A Year in Review:
Key U.S. Employment Law Developments
in 2013 and What to Expect in 2014
Thursday, January 16, 2014
PRESENTERS
Moderator
Stephen J. Hirschfeld, CEO, Employment
Law Alliance; Partner, Hirschfeld Kraemer
LLP, San Francisco, CA
shirschfeld@hkemploymentlaw.com
2
Speakers
Leonard Court, Director, Crowe & Dunlevy,
Oklahoma City, OK
leonard.court@crowedunlevy.com
Robert N. Holtzman, Partner, Kramer, Levin,
Naftalis & Frankel LLP, New York, NY
rholtzman@kramerlevin.com
3
Speakers
Carl Crosby Lehmann, Principal,
Gray Plant Mooty, Minneapolis, MN
carl.lehmann@gpmlaw.com
Susan T. Spradley, Shareholder,
GrayRobinson, P.A., Orlando, FL
susan.spradley@gray-robinson.com
4
Speakers
Susan E. Stahlfeld, Partner,
Miller Nash LLP, Seattle, WA
susan.stahlfeld@millernash.com
5
Recent NLRB Developments
Leonard Court, Crowe & Dunlevy
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What Will 2014 Do for 2012?
• In 2012, the NLRB issued several
controversial decisions expanding
the involvement of the NLRB Section
7 rights into the non-union sector.
• However, the majority of the fivemember Board was serving by
recess appointment.
7
What Will 2014 Do for 2012?
• The business community, led by the
U.S. Chamber of Commerce,
challenged the legality of these
recess appointments.
8
2012 Expansive Board Decision
• Social media
• Asking an employee not to discuss
an ongoing investigation
• Requiring agreements, including a
waiver of rights to file a class action
• At-will language in employee
handbooks
9
2012 Expansive Regulatory Action
• “Quickie” election rules
• NLRB poster requirement
• Newer remedial requirements
10
Why 2014 Is Critical to the 2012
NLRB Actions
• Noel Canning – Oral argument held
January 13, 2014
– Court of Appeals held that the 2012
recess appointments were invalid.
– Five new members were confirmed in
fall 2013
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Why 2014 Is Critical to the 2012
NLRB Actions
• New General Counsel – Richard
Griffin
– Directs enforcement of the Act
– One of the January 2012, recess
appointees
12
Judicial Treatment of 2011- 2012
Board Actions
• Fifth Circuit overturns D R Horton
decision concerning class action
waivers – December 2013
• NLRB dismisses appeal of ruling
invalidating the election rule changes –
December 2013
• NLRB did not appeal court appellate
court decisions invalidating poster
regulations – January 2, 2014
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What to expect if the
U.S. Supreme Court affirms
NOEL CANNING
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The Most Important
New State Laws
Affecting Employers in 2014
Stephen Hirschfeld, Hirschfeld Kramer
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New State Laws
• Wage and hour
• EEO
• Background checks
• Leaves
• Legalization of marijuana
• Miscellaneous
16
The Latest
Discrimination Decisions
and
Update on Key EEOC Enforcement
Priorities and Efforts
Susan T. Spradley, Gray-Robinson
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EEOC’s FY 2013 Performance and
Accountability Report
• $372.1m record award amount from
private employers
− $6.7m increase over 2012
• $39m resolved lawsuits
• Enforcement and litigation statistics
for FY 2013 available in early 2014
• www.eeoc.gov
18
Retaliation – Supreme Court
University of Texas Southwestern Medical
Center vs. Nassar, 133 S.Ct. 2517 (2013)
• Holding: A plaintiff making a claim for
Title VII retaliation must prove that
his/her protected activity was a butfor cause of the employer’s alleged
adverse employment action.
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Retaliation – Supreme Court
University of Texas Southwestern Medical
Center vs. Nassar, 133 S.Ct. 2517 (2013)
• What it means: heightened standard
− Positive decision for employers as
the “but-for” standard is more
stringent for an employee to meet
than the “motivating factor” standard.
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Title VII: Supervisor – Supreme Court
Vance v. Ball State University et al.,
133 S.Ct. 2434 (2013)
• Answers who is supervisor for Title
VII
• “Supervisor” for purposes of vicarious
liability under Title VII if empowered
by the employer to take tangible
employment actions against an
employee
21
Hot Topic: Title VII - Supervisor
Vance v. Ball State University et al.,
133 S.Ct. 2434 (2013)
• Why is definition important?
