Labor Relations & Wages Hours Update August 2012 Hot Topics in LABOR LAW REPORTS: NLRB to appeal ruling rejecting election process reforms The NLRB filed a notice of appeal on Tuesday, August 7, informing the Court of Appeals for the District of Columbia that it will appeal a district court judge’s ruling that blocked reforms to the NLRA’s election processes. U.S. District Judge James Boasberg in Washington rejected the board’s rule change on May 14, after finding that the board lacked a quorum when it passed the rule because only two of the board’s then-three members participated in the vote. On July 27, he rejected the board’s request to reconsider the decision. The board has insisted that Boasberg misunderstood the mechanics of the board’s electronic voting room and that the allegedly missing members, Republican Brian Hayes, was both present for the meeting in which the rule was passed and participated in votes on other matters during the meeting. Among other things, the board’s rule changes would cut the amount of time between the filing of a representation petition and an election by limiting the amount of issues that can be dealt with in pre-election hearings. NLRB asks for amicus briefs in case dealing with whether college professors can join union According to a recent article in the Pittsburgh Post-Gazette, the NLRB has solicited amicus briefs in a case dealing with whether professors at Point Park University can join a union. The faculty attempted to organized in 2004 The article notes that the U.S. Supreme Court ruled in 1980 that faculty members at Yeshiva University were managers not entitled to union representation because they shared governance over the university with administrators. Thus, before the NLRB can decide that a faculty is allowed to organize, it must find differences between the administrative power of the university faculty in question and that of the Yeshiva faculty. The paper reports that Point Park’s attempt to introduce a new faculty handbook without faculty input led to the organizing drive as the new handbook did not detail the power of the new deans; a provost was in charge when the old handbook was written. The NLRB ordered the university to bargain with the union, but Point Park sued and, eventually, the U.S. Court of Appeals for the District of Columbia Circuit ordered the NLRB to explain why Point Park faculty is allowed to organize under the NLRA. NLRB invites briefs on questions of tax payments and Social Security contributions in remedial awards The NLRB has invited briefs from all interested parties on whether, in awarding back pay, it should routinely require respondents to: 1) submit documentation to the Social Security Administration so that backpay is allocated to the appropriate calendar quarters, and 2) pay for any excess federal and state income taxes owed as a result of receiving a lump-sum payment. The invitation was contained in the Board’s recent Latino Express decision. In that case, the Board largely agreed with the administrative law judge that the company committed multiple unfair labor practices, including illegally dismissing two employees, during the course of a union organizing campaign. The Acting General Counsel has requested two additional remedies that would, if adopted, represent a change in Board practice. He asked that the employer be ordered to submit appropriate documentation to the Social Security Administration so that backpay would be allocated to the appropriate calendar quarters. The AGC also asked that discriminatees receive a lump-sum backpay award. Because the remedies would represent a change to Board practice, the Board severed the remedial issues from the ruling and invited briefs on the issue. The Board has said that briefs should not exceed 25 pages and should be filed with the Board on or before October 1. Workforce committee Republicans demand that Labor Secretary explain recent DOL guidance on WARN Act In a letter sent to DOL Secretary Hilda L. Solis, House Education and the Workforce Committee Chairman John Kline (R-Minn.), Workforce Protections Subcommittee Chairman Tim Walberg (R-Mich.) and Health, Employment, Labor, and Pensions Subcommittee Chairman Phil Roe, M.D. (R-Tenn.) demanded that Solis provide documents and communications related to the development of the DOL’s recent guidance regarding contractor duties in relation to the potential sequestration and the Worker Adjustment and Retraining Notification (WARN) Act. The DOL ruling states that WARN Act notices, which generally must be sent no less than 60 days before a mass layoff or plant closing, do not apply in the case of a sequester 2 because it remains uncertain whether the sequester will go into effect at the beginning of 2013. Under a budget deal reached last year, the sequester will go into effect if Congress is unable to agree on a long-term plan to address the federal budget deficit. Any sequester would impose severe cuts in funds for the Defense Department and civilian federal agencies. According to the Republicans, however, the guidance is nothing more than “a political document that underscores the legal uncertainty facing employers and leaves countless workers in the dark about whether they will lose their jobs.” Kline said that the document request is necessary to prevent “the administration’s attempt to hide from workers the devastating consequences of sequestration.” The Republicans expressed concern that the guidance is misleading and incomplete. They allege that the guidance suggested that it conferred “blanket immunity from the WARN Act.” The reality, according to the Republicans, is that individual employees could, in the event of layoffs caused by the sequestration, file private suits. The guidance, they note, fails to explain that the DOL has no enforcement role when it comes to WARN Act notices. Thus, the Republicans have asked for information regarding how the DOL developed and crafted the guidance and the legal basis for the conclusions contained in the guidance. Republican senators submit comments to NMB arguing that 50 percent showing of interest threshold applies to mergers In a letter sent this week to National Mediation Board Chairman Harry R. Hoglander, three Republican Senators insist that the Federal Aviation Administration Modernization and Reform Act requires a 50 percent showing of interest before a representation election can be held and that the showing applies in cases of mergers as well. Senators Johnny Isakson (R-Ga.), Mike Enzi (R-Wyo.), and Orrin Hatch (R-Utah) submitted their written comments in response to the Notice of Proposed Rulemaking (NPRM) issued by the NMB on May 15. That NPRM dealt with the Federal Aviation Administration Modernization and Reform Act, which revised the election process under the Railway Labor Act (RLA). Prior to the enactment of the FAA reform act, the RLA representation election procedure required a threshold showing of support from at least 35 percent of the employees and more than a 50 percent showing of support if they were already represented. The law states that the NMB cannot direct an election unless “the application is supported by a showing of interest from not less than 50 percent of the employees in the craft or class.” That language has been challenged in a “colloquy” inserted into the Congressional Record claiming the 50 percent threshold does not apply to situations where union represented units have merged. In its own NPRM, the NMB stated that “[t]he amended language is silent with regard to mergers.” The NMB, thus, declared that it needed to clarify the situation. 3 According to the Republican Senators, the NMB’s reasoning “ignores the traditional construction of statutory language.” They insist that if Congress wanted to exclude mergers from the threshold requirement, it would have done so and that, lacking the exclusion, the NMB is barred from presuming that the exclusion exists. They contend that Congress chose to apply the new standard to all representation petitions and that the decision to do so was “the result of bipartisan negotiations and compromise, where opponents could have specifically included language exempting mergers if that were truly the intent.” The senators expressed their belief that the NMB’s final rule on the issue will reflect what they believe to be “the law’s plain language and clear legislative intent.” NLRB revises notice language to be used in cases of unfair labor practices by unions The NLRB has issued a memo to its regional offices regarding the language to be used in notices when unions have been found to have committed unfair labor practices. Originally issued on May 24, 2012, the memo said that unions should electronically distribute remedial notices to members, and post them electronically on any intranet site or website that the union would used to communicate with its members and that notices that have to be read to members must be read at union meetings. The revised memo makes it clear that in the “large majority of cases” against unions, electronic communication, notice posting and notice reading should reach all bargaining unit employees, not just members. The revision and the original memo apply only to ULPs committed by unions in their capacity as a labor organization and not in cases when charges have been filed against a union in its capacity as an employer. National Right to Work Foundation assists two appeals of NLRB moves The National Right to Work Foundation has assisted in two appeals of recent actions by the NLRB. In the first, an Ohio mechanic filed an appeal of the Board’s rejection of his petition to decertify the International Association of Machinists. In the second, two Boeing employees appealed the dismissal of charges against the IAM over its conduct surrounding a disputed Boeing unit election. The mechanic, Kyle Chilton, filed his appeal on Friday to the petition for decertification he and several co-workers filed with the Board seeking to dump their union, the IAM. In his appeal of the Board’s decision, Chilton alleges that the Board incorrectly based its decision on alleged unfair labor practices by the employer that the IAM claimed influenced the decertification petition; Chilton notes that those ULPs have yet to be confirmed. Chilton, who is represented by the NRWF, also contends that the decision is improper because the Board lacks a quorum. The NRWF has filed numerous briefs in various cases contending that the Board lacks a quorum because President Barack Obama named three members to the board via his recess appointment powers, despite the fact that the Senate was in pro forma session. 4 In the second case, two Charleston, South Carolina, Boeing company employees filed a federal appeal with the Board of the dismissal of their charges alleging that the IAM forced Boeing to accept contract concessions by filing charges against the Board. The employees further argued that they were denied participation in the hearing that concluded the IAM’s case against Boeing, even though they were granted intervenor status by the NLRB in Washington, D.C. In addition, the workers have contended that the IAM’s charges have caused other companies to reconsider placing work in right-to-work states; the heart of the IAM’s charge was that Boeing placed work in South Carolina to punish the union for an earlier strike. LEADING CASE NEWS 1stCir: Agreement between Teamsters and employer intended to protect union jobs; not unlawful hot cargo agreement The NLRB erred in concluding that an agreement between the Teamsters union and an employer, which prohibited the employer from doing business with two third-party subcontractors, violated Sec. 8(e) with respect to one of the subcontractors, ruled the First Circuit (NLRB v Teamsters, Local 251, August 14, 2012, Lipez, K). In light of contradictory evidence in the record that the board failed to consider, the plain text of the agreement was not substantial evidence supporting its conclusion that the agreement had an impermissible intent. The appeals court agreed with an administrative law judge that the agreement was intended to preserve union jobs with the employer. The employer was a highway construction general contractor and a signatory to a multiemployer collective bargaining agreement with the Teamsters. Over the years, the number of the employer’s employees represented by the union declined, in part due to a concerted effort by the employer to replace unionized truck drivers with non-union subcontractors. When a truck driver retired, the employer would sell a truck and replace that person with a non-union subcontractor. The union was especially troubled by the employer’s use of two subcontractors that did not pay the prevailing rate to their drivers. Under the parties’ CBA, the employer was not permitted to use subcontractors unless those employees were paid the prevailing rate. After the union filed charges with the NLRB regarding the use of subcontractors in violation of the CBA, the employer and union agreed that the services of the two subcontractors would not be used. This agreement is the primary subject of this dispute. Prohibited subcontractors. In April 2001, the union determined that the employer was again using one of the prohibited subcontractors and its drivers were not being paid the prevailing rate. When the employer indicated it intended to continue using the subcontractor, union members went on strike. Following the strike, the employer filed charges with the NLRB alleging the union violated Sec. 8(b)(4)(ii)(A) & (B), and 8(e) of the NLRA. The ALJ found that the agreement was unlawful as to one subcontractor because the union had not established that it was performing work traditionally performed by the employer’s bargaining unit employees. However, the agreement was not unlawful as to the subcontractor that was performing traditional bargaining unit work. Thus, the ALJ found that the union’s efforts to enforce the agreement as to that 5 subcontractor were lawful. The NLRB reversed the law judge’s decision as to the union performing bargaining unit work. Section 8(e) makes it unlawful for a union and employer to enter an agreement to refrain from doing business with any other person. However, the Supreme Court ruled in NLRB v International Longshoremen’s Association that the provision is intended to reach only agreements with secondary objectives, not those with primary purposes protected by the Act. Among the primary purposes protected by the Act is preserving for contracting employees themselves work they traditionally performed. It is the intended purpose of an agreement, not its effect, that determines whether it has a permissible primary object. Intent of agreement. In reversing the ALJ’s decision, the NLRB focused exclusively on the language of the agreement in concluding that the agreement violated Sec. 8(e) regardless of the circumstances, observed the appeals court. However, because significant record evidence of the surrounding circumstances indicated that the agreement did not have an impermissible purpose, the plain text of the agreement was not substantial evidence supporting the board’s conclusion. In this instance, the agreement was intended to enforce the union standards clause in the CBA and, thus, preserve union jobs. The subcontractors were identified in the agreement because they were the subcontractors who failed to pay the prevailing rate. Moreover, the NLRB’s decision ignored evidence regarding repeated meetings between the employer and union concerning the use of contractors who did not pay the prevailing rate. Additionally, the employer was not absolutely prohibited from using the subcontractor so long as it would pay its drivers the prevailing rate. The court concluded that this was powerful evidence that the agreement was intended to preserve union jobs with the employer rather than achieve union objectives with respect to the subcontractor. Union drivers faced a real threat of displacement by the subcontractors, as illustrated by the diminishing size of the bargaining unit. However, none of that evidence was discussed in the board’s decision. Thus, the court ruled that both prongs of the test for identifying lawful work preservation agreements were present in this case. The court denied the NLRB’s cross-application for enforcement of its order with respect to the agreement’s prohibition on the use of a subcontractor for bargaining unit work. The case number is 11-1818. Linda J. Dreeben for the NLRB. Marc B. Gursky (Gursky Law Associates) for the Union. 