One year ago, a number of authors contended the NLRB, because of several decisions, was responsible for the decline in civility in the workplace.  They suggested the NLRB “condoned workplace profanity and insubordination”; others suggested the NLRB had “killed” workplace civility.  There was a fair amount of hyperbole in those articles.  Yes, management lawyers, myself included, were very disappointed in those Board decisions.  The pro-union majority seems likely to retain control until at least August 2018, and employers should develop strategies to minimize the impact of those decisions.  Fortunately, several 2015 developments provide greater guidance to employers.  My first post offers guideposts for lawfully meting discipline for vulgarity and other uncivil behavior in the workplace.  My second post, forthcoming next week, suggests how employers may draft lawful civility work rules. Importantly, NLRB limitations on discipline for profanity and abusive language only apply when an employee is engaged in union activities or protected concerted activities.  Concerted activities have been generally limited to group complaints brought to management’s attention, or where an individual seeks to induce group action.  Where concerted or union activities are not involved, employers may take disciplinary action for use of profanity and uncivil conduct, without fear of NLRB action. The NLRB has dealt with uncivil behavior and profanity frequently over its eighty (80) years.  The Board has generally recognized that, in labor relations matters, emotions can run high, and angry employees will sometimes use vulgar and profane language in an atmosphere of conflict.  The Supreme Court noted in 1966 that “the NLRB tolerates intemperate, abusive and inaccurate statements” in union campaigns.  Other cases arose out of strikes where strikers were found to be protected from discharge, even if vulgar or profane, unless the verbal statements are accompanied by physical threats or gestures or are aggravated.  As a consequence, the NLRB has regularly upheld an employee’s exercise of Section 7 rights, including leeway for impulsive and profane comments made while exercising those rights. But the Board’s tolerance of uncivil workplace conduct is not unlimited.  The Board and federal courts have held that an employee exercising Section 7 rights can lose his/her protection if the employee’s concerted actions about working conditions are sufficiently “opprobrious”.  The NLRB has held that grabbing or shoving a supervisor as part of an otherwise lawfully protected protest will lose the protection of the Act.  However, telling a supervisor that he was the “devil” and “Jesus would punish him” while engaged in concerted activities did not lose the Act’s protection. The line between protected and unprotected uncivil and insubordinate behavior is not a bright one.  Whether an employee has engaged in “opprobrious conduct,” which loses the Act’s protection, depends upon (i) the place of the discussion (work or non-work area); (2) the subject matter of the discussion; (3) the nature of the outburst; and (4) whether the employer provoked the outburst.  If there is an inappropriate physical touching accompanying the outburst, this will likely make the employee’s behavior unprotected. But the “opprobrious conduct” defense is not the only basis for an employer to discipline an employee engaged in profanity while exercising Section 7 rights.  If an employer can demonstrate that the employee would have discharged an employee for profanity, even in the absence of protected activity, it is a defense to an alleged NLRB violation (Wright Line defense).  Thus, an employer that consistently enforces a profanity rule by terminating the offender, may lawfully terminate an employee who curses at his supervisor while making protected safety complaints. A recent example of an employer’s need to consistently enforce profanity rules isPier Sixty, L.L.C. decided in March.  In that case, a disgruntled employee, after a confrontation with his manager, made a Facebook posting which repeatedly used the F word in reference to his boss and relatives and finished with “Vote YES for the UNION!!!!!!!”  The post was visible to his Facebook friends including ten co-workers.  While the post was clearly profane, the Board refused to find the comments unprotected because “vulgar language (was) rife in (the employer’s) workforce” and some executives curs(ed) at employee’s daily.  The Board noted that supervisors frequently used the F word toward employees. The Board has also recently demonstrated that the consistent application of work rules can be a defense to a discharge for threatening and vulgar statements.  This June, the NLRB reconsidered its 2012 decision, Fresenices USA Mfg. The 2012 decision in Fresenices was cited by authors as proof for NLRB of his hostility toward civility in the workplace.  In the June decision, the Board reversed itself.  Unlike the prior decision which found that the vulgar and threatening remarks were protected and did not lose the Act’s protection, the June decision backed away from that conclusion and “reserved judgment” on that issue. The June decision held the discharge was however lawful as the company had a practice of terminating employees guilty of dishonesty – and would have reached the same decision – even in the absence of Section 7 activity.  This was a small, but favorable, step by the Board.

A battle rages concerning worker classification in the aviation and aerospace industry, and employers with private aircraft are often on the defensive in a surprise attack by the IRS.  The IRS is a particularly formidable foe, and seeing the IRS across the battlefield is never a welcome sight. For employers in the aviation and aerospace industry or for those that own their own aircraft, this battle involves another potential foe:  the FAA.   The FAA has standards and requirements for the operation of aircraft used for commercial purposes.  In some instances, employers are required to pick a side – do you want to be in compliance with the FAA or the IRS?  A battle victory over one may mean a crushing defeat with the other – or a defeat at the hands of both. Historically, employers and private aircraft owners do not directly employ an aircraft’s pilots or crewmembers or those who perform key safety-sensitive functions.  As such, companies have retained such workers on an independent contractor basis.  These businesses meticulously document this relationship to ensure compliance with all IRS and state-specific regulations.  The FAA, however, requires that these functions be performed by those who work under the direction of the aircraft owner.   If an employer retains control over the worker for FAA purposes, then the worker may be deemed by the IRS an employee, not an independent contractor.  If the business gives control over to the worker for IRS purposes, then the company may run afoul of FAA regulations. An employer, however, has weapons it can use to fend off attacks from both the IRS and the FAA and ultimately prevail on both fronts.  A business can either employ those critical workers or it may use a crewmember agency agreement. The agency agreement must be clear as to the exercise of operational control and safety-sensitive functions.  Another option is an aircraft management company but even then the business must be careful on the language of the agreement. A business can comply by ensuring that the aircraft’s critical functions are being performed by a worker who has a clearly defined relationship with the business and that all critical functions are being performed by the people who are categorized correctly. In addition, a business should review all of its aircraft agreements to ensure operational control and safety-sensitive functions are properly addressed.  When facing off with the IRS or the FAA, careful advanced planning is the best defense (and offense).

In a potential expansion of protections afforded to whistleblowers under the federal False Claims Act (“FCA”), a federal judge in the Eastern District of Virginia reserved ruling on whether the anti-retaliation provision of the FCA, 31 U.S.C. § 3730(h), provides relief for post-termination retaliation. The court also declined to decide whether § 3730(h) permits individual liability. Following his termination from Cardiology Associates of Fredericksburg Ltd. (“CAF”), Dr. Patrick J. Fitzsimmons filed suit against CAF and six individuals, including the clinic’s physicians and practice administrator, alleging, among other things, that Defendants withheld post-termination compensation, to which he was entitled pursuant to his employment contract, in retaliation for his reports of improper billing practices. Denying CAF’s motion to dismiss Fitzsimmons’ FCA claim on the grounds that § 3730(h) does not cover post-employment retaliation, Judge Lauck found that although the “vast majority” of district courts have agreed with the Defendants’ interpretation of that provision, this case was distinguishable because the terms of Dr. Fitzsimmons’ employment agreement specifically provided for additional compensation in the event of termination. Judge Lauck indicated that the issue of whether the FCA contemplates recovery for an employee’s post-termination retaliation would be more appropriately resolved on a motion for summary judgment. Judge Lauck also declined to rule on the individual defendants’ argument that § 3730(h) precludes individual liability, noting that the district courts were in disagreement as to whether the 2009 amendment to § 3730(h), which removed language requiring discrimination “by [an employee’s] employer,” was meant to extend liability to individual defendants or preserve the status quo, and that the Fourth Circuit had yet to weigh in on the issue. Given the lack of guidance from the circuit Courts of Appeal on the issues raised by Defendants in their motions to dismiss, it remains to be seen whether the majority view among the district courts regarding liability for post-termination retaliation will prevail. Judge Lauck’s opinion suggests that, at least in some cases, a broader interpretation of § 3730(h)’s protections may be warranted. The case is Fitzsimmons v. Cardiology Associates of Fredericksburg Ltd. et al., case number 3:15-cv-00072, in the U.S. District Court for the Eastern District of Virginia. A copy of Judge Lauck’s decision can be found here. 

Employers in today’s fast-paced business climate may feel like they are racing in circles when attempting to trust employees with critical company information and also protect that very same information from misuse.  Diligent use of non-disclosure agreements from the inception of the employment relationship is just the beginning.  Staying ahead of the pack also requires quick action when employees depart.  Employees who depart for a competitor often have an unfair early lead.  Chances are that they have planned and timed their departure for their benefit, and have strong incentive to use confidential information that they have acquired about their employer’s business in their new job.  To regain the advantage and shield key information from misuse and prying eyes, employers should consider promptly taking the following steps once a key employee announces a departure for a competitor. 1.  Discontinue Employee Access to Confidential Information Once an employer learns of an employee’s intended departure for a competitor, it should immediately sever the employee’s continued access to confidential information.  It should require the employee to return all confidential documents, marketing plans, customer information, and similar data.  These measures should be designed to include both hard-copy and electronic records.  Procedures should be well-established even before a departure is announced to provide for limiting or discontinuing computer access, and to cease routine automatic distribution of reports, sensitive emails and other documents that contain company confidential information to the employee.  Company keys, cell phones, laptops, and other tangible property should also be secured. 2.  Review the Employee’s Email Account and Computer The departing employee’s computer and email account should be reviewed to ensure that the employee has not taken or otherwise misused confidential information or diverted clients and/or information.  Before doing so, though, employers should properly image – or copy – the computer hard drive to ensure proper preservation.  Although this may add cost to the process, it is crucial to protect the evidentiary integrity of the electronic information on the computer. 3.  Remind the Employee of his or her Continuing Obligations A departing employee should be reminded of his or her continuing obligations to protect company trade secrets and confidential information, and to observe other contractual obligations, when he or she departs.  Whether this is done in person during an exit interview, or exclusively through a transmitted communication, the instruction should be in writing to ensure that there is no dispute over what was said and whether the reminder was provided. 4.  Consider Other Investigation Depending on the circumstances, the employer should also conduct at least some additional investigation, even if minimal.  Evaluating the employee’s activities in the final few weeks or months of his her employment, for instance through review of his or her client contacts, sales, and other activities may reveal tell-tale signs of pre-departure competition or diversion of information.  The employee’s blog posts, Facebook updates, and similar social media activity are often surprisingly ripe with helpful information.  Other employees may also be aware of pre-departure misconduct.  Careful canvassing of these resources should at least be considered in every case. 5.  Assign Tasks and Clients to Other Employees Client and key task responsibility should be assigned to other employees to handle following the employee’s announcement of an intended departure.  The best protection an employer has against diversion of clients is to continue strong, meaningful relationships with those clients. 6.  Consider Notifying the New Employer of the Employee’s Obligations While unnecessary in every case, in some situations it may help to notify the employee’s new employer of the employee’s obligations to protect certain confidential information.  Doing so puts the new employer on notice.  This, in turn, will either incentivize the new employer to ensure that the employee does not improperly misuse confidential information or put the new employer to potential liability if it benefits from any such misuse. These measures will not in themselves provide certainty against misuse of information.  However, when they are coupled with non-disclosure agreements and strong information security protocols, they often provide employers with the necessary boost to accelerate ahead of any improper competition.

There are approximately 1.44 billion active monthly Facebook users and 316 million active monthly Twitter users, in addition to millions who blog or use Instagram and Snapchat. More likely than not, your employees, customers, and clients are social media users. The rise of smartphones has made social networking a swipe or finger tap away; however, companies may find themselves in hot water if an employee “posts” or “tweets” inappropriate material about co-workers, the company, or clients. While it is impossible for a company to monitor every single post or tweet made by employees, a company may and should create social media policies outlining the “dos and don’ts” of posting or tweeting. Developing a social media policy is a great opportunity to create a cohesive brand and culture online, and it may be a company’s first line of defense for mitigating social media risk. The needs of every company are different; nevertheless asocial media policy can address several fundamental topics such as: The usage that is permitted on work computer systems, e-mail, and internet during working hours; Disclosure of confidential or propriety information related to the company or clients; The use of company logos or trademarks; Discriminatory statements and harassment; Whether social media accounts will be monitored; and Actions that may be subject to discipline. Companies also need to consider whether employees should be required to create separate private and professional social media accounts if the employee posts or tweets on behalf of the company. If a company allows an employee to post or tweet on its behalf, the social media policy should clearly define who owns the account—the company or the employee. When creating a social media policy, employers must also remember that under the National Labor Relations Act, social media policies cannot prohibit discussions regarding the terms and conditions of employment. While social media policies seek to prevent chaos, companies should remember that positive employee use of social media is a powerful tool that employers may harness to increase business and brand loyalty. The use of social media by individuals and companies is changing rapidly.  Likewise, the law on social media is rapidly evolving.  Therefore, it is necessary to not only create, but also regularly review social media policies.

