On February 6, 2018, Airlines for America, a trade association and lobbyist organization for the American airline industry, filed a lawsuit in federal court in Washington State against the Washington Department of Labor & Industries challenging the state’s enforcement of its paid sick leave requirements against airline employers.  On behalf of its members, which include carriers, Airlines for America seeks declaratory and injunctive relief to invalidate Washington’s new Paid Sick Leave Act and to prohibit its enforcement with respect to flight crewmembers, such as pilots and flight attendants. Airlines for America is challenging the application of  Washington Paid Sick Leave Act to the airlines on the grounds that it violates the United States Constitution -- specifically, the Fourteenth Amendment’s Due Process Clause and the Commerce Clause -- because the law also applies  to employees outside the state of Washington and has a negative impact on interstate commerce. The lawsuit also challenges the sick leave law on the basis that it is preempted by the Airline Deregulation Act because it negatively impacts carriers’ “prices, routes, and services.” Washington voters passed the paid sick leave law in November 2016 and it took effect on January 1, 2018. In addition to establishing a statewide minimum wage, it requires employers to provide paid sick leave to employees at the rate of one hour of paid sick leave for every thirty hours worked. The law applies broadly to Washington employers and employees.  It does not include exemptions typically seen in other state and local paid sick leave laws for employees covered by collective bargaining agreements that provide for paid sick leave, or flight crewmembers under the Railway Labor Act. Without these exemptions for airline employees, carriers will have to comply with a patchwork of inconsistent state and local paid sick leave laws, which will cause an undue burden on the airlines’ operations. This legal challenge is an important development for airline employers as they determine the best way to comply with the paid sick leave laws sweeping the nation, while still operating a network of flights and mobile employees crossing state lines. Future court rulings may provide much-needed guidance on these important issues. Be sure to check back for future updates as we will continue to monitor this litigation.

The Pension Benefit Guaranty Corporation (“PBGC”) recently updated and expanded its Missing Participant Program. For most defined benefit plans with missing participants, this program has been a required step in the termination process since 2006. The new regulation, effective January 22, 2018, expands the program to include, on a voluntary basis, terminating defined contribution plans and thereby alleviates problems that employers have had since the Internal Revenue Service (“IRS”) and Social Security Administration (“SSA”) ceased helping to find missing participants through their letter forwarding program. Now, plan sponsors of terminating defined contribution plans may transfer accounts of missing participants to the PBGC to liquidate the plan and, hopefully, reunite missing participants with their accounts. The new PBGC program does not yet replace existing guidance from the U.S. Department of Labor (“DOL”) regarding missing participants. For example, DOL Field Assistance Bulletin 2014-01, identifies an Individual Retirement Account (“IRA”) as the preferred disposition of a missing participant’s account and does not envision the possibility that the account may be transferred to the PBGC. However, the preamble to the final regulation indicates DOL’s intent to review and possibly revise its guidance to coordinate with the PBGC’s final rule. In addition, below we review some common plan termination compliance snafus and how to avoid them:  Final Amendment(s): Regardless of the type of plan document, or how long ago it was restated, the document must be updated for all law changes up to the date of termination.  To a certain extent, the termination of a plan accelerates the amendment deadline for any recent law changes.   If the document is not properly updated, the qualified status of the plan will be at risk. Successor Plan Issues: Plan sponsors often assume that terminating a plan will enable participants to take a distribution.  This may not always be the case.  There is a rule applicable to terminating 401(k) plans, which may prohibit participants from taking a distribution until they actually separate employment.  This rule may be triggered if the plan sponsor maintains another plan or adopts a “successor” plan. Partial Termination:Upon plan termination, all affected participant accounts must become 100% vested.  However, similarly accelerated vesting must occur if there is a “partial termination” of the plan. A partial termination may occur when, for example, more than 20% of plan participants are laid off in a particular year. The IRS has published a website devoted to this concern. Filing Form 5310 with the IRS: A plan sponsor may request that the IRS issue a favorable determination letter upon plan termination. While not required, this is often advisable to provide assurance that the plan is not disqualified (through audit or otherwise) after final distributions have been made. Terminating a plan is often necessary. However, great care should be taken to ensure that the plan is properly wrapped up rather than unraveled.

Following last year’s trend, the Office of Federal Contract Compliance Programs’ (“OFCCP” or “Agency”) website indicates that February 1, 2018, the Agency mailed 1,000 Corporate Scheduling Announcement Letters (“CSALs”). The CSALs do not commence an audit – only a scheduling letter can do that – but they provide an advance courtesy notice that an organization has been identified by the Agency and may receive a scheduling letter for an audit. What does this mean? Organizations that receive CSALs should take the extra time provided to ensure their affirmative action programs and supporting documents are up to date and fully compliant. Organizations should also review their adverse impact data and any potential pay disparities. The CSALs have once again been sent directly to the attention of the Human Resources Director; therefore, it is important to alert HR representatives to watch for the letters. Take note, CSALs are not required by law prior to the issuance of a scheduling letter for an audit, which means federal contractors and subcontractors that do not receive a CSAL may still be scheduled for an audit. Whether an organization receives a CSAL or not, contractors can still receive scheduling letters, which the OFCCP’s website notes will be issued on March 19, 2018.  As a reminder, once an organization receives a scheduling letter, there are only 30 days to respond with the initial submission. Shifting from past practices, the OFCCP will limit audits in 2018 to: No more than 10 establishments of a single contractor placed on the scheduling list; No more than four establishments of a single contractor placed on the scheduling list for a single district office; and No establishment with an audit closed in the last five years is placed on the scheduling list. The OFCCP has not indicated which industries will be targeted, as it has done in past years. Polsinelli will continue to monitor developments and will provide updates as they become available. In the event your organization received a CSAL, we recommend you contact counsel immediately.

In 2014, the National Labor Relations Board (“NLRB” or “Board”) published the controversial “ambush election” rule, which was intended to decrease the time between the filing of a petition for representation and a union election. The rule, which became effective in April 2015, changed the scope of pre-election hearings and the timing and content of pre-election disclosures and required that the time between petition and election be less than thirty days. Employers and industry groups unsuccessfully challenged the rule in federal court. See, e.g., Associated Builders and Contractors of Texas v. NLRB, 826 F.3d 215 (5th Cir. 2016). Last month, the Board, over the scathing dissent of two members, issued a request for information regarding whether the NLRB should retain without change, modify, or rescind the “ambush election” rule. In response to dissenting members, the Board emphasized that its request “merely poses three questions” and “does not suggest even a single specific change in current representation-election procedures.” However, the Board’s dissenting members characterized the request as part of a bad faith effort to rescind or substantially revise the rule. Members Mark Pearce and Lauren McFerran each prepared dissents lambasting the majority’s request and extolling what they believe to be the benefits of the rule. Member Pearce characterized the Board’s request as a search for “alternative facts to justify rolling back the [NLRB’s] progress in the representation-case arena.” Member McFerran made a similar objection, stating that the request amounts to “little more than an open-ended ‘raise-your-hand-if-you-don't-like-the-Rule’ straw poll” that is unlikely to generate meaningful feedback. Arguably more consequential is Member McFerran’s suggestion that the Board failed to articulate a reasoned basis for reconsidering the rule and, thus, any changes would run afoul of the Administrative Procedure Act. Perhaps laying the groundwork for future legal challenges, Member McFerran cautioned that “it should come as no surprise” in the future if a reviewing court “looks back skeptically” at what she characterized as a “partisan effort to roll back," the rule. The deadline to respond to the Board’s request for information is March 19, 2018. We will keep a close watch on the Board’s rulemaking process and provide substantive updates.

The U.S. Department of Labor’s (“DOL”) Office of the Inspector General (“OIG”) is investigating the rule-making process relating to the DOL’s new tip pool regulation in response to reports that the DOL buried internal estimates regarding the proposal’s impact on workers. On February 5, 2018, the OIG informed the DOL’s Wage and Hour Division that OIG will audit the DOL’s rule-making process regarding the tip-pooling rule. The DOL’s internal oversight office launched the review on February 2, 2018. Also on February 5, Democratic state attorneys general from 17 states — led by California, Illinois, and Pennsylvania—wrote to the DOL threatening litigation on the grounds that the DOL’s failure to release regulatory data on tip pooling violates the federal rulemaking law, and may also violate the Administrative Procedure Act. The letter further expresses concern that the DOL refused to release an internal analysis regarding the rule’s projected impact on worker tips. Employee advocates have also expressed serious reservations regarding the tip pooling rule, as media reports suggest that the DOL’s internal analysis of the rule indicated employees could receive fewer wages as tips. The rule would allow tip pooling among restaurant servers and other workers who earn gratuities and back-of-the-house employees who do not, reversing a 2011 regulation providing that tips are the property of the workers who earn them. In addition, if an employer pays tipped workers at least the federal minimum wage of $7.25 per hour, the employer could also share in the tip pool. The DOL is currently soliciting comments regarding the regulation’s economic impact.  Employers in the restaurant business would do well to pay attention to further developments regarding the rule, which will be posted here. Stay tuned

Recently, NLRB General Counsel Peter Robb announced his intention to restructure the NLRB’s field office operations and revamp the NLRB’s current case processing procedures. On January 11, 2018, Robb hosted a conference call with the NLRB’s Regional Directors to inform them of his plan to reorganize the NLRB’s 26 Regional Offices into a smaller number of districts or Regions supervised by officials who would report to the General Counsel. On January 29, 2018, Beth Tursell, who heads the NLRB’s Operational Management Division and reports directly to Peter Robb, issued a “Case Processing Memo,” which sets forth a number of suggested changes to the NLRB’s procedures, including: 1) Requiring all parties to respond to inquiries from the NLRB within two days or face closure of the investigation 2) Reducing the amount of time allotted for investigations from two weeks to one week, depending on the case type 3) Directing agency officials to seek settlements in “all” cases “in lieu of litigation,” (even without approval from the Regional Director) Some of the proposals outlined in the Case Processing Memo have drawn criticism. Specifically, if the proposals are implemented, investigations will likely be shortened, which limits an employer’s ability to respond to an Unfair Labor Practice Charge.  Robb and Tursell have requested input from agency staff regarding these proposed changes. Thus, it remains to be seen whether the current proposals will be implemented “as is,” or if further changes will result prior to adoption. Employers, particularly those with unionized labor forces, would be wise to stay abreast of these and other possible changes and can do so by watching this space. Stay tuned for further updates.