3rdCir: Employer did not violate CBA by denying union representatives access to employees of recently acquired nonunion stores In a decision not designated for publication, the Third Circuit dismissed a union’s complaint filed pursuant to Sec. 301 of the LMRA alleging that an employer violated the terms of a collective bargaining agreement by denying union representatives access to employees of recently acquired nonunion stores (United Food and Commercial Workers 6 Local 23 v Giant Eagle Markets Co, August 3, 2012, McKee, T). In the controlling decision in Rite Aid of Pa, Inc v United Food and Commercial Workers Union, Local 1776, the appeals court found that a similar recognition clause merely established the union’s position as the exclusive bargaining representative of unit employees and defined the range of matters subject to bargaining. It did not purport to include anything resembling the union’s claimed right of access to newly acquired stores. The employer operated grocery and convenience stores in western Pennsylvania, among other places. Certain employees were represented by the union, and the parties were signatories to a CBA covering those employees. In September 2010, the union filed a grievance against the employer alleging that it violated the CBA by denying union representatives access to several recently acquired nonunion grocery stores. The employer took the position that the matter was not arbitrable under the CBA. In response, the union filed a complaint seeking to compel the employer to submit the grievance to arbitration. The union subsequently filed a second grievance that met the same result. On the union’s motion to amend its complaint, the district court concluded that the grievances were not arbitrable as a matter of law. On appeal, the Third Circuit determined that its decision in Rite Aid, which concerned the same type of grievances at issue here, controlled this dispute, rejecting the union’s attempt to distinguish the case at hand. In Rite Aid, the court concluded that the union’s grievances were not arbitrable under the governing CBA because the terms of that agreement were not implicated by those grievances. A right of union access to newly acquired stores could not plausibly be derived from the contract’s recognition clause. As a consequence, the appeals court granted the employer’s motion to dismiss. The case number is 11-2536. Marianne Oliver (Gilardi, Cooper & Lomupo) for Union. Susan G. Flynn (Marcus & Shapira) for Employer. 6thCir: Employer could not withdraw union recognition simply because it reassigned unit members to a non-union facility Substantial evidence on the record supported a decision of the NLRB that a bargaining unit retained its separate identity and remained an appropriate bargaining unit following an employer’s decision to close a unionized facility and assign those employees to an unrepresented facility and withdraw recognition from the union (NLRB v ADT Security Services, Inc, August 3, 2012, Stranch, J). As a consequence, the Sixth Circuit enforced the board’s order that ADT rescind its unilateral actions and recognize and bargain in good faith with the union. For almost 29 years, ADT recognized the union as the exclusive bargaining representative of a unit of service employees at its Kalamazoo facility. In May 2008, the employees were advised that ADT was closing the facility and would consolidate operations at its Wyoming, Michigan facility, and would no longer recognize the union as 7 their bargaining representative. As a result of the change, the employees’ overtime and drive-time entitlements would be decreased, and the rules regarding vacation eligibility also changed. ADT did not notify the union of the changes to the employees’ working conditions. Instead, it sent the union a letter announcing the consolidation of the 14 unionized employees with 27 unrepresented servicemen at the Wyoming facility. Because the union would not be representing a majority of employees at the Wyoming facility, ADT announced it was withdrawing recognition from the union as representative of the former Kalamazoo employees. At the time recognition of the union was withdrawn, there was a collective bargaining agreement in effect. The NLRB ordered ADT to rescind the withdrawal of recognition, extend recognition to the union as bargaining representative of the former Kalamazoo employees, reinstate the CBA without retracting any benefit conferred, and to bargain collectively in good faith with the union. After ADT refused to comply, this enforcement action followed. Withdrawal of recognition. The NLRB did not err in its determination that the 14 former Kalamazoo employees remained an appropriate bargaining unit following the ADT’s withdrawal of recognition. The Sixth Circuit rejected the employer’s assertion that following consolidation of the two facilities, the Kalamazoo employees were no longer a distinct bargaining unit. In evaluating the appropriateness of the board’s designation of a bargaining unit, the appeals court applied a “community of interests” test. In this instance, ADT was required to establish that compelling circumstances overcame the almost 29-year bargaining history between the parties. Although both the Kalamazoo and the Wyoming servicemen had similar skills and duties, they continued to exercise those skills in their own distinct geographical areas. The Kalamazoo servicemen were not “absorbed” or “integrated” into a unit including all servicemen who work out of the Wyoming facility. Further, some of the terms of employment that distinguished the Kalamazoo servicemen from the Wyoming servicemen remained intact following the consolidation. ADT dispatch continued to maintain separate “on call” lists for emergencies in the two service territories. Consequently, there was substantial evidence to support the board’s conclusion that the Kalamazoo employees were not functionally integrated into the Wyoming facility and remained a distinct unit of servicemen. Although common supervision was a factor favoring a determination that the unit had lost its separate identity, the board’s finding that the servicemen were relatively independent from their immediate supervisors was supported by substantial evidence. Here, the servicemen gave consistent testimony that their regular contact with their supervisor was almost exclusively by telephone with only sporadic in-person contact. Consequently, the NLRB did not abuse its discretion in its application of the “community of interests” test, its determination that ADT had shown no “compelling circumstances” to overcome the parties’ long bargaining history, and its conclusion that the former employee unit maintained its integrity following the closure of the Kalamazoo facility, and continued to be an appropriate unit with which ADT was obligated to bargain. 8 The appeals court granted the board’s application for enforcement of its order. The case number is 10-2549. Linda Dreeben for National Labor Relations Board. Bernard P. Jeweler (Ogletree Nash) for Employer. 6thCir: Suit against union for failure to arbitrate improperly brought under LMRDA A teacher’s assistant (TA) improperly filed a claim against her union for its failure to arbitrate her termination under the Labor-Management Reporting and Disclosure Act (LMRDA) when she should have filed the claim under the Labor Management Relations Act (LMRA) and, thus, she failed to state a claim under the LMRA, ruled the Sixth Circuit (Huntley v Ohio Association of Public School Employees, August 15, 2012, Siler, E). In its unpublished opinion affirming a district court’s grant of summary judgment to the union and employer, the court also held that there was no federal jurisdiction over the TA’s remaining claim for breach of the CBA, and that the district court properly denied the TA’s motion to amend her complaint. Judge Helene N. White dissented. The TA was employed by the Economic Opportunity Planning Association of Greater Toledo (EOPA) and was a member of the Ohio Association of Public School Employees (OAPSE). EOPA and OAPSE had a CBA that governed complaints for wrongful termination. Under the CBA, if the employee and union were not satisfied with the EOPA’s written response to a grievance over a termination, the union and employee could, but did not have to, submit the grievance to arbitration. After the TA was fired, the union declined to submit his grievance to arbitration, having decided that the TA’s claims were meritless. The TA then filed suit against EOPA and the OAPSE, contending that the failure to arbitrate violated the LMRA, the CBA, and Ohio state law. The district court granted the defendants’ motion for summary judgment. No LMRDA claim. The appeals court affirmed the district court’s finding that the TA failed to state a claim under the LMRDA. The court noted that the LMRDA applies only to unions, not to employers, so there was no claim under the LMRDA against EOPA. Moreover, the LMRDA did not provide a cause of action against the union, because the LMRA governs claims for failure to arbitrate. Thus, the TA failed to state a claim under the LMRDA. State law and CBA claims fail. Additionally, the appeals court found that the employee’s CBA and state law claims also failed. Even if the loss of the LMRDA claim did not strip those claims of the requisite federal nexus, both claims failed on the merits. The claim against the union for the failure to arbitrate failed because, on its face, the CBA said only that the union and employee, if not satisfied with the employer’s response to the grievance “…may submit a grievance.” Because submitting a grievance to arbitration was optional, there could be no claim against the union for failing to do so. Additionally, the claim against EOPA failed because its duty to arbitrate was never 9 triggered, as OAPSE never submitted the grievance to arbitration. Lastly, the state law claim failed because without a federal nexus, the court had no jurisdiction. Motion to amend denied. Lastly, the court affirmed the district court’s denial of the TA’s motion to amend the complaint to reflect an LMRA count, because the statute of limitations for the LMRA claim had passed. The statute of limitations for a failure to arbitrate claim under the LMRA is six months and, thus, the proper inquiry was when the TA knew that OAPSE would not submit the grievance to arbitration. The TA was terminated on May 20, 2007, and pursuant to the CBA, OAPSE had 20 days after the employer’s written response to submit the grievance. Assuming that every step of the grievance process took the maximum number of allowable days, the court found that the union had until, at the latest, early September 2008 to submit. The limitations period would have expired six months later, in March 2009; however, the TA did not file her claim until May 21, 2009. Thus, the district court properly denied the motion to amend. Dissent. Justice White dissented, finding that the evidence indicated that the union had not fully decided not to submit the grievance until December 10, 2008. A new union president had taken over and was, until that date, reviewing the grievance. Therefore, the dissent argued that the TA would not have known until that date that the union had declined to submit the grievance. Moreover, because neither the TA nor the new union local president ever received the final notice of the union’s decision, the dissent disagreed with the majority’s determination of when she should have reasonably known that the union was not going to pursue arbitration on her behalf. The case number is 11-3345. Percy Squire (Percy Squire Co) for Employee. Kristen E. McKinley (Ohio Association of Public School Employees) for Union. Laura J. Avery (Reminger & Reminger) for Employer. 6thCir: Pre-election agreement between union and employer did not violate NLRA An employer and union did not violate the NLRA when they entered into an agreement setting forth bargaining principles that would go into effect if the employees chose the union as their bargaining representative, the Sixth Circuit ruled (Montague v NLRB, August 23, 2012, Rogers, J.) In denying a petition to review a ruling by the NLRB that affirmed the dismissal of a complaint against the union, the court noted that the Board’s interpretation of the NLRA in terms of the lawfulness of the agreement was reasonable and, thus, could not be set aside. Background. The United Auto Workers union sought to represent employees at the Saint John’s, Michigan facility of the auto parts manufacturer, Dana Corp. The parties, which had a long-standing relationship, entered into a Letter of Agreement (LOA) that set forth ground rules for the upcoming organizing drive and that created a bargaining framework that would govern future negotiations if a majority of workers chose the union. Included in the framework was a promise that the union would not seek to change the current 10 approach to healthcare. The LOA also set forth conditions that would have to be included in future bargaining agreements. After the parties signed the agreement, several workers filed unfair labor practice charges with the NLRB contending that the LOA was an unlawful recognition of the union that interfered with their right to choose or not choose a union. Although the UAW failed to win majority recognition and the plant closed, the case continued and a Board ALJ recommended dismissing the charges. A split panel of the NLRB affirmed the dismissal, finding that the LOA was not a complete CBA, but rather only a framework for future CBA’s. The dissenting member found that the LOA could have led employees to believe that they had no choice but to vote for the union. The majority countered that the employees clearly did not believe that, as they voted against representation. The appeals court noted that it could not overturn the Board’s ruling if it was a reasonable interpretation of the NLRA. In this case, the court found the Board’s ruling to be reasonable. No recognition. Deferring to the Board’s finding that the LOA did not unlawfully recognize the union, the court noted that the LOA explicitly stated that the employer would not recognize the union until the union had won a majority of the votes for the proposed unit. The LOA also stated that the “employee’s freedom to choose is a paramount concern.” Additionally, there was no evidence of an oral agreement constituting “premature recognition” of the union. Thus, the court found that the LOA was not an unlawful recognition of the union. Not a full-fledged agreement. Moreover, the Board reasonably ruled that the LOA was not a full-fledged CBA. Specifically, the appeals court noted the Board’s finding that the LOA required numerous and substantial negotiations that would have had to occur, after the union became the bargaining representative, before the LOA’s provisions would go into effect. Further, the LOA did no more than create a framework for future collective bargaining. Although some of the terms in the LOA were binding on future CBAs, the Board’s ruling was reasonable, finding that the employees were free to reject the union if they did not like the provisions, the appeals court found. Because the employees could have, and did, reject the union, the LOA did not impermissibly interfere with their freedom to choose the bargaining representative. The employees knew what was in the LOA before the election and they could choose whether to reject or accept the union based on that document. Lastly, the court found that a provision in the LOA setting forth a dispute resolution process for violations of the LOA did not interfere with the employees’ choice, because the provision applied only to violations of the LOA, not to violations of future CBAs. Therefore, because the Board’s ruling that the LOA did not interfere with the employees’ choice in violation of the NLRA was reasonable, the court denied the petition for review. The case number is 11-1256. 