By now it’s likely most people have caught a breaking news story, a Twitter feed, a Facebook post, or our June 26, 2015 blog, on the ground-breaking Supreme Court same-sex marriage ruling in Obergefell v. Hodges.  The ruling, which guarantees same-sex couples the right to marry in all 50 states, was one giant leap for mankind.  But now that the dust has settled and the news stories are dwindling down, with respect to benefits, employers are faced with the question, now what? Following the Supreme Court’s 2013 opinion in United States v. Windsor, same-sex couples had the full range of marital rights and benefits in all areas of federal law, including benefits.  The recent Obergefell ruling extends rights by requiring states to license marriage between two people of the same sex and recognize a same-sex marriage lawfully licensed and performed out-of-state.  Now, same-sex married couples have the same rights under both state and federal laws. Before Obergefell, employers had a fiduciary duty to ensure that a same-sex marriage was valid in the jurisdiction in which it was entered for purposes of determining eligibility for survivorship or other benefits in its benefit plans.  After Obergefell, it is no longer required because all states must now license same-sex marriages.  Whether concerning a retirement plan or a health and welfare plan (such as health insurance coverage), employees in same-sex marriages must now be treated the same as any other married employee. Domestic partner benefits, whether same-sex or opposite sex, has been a way for unmarried domestic partners to obtain employer-covered health insurance.  After Obergefell, employers may decide that the equal opportunity for same and opposite-sex couples to marry and obtain health care coverage is generous enough and that, in light of the sometimes complex domestic partnership rules, those benefits should be eliminated from the plan. However, if the decision to eliminate domestic partner benefits is made, employers should be wary about eliminating coverage mid-year and instead provide a transition period so that employees can either decide to get married or find alternative coverage. If an employer decides to eliminate domestic partner benefits mid-year, it may lead to an inconsistency with 125 plan (also known as “cafeteria plan”) elections.  Currently, it is not clear that elimination of coverage for domestic partners would allow an election change under a 125 plan.  If not, an employer may be required to withhold amounts from an employee’s pay for benefits that are not being provided.  It may be argued that elimination of domestic partner benefits is a permitted mid-year change as a greatly modified benefit.  However, employers should be hesitant to allow a change in status election without further guidance and may want to wait until an employee benefit plan’s open enrollment period to provide for changes in elections.  The Obergefellruling is a good reason to perform compliance reviews to ensure plan documents, policies and procedures are up to date.  Employers should consider beginning with the following: Amend plan documents if necessary for compliance with Windsor and Obergefell. Confirm beneficiary designation forms are up-to-date. Eliminate any same-sex discriminatory language in plans and Summary Plan Descriptions. Review retirement plan distribution election forms to ensure joint and survivor annuity elections and waivers properly recognize same-sex spouses. Update new-hire literature. Update qualified domestic relations order (QDRO) procedures to apply to same-sex divorce. It is likely that the IRS will issue additional guidance on the effect of Obergefell.  We will continue to follow the changes and monitor how the changes affect employers and benefit plans.

Your company has been served with a putative employment discrimination class action. You know the named plaintiff signed an arbitration agreement, but it is silent as to whether class arbitration is permitted or prohibited. Does this mean that your company is still faced with the risks and higher costs inherent in class arbitration? Some initial good news – silence on the issue of whether class arbitration is permitted or prohibited does not automatically result in class arbitration. The Supreme Court held inStolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010), that class arbitration is not proper unless there is a “contractual basis” in the relevant agreement showing that the parties agreed to class arbitration. However, the Supreme Court did not explain what it meant by “contractual basis.” In other words, the Supreme Court unfortunately did not hold in Stolt-Nielsen that class arbitration is permitted only where there is an express provision for such a procedure in the arbitration agreement. This ambiguity has resulted in a case-by-case review by courts and arbitrators to decide whether class arbitration is permitted, with unpredictable results. Indeed, in 2013 the Supreme Court upheld an arbitrator’s decision to allow class arbitration despite the subject arbitration agreement’s silence on the issue. Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013). The Court seemed skeptical of the merits of the arbitrator’s decision, but because of the incredibly narrow standard of judicial review of arbitrators’ decisions, class arbitration was upheld in that case. Does the Court or the arbitrator decide whether your silent arbitration agreement allows class arbitration?  The two circuit Courts of Appeal to address the issue both have held that the availability of class arbitration is a question for a court to decide, unless the parties have clearly agreed to submit the question to the arbitrator.Opalinski v. Robert Half Int’l Inc.,761 F.3d 326 (3d Cir. 2014); Reed Elsevier, Inc. ex rel. LexisNexis Div. v. Crockett, 734 F.3d 594 (6th Cir. 2013). Also, though unpublished and devoid of in-depth analysis, the Ninth Circuit likewise upheld a district court’s decision to prohibit class claims from being arbitrated. Eshagh v. Terminix Int’l, Co., 588 F. App’x 703 (9th Cir. 2014). Nevertheless, the remaining Circuits have not addressed the issue, so in those Circuits, concern remains regarding not only whether class arbitration will be permitted, but also who makes that decision for you. Generally, an arbitration agreement should not empower the arbitrator to decide whether class arbitration is permissible.  This is not to denigrate arbitrators, or suggest that arbitrators always allow class arbitration. Rather, if an arbitrator is empowered to make this crucial decision, there is no real option for appealing a decision permitting class arbitration. Note that if your arbitration agreement states that the parties agree that any arbitration will be conducted pursuant AAA’s Commercial Rules, your company has agreed to submit the availability of class arbitration to the arbitrator, per Rule 3 of the AAA’s Supplementary Rules for Class Arbitration. Reed v. Florida Metro. Univ., Inc.,681 F.3d 630 (5th Cir. 2012). Of course, the uncertainty of class arbitration in the face of a silent arbitration agreement can be avoided by including an express class arbitration waiver in the Agreement. This decision involves a host of considerations. Stay tuned!

The Multiemployer Pension Reform Act of 2014 (“MPRA”) was passed as a part of a Congressional effort to aid failing multiemployer pension plans. Partition is one tool the MPRA provides to the Pension Benefit Guaranty Corporation (the “PBGC”) to assist troubled multiemployer pension plans. Partition separates plan participants and beneficiaries whose employers are no longer contributing to the plan due to bankruptcy or other reasons, from the participants and beneficiaries who are still covered by a contributing employer. In June, the PBGC released final proposed rules that provide guidance on how a struggling multiemployer pension plan can apply for plan partitions. A partition is the transfer of a portion of an original multiemployer pension plan’s liabilities to a successor plan, which is financially backed by the PBGC, in order to prevent the original plan from reaching insolvency. To be eligible for partition, the multiemployer pension plan must meet multiple requirements, set forth in the application for partition filed by the plan sponsor. The plan must be in “critical and declining status.” “Critical” is generally defined by ERISA § 305(b), as a plan that has less than 65% of the funding necessary to pay its pension benefit obligations. The plan is “declining” if it is projected to become insolvent during the current plan year, during any of the 14 succeeding plan years, or during any of the 19 succeeding plan years if the plan has a ratio of inactive participants to active participants that exceeds two to one. The plan sponsor also must establish that all reasonable measures to avoid insolvency have been exhausted, including a “suspension” of benefits. The partition must be necessary in order for the plan to remain solvent, and must reduce the PBGC’s expected long-term loss concerning the plan. The PBGC must be able to continue satisfying its existing financial obligations to other plans, as the costs for partition are funded by the PBGC. If the PBGC grants partition, the participants and beneficiaries whose employers are no longer plan contributors are separated into the successor plan. The PBGC then provides 100% of the minimum statutorily guaranteed benefits to the participants and beneficiaries allocated to the successor plan. (The minimum guaranteed benefits are a small percentage of the benefits originally promised by pension funds, often no more than one third of the promised benefits.) Since a partition application must show the plan has taken all reasonable measures to avoid insolvency, including benefit suspension, the PBGC expects (and will probably require) any plan applying for partition will also apply for a proposed suspension of benefits. Under a suspension of benefits, the participants and beneficiaries covered by the successor plan receive 110% minimum statutory guarantee. The PBGC covers 100% of the statutorily guaranteed rate, and the original plan remains responsible for the additional 10% owed to the partitioned participants and beneficiaries. With respect to suspension of benefits, there are various requirements and limitations; for example, the suspension of disability benefits and benefits for those over 80 years old are prohibited. If the plan’s application for partition and benefit suspension is accepted, it must be approved by a vote of eligible plan participants and beneficiaries before implementation. In summary, the purpose of partition under the MPRA is to allow multiemployer pension plans to provide fuller benefits to contributing employers’ participants and beneficiaries, while allowing those without a contributing employer to receive more benefits than those statutorily guaranteed. While applying for partition includes many challenging steps for the fund, it may be a useful tool to avoid insolvency of a multiemployer pension plan. To read more on Polsinelli’s coverage of the MPRA, please see: Volume 1, February 2015 Volume 2, March 2015 Volume 3, April 2015 Volume 4, July 2015

The recent Supreme Court decision in Kerry v. Din places limits on immigrant families’ ability to live together in the United States.  In the Din case, a US citizen, petitioned to have her husband immigrate to the United States from his home in Afghanistan.  The husband’s visa application was denied by the US Consulate in Afghanistan on the basis that he had engaged in terrorist activities, but without providing the husband or Din any details. The Din decision provides another significant hurdle when seeking review of visa decisions made by US Consular officials.  The Court found it legally sufficient that the Consulate denied the husband’s visa application by merely citing to the terrorism bar, but without providing any underlying facts. Din filed an action in federal district court in California, claiming that she was denied due process when her husband’s visa application was rejected without a more detailed explanation regarding his alleged terror activities.  Ultimately, the Supreme Court determined the visa denial neither violated Din’s due process rights nor her implied fundamental liberty rights. Writing for the plurality, Justice Scalia found that there is not a constitutional right for a US citizen to live in the US with his or her spouse.  Rather, Justice Scalia reasoned, the denial of the visa application was nothing more than a deprivation of her husband’s ability to immigrate to the US.  And, according to Justice Scalia, no process is due if one is not deprived of life, liberty, or property under the Fifth Amendment. Moreover, Justice Scalia did not find an implied fundamental right in the unity and happiness of the immigrant family that created a due process right for Din.  In short, the Court found that neither Din’s right to live with her husband nor her own right to live in the US was implicated, and as a result her constitutional claims of violation of due process failed. The Dindecision certainly makes it easier for US Consulates to exclude foreign nationals for claimed national security reasons.  Neither the foreign national nor his or her family has a viable mechanism to appeal a visa denial.  While national security is paramount, the potential exists for families to be kept apart based on faulty or incomplete information that is unchallengeable.  Without the protection of due process, it will take an act of Congress to provide for some form of review of this type of Consular decision making. Perhaps not all is lost for Din and her husband.  Justice Scalia pointed out that the couple is free to live together anywhere in the world where both are permitted to reside.

Title VII does not specifically prohibit discrimination based upon sexual orientation. Even so, courts and the EEOC have recently been willing to afford Title VII protection from sex discrimination to individuals on the basis of sexual orientation. The rationale for extended protection emanates from Price Waterhouse v. Hopkins, which held that Title VII prohibits discrimination based on an individual’s failure to conform to sex stereotypes. In a decision issued last week, administratively adjudicating a federal government employee’s sexual orientation discrimination claim, the EEOC determined that . . . the question is not whether sexual orientation is explicitly listed in Title VII as a prohibited basis for employment actions. It is not. Rather the question for the purposes of Title VII coverage of a sexual orientation claim is the same as any other Title VII case involving allegations of sex discrimination – whether the [employer] has relied on sex-based considerations. According to the EEOC, discrimination on the basis of sexual orientation is premised on sex-based expectations and stereotypes. Therefore, the EEOC concluded that “sexual orientation is inherently a ‘sex-based consideration,’ and an allegation of discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII.” The EEOC decision cites a number of federal courts from across the country recognizing Title VII stereotyping claims based on sexual orientation. The EEOC extensively relies on the US District Court for the DC Circuit’s reasoning from its 2014 opinion in Terveer v. Billington, which held that a plaintiff stated a claim for sex discrimination based on his sexual orientation. The plaintiff there alleged that he is a homosexual male whose sexual orientation is not consistent with the defendant's perception of acceptable gender roles, and that the defendant denied him promotions and created a hostile work environment because of his nonconformity with male sex stereotypes. The court denied defendant’s motion to dismiss, finding that the plaintiff sufficiently plead he was the victim of sex stereotyping, a form of sex discrimination recognized under Title VII. Although the recent EEOC ruling does not disturb the existing federal law, which does not extend Title VII protections to claims based on sexual orientation in the absence of sex stereotyping, momentum is gathering behind the EEOC’s view, underscored by the Supreme Court’s ruling in Obergefell v. Hodges that legalized same sex marriage nationwide. Thus, employees treated less favorably than other employees because he or she does not fit into a particular mold of how someone of that gender should look or act may likely have a valid Title VII sex-discrimination claim.  Some federal courts may be persuaded that sexual orientation discrimination is sex stereotyping prohibited by Title VII. Until the matter is reconciled in a future Supreme Court ruling, or act of Congress, employers seeking to avoid lawsuits should base their employment decisions on valid business factors and legitimate reasoning – and not upon biases or stereotypes. Employers should also review and consider revising their policies and procedures as related to non-discrimination, harassment, EEO policies, and benefits to conform to the recent EEOC decision.