− Different rules apply in cases in
which the harasser is a supervisor,
as opposed to a co-worker
• Lesson: define supervisor in policies
and train supervisors on policies
22
ADA – Fitness For Duty
Owusu-Ansah v. Coca-Cola,
715 F.3d 1306 (11th 2013)
− Confirms an employer can require
an employee to take a Fitness for
Duty Evaluation where the
evaluation is “job related and
consistent with business necessity”
23
ADA: Attendance as Essential Function
Allen v. Babcock & Wilcox Technical
Services Pantex, LLC, 2013 WL
5570192 (N.D. Texas Oct. 9, 2013)
• Supports the position that Courts
should defer to an employer’s
judgment in determining whether
attendance is an essential function
of the job
24
ADA: Attendance as Essential Function
EEOC v. AT&T Corp., 2013 WL 6154563
(S.D. Indiana Nov. 20, 2013)
• Court refused to determine as a matter
of law whether regular attendance was
an essential function of the job
• Appears that employer’s job description
not stating that attendance was an
essential function of the job played a
major role in the Court’s decision
25
ADA: Attendance as Essential Function
EEOC v. AT&T Corp., 2013 WL 6154563
(S.D. Indiana Nov. 20, 2013)
• Lesson: If employer considers
attendance an essential function of
the job, have a provision in
handbook as well as job description
stating so
26
Employer Push Back: EEOC Tactics
New Holland v. EEOC, 1:13-cv-01176 (D.C.
D.C. Aug. 1, 2013)
• Suit against EEOC for sending out a
mass email to employees, including
managers, regarding a potential
class action against the company
− Asserted: search and seizure of
property
• EEOC moved to dismiss
27
Employer Push Back:
EEOC Guidance – Convictions
EEOC v. PeopleMark, Inc., 732 F.3d 584
(6th Cir. Oct. 7, 2013) – on appeal
• EEOC - knowing that the employer had
no policy categorically rejecting felony
applicants - continued to litigate on that
basis and drove up defendant’s costs
• Affirmed district court order directing
EEOC to pay $750,000 + of company’s
fees and costs
28
Employer Push Back:
EEOC Guidance – Convictions
State of Texas vs. EEOC, Case 5:13-cv00255-C (N.D. Texas filed Nov. 4, 2013)
• Challenge by Texas AG to EEOC
conviction guidance’s categorical ban
on employer’s right to refuse to hire a
convicted felon
• EEOC response due January 27, 2014
29
Employer Push Back: Credit Checks
EEOC v. Kaplan Higher Learning
Educ. Corp., 2013 WL 322116
(N. D. Ohio Jan. 28, 2013)
• EEOC accused employer of discriminating
against African Americans by using credit
checks to screen job applicants
• EEOC could not prove use of credit checks
had disparate impact on African Americans
− EEOC’s own background check
− Case is on appeal to the Sixth Circuit
30
Employer Push Back: EEOC Subpoena
EEOC v. Home Nurse, Inc., 1:13-cv-02927
(N.D. GA Sept. 9, 2013)
• Charge filed but CP: not disabled,
under 40, no preexisting generic
condition, Caucasian
• EEOC/subpoena/raid
• Court quashed 4th subpoena
31
Trend: Gender/Same-Sex Stereotyping
EEOC v. Boh Brothers Construction
Co, LLC (5th Cir. 2013)
• “Same-sex/gender-stereotyping” as
form of discrimination prohibited by
Title VII
• EEOC could rely on genderstereotyping evidence to show samesex harassment was “because of sex”
32
Yours, Mine, and Ours:
Evolving “Joint Employer" Law
Susan E. Stahlfeld, Miller Nash
33
Risks of Being a Joint Employer
• Wage and hour law
• FMLA
• Affordable Care Act
• NLRA
• WARN Act
• Harassment and discrimination
• Accommodating disability
34
Determining Joint Employer Status?
• Economic realities of the relationship
• Key is “control”
• Courts balance totality of the
circumstances
• Technically different but effectively
similar tests in each jurisdiction
• Protect legitimate outsourcing/
independent contractor/subcontractor
relationships
35
Primary Factors Affecting
Joint Employer Status
• Power to hire and fire
• Power to set rate of pay and method
of payment
• Maintain employment records
• Supervise and control
36
Power to Hire and Fire
• Formally and functionally
• May include power/authority to
discipline
• Requests to transfer workers
• Quality control, safety, security:
– Background and drug tests
37
Rate and Method of Payment
• Expansive definition: all types of
compensation, benefits, etc.
• Courts acknowledge that payment is
always influenced by what is paid to
direct employer
• Question is degree of control over
pay
• Does the contract speak to payment?
38
Employment Records
• Records for safety and quality control
purposes
• Courts look to purpose of the
records: beyond quality control?