11 William L. Messenger (National Right to Work Legal Defense Foundation) for Employees. Julie B. Broido for the NLRB. 8thCir: Union’s refusal to enter into agreement with subcontractor was unlawfully intended to force contractor to sign union agreement A union’s refusal to enter into an agreement with a fencing subcontractor was intended to pressure the nonunion contractor with whom the subcontractor worked to sign a union agreement and was, thus, unlawful, ruled the Eighth Circuit (Laborers District Council of Minnesota and North Dakota v NLRB, August 7, 2012, Loken, J). The court denied the union’s petition for review of an order by the NLRB that required the union to cease and desist from attempting to coerce the contractor. Pre-hire agreement. The union entered into a pre-hire Highway-Heavy agreement with a multi-employer group that required the participating employers to contract or sublet work on the highway project only to entities that either signed, or were already signatories to, a union labor agreement. Century Fence Company was a nonunion contractor that bought and delivered fencing work to the job site. Although Century used only union-affiliated subcontractors when working with signatories to the agreement, in 2007 the union began pressuring the signatories not to enter into subcontracts with Century because of its nonunion status. In 2008, the union told Century that if it did not sign a union contract, the union would neither sign, nor renew contracts with subcontractors who did business with Century. Century filed an unfair labor practice (ULP) complaint with the NLRB and, pursuant to a subsequent settlement agreement, the union agreed not to threaten or coerce any subcontractor to stop doing business with Century. In 2010, the newly formed Lake Area, a fencing subcontractor, signed the HighwayHeavy agreement and submitted a new-contractor processing form to the union. Lake Area intended to work with Century and to become a union-affiliated subcontractor, but when the union learned of its affiliation with Century, it refused to sign the agreement with Lake Area. Lake Area filed a ULP charge and the NLRB upheld an ALJ’s finding that the refusal violated the NLRA because it was done to force Century to become a signatory contractor. The union appealed the order. Freedom to contract. As an initial matter, the appeals court rejected the union’s argument that the NLRB order was contrary to the union’s freedom to contract. The court found that the union’s right to refuse a contract for a motive made unlawful by the NLRA was not “unfettered.” The court noted that the NLRA does not require the conduct itself to be unlawful if the underlying motive is prohibited by the Act. In this case, the union’s lawful refusal to enter into a contract with Lake Area was made unlawful by the union’s underlying desire to use that refusal to pressure Century to sign a union contract. The court also rejected the union’s argument that the board order was a directive that the union could not exercise its freedom to contract. The court held that the order merely instructed the union to stop coercing the subcontractor. If that meant that the union would 12 have to sign agreements with subcontractors who worked with Century, “that will be the result of the Union’s prior unlawful actions.” Coercive activity. The union also argued that the board erred in finding that union’s refusal to sign the agreement with Lake Area was coercive because, under Sec. 8(b)(4)(ii)(B) of the NLRA, agreements signed under Sec. 8(f) are purely voluntary. The court, however, noted that the main focus of the inquiry is not the lawfulness of the contested action, but rather the impact of that action on the secondary employer. The board itself has ruled that refusing to execute a CBA may violate the Act if done for unlawful coercive reasons. The fact that the agreement would have been an initial one with Lake Area did nothing to minimize the coercive effect of the refusal to sign the agreement. The court also rejected the union’s argument that its refusal to sign was not economically coercive because Lake Area had no prior union affiliation and had no right to union affiliation. The court took note of the board’s finding that Lake Area had intended to become a union contractor, but that the union’s refusal barred Lake Area from all union work in the area pursuant to the Highway-Heavy agreement. The refusal “crippled” Lake Area’s business plan, deprived it of a “ready supply of trained labor,” and went beyond persuading Lake Area not to work with Century and into the realm of unlawful coercion. Thus, the court denied the union’s petition to review the NLRB order. The case numbers are 11-2848 and 11-3115. Brendan D. Cummins (Miller & O'Brien) for Union. Linda Dreeben for National Labor Relations Board. 8thCir: Death of grievant did not relieve employee of duty to arbitrate grievance The death of a grievant after an employer had agreed to arbitrate his termination grievance but before proceedings had commenced, did not relieve the employer of its duty to arbitrate the grievance, ruled the Eighth Circuit in reversing a federal district court’s denial of the union’s motion to compel arbitration (Sheet Metal Workers Local No 2 v Silgan Containers Manufacturing Corp, August 28, 2012, Melloy, M). The interests of employees whose grievances arise in the course of their employment, but who die before those grievances are resolved, do not diverge from the interests of current employees, noted the court. Thus, the arbitration provision covered workers after their death. Grievance process. The employer and union were parties to a CBA governing the working conditions of unit employees, including a grievance process. Under that provision, employees had the right to file grievances and grievances that were not resolved by the employer and union could be submitted to arbitration. The CBA also provided that discharged workers who wanted to grieve their termination needed to file written protest with the union within seven days of the termination. 13 In February 2010, the grievant was terminated under a provision of the CBA allowing for termination for just cause — dishonesty or intoxication. The union grieved the termination and when that failed, it filed a demand for arbitration. The parties selected an arbitrator and chose November 17, 2010, as the date for the hearing. But the grievant was killed in a car accident on November 12, 2010. Thereafter, the employer refused to continue with the hearing, contending that the employee’s death rendered the point moot. The union filed a motion to compel arbitration that was denied by the district court because the deceased individual no longer fit within the CBA’s definition of employee. CBA protected deceased employee. The Eighth Circuit agreed that the grievance procedure applied only to employees. However, unlike the district court, it found that the deceased grievant fell within the CBA’s definition of employee. The appeals court found that nothing in the CBA indicated that the mandatory arbitration provision ceased to apply when grievants filed a grievance, but died before the hearing. It also did not exclude such claims and the court found that the CBA provided for monetary damages which could be awarded to the deceased worker’s estate. The employer argued that the estate was not a party to the suit, but the court found that the estate was standing in for the grievant. “[J]ust as an employee must submit to mandatory arbitration in life,” the court wrote, “so to must the estate of that employee after his or her death.” The employer cited the U.S. Supreme Court decision in Allied Chemical & Alkali Workers of America v Pittsburgh Plate Glass Co in support of its argument that deceased employees were not covered by the CBA, but the Eighth Circuit found that reliance on that case was misplaced. In Allied Chemical the High Court ruled that employers can refuse to bargain with employees who have ceased employment without expectation of further employment because they have stopped being employees. In that case, however, the Court was discussing retirees, a group that did not share a community of interest with current workers. In contrast, the deceased worker had a community of interest with the current workers. Here, the issue was the employer’s continuing duty to resolve grievances brought by former employees over a dispute that occurred during the worker’s employment. Moreover, because the claim arose while the worker was an employee, the CBA continued to control the issue and mandated arbitration of it. Arbitration nor revoked by agency principles. The appeals court next analyzed whether some other legal principle could revoke the arbitration provision following the worker’s death. The employer argued that under the principles of agency, the union lost the power to represent the employee because agency law bars agents from asserting the rights of a deceased principle. The court, however, found that the union was not the worker’s agent because as opposed to a true principle, the employee could not have overridden the union’s wishes. The union had complete control of the grievance process. Indeed, employees relied entirely on the union to file grievances. Furthermore, once the union took over the grievance process, the employees were only allowed to attend meetings by prior request to the union. Lastly, unlike the agent-principle relationship, in a union-employee relationship, the union represents all represented employees and when deciding whether to bring a grievance, must decide whether doing so would best serve all 14 employees, not just the grievant. Therefore, the court held that agency principles did not revoke the arbitration provision. Thus, because the CBA covered the deceased employee and the mandatory arbitration provision was not revoked by agency laws, the Eighth Circuit reversed the prior denial of the motion to compel and remanded the matter to the district court. The case number is 11-3251. Donald Ray Aubry (Jolley, Walsh, Hurley & Raisher) for Union. Andrew John Martone (Hesse Martone) for Employer. 8thCir: Union charge against employer not baseless; court declines to set aside results of election Substantial evidence supported an NLRB determination that a union’s charge that an employer unlawfully threatened to shutdown its facility if the union won an upcoming election was not baseless or frivolous, ruled the Eighth Circuit in refusing to set aside the results of an election won by the union (Warren Unilube, Inc v NLRB, August 28, 2012, Colloton, S). In view of evidence that employees believed the employer was responsible for a newspaper editorial opposing the union and suggesting the employer might shut down the facility, the appeals court concluded that the union’s unfair labor practice charge against the employer was not baseless or intended as a delay tactic, so as to require that an election be set aside. Election agreement. After a union petitioned the NLRB to be certified as the bargaining representative of a unit of employees, the union and the employer entered into a stipulated election agreement, and an election was scheduled. Two days before the election, an editorial appeared in the local newspaper opposing the unionization efforts and suggesting that if the union won, management could close the facility. The next day, the union filed an unfair labor practice charge alleging the employer had threatened to close its facility if the employees voted in favor of the union. Pursuant to “blocking charge policy,” an NLRB regional director postponed the election and held the union’s petition in abeyance. That same day, the employer’s president issued a memorandum discussing the editorial and disavowing an intention to close the plant, regardless of the outcome of the election. Thereafter, the union requested to proceed with the election, and the parties entered a second stipulated election agreement. Employees voted in favor of the union, and the employer subsequently filed objections to conduct that allegedly affected the election results. Specifically, the employer claimed that the union filed a “baseless” unfair labor practice charge that delayed the election. It also denied responsibility for the editorial. According to the employer, because the union had no basis for its charge and the employer had immediately published a disclaimer, the election should have been held on schedule. The actions of the union and the board destroyed the conditions necessary for a valid election, it argued. 15 The regional director recommended overruling the employer’s objections and the certification of the union. Following the union’s certification, the employer refused to negotiate a collective bargaining agreement. Subsequently, unfair labor practice charges were filed against the employer alleging it unlawfully refused to recognize and bargain with the union. The NLRB declined to reexamine its certification decision and ordered the employer to recognize and bargain with the union. The employer petitioned for a review of that order. Union charge not baseless. Observing that a threat to close a plant is “one of the most potent instruments of employer interference” with employees, the Eighth Circuit concluded that substantial evidence supported the board’s finding that the union charge was not baseless or frivolous. Although the editorial did not attribute its information to any source, given its content and the impending election, it was not unreasonable for the board to accept the union’s assertion that it acted in good faith when it filed the charge against the employer. There was evidence that the employees were talking about the editorial the next day and they all seemed to believe the company was behind it. Moreover, even though the employer issued its disclaimer, the employees continued to hold to that belief. Such evidence suggested that the union’s concern was not baseless. The court also disagreed with the employer’s suggestion that the fact that the union later requested to proceed with the election demonstrated that the allegation was baseless when filed. The rescheduled election occurred nearly a month after the editorial appeared. A union may rationally conclude that a fair election is possible after the passage of time diminishes the impact of the alleged unfair labor practice. Thus, it was not unreasonable for the board to accept that the union followed that course in this instance. Delay tactic. Similarly, the appeals court was not convinced that the board’s eventual dismissal of the unfair labor practice charge showed that the union filed a baseless charge as a delay tactic. A determination by the board that there was insufficient evidence of a violation by the employer came after it conducted an investigation, and did not show that the union had no basis for the charge on the eve of the election, concluded the court. Given the timing of the editorial, its inflammatory content, and the lack of identified sources for the information, the court declined to say that the board’s finding was unsupported by substantial evidence. Blocking charge policy. Finally, the court rejected the employer’s contention that the election should be set aside because the regional director’s postponement of the election violated board policy and gave credence to the union’s charge. Under the NLRB’s “blocking charge policy, an election may be suspended pending resolution of unfair labor claims,” noted the court. Where a charge is filed too late to permit adequate investigation before the scheduled election, the regional director had the discretion to postpone the election, to hold the election and impound the ballots, or to conduct the election and issue a certification prior to an investigation. In this instance, the employer asserted that the union’s charge was not supported by substantial evidence and the election should not have been postponed. However, the 16 appeals court noted that substantial evidence is not a prerequisite to postponement of an election under the board’s policy. Here, there was substantial evidence to support the NLRB’s conclusion that the regional director had a sufficient basis to postpone the election, and that the postponement did not interfere