As discussed in our June 30, 2015 blog post, the Department of Labor (“DOL”) recently proposed changes to the salary requirements of the Fair Labor Standards Act’s (“FLSA”) white collar exemptions – putting many currently classified exempt employees in danger of losing their exempt status. While there are obvious issues related to revamping policies and record keeping practices for these affected employees, another issue lurks in the shadows – these once exempt employees regularly communicating and working outside of work hours via their smartphones. More and more communication in the workplace is being done via emails and text messages on smartphones – particularly by exempt employees because their work  hours are not tracked and they are not eligible for overtime. With the DOL’s newly proposed rules, what is a company to do with employees who were once exempt and regularly used their smartphone for work and are now no longer exempt? This question has not flown under the DOL’s radar. In its Spring 2015 regulatory agenda, the DOL’s Wage and Hour Division announced a request for information regarding “the use of technology, including portable electronic devices, by employees away from the workplace and outside of scheduled work hours.”  While the DOL did not propose any formal rule-making on the issue, it is likely the DOL will implement new rules relating to non-exempt employees’ use of smartphone and other electronic devices outside of normal work hours. Non-exempt employees may sue employers for unpaid wages and overtime for time spent responding to electronic communication on smartphones outside of work hours.  The FLSA also allows “similarly situated” employees to litigate collectively to recover alleged unpaid overtime, unpaid wages, liquidated damages, and attorneys’ fees and costs.  The number of lawsuits on this particular issue is relatively small thus far but is growing.  Ironically, Verizon and T-Mobile have both been the subject of FLSA collective action suits where the plaintiffs alleged the companies required them to carry smartphones and monitor and respond to work-related emails and text messages at all hours.  These cases ultimately settled before the filing of any dispositive motions. However, in Allen v. City of Chicago, No. 10-C-3183, 2013 WL146389 (N.D. Ill. January 14, 2013), a police officer sued the City of Chicago for unpaid overtime related to off-the-clock usage of his smartphone device.  The officer alleged that the police department issued police officers electronic devices and required them to respond to work-related emails, text messages, and voicemails around the clock while off duty.  The court conditionally certified a class of all police officers employed by the City that were required to carry smartphones, and in October 2014, denied the City’s motion to decertify the class.  The case is still pending. Regardless of the increased prevalence of these cases, the advantages of smartphone use by employees and an employer’s ability to easily communicate with those employees outside work hours ensures that smartphones are here to stay.  If employers still wish for their employees to be connected via smartphone – even if the employee no longer meets the white collar exemption under the DOL’s new proposed rules – certain precautions should be taken: 1.  Employers must ensure that employees are properly classified as exempt or non-exempt based on their duties actually performed and salary. 2.  If at all possible, the issuance of smartphones or the ability of employees to use their own smartphone to access employer emails should only be granted to exempt employees. 3.  If smartphones must be used by non-exempt employees, those employees should be required to keep detailed time records of each phone-related activity, including the date, time, and description of the communication, and how long the employee spent reviewing and responding to the communication.    4.  Employers must have and routinely educate employees on a policy against performing unauthorized work and off-the-clock work.  Similarly, employers must follow through with disciplinary action against employees who violate the policy, including, but not limited to, confiscating employer-owned phones, suspending the employee’s ability to access the employer’s email via their own smartphone, and termination. 5.  Employers should monitor employee’s access to and use of the employer’s network and email systems to ensure employees are following the employer’s policies. 6.  The employer can require supervisors to send emails with a “delayed delivery” so non-exempt employees do not receive emails until they are on-the-clock during normal work hours. Because of the rampant use of smartphones and electronic devices in the business world, coupled with the DOL’s Spring 2015 Request for Information, it is likely that litigation on this topic will become more prevalent.  Employers are encouraged to preemptively address off-the-clock smartphone usage by those employees that soon may be reclassified as non-exempt under the DOL’s proposed changes to the white collar exemptions.

The next term for the California Supreme Court will be robust with employment decisions. We provide you with the hottest cases to watch that may affect your business over the course of the next year. The court is poised to address rest breaks, classification of employee versus independent contractor, seating requirements and personnel file issues. Meanwhile, civil rights attorneys have recently filed in the trial courts a flurry of cases against shared “on demand” economy entities claiming that workers are misclassified. We will keep you informed of relevant developments in the law that may affect the decisions of the court. Augustus v. ABM Security Services, Inc., S224853. (B243788; 233 Cal.App.4th 1065; Los Angeles County Superior Court; BC336416, BC345918, CG5444421.)Petition for review after the Court of Appeal reversed the judgment in a civil action.  This case presents the following issues: (1) Do Labor Code, § 226.7, and Industrial Welfare Commission wage order No. 4-2001 require that employees be relieved of all duties during rest breaks? (2) Are security guards who remain on call during rest breaks performing work during that time under the analysis of Mendiola v. CPS Security Solutions, Inc. (2015) 60 Cal.4th 833? Dynamex Operations West, Inc. v. Superior Court, S222732. (B249546; 230 Cal.App.4th 718; Los Angeles County Superior Court; C332016.) Petition for review after the Court of Appeal granted in part and denied in part a petition for peremptory writ of mandate.  This case presents the following issue: In a wage and hour class action involving claims that the plaintiffs were misclassified as independent contractors, may a class be certified based on the Industrial Welfare Commission definition of employee as construed in Martinez v. Combs (2010) 49 Cal.4th 35, or should the common law test for distinguishing between employees and independent contractors discussed in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 control? Kilby v. CVS Pharmacy, Inc./Henderson v. JPMorgan Chase Bank NA, S215614. (9th Cir. Nos. 12-56130, 13-56095; 739 F.3d 1192, Southern District of California, 3:09-cv-02051–MMA-KSC; Central District of California, 2:11-cv-03428-PSG-PLA.) Request under California Rules of Court, rule 8.548, that this court decide questions of California law presented in consolidated appeals pending in the United States Court of Appeals for the Ninth Circuit. The questions presented are: For purposes of IWC Wage Order 4-2001 § 14(A) and IWC Wage Order 7-2001 § 14(A), “(1) Does the phrase ‘nature of the work’ refer to an individual task or duty that an employee performs during the course of his or her workday, or should courts construe ‘nature of the work’ holistically and evaluate the entire range of an employee’s duties? (a) If the courts should construe ‘nature of the work’ holistically, should the courts consider the entire range of an employee’s duties if more than half of an employee’s time is spent performing tasks that reasonably allow the use of a seat? (2) When determining whether the nature of the work ‘reasonably permits’ the use of a seat, should courts consider any or all of the following: the employer’s business judgment as to whether the employee should stand, the physical layout of the workplace, or the physical characteristics of the employee? (3) If an employer has not provided any seat, does a plaintiff need to prove what would constitute ‘suitable seats’ to show the employer has violated Section 14(A)?” McLean v. State of California, S221554. (C074515; 228 Cal.App.4th 1500; Sacramento County Superior Court; 34201200119161CUOEGDS.) Petition for review after the Court of Appeal affirmed in part and reversed in part the judgment in a civil action. This case presents the following issues: (1) When bringing a putative class action to recover penalties against an “employer” under Labor Code section 203, may a former state employee sue the “State of California” instead of the specific agency for which the employee previously worked? (2) Do Labor Code section 202 and 203, which provide a right of action for an employee who “quits” his or her employment, authorize a suit by an employee who retires? Mendoza v. Nordstrom, S224611. (9th Cir,. No. 12-57130; 778 F.3d 834, Central District of California; 8:10-cv-00109-CJC-MLG.)Request under California Rules of Court, rule 8.548, that this court decide questions of California law presented in a matter pending in the United States Court of Appeals for the Ninth Circuit. The questions presented are: “(A) California Labor Code section 551 provides that ‘[e]very person employed in any occupation of labor is entitled to one day’s rest in seven.’ Is the required day of rest calculated by the workweek, or is it calculated on a rolling basis for any consecutive seven-day period? (B) California Labor Code section 556 exempts employers from providing such a day of rest ‘when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.’ (Emphasis added.) Does that exemption apply when an employee works less than six hours in any one day of the applicable week, or does it apply only when an employee works less than six hours in each day of the week? (C) California Labor Code section 552 provides that an employer may not ‘cause his employees to work more than six days in seven.’ What does it mean for an employer to ‘cause’ an employee to work more than six days in seven: force, coerce, pressure, schedule, encourage, reward, permit, or something else? Poole v. Orange County Fire Authority, S215300. (G047691, G047850; 221 Cal.App.4th 155; Orange County Superior Court; 30-2011-00463651.) Petition for review after the Court of Appeal reversed the judgment in an action for writ of administrative mandate. This case presents the following issue: Did a daily log about firefighters, which was maintained by a supervisor and used by the supervisor to prepare annual performance evaluations, qualify under the Firefighters Procedural Bill of Rights Act (Gov. Code, § 3250 et seq.) as a personnel file and/or as a file used for personnel purposes?

After protracted negotiations, the California State Legislature passed AB 304 as urgent legislation to amend California’s mandatory paid sick leave law, also known as Healthy Workers, Healthy Families Act of 2014 or AB 1522 (the “Act”).  The bill was signed into law by Governor Jerry Brown  on July 13, 2015, making the amendments effective immediately.   A copy of AB 304 can be found here. Effective July 1, 2015, the Act required nearly all employers to provide paid sick leave for an employee who works in California for 30 days or more per year, regardless of the size of the employer or the type of employee; see previous coverage on specifics of the Act here.  However, the Act as initially written caused significant confusion and contained many ambiguities, making the day-to-day application for some employers difficult.  Accordingly, the California Legislature moved swiftly to put into effect “clean-up” amendments aimed at clarifying the uncertainties of the Act.  The key areas of clarification for employers in the amendments include: rate of pay calculation, alternative accrual methods, recordkeeping requirements, and clarification on the definition of eligible employees and requirements for rehired employees. Rate of Pay Calculation of Paid Sick Leave The amendments now clarify the proper methods for employers to calculate the rate of pay for nonexempt employees utilizing paid sick leave, permitting any of the following calculations: 1. in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek; or 2. by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. For exempt employees, employers should calculate paid sick leave in the same manner as the employer calculates wages for other forms of paid leave time. Alternative Accrual Methods Now Expressly Authorized Under the original Act, employers could provide paid sick time using an accrual based on hours worked (1 hour for every 30 hours worked) or provide a lump sum of 3 days or 24 hours at the beginning of the year.  These two options remain available for compliance.  However, now additional accrual methods are authorized, provided that the employee accrues sick time on a regular basis and the employee will have a minimum of 24 hours of accrued sick leave available by the 120th calendar day of his/her employment of each calendar year, or in each 12-month period. Grandfather Clause for Pre-January 1, 2015 Accrual Policies The Legislature clarified protections for employers that prior to January 1, 2015 already had policies providing for paid sick leave or paid time off (“PTO”) that utilized a different accrual method than providing one hour per 30 hours worked.  Specifically, while employers will also still need to comply with other provisions of the Act, if their pre-January 1, 2015 policies met the following criteria they will be “grandfathered” in: 1. accrual method providing on a regular basis at least one day or eight hours of accrued sick leave or paid time off within three months of employment of each calendar year, or each 12 month period, and 2. the employee was eligible to earn at least three days or 24 hours of sick leave or PTO within nine months of employment.  It is important to note that if the employer modifies the accrual method used in its “grandfathered” policy, the employer will then have to comply with the alternative accrual methods discussed above.  Employers are also permitted to increase the accrual amount or rate for a class of employees. Recordkeeping Requirements Employers are required to keep records of hours worked and sick time used/accrued for three years.  However, the AB 304 amendments clarify that an employer is not obligated to inquire into or record the purposes for which an employee uses paid sick leave or PTO.  This is an important clarification for employers who use PTO policies to satisfy the Act’s requirements. Wage Statements for Unlimited Paid Sick Leave/PTO Employers are required under the Act to provide written notice to employees of the amount of paid sick leave available, or PTO an employer provides in lieu of sick leave, on the employee’s itemized wage statement.  The clean-up legislation now clarifies that if an employer provides unlimited paid sick leave or unlimited PTO to an employee, the employer may now satisfy this requirement by indicating on the notice or the employee’s itemized wage statement “unlimited.” Employees Must Work 30 Days in California for the Same Employer To Qualify It is now clear from the clean-up amendments that an employee must work for the same employer for 30 days or more in California within one year to qualify for the paid sick leave under the Act.  Prior to the amendments, it was not clear if the 30 days of employment applied if an employee worked for different employers in the state. Reinstatement of Paid Sick Leave Balance Upon Rehire AB 304 clarifies that an employee that separates from an employer and is rehired by that same employer within a year of separation shall be entitled to use the previously accrued and unused paid sick days as long as the employee was not paid out at the time of separation.  This is significant because if an employer used a PTO policy to comply with the Act, the accrued and unused PTO is treated as wages under California law and must be paid out at the time of separation (In contrast, accrued and unused paid sick leave does not need to be paid out at separation).  This begged the question whether the accrued and unused PTO balance had to be reinstated if an employee was re-hired within one year of separation since the employer had paid it out.  These clean-up amendments clarify that the answer is no. The re-hired former employee will also be entitled to use those previously accrued and unused paid sick leave days and to accrue additional paid sick days upon rehiring subject to the use and accrual limitations. Retired Annuitant Employee of a Public Entity Excluded The amendments clarify the definition of “employee” to now exclude a retired annuitant of a public entity.  Accordingly, an employee of the state, city, county, district or any other public entity who is a recipient of a retirement allowance and employed without reinstatement into his or her respective retirement system does not qualify for mandatory sick leave under the Act. Summary While the “clean-up” amendments provide further guidance to employers on the practical application of the Act, they do not answer all of the outstanding questions in applying the Act or calm the significant confusion that exists from the ambiguities that remain in the Act.  Employers should continue to monitor PolsinelliAtWork.com and the DLSE website for updates, and to consult with an experienced labor and employment attorney for further guidance in complying with the law.   A detailed review of employer policies and employee handbooks is recommended to ensure compliance with the Act.  For more information or to initiate a review of your own employment policies and procedures, please contact the authors or your Polsinelli attorney.