As a general matter, many courts disfavor restrictive covenants in the employment context because they restrain trade. However, the law also seeks to prevent unfair competition. As a result, if an employer can point to a legitimate business interest in need of protection, it may be able to enforce a restrictive covenant agreement (RCA) that is narrowly tailored to protect that interest. What constitutes a protectable interest? This varies from state to state; however, courts typically recognize an employer’s need to protect the following: Confidential information and trade secrets Longstanding customer goodwill The value of specialized training Workforce stability. As with other considerations related to the enforceability of RCAs, what qualifies as a protectable interest will vary from state to state. To protect these interests, employers typically employ a combination of the following devices: Nondisclosure Noncompete Customer/client nonsolicitation Employee nonsolicitation. Of these, a non-compete is the most difficult to enforce and will receive the closest scrutiny from a court during an enforcement action. Unlike a nonsolicitation provision, which focuses on preventing a former employee from stealing an employer’s customers on behalf of a competitor, a non-compete provision prevents an employee from working for that competitor at all. Because a non-compete can significantly limit an individual’s ability to earn a living, courts will evaluate a number of factors to determine whether the non-compete is reasonably necessary to protect the employer's interest—commonly referred to as the “Rule of Reason.” Click through toread the full article regarding the enforceability of restrictive covenants in different states and best practices employers can take to maximize their chances to enforce restrictive covenants. Note: this article was first published in Employee Relations Today’s Fall 2017 Edition, 2018 Wiley Periodicals, Inc.

By now, most employers are familiar with their obligations under the Americans with Disabilities Act of 1990 (ADA) to not discriminate against, and possibly provide accommodations for, qualified individuals with disabilities. However, these same employers may not be aware of the newest frontier of plaintiffs’ lawsuits — claims that company websites do not comply with the ADA. Title III of the ADA prohibits discrimination on the basis of disability in the activities of places of public accommodations. Places of public accommodations include businesses that are generally open to the public, such as restaurants, movie theaters, schools, day care facilities, recreation facilities, hospitals, and doctors’ offices. Title III of the ADA also requires newly constructed or altered places of public accommodation, as well as commercial facilities (privately owned, nonresidential facilities, including factories, warehouses or office buildings whose operations affect commerce), to comply with ADA standards. At the time of the ADA’s passage, the internet was not a consideration in the ADA’s provisions or implementation. However, given the internet’s now prevalent use for consumer applications, the ADA’s requirements now extend to include company websites. The growing consensus of the courts and the United States Department of Justice (DOJ), the agency responsible for enforcing Title III of the ADA, is that websites are places of public accommodation that must comply with the ADA. State laws may also impose similar compliance obligations on companies. The DOJ is reviewing websites for compliance. In actions brought by the DOJ, monetary damages and civil penalties may be awarded. Civil penalties may not exceed $50,000 for a first violation or $100,000 for any subsequent violation. Private parties may also file suit to obtain court orders to compel companies to bring their websites into compliance with the ADA’s public accommodation provisions. No monetary damages are available in such suits under federal law; however, reasonable attorneys’ fees may be awarded — making these attractive potential class actions for plaintiffs’ attorneys. State laws may also provide for monetary damages. The DOJ has not yet established binding regulations governing website ADA compliance, and is not expected to do so until 2018 However, it appears to be a near certainty that the DOJ will adopt the current “Web Content Accessibility Guidelines (WCAG-2.0) Level AA” (WCAG) as the relevant regulations. The WCAG explain how to make web content more accessible to people with disabilities. Web content generally refers to the information in a web page or web application, including natural information such as text, images, and sounds and code or markup that defines structure, presentation, etc. Until the adoption of binding regulations, the plaintiffs’ bar and the DOJ seem to be treating WCAG as the de facto standards for ADA compliance. Therefore, compliance with WCAG is highly recommended. Evaluating reasonable accommodation issues for applicants and employees is complicated enough. To keep pace with companies’ ever-growing list of compliance obligations, companies are strongly encouraged to seek counsel to determine whether their websites comply with the ADA and any applicable state laws.

The start of the year is prime time for employers to review employee handbooks. Many policies remain the same year after year. Employers may wish to pay attention to certain policies due to recent changes in the law. 1. Defense of Trade Secrets Act (DTSA) notice. If your company has a confidential-information policy or requires employees to sign non-disclosure agreements, then you should consider including notice of the DTSA’s immunity exceptions. Such notice permits the company to seek all available remedies under the DTSA should a given employee breach their obligations to keep certain information confidential. 2. Protected classes. Employers should review the list of protected classes in their policies prohibiting discrimination, harassment, and retaliation in order to ensure compliance with federal, state, and local laws. For example, the Equal Employment Opportunity Commission (EEOC) views sexual orientation and gender identity discrimination as a form of sex discrimination—and some cities and states prohibit such conduct. 3. Nursing mother policy.The Patient Protection and Affordable Care Act (ACA) requires employers subject to the Fair Labor Standards Act (FLSA), (unless they have fewer than 50 employees and can demonstrate that compliance would impose an undue hardship), to provide unpaid, reasonable break time for an employee to express breast milk for one year after her child’s birth. Several states and some municipalities have similar requirements. 4. Drug and alcohol-free workplace policy.With an increasing number of states enacting both medical and recreational marijuana use laws, employers should consider revising policies to clearly tell employees the employer’s stance on drug testing and how the use of marijuana (even when outside of the workplace) may impact the results of such tests and employment opportunities. In addition to the above considerations, the National Labor Relations Board (NLRB) has focused its attention on numerous handbook policies in its quest to protect employees’ rights to engage in protected, concerted activity. Employers should ensure their policies concerning confidential investigations, workplace recordings, positive employee attitudes, social media and communications, solicitation, and dress code comply with current NLRB decisions.

The Family and Medical Leave Act requires employers with 50 or more employees to permit eligible employees to take covered unpaid medical or caregiver leave.  How can an employer respond when an employee approved to take FMLA leave is later suspected of taking FMLA leave for an improper purpose, such as to moonlight at another job,  go on vacation, or  avoid undesirable work assignments? Nothing in the FMLA statute or regulations prevents employers from ensuring that employees who are on leave from work do not abuse their leave.  Fraud and dishonesty in the use of FMLA leave may be grounds for termination of employment.  An employer suspecting FMLA fraud or abuse may investigate and take action to deter future FMLA abuse. Below are several options to consider: Interviewing the Employee. Employers can investigate suspicious circumstances suggesting FMLA abuse by interviewing employees about their actions and whereabouts on the day(s) in question. Before interviewing the employee, the employer may gather publicly available information (e.g., social media) about the employee’s relevant activities. Other employees who may have witnessed relevant events may also be interviewed.    An employee’s inability to explain, or lack of credibility when explaining, his or her relevant actions or whereabouts may support a finding that the employee has lied or engaged in FMLA misuse.  When interviewing an employee in this context, it is suggested to consult with counsel to ensure the questions do not include prohibited medical inquiries or discourage or interfere with the legitimate taking of FMLA leave.  Private Investigation. Surveillance by a private investigator can document an employee’s physical movements and activities inconsistent with the taking of FMLA leave. Engaging counsel can help to ensure a proper scope of surveillance and that the employer is presented with appropriate facts upon which to assess the suspicion of FMLA fraud or abuse. Recertification.Employees who take intermittent FMLA in a pattern (e.g., every Friday) or under objectively suspicious circumstances (e.g., several employees take FMLA leave on the day after the Super Bowl) may be required to recertify the taking of FMLA. Although employers cannot challenge the medical opinions of the employees’ health care providers as part of recertification, the recertification request may deter future FMLA abuse. If recertification is not timely provided, FMLA can be denied. Recertification may be requested in conjunction with an employee interview or surveillance. Experienced counsel can guide employers through the strategic use of these and other techniques to investigate and deter FMLA fraud and abuse.

The U.S. Department of Transportation’s (“DOT”) new Final Rule modifying DOT regulation 49 CFR Part 40 (“Final Rule”) became effective January 1, 2018.  Specifically, the Final Rule affects employers of employees in safety sensitive positions, and includes changes to the types of drugs for which employers can test, as well as the manner in which employers submit specimens for testing. Changes to Drug Testing Panel The Final Rule modifies the drug testing panel to include testing for semi-synthetic opioids (i.e., hydrocodone, oxycodone, hydromorphone, and oxymorphone). In addition, the Final Rule 1) changed the name of the category of drugs to be tested from “opiates” to “opioids;” 2) removed testing for methylenedioxyethylamphetaime (MDEA); and 3) added testing for methylenedioxyamphetamine (MDA).  Now, the drugs for which employers must test employees subject to the Final Rule include marijuana, cocaine, amphetamines, phencyclidine, and opioids. Changes to Specimen Collection Employers and Consortium/Third Party Administrators are no longer required to submit blind specimens to laboratories. Under the prior regulation, an employer sent a blind specimen to a laboratory, accompanied by a Federal Drug Testing Custody and Control Form, with a fictitious donor name for quality control purposes to see whether the laboratory’s results matched the known contents of that particular blind specimen. Because no false positive results have been found in the last 25 years of drug testing through testing blind specimens, the DOT removed the blind specimen testing requirement. Other Notable Changes The Final Rule additionally changed Medical Review Officer (MRO) practices. In particular, a “prescription” is now defined as a legally valid prescription consistent with the Controlled Substances Act (CSA). This is a significant change: the CSA classifies marijuana as a Schedule I drug, so a prescription for medical marijuana under state law does not qualify as a legally valid prescription for DOT drug testing purposes. Furthermore, the Final Rule modifies the timing regarding when a MRO must communicate to a third party that the MRO considers an employee may be medically unqualified for their position or may pose a significant safety risk when performing a safety sensitive function.  Specifically, if an MRO determines that a legally prescribed medication may make the employee medically unqualified or cause him/her to pose a significant safety risk, the MRO must provide the employee with up to five business days to have his/her physician contact the MRO to discuss whether the medications can be changed to either a prescription that does not make the employee medically unqualified or a prescription that does not pose a significant risk before the MRO may report a safety concern to a third party, including the employer. Employers would do well to examine their DOT drug testing procedures to ensure compliance, and may do so with the assistance of able counsel.

