November 2014 Legislative Update

KEVIN M. MCCARTHY
PARTNER
269-276-8109
FAX 269-276-8309
[email protected]
ANNUAL LEGAL AND LEGISLATIVE UPDATE
NOVEMBER 2014
By: Kevin M. McCarthy
[email protected]
-andAllyson Terpsma
[email protected]
Legislative and Regulatory Developments
NLRB Hearing Conducted on Proposed “Quickie Election” Rules
On April 10 and 11, 2014, the NLRB took public comments on 56 proposals to change the rules
governing union elections. The focus of many of the proposals is to radically speed up the
election process, which would give unions a better chance of prevailing. For decades, the
guideline for the conduct of an election has been approximately 42 days after the filing of the
petition. If the new proposals are put in place, this guideline could change to as little as 10-11
days. Employer representatives believe these proposed rules are patently unfair to employers
and would violate their due process rights.
NLRB Accepts Court of Appeals Decisions Invalidating Employer Notice Requirements
In 2011, the NLRB imposed on private sector employers an obligation to post 11” x 17” NLRB
notices designed to inform employees of their rights under the National Labor Relations Act.
The rule never went into effect, as courts enjoined its application. Two federal Courts of
Appeals ultimately struck down this requirement, on the basis that it violated employers’ free
speech rights. The deadline for the NLRB to request the Supreme Court to review these
appellate decisions passed on January 4, 2014 without the NLRB making this request to the
Supreme Court.
NLRB Seeks to Increase Coordination with OSHA, WHD in Processing Charges
On August 8, 2014, the NLRB’s Office of General Counsel issued a memorandum outlining the
circumstances and procedures for increased coordination between the NLRB and OSHA and the
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Labor Department’s Wage & Hour Division when processing charges and complaints. If in
processing an NLRB charge the NLRB uncovers facts that suggest an employer may have
violated the OSH Act or the FLSA, the NLRB should notify the Charging Party that he or she
has the right to file a complaint with OSHA or the WHD, respectively. Furthermore, if OSHA or
the WHD is already handling a parallel investigation, the NLRB is to coordinate case processing
through the DOL.
Paycheck Fairness Act Revived
On September 10, 2014, the U.S. Senate voted to end debate on the Paycheck Fairness Act, by a
73-25 margin. If passed, it would strengthen the provisions of the Equal Pay Act by requiring
that pay differentials between male and female employees in the same jobs be justified solely by
seniority, merit and/or production, thereby eliminating the current defense of the differential
being explained by “factors other than sex.”
Executive Order Requires Contractors to Disclose Labor Law Violations When Bidding on
Federal Contracts
On July 31, 2014, President Obama signed an Executive Order requiring federal government
contractors to disclose all labor law violations, including wage and hour, workplace safety,
collective bargaining, family and medical leave, and civil rights violations from the past three
years when competing for a federal contract valued at more than $500,000. Contractors will be
urged to not contract with employers with “repeat violations.” Further, the Executive Order
directs employers with federal contracts of at least $1 million not to require their employees to
enter into pre-dispute arbitration agreements for disputes arising out of Title VII of the Civil
Rights Act or torts related to sexual assault or harassment. The Executive Order is expected to
apply to new federal contracts in 2016, but draft regulations and guidance will be published for
public comment before being finalized.
Proposed Increases Minimum Wage to $10.10 for Federal Contractors
The DOL issued a final rule on October 1, 2014, requiring federal contractors and subcontractors
to pay a minimum wage of $10.10 per hour. The increased minimum wage is projected to
benefit nearly 200,000 workers, while costing federal contractors approximately $100 million
annually. The change will affect contracts signed after January 1, 2015 in four major categories:
contracts for construction, service contracts under the Service Contract Act, federal facilities
concessions contracts and contracts connected to the use of federal property for services
performed for the benefit of federal employees or for the general public. As of January 1, 2016,
and annually thereafter, the Secretary of Labor will adjust the minimum wage based on the CPI
for Urban Wage Earners and Clerical Workers.
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DOL Plans to Collect Federal Contractors’ Summary Pay Data and Demographic
Information
On August 6, 2014, the DOL announced a proposed rule that would require federal contractors
and subcontractors to submit annual equal pay reports providing summary pay data and
demographic information on their workforces to its Office of Federal Contract Compliance
Programs. According to the DOL, such data collection would allow the OFCCP to direct its
enforcement resources toward contractors whose summary data suggests potential sex or race
discrimination in pay, while reducing the chances the agency will review compliant contractors.
The proposed rule was open for public comment until November 6, 2014.
President Obama Orders Federal Contractors to Not Discriminate Based on Sexual
Orientation or Gender Identity
On July 21, 2014, President Obama signed an Executive Order prohibiting federal contractors
from discriminating against employees based on gender identity or sexual orientation. The
Secretary of Labor is required to prepare regulations implementing the Executive Order within
90 days to provide further guidance on the obligations it imposes. This decision could set the
stage for broader federal anti-discrimination legislation in the future. Eighteen states and the
District of Columbia have already enacted laws that prohibit employment discrimination on the
basis of sexual orientation and gender identity, and three additional states ban sexual orientation
bias. The Senate passed the Employment Non-Discrimination Act (ENDA) in November 2013,
but the bill stalled in the House of Representatives.
The EEOC and FTC Issue “Best Practices” on Background Checks
The EEOC and FTC have jointly issued a document setting forth their views of “best practices”
for dealing with background investigations.