On July 15, 2015, the Wage & Hour Division of the United States Department of Labor issued a 15-page Administrator’s Interpretation offering the DOL’s view on how the Fair Labor Standards Act’s (“FLSA”) definition of “employ,” meaning “suffer or permit” work, impacts the legal test for whether workers are considered employees or independent contractors.  A business with properly classified independent contractors need not compensate such individuals in accordance with the minimum wage and overtime requirements FLSA. Although the Administrator’s Interpretation is not binding law, it previews positions DOL likely will take in future investigations and litigation challenging the classification of independent contractors.  The Administrator’s Interpretation also may influence court decisions and those of various state and other federal agencies grappling with the “employee v. independent contractor” issue.  Consequently, the Interpretation should inform employers’ regular internal reviews of existing and proposed classifications. The Administrator’s Interpretation laments so-called “fissured workplaces,” resulting from increasing replacement of employees with contracted labor, through the use of subcontractors, temporary agencies, labor brokers, franchising, licensing and third-party management.  Meanwhile, as discussed in our ongoing Uber Watch post series, independent contractors have also burgeoned through participation in the sharing economy, across various service industries.  The Administrator’s Interpretation notes the evolving “nature of [] business, regulatory requirements, or the desire to ensure that [] customers are satisfied” do not create exemptions from the economic realities test.  If one or more of these circumstances trigger the factors under the “economic realities” test, an employment relationship is more likely to be found. A multi-factored “economic realities” test is commonly applied to determine whether an employer “suffers or permits” work creating an employment relationship triggering the FLSA.  The July 15, 2015 Administrator’s Interpretation discusses six factors: Is the work an integral part of the employer’s business? Does the worker’s managerial skill affect the worker’s opportunity for profit or loss? How does the worker’s relative investment compare to the employer’s investment? Does the work performed require special skill and initiative? Is the relationship between the worker permanent or indefinite? What is the nature and degree of an employer’s control? Many state laws, such as state overtime laws, unemployment insurance, worker’s compensation, implicate different tests for classifying independent contractors and employees.  Thus, an independent contractor relationship should be assessed on a state-by-state and law-by-law and basis. Businesses, especially in labor intensive industries and the sharing economy, should closely track the evolving standard of employment and independent contractor classification.  We will track how the Administrator’s Interpretation affects future DOL Wage & Hour investigations and whether it is cited persuasively by courts interpreting the FLSA.

Are you impressed by how conclusively the tests on CSI and similar shows solve their investigators’ cases? Apparently the Loss Prevention Manager for Atlas Logistics Group Retail Services, LLC was. When he was charged with the unenviable task of discovering which employee(s) were defecating in the company’s grocery warehouse, he decided to turn to DNA. Atlas hired a lab to swab the cheeks of employees who were scheduled to work when the incidents occurred and compared the DNA of the employees to the DNA that was left behind by the offender(s). The lab did not analyze the DNA samples to identify any propensities for disease, but the testing did identify genotypes and mutations. Two of the employees tested then protested and filed Charges of Discrimination with the Equal Employment Opportunity Commission and filed what, by all accounts, is the first lawsuit under the Genetic Information Nondiscrimination Act (“GINA”) to go to a jury. The employees who sued were not a DNA match with the samples in the warehouse, and they did not allege genetic discrimination. Rather, the case focused on GINA’s prohibition against employers requesting, requiring, or purchasing genetic information, including genetic tests, from and about employees. The statute defines genetic tests as “analysis of human DNA, RNA, chromosomes, proteins, or metabolites, that detects genotypes, mutations, or chromosomal changes.” The employees and Atlas filed cross-motions for summary judgment. Atlas argued that the DNA testing it performed was not prohibited by GINA because the testing did not analyze propensity for disease. However, the trial court rejected Atlas’s argument based on the broad wording of GINA. Because the testing analyzed DNA, the trial court found that Atlas had requested or required genetic testing and granted summary judgment for the employees.[2] In June, the trial court held a jury trial on damages. On June 22, 2015, a jury awarded the employees a total of $2.23 million. A whopping $1.75 million of that verdict was punitive damages. The remainder, $475,000, was for emotional distress damages. Atlas may challenge this verdict as exceeding the caps on awards under GINA. Even if Atlas succeeds in reducing the verdict, this case is a cautionary tale for employers. The summary judgment ruling indicates that courts will not take kindly to requesting genetic information as part of a workplace investigation. Further, because GINA prohibits purchasing genetic information, an employer acts at its peril if it pays for genetic testing or test results even if the employee volunteered the sample. Additionally, the jury’s verdict shows that juries expect employers to know and follow the law – and may not be very forgiving of violations. Like any cautionary tale, this tale can only be effective if it is shared. Employers should use this case as an opportunity to remind management, human resources, and risk management employees about the limitations imposed by GINA. In order to avoid violating other laws while complying with GINA, employers should also remind employees of the federal, state, and local laws on audio and visual surveillance.

In 2013, the U.S. District Court for the Southern District of New York held that two employees were improperly classified as unpaid interns, relying on the Department of Labor’s six-factor test (previously discussed here), and granted another unpaid intern’s motions for class and conditional certification in Glatt et al. v. Fox Searchlight Pictures, Inc. et al.  Last week, a three-judge panel of the Second Circuit Court of Appeals rejected the six-factor test, vacated the district court’s orders, and remanded the case. The Second Circuit rejected the DOL’s six-factor test as too rigid and not persuasive because the factors resulted from the agency’s attempt to interpret case law, as opposed to statutory language or its own regulations.  In its place, the Second Circuit adopted a version of the defendant’s proposed “primary beneficiary test,” where “the proper question is whether the intern or the employer is the primary beneficiary of the relationship.”  The Court articulated the following “non-exhaustive set of considerations” for this new test: The extent to which the intern and the employer clearly understand that there is no expectation of compensation.  Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa. 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 coursework or the receipt of academic credit. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar. 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 entitlement to a paid job at the conclusion of the internship.   The Court reasoned that the primary beneficiary test focuses on what the intern receives in exchange for his or her work, while according courts the flexibility to examine the economic reality as it exists between the intern and the employer. The recent decision has been criticized for placing too much value on the internship’s association with academic programs and institutions and for replacing the Department of Labor’s six factors with a novel test supported by minimal legal authority.  However, while not foreclosing the possibility of successful motions for class or conditional certification, it seems that this new test will make it more difficult due to its requirement that courts “consider individual aspects of the intern’s experience.”  For now, the intern’s case heads back to the district court for evaluation of the plaintiff’s internship program under new Second Circuit standard.  The ruling demonstrates how the law concerning intern compensation is constantly evolving and why it is critical for employers to be cognizant of how their internship programs are structured and administered.

Many employers conduct some level of background screening on applicants and, at times, current employees.  From the employer perspective, the benefit is clear—employers want to know who they are hiring and avoid potential claims of negligent hiring. More and more, however, state and federal laws and the agencies that enforce them are creating obstacles.  “Ban the box” legislation, the Fair Credit Reporting Act (“FCRA”), and the Equal Employment Opportunity Commission’s (“EEOC”) guidance all restrict the information employers can request, how they request it, and how they can use it.  Some employers are throwing up their hands and throwing in the towel.  But employers need not panic.  Although increasingly more complicated, background checks can still be a useful tool—employers just need to be aware of the changing landscape. First, employers should stay abreast of changes in local and state law.  Has the state or municipality enacted “ban the box” legislation (i.e., a prohibition against asking on an employment application whether an applicant has a criminal record)?  Is such legislation on the horizon?  If so, this question must be removed from job applications.  Even if not, consider removing the question from job applications and requesting the information at a later point in the hiring process. Second, if background checks are run through a third party, make sure to comply with FCRA requirements.  Among other things, employers must make a disclosure in a separate documentto the individual that the background check will be obtained for employment purposes and receive authorization from the individual.  If the decision not to hire the individual is based on the background check, the employer must notify the individual of the adverse action, provide the individual with a summary of rights, and provide the individual with a copy of the background check information on which the decision is based.  The FCRA has additional requirements, as do some states, so it is important to understand all applicable obligations. Finally, once the background check is run, be careful how it is used.  In August 2012, the EEOC issued enforcement guidance regarding employer use of arrest and conviction records.  The EEOC has long taken the position that an employer’s use of an individual’s criminal history when making employment decisions may violate Title VII of the Civil Rights Act of 1964 (“Title VII”).  The EEOC’s primary concern is discrimination on the basis of race and national origin, because minorities and some ethnic populations have a higher rate of arrest and conviction. The EEOC’s position is that a covered employer is liable for violating Title VII when an individual demonstrates that (1) the employer’s neutral policy or practice has the effect of disproportionately screening out a Title VII-protected group (e.g., a blanket policy that the employer will not hire any individual with a criminal record) and (2) the employer fails to demonstrate that the policy or practice is job related for the position in question and consistent with business necessity. Employers can establish that an exclusion is job related and consistent with business necessity in two ways: (1) validate the criminal conduct exclusion for the position in question with the EEOC’s Uniform Guidelines on Selection Procedures; or (2) consider the nature of the crime, the time elapsed, and the nature of the job and provide an opportunity for an individualized assessment. Failure to understand these obligations could cause liability issues for employers.  There has been an uptick in FCRA cases, and the EEOC continues to pursue claims of discrimination based on employers’ background check policies and practices.  Employers, however, can still conduct background checks, but should be mindful of all applicable legal obligations.

