity was consistent with his medical leave.
Fired. On May 1, 2008, in response to information that the employee was working at his
restaurant while on leave, the employer fired him four weeks before the expiration of his
approved medical leave because his employer believed he was misusing leave by
working part time in the restaurant. The employee filed suit in state court alleging
multiple claims under FEHA and the CFRA, which ultimately were submitted to
arbitration. The arbitrator denied the employee’s CFRA claim based on the so-called
honest belief or honest suspicion defense.
The employee sought to vacate the arbitration award, arguing that the arbitrator
committed reversible legal error because he exceeded his powers when he accepted
employer’s honest belief defense as to his medical condition. Denying the employee’s
motion to vacate the arbitrator’s award, the court granted AutoNation’s petition to
confirm the award. The appeals court reversed the trial court’s judgment, concluding that
the arbitrator had violated employee’s right to reinstatement under the CFRA when he
applied the honest belief defense to his claim.
Review of arbitration awards. Generally, courts cannot review arbitration awards for
errors of fact or law, even when those errors appear on the face of the award or cause
substantial injustice to the parties. This is true even where, as here, an arbitration
agreement requires an arbitrator to rule on the basis of relevant law, rather than on
principles of equity and justice. The California Arbitration Act and the Federal
Arbitration Act (FAA) provide limited grounds for judicial review of an arbitration
award. Under both statutes, courts are authorized to vacate an award if it was (1)
procured by corruption, fraud, or undue means; (2) issued by a corrupt arbitrator; (3)
affected by prejudicial misconduct on the part of the arbitrator; or (4) in excess of the
arbitrator‘s powers.
Narrow exceptions. The high court explored caselaw concerning the “narrow
exceptions” to the general rule that an arbitrator’s decision cannot be reviewed for errors
of fact or law. Most recently, the court revisited the standard of review for arbitration
awards involving unwaivable statutory rights in Pearson Dental Supplies, Inc. v. Superior
Court. In Pearson Dental, the arbitrator committed a “clear error of law” by misapplying
a relevant tolling statute and incorrectly holding that an employee‘s claim was timebarred, thus depriving the employee of a hearing on the merits. In that instance, the court
held that when “an employee subject to a mandatory employment arbitration agreement is
unable to obtain a hearing on the merits of his FEHA claims, or claims based on other
unwaivable statutory rights, because of an arbitration award based on legal error, the trial
court does not err in vacating the award.”
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California Family Rights Act. The CFRA, a state counterpart to the FMLA, allows
employees to take leave from work for certain personal or family medical reasons
without jeopardizing their job security. The CFRA has two principal components: (1) a
right to leave of up to 12 weeks in any 12-month period to care for a family member or
for the employee‘s own medical condition; and (2) a right to reinstatement in the same, or
a comparable, position at the end of the leave. The right to reinstatement is unwaivable—
but not unlimited. Employers must not deny employees reinstatement “unless the refusal
is justified by the defenses stated in section 11089(c)(1) and (c)(2)” of the applicable
regulations. These provisions mirror the FMLA.
In addition, courts have distinguished between two theories of recovery under the CFRA
and the FMLA. “Interference” claims prevent employers from wrongly interfering with
employees’ approved leaves, and “retaliation” or “discrimination” claims prevent
employers from terminating or otherwise taking action against employees because they
exercise those rights.
Adopting “honest belief defense.” The appeals court vacated the arbitration award in
this case because it believed the arbitrator had committed legal error by adopting the
honest belief equitable defense. The arbitrator found that the employee was fired because
he violated the employer’s policy against outside work while on approved CFRA medical
leave, not because he was on approved leave. The evidence to support that finding was
overwhelming. The employer explicitly warned plaintiff that its policy prohibited any
outside employment, including self-employment, and the employee knowingly ignored
the warnings.
Here, the arbitrator found the employee’s discharge was based on a clear violation of
company policy—a legally sound basis for upholding the award—and he would likely
have made that finding regardless of the evidence or findings as to the employer’s honest
belief that the employee was misrepresenting his medical condition. Thus, even if the
arbitrator was mistaken in relying on an honest belief defense, the employee was not
prejudiced, said the court, holding that the arbitrator’s award in the employer’s favor will
stand.
Honest belief defense. The California Supreme Court left open the question whether the
honest belief defense applies when an employer terminates an employee based on a
reasonable belief that the employee is violating company policy while on CFRA or
FMLA leave as an unsettled question of law. Finding that the arbitrator made no legal
error that deprived the employee of an unwaivable statutory right when he relied upon the
substantial evidence that the employee violated company policy, the high court avoided
resolving the question of the validity of the “honest belief” defense.
The case number is: S207536.
Attorneys: Scott Ohara Cummings (Law Offices of Scott O. Cummings) for Avery
Richey. Richard A. Derevan (Snell and Wilmer) for AutoNation, Inc., Webb Automotive
Group, Inc., and Mr. Wheels, Inc.