with a free and fair election. The case numbers are 11-2664 and 11-2974. Frederick J. Lewis (Lewis & Fisher) for Employer. Daniel Blitz for NLRB. 10thCir: Employer failed to preserve objections for appeal because arguments not first presented to NLRB Because an employer failed to develop its objections to unfair labor practice charges before the NLRB, those unpreserved arguments could not be heard for the first time on appeal, however meritorious they may be, ruled the Tenth Circuit (Public Service Company of New Mexico v NLRB, August 28, 2012, Gorsuch, N). Under 29 USC Sec. 160(e), the employer had to present objections to the NLRB before they could be considered by the court. Here, the appeals court determined that the employer failed to meet those requirements where arguments presented to the court had not been raised before the NLRB. Moreover, the court determined that the employer’s preserved arguments failed on their merits. This dispute arose when the employee was terminated for violating the employer’s ethics policy and state law when he disconnected a customer’s gas service without obtaining permission from his supervisor. In pursuing the employee’s discharge grievance, his union requested information concerning the discipline imposed on non-union employees who were alleged to have violated the employer’s ethics policy and state law. The employer refused the request. Thereafter, the union filed a charge with the NLRB alleging unfair labor practices. Following months of delay, on the eve of a hearing, the employer relented and handed over to the union all the information it wanted. Nevertheless, the Board found that the employer had acted unlawfully after concluding that the information sought was relevant to the grievance, that the information request was made in good faith, and the employer’s delay in providing the information was unreasonable. The employer was ordered to post a notice informing employees of their rights and the company’s promise to do better. Disciplinary information. In its petition for review of the NLRB’s order, the employer challenged whether the disciplinary information about non-union employees was relevant to the union’s processing of the employee’s grievance. As an initial matter, the appeals court noted that the employer clearly preserved its objection that union already possessed disciplinary information about two non-union supervisors, and sought information about their treatment only to harass the company. Although the employer made a terse twosentence objection, the court ruled that its submission was enough to preserve its claim that information about the discipline of non-union employees was irrelevant because they were not similarly situated to union employees, and the union was obligated to clearly explain the relevance of such information. 17 Moreover, the Board’s opinion suggested that it fully understood both the nature and scope of these two specific objections, noted the court. Consequently, the court held that the employer’s submission presented qualifying “objections” on these two issues under Sec. 160(e), by providing sufficient specificity and clarity to allow the NLRB to bring its expertise to bear. Failure to preserve objections. With respect to other objections, the court determined that the employer failed to preserve those by first presenting its arguments before the NLRB as required by Sec. 160(e). To determine whether Sec 160(e)’s “objection” requirement has been satisfied, the court asks: Was the matter the petitioner seeks to raise here pressed before the board with “sufficient specificity and clarity” so the tribunal was aware it needed to be addressed? Here, the employer presented forceful arguments that whether it treated the employee differently from other employees was irrelevant, and that board precedent required the union to make at least some evidentiary showing that differential treatment exists before it is entitled to discovery. However, the appeals court determined that it had no authority to hear those objections because the employer never presented them to the board. Further, the board’s failure to respond to these arguments also suggested that it did not understand them to be in play. The fact that the employer actually filed three other qualifying Sec. 160(e) relevance objections before the board did not mean that it could pursue on appeal any other tangentially related objections that it wishes. The statute speaks of the need to present each objection in the singular. The point of the statute — to provide the NLRB with a chance to pass on each objection before litigation ensues in the court — would be undone if one objection could sweep in others hidden under its skirt, observed the court. Because Sec. 160(e)’s formal requirement and substantive aim were not met, the appeals court declined to hear the employer’s newly minted objections, whatever their merits may be. The Supreme Court has long held that Sec. 160(e) is a nonwaivable jurisdictional bar to consideration of objections not presented to the NLRB (Woelke & Romero Framing, Inc v NLRB). Preserved arguments. Turning to the merits of the three preserved objections, the court quickly disposed of the employer’s arguments. The employer first asserted that information about discipline of non-union employees is irrelevant because they are not similarly situated to union employees. Although CBAs often impose different standards for the treatment of union workers, in this instance, the ethics policy applying to the employee’s termination applied to union and non-union employees equally. Thus, the records sought by the union bore directly on the theory it sought to prove. With respect to whether the union had to explain the relevance of the requested information to an issue covered by the CBA, the court noted that while there was a kernel of truth to the employer’s assertion, the record contained substantial evidence that the union did in fact timely apprise the employer of the basis for its request. Finally, the employer’s objection that the union’s request was motivated by an improper purpose — the union sought a way around a protective order — also failed. Rather, the NLRB found credible the testimony of a union official that he did not know whether two non-union 18 employees had been disciplined for causing a gas leak. Thus, the employer’s petition for review was denied. The case numbers are 11-9536 and 11-9540. Paula G. Maynes (Miller Stratvert) for Employer. Nichole Lancia for NLRB. Hot Topics in WAGES HOURS Increase in minimum wage could create 100,000 jobs A report published this week by the non-partisan Economic Policy Institute indicated that an increase in the federal minimum wage of $2.65 over the next two years could add as many as 100,000 jobs to the national economy. The report suggested that such an increase would affect up to 28 million workers who would get almost $40 billion in additional wages during that time. The report suggests that those wages would, in turn, expand the U.S. gross domestic product (GDP) by roughly $25 billion, resulting in the creation of approximately 100,000 net new jobs. According to the report, almost 55 percent of the beneficiaries of such an increase would be women. Over the last month, legislation has been introduced in both the U.S House of Representatives and the Senate to increase the minimum wage. BLS report shows 90 percent of wage and salary workers had access to some form of employee leave in 2011 According to a report prepared by the Bureau of Labor Statistics, 90 percent of wage and salary workers had access to paid or unpaid leave at their main jobs in 2011. The BLS also reports that 21 percent of wage and salary workers took paid or unpaid leave during an average week and that those workers took an average of 15.6 hours. The report also noted that 56 percent of wage and salary workers, who would have otherwise had to have taken leave or who had no access to leave, were able to adjust their work schedules or location. These findings are from a supplementary set of questions asked as part of the 2011 American Time Use Survey (ATUS), a continuous household survey that estimates how people spend their time. The data regarding leave were collected as part of the 2011 Leave Module sponsored by the DOL’s Women's Bureau and were collected directly from wage and salary workers. The data thus represent only workers' knowledge on these topics. The BLS found that on average, 59 percent of wage and salary workers had access to paid leave, while 77 percent had access to unpaid leave; 7 percent did not know whether they had leave. Overall, 90 percent of American workers had access to some kind of employee leave. Gender played little role in which workers had access to leave, with 90 percent of male and 91 percent of female workers having access. 19 The report also analyzed the kinds of leave available to workers in various industries. Workers in management, business, and financial operations jobs were the most likely to have access to paid leave (77 percent) and 76 percent of workers in the public sector had access to paid leave, compared with 57 percent of private-sector workers. The report indicates that workers holding only one job were more than 3 times as likely to have access to paid leave than were part-time workers (71 percent compared with 22 percent.) In 2011, 21 percent of wage and salary workers took paid or unpaid leave during an average week and those workers took an average of 15.6 hours of leave. Women (23 percent) were slightly more likely than men (20 percent) to take leave from their jobs during an average week. Of those wage and salary workers who took leave from their main jobs during an average week, 57 percent used only paid leave and 40 percent used only unpaid leave. Three percent of these workers used a combination of paid and unpaid leave. The data also showed that 56 percent of wage and salary workers were able to adjust their work schedules or location of their main jobs instead of taking time off from work in 2011. Among wage and salary workers age 25 and over, 61 percent of those with a bachelor's degree or higher were able to adjust their work schedules or location instead of taking time off from work, compared with only 38 percent of workers with less than a high school diploma. Secretary of Labor Hilda L. Solis said that the DOL is “looking forward to engaging in an in-depth analysis of the survey results.” National Council on Disability recommends phase-out of paying lower wages to workers with disabilities On Thursday, August 23, the National Council on Disability (NCD) issued a report calling for the phase-out of a provision in the FLSA that allows employers who get a certificate from the DOL to pay workers with disabilities less than the federal minimum wage. The report by the independent federal agency would end the Sec. 14(c) program in phases over the next six years. The NCD advises the White House on disability discrimination policy. Recognizing that an immediate end to the program would adversely affect many workers involved in the program, the NCD decided to adopt the phase-out approach. Such an approach, the NCD said, will protect both workers and employers. In the first step, the DOL will be barred from issuing any further issuing 14(c) certificates following the passage of legislation ending the program. During this phase, the NCD would also bar any Individualized Education Plan (IEP) from identifying placement in a subminimum wage program as a permissible goal. In the second phase, all providers who administer 14(c) certificates would be required to phase out of the program within two years. Priority in this phase would be given to individuals who have held a 14(c) 20 certificate for 10 years or less. For individuals who have held a 14(c) certificate for a period of time between 10 and 20 years, the phase out would occur over four years and for individuals who have held a 14(c) certificate for more than 20 years, the phase out would occur over six years. The National Federation of the Blind praised the recommendation. The federation’s president, Dr. Marc Maurer, said that he will “thoroughly review the NCD report and its forthcoming legislative proposal in order to find ways to work toward our common goal of eliminating the unfair, discriminatory, and immoral practice of paying workers with disabilities less than the federal minimum wage.” Republican platform calls for end to Davis-Bacon, card checks and PLAs; promises to pass RAISE Act The Republican party has laid out its approach to labor relations. In the platform unveiled this week at its nominating convention, the GOP promises to repeal the Davis-Bacon Act and to end the use of card-checks and project labor agreements. The platform accuses the Obama Administration of “clinging to antiquated notions of confrontation and concentrating power in the Washington offices of union elites.” Specifically, the platform states that the administration has “strongly supported the antibusiness card check legislation to deny workers a secret ballot in union organizing campaigns.” It also blasts the administrations for using PLAs and accuses it of turning the NLRB into “a partisan advocate for Big Labor, using threats and coercion outside the law to attack businesses.” The GOP’s platform vows to block card check by enacting the Secret Ballot Protection Act, which would also bar employer recognition agreements. The Obama Administration had supported passage of the Employee Free Choice Act (EFCA) early on, which would have contained a card check provision, but has done nothing to attempt to pass the law in the last two years. The platform also vows to pass the RAISE Act, sponsored by Senator Marco Rubio (R-Fla) that would allow employers to negotiate raises with unionized workers while excluding their union from those talks. In addition, the platform calls for a repeal of the Davis-Bacon Act, which sets prevailing wages for public construction projects. In addition, the platform pronounces the GOP support for enactment of a law that would make Right-to-Work the law of the land and praises efforts by Republican governors to diminish the power of public sector unions. “We salute the Republican Governors and State legislators who have saved their States from fiscal disaster by reforming their laws governing public employee unions,” it says. “A Republican President will protect the rights of conscience of public employees by proposing legislation to bar mandatory dues for political purposes.” 