While many employers see summer as the primary season for interns, these temporary employees are frequently placed throughout the school year, and the employment considerations that accompany them must be front of mind all year long. Through internship programs, employers can educate and recruit future employees, while offering students valuable experience. But this mutually beneficial relationship can present unforeseen consequences for employers that do not carefully consider the tasks interns perform and whether the law requires interns to be paid. Under the Fair Labor Standards Act, an individual who is “employed” must be paid at least minimum wage for all hours worked. However, an employer—limited for purposes of this discussion to mean a for-profit private sector business—may be exempt from minimum wage laws if the internship serves the interest of the intern. The United States Department of Labor uses the following six factor test: The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an education environment; The internship experience is for the benefit of the intern; The intern does not displace regular employees, but works under close supervision of existing staff; The employer that provides the training derives no immediate advantage from the activities of the intern; The intern is not necessarily entitled to a job at the conclusion of the internship program; and The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship. Some jurisdictions, such as New York and California, have developed additional factors for consideration, such as intern training, screening, and benefits. In a competitive job market, many interns are grateful for any internship opportunity, paid or unpaid. In the past few years, interns have successfully pursued claims for unpaid wages and liquidated damages against several high-profile companies. In 2013, a federal court held that unpaid interns were in fact employees of Fox Searchlight Pictures, Inc., entitled to compensation for their work on movies like Black Swan and 500 Days of Summer. More recently, similar class action lawsuits have resulted in multi-million dollar settlements with Warner Music Group Corp., Viacom, and NBCUniversal. Prudent employers should regularly evaluate their internship programs to ensure that any unpaid interns’ responsibilities do not entitle them to minimum wages. In addition to the aforementioned six factors and any state law requirements, employers should consider: Is the internship structured similar to an academic experience (i.e., job shadowing)? Are existing employees required to work additional hours to perform the intern’s responsibilities in the intern’s absence? Does the intern receive the same level of supervision as existing employees? Is the internship for a fixed duration? Is the internship understood to be a “trial period”?

In a development many view as a sign of an anti-union majority, the United States Supreme Court has agreed to hear a case that could reverse four-decades of pro-union precedent and strike another, potentially significant blow to organized labor in the courts.  Next term (October 2015), the Court will decide Friedrichs v. California Teachers Association, which challenges a California requirement that public school teachers pay union fees, even if the teachers do not want to participate in the union or disagree with the union’s lobbying position on issues.  A victory for teachers challenging the fees in Friedrichs would result in banning so-called “fair share” fees unions impose on non-union public employees or, at minimum, require that non-union employees affirmatively opt-in (as opposed to having to affirmatively opt-out) to being charged the fees. Fees May Violate the First Amendment At issue in Friedrichs is the validity of union “fair share” fees, which are dues that public sector unions are allowed to collect from non-union employees who are part of a union workforce.  The fees are supposed to be used for union “operations,” such as efforts relating to collective bargaining, contract administration, and grievance procedures.  Union leaders and proponents of the fees argue that, because all workers in a unionized workplace share in the benefits of the union’s efforts, even non-union workers should pay at least some dues to avoid “free riding,” that is, getting benefits without financial participation.  In addition to helping fund union operations, unions also depend on these fees as a substantial source of revenue to support their lobbying and other legislative efforts. The Friedrichs teachers and other critics of this union practice—most notably Justice Samuel Alito, who authored the majority opinion in the 2014 case Harris v. Quinn, which held certain Illinois home health care workers could not be forced to pay these fees because there were not “full-fledged public employees”—contend that forcing non-members of the union to pay for union lobbying efforts that they do not support violates the First Amendment. Indeed, as Justice Alito wrote in Harris: “no person in this country may be compelled to subsidize speech by a third party that he or she does not wish to support.” Speculation that the Court would address the issue raised in Friedrichs has been widespread since the Harris decision.  In addition to rejecting application of fees to individuals who were not clearly public employees, the Court’s strong criticism of the 1977 foundational case supporting these fees, Abood v. Detroit Board of Education, signaled to anti-union groups that the time is ripe to challenge the future of this practice. A Blow to Unions in the Public Sector More than a third of government workers belong to unions.  In post-recession America, however, public sector unions have felt significant pressures as state governments have tightened budgets, re-tooled, reduced or eliminated benefits and pension programs, and stripped unions of collective bargaining rights.  If the Court acts as many predict and overturns Abood next term, the already-weakened public sector unions may face greater strategic challenges to both recruit talented workers to government and to generate new revenue to fund its lobbying efforts at state and local government.  The union position in Friedrichs is that they need the financial support for the benefit of our children. On the other hand, the expected result would be a win for advocates of the First Amendment and individual employee rights, as it would restore the rights of non-union public employees to make their own decisions relating to supporting union lobbying and political positions and decisions.

On June 30, 2015, the United States Department of Labor issued proposed rules revamping the Fair Labor Standards Act “white collar” exemptions.  The “white collar” exemptions include the executive, administrative, professional, outside sales, and computer employee exemptions from the FLSA requirement that all employees be paid overtime wages for time worked over forty hours per week.  More than doubling the white collar exemptions’ minimum salary requirement from $455 per week ($23,660 per year) to likely at least $970 per week ($50,440 per year), will, according to the DOL, make an estimated 4.6 million workers (at minimum) ineligible for the exemption and, in turn, eligible for overtime wages.  Currently, the “white collar” exemptions apply to employees who are compensated on a salary basis at a rate of not less than $455 per week ($23,660 per year) and who meet certain job duty requirements.  The “white collar” exemption for highly compensated employees applies when employees are compensated not less than $100,000 per year (including at least $455 per week paid on a salary or fee basis) and customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee.  The DOL’s proposed rules will more than double the minimum salary amount requirement. In its Notice of Proposed Rulemaking released today, the DOL proposes, among other things: Increasing the minimum salary-basis requirement for most of the “white collar” exemptions from $455 per week ($23,660 per year) to likely at least $970 per week ($50,440 per year), which is the 40th percentile of weekly earnings projected for the first quarter of 2016, based on computations by the Bureau of Labor Statistics; Automatic annual adjustments to the minimum salary requirement using one of two methods and the most recent data published by BLS; Increasing the minimum annual compensation requirement for the highly compensated employee “white collar” exemption from $100,000 annually and at least $455 per week to at least $122,148 annually and likely at least $970 per week, which is the 90th percentile of weekly earnings in 2013 as computed by BLS (the proposed rule does not provide projected dollar amounts for the highly compensated employee exemption in 2016); and Automatic annual adjustments to the minimum salary requirement for the highly compensation using one of two methods and the most recent data published by BLS. The proposal to automatically update the minimum requirements every year would require employees to reevaluate the compensation of their exempt employees annually.  However, increases in the minimum salary requirement do not impact workers who do not have to comply with the salary level test, including outside sales workers, teachers, academic administrative personnel, physicians, lawyers and judges. Employers should also be aware of potential, future changes to the job duties components of the “white collar” exemptions, as the proposed rulemaking invites comments on whether any such changes should be made in light of the proposed increases to minimum salary requirements.  Given the list of issues on which the DOL seeks comment, the DOL may change the duties requirements overall (for example, by re-instituting a long and short duties test), set a minimum threshold of time that employees must spend performing exempt work (as some state laws already do), and/or modify the concurrent duties doctrine.  Any such changes may require re- evaluation, and possibly re-design, of work forces.  While the rulemaking is only “proposed” at this time, the question for employers should not be “if” they need to comply, but should be “by when”?  Employers should start getting ready to reevaluate the compensation of all of their currently exempt employees.  Employers will have to choose whether to increase salaries to meet the new tests, or re-classify employees as non- exempt and potentially pay overtime to employees working over forty hours per week. If you have questions on how your company should prepare for the “when” the proposed regulations take effect or if you are interested in submitting public comment on these proposed regulations, please contact us.

In the most anticipated decision of the year, the United States Supreme Court ruled 5-4 that the 14th Amendment guarantees same-sex couples the right to marry.  The decision, penned by swing-vote Justice Anthony Kennedy, held that marriage is a fundamental right and “couples of the same-sex may not be deprived of that right and that liberty.” The case, Obergefell v. Hodges, involved couples challenging same-sex marriage bans in Michigan, Ohio, Kentucky, and Tennessee.  The Sixth Circuit Court of Appeals, which hears challenges to laws in those states, upheld the bans on grounds of tradition and the “distinctiveness” of opposite-sex marriage. Rejecting these contentions, Justice Kennedy wrote: “far from seeking to devalue marriage, the petitioners seek it for themselves because of their respect—and need—for its privileges and responsibilities.”  The decision was anchored to four premises regarding marriage: (1) personal choice regarding marriage is inherent to individual autonomy; (2) precedent establishes that the right to marry is fundamental as it supports the importance our society puts on two-person unions; (3) it safeguards children and families; and (4) it is a keystone to the order of our society, of which “there is no difference between same- and opposite-sex couples.” Same-Sex Marriage and Employers The landmark decision will impact employers across the nation.  Employers will no longer be required to maintain state-by-state policies and procedures reflecting what had been a patchwork of different, oftentimes contradictory, state laws.  Moving forward, employers have a clear mandate regarding the treatment of same-sex couples.  From guaranteeing same-sex spouses access to benefits to revising discrimination policies, employers will face challenges and opportunities to conform their businesses to the new state of the law. We will keep you apprised as these policies evolve. A few examples include: Family and Medical Leave Act (FMLA): FLMA guarantees employees leave to care for spouses, which now includes same-sex couples. Benefits: Employer-provided benefits plans now must be offered to same-sex couples. Sexual Orientation/Marital Discrimination: Depending on state laws regarding discrimination on the basis of sexual orientation and marital status, employers must be mindful and review their policies to ensure compliance with the new law. Taxes: Employers should be prepared to handle revised W-4 filings for employees who now have the right to get married and update their tax filing status. Spousal Privilege/Confidentiality: Married same-sex spouses are now afforded the same rights to their spouse’s confidential communications, to refuse to testify in court against their spouse, and to be privy to the contents of confidential settlement or severance agreements entered into by their spouse. We will continue to monitor the impact of the same-sex marriage decision on employers at the state level and across the Nation.

Earlier this month, the National Labor Relations Board (“NLRB” or the “Board”) again answered the question of “what not to wear” in unsurprising but disappointing fashion.  Continuing its crusade against handbook policies, an administrative law judge (“ALJ”) held that Walmart (Case No. 13-CA-114222) violated Section 8(a)(1) of the National Labor Relations Act (the “Act”) by maintaining a dress code which limited employees to wearing “small, non-distracting logos and graphics,” finding that such a provision was “overly broad, not justified by special circumstances, and place[d] unlawful restrictions on associates’ Section 7” rights.  This decision provides yet another reminder of the need to draft dress codes with a careful eye toward the NLRB’s evolving pro-employee interpretations of the Act. At issue in Walmart was a handbook policy which expressly provided: Walmart logos of any size are permitted.  Other small, non-distracting logos or graphics on shirts, pants, skirts, hats, jackets or coats also are permitted… Although Walmart did not establish a “definition for what logos qualify as ‘non-distracting,’” it provided several examples to the ALJ as to what did and did not violate its dress code policy.  Specifically, it allowed employees to wear buttons smaller than the Walmart nametag, including a 1.5 inch diameter button with a bible passage and a 2x2 inch photo of a coworker who died in a car accident.  Violations of the dress code included a 3x5 inch picture of a different employee who died in a car accident and a 3x5 inch piece of paper in which an associate drew a hammer and sickle and wrote “Comrade [name].  How may the Communist Party help you.”  Those items, it argued, were determined to be too large and/or distracting. Interestingly, Walmart allowed employees to wear a small button bearing the logo of the Organization United for Respect at Walmart, an association (though not a union) dedicated to improving the terms and conditions of employment for Company employees.  It banned a similar button from the same organization, because its 3.5 inch diameter was deemed too large. Despite this facially neutral policy, and the allowance of smaller “Union” buttons, the ALJ still held that such a restriction interfered with its employees’ exercise of their rights under the Act. Key to this determination was that Walmart had not demonstrated that there were any special circumstances that justified a departure from the general rule that employees are allowed to wear clothing bearing Union insignias at the workplace.  On the contrary, Walmart’s proffered reasons for the limitations (an interest in ensuring that its associates are easily identified by their nametags and that the noncompliant logos distracted customers from their shopping experience) “fell flat.” This ALJ may have decided differently had Walmart only enforced the limitation when associates were on the sales floor and in a position to interact with customers.  The Board has approved an employer’s “special circumstances” argument where it demonstrates that a strict uniform policy is necessary for a public image that the employer has established as part of its business plan. See, e.g., W San Diego, 348 NLRB 372, 373 (2006). This decision is another good reminder for employers to review their employee handbooks and eliminate overbroad dress codes that its employees would reasonably construe to interfere with their Section 7 rights.  Uniform policies should be narrowly tailored, such that prohibitions on “what to wear” are limited to public spaces with customer interaction.  Employers are encouraged to be proactive in ensuring compliance with the Board’s recent guidance on handbook policies (see GC 15-04, Report of the General Counsel Concerning Employer Rules).