In 2017, the Centers for Disease Control reported that more than one-third of U.S. adults are obese.  But does that mean that one-third of U.S. adults are disabled?  Not necessarily.  The California Supreme Court decided twenty-five years ago in Cassista v. Community Foods, Inc. that obesity can qualify as a disability under the state anti-discrimination statute if it results from a physiological condition affecting a basic bodily system, and limits a major life activity.  However, the California Court of Appeal’s recent decision in Cornell v. Berkeley Tennis Clubseems to have eased a plaintiff’s burden of proving obesity qualifies as a disability. The plaintiff in the case, Ketryn Cornell, who was objectively obese, was employed by the Berkeley Tennis Club (the “Club”) for more than 15 years, holding positions as a life guard, tennis court washer and pool manager during her tenure.  She received positive performance reviews, raises, and bonuses until she was terminated for allegedly concealing a recording device when attempting to record a board meeting.  Recording a private conversation without every participant’s consent is a crime under California law.  Ms. Cornell denied planting the recording device and sued the Club under the Fair Employment and Housing Act (FEHA) alleging, among other things, that the Club discriminated against her and harassed her because of her disability -- obesity.  In support of her claims, Cornell produced evidence that her supervisor made several insensitive remarks and took several actions regarding her weight, including 1) suggesting that she undergo weight-loss surgery; 2) directing the kitchen staff not to give her extra food because “she doesn’t need it;” and 3) refusing her request that the Club special order a uniform that would fit as an accommodation.  The trial court granted the Club’s motion for summary judgment, holding that Cornell failed to produce evidence that her obesity qualified as a disability. The Court of Appeal reversed as to the discrimination and harassment claims.  On the discrimination claim, the Court held that the Club failed to show that Cornell could not establish that her obesity had a physiological cause. Importantly, the Court found that a physiological cause could include a genetic cause and, to defeat summary judgment, it was sufficient for Cornell’s doctor to find a genetic cause based on nothing more than her body mass index.  The Court also determined that the Club’s failure to adequately investigate the recording allegations and the discriminatory comments of her supervisor were sufficient evidence to defeat summary judgment.  As to the harassment claim, the Court found a triable issue as to whether the alleged harassment was sufficiently severe and pervasive.  Although the supervisor’s inappropriate comments about Cornell’s weight, standing alone, were too isolated to preclude summary judgment, the Court also considered evidence that the supervisor reduced Cornell’s hours, passed her over for internal jobs, and paid her less.  Taken together with the weight-based comments, the Court concluded this evidence was sufficient to preclude summary judgment on the harassment claim. In light of Cornell, California employers should take complaints of obesity discrimination and requests for accommodation based on obesity seriously.  As with other bases of discrimination and harassment, California employers should consult with experienced employment counsel to ensure that effective policies are in place to prevent disability discrimination and harassment and to investigate obesity-based complaints when they arise.

On January 5, 2018, the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) reissued 17 Opinion Letters that were previously issued in January of 2009 in the waning days of the Bush administration. The Obama administration promptly withdrew the Opinion Letters in March, 2009, “for further consideration.” Subsequently, the Obama DOL discontinued the practice of issuing Opinion Letters in favor of publishing more Administrator Interpretations. The requirements of the Fair Labor Standards Act (FLSA) and the Family Medical Leave Act (FMLA) are established by statutes and regulations promulgated by the DOL.  Employers or other interested parties may seek guidance from the WHD regarding interpretation of the FMLA and FLSA.  In response, the WHD may provide official written explanations of the FLSA or the FMLA requirements through Opinion Letters. Notably, Opinion Letters are intended to be “fact-specific,” based on the facts presented in the individual inquiry. The 17 re-issued Opinion Letters are fact-specific. Many of the re-issued Opinion Letters are based on specific job positions in specific industries, i.e., the exempt status of civilian helicopter pilots, the exempt status of project superintendents of a commercial construction company, and the exempt status of clinical coordinators and business development managers for a temporary medical professional provider.  Other reissued Opinion Letters opine regarding calculating the regular rate of pay for firefighters and alarm operators under a collective bargaining agreement, the exempt status of client service managers at an insurance company, and the application of the retail or service exemption to plumbing sales/service technicians, compensation of “on-call” hours of ambulance personnel. The Opinion Letters do not create “new law,” but rather may provide employers with guidance as they navigate the strictures of the FMLA and the FLSA.  Employers concerned with whether a given Opinion Letter may apply to their specific problem would do well to discuss the matter with able counsel. For a complete list of the re-issued Opinion Letters (including a link to the Opinion Letters), visit https://www.dol.gov/whd/opinion/flsa.htm. 

It’s a new year, and a new session for the active California Legislature. On January 3, 2018, in a likely effort to respond to the #MeToo movement, the Stand Together Against Non-Disclosure Act (“STAND” or the “Bill”) was introduced in the California Senate.  The Bill seeks to prohibit parties, including all public and private employers in California, from including nondisclosure provisions in settlement agreements in cases involving sexual assault, sexual harassment and/or sex discrimination. Intends to Expand Existing Law: California law currently prevents parties from including confidentiality provisions in settlement agreements related to claims for certain sexual offenses, including felony sex offenses, childhood sex abuse, sexual exploitation of a minor, or sexual assault of an elder or dependent adult.  The STAND Act seeks to expand these prohibitions to claims for sexual assault, sexual harassment and sex discrimination, unless a claimant requests the inclusion of a nondisclosure provision in the settlement agreement.[1] Unintended Consequences: As currently drafted, the Bill appears to have at least three unintended consequences: Permits the inclusion of confidentiality provisions in settlement agreements for claims that have yet to be filed with the courts.  Thus, parties may seek to resolve a claim prior to filing.  Many sexual misconduct lawsuits are highly fact intensive and at times require significant investigation.  Employers will likely have more incentive, especially in the current charged environment, to resolve a claim regardless of whether they believe there was misconduct to avoid public disclosure and potential damage to the employer’s reputation.  Consumer Attorneys of California believe that confidentiality provisions at the request of the claimant will provide a guarantee of privacy to those who would not otherwise speak out.  The unilateral election for confidentiality in the hands of the claimant could result in higher settlement demands for the inclusion of a confidentiality provision in the settlement agreement. Once a complaint is filed, parties may be less likely to settle the claim since confidentiality cannot be required in a settlement agreement post-filing of the complaint.  This may result in the use of additional judicial resources, including more jury trials and law and motion filings. Stay tuned as this important Bill works its way through the legislative process.    ------------------------------ [1] Please see our recent blog regarding provisions of the recently passed Tax Cuts and Jobs Act of 2017 that provide negative tax consequences to employers that include confidentiality provisions in settlement agreements resolving allegations of sexual misconduct.

When President Elect Trump is inaugurated, he will immediately have the opportunity to appoint two new members of the National Labor Relations Board (NLRB). Both of those appointees will be Republican appointees, and will immediately provide the NLRB with a Republican majority. A new “Trump Board” will have the opportunity to review existing decisions as new cases arise, but due to the time progression of most NLRB cases, the result of this review will not likely be felt prior to the middle of 2018. This blog post will review precedential decisions established by the present “Obama Board” that are likely to be considered,revised, or reversed by the new Trump Board. Joint Employment.Since 2011, the NLRB has expanded the definition of joint employment. When two or more employers are found to be joint employers, they both have the same responsibilities to recognize and bargain with a union selected by their employees. Recently, the NLRB ruled that fast food franchisers and franchisees may be joint employers. Similarly, the NLRB determined that a business may be a joint employer of temporary employees supplied by a staffing agency, and that those temporary employees may be counted along with employees directly hired by the business to form a bargaining unit. The NLRB’s decisions have not depended upon whether both employers actually control the terms and conditions of employment of the temporary employees, but rather whether the putative joint employers have the authority to control such terms, regardless of whether such authority was ever exercised. Also, the Obama Board found that if a business can indirectly control employees by influencing the contractor who hired the employees, that indirect authority is sufficient to establish joint employment. A new Trump Board may reverse the joint employer decisions and revert to traditional NLRB principles, which only lead to a joint employer finding when both employers actually and directly control the terms and conditions of employment of employees in a bargaining unit. If the new Trump Board reaches such a determination, then franchisers and businesses who utilize contracting services that bring in temporary employees are much less likely to be considered joint employers. Micro-Units.Prior to the Obama Board, the NLRB most often determined that bargaining units comprised of all employees at a facility (with certain limited exceptions) were presumptively appropriate. The Obama Board reversed that doctrine and placed the burden on the employer, rather than the organizing union, to demonstrate that a small group of employees was an appropriate or inappropriate bargaining unit. Specifically, if there exists a sufficient community of interest among a small group of employees (i.e., common terms and conditions of employment), then the Obama Board considers that group of employees to be a presumptively appropriate bargaining unit, and an employer must show by “overwhelming evidence” that a broader group of employees should be included in the proposed bargaining unit. This decision, known colloquially as Specialty Healthcare and its progeny, paved the way for ”micro-units” that consist of only a few employees (e.g., only the cosmetics and fragrance employees at a Macy’s in Massachusetts). A new Trump Board could reverse the present policy and eliminate the presumptive appropriateness of “micro-units.” Handbook Interpretations. Numerous NLRB decisions over the last several years have concluded that provisions frequently included in employee handbooks are unlawful and overly broad because they might have a chilling effect on employees who wish to exercise their rights under the National Labor Relations Act (NLRA). In one case, the Obama Board determined that a handbook rule prohibiting “harassment” was too broad because it might cause employees to believe they could not vigorously argue with co-workers in the context of a union organizing campaign. Similarly, handbook provisions that required employees to keep investigations regarding employee misconduct confidential were held to be unlawful because employees could possibly construe such a prohibition as preventing them from discussing terms and conditions of employment. It is likely that a Trump Board will reverse these decisions and allow employers broader discretion in promulgating handbook provisions and other workplace rules. Mandatory Arbitration and Class Action Waivers. The NLRB has held that individual contract provisions between an employee and an employer requiring an employee to resolve disputes through arbitration and prohibiting employees from joining class actions filed in courts are unlawful. The NLRB found that these provisions, and particularly the prohibition against participating in class actions (e.g., “class action waivers”), prevented employees from joining together to address wages, hours, working conditions as specified in Section 7 of the NLRA. At the present time, two federal courts of appeals have sustained the NLRB’s decisions prohibiting mandatory arbitration and class action waivers and two courts of appeals have refused to follow those decisions. While a Trump Board is likely to reverse the Obama Board position, the issue may still be addressed by the Supreme Court because there is now a split among the federal circuit courts. Social Media Policies.Since 2011, the NLRB has limited an employer’s discretion to prohibit employee communications on social media about the employer. Among other things, employer efforts to restrict employees from social media communications about the employer’s workplace, supervisors, and/or products have been found to unlawfully limit an employee’s Section 7 rights. Again, it is likely that the new Trump Board will allow employers greater latitude to prohibit employee statements on social media, particularly with respect to statements about the employer’s products. The Obama Board attempted to facilitate union organization and limit the authority of employers to restrict communications by employees that might relate to efforts to improve wages, hours and working conditions. While the effect may not be felt for some time, it is likely that many of the changes initiated by the Obama Board will be sharply cut back or reversed by a new Trump Board.