• May consider payroll, insurance,
taxes, and other records
39
Supervision and Control
• Production line v. service industry
• Work that is “integral” to a company’s
business
• Work performed on premises
• Work performed during regular
business hours
• Setting work schedules
40
Supervision and Control
• Owning and providing equipment/
tools/supplies
• Replacing subcontractors without
material change to the contracts
• Working exclusively or predominately
for one company
41
Supervision and Control
• Quality control and compliancemonitoring v. affecting the terms and
conditions of employment
• Communicating with supervisors v.
communicating directly with workers
• Periodic observance
42
The Future of Wage and
Hour Claims
Carl Lehmann, Gray Plant Mooty
43
General Overview
• Whether the worker is an employee
− Independent contractors
− Unpaid internships
• Paying for all time worked
– Connectivity overtime
– Donning and doffing
• Avoiding class actions with arbitration
agreements
44
Contractors vs. Employees
• Continues to be source of claims
– Large class actions
– Department of Labor
“Misclassification Initiative”
• Payroll Fraud Prevention Act
45
Contractors vs. Employees
• Action items
– Review the “economic realities” of
existing contractor relationships
– Analyze pros and cons of converting
to employees
46
Unpaid Interns vs. Employees
• Attention is new / law remains same
– Provides training similar to an educational
environment
– Experience is for the benefit of the intern
– Internship does not displace employees
– Employer derives no immediate gain (may
actually cost)
– No expectation of leading to a job
– Clear understanding that internship is
unpaid
47
Unpaid Interns vs. Employees
• Action items
– Keep tabs on employees using
interns
– Implement a policy for approval and
oversight
– Consider whether paying interns
saves in the end
48
Connectivity Overtime
• Must pay for all time “suffered or
permitted to work”
• What to do with non-exempt
employees who never unplug?
49
Connectivity Overtime
• Action items
– Give clear, consistent, and written
instructions
– Train employees on policy – and
enforce it
– Consider pros and cons of technical
fixes
– Discipline in ways other than pay
docking
50
Sandifer v. U.S. Steel
• Pending before Supreme Court
• FLSA provision on “changing clothes”
in union setting
• Action items
– Stay tuned for any broad FLSA
decision
– Keep on eye on employee noncompensable time at work
51
Class Actions – Arbitration Agreements
• Court’s rejecting NLRB’s D.R. Horton
decision
• More courts accepting of waivers of
FLSA collective action claims
• Action items
– Review state of law in your jurisdiction
– Consider arbitration agreements as
potential strategy for avoiding class
actions
52
Is it Finally Time for Employers to
Implement an Arbitration
Program?
Robert N. Holtzman, Kramer Levin Naftalis & Frankel
53
Arbitration and Class Certification
• Is it finally time for employers to
implement an arbitration program?
• The Supreme Court takes another
step in making it more difficult to
certify class actions
54
In the Beginning (of 2013)
• Despite years of precedent favoring
arbitration, the use of arbitration in the
employment context has been
subjected to ongoing attacks
– Certain states, notably California, raised
substantial impediments
– Confusion arose regarding how class
claims and collective claims under the
FLSA would be impacted by arbitration
agreements
55
Supreme Court Fends Off Attacks on
Arbitration – Again
• In 2013, the Supreme Court returned its
focus to the parameters of class action
litigation in three important decisions:
– American Express Co. v. Italian Colors
Restaurant, 133 S. Ct. 2304 (2013)
– Oxford Health Plans LLC v. Sutter, 133 S.
Ct. 2064 (2013)
– Comcast Corp. v. Behrend, 133 S. Ct. 1426
(2013)
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Arbitration Basics
• Alternative method of dispute resolution
– Third party neutral issues a binding
decision resolving the dispute
– Essentially no right of appeal or other
review, except for fraud or bias
– Reduced discovery and modified rules of
evidence
– Often allows for faster resolution of claims
• Arbitration is a creature of contract – rights
and obligations derive from the parties’
arbitration agreement
57
American Express Co. v.
Italian Colors Restaurant
• Plaintiffs asserted class claims for
violations of federal antitrust laws, claiming
that AmEx used its monopoly power in
charge card market to force merchants to
pay exorbitantly high fees
• Relying on an arbitration clause in the
parties’ agreement barring arbitration “on a
class action basis,” AmEx moved to
compel individual arbitration of the claims
58
American Express Co. v.