On Friday, June 5, 2015, Wage & Hour Division Administrator David Weil announced the United States Department of Labor will “very soon” release an administrator interpretation about the criteria needed for an employer to properly classify a worker as an independent contractor instead of an employee.  Weil declined to specify when, exactly, the guidance would be released but hinted at an “early summer” issuance. Recent statements issued by the Obama administration and rulings by the National Labor Relations Board suggest the forthcoming DOL administrative interpretation may attempt to broaden the existing legal standard for employment, thus making it more difficult for employers to establish and maintain independent contractor relationships.  In addition, several recent high-profile lawsuits have challenged major companies that rely upon independent contractors, including FedEx and Uber. U.S. DOL Administrator interpretations have historically been controversial.  A 2010 administrator interpretation that mortgage bankers were not exempt from overtime compensation under the FLSA administrative exemption was unsuccessfully challenged in the United States Supreme Court. Weil’s statement about the forthcoming guidance on the definition of employment comes on the heels of the Department’s proposals last month to revise and “modernize” the “white collar” exemptions to overtime pay under the Fair Labor Standards Act.  These proposals, under current review by the White House, are expected to tighten, perhaps significantly, some overtime exemption requirements. Employers of all sizes and industries across the board should closely monitor these potential changes in the employment landscape.  We will continue to provide updates on DOL administrator interpretations and rule proposals.

Since its enactment in 2010, the Affordable Care Act (the “ACA”) has required employers to make numerous changes in the types of health insurance coverage they offer to their employees, and endure continued uncertainties around compliance issues as the ACA guidance evolves.    Historically, employers have often excluded various classifications of employees from coverage under their health insurance plans, particularly if they were expected to work less than a certain number of hours per week.  Beginning in 2015, however, employers with at least 50 full-time employees (“FTEs”) must now offer health insurance to all employees who work at least 30 hours or more per week to comply with the ACA.   A company that fails to satisfy this so-called “employer mandate” faces the possibility of significant penalties under the ACA. In light of these new mandates, many employers that have previously excluded employees working less than 40 hours per week under their health plans now face the possibility of having to offer participation in their plans to additional individuals.   This has caused significant concerns for employers such as retailers and restaurant chains, which tend to have large numbers of non-covered employees with lower wages and fluctuating work schedules. To reasonably manage the employer costs associated with providing health insurance coverage for the ACA employer mandate, many employers have been reducing the work schedules of hourly employees to bring  them below the 30-hour per week threshold.    While there is no express rule under the ACA prohibiting this approach, we have been predicting for some time that claims would eventually be brought under the Employee Retirement Income Security Act (“ERISA”) and employment discrimination laws regarding whether employers have the right to manage their employees’ hours in this manner. In what appears to be the first case of its kind, a class action lawsuit now has been filed in federal court for the Southern District of New York to test the legal waters on this issue.    In Marin v. Dave & Buster's, Inc., S.D.N.Y., No. 1:15-cv-03608, the plaintiffs allege that Dave & Buster’s, the national restaurant chain, violated ERISA Section 510 by impermissibly interfering with employees’ rights to health insurance benefits by reducing their hourly work schedules to less than 30 hours per week to avoid any additional costs under the ACA employer mandate.  The plaintiffs are seeking lost wages and the restoration of their health coverage, as well as reimbursement of their out-of-pocket medical costs. While it is far too soon to make any predictions around the merits of the claims being made in this case, this lawsuit illustrates the continued uncertainty that only further complicates employer strategies when managing around their ACA compliance responsibilities.   Companies that are subject to the ACA employer mandate should review their compliance strategies now to address any risks with their employment classifications and the delivery of health care benefits to their FTEs.

As we have noted in our ongoing Uber Watch post series, Uber’s revolutionary sharing economy business model has been challenged in several lawsuits disputing whether Uber drivers are properly classified as independent contractors, rather than employees.  These cases may also fundamentally affect other sharing economy businesses that provide software or networks linking workers to customers seeking rides or other services.  On June 3, 2015, a hearing officer of the California Labor Commission ruled that former Uber driver Barbara Berwick was an employee, not an independent contractor, and was therefore entitled to expense reimbursements under California law.  On June 16, 2015, Uber appealed the ruling to Superior Court of California, San Francisco County.  If upheld, the Labor Commission ruling could erode Uber’s classification of drivers as independent contractors exempt from state and federal minimum wage, overtime, unemployment insurance, health insurance, and expense reimbursement laws.  The Labor Commission ruling is noteworthy for the aspects of Uber’s business model found to be dispositive. The hearing officer substantially relied on California precedent holding that taxi cab drivers are employees of a taxi cab company.  Unlike a taxi company, however, Uber did not provide vehicles to drivers or dictate which fares to take or when to work.  Still, Uber was deemed to have exercised “all necessary control over the operation as a whole” to be classified as an employer because its software matched drivers to fares, it required drivers to maintain a minimum customer satisfaction rating, and it limited drivers to using cars less than 10 years old.  Under such reasoning, any company that provides a website or software matching a service provider to customers and that takes steps to ensure that the service is provided in a safe or acceptable manner might be an employer.   For example, Etsy or eBay might be an employer of an artisan who sells her handiwork on those websites. The hearing officer also reasoned that the former Uber driver’s services are integral to Uber’s business because Uber is “in the business of provided transportation services to customers” and “without drivers . . . , [Uber’s] business would not exist.”  The ruling rejected the testimony of Uber management that Uber is not in the transportation business, but rather, a software company in the business of connecting drivers to passengers.  If the Labor Commission’s “but for” test is dispositive to the employer-independent contractor dichotomy, the sharing economy business model may be in jeopardy. The hearing officer then noted, contrary to earlier findings, that Uber is involved “in every aspect of the operation” because Uber requires drivers to provide bank accounts and social security numbers (obviously, so they can receive fares), and because Uber requires drivers to pass a background and DMV check (obviously, for passenger safety).  Uber, however, was also found to exercise control in setting fares, regulating the types of cars used by drivers, and deciding whether to charge cancellation fees to no-show passengers. We will continue to monitor Uber’s appeal of the hearing officer’s ruling and other cases challenging the independent contractor classification at the heart of the sharing economy business model.

The term transgender – and the public’s understanding of gender reassignment – has become more commonplace since Diane Sawyer’s April 2015 interview with former Olympian and TV personality, Bruce Jenner and the more recent Vanity Fair coverage of Caitlyn Jenner. Employers should take note that transgender status is subject to increasing legal protections. Title VII of the 1964 Civil Rights Act prohibits gender discrimination, but does not expressly include transgender status a defined protected class. However, the Equal Employment Opportunity Commission has recently brought its third transgender discrimination lawsuit under the existing Title VII framework prohibiting gender stereotyping: EEOC v. Deluxe Financial Services, Inc. In this case, the EEOC alleges that the Minnesota check-printing company illegally discriminated against a transgender employee by prohibiting her from using the women’s restroom, as well as subjecting her to a hostile work environment. The employee had performed her job satisfactorily for two years before presenting herself as a woman. At that time, as the EEOC alleges, coworkers began using hurtful epithets and would intentionally use the wrong gender pronouns to refer to her. This case follows two previous suits filed by the EEOC, EEOC v. Lakeland Eye Clinic and EEOC v. R.G. & G.R. Harris Funeral Homes, Inc. In the first lawsuit the EEOC filed of this type, the EEOC claimed that Lakeland Eye Clinic, a Florida-based organization of health care professionals, improperly fired its Director of Hearing Services after she began to present as a woman, despite having performed her job duties satisfactorily throughout her employment. The case recently settled, with the employer agreeing to pay $150,000 in damages and adopting a new gender discrimination policy that prohibits discrimination because an employee is transgender, is transitioning from one gender to another, or because the employee does not conform to the organization’s gender-based preferences or stereotypes. The lawsuit against R.G. & G.R. Harris Funeral Homes, Inc. alleges that, despite having adequately performed her duties, a funeral director was fired for undergoing a gender transition from male to female. The funeral home moved to dismiss the complaint arguing, among other things, that “gender identity disorder” is not protected by Title VII. The Michigan district court, however, found a transgender person, just like anyone else, can bring a sex stereotyping gender discrimination claim under Title VII. Applying well-settled gender stereotyping precedent, the court noted there is no distinction between the employer that acts on the basis of a belief that a woman must not be aggressive, and an employer that acts on the belief that a man should not wear a dress and makeup. In addition to these recent federal cases, nineteen states have enacted prohibitions on transgender discrimination. These developments highlight the need for employers to set a tone of tolerance and mutual respect when dealing with transgender issues. Employers should also consider including prohibitions on sex stereotyping and gender nonconformity in their non-discrimination policies. Counsel can assist with the implementation of guidelines that address dress and appearance rules, the use of the name and pronouns appropriate to the gender of the employee going through a transition, and provide for adequate access to restrooms and locker room facilities consistent with the employee’s gender identity.

On June 15, 2015, the Colorado Supreme Court held that the Colorado Lawful Activity Statute does not prohibit an employer from terminating the employment of an employee for off-the-job use of medical marijuana.  However, this may not be the last challenge to Colorado employers’ drug policies. In Coats v. Dish Network, L.L.C., case no. 13SC394, Brandon Coats challenged his termination by Dish Network, L.L.C. after he tested positive for marijuana.  Coats, a quadriplegic, held a license from the State of Colorado to use medical marijuana pursuant to the state’s Medical Marijuana Amendment to the Colorado Constitution.  Coats alleged that he used medical marijuana within the limits of the license, and never on his employer’s premises.  He further alleged that he was never under the influence of marijuana at work. Coats challenged his termination as a violation of the Lawful Activities Statute, C.R.S. section 24-34-402.5, which prohibits an employer from discharging an employee for “engaging in any lawful activity off the premises of the employer during nonworking hours,” subject to certain exceptions.  Dish filed a motion to dismiss the lawsuit, arguing that the use of medical marijuana was not “lawful activity” because it was prohibited under both state law and federal law.  The trial court granted the motion and dismissed the case because Colorado’s Medical Marijuana Amendment created an affirmative defense to criminal charges arising from medical marijuana use rather than making medical marijuana use legal.  Coats appealed to the Colorado Court of Appeals. On April 25, 2013, a majority of the Colorado Court of Appeals held that Coats had not stated a claim for relief under the Colorado Lawful Activities Statute because medical marijuana use was prohibited by federal law and thus was not a “lawful activity” for purposes of C.R.S. section 24-34-402.5.  One Judge dissented from the majority’s opinion, stating that he would have held that the term “lawful” in section 24-34-402.5 refers only to Colorado state law and that medical marijuana use is protected by the Colorado Lawful Activities Statute because such use is lawful under Colorado law. Coats appealed this decision to the Colorado Supreme Court, which issued its opinion on June 15, 2015.  The Colorado Supreme Court began its analysis by determining the generally understood meaning of “lawful.”  The Colorado Supreme Court agreed with the Court of Appeals that the commonly accepted meaning of lawful is “not contrary to or forbidden by law.”  Next, the court concluded that the term “lawful” in the Colorado Lawful Activities Statute is not limited to activities that are permitted by Colorado law.  Instead, the Lawful Activities Statute protects activities that comply with the applicable state and federal laws.  While the court noted that the United States Department of Justice announced that it will not prosecute patients who are using medical marijuana in accordance with state law and that Congress passed an act prohibiting the Department of Justice from using public funds to prevent states from implementing their own medical marijuana laws, marijuana use is still prohibited under the federal Controlled Substances Act.  Because the Court concluded that Coats’s medical marijuana use was not protected by the Lawful Activities Statute, the Court did not address whether Colorado’s Medical Marijuana Amendment makes medical marijuana use “lawful” by conferring a right to such use.  Previous statements by counsel who represent employees in Colorado suggest that, despite the ruling in Coats, they may pursue two avenues to attack terminations based on marijuana use.  First, counsel for employees may challenge terminations of employees who engage in recreational marijuana use under the Colorado Lawful Activities Statute.  Although recreational marijuana use is illegal under federal law just like medical marijuana use, employees may raise challenges under the Lawful Activities Statute based on the language in the Colorado recreational marijuana amendment stating that it is not “unlawful” nor an “offense under Colorado law” for people twenty-one years of age or older to use marijuana for non-medical purposes.  Second, counsel for employees may challenge medical and recreational marijuana terminations as tortious wrongful terminations in violation of public policy.  In other words, employees would argue that they were terminated in retaliation for exercising alleged constitutional rights to use marijuana. Colorado employers should continue to monitor this area of the law.