As 2017 drew to a close, two key members of the National Labor Relations Board (“NLRB” or “Board”) signaled their readiness to revisit the Board’s current stance regarding the confidentiality of severance agreements. All employers should take notice. In a footnote to the Board’s December 27, 2017 order denying summary judgment in Baylor University Medical Center, 10-CA-195335, Members Marvin E. Kaplan and William J. Emanuel, both appointed by President Trump, not only expressed their concurrence with the order but further noted their belief “to the extent not already permitted under Board precedent, the legality of confidential severance agreements for former employees should be reconsidered.”  Days before the issuance of the Baylor University Medical Center order, President Trump named Member Kaplan the Board’s Acting Chair. Confidentiality provisions of agreements resolving alleged workplace sexual harassment allegations came under increasing fire in 2017 as reports circulated regarding Hollywood icons as well as high profile news anchors, commentators and executives, and the #MeToo national awareness campaign gained steam across professions and industries. Recent Decisions by the Obama-Era Board have indicated strong disfavor of “confidentiality” obligations imbedded in such instruments as “non-disclosure” and “non-disparagement” agreements, otherwise known as NDAs. Previously, the Board has barred such contractual obligations upon finding they overreach and infringe on certain rights of employees (unionized and non-unionized alike) to engage in “concerted activities” protected under the National Labor Relations Act (in other words, acting collectively to protect not only themselves but coworkers). Specifically, the Board has invalidated such provisions by finding they tend to chill employees’ Section 7 rights under the Act to discuss terms and conditions of their employment. Indeed, only rarely would the Board in the Obama Era uphold such provisions absent determining them to be very narrowly tailored. The December 27 footnote to what would have been an otherwise obscure Board Order by Members Kaplan and Emanuel caught the attention of employers throughout the country. These comments by the Board’s newest Members (including now the Acting Chair) portend another shift of the Trump Board away from the prior Obama Board, clearly signaling the Board may become more tolerant of employer-imposed confidentiality restrictions in not only severance agreements (as noted by Members Kaplan and Emanuel) but also NDAs. Such a shift would be similar to that recently announced on December 14, 2017 whereby the Board took a more lax position evaluating employer personnel policies, one that will generally be more favorable to employers seeking to enforce workplace rules.

The U.S. Department of Labor ( “DOL”) recently announced that it is abandoning its six-factor test and will use the “primary beneficiary” test first enunciated by the 2nd Circuit in Glatt et al. v. Fox Searchlight Pictures, Inc. et al., 811 F.3d 528 (2d Cir. 2015)   The DOL stated the primary beneficiary test “eliminate[s]unnecessary confusion among the regulated community” and will provide DOL’s investigators increased flexibility to “holistically analyze internships on a case-by-case basis. The DOL’s website provides a Fact Sheet that identifies seven factors employers should consider when determining whether an intern is an employee: The extent to which the intern and the employer clearly understand that there is no expectation of compensation, and any promise of compensation, express or implied, suggests that the intern is an employee. The extent to which the internship provides training that would be similar to that which would  be given in an educational environment, including  the clinical and other hands-on training provided by educational institutions. The extent to which the internship is tied to the intern’s formal education program by integrated course work or the receipt of academic credit. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic year. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern. The extent to which the intern and the employer understand that the internship is conducted without an entitlement to a paid job at the conclusion of the internship. When applying the new test, employers should keep in mind that no single factor is decisive.  Each analysis should apply all seven factors to the facts and circumstances of each internship. The DOL’s decision to adopt the primary beneficiary test comes as welcome news for employers.  Specifically, the primary beneficiary test seems to allow employers to utilize interns to the extent the intern understands the internship will not be paid, is conducted without a guarantee of a paid job at its conclusion, and provides hands-on training, among other things.  When considering bringing on an intern, an employer would do well to define the parameters of the internship in writing, and should further consider putting to writing an agreement with the intern reflecting the unpaid nature of the internship.

Employers, take note:effective January 1, 2018, 18 states, as well as several cities across the country, increased the minimum wage. Companies with employees in Alaska, Arizona, California, Colorado, Florida, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, and Washington should review their pay practices to ensure compliance with the new state minimum wage rates. Additionally, according to the Economic Policy Institute, 39 localities across the United States have adopted a minimum wage above even their own state’s minimum wage.  Legislators in Oregon, Maryland, and Nevada have introduced bills to increase the minimum wage in their respective states in 2018. And in cities and counties in California, Illinois, Maryland, Maine, Minnesota, New Mexico, and Washington, D.C., ordinances to raise the local minimum wage rate are being considered as well. With these changes, 29 states and Washington D.C. have a higher minimum wage than the federal minimum wage rate. Thus, employers with employees in more than one state must ensure compliance with federal law, and may also have to ensure compliance with state and local law regarding minimum wage. With the constant changes in minimum wage rates coming at both the state and local level, employers would do well to audit their pay practices in the New Year.

Employers take note: a provision contained in the recently-passed Tax Cuts and Jobs Act of 2017 (the “Act”) now limits tax deductions for certain types of settlement agreements. Specifically, Section 13307 of the Act, styled “Denial Of Deduction For Settlements Subject To Nondisclosure Agreements Paid In Connection With Sexual Harassment Or Sexual Abuse,” (“Section 13307”) prohibits employers from taking income tax deductions for: Any settlement or payment related to sexual harassment or sexual abuse if the settlement or payment is subject to a nondisclosure agreement; or Attorney’s fees related to such settlements. Previously, when the parties in a dispute involving allegations of sexual harassment or misconduct settled those claims, they agreed to a nondisclosure provision in the settlement agreement. In other words, both parties would be prohibited from disclosing the terms and amount of the settlement (with corresponding penalties resulting from any violation of the provision). The nondisclosure provision did not affect whether any monies paid pursuant to the terms of the settlement agreement were tax-deductible. Now, however, if a settlement agreement subject to Section 13307 of the Act contains a nondisclosure provision, then the parties to the settlement agreement may not take a tax deduction for the amount of the settlement or any corresponding attorneys’ fees. Another potential problem that employers may face relates to settlements that resolve multiple claims. Indeed, instances arise where employees and employers settle matters that resolve sexual harassment claims and non-sexual harassment claims in one fell swoop. Section 13307 does not define the terms “related to sexual harassment or sexual abuse” so careful drafting of the settlement agreement and/or ancillary agreements is recommended to maximize opportunities to deduct payments that are not subject to Section 13307. Furthermore, a portion of attorney’s fees attributable to non-Section 13307 claims may also be deductible. Stated simply, the scope and breadth of Section 13307 remains murky, and it will take time before clear answers to the above-listed questions emerge. Thus, employers defending against allegations of misconduct covered by Section 13307 would do well to discuss the implications of settling such claims with competent counsel.

Recently, we reported that the “new” National Labor Relations Board (“NLRB” or the “Board”) has commenced the anticipated roll back of decisions and procedures rendered by the Obama Administration’s NLRB. On Friday, December 15, 2017, the NLRB issued another important decision with far-reaching implications for all employers. In Boeing Company, 365 NLRB No. 154 (2017), the NLRB established a new standard for evaluating whether workplace rules, policies, or employee handbook provisions unlawfully interfere with employees’ exercise of rights under Section 7 of the National Labor Relations Act (“NLRA”). Under the new standard established in Boeing, the NLRB will balance the impact an employer’s proffered rule may have upon an employee’s Section 7 rights to engage in protected concerted activity against the employer’s business justification for the rule. The NLRB indicated it would categorize the results of future decisions in three ways: Category 1 will include rules the NLRB designates as lawful because (i) the rule, when “reasonably interpreted,” does not prohibit or interfere with the exercise of Section 7 rights; or (ii) the potential adverse impact on protected rights is outweighed by the employer’s business justification(s) for the rule. Category 2 will include rules warranting individual scrutiny on a case-by-case basis as to whether the rule would prohibit or interfere with Section 7 rights, and if so, whether any adverse impact on employees’ protected conduct is outweighed by legitimate justifications. Category 3 will include rules that the NLRB will designate as unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on employees’ Section 7 rights is not outweighed by legitimate business justifications. The Board specifically identified employer policies that would prohibit employees from discussing wages or benefits with each other as an example for this third category. The three categories identified by the NLRB represent a classification of results from the NLRB’s application of the new test and are not part of the test itself. The NLRB will determine in future cases the types of additional rules that fall into each category. The new balancing test established in Boeing Company overrules the “reasonably construe” standard in place since 2004. Under the “reasonably construe” standard, the NLRB could conclude that a proffered work rule violated the NLRA so long as an employee could “reasonably construe” the rule to interfere with their Section 7 rights. The Board’s new balancing test seeks to provide employees, employers and unions with greater clarity and certainty. While it will take time to determine the full impact of the Boeing decision, the fact that the new balancing standard requires the NLRB to consider the business purpose of a rule is a remarkable shift in the Board’s evaluation of workplace rules, policies and employee handbook provisions. In light of the new balancing test, employers should consider clearly articulating the business justification(s) for workplace rules, policies, and procedures, particularly those that could conceivably implicate rights arising under Section 7 of the NLRA.

Pursuant to Wage Orders promulgated by California’s Industrial Welfare Commission, most non-exempt employees in California are entitled to a paid 10 minute rest break for every 4 hours worked or major fraction thereof. In December 2016 the California Supreme Court clarified in Augustus v. ABM Security Services, Inc. (2016) 2 Cal. 5th 257, 260, that during said rest breaks, “employers must relieve their employees of all duties and relinquish any control over how employees spend their break time.” As we anticipated when this decision first came out, there has been a steady uptick in litigation about this matter as the courts work to define the nature of relinquishing control in the context of a 10 minute rest break. Prior to Augustus, the California Labor Commissioner, Division of Labor Standards Enforcement (“DLSE”) directed that employers could require employees to stay on the premises during rest breaks. However, in the wake of Augustus, in November 2017, the DLSE published updated guidance on the provision of rest breaks to California non-exempt employees and made clear that employers “cannot impose any restraints not inherent in the rest period requirement itself,” including whether employees may leave the premises. As the New Year approaches, California employers should ensure they are meeting the requirements of California rest break law. California businesses should: Review and update policies to reflect that employees entitled to rest breaks may take them at the location of their choosing; Train managers and supervisors on requirements for rest breaks for California employees to ensure expectations are properly communicated; and Communicate to eligible employees their rights regarding rest breaks. If you have concerns that your business may have unintended liability for the provision of rest breaks or you have concerns about remaining compliant, please contact your Polsinelli attorney.