21 The Democratic convention is next week and it is expected that the platform will contain more labor-friendly language. LEADING CASE NEWS 2ndCir: Teacher’s claim he was denied tenure in retaliation for FMLA leave revived; fact issue raised as to whether he worked three hours fewer than minimum required for leave eligibility A high school teacher who alleged that he was denied tenure in retaliation for taking FMLA leave presented a fact issue as to whether he worked enough hours to be eligible for leave, despite the fact that pursuant to the governing CBA, he worked three hours fewer that the minimum required by the Act, the Second Circuit ruled in reversing summary judgment in favor of the school district (Donnelly v Greenburgh Central School District No 7, August 10, 2012, Lynch, G). The appeals court also found that the lower court erred in ruling that because the teacher failed to show that he was qualified for tenure under the standard applied to colleges and universities, he failed to present a triable issue of fact regarding his FMLA-retaliation claim. Tenure decision. Hired under a three-year probationary contract, the high school English teacher was assigned to a magnet academy his first year. While there, he had perfect attendance and received the highest overall rating in each of three evaluations. Transferred to a different school for his final two years, he continued to receive good evaluations. In the fall of his third year, however, he took several days of leave in order to recover from gall bladder surgery. When he returned from leave, his performance evaluations began to decline and he received criticism for his excessive absences, including those taken during his medical leave. At the end of the year, his principal did not recommend him for tenure. In denying tenure, the district relied only on the evaluations from the second school. District court’s decision. Alleging that the district denied him tenure in retaliation for his leave, the teacher sued. Calculating his hours worked exclusively by reference to the CBA, a magistrate judge found that the teacher was not eligible for FMLA leave as a matter of law because he had worked only 1,247 hours in the preceding year, three hours fewer than the minimum required under the FMLA. The magistrate then found that even if he were eligible for leave, he did not show he was qualified for tenure under a standard applied to colleges and universities. Finding the tenure issue dispositive, the district court held that the employee failed to present a triable issue of fact regarding his FMLA claim. It did not address the employee’s eligibility under the Act. Hours worked. On appeal, the school district argued that pursuant to the CBA, teachers worked 7.25 hours a day. Because the employee was present 172 days in the preceding school year, the district concluded that he worked 1,247 hours; thus he was ineligible for FMLA leave. Stating that the calculation “cannot stop there,” the appeals court turned to 29 C.F.R. Sec. 825.110(c)(1), noting that it specifically rejects the proposition that a compensation agreement, like the CBA in this case, can conclusively determine the computation of hours required for FMLA eligibility unless it accurately reflects all hours 22 an employee has worked for or been in service to the employer. Thus, the number of hours worked is a factual question, and while the CBA can be considered, it is not determinative. Adopting a standard similar to that expressed by the Sixth Circuit in Staunch v Cont’l Airlines Inc, the court stated that in cases where a plaintiff avers that a relevant compensation agreement, like the CBA, does not accurately reflect all the hours the employee actually worked, the employer has the burden of showing that the employee has not worked the requisite hours. As a result, to succeed on a summary judgment motion, an employer must show that either the hours alleged by the plaintiff could not have occurred or that they are not compensable as a matter of law under the FLSA. Here, the CBA implicitly acknowledged that on occasion, teachers must work outside of the 7.25 hours anticipated. In addition, FMLA regulations expressly note that full-time elementary and secondary teachers often work outside the classroom or at their homes (29 C.F.R. Sec. 825.110(c)(3)). Moreover, the teacher alleged that he worked a total of 1.5 hours before and after class every day. Finding that this claim alone would be enough to shift the burden to the district, the court observed that, in an evaluation of the teacher, the principal corroborated this claim when he wrote that the teacher regularly arrived early and stayed late in the afternoon working with kids “to ensure their success.” Accordingly, the court stated, if the teacher did in fact work an extra half hour a day beyond what the CBA required, he worked more than the three additional hours he needed to demonstrate FMLA eligibility. Integral and indispensable activities. The district next contended that even if the hours the teacher claimed to work beyond those required by the CBA were spent on tasks related to teaching, he failed to show that they were devoted to activities that were an integral and indispensable part of his principal activity of teaching. Noting that the line separating integral and indispensable activities from those that are not is not always clear, the court found that the CBA and the regulations establish that a teacher’s principal work activities, such as preparing lesson plans and grading tests, extend beyond the hours worked in front of a class. The court rejected the district’s argument that because the teacher did not provide details on what he did during the extra hours he claimed to work, he failed to raised a genuine fact dispute about whether he worked three additional compensable hours beyond the CBA’s requirements. “A reasonable jury could conclude that even if a teacher is permitted to go home after seven and a quarter hours, he or she is still required to prepare proper lessons and formulate and grade examinations, and that the District will not accept as an excuse for inadequate lesson plans and ungraded student papers that the teacher did all he or she could in the time required under the CBA.” According to the court, the law does not prevent teachers who work at home from ever counting that time for purposes of FMLA eligibility. Thus, finding that the teacher raised a fact issue regarding whether he was qualified for FMLA leave, the court held that the district was not entitled to summary judgment on this issue. 23 Retaliation. The district next argued that the lower court correctly ruled that the teacher failed to show that he was qualified for tenure under the standards announced by the Second Circuit’s decision in Zahorik v Cornell Univ, and because he was not qualified for his position, he could not establish a prima facie case of FMLA retaliation. Noting that Zahorik is applicable only in the context of challenges to university tenure denials, the court declined to apply it to teachers denied tenure in the elementary or secondary schools. Rather, the teacher demonstrated that he held the basic qualifications to be eligible for promotion. He held the necessary education and licensing credentials to serve as a teacher and he worked as a teacher for the necessary period of time to be considered for tenure. Of the nine performance reviews he received, he received the highest evaluation possible in six. The remaining three all occurred after he took leave. Consequently, he established that he was qualified for the position. Finally, the court found that an adverse employment action occurred giving rise to an inference of retaliatory intent. Before his medical leave, the employee’s evaluations were extremely positive; after his leave, the evaluations deteriorated. Moreover, the negative evaluations specifically noted his excessive absences, including those taken pursuant to the FMLA (assuming his eligibility). Thus, the court concluded, the employee established his prima facie case. The case number is 11-2448-cv. William D. Frumkin (Sapir & Frumkin) for Employee. Caroline B. Lineen (Rutherford & Christie) for Employer. 3rdCir: Court upholds denial of class certification in suit alleging Wal-Mart contracted with janitorial service companies in scheme to avoid wage standards by using immigrant labor A federal district court properly rejected final certification of an FLSA collective action filed by janitorial workers who were hired by cleaning service companies under contract to Wal-Mart, ruled the Third Circuit (Zavala v Wal Mart Stores Inc, August 9, 2012, Smith, D). Considering the numerous differences among members of the proposed class, the appeals court concluded that the plaintiffs had not met their burden of demonstrating that they were similarly situated. Moreover, the appeals court also rejected RICO and false imprisonment claims filed against the retail giant. RICO claims. According to the plaintiffs, Wal-Mart paid its contractors with full knowledge that they were hiring illegal immigrants to work in its stores. The complaint alleged that two senior Wal-Mart executives understood that the contractors were hiring illegal immigrants, that contractors would pick workers up at the airport and transport them across state lines to work, and that workers were permitted to sleep in stores. The complaint also alleged that contractors advertised in foreign newspapers for Wal-Mart cleaning jobs. Additionally, the plaintiffs claimed they were coerced through threats to report their immigration status to authorities. However, the record indicated that the plaintiffs did not work exclusively for Wal-Mart, nor did the company hire its cleaners 24 exclusively from the pool of illegal immigrants. Thus, the appeals court upheld the district court’s dismissal of the plaintiffs’ RICO claim that Wal-Mart engaged in a scheme to encourage the hiring of illegal workers in order to reduce costs and increase profits. FLSA decertification. The district court’s decision to decertify the FLSA collective action came after an examination of questionnaires filed by the plaintiffs revealed that the opt-in plaintiffs worked for dozens of different stores, for numerous different contractors, at various pay rates and methods. Their attempt to show they were similarly situated by pointing to a Wal-Mart maintenance manual which set uniform standards for cleaning stores failed. Similarly, the plaintiffs were unable to show that Wal-Mart exercised control over the proposed class and that this control was common across stores. The plaintiffs also asserted that Wal-Mart exercised the right to hire and fire cleaning crews; however, they conceded that cleaners had limited contact with store managers and they did not receive training from Wal-Mart. Noting that a “stricter standard” applied to final certification of an FLSA collective action, the Third Circuit agreed with the district court that the plaintiffs did not meet their burden of demonstrating they were similarly situated. The plaintiffs had to satisfy their burden by a preponderance of the evidence, the appeals court held — a conclusion buttressed by the Supreme Court’s presumption, as set forth in Grogan v Garner, “that this standard is applicable in civil actions between private litigants unless ‘particularly important individual interests or rights are at stake.’” Here, the similarities among the proposed plaintiffs were too few, and the differences between them were too many. Being similarly situated does not mean simply sharing a common status, like being an illegal immigrant. Rather, it means that one is subjected to some common employer practice that, if proven, would help demonstrate a violation of the FLSA. While common links — a scheme to hire and underpay illegal immigrant workers, a uniform maintenance manual, and supervision by store managers — were relevant, they were of minimal utility in streamlining resolution of the cases. Putative class members worked in 180 different stores in 33 states and for 70 different contractors. Also, individuals worked varying hours and for different wage rates, depending on the contractor that employed them. Given the significant differences among the individual claimants and the nature of their employment, the appeals court agreed with the district court that the plaintiffs did not meet their burden of demonstrating that they were similarly situated. Involuntary servitude. With respect to their involuntary servitude claim, the court noted that the plaintiffs presented evidence of some difficult working conditions, but they did not allege that they were held in a labor camp or forced into daily labor by a religious sect. Moreover, claims that the plaintiffs were threatened with deportation were likewise insufficient to constitute involuntary servitude. Although the plaintiffs alleged that they were often kept beyond the end of their shifts to finish their work, they did not claim that they were forced to remain once that work was finished. The record demonstrated that the plaintiffs often switched jobs, freely moving to different employers in different cities. 25 Thus, the appeals court concluded that the plaintiffs failed to adequately plead the RICO predicate of involuntary servitude. False imprisonment claims. The plaintiffs’ false imprisonment claims rested on WalMart’s practice of locking store exits while they worked after stores closed at night and on weekends. According to the plaintiffs, managers were often unavailable to open the doors; on occasion, they were not even in the store. Although the false imprisonment claims survived Wal-Mart’s initial motion to dismiss, the retailer later offered affidavits asserting that it locked its doors at night to provide security for its staff and merchandise, that managers were often available to unlock doors, and that it had accessible emergency exits. Also, deposition testimony showed that the plaintiffs could and sometimes did leave for breaks. Moreover, Wal-Mart provided declarations that “emergency exits” were properly marked and were not obstructed. The district court found Wal-Mart’s assertions regarding the presence of emergency exits dispositive, as false imprisonment cannot occur where there is a safe alternative exit. The appeals court agreed, and expanded on the lower court’s analysis. The majority of the plaintiffs’ false imprisonment claims failed because the workers impliedly consented to their “imprisonment,” concluded the appeals court. From the very beginning, the plaintiffs were aware of Wal-Mart’s policy to lock the main doors of its stores. Nevertheless, they chose to continue coming to work. Even where plaintiffs alleged that they became ill and could not leave before the end of the shift, the court noted that their complaints were resolved by the availability of emergency exits. Thus, the district court’s decision was affirmed. The case number is 11-2381. James L. Linsey (Linsey Law Firm) for Employees. David P. Murray (Willkie, Farr & Gallagher) for Employer. 3rdCir: Despite history of attendance problems, employee discharged seven days after calling off work from ER where her mother was taken moves forward on FMLA claims In a split decision, the Third Circuit ruled that an employee with prior attendance and scheduling problems who was discharged seven days after she called off work from the emergency room where her mother had been taken by ambulance could proceed on her FMLA retaliation and interference claims (Lichtenstein v University of Pittsburgh Medical Center, August 3, 2012, Van Antwerpen, F). The employee had raised genuine fact questions of whether her notice to the employer was adequate, her invocation of FMLA rights was a negative factor precipitating her termination, and the employer’s justification for its action was pretextual. The appeals court thus vacated a lower court’s grant of summary judgment in the employer’s favor. Judge Ambro dissented. The employee was initially hired as a research assistant and later transferred to one of the employer’s other hospitals, where she worked as a psychiatric technician. She was fired 26 four months later while still in her probationary period. During her short tenure, she had a history of attendance, tardiness, and scheduling problems. The employer claimed the last straw was on December 30, when she arrived several hours late and left several hours early (she was sometimes scheduled to work 16-hour shifts). The employee, however, asserted that she was fired because she had called a nursing supervisor on January 3 to advise her that she was at a hospital emergency room, where her mother had been taken by ambulance, and would be unable to work that day. She also requested leave again on January 7. The employee filed FMLA interference and retaliation claims, but the district court granted summary judgment to the employer on both claims. The employee appealed. The Third Circuit concluded that the employee presented sufficient evidence to proceed on both claims. Because the employee established that she was entitled to take FMLA leave on January 3 and/or January 8, and that the employer denied her right to do so, the circuit court readily concluded that she stated a prima facie FMLA interference claim. Notice requirement. In rejecting the employee’s FMLA retaliation claim, the district court concluded that she failed to establish the requisite notice. The appeals court disagreed. It was undisputed that the employee’s mother suffered a sudden, severe, and unexpected health condition on January 3 that required her to remain in the hospital for over a week?a serious health condition that entitled the employee take FMLA leave on that date. The employee also correctly followed the employer’s call-off procedure by calling a nursing supervisor soon after she arrived at the emergency room. This was enough to raise a genuine dispute of whether the employee notified the employer as soon as practicable under the facts and circumstances (as required in the case of unforeseeable leave). Moreover, the employee gave specific notice of a serious medical condition. As the court emphasized, the employee told the nursing supervisor that she was currently in the emergency room, that her mother had been brought to the hospital by ambulance, and that she would be unable to work that day. The proper question is not whether the information conveyed to the employer necessarily rules out non-FMLA scenarios, but rather, whether the information permits the employer to reasonably determine whether the FMLA may apply, the appeals court noted. It doesn’t matter that people in such circumstances might not require in-patient care as defined by the FMLA. Because many people in such circumstances do require such care, a reasonable jury could conclude that reasonable notice was given under the circumstances. Moreover, the adequacy of the notice given was consistent with the guidance set forth in 29 CFR 825.303(b). The employee “stated that her mother was still at the hospital, which implied ‘continuing care,’ and it could reasonably be inferred that a person brought by ambulance to an emergency room and remaining at the hospital is ‘unable to perform daily activities,’” wrote the court. Thus, there was a genuine dispute about whether the employee’s call to the nursing supervisor met this standard, and her failure to provide more information when she returned to work the next day did not defeat her claim at this stage. 