Thanks to Tom Brady and the New England Patriots, workplace text messages are back in the spotlight. The Super Bowl champions’ protestations of innocence have been deflated by a series of text messages between two equipment managers and their star quarterback. Like many employees at most companies, the staffers and Brady exchanged text messages filled with inside jokes, vague instructions, and discussions that are now subject to multiple interpretations. All of this threatens to put the Patriots’ starting quarterback on the sidelines for the first four games of next year. Can we learn any lessons from this latest text mess? Pros: Texting is ubiquitous. For many people, texting has overtaken telephone calls and emails as their primary method of communication. Texting can be a highly efficient way to determine an employee’s whereabouts or obtain a yes/no response to a simple question, such as “Are you coming to this meeting?” or “Are you dialing into this conference call?” Texting can be a useful way to inform colleagues that you have provided them with information or materials that might otherwise be overlooked. For instance, the utility of singling out an urgent email from among hundreds that the recipient may have received that day: “I sent you the budget via email. Check your email.” Cons: Texting provides little room for providing context (ask Tom Brady about this one). Texting tends to be far more informal than email or in-person communication; employees can drift into inappropriate language or other improper conversations in the relaxed medium. Texting may encourage off-the-clock work if sent to non-exempt employees during non-working hours. Texting can hamper productivity by forcing employees to check multiple message systems for work-related information (email, voicemail, text messages). Employers should incorporate a specific discussion of text messaging in their employment policies and training. Topics that should be addressed include: application of harassment and discrimination policies to text messages, expectations (or lack thereof) of privacy on employer-owned devices, prohibiting the use of text messages to send confidential information, and basic text messaging etiquette for business communications. Through these proactive measures, employers can avoid the headaches caused by careless, confusing, or misleading texting by their employees.

The prospect of non-compete litigation can be a source of extreme anxiety for employers and employees alike.  The costs of pursuing or defending non-compete litigation can prove enormously costly in terms of legal fees and expenses and the unpredictable results of such efforts can be mutually unappealing: employers may see valued business relationships jeopardized or lost; employees can be left unable to earn a living in their chosen field. Against this backdrop, physicians in Washington recently made the news as they presented testimony to state lawmakers about an increasingly common approach to securing a release of their non-compete obligations: paying hefty fines. Physicians reported paying or potentially facing amounts ranging from $50,000 to $427,150 for leaving their employers to secure new employment in the same geographic area.  Opponents question these practices in an era of physician shortages and rapidly evolving patient care models.  Defenders reject the suggestion that such payments are fines at all, explaining that they are the product of negotiated settlements aimed at reimbursing employers for the expenses associated with departing employees and business. Regardless of whether such payments are "fines" or "settlement payments," the practice highlights an honest, if seldom articulated, reality: business considerations, not technical legal arguments, tend to drive the resolution of most non-compete disputes.  In Washington, the parties seem to have simply cut to the chase: skipping the legal back and forth and settling on fixed payments up front to avoid the stress, expense and uncertainty of litigation. Physicians and health care providers in Washington aren't the only ones who have figured out that cutting to the chase may be preferable to protracted and costly litigation.  In the retail securities world, a standing protocol agreement between competing brokerage firms spells out specific steps which, if followed, will enable individual brokers to move freely from one firm to another without regard to any post-employment non–compete restrictions.  These steps include precautions designed to ensure that customer choice is respected, confidential information is not used without appropriate authorization and employers and employees are given a fair chance to compete for business.  The rationale behind this approach is well-explained on the Protocol website: Every year, hundreds of Registered Representatives leave their firms to create new firms or move to other companies. Until 2004, these transitions were often accompanied by lawsuits in which the former employers sought to enforce contractual non-solicitation and non-compete provisions limiting contact with the customers that were served by the departing individual. These suits could be costly and sometimes resulted in injunctions that prevented the brokers from contacting their customers on behalf of their new employer. The Protocol for Broker Recruiting virtually ended this litigation among firms that chose to enter into the agreement. Non-compete litigation may prove financially rewarding for lawyers, but employers and employees can often benefit from skipping that exercise entirely.  Upfront approaches, such as those in Washington and the brokerage world, are two possible models.  Other approaches are also possible, depending upon the unique business considerations underlying non-compete agreements in a particular industry or market.  For example, an employer could tailor and unilaterally impose restrictions on a new employee’s job duties when that employee is subject to a non-compete agreement.  Such unilateral restrictions could essentially stake out a “middle ground” between no competition and unrestrained competition.  The key to any such approach is to undermine the economic or business factors that would otherwise trigger litigation.  Ultimately, such an upfront approach may leave each side with less than they want, but should be calculated to put them in a better position than they should reasonably expect in litigation. Note: for more information on the Protocol for Broker Recruiting in the securities industry, please click here for a white paper produced by Polsinelli's Financial and Securities Litigation practice.

“If you don’t read the newspaper, you’re uninformed; if you read the newspaper, you’re misinformed.”  – Mark Twain Facebook, Twitter, Google, and other tech companies have acknowledged the gender gap in their industry and have demonstrated efforts to close it.   Much work remains, particularly at the university pipeline, where only 19% of computer science majors are female, and yet, female programmers comprise 20% of the workforce. Rather than commend tech companies for their candor and commitment to equality, media outlets have been quick to indict tech companies based upon their own voluntary demographic disclosures and have spotlighted the recent filing of a few gender discrimination lawsuits by former employees.  No commentary—by this blog or any media outlet—should presume as fact (or fiction) allegations in lawsuits, especially to march in step with stereotypes and political agendas.  No matter how many reports seek to vilify an entire industry on the basis of a handful of unproven claims (perhaps just to collect hits and sell advertising), the truth seeking process will always belong to our judicial system. A recent lawsuit filed by Tina Huang, a former Twitter software engineer, alleges not only discrimination and retaliation against Huang individually, but also company-wide gender discrimination against women seeking promotions to a number of senior technical positions.  Judgment must be reserved on such a sweeping indictment. According to Huang, promotions at Twitter are by “managerial fiat” within a “black box.”  Huang alleges that promotions are subjective decisions made “predominantly” (i.e., not exclusively) by men and are “tainted with conscious or unconscious prejudices and gender-based stereotypes.”  Huang claims that she was not promoted due to her gender and was subject to retaliation for voicing a complaint. Huang also alleges that “Twitter promotes women to upper rungs of the technical ladder in fewer numbers and at a significantly slower rate than would be expected based on the number of women in the pool of lower positions from which promotions to those rungs are made.”  However, what is “expected” is unclear (particularly given existing gender demographics), and whether such “expectation” constitutes credible evidence of class-wide discrimination remains to be adjudicated. It remains to be seen whether Huang can prove facts to support her claims of individual and company-wide gender discrimination, and whether Twitter can support its defenses.   We will follow these developments and immediately report the factual developments in the Silicon Valley.

A recent landmark ruling by the NLRB could allow unions to take full advantage of modern and inexpensive methods of communication to boost their organizing and recruiting campaigns in the workplace. Just months ago, an NLRB judge invalidated an employer’s e-mail policy that barred employees from discussing union activities via work e-mail.  This decision reversed years of precedent and may have sweeping ramifications for employers and unions throughout the country. In 2012, the Communications Workers of America (CWA) petitioned to represent Purple Communications’ employees. After losing the elections, the CWA filed unfair labor practice charges against Purple, asserting that the company’s electronic communications policy interfered with the workers’ freedom of choice in the elections, thereby unlawfully interfering with employees’ rights to engage in protected concerted activity. Broadly speaking, Purple barred company employees from using work e-mail for nonbusiness purposes. More specifically, Purple’s electronic communications policy prohibited employees from, among other things, using the company’s e-mail system to engage in “activities on behalf of organizations or persons with no professional or business affiliation with the Company” or to send “uninvited email of a personal nature.” In 2013, relying on longstanding case law, an Administrative Law Judge initially ruled in Purple’s favor and upheld the policy—citing a 2007 NLRB decision holding that policies prohibiting the use of a company’s e-mail system for purposes of union organizing were allowable.  But the union appealed, and in a 3-2 decision, the NLRB overturned the Register Guard decision and longstanding precedent.  In support of its holding, the NLRB stated that its 2007 decision was outdated because, in the years since Register Guard, e-mail had become the dominant force of communication.  Additionally, the NLRB held that employees have a presumptive right to use their employer’s e-mail systems to communicate about workplace issues—specifically including union organizing. Importantly, the Board’s holding in Purple was limited to e-mail only, and does not restrict an employer from monitoring its e-mail systems in furtherance of legitimate management objectives (i.e., to prevent harassment) or enacting certain constraints on the use of its systems (e.g., prohibiting large attachments).  Furthermore, the decision applies only to employees who have already been given access to their employer’s e-mail system in the course of their work; the opinion is not meant to address non-employee access to employer e-mail systems or require employers to provide employees with e-mail capabilities. With Register Guard overturned, the NLRB then sent the Purple case back to the ALJ to decide whether any “special circumstances” justified Purple’s e-mail policy.  In March of this year, the ALJ determined that no such circumstances were presented and, accordingly, summarily invalidated Purple’s e-mail restriction policy.[2] Purple appealed the decision and, in briefing submitted last month, argued that the ALJ’s original decision mistakenly assumed that employees who are granted access to their employer’s e-mail system for work purposes are entitled to use that same system on non-working time. Ultimately, this ruling has the potential to be a game-changer for organized labor.  Internal union organizers, who themselves may serve outside counterparts, now have powerful communication methods that can get the union message out cheaply, quickly and frequently—using the employer’s tools as their own.  Employers who wish to limit this activity should seek counsel for advice on restrictive methods under the bounds of the law.

The MTV Generation is well-familiar with the hooks of Rockwell’s 1984 hit, “Somebody’s Watching Me:” I'm just an average man, with an average life. I work from nine to five; hey hell, I pay the price. All I want is to be left alone in my average home; But why do I always feel like I'm in the Twilight Zone, and I always feel like somebody's watching me. And I have no privacy. Whoa, I always feel like somebody's watching me. Tell me is it just a dream? Flash forward to 2015 – and the advent of Global Positioning System (GPS) devices – and Rockwell’s lyrics strike an eerie, though paranoid, prophecy for the 21st Century Workplace. Today’s GPS technology, imbedded in employer-issued property such as smart or mobile phones, navigation systems or GPS devices installed on company cars, allows employers to monitor employees’ movements and locations in real-time almost anywhere. However, simply because GPS technology exists for employers to track employees, wary employers should balance their use of such technology with employees’ privacy rights. With the current paucity of pertinent case law, employers tracking employees through GPS devices may be vulnerable to litigation. Recently, a California-based employee, Myrna Arias, filed suit against her former employer, Intermex Wire Transfer, LLC, in California state court alleging Intermex fired her after she removed a job management app from her phone that tracked her GPS location while she was off duty. In her complaint, Arias alleges that her supervisor bragged that he knew how fast she was driving because of the app. Within weeks of Arias complaining about what she believed to be an intrusion onto her privacy, Intermex terminated her. Arias alleges Intermex violated her right to privacy and California labor laws, committed unfair business practices and wrongfully terminated her against public policy. At least 28 states and the District of Columbia have enacted statutes protecting employees from discrimination or retaliation based on the employee’s participation in lawful recreational or leisure activities during personal, off-duty time. For unionized employers, GPS monitoring might be challenged as an unfair labor practice under the National Labor Relations Act. Balancing business-related reasons for tracking employees with those employees’ privacy rights (which may be statutorily protected) should prove food for thought for the wary employer. Prior to implementing a GPS monitoring program on company-issued devices or company cars, an employer should consider: Is surveillance of employees via GPS devices business-related and truly necessary? What effect, if any, may GPS surveillance have on employee morale? How should implementation of a GPS surveillance program be communicated to employees? How should expectations of the proper use of GPS surveillance be communicated to management? What details of a surveillance program should be included in a GPS monitoring policy? In the end, employers should review their privacy policies regarding employee privacy issues and seek answers to such questions before implementing GPS surveillance of on- and off-duty conduct. Rockwell’s 1984 reflections on paranoia perhaps ring more true today.