At the end of an unprecedented week of reversals of “Obama Board” precedent, the National Labor Relations Board (“NLRB” or “Board”) reversed its 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile,357 NLRB 937 (2011), casting aside the concept of micro-units and reverting back to the traditional community of interests test for determining bargaining unit appropriateness in representation cases. In PCC Structurals, Inc.,365 NLRB No. 160 (2017), the International Association of Machinists & Aerospace Workers filed a petition for election with the NLRB, seeking to represent a unit of approximately 100 production employees. The Employer, a metal casting company, objected to the unit and argued that its maintenance employees shared the same community of interests as the production employees. It asserted that a wall-to-wall bargaining unit, consisting of 2,565 production and maintenance employees, was the only appropriate unit. The Regional Director disagreed and concluded that the maintenance employees did not share an “overwhelming” community of interests with the production employees. The Employer lost the representation election in this micro-unit by sixteen votes. On appeal, the newly constituted Republican majority reversed and remanded. In a 3-2 decision, the Board discarded the “overwhelming” community of interest standard, and reinstated its pre-2011 standard “that the Board has applied throughout most of its history” allowing it to “evaluate the interests of all employees – both those within and those outside the petitioned-for unit.” The majority criticized the NLRB’s Specialty Healthcare decision for changing the standard for appropriateness in representation petitions, disputing that there ever was a need to “clarify” the traditional community of interests test. Focusing on the interests of excluded employees, which it believed was ignored by the “overwhelming” community of interests standard, the NLRB held, “We believe Specialty Healthcare effectively makes the extent of union organizing ‘controlling,’ or at the very least gives far greater weight to that factor than statutory policy warrants, because under the Specialty Healthcare standard, the petitioned-for unit is deemed appropriate in all but rare cases.” The traditional test will focus on whether the excluded employees share the same community of interest as those in the petitioned-for unit and consider factors such as functional integration, organizational/departmental structure, skills and training, interchangeability, common supervision, along with similarities/differences in working conditions, wages and benefits. In a strongly worded dissent, the Democratic members of the NLRB chided their Republican colleagues as being hypocritical and opportunistic, in light of their newly found majority status and the impending departure of Chairman Miscimarra (who left the NLRB the following day). It argued, “Instead of performing its statutory duty…the Board’s newly-constituted majority seizes on this otherwise straightforward case as a jumping off point to overturn a standard that has been upheld by every one of the eight federal appellate courts to consider it.” As with the recent decision on joint employers, this decision is an overdue but welcome victory for Employers. Challenges to “arbitrary” or “irrational” designations of micro-units will likely be much more successful under the traditional standard. A Union’s ease in organizing smaller and smaller units will become more difficult.

On December 14, 2017, the National Labor Relations Board (“NLRB” or the “Board”), issued a case styled Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156, that expressly overruled the controversial Browning-Ferris Industries of California, Inc.,362 NLRB No. 186(Browning-Ferris)decision issued in 2015. When doing so, the Board reverted to its prior (and longstanding) joint-employer standard. In a 3–2 vote, the Board overturned the joint-employer standard enunciated in Browning-Ferris, which provided that two or more entities, such as a company and a contractor, would be considered joint employers where (for example) the company possessed “indirect control” over aspects of the contractor’s workforce, such as wages, hours, or other material terms and conditions of employment. The Board majority commented: “We think that the Browning-Ferris standard is a distortion of common law as interpreted by the board and the courts, it is contrary to the [National Labor Relations Act], it is ill-advised as a matter of policy, and its application would prevent the board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.” The Board then announced it was returning to its longstanding joint-employer standard that existed prior to Browning-Ferris, which provides that two or more separate entities ( such as the company and contractor discussed above) will be considered joint-employers where the company exerts “direct and immediate” control over the contractor’s employees’ terms and conditions of employment. According to the Board majority: “A finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’” Applying the reinstated joint-employer standard, the Board affirmed the Administrative Law Judge’s determination that Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. -- companies owned by the same individuals --are joint employers and therefore jointly and severally liable for the unlawful discharge of seven striking employees. The Hy-Branddecision represents a welcome change for employers that make use of another entity’s employees, such as franchisors and franchisees or contractors and subcontractors, among many other business relationships. Indeed, the Board’s decision to overrule Browning-Ferrisprovides businesses with greater certainty when entering into relationships with other entities, and further decreases the risk an employer will be found liable for a separate entity’s unfair labor practices.

In two recent developments, the “new” National Labor Relations Board (“NLRB” or the “Board”), which includes two Members nominated by President Trump, has commenced the anticipated roll back of decisions and procedures rendered by the previous Administration’s NLRB. 1. The NLRB General Counsel can no longer demand settlements with a full remedy for all violations. In UPMC, 365 NLRB No. 153 (December 11, 2017), the Board reversed a 2016 decision that prohibited settlements of NLRB complaints over the objection of the NLRB General Counsel (Prosecutor) and the party filing the charge, unless the settlement provided complete remedies for all violations alleged in the Complaint. The 2016 decision, United States Postal Service,364 NLRB No. 116 (2016), had overturned decades-long NLRB precedent established inIndependent Stove, 287 NLRB 740 (1987). In the UPMCmajority’s (Chairman Philip Miscimarra, Member William Emanuel, Member Marvin Kaplan) view, requiring a settlement of all violations with a full remedy for the employees (and union) “imposed an unacceptable constraint on the Board itself which retained the right under prior law to review the reasonableness of any … settlement terms” offered by Respondents (employers and unions). According to theUPMC majority, the 2016 USPSdecision unduly restricted the settlement of NLRB cases and ignored the risks inherent in NLRB litigation. The UPMC decision now allows a Respondent, with approval of the Administrative Law Judge, to settle a case without providing full and complete relief, so long as the resolution is “reasonable.” This approach should facilitate more settlements, and reduce the costs and uncertainty inherent in litigation (for employers and the NLRB). The dissent strongly disagreed with what it called “an eleventh hour” decision during Republican Chairman Miscimarra’s last week as a Board member. However, Chairman Miscimarra will soon likely be replaced by another Republican. 2. The NLRB seeks comments on quickie elections – is more change likely? The day after the UPMCdecision, the NLRB published a Request for Information (“RFI”) in the Federal Register seeking prompt public comments about the controversial 2014 Election Rule, commonly referred to as the “quickie election” rule. Specifically, the RFI seeks public input from December 13, 2017 until February 12, 2018 regarding the following three questions: Should the 2014 Election Rule be retained without change? Should the 2014 Election Rule be retained with modifications? If so, what should be modified? Should the 2014 Election Rule be rescinded? The “quickie election” rule, effective since April 2015, impacted NLRB elections in three main ways: It significantly shortened the time period between the date a petition for election is filed and the date of the election. As a result, elections frequently took place approximately three weeks after the petition was filed. This period shortened employers’ time to respond to the union’s campaign efforts from approximately 6 weeks to 23 days. It considerably restricted the scope of any pre-election challenges that might result in litigation, such as individual voter eligibility issues, unless the question relating to eligibility affected twenty percent (20%) of the proposed unit. Eligibility issues, including determining who is a supervisor and thus is precluded from voting, were generally delayed until after the elections if the union won. It forced employers to disclose a substantial amount of private employee information to the unions, including providing unions with employee contact information. In particular, the employer is required to disclose, for the first time, employee personal email addresses and phone numbers, including all cell phone numbers. Previously, only mailing addresses needed to be disclosed. While the “quickie election” rule has not substantially increased union election win percentage, opponents of the rule have objected to the limited time it provides employers to communicate with employees regarding the election, the deferral of election eligibility issues until after the election, as well as the procedural challenges. Takeaways Moving forward, interested parties should monitor the new Board’s actions. The recent developments indicate the new Board could likely overturn some of the decisions rendered and procedures proffered by President Obama’s NLRB.

Earlier this year, we reported that the San Francisco Board of Supervisors passed legislation to assist working mothers by requiring employers to provide additional accommodations for lactation. On January 1, 2018, the Lactation in the Workplace Ordinance (the “Ordinance”) takes effect. The City of San Francisco’s Office of Labor Standards and Department of Public Health (collectively, the “City”) has published sample forms and guidance for employers to consider when preparing such policies. As a brief refresher, the Ordinance requires virtually all employers (there is no minimum employee threshold) to provide employees a lactation location that is (1) not a bathroom, (2) free of intrusion, (3) clean and safe, (4) available as needed and (5) that has a surface (e.g., a counter or table), electricity, and a chair. There must also be a sink and refrigeration nearby. The space provided may be the employee’s normal work area or a multipurpose room to the extent it meets these requirements. Because of ambiguity regarding the Ordinance’s key terms, the City also has published a “Best Practices and Legal Requirements Checklist” for employers to consider when developing lactation policies. To be clear, the information contained on the checklist goes beyond the legal requirements, and the City advocates that employers—to the extent possible—dedicate a permanent, private room or space for lactation, to include the following: Internal lock, clock, adjustable temperature control, footstool, Wi-Fi, telephone, mirror, lockers, partition, hospital grade breast pump, tape and pen for labeling containers, amongst other things; Reservation system to use the room; External signage; Regular janitorial servicing; and Access to educational literature and resources. The City also proposes several “best practices” for employers to consider when accommodating lactation breaks requested by employees. These include providing employees, upon request, with temporary reduced hours or modifications to job duties, job sharing, flex time, alternative work schedules, and/or telecommuting. If practicable and not otherwise prohibited, the City also encourages employers allowing caregivers to bring the child to the workplace for feedings. While not expressly required by the Ordinance, these “best practices” shed light on how City regulators may interpret the Ordinance’s provisions when determining whether an employer is in compliance with the Ordinance. Please contact your local Polsinelli employment lawyer if you have questions about this Ordinance or would like us to review your company’s policy and approach to compliance with this new law.