Italian Colors Restaurant
• Plaintiffs argued that requiring individual
arbitration was prohibitively expensive
because the cost of the expert analysis
required to prove an antitrust claim would
far exceed any possible recovery
• The Supreme Court reversed the Second
Circuit, finding that the bar on class action
procedures did not preclude the effective
vindication of plaintiffs’ rights
59
American Express Applies to
Employment Disputes
• Sutherland v. Ernst & Young LLP, 726
F.3d 290 (2d Cir. 2013), applies the
holding of American Express to
employment disputes arising under the
FLSA, a reversal of the Second Circuit’s
prior reticence to enforce class action
waivers in the employment context
60
American Express Applies to
Employment Disputes
• The Second Circuit found that American
Express and the Supreme Court’s earlier
decision in AT&T Mobility v. Concepcion
“inexorably lead to the conclusion that the
waiver of collective action claims is
permissible in the FLSA context”
• The Eighth Circuit held similarly in Owen v.
Bristol Care, Inc., 702 F.3d 1050 (8th Cir.
2013)
61
Oxford Health Plans LLC v. Sutter
• Arose in an unusual procedural context,
which led to an anomalous result
• Key takeaway is that arbitration awards
are reviewable only under an extremely
deferential standard that renders them
essentially unreviewable.
62
Oxford Health Plans LLC v. Sutter
• Key rulings:
– “[T]he sole question . . . is whether the
arbitrator (even arguably) interpreted the
parties’ contract, not whether he got its
meaning right or wrong.” An arbitral decision
“must stand, regardless of a court’s view of its
(de)merits” as long as the arbitrator is “even
arguably construing or applying the contract.”
– The arbitrator “provided an interpretation of the
contract . . . His interpretation went against
Oxford, maybe mistakenly so. But still, Oxford
does not get to rerun the matter in a court.”
63
The Contrary View of the NLRB
• Employers considering the use of
arbitration agreements that contain
class action waivers must be aware of
the NLRB’s decision in D.R. Horton, Inc.
and Michael Cuda, Case 12-CA-25764,
357 NLRB No. 184 (Jan. 3, 2012)
– An employer violates the NLRA by
requiring employees to sign an
arbitration agreement containing a class
or collective action waiver
64
The Contrary View of the NLRB
• The Fifth Circuit reversed in a decision
filed December 3, 2013
• Every Circuit Court that has addressed
the issue has rejected the NLRA’s
rationale and held arbitration
agreements containing class waivers
enforceable
• Nonetheless, the NLRB continues to
adhere to D.R. Horton
65
To Arbitrate or Not to Arbitrate –
Potential Benefits
• Potential elimination of class and
collective claims
• Generally more expeditious than litigation
• Generally reduced litigation costs and
discovery
• Not a public forum; greater confidentiality
• Reduced risks of a runaway jury verdict
66
To Arbitrate or Not to Arbitrate –
Potential Negatives
• Tendency to do “equity” can result in
awards on legally deficient claims
• Very limited grounds for review/appeal
• Hostility to dispositive motions
• Tendency to “split the baby”
• Increased fees for use of arbitration forum
and arbitrators compared to court litigation
• Uncertainty of NLRB enforcement in light
of D.R. Horton
67
Key Elements of an
Arbitration Program
• Draft arbitration clauses that explicitly
state that arbitration may be maintained
only on an individual basis and that
class, collective or other types of
representative arbitrations are not
permitted
68
Key Elements of an
Arbitration Program
• Consider making clear that the
agreement to arbitrate does not
preclude the filing of an unfair labor
practice charge with the NLRB or the
filing of a charge of discrimination with
the EEOC
• Fees typically covered in large part by
employer
69
Class Certification Gets More
Challenging: Comcast Corp. v. Behrend
• Plaintiffs alleged that Comcast violated
antitrust laws
• The Supreme Court reaffirmed that
courts must “rigorous[ly]” analyze
whether the requirements of Rule 23
have been met
70
Class Certification Gets More
Challenging: Comcast Corp. v. Behrend
• Rule 23(b)(3) cannot be satisfied where
“[q]uestions of individual damage
calculations will inevitably overwhelm
questions common to the class”
• Here, plaintiffs failed to establish that
damages could be calculated on a classwide basis and therefore could not satisfy
the predominance requirement of Rule
23(b)(3)
71
Application of
Comcast Corp. v. Behrend
• We are still in the early days of
Comcast, and courts applying its
teachings have articulated inconsistent
views as to when the existence of
individualized damages will preclude
class certification
72
Application of
Comcast Corp. v. Behrend
• The Second Circuit has agreed to hear “in
tandem” two wage and hour appeals
addressing the application of Comcast –
one in which certification was denied and
one in which certification was granted as
to liability only, with damages bifurcated
• The Sixth and Seventh Circuits have
upheld classes certified only as to liability
where damages were found to be
73
individualized
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