27 The court rejected the employer’s assertion that the information provided by the employee fell short of showing she was needed to care for her mother. She told the employer that she was “currently in the emergency room” with her mother and “unable to work that day.” From these statements, a reasonable fact-finder could infer the employee was seeking leave to care for her mother. An employer does not have to have a doctor‘s report “to realize that a person rushed to the hospital in an ambulance will likely receive ‘psychological comfort and reassurance’ by the presence of their loved ones,” a permitted basis for FMLA leave. Nor did it matter whether the employer knew if the employee was an only child or there were other family members at the hospital available to care for the employee’s mother. Finally, the employee’s letter indicating she was needed to care for her mother after she was released from the hospital did not imply she did not care for her earlier, on January 3. Causation. The employee also presented evidence sufficient to raise an inference of a causal link between her FMLA leave and her termination. She was terminated seven days after she invoked her right to FMLA leave and three days after her supervisor returned from vacation. As the employer noted, she would have been discharged earlier if her supervisor’s plans had not been thwarted by the employee calling off on the first day she and her supervisor were scheduled to work the same shift, when the supervisor had intended to fire her. This temporal proximity was sufficient to show causation. In addition, there was evidence that the employer viewed the employee’s January 3 absence as a negative factor in its termination decision. There was also evidence showing that the supervisor was on notice of the employee’s request for FMLA leave, despite the employer’s assertions otherwise. Thus, the employee met the prima facie causation requirement. Pretext. The employer asserted that the employee was fired due to her chronic tardiness and absenteeism, and that the last straw was her late arrival and early departure on December 30. However, the employee offered evidence belying the employer’s key assertions that December 30 was the final straw and that the supervisor made the decision to discharge the employee prior to her absence on January 3. Notably, the only evidence that the discharge decision was made prior to the employee’s FMLA leave request on January 3 was the supervisor’s own testimony, and she had contradicted herself on this very point. Although the lower court found this timing issue immaterial, the appeals court found it critical. The employer was aware of the employee’s performance deficiencies before January 3, but did not fire her until after her leave that day. Although the employer asserted that the delay was merely because the supervisor went on vacation and did not have an opportunity to fire her sooner, the supervisor’s own testimony raised serious doubts about this contention. Because the timing of the discharge decision could give rise to the inference that she would have not been terminated had she not taken leave, the employee met her burden of showing pretext.. The case number is 11-3419. Charles H. Saul (Margolis Edelstein) for Employee. John J. Myers (Eckert, Seamans, Cherin & Mellot) for Employer. 28 4thCir: Executive assistant to CEO of real estate investment trust was an exempt administrative employee The executive assistant to a senior executive for a real estate investment trust qualified as an exempt administrative employee, ruled the Fourth Circuit in an unpublished opinion (Altemus v Federal Realty Investment Trust, July 31, 2012, per curiam). Although salary alone is not dispositive under the FLSA, the appeals court concluded that the employee’s high salary created doubt as to whether she fell within the scope of the intended protected class in light of the legislative goals of the Act. The employee was the sole executive assistant to the company’s CEO and COO. The employee alleged that she worked in excess of 40 hours per week during her tenure but was not provided overtime compensation. Although there were 10 to 14 executive assistants employed by the company during her tenure, she was the only one classified as exempt. She was highly compensated with a base salary during her last three years in excess of $84,000 plus an annual bonus. Additionally, the CEO would routinely give her a $5,000 personal check at the end of the year. In contrast, the base salary of other executive assistants was less than $60,000. Moreover, the employee was the only executive assistant who participated in the employer’s 15 percent annual bonus pool, while the other executive assistants were in a seven percent bonus pool. The employee was also the only executive assistant given stock options. Primary duty. The employee coordinated the CEO’s travel arrangements (he spent approximately 30 percent of his time on business travel). She monitored his calendar, his email, and his communications while he was away from the office. She also screened incoming calls, coordinated meetings, prepared slides and handouts for meetings, and assisted with the CEO’s participation on external boards and professional organizations, all of which was necessary for the smooth administration of the CEO’s office. According to the employee, however, her duties performing personal work for the CEO and his family required 75 to 80 percent of her time. The district court had rejected the employee’s argument that the “50 percent rule” governed its analysis of her primary duty, finding that employees may qualify for the FLSA’s administrative exemption if they devote less than half of their time to administrative duties. The lower court also rejected the employee’s contention that she spent only 20 to 25 percent of her time completing administrative duties directly related to the management of the company and exercised little discretion, finding that the record contradicted this proposition. Thus, the court ruled the employee fell within the FLSA’s administrative exemption and was not entitled to overtime. The Fourth Circuit affirmed, concluding the district court did not err in finding that the employee’s primary duty related to the management of the company rather than the CEO’s personal tasks. Despite the employee’s claims that she spent 75 to 80 percent of her time performing personal tasks for the CEO, she did not allege that such work supplanted her administrative tasks. 29 Discretion and independent judgment. The record established that the employee had significant responsibilities as the sole administrative assistant to the CEO of a large company. Her performance reviews prepared by the CEO reflected the high level of independence and discretion she enjoyed. Moreover, the fact that she completed her administrative tasks while the CEO was out of the office on business travel approximately 30 percent of the time was further evidence of her exercise of independent judgment and discretion. In addition, the employee was paid a salary commensurate with her level of responsibility. Taking bonuses into account, her salary was nearly twice that of the company’s nonexempt assistants. This salary disparity further supported a finding of exempt status. Thus, the appeals court again found the district court did not err. Consequently, the district court properly awarded summary judgment in favor of the employer on the employee’s overtime claims. The case number is 11-2213. Laurence S. Kaye (The Kaye Law Firm) for Employee. Christine Nicolaides Kearns (Pillsbury Winthrop Shaw Pittman) for Employer. 6thCir: Deputy clerk of city council, employed by legislative body and outside civil service laws, excluded from coverage under FLSA A city council deputy clerk was unable to bring a suit for minimum wage and overtime compensation for the three-month period in which he did not receive a regular paycheck because he was excluded from coverage under the FLSA and corresponding state law under the “legislative employee” exclusion, ruled the Sixth Circuit (Ellington v City of East Cleveland, August 6, 2012, Cleland, R). The appeals court noted that although this was its first opportunity to interpret and apply the “legislative employee” exclusion, the statutory language was unambiguous: because the deputy clerk was employed by a legislative body of a political subdivision of the state and was not subject to civil service laws, he was excluded from FLSA coverage, even though he was not a policymaker or on the staff of an elected official. As a result of a political squabble between the mayor and city council, an employee appointed to the position of deputy clerk did not begin receiving regular paychecks and compensation for unpaid wages for three months, until the public officials resolved their dispute. A year later, a state-court sponsored arbitration panel awarded damages to the employee. The city appealed that award. Ultimately, the state court action was dismissed in favor of a federal suit in which the employee sued the city for its failure to issue him paychecks for the three-month period, in violation of the FLSA’s minimum wage and overtime provisions as well as state law. The district court determined that the employee was subject to the “legislative employee” exclusions to the federal and state minimum wage and overtime provisions. 30 Legislative employee exclusions. On appeal, the employee challenged the district court’s finding that the “legislative employee” exclusions of the FLSA and state law applied to his position as deputy clerk. Under Sec. 203(e)(2)(C)(ii), individuals who work for a state or a political subdivision are not employees subject to the FLSA if they are not subject to civil service laws and are appointed to a policymaking position by elected officials, among other exclusions. The employee did not contest the district court’s conclusion that the first two elements of the exclusion were satisfied. Both sides acknowledged that the employee was employed by a political subdivision of the state, and that the civil service laws did not apply to his position as deputy clerk. However, the employee argued that the district court erroneously found that he was a legislative employee. The Sixth Circuit rejected the employee’s argument that the district court applied the wrong analysis and that it should have applied the “personal staff” exclusion of Birch v Cuyahoga Cnty Probate Ct. The appeals court determined that Birch was not controlling in this case and to accept its “personal staff” analysis would render the “legislative employee” exclusion mere surplusage in the FLSA. Legislative body. Because the city council was undoubtedly the city’s legislative body, the exclusive inquiry with respect to the third element was whether an employment relationship existed between the employee and the city council, declared the appeals court. In this instance, the economic realities of the relationship between the employee and the city council overwhelmingly supported a finding that an employment relationship existed. The city council had substantial authority to hire and fire the employee; it interviewed him; it offered him the deputy clerk position; and it worked to ensure that he was compensated for his services. Also, authority to remove the employee from his position was vested in the city council. Further, his duties and work assignments directly corresponded to city council activities. Moreover, the employee’s lack of involvement in the development of legislation was immaterial to determining whether he was an employee of the city council. Similarly, the purported administrative and clerical nature of his duties did not alter the employment relationship determination. Consequently, the Sixth Circuit ruled that the district court correctly concluded that the deputy clerk was employed by the city council, and so he was not an “employee” within the meaning of the FLSA. Similarly, because the Ohio Minimum Fair Wage Standards Act expressly adopted the FLSA’s definition of “employee,” the appeals court ruled that the deputy clerk did not qualify as an employee subject to the benefits of Section 34a of the state law. The case number is 11-3700. Bruce B. Elfvin (Elfvin Besser) for Employee. Ronald K. Riley (City of East Cleveland) for Employer. 