On December 4, 2017, the Department of Labor (“DOL”) proposed a rule that will rescind the 2011 regulation prohibiting restaurants, bars, and other service industry employers from requiring front-of-house employees, such as servers, to share tips with back-of-house workers, such as cooks and dishwashers. The current rule does not require tipped employees to share their tips with non-tipped employees; however, the proposed rule, which was first announced in July, will allow employers to require tipped employees to split tips with their co-workers. “The proposal would help decrease wage disparities between tipped and non-tipped workers,” the DOL said in a statement Monday. Under the Fair Labor Standards Act (FLSA), the federal law which governs minimum wage and overtime, employers may take what is called a “tip credit,” meaning they can pay tipped employees less than the minimum wage (the federal tipped minimum wage $2.13 however some states require more) so long as the tips earned by a given employee will increase their wage rate to at least $7.25 an hour (or the state minimum wage, if higher).  Under the DOL’s new rule, employers may choose to not take a tip credit by paying all employees minimum wage. If an employer pays everyone minimum wage, the employer could decide how to split tips received from customers as the tips would no longer be the property of the employee. The proposed rule only applies to employers who pay tipped employees at least the federal minimum wage of $7.25 an hour (or the state minimum wage, if higher than the federal minimum wage) and allow compensation sharing through a “tip pool” with employees who usually do not receive tips, such as cooks and dishwashers. The DOL will accept public comments on the proposed regulation for 30 days (until January 4, 2018). If you have questions about how the proposed rule will affect your business, contact the Labor and Employment attorneys at Polsinelli.

Medical leaves pose operational and legal challenges for employers. As we have previously addressed, those challenges multiply when the employee’s medical leave stems from a workplace injury and workers’ compensation laws are added to the employer’s compliance challenges. Indeed, such injuries can result in the employee seeking leave for an indefinite amount of time. To avoid the uncertainty and difficulties caused by employee absences of indefinite duration, some employers have implemented a “maximum leave” policy – a policy that limits the total amount of leave (from all laws and policies) that an employee can take in a given period of time. However, even a very generous maximum leave policy could violate the Americans with Disabilities Act (ADA), as some courts have held that extended leave can be considered a “reasonable accommodation” of an employee’s disabling condition. Similarly, the U.S. Equal Employment Opportunity Commission has taken the position that “maximum leave” policies are subject to exceptions in the interactive process and that an employer should reasonably accommodate an employee seeking an exception unless doing so will cause an undue hardship. Below are three steps that an employer can take to reduce the risk of an ADA violation when implementing a “maximum leave” policy. 1. Maintain Flexibility The EEOC has recently obtained multi-million dollar consent decrees and settlements from employers that sought to enforce maximum leave policies with respect to disabled employees.  An employer that implements a maximum leave policy may need to consider granting an employee leave beyond the “maximum” allowed leave as an accommodation under the ADA. Accordingly, employers may wish to consider including a statement in any maximum leave policy which provides that there are situations where leave time beyond the stated limit will be granted. 2. Communicate Carefully with Employees Some employers send form letters to employees who are approaching the end of the maximum leave period, which state that the employee must either return to work at the end of the maximum leave period or face termination. The EEOC’s guidance on maximum leave policies suggests that it may consider these communications to violate the ADA. Employers may wish to consider tempering those letters and adding a request that the employee advise the employer by a date certain if the employee believes they may need further leave as an accommodation. 3. Train Employees Employers may wish to train employees that leave may be granted as an accommodation under the ADA and that a maximum leave policy does not prohibit such an accommodation. In particular, employers would do well to train human resources officials, other employees who implement the policy, and all managers on the need to maintain flexibility regarding maximum leave policies to avoid running afoul of the ADA.

On December 1, 2017, the newly appointed National Labor Relations Board (“NLRB”) General Counsel, Peter Robb, issued a memorandumstyled GC Memorandum 18-02 (the “Memorandum”), which provides insight into his likely agenda as General Counsel. While the Memorandum is relatively brief, it suggests that Mr. Robb may seek to revisit some of the policy decisions rendered by President Obama’s NLRB. The Memorandum instructs the NLRB’s Regional Offices to seek “alternative analysis” from the NLRB's Division of Advice regarding 15 separate issues before issuing Complaints, including matters that involve employer handbook rules; joint employer status; off-duty employee's access to property; protected work stoppages; expanded application of an employee's Weingarten rights; disparate treatment of represented employees during contract negotiations; establishing a duty to bargain before imposing discretionary discipline where parties have not executed initial collective bargaining agreement; dues checkoff; and appropriate remedies. The Memorandum also rescinded seven prior General Counsel Memoranda. Employers will be encouraged to note that the Memorandum expressly rescinds General Counsel Memorandum 15-04, which had barred employers from promulgating a host of seemingly innocuous rules in employee handbooks on the grounds that the rules could conceivably chill employees from exercising their Section 7 rights. Moreover, the Memorandum ended a number of initiatives that were pursued by President Obama’s NLRB, including efforts to extend NLRB decisions to electronic systems regularly used in the course of work. Employers have a number of reasons to be optimistic about the Memorandum, as it seems to portend a more employer-friendly agenda than the previous administration. However, the full implications of Mr. Robb’s tenure will more clearly be seen via Complaints that are proffered and NLRB decisions that are rendered. We will continue to report on NLRB cases and decisions here, so stay tuned.

In a post-Defend Trade Secrets Act world, employers have a host of civil remedies available to them for the misappropriation of trade secrets under both state and federal law. To obtain relief, an employer must establish that the information it claims is subject to trade secret protection is, in fact, protected as confidential and secret. Below we outline five actions an employer might consider to demonstrate it has taken the necessary measures to protect the secrecy of its confidential information. Written agreements with employees who have access to trade secrets.These agreements may contain confidentiality, non-disclosure, non-solicitation, or non-competition provisions. To be effective, it is critical that such agreements define clearly what constitutes “confidential information,” and include a clause affirmatively requiring the return of such “confidential information” upon the termination or resignation of the employee. Written policies governing employee conduct.Employers should set forth clear rules for marking and maintaining confidential information, such as written instructions related to copying and sharing of confidential information. Employers can also include restrictions on the sharing or disclosure of confidential information in employee handbooks or other policies that are shared with all employees. Limiting employee access to trade secrets.This may include limiting physical access to documents stored in hard copy, by, for example, limiting locations where the confidential information is maintained, locking those locations, and tracking individuals accessing the information. Employers should also take care to protect electronically-stored information by, for example, employing password protection on documents and databases containing confidential information, restricting access to such documents on external devices, and implementing security monitoring measures. Limiting outsiders’ access. Similarly, employers should limit outsider access to areas housing confidential physical documents and devices with access to electronically stored information. Depending on the information, this may include the use of security guards or cameras, perimeter fencing, visitor badges with log in and out procedures, and security card access to certain areas. Controls on public dissemination.Employers may consider designating an employee to review and approve publicly disseminated information, including publications, presentations, promotional materials, and website content to ensure trade secret information is not inadvertently disclosed. Employers should also carefully evaluate the scope of information shared in meetings with potential partners or customers, and may further consider requiring meeting participants to enter into non-disclosure agreements if confidential information must necessarily be shared. Employers should remember that any security measures should be regularly monitored, audited, and updated to maintain their effectiveness. Efforts to maintain these procedures may pay dividends should the employer have to pursue a former employee for trade secret theft.

The Bakery & Confectionery Union and Industry International Pension Fund (“B&C Fund”) has been underfunded for many years. Indeed, since the bankruptcy of Hostess Corporation in 2012, the B&C Fund’s financial position has worsened. The assets of the B&C Fund currently comprise only 37 percent of its liability. Stated differently, the B&C Fund has only 37 cents to pay for each dollar of vested benefits to employees and retirees. Employers also continue to leave the B&C Fund, and the demographics of the B&C Fund reflect a high ratio of retirees in relation to active employees. The B&C Fund’s actuaries estimate that the fund will become insolvent 13 years from January 1, 2017. In an effort to address its funding deficiency, the B&C Fund has invited contributing employers to a meeting to be held in December 2017 regarding a possible new “two-pool” program. The two-pool program will likely be similar to the program adopted by the New England Teamsters Pension Fund. Thus, employers who join the new pool will likely pay a withdrawal liability amount, possibly on a discounted basis, for past unfunded liability. They will then join the “new pool,” which will be funded at a very high rate—with reduced benefits—to prevent future unfunded liability problems like those in the present plan. In theory, employers who join the new pool will be shielded from additional liability payments should the B&C Fund become insolvent and suffer a mass withdrawal. A new two-pool proposal might offer benefits for contributing employers to the B&C Fund, although it is unlikely to be a panacea for the Fund’s long term financial problems. Nevertheless, the B&C Fund’s two-pool proposal may mark the first significant proposal by a large multiemployer pension plan since the proposal suggested by the Central States Pension Fund was rejected by the Pension Benefit Guaranty Corporation (“PBGC”) and The Treasury Department during 2016. Employers that contribute to the B&C Fund should explore any new two-pool program carefully. Among other things, employers should ask whether a discount of present withdrawal liability will be offered to employers who enter into the new pool, either for an initial lump sum payment or for payment over time. Employers should also determine whether the B&C Fund and the PBGC will provide written assurances that employers who pay current withdrawal liability as a condition to entering the new pool will be shielded from additional withdrawal liability should the B&C Fund face insolvency and mass withdrawal in the future. Lastly, employers should inquire whether there will be a partition plan included in the two-pool program that will separate benefits for “orphaned” employees of Hostess and other employers who are no longer contributing to the B&C Fund. Stay tuned to the Polsinelli at Work blog, where we will provide further updates regarding the “two-pool” program as they become available.

This week, the United States Supreme Court heard oral argument in Digital Realty Trust, Inc. v. Somers to consider whether the Dodd-Frank Act (“Dodd-Frank”) protects internal whistleblowers and, more broadly, regulatory agencies’ power to interpret federal statutes. The Court’s decision could impact an employer’s ability to terminate employees who report concerns of malfeasance internally, and give agencies the power to circumvent Congress’ legislative authority. In Digital Realty, the employer terminated an employee after he internally reported alleged corporate malfeasance. The employee then filed suit, claiming that his termination violated Dodd-Frank’s anti-retaliation provision. Dodd-Frank prohibits retaliation against a “whistleblower” – defined as any individual who provides information relating to a violation of securities laws to the Securities and Exchange Commission (“SEC”), in a manner established, by rule or regulation, by the SEC. In 2011, the SEC interpreted Dodd-Frank’s “whistleblower” definition to include those who make internal reports.  The SEC’s interpretationis impactful – since 2012, 83% of whistleblowers who have received judgments first reported internally to their company and then later to the SEC. The employer in Digital Realty moved to dismiss the employee’s Dodd-Frank retaliation claim, arguing that Dodd-Frank only protects those who provide information to the SEC and not those who internally report violations. The district court denied the employer’s motion and the Ninth Circuit affirmed. If the Supreme Court agrees with the Ninth Circuit, employers may be subjected to further litigation when terminating employees who have internally reported concerns related to Dodd-Frank. Moreover, regulatory agencies could perceive they have greater leeway to interpret legislation. As political affiliations within agencies change, so too could the agencies’ interpretations of statutes. Under such a scenario, employers would need to pay close attention to agency interpretations to minimize legal exposure. Conversely, the Court could strictly interpret Dodd-Frank and limit agencies’ powers, giving strength and certainty to express legislative enactments. Regardless, employers should be mindful of the Court’sDigital Realty decision because it will impact whistleblower litigation and may provide a preview to this Court’s treatment of future employment law cases. Keep watching the Polsinelli at Work blog for more updates regarding this matter.