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N.J. Sup. Ct.: Worker-friendly test will decide independent contractor status under
state wage law
By Lisa Milam-Perez, J.D.
Resolving a question of state law certified to the court by the Third Circuit, the New
Jersey Supreme Court concluded that the “ABC” test, derived from the state’s New
Jersey Unemployment Compensation Act, governs whether a worker is an employee or
an independent contractor under state wage laws. The holding came in a class-action
wage suit brought by workers who deliver mattresses to customers for a retail mattress
chain who alleged they were improperly misclassified as independent contractors to their
financial detriment (Hargrove v. Sleepy’s Inc., January 14, 2015, Cuff, M.).
Contending that the Independent Driver Agreements they signed in order to work
delivering mattresses for the employer were merely “a ruse to avoid payment of
employee benefits, such as health insurance, deferred compensation benefits, and medical
or family leave,” the plaintiffs filed suit alleging they were misclassified as independent
contractors in violation of the New Jersey Wage Payment Law (WPL) and New Jersey
Wage and Hour Law (WHL).
The federal district court in New Jersey had the first crack at the case and, looking at the
undisputed facts and utilizing the factors for employee status as set forth under ERISA, it
concluded the plaintiffs were clearly independent contractors. On appeal, the Third
Circuit sought guidance from the state’s highest court as to which standard ought to be
applied under state law. The WHL’s implementing regulations adopted the “ABC” test
set forth in the unemployment compensation law; as for the WPL, though, neither the text
of the statute nor its regulations gave an answer.
Several tests to choose from. Offering three tests for the state high court’s consideration,
the plaintiffs urged it to find, “at the very least,” that the hybrid “nature of the work” test
should control. The “ABC” test was even better, in their view. Failing these, the plaintiffs
contended that the “economic realities” test used under the FLSA should apply—but at
any rate, the “right of control” test, used in the negligence context and “never intended to
protect or address the financial security of employees,” was a poor fit.
For its part, the putative employer argued in favor of the right-of-control factor to be used
as the second element of a two-step analysis. Numerous amici weighed in as well—
including the state DOL, which advised that the agency has, “over time,” come to apply
the ABC test when determining independent contractor status under the WPL. (Pursuant
to the WHL’s regulatory framework, it had always used that standard to interpret and
resolve WHL claims.) The high court launched its analysis with a nod to the deference
due the agency, then noted that, given the remedial purposes of the WPL, the statute
should be liberally construed.
Easy as “ABC.” Under the “ABC” test, a worker is presumed to be an employee unless
the employer can establish all three of the following: “(A) the individual has been and
will continue to be free from control or direction over the performance of such service,
both under his contract of service and in fact; and (B) Such service is either outside the
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usual course of the business for which such service is performed, or that such service is
performed outside of all the places of business of the enterprise for which such service is
performed; and (C) Such individual is customarily engaged in an independently
established trade, occupation, profession or business.” If any of the three criteria are not
met, then the individual is an employee.
Same test should apply to both. At bottom, the court concluded that the same test of
independent contractor status should apply both under the WHL and WPL. “[N]o good
reason has been presented to depart from the standard adopted by the DOL to guide
employment status determinations or to disregard the long-standing practice of treating
both statutory schemes in tandem,” the court wrote. “Therefore, we hold that any
employment-status dispute arising under the WPL and WHL should be resolved by
utilizing the ‘ABC’ test.”
The court noted the similar—albeit not identical—language used to define “employ” and
“employee” in both statutes, but more importantly, their similarity of purpose. “Like
FLSA, the WPL and WHL address the most fundamental terms of the employment
relationship.” The WPL was enacted to assure timely and predictable payment of wages;
the WHL, to protect employees from unfair wages and excessive hours of work. “Statutes
addressing similar concerns should resolve similar issues, such as the employment status
of those seeking the protection of one or both statutes, by the same standard.”
Other tests rejected. Likening the traditional “right of control” test derived from the
Restatement on Agency to a “totality of the circumstances” analysis, and noting the
standard was the narrowest of the three options, the court observed that it had previously
found this test wanting in the Conscientious Employee Protection Act (CEPA) context.
“[E]xclusive reliance on a traditional right-to-control test to identify who is an
‘employee’ does not necessarily result in the identification of all those workers that social
legislation seeks to reach,” it had previously written.
As for the “economic realities” test, the FLSA uses it. And the FLSA’s “suffer or permit”
language has come to be seen as the broadest definition of “employee” operable—and
thus arguably most fitted to furthering the remedial goals of the statutes at issue here, the
court noted. But that wasn’t reason enough to jettison the test used by the state DOL, the
court reasoned. “New Jersey decided to take a different approach—one that presumes a
person seeking protection of the WPL or WHL is an employee.” Moreover, it added, the
ABC test is a more predictable one, “and may cast a wider net.” That was good enough
for the state high court.
The case number is 072742.
Attorneys: Anthony L. Marchetti, Jr. (Marchetti Law) for Sam Hargrove. Matthew J.
Hank (Littler Mendelson) for Sleepy’s, LLC.
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