31 6thCir: Named plaintiff’s collective action properly dismissed for failure to file written consent; action properly decertified as plaintiffs not similarly situated In an unpublished decision, the Sixth Circuit affirmed a district court order decertifying an FLSA collective action after it determined that the potential opt-in plaintiffs were not similarly situated (Frye v Baptist Memorial Hospital, Inc, August 21, 2012, Cook, D). The appeals court also affirmed the district court’s grant of summary judgment to his former employer due to his failure to file a written consent within the statute of limitations. Although the requirement that a named plaintiff in a collective action file a written consent may seem redundant, the FLSA’s mandate was clear, observed the appeals court. Consequently, because the employee did not file a written consent within the Act’s two- and three-year statutes of limitations, his claim was properly dismissed. Pay policy. The employee, who worked as a nurse, filed a collective action asserting that his employer’s policy of automatically deducting (auto deduct policy) pay for employees’ lunch breaks violated the FLSA’s requirement that employees be paid for all time worked. Although the district court initially granted conditional certification, following discovery it decertified the collective action, finding that the employee failed to present substantial evidence that the potential plaintiffs were similarly situated. Considering the factors addressed in O’Brien v Ed Donnelly Enterprises, Inc, the court noted the varied job duties of the opt-in plaintiffs, and the different “exception procedures” used to ensure compensation for work performed during meal breaks. Further, the court found that the employee failed to rebut the hospital’s formal policy of compensating for all time worked with evidence of a de facto policy to the contrary. Many opt-in plaintiffs testified that the employer paid them for time claimed through the exception procedures. On appeal, the Sixth Circuit concluded that the district court properly exercised its discretion in weighing the O’Brien factors and granting decertification. The district court recognized that an auto deduct policy, without more, does not violate the FLSA. Deposition testimony offered by the employee showed that some opt-in plaintiffs did not know their compensation rights with respect to interrupted meal breaks, others voluntarily declined to report work performed during meal breaks and still others lunched at their workstation without realizing that it entitled them to compensation. However, such evidence was indicative of individual FLSA violations, but failed to demonstrate similarly situated plaintiffs experiencing a common injury. Unrebutted was the district court’s finding that the vast majority of opt-in plaintiffs knew of the employer’s exception procedures, were paid for time reported via those procedures, and were not discouraged from reporting work performed during lunch breaks. Written consent. Additionally, the Sixth Circuit agreed with the district court that the employee did not file the necessary written consent within the FLSA statute of limitations. To bring a collective action, a plaintiff must file a written consent to opt-in to the collective action. The employee received his last paycheck from the hospital on April 27, 2007, but failed to file a written consent to the collective action. In this instance, the employee argued that the FLSA does not require named plaintiffs, such as himself, to file written consents. However, the appeals court noted that the plain language of 29 U.S.C. 32 Sec. 256(a) does. Courts construe the language of that provision to require a named plaintiff in a collective action to file a written consent to join the collective action. The court rejected the employee’s argument that it should excuse his claim from the written consent requirement because the district court decertified the action. The employee asserted that the decertification order acted as an amended pleading, converting this action into an individual claim. However, the employee’s complaint unambiguously signaled his intent to pursue a collective action under the FLSA, so he needed to comply with the written consent requirement within the statute of limitations. Moreover, the appeals court concluded that the employee’s unsigned deposition testimony did not constitute the employee’s written consent. Further, his retainer agreement was signed well after the expiration of the FLSA’s two- and three-year statute of limitations and so could not be considered the filing of written consent. Finally, the filing of a collective action complaint signed by his attorney did not satisfy the FLSA’s written consent requirement. The case number is 11-5648. Alan G. Crone (Crone & McEvoy) for Employee. Paul E. Prather (Littler Mendelson) for Employer. 7thCir: Employees’ settlement of wage claims did not moot appeal of decertification of class and collective actions The Seventh Circuit denied an employer’s motion to dismiss the appeal of a trial court’s decision to decertify a Rule 23 class action after the named plaintiffs had entered a settlement of the suit (Espenscheid v DirectSAT USA, LLC, August 6, 2012, Posner, R). The appeals court rejected the employer’s contention that the suit became moot after the settlement because the plaintiffs suffered no injury as a result of the trial court’s denial of certification. Moreover, the court held, there was no relevant difference between the collective and class actions with respect to the plaintiffs’ appeal of the decertification. If appeals such as these were held to be precluded on standing grounds, there would be no judicial economies, the appeals court reasoned, since if the named plaintiffs exit the scene, then another class member can step forward and take their place. The named plaintiffs were satellite installation technicians who brought nationwide class and collective actions against their employer for uncompensated overtime. After initially granting certification of the class and collective actions, the district court determined that the classes were unworkable and decertified them, leaving the claims to proceed as individual suits. Thereafter, the plaintiffs settled their claims, and the suits were dismissed. However, the settlement reserved the plaintiffs’ right to appeal the decertification. The plaintiffs appealed, and the employer sought dismissal of the appeal on the ground that the plaintiffs suffered no injury as a result of the denial of certification, and so the federal courts lost jurisdiction of the case. 33 Incentive rewards sought. On appeal, the plaintiffs pointed to a provision of the settlement agreement, which stated that they were seeking an incentive reward for their services as the class representatives. This reward was contingent on certification of the class, so the prospect of such an award gave them a tangible financial stake in getting the denial of class certification revoked and to entitle them to appeal that denial, the plaintiffs argued. The Seventh Circuit agreed. It observed that a settling plaintiff would be an adequate class representative if there was no significant conflict of interest and the prospect of an incentive award was sufficient to motivate him to assume the risks of serving as class representative and discharge the duties of the position fully. An important motivating factor is that if the class action suit fails, no incentive award will be made, while if it succeeds, the award may be larger. Moreover, the court noted that judicial economy will rarely be served by preventing the settling plaintiff from appealing. If the class is certified as a result of the appeal but the plaintiff is replaced as class representative, still the efforts that he previously expended on behalf of the class might entitle him to a modest incentive award. Therefore, the employer’s motion to dismiss the appeal for want of jurisdiction was denied. The case number is 12-1943. Timothy D. Edwards (Axley Brynelson) for Employee. Miguel A. Estrada (Gibson, Dunn & Crutcher) for Employer. 7thCir: Account manager terminated for poor performance after his manager accompanied him on a drive-along with just one-days’ notice, could pursue FMLA claims An account manager who took several days of FMLA leave over a two-month period due to a heart condition, and was subsequently terminated after his sales manager accompanied him on a drive-along with just one-days’ notice, could pursue his FMLA interference and reprisal claims, ruled the Seventh Circuit (Pagel v TIN Inc, August 9, 2012, Kanne, M). Reversing the district court’s dismissal of his claims on summary judgment, the appeals court held that despite the lower court’s finding that the employer had a nondiscriminatory reason for discharging the employee, the evidence revealed that the drive-along may have been nothing more than a set-up. In the summer of 2006, the account manager began experiencing chest pain and labored breathing. After two doctor’s appointments in July, he was ordered to undergo a two-day stress test. The test revealed a septal wall ischemia — a blockage in a portion of his heart. Thereafter, he was admitted to the hospital overnight for an angioplasty and stent placement and advised to rest for several days. His symptoms returned the following week and he was admitted to the hospital for two nights. A CT Scan revealed an unrelated mass in his left lung. A subsequent PET Scan of the mass was negative. Five days before his angioplasty, the account manager was counseled about his performance. His sales manager told him that his sales revenue and volume had declined 34 over the past two years and that his year-to-date numbers were the worst yet. He was also berated for making the second fewest daily sales calls. Finally, he was advised that he risked termination if his performance did not improve. He vigorously disputed the manager’s underlying data, arguing that there were numerous sales of which he was unaware and that the per-day calculations inaccurately included days that he received FMLA-qualifying treatment. While the account manager was in the hospital for his PET Scan, his sales manager notified him that he would be evaluating his performance the following day during a “sales ride.” Because the employee had no prior plans to be in the area selected by his supervisor, he hastily attempted to schedule calls and ultimately was only able to arrange one call. The ride-along did not go well and as a result, he was informed that he was being terminated for poor performance. Leave entitlement. The account manager sufficiently established that he suffered from a serious health condition that made him unable to perform his job functions, and thus was entitled to FMLA leave, ruled the appeals court. As to the employer’s assertion that his PET Scan did not qualify as a serious health condition, the appeals court emphasized that the employee’s serious health condition required inpatient stays in the hospital on two occasions. His inpatient care on those nights qualified his heart ailment as a serious health condition. Moreover, although he apparently made a few phone calls to customers during his recovery, he could not fully perform the essential function of visiting existing and prospective customers. Indeed, he would not have been provided a company car if calling on customers required nothing more than a phone call. A triable fact issue also existed as to whether the account manager gave sufficient notice of his intent to take leave. He asserted that he spoke with his sales manager about his chest pain prior to both his July appointments and that he believed he discussed his upcoming two-day stress test with him in early August. Although his memory was “fuzzy” about these discussions, he definitively stated that he both phoned and emailed his manager about his need for leave prior to the angioplasty. And, although the account manager’s description of his notice was ambiguous, the sales manager himself admitted that he was aware of the employee’s chest pain and that the employee told him that he was going to be in the hospital. Interference. The district court erroneously held that the account manager was undisputedly discharged for poor performance rather than for taking leave, ruled the appeals court. Significantly, there was evidence in the record which reflected that the employee was fired in part because he failed to meet sales expectations, even though he had missed a number of days for FMLA treatment. There was also evidence that the sales manager relied on inaccurate data in finding that the account manager failed to meet certain reporting requirements. Although the employer presented evidence showing that the employee was terminated for poor performance, the district court erred in accepting as undisputed it’s argument that the employee’s disastrous performance during the manager’s ride-along was a legitimate, nondiscriminatory ground for his termination. 35 Rather, the appeals court found credence to the account manager’s assertion that his performance during the ride-along should not be considered because the sales manager set him up to fail. Notably, there was undisputed evidence that account managers need one week to set up and prepare for a sales call. Thus, the one day he was given to schedule sales calls guaranteed poor performance. Moreover, he was not required to show that he objected to the sales manager’s ride-along at the time the request was made. First, nothing required him to have objected as employees routinely comply with a superior’s request regardless of how unfair he may perceive the request to be. Moreover, the he was already “on thin ice” with the manager. Any failure to object also did not change the inference that the sales manager’s request looked suspicious. A reasonable jury could view this evidence as the manager setting the employee up for failure. Further, the appeals court rejected the employer’s assertion that it had other independent grounds to find the account manager’s performance to be unacceptable. Specifically, it argued that his sales revenue and volume had declined, he had identified no new target customers, and he did not contact two prospective customers in his territory. However, as noted by district court, which relied solely on the ride as a nondiscriminatory reason for the discharge, much of the other evidence of poor performance was disputed. FMLA Reprisal. The account manager similarly presented enough evidence of pretext to establish a causal link sufficient to defeat summary judgment on his reprisal claim. Significantly, undisputed evidence suggested that account managers needed one week to schedule and fully prepare for a customer visit. Thus, the one-day notice he was given looked like nothing more than a set up. Although poor performance could certainly be a valid, nondiscriminatory basis for his termination, a triable fact issue existed as to whether that was the true reason his discharge. The case number is 11-2318. Robert J. Hanauer (Cusack, Fleming, Gilfillan & O’Day) for Employee. Christopher J. DeGroff (Seyfarth Shaw) for Employer. 7thCir: Salesperson did not put employer on notice of need for FMLA-qualifying leave, was terminated for faltering sales; FMLA interference and retaliation claims fall short A sales associate for a homebuilder failed to provide sufficient “inquiry notice” of her need for FMLA leave to compel the employer to inquire further into whether she was seeking FMLA-qualifying leave to care for her ailing parents, the Seventh Circuit held (Nicholson v Pulte Homes Corp, August 9, 2012, Sykes, D). Moreover, the record evidence showed the employee was discharged because she didn’t make a single sale for several months running — not because she requested FMLA-protected leave. Therefore, her FMLA interference and retaliation claims were properly disposed of on summary judgment, the appeals court held, affirming the court below. 36 Failing health, falling sales. The employee had assumed caretaking duties for her ailing parents; her father suffered from leukemia, and her mother was later diagnosed with kidney failure. She made occasional references to her parents’ illnesses at work, but the only inkling she gave that she needed to take FMLA leave to care for them was a single comment that she might have to take leave a few months down the road when her father underwent chemotherapy. Nicholson never indicated that she needed time off to care for her mother (in fact, she told her supervisor that she was driving her mother to medical appointments on her days off and that she could not work outside her normal hours because of her responsibilities to her parents). However, prior to her employer’s decision to discharge her, the employee had requested only a single day off, to attend a doctor’s appointment with her father — a request that her supervisor granted. Meanwhile, the employee had been put on a performance improvement plan after missing her sales quota for several months in a row and displaying a poor attitude. On June 22, after the employee failed to make a single sale in the previous two months, company executives decided to terminate her before her PIP expired. They planned to break the news on the 24th, at the end of the week, after they arranged coverage for her sales office. On the morning of the 23rd, the employee called in to report that she would not be in that day because she had to take her mother to the emergency room. She was excused for her absence, but was discharged the next day, as planned. The employee assumed at the time that she was fired for failing to meet the terms of her performance improvement plan, she acknowledged. But she filed an FMLA suit nonetheless, alleging unlawful interference and retaliation. The lower court granted summary judgment in the employer’s favor, concluding that the employee provided insufficient notice of her intent to take FMLA leave; also, because she never engaged in FMLA-protected activity, she could not prevail on her retaliation claim. Insufficient notice. Concluding that the employee did not put the employer on adequate notice of her need for FMLA-qualifying leave, the Seventh Circuit affirmed. She did not explicitly inform the employer that she needed time off to care for her parents; at most, the appeals court noted, “she made a few casual comments to her supervisors about her parents’ ill health.” Also, at the time the discharge decision was made, the employee had requested only one day off to care for her father, a request that was granted. Therefore, she could