On November 26, 2017, New York City will join other cities, such as San Francisco and Seattle, when its predictive scheduling laws take effect and require retail employers to give employees a minimum amount of advance notice of their work schedule. Covered retail employers will be required to provide employees with written schedules at least 72 hours before the first shift on the work schedule and to conspicuously post the schedule at least 72 hours before the beginning of the scheduled hours of work. Employers must also update the schedule and directly notify affected employees after making changes to the work schedule, as well as transmit the work schedule electronically, if that is how schedules are regularly communicated. Which Retailers Are Covered? This legislation applies to “retail businesses,” which are defined as entities with 20 or more employees engaged primarily in the sale of consumer goods at one or more stores within the city. The good news for small retailers is that the law does not impact single location, “mom and pop” shops that have fewer than 20 employees. For purposes of the legislation, “employees” are defined as full-time, part-time and temporary employees (including seasonal/holiday workers). If the number of employees fluctuates (over the holidays, for example), the number of employees is determined for the current calendar year based upon the average number of employees who worked for compensation per week during the preceding calendar year. If the employer operates a chain business, then the total number of employees in that group of establishments must be counted. “Consumer goods” means products that are primarily for personal, household, or family purposes, such as appliances, clothing, electronics and groceries. What This Means for Retail Employers This holiday season, the flexibility of retail employers when scheduling shifts to meet day-to-day business needs is about to change, just as retailers hit the busiest time of the year. Retail employers will not be permitted to: Schedule an employee for an on-call shift; Cancel a regular shift for a retail employee within 72 hours of the scheduled start of such shift; Require a retail employee to work with fewer than 72 hours’ notice, unless the employee consents in writing; and Require a retail employee to contact a retail employer to confirm whether or not the employee should report for a regular shift fewer than 72 hours before the start of such shift. The law also requires retail employers to provide an employee, upon request, with his/her work schedule, in writing, for any week the employee worked within the prior three years. Upon request, retail employers will also be required to provide the most current version of the work schedule for all employees at that work location, regardless of whether changes to the work schedule have been posted. What Remains the Same for Retail Employers Some important scheduling flexibility will remain intact for retail employers. For example, employers will still be able to give an employee time off at the employee’s request and/or allow an employee to trade shifts with another employee. Retail employers may also make changes to employees’ work schedules with less than 72 hours’ notice if the employer’s operations cannot begin or continue due to matters beyond their control, such as: Threats to the retail employees or the retail employer’s property; Failure of public utilities or the shutdown of public transportation; Fire, flood or other natural disaster; or State of emergency declared by the president of the United States, governor of the state of New York or mayor of the city. Penalties for Violations Employers are subject to penalties equal to the greater of $500 for each affected employee or the employee’s actual damages. For failing to provide and post work schedules, employers are subject to penalties of $300 for each affected employee. Other remedies are also available, including injunctive and declaratory relief, and attorneys’ fees. Conclusion When the law takes effect on November 26, New York will be the latest city to enact a predictable scheduling law, but it will not likely be the last. San Francisco, Seattle and other municipalities have enacted similar laws and the trend continues to grow. National retailers that rely on fluid personnel schedules should check the jurisdictions in which they operate to ensure they are in compliance with applicable law.

Employers across the country should think twice before asking job applicants about their salary history. As we reported earlier this year,  a number of state legislatures (and some local governments) considered legislation this past session designed to prohibit inquiries into wage history, in an effort to fight wage discrimination and the gender pay gap. Philadelphia's ordinance is currently on hold pending a legal challenge. However, New York City's law became effective on October 31, 2017, and the city recently released guidelines for both employersand employees regarding proper--and improper--inquiries.  Albany County, New York also recently banned inquiries regarding wage history; the ordinance was signed by the County Executive on November 6, 2017 and will become effective 30 days after filing with the New York Secretary of State. Likewise, San Francisco enacted a salary history ban ordinance this summer. A ban on such inquiries will go into effect for the entire state of California effective January 1, 2018. Asking about applicant's salary history in Oregon is prohibited effective October 2017 (although some provisions of the law will not be effective until 2019) and the law in Puerto Rico also became effective earlier this year. Delaware's statute becomes effective in December 2017. Moreover, the Illinois legislature passed a salary history ban this past term, but Governor Bruce Rauner vetoed the legislation. The Illinois House of Representatives voted to override the veto, but earlier this month the Senate failed to obtain the votes needed to override the veto. Governor Rauner stated that he was not opposed to the legislation, but wanted the law to more closely match what had been enacted in other states, such as Massachusetts, where an employer may ask about wage history after an applicant has been offered a job. Governor Rauner's objection to the Illinois legislation highlights a significant issue for employers: differences between laws enacted in various jurisdictions where a company may have employees. While the law in one jurisdiction (such as Delaware and New York City) may allow an employer to ask an applicant about salary expectations, the law in other jurisdictions is not so clear. Similarly, while California and New York City allow employers to take voluntarily disclosed salary history into account, laws in other jurisdictions are silent as to whether (and how) voluntarily disclosed salary history may be used by the employer. It is widely expected that the Illinois legislation will be reintroduced in the upcoming legislative session. In addition, a number of other states (including Idaho, Maryland, New York, Rhode Island, Texas and Virginia) will likely re-visit the issue during their respective 2018 legislative sessions. Consequently, employers wishing to act proactively should consider taking the following steps as part of their routine interviewing and hiring practices: Eliminate wage history questions from job applications, especially those that are used in multiple jurisdictions; Train both hiring managers and human resources personnel regarding what inquiries are permissible in a given jurisdiction, taking into account that in some instances an applicant may reside in a state with a different law than that of the physical location of the company headquarters or the individuals involved in the hiring decision; Evaluate how wages are set for particular positions and create salary bands based on market wage conditions; and Create a system of documenting when an applicant voluntary discloses salary information to insure compliance with laws.

With the smells of turkey, stuffing, and cranberry sauce about to fill kitchens across the country next week, people are getting ready for the holiday season. And as Norman Rockwell has taught us, nothing says the holidays more than a blanket of snow on the ground. But what happens when that blanket of snow prevents employees from reporting to work? Or, even worse, causes an employer to shut down its business for the day? Do you, as an employer, still have to pay your employees? As with most compensation issues, the answer depends on whether the employee is exempt or non-exempt. If weather conditions cause an employer to shut down operations and close, exempt employees are still entitled to pay for the duration of the closing, assuming the business is closed less than a workweek. The rationale is that the exempt employee is available for work, but it is the employer who has made the work unavailable to the employee. On the other hand, when an employer closes shop due to inclement weather, non-exempt employees are not entitled to wages during the closing. Of course, the employer has the discretion to allow non-exempt employees to use PTO during the closing. But what happens when the employer remains open despite inclement weather, and the employee does not report to work? If the employee is classified as non-exempt, the same rules apply – the employee is not entitled to wages during the absence, but the employer has the discretion to allow the non-exempt employee to use PTO for the absence. As for exempt employees, the answer can be a little more complicated. An exempt employee who stays home even though the employer is open for business is not entitled to pay for that day because the employee chose to remove him or herself from the workplace for personal reasons. If the employer has a PTO policy and the employee has accrued time, the employee can use PTO to cover his or her absence. In the event the employee has no accrued PTO available, the employer can reduce the employee’s pay for the absence—in full-day increments only—without violating the salary-basis test of the FLSA. However, this assumes that the exempt employee performs no work during the day while away from the office. If the exempt employee performs any work from home (e.g., answering emails, taking calls, working on the computer, etc.), the exempt employee is working and, thus, is entitled to his or her full salary for that day. Now, if the employee only works from home during some of the work day and takes some work time off, the employer may make deductions from the exempt employee’s PTO bank for the time not worked. However, the employee must still be compensated for the entire day of work – even if the employee does not have enough PTO in his or her bank to cover the partial day. It is imperative to ensure employees are properly compensated during inclement weather – particularly exempt employees so there is no risk of losing the exemption. Of course, it is recommended to engage qualified wage and hour counsel to help you navigate this tricky compensation area.

In recent months, we have written about the limits Article III places on plaintiffs bringing Fair Credit Reporting Act (FCRA) claims. (Seehere, here, and here). In October, two federal district courts further illustrated these limits by dismissing FCRA actions based on lack of Article III standing. In Saltzberg v. Home Depot, U.S.A., Inc., 2017 WL 4776969 (C.D. Cal. Oct. 18, 2017), the plaintiff completed the employer’s disclosure and authorizations forms, which consisted of two pages. The plaintiff alleged that the background check authorization was invalid because the two forms constituted one document and thus the employer violated the FCRA’s standalone disclosure requirement.See 15 U.S.C. § 1681b(b)(2)(A)(i). The court dismissed the plaintiff’s claim for failure to allege Article III standing. It concluded that the plaintiff’s complaint merely contained “an allegation of a statutory violation, not an injury-in-fact.” Such a “violation of the FCRA is insufficient without connecting it to a concrete injury.” A Florida federal district court reached a similar conclusion in Riley v. United Parcel Serv. of Am., Inc.,Case No. 6:17-cv-00254, Dkt. 58 (M.D. Fl. Oct. 2, 2017). In Riley, the employer made a conditional offer to the plaintiff, which it subsequently rescinded based on the results of a background check. The plaintiff brought FCRA claims against the employer for failure to provide him with: (a) a pre-adverse action notice before rescinding the offer; (b) a copy of the background report; and (c) a description of rights under the FCRA. While the employer’s background check provider furnished this information to the plaintiff, he contended that disclosure from the provider “cannot take the place of the notice UPS was required to provide[.]” The plaintiff claimed to have suffered a concrete injury because the employer failed to provide the requisite information, and the employer’s non-compliance “deprived him of the opportunity to learn of the charges against him and … tell[] [the employer] his side of the story.” The employer moved to dismiss, arguing that the plaintiff lacked Article III standing because he did not allege his consumer report was inaccurate, and he received all of the required information, albeit it not from the employer. The court granted the employer’s motion because the plaintiff did not adequately allege “a harm or a material risk of harm that Congress identified or intended to curb when it passed the FCRA.” It reasoned that the plaintiff did not sustain a cognizable “informational injury” because “he was already in possession of [the required] information” even though he received it from a third party. Moreover, the court disregarded the plaintiff’s “conclusory assertion that he had no opportunity to learn of the charges against him or that he was prevented from discussing the contents of his consumer report with [the employer] before it revoked its conditional job offer.” What This Means for Employers As discussed previously on this blog, courts throughout the country continue to address the contours of Article III standing in the context of the FCRA. Compliance is the best defense to such actions, and employers should analyze their background check disclosure and authorization forms to avoid costly class litigation. Employers faced with FCRA litigation should consult with experienced counsel to explore the potential for early dismissal based on lack of Article III standing.