Last month there was enough rain in Texas to cover the entire state with eight inches of water. This tragic flooding is a timely reminder of storm-related issues that employers need to bear in mind when natural disasters strike. For example, the flooding in Texas forced numerous employers to close their offices, some for extended periods of time. Must these employers pay employees who missed work because of the floods? The Fair Labor Standards Act (FLSA) provides an answer to this question, which depends on whether the employee is exempt or nonexempt. Nonexempt Employees: Under the FLSA, an employer is generally not required to pay nonexempt employees for hours that they do not actually work. Thus, an employer is not required to pay nonexempt employees for days that they did not come to work or for days that the business was closed due to the flooding. This does not apply to nonexempt employees who receive fixed salaries for fluctuating workweeks. These employees must be paid their full weekly salary for any week during which any work was performed, even if they missed some work due to the flooding. Exempt employees: The FLSA requires an employer to pay an exempt employee’s full regular salary if the business closes due to inclement weather or other disaster for less than a full workweek. A private employer may, however, deduct the period of absence from the employee’s paid vacation or paid time off (leave bank), as long as the employee receives his or her full salary for the week. If the business remains open but an employee cannot get to work because of the flooding, an employer can deduct an exempt employee’s salary for a full day’s absence. Indeed, the U.S. Department of Labor considers an absence caused by transportation difficulties experienced during weather emergencies, if the employer is open for business, as an absence for personal reasons. Under such circumstances, an employer may require an exempt employee to use his or her leave bank for the full day that he or she fails to report to work. If an employee is absent for one or more full days for personal reasons, the employee’s salaried status will not be affected so long as deductions are made from his or her salary for such absences. A deduction from salary for less than a full-day’s absence is not permitted, but the employer may make a partial deduction from the employee’s leave bank. If there is insufficient time in the leave bank, no deduction from salary is permitted. Employers should be cautious when docking salaried employees’ pay. It may be more appropriate to require employees to “make up” lost time after they return to work, which is permissible for exempt employees. If Texas employers are aware of and adhere to these guidelines, they will likely avoid FLSA claims related to the recent flooding.

Yesterday in EEOC v. Abercrombie & Fitch Stores, Inc. the Supreme Court held that making employment decisions based on assumptions related to religion (or any other protected class for that matter) can trigger liability under Title VII.  In an 8-1 opinion, the Supreme Court ruled in favor of the EEOC and held that actual notice to the employer is not required to trigger a religious accommodation obligation under Title VII. Rather, the plaintiff need only show that his or her need for an accommodation (even if the employer “has no more than an unsubstantiated suspicion that accommodation would be needed) was a motivating factor in the employer’s decision not to hire. Takeaways for Employers: Ultimately, the Court's holding is not a surprise. Since its 1989 holding in Price Waterhouse v. Hopkins, the Court has made clear that decisions based on stereotypes and assumptions can get employers into trouble. In light of the Abercrombie holding, employers should ensure that its hiring managers understand not only religious discrimination is prohibited, but also that there may be an affirmative duty to adjust a facially neutral policy as an accommodation to the religious beliefs of an applicant or employee. For a more in-depth analysis on the ruling, please click here. Previous intelligence on the case:      Abercrombie & Fitch Drops "Look Policy"      Headscarf Heartache: Supreme Court Considers EEOC Case Against Abercrombie

Last month there was enough rain in Texas to cover the entire state with eight inches of water. This tragic flooding is a timely reminder of storm-related issues that employers need to bear in mind when natural disasters strike. For example, the flooding in Texas forced numerous employers to close their offices, some for extended periods of time. Must these employers pay employees who missed work because of the floods? The Fair Labor Standards Act (FLSA) provides an answer to this question, which depends on whether the employee is exempt or nonexempt. Nonexempt Employees: Under the FLSA, an employer is generally not required to pay nonexempt employees for hours that they do not actually work. Thus, an employer is not required to pay nonexempt employees for days that they did not come to work or for days that the business was closed due to the flooding. This does not apply to nonexempt employees who receive fixed salaries for fluctuating workweeks. These employees must be paid their full weekly salary for any week during which any work was performed, even if they missed some work due to the flooding. Exempt employees: The FLSA requires an employer to pay an exempt employee’s full regular salary if the business closes due to inclement weather or other disaster for less than a full workweek. A private employer may, however, deduct the period of absence from the employee’s paid vacation or paid time off (leave bank), as long as the employee receives his or her full salary for the week. If the business remains open but an employee cannot get to work because of the flooding, an employer can deduct an exempt employee’s salary for a full day’s absence. Indeed, the U.S. Department of Labor considers an absence caused by transportation difficulties experienced during weather emergencies, if the employer is open for business, as an absence for personal reasons. Under such circumstances, an employer may require an exempt employee to use his or her leave bank for the full day that he or she fails to report to work. If an employee is absent for one or more full days for personal reasons, the employee’s salaried status will not be affected so long as deductions are made from his or her salary for such absences. A deduction from salary for less than a full-day’s absence is not permitted, but the employer may make a partial deduction from the employee’s leave bank. If there is insufficient time in the leave bank, no deduction from salary is permitted. Employers should be cautious when docking salaried employees’ pay. It may be more appropriate to require employees to “make up” lost time after they return to work, which is permissible for exempt employees. If Texas employers are aware of and adhere to these guidelines, they will likely avoid FLSA claims related to the recent flooding.

Beginning July 1, 2015, virtually all California employees are entitled to accrue paid sick leave, which may be taken as early as September 30, 2015.  To ensure timely compliance and minimal disruption to business operations, California employers of all sizes should become familiar with the new paid sick leave law, known as Healthy Workplaces, Healthy Families Act of 2014.   The following ten points are the cornerstones of compliance. Accrual Rate Existing Sick Leave or PTO Policy Sick Leave use Qualifying Reasons for Use Covered Family Members Rate of Pay for Paid Sick Leave Carry Over Employee Notices Exemptions No Pay-Out Required For an in-depth analysis on each point, please click here.

In EEOC v. Abercrombie and Fitch Stores, Inc., argued before the United States Supreme Court in February, 17-year-old Samantha Elauf applied to work as a sales representative at Abercrombie.  During the interview, she wore a traditional Muslim headscarf but said nothing about her faith.  Abercrombie did not hire Ms. Elauf because her headscarf violated the company’s “Look Policy,” but denied knowing that the garment was, in fact, religious. While we await the Supreme Court’s decision as to whether Abercrombie’s actions violated the religious discrimination prohibitions of Title VII of the Civil Rights Act of 1964, this case presents an opportunity to review the basic obligations of employers concerning religious accommodations, which may include clothing, in the workplace. Title VII prohibits discrimination, harassment, and retaliation based on an employee’s religion. “Religious belief” is defined as a belief that is both “religious” in the employee’s own view and sincerely held by the employee. Thus, the law’s protection extends beyond mainstream religions. Title VII also requires employers to “reasonably accommodate” religious beliefs, practices, and observances unless “undue hardship,” meaning more than a minimal effort or expense, would result. The law requires employers to accommodate only sincerely held religious beliefs that conflict with work requirements.  Although courts rarely question the sincerity or religiosity of a particular belief, it is important to remember that Title VII was intended only to protect individuals with sincere religious beliefs, and therefore does not apply to requirements of personal preference rooted on non-theological grounds, such as politics, culture, or heritage. As long as an employer has reasonably accommodated an employee’s religious needs, the employer does not need to consider or adopt an employee’s own alternative or suggested accommodation—even if it is preferred by the employee.  Examples of reasonable accommodations vary, but have included such things as scheduling changes, modification of certain job duties, use of private company spaces for prayer, and excused absences from employer programs that include conflicting religious expression. If the accommodation requested requires anything more than ordinary administrative costs, diminishes efficiency in other jobs, infringes on other employee’s job rights or benefits, impairs workplace safety, or conflicts with other laws or regulations, it is likely an undue hardship.  Examples of possible undue hardships may include training part-time employees at substantial cost to cover for another employee who cannot work on Saturdays or paying premium or overtime costs to accommodate the religious needs of employees. Note: listen to a previous podcast on this matterhere.

Beginning on September 2, 2015, the Stop Credit Discrimination in Employment Act, which amends the New York City Human Rights Law, goes into effect and prohibits all New York City employers with four or more employers from running credit checks on most job applicants and current employees. Unlike “ban-the-box” legislation, which restricts when and how an applicant’s criminal history can be considered in the hiring process, the Stop Credit Discrimination in Employment Act prohibits employers from considering, in any way at any time, most applicants’ or employees’ credit histories, including credit scores, credit reports, details about credit accounts, late or missed payments, charged-off debts, bankruptcies, judgments, or liens. As of September 2, 2015, it is an unlawful discriminatory practice for a New York City employer (1) “to request or to use for employment purposes the consumer credit history of an applicant for employment or employee,” or (2) “[to] otherwise discriminate against an applicant or employee with regard to hiring, compensation, or the terms, conditions or privileges of employment based on the consumer credit history of the applicant or employee.”  Violations are subject to a private right of action by job applicants and employees, in addition to civil penalties. The New York City ban on credit checks does not apply to positions subject to credit checks under state or federal law or to jobs requiring bonding, security clearance, access to trade secrets, signatory authority or fiduciary responsibilities for over $10,000 in third party funds, and many IT security positions. Although several states and cities (e.g., California, Chicago, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington) have already enacted laws banning credit checks in hiring, none are as restrictive as New York City’s law.  This strict credit check law comes on the heels of legislation signed on April 20, 2015, requiring the New York City Human Rights Commission to conduct at least five investigations per year using “testers” to apply for open jobs, in an attempt to identify private sector employment discrimination, including unlawful credit check discrimination. New York City employers should promptly review and update their credit check policies to ensure compliance by September 2, 2015 and consult with counsel on potentially applicable exemptions.

The Uber mobile app, which matches consumers requesting rides with nearby drivers, is available in over 200 cities worldwide.  Uber’s revolutionary business model has been a remarkable commercial success and has inspired sharing economy startups in a variety of fields—a phenomenon known as "Uberification."  This fundamental evolution in the delivery of goods and services has drawn the attention of the plaintiff’s bar like wolves into the flock.  Lawsuits challenging the staffing models underlying the sharing economy pose a substantial threat to its realized efficiencies.  Recent lawsuits  by Uber drivers argue that they are employees, rather than independent contractors, under California law, and thus entitled to overtime wages, unemployment, cost reimbursements, and other traditional employment benefits and protections.  Because these cases have broad implications for the emerging sharing economy, not to mention fair fares to and from your local airport, we will be tracking these cases in a recurring “Uber Watch” series. Riding the wave of litigation arguing for an expanded definition of employment in the franchise context, attorneys for Uber drivers seek to expand the definition of employment under California law to include Uber drivers classified as independent contractors.  If the drivers’ arguments are accepted, Uber would be subject to the wide range of legal obligations owed by an employer to its employees.  The costs associated with an expanded definition of employment could potentially upend the sharing economy business model of many ventures.   A handful of class actions have been filed against Uber in the Northern District of California and have been assigned to the same federal judge, the Hon. Edward Chen.  Despite asserting different employment-related claims under different California laws, many of these cases place at issue whether Uber’s drivers are employees or independent contractors.  Identifying a potential common issue, on May 14, 2015, Judge Chen directed counsel in several Uber employment cases to discuss how to prepare their cases for summary adjudication, or even a trial, on that question. While the Court’s suggestion of consolidated partial adjudication is not unprecedented, and may in theory serve judicial economy, any such adjudication must comply with the strict class certification requirements of Federal Rule of Civil Procedure 23.  The rigor of these requirements is amplified by the factual differences across cases, which compound factual variances within each case’s claims.  The Court’s desire for judicial economy must also cede to Uber’s Constitutional due process rights, which arguably extend beyond the procedural guarantees of Rule 23 when multiple cases are consolidated for class adjudication of a single issue.  Management remains perplexed as to why the court, in its neutrality and call for judicial efficiency, appears to lean towards the plaintiffs favor in these actions. Stay tuned for further developments in Uber litigation and other cases challenging staffing models outside the traditional employment relationship.

The U.S. Citizenship and Immigration Services (USCIS) announced on May 19, 2015 that the agency will temporarily suspend premium processing for all H-1B Extension of Stay petitions until July 27, 2015. This action reflects the need to shift resources in light of the upcoming Employment Authorization for Certain H-4 Spouses final rule, which will drain resources based on the expected initial high volume. The agency confirmed, however, that it will continue to premium process H-1B Extension of Stay petitions for requests filed prior to May 26, 2015. USCIS further stated that H-1B petitions subject to the H-1B cap that are requesting a change of status or consular notification will continue to be processed without incident. Still, suspension of premium processing may have a substantial impact on H1B workers over the next few months. Premium processing of a case allows a company to pay an extra $1,225 in addition to all standard filing fees for premium service.  This means an expedited response within 15 days. With the unavailability of premium processing, employers can expect extended processing times.  Adjudications of H1B filings are currently taking 2 months. The temporary suspension of premium processing is likely to impact H-1B employee summer travel plans as well as business trips.  Most H-1B workers applying for an Extension of Stay will also require a visa renewal the first time they travel abroad. A valid H-1B approval is required to apply for the new visa.  Accordingly a petition approval is necessary prior to traveling outside the United States. Employers are urged to contact immigration counsel to discuss these travel related implications and the overall impact of the suspension of premium processing. MAY 20, 2015