not establish that her employer interfered with her rights under the Act. FMLA regulations generally permit an employer to enforce notice and other procedural requirements for invoking FMLA leave, the appeals court noted, pointing out that an employee’s failure to comply with an internal leave policy is a sufficient ground for termination and forecloses an FMLA claim. Here, as the company’s employee handbook clearly stated, employees are required to notify HR, not just a supervisor, of their need for FMLA leave. The employee failed to comply with this internal leave policy. Yet, “[b]ecause an employee can be completely ignorant of the benefits conferred by the FMLA and still be entitled to its protections,” the better question was whether the employee put the employer on “inquiry notice” that she wanted FMLA-qualifying leave, the court wrote. To do so, the employee was not required to specifically refer to the 37 FMLA so long as she alerted her employer to the seriousness of the health condition for which caretaking leave was sought. If she did provide sufficient notice that she needed time off to care for her seriously ill parents, then the employer had a duty to inquire further to confirm the employee’s FMLA entitlement. On the facts at hand, however, the employee could not make this showing. While her supervisor was alerted to the seriousness of her father’s health condition, she was not on notice that the employee needed medical leave to care for him; at most, it was aware of the possibility that she might need leave in the future. Also, the employee never described the seriousness of her mother’s condition. Interference, retaliation not shown. Nor could the employee show that her employer denied or otherwise interfered with the employee’s right to FMLA benefits. At no time did her supervisor deny a leave request. And, while termination may constitute a denial of protected benefits, the discharge at issue here came two months after the employee’s isolated leave request was granted, undermining any showing of causation. Further, the employee’s assertion that the discharge decision was really made on June 24, the day after she asked for protected leave to bring her mother to the ER, was purely speculative. Without evidence that the employee provided sufficient notice of the need for FMLA leave, she was unable to show she engaged in FMLA-protected activity; thus, her retaliation claim failed at the outset as well. Even assuming she had made the requisite threshold showing, the employee could not establish that she was placed on a PIP or discharged as a punishment for taking leave. The undisputed evidence plainly revealed that the employee was not performing her job satisfactorily. Her circumstantial evidence of retaliatory intent, including claims of “suspicious timing,” came up short. Thus, summary judgment to the employer was affirmed. The case number is 11-2238. Alejandro Caffarelli (Caffarelli & Siegel) for Employee. Christopher G. Ward (Foley & Lardner) for Employer. 8thCir: Sales representative was independent contractor, not employee, could not maintain claim for breach of unilateral employment contract A manufacturer’ sales representative was an independent contractor, not an employee, so that certain policy documents issued by the company outlining the parties’ relationship did not create a unilateral contract, ruled the Eighth Circuit (Fesler v Whelen Engineering Co, Inc, August 16, 2012, Colloton, S). The appeals court concluded that the plaintiff was generally able to perform his work in the means and manner he saw fit, and the manufacturer did not control the “methods, details, and particulars” of his work, so as to give rise to an employer-employee relationship. Employment relationship. As a commissioned sales representative, the plaintiff was responsible for promoting and selling the employer’s automotive and industrial products in his assigned territory. He did not sign any contract, agreement, or any other 38 documentation related to his relationship with the company. Commission payments were deposited into an account of a corporation formed by the plaintiff, and he then received a paycheck with withholdings paid through that company. Through his company, the plaintiff hired employees and paid office expenses and expenses incurred for promoting and selling the manufacturer’s products. Throughout his tenure, the manufacturer provided the plaintiff with documents that outlined the policies and procedures applicable to sales representatives. Those documents identified sales representatives as “independent contractors, not employees,” and stated that they were appointed on a non-exclusive basis. In October 2007, the employer terminated the plaintiff’s relationship. Thereafter, the plaintiff sued for breach of contract. Breach of contract claim. The employee’s breach of contract claim alleged that policy documents periodically issued by the manufacturer created a unilateral contract of employment, and that the manufacturer breached that contract by terminating him without just cause and by failing to provide him with notice of substandard performance and an opportunity to cure. The manufacturer was granted summary judgment on the basis that the plaintiff was an independent contractor, and the written policies were insufficient to constitute a unilateral contract of employment, or that such a contract was breached. In this instance, the Eighth Circuit found that most of the factors for determining whether an individual is an employee or independent contractor under Iowa law, as enunciated in Iowa Mut Ins Co v McCarthy, weighed heavily in favor of finding that the plaintiff was an independent contractor. The plaintiff was on the payroll of his own independent business, he was paid commissions based on sales in his territory, not the amount of time he worked. He hired, paid, and supervised his own employees, furnished his own office equipment and supplies and paid for his own travel expenses, taxes, workers’ compensation, and insurance. Although the manufacturer exercised some control over the plaintiff’s work, the limited degree of direction evidenced here did not make him an employee. The judgment of the district court was affirmed. The case number is 11-2666. Robert Eugene Breckenridge, II (Breckenridge & Duker) for Employer. Leonard T. Strand (Simmons Perrine Moyer Bergman) for Employer. 9thCir: Question whether employer can average commission payments over pay periods under California law certified to California Supreme Court The Ninth Circuit certified to the California Supreme Court the question of whether an employer can average an employee’s commission payments over certain pay periods when it is equitable and reasonable to do so in order to satisfy California’s compensation requirements (Peabody v Time Warner Cable, Inc, August 17, 2012, per curiam). Because of the complexity of the state law issues, and because of their significant policy implications that will affect many employers and employees throughout the state, the 39 Ninth Circuit concluded that the state high court was better qualified to answer the certified question in the first instance. In the underlying dispute, the employee was an account executive for Time Warner who sold advertising on a commission basis. Her commissions were based on revenue generated by advertising aired each month—the broadcast month. According to the employee, she generally worked 45 hours per week and was paid on a bi-weekly basis. Following her resignation, she brought a putative class action in state court on behalf of former and current account executives alleging violations of California’s wage and overtime laws. After the matter was removed to federal court, the parties stipulated to decide summary judgment before class certification. The district court granted summary judgment in favor of Time Warner, and the employee appealed. Because there is no controlling precedent explaining how commissions should be allocated, and this question would determine the remaining issues raised by the employee’s appeal, the Ninth Circuit certified the question. Generally, under California Labor Code Sec. 510, an employer is required to pay overtime to an employee who works more than 40 hours per week. Similarly, Sec. 4(B) of IWC Wage Order 4-2001 requires employers to pay employees on the established payday for the period involved, the applicable minimum wage for all hours worked in the payroll period, whether the remuneration is measured by time, piece, commission, or otherwise. The wage order requires that employers pay employees overtime pay for hours over 40 in a workweek. However, Sec. 3(D) of Wage Order 4-2001 creates an exemption from the overtime requirements for employees paid through commission. The employee contended that her earnings did not exceed one and one-half times the minimum wage at all relevant times for application of the exemption. The analysis of whether the employee’s earnings exceeded one and one-half times the minimum wage hinged on how commissions can be calculated and allocated over pay periods. Commissions were paid on a monthly basis, so during half of the pay periods the employee’s pay was insufficient to qualify for the commissions paid exemption. On the other hand, Time Warner argued that the employee’s earnings should be calculated based on the broadcast month, so that her commissions counted towards the pay period in which they were earned, rather than the actual pay period in which they were paid. The Ninth Circuit noted that there was no California case directly on point that explains how commission payments should be allocated over pay periods to determine whether an employee qualifies for California compensation requirements. It is also not clear whether courts may look to federal law under the FLSA to determine how commission payments should be allocated. The case number is 10-56846. Daniel J. Turner (Van Vleck Turner & Zaller) for Employee. Joseph Scott Carr (Wargo & French) for Employer. 40 10thCir: Failure to provide medical documentation for continued absence dooms employee’s FMLA and discrimination claims An employee who did not provide medical records in response to a request for medical certification of her need for leave did not establish that she had a serious health condition for purposes of the FMLA, ruled the Tenth Circuit, affirming summary judgment for the Air Force on her interference and retaliation claims (Smith v Wynne, August 20, 2012, Lucero, C). Further, although there were questions on whether her supervisor actually approved her leave, the employee’s race and sex discrimination claims also failed as a matter of law because she could not show that the reason for her termination – the lack of medical authorization of her need for leave – was pretext for discrimination. AWOL. The African-American computer engineer at Tinker Air Force Base filed a workers’ comp claim on March 5, 2004, alleging she was injured due to “stress and pressure” from her supervisor. Three days later she asked the supervisor if she could take leave and he agreed. She exhausted her leave on March 31 and called the supervisor to check in. The parties disagree on what was said. She alleged that she requested leave without pay (LWOP), which he approved. He asserted that he did not approve LWOP and warned her that she was now absent without leave (AWOL). The supervisor noted on the leave database that she was AWOL and contacted HR to ask what his options were. HR responded it would not take action until she had been AWOL for 10 days. On April 1, the employee signed in remotely, saw she was listed as AWOL, and called the supervisor to say she had requested LWOP but the parties disputed whether he told her the request was denied. On April 8, the supervisor removed the AWOL designation from the database. On April 13 he exchanged emails with HR asking to begin the process of terminating the employee. He reported that he had not heard from the employee since the March 31 conversation. On April 14, the employee sent the supervisor a letter stating she had requested LWOP on March 31 and he had approved it. Four days later, however, he sent her a memo advising that she had not reported for duty since April 1, no one had heard from her, and that no leave had been requested or granted. The memo advised that if she was requesting special medical restrictions she should provide information on the condition from her doctor and a form for that purpose was attached. The memo also warned that if she did not report for regular full-time duty or provide sufficient medical evidence to cover the absences, action might be taken to propose her termination. On April 21, the employee wrote to the supervisor and his superiors explaining that she had requested LWOP. On April 29 she submitted her medical records to the employee who processed her workers’ comp claim. The records included a form indicating she was able to return to work without restrictions. The employee also attached a note requesting that the records not be released to the supervisor or second-level supervisor. On May 19 she was given a notice of proposed removal with 20 days for her to respond. She did not reply and on July 8, she was terminated for unauthorized absences. In administrative proceedings, an ALJ found that the Air Force did not violate the FMLA or discriminate against the employee based on her race, gender, or disability. In a subsequent suit, the 41 district court agreed and after a de novo review, granted summary judgment for the Air Force. The employee appealed and the Tenth Circuit affirmed. FMLA claims. The employee claimed the Air Force interfered with her FMLA rights and retaliated against her for invoking those rights. As an initial matter, the court rejected the jurisdictional and sovereign immunity challenges by the Air Force, concluding that the ALJ considered the FMLA allegations and thus the employee did not waive them. Further, she was not bringing freestanding FMLA claims but asserted them as an affirmative defense to her termination, so there were no sovereign immunity concerns. Nonetheless, the court concluded that the FMLA claims failed because she did not show that she had a “serious health condition.” The only evidence was the records submitted to the workers’ comp representative and these only included three or four outpatient visits to treat anxiety, depression, and situational stress. Most significantly, they included a recommendation that she could return to work without restrictions. Absent a serious health condition, the employee was not covered by the FMLA and summary judgment was properly granted on both the interference and retaliation claims. Discrimination claims. Likewise, the employee’s gender and race discrimination claims also failed as a matter of law. She established a prima facie case but could not overcome the Air Force’s legitimate nondiscriminatory reason for her termination. Although there were questions as to whether the supervisor lied to HR about not hearing from the employee and whether she initially requested and was granted LWOP rather than be AWOL, none of these went directly to the issue of pretext with respect to the termination decision. Regardless of any earlier evasion, the supervisor made it clear to the employee in the memo that she could take LWOP for a medical condition if she returned the work restriction evaluation form. She was again warned on May 19 that she was in danger of termination because she had not requested leave or provided medical documentation. The employee argued that the supervisor “knew” she submitted medical records to the workers’ comp representative but the only other evidence was that person’s statement that she did not provide the medical documentation to the supervisor because of the employee’s note requesting she not do so. Thus, the employee failed to cast doubt on the asserted reason for her termination – her failure to provide medical authorization to extend her absence from work. Accordingly, summary judgment was properly granted on the discrimination claims as well. The case number is 11-6195. Melvin C. Hall (Riggs Abney Neal Turpen Orbison & Lewis) for Employee. Robert A. Bradford (U.S. Attorney’s Office) for Employer. 42