On November 7, 2017, the U.S. House of Representatives voted on and passed the Save Local Business Act, H.R. 3441 (the Act). If passed by the Senate and signed into law by President Trump, the Act would reverse a National Labor Relations Board (NLRB) decision that expanded the definition of what entities can be considered “joint employers” for purposes of the National Labor Relations Act (NLRA). The House’s passage of the Act is welcome news for entities that may have been considered “joint employers” pursuant to the NLRB’s 2015 standard set forth in Browning-Ferris Industries of California Inc., which expanded joint employer liability to employers that exercised or possessed “indirect control” over aspects of another employer’s workforce, such as contractors, franchisees, or staffing agency employees. If signed into law, the Act would undo the NLRB’s Browning-Ferris decision and amend both the NLRA and the Fair Labor Standards Act (FLSA) to provide that an employer is only jointly liable for a business partner’s violation of law when it exercises “direct control” of the partner’s workers. This more limited definition encourages employers to enter into profitable relationships with business partners because there is less fear of becoming liable for the other employer’s bargaining responsibilities and employment law violations. Note the Act faces a tough road in the Senate, where it will need the backing of at least eight Democrats to avoid a filibuster. A companion bill has yet to be introduced in the Senate. The Act marks the latest effort to reverse the controversial Browning-Ferris decision, which is currently on appeal in the D.C. Circuit. It also comes as the U.S. Supreme Court has been asked to take up a decision expanding joint employer under the FLSA. We will continue to monitor the Act’s progress, as well as the Browning-Ferris case as it winds its way through the courts.

Many states allow businesses to require employees to sign agreements restricting their competitive activities following the termination of employment. Such restrictive covenant agreements, including non-competition and non-solicitation agreements, can be great tools to protect an employer’s business interests. Business owners should keep the following in mind to increase the chances that the restrictive covenant agreements are enforced: What is the employer’s protectable interest? An employer generally must set forth a protectable interest to justify the prohibitions contained in a restrictive covenants agreement. Protectable interests can include trade secrets, customer relationships and customer-related information, and confidential business information. If an employee does not have access to confidential business information or trade secrets, or does not have access to client information or contact with clients, a restrictive covenant agreement may not be enforceable against that employee.  Are the geographic, temporal, and/or customer restrictions contained in the restrictive covenant reasonable? Overbroad restrictions will generally not be enforced. For example, a restrictive covenant preventing an employee from working anywhere within the United States following the end of his or her employment is often not enforceable (with limited exceptions). Likewise, a restriction preventing an employee from contacting any/every customer of the business may also not be enforceable with respect to customers with whom the employee had no material contact during his or her employment.        Did the employee receive adequate consideration for entering into the agreement? In some states, continued employment is not sufficient consideration for a restrictive covenant agreement. In other words, in those states, the restrictive covenant agreement must be supported by additional consideration separate and apart from continued employment to be enforceable.  Also, remember that restrictive covenant agreements should be signed by both the employee and a representative of the company to be a binding contract. While restrictive covenant agreements can be useful tools to protect your business, they are considered restraints of trade, and courts may look for reasons to either lessen their impact or strike them outright. Carefully drafted agreements are more likely to be enforced, protecting a business from former employees who may seek to exploit the knowledge gained and relationships cultivated on behalf of a new employer.

Neither Title VII nor the Missouri Human Rights Act (the “MHRA”) expressly prohibits discrimination on the basis of sexual orientation. In a prior post, we discussed a developing theory adopted by courts and administrative agencies that extends Title VII protections of sex discrimination to LGBTQIA individuals on the basis of nonconformance to gender stereotypes. The Missouri Court of Appeals recently held for the first time that the MHRA similarly supports a sex-stereotyping theory and that “[s]ex-based stereotyping can give rise to an inference of unlawful discrimination.” In Lampley v. Missouri Commission on Human Rights, an employee filed a Charge of Discrimination alleging that his employer discriminated against him on the basis of sex. The employee alleged that, as a gay male, his behavior and appearance contradicted the stereotypes of maleness held by his employer, and the employer treated him differently from employees who conformed to gender stereotypes. The Missouri Commission on Human Rights (“MCHR”) terminated its investigation into the employee’s complaints and did not issue a right to sue letter on the grounds that it lacked jurisdiction over the claims because they were based on sexual orientation. The employee petitioned the trial court for administrative review, which granted summary judgment in favor of the MCHR on the grounds that sexual orientation and gender stereotyping are not recognized under the MHRA. The Court of Appeals for the Western District of Missouri acknowledged that claims of discrimination based on sexual orientation are not covered by Missouri law. Reversing the trial court, the Court of Appeals held that the MHRA does, however, prohibit sex-based stereotyping that deprives persons of rights based on traits unique to one’s sex (real or perceived). The Court of Appeals found that the employee’s sexual orientation was merely incidental to the underlying claim of sex discrimination. Whether the employee is “gay neither precludes nor insures his MHRA protections.” The Court of Appeals further held that: "If an employer mistreats a male employee because the employer deems the employee insufficiently masculine, it is immaterial whether the male employee is gay or straight. . . . a sex stereotyping analysis does not create a new suspect class, but simply recognizes the manifold ways sex discrimination manifests itself. The MCHR seems to fear that gay and lesbian employees will assert sex stereotyping in lieu of a sexual orientation claim. That is, the MCHR fears sex stereotyping will be a mere pretext. But the issue before this court is simply whether material issues of fact prevent the entry of judgment as a matter of law. Whether the claim is mere pretext is a question for the trier of fact." The case was remanded to the trial court with instructions for the MCHR to issue a right to sue letter, which will allow the employee to pursue his claims in court. The MCHR may request rehearing or transfer to the Missouri Supreme Court for further review. This ruling potentially broadens the scope of actionable claims under the MHRA. Employers should review and consider revising their policies and procedures regarding non-discrimination, harassment, equal employment, and benefits to conform to recent decisions regarding sex-stereotyping and other legal developments.

On October 30, 2017, the U.S. Department of Labor (DOL) filed an appeal in the United States Court of Appeals for the Fifth Circuit of the August 31, 2017 ruling by the United States District Court for the Eastern District of Texas that invalidated proposed revisions to the Fair Labor Standards Act (FLSA) overtime regulations. Judge Mazzant of the ED of Texas previously issued a nationwide injunction preventing implementation of the regulations that were to take effect on December 1, 2016. According to a DOL statement, “On October 30, 2017, the Department of Justice, on behalf of the Department of Labor, filed a notice to appeal this decision to the U.S. Court of Appeals for the Fifth Circuit. Once this appeal is docketed, the Department of Justice will file a motion with the Fifth Circuit to hold the appeal in abeyance while the Department of Labor undertakes further rulemaking to determine what the salary level should be.” The regulations would have approximately doubled the minimum salary requirement for an employee to meet the requirements of the executive, administrative, and professional exemptions to the minimum wage and overtime requirements under the FLSA (the so-called “white collar” exemptions). Employers applauded when Judge Mazzant issued the nationwide injunction. Employers were further encouraged when the DOL published a Request for Information (RFI) regarding the overtime final rule in July of 2017. The comment period for the RFI has ended, and the DOL is reviewing those submissions. Based on the statement issued, the DOL’s appeal appears designed to provide additional time to rewrite the overtime rule and potentially render the Fifth Circuit litigation moot. We continue to monitor these developments and will provide information and analysis as it becomes available.

On September 7, 2017, the U.S. Court of Appeals for the Eleventh Circuit determined that different treatment based on an employee’s breastfeeding is prohibited by the Pregnancy Discrimination Act (“PDA”). In Hicks v. City of Tuscaloosa,No. 16-13003, the plaintiff worked for a police department, and only eight days after she returned from job-protected pregnancy leave, the plaintiff was reassigned from the narcotics task force to the patrol division. Along with a reduction in pay and different job duties, the plaintiff’s new position as a patrol officer required that she wear a ballistic vest all day, which was not required in her prior position in the narcotics task force. Before plaintiff began work in the patrol division, her doctor wrote a letter recommending that she be considered for alternative duties because the ballistic vest was restrictive and could cause breast infections that would lead to an inability to breastfeed. The police chief offered the plaintiff a safe beat with access to lactation rooms and priority in receiving breaks. However, the police chief refused to consider the request for alternative duty and informed the plaintiff that she could either wear a specially fitted vest or not wear a vest at all. The plaintiff viewed specially fitted vests as ineffective because of the gaping holes they left, and believed that not wearing a vest was too dangerous. Accordingly, she resigned that day and subsequently filed suit. Among other issues, the Eleventh Circuit addressed whether the plaintiff was constructively discharged when presented with alternative options for ballistic vests. The court observed that Title VII of the Civil Rights Act, as amended by the PDA, prohibits discrimination “on the basis of pregnancy, childbirth, or related medical conditions.” The court was tasked with determining whether breastfeeding qualified as a “related medical condition[],” and found that it did. The court explained that the PDA includes a broad catchall phrase, and that it is “a common sense conclusion” that breastfeeding is a gender-specific condition covered by that phrase. Indeed, breastfeeding “clearly imposes upon women a burden that male employees need not – indeed, could not, suffer.” The court also emphasized the U.S. Supreme Court’s prior conclusion that the entire purpose behind the PDA is to guarantee women the basic right to participate fully and equally in the workforce, without being denied the right to full participation in family life. When holding that the PDA covered physiological conditions post-pregnancy, the court observed that the PDA would be rendered a nullity if women were protected during pregnancy, but could be thereafter terminated for breastfeeding attendant to that pregnancy. The Eleventh Circuit added the caveat, however, that its ruling did not require that employers provide special accommodations to breastfeeding workers. The plaintiff in Hicks had not sought a special accommodation, but rather “alternative duty,” which her employer had previously granted to employees with temporary injuries. This decision is a critical reminder to employers to act with caution when pregnant or breastfeeding employees request job-related accommodations. Failure to act in conformance with the PDA risks exposure to legal liability, so employers would do well to consult with counsel during the interactive process.