The document can be found at
http://www1.eeoc.gov//eeoc/publications/background_checks_employers.cfm?renderforprint=1.
The FTC’s portion of the document basically repeated the key requirements of the Fair Credit
Reporting Act. The EEOC laid out some basic rules of employment discrimination, such as
“treat everyone equally,” “apply the same standards to everyone” and “don’t ask any medical
questions before a conditional job offer has been made.”
It also stated that employers should take care “when basing employment decisions on
background problems that may be more common among people of a certain [protected
characteristic].” “For example, employers should not use a policy or practice that excludes
people with certain criminal records if the policy or practice significantly disadvantages
individuals of a particular [protected characteristic], and does not accurately predict who will be
a responsible, reliable, or safe employee.”
EEOC’s Criminal Background Check Guidance Criticized at House Hearing
A June 10, 2014 House oversight hearing of the EEOC featured critics of the agency’s guidance
on employers’ use of criminal background checks. Under the guidance, if an applicant with a
criminal history is excluded after a criminal background check without an individualized
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assessment, there is a presumption of race or national origin discrimination. Further, the EEOC
provides no guidance on what an employer should do when state laws require criminal
background checks other than directing the employer to establish that a screen based on such a
state law is job-related and consistent with business necessity.
EEOC Issues New Guidance on Pregnancy Accommodation
The EEOC issued new enforcement guidance on pregnancy discrimination and related issues on
July 14, 2014. The guidance, which was not published for public comment prior to release,
includes a new interpretation of the Pregnancy Discrimination Act that would require employers
to provide “reasonable accommodation,” as defined by the ADA, to pregnant employees. Taking
aim at Young v. United Parcel Service, Inc., which is pending before the Supreme Court, the
EEOC’s guidance makes clear that an employer must provide light duty work to pregnant
employees if it does so for any other disabled workers.
The guidance also expands the PDA’s scope beyond pregnancy to include every other facet of
the reproductive process—from the decision whether to conceive, to the termination of
pregnancy, to childbirth, to post-childbirth conditions (including lactation). It also suggests that
the EEOC may challenge the validity of employer policies that limit sick leave to the extent they
have a disparate impact on pregnant women. Another provision of the guidance states that,
while only mothers can receive pregnancy-related medical leave, mothers and fathers are entitled
under Title VII to receive equal parental leave for the purpose of bonding or caring for a child.
The guidance also makes clear that the EEOC will consider any pregnancy-related inquiries
preceding an unfavorable employment decision as evidence of pregnancy discrimination.
DOL Redefines Spouse Under the FMLA
On June 20, 2014, the DOL issued a proposed rule changing its definition of “spouse” under the
FMLA in light of the Supreme Court’s decision in United States v. Windsor. Under the
proposed rule, “spouse” will no longer be defined by the individual’s state of residence, but by
the state (or country) in which the marriage was entered. This will allow all legally married
couples to have consistent federal family leave rights regardless of whether the state in which
they currently reside recognizes their marriages.
WHD Plans New Rules on FLSA Exemptions and Employee Status
In response to a March 13, 2014 memorandum from President Obama, the Wage & Hour
Division announced in May its intention to revise the FLSA regulations defining the minimum
wage and overtime exemptions for executive, administrative, professional, outside sales, and
computer employees. The WHD anticipates completing this proposed regulation in early 2015.
The WHD also intends to propose a “Right to Know” rule, which would require employers to
disclose to workers their status, either as an employee or some other status such as independent
contractor. Under the proposed rules, employees would also have a right to know how their pay
is calculated.
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Data for Number of Lives Covered by Health Plans to Be Reported by November 17
Employers are to pay $63 in 2015 for each person covered by their health care plans. That
number of covered employees and dependents is to be reported to the Department of Health and
Human Services by November 17, 2014. This requirement applies to both self-insured and fullyinsured plans. Alternative methods of counting covered lives are available. This report is to be
made via the HHS website, www.Pay.gov. The money collected will fund a temporary
reinsurance program, as provided for by the Affordable Care Act.
90 Days Can = 120 Days under the PPACA
The Patient Protection and Affordable Care Act contains a requirement that an employer may not
impose a waiting period on its health insurance coverage in excess of 90 days. A recent PPACA
regulation, however, says that the 90-day period can be extended to 120 days if an employer has
in place a “reasonable and bona fide orientation period” of no more than 30 days. The definition
of what is “reasonable and bona fide” is discussed in a proposed regulation that has not yet been
finalized. The first regulation is effective for health insurance plans beginning on or after
January 1, 2015.
Minimum Wage Developments
In Michigan, in response to a ballot initiative designed to increase Michigan’s minimum wage
from $7.40/hour to $10.10/hour in phases through 2017, the legislature approved – and Governor
Snyder signed -- a bill by which the minimum wage rose to $8.15/hour on September 1, 2014
and will eventually increase to $9.25/hour on January 1, 2018. Ten states plus the District of
Columbia have enacted minimum wage increases so far this year.
Michigan House Allows Public Safety Personnel to Receive Step Increases after Contract
Expiration
Public Act 54 of 2011 made it illegal for public employers in Michigan to pay their unionized
employees step increases after the expiration of their collective bargaining agreements. On June
10, 2014, the Michigan Senate passed S.B. 850 by a 27-10 margin, exempting public safety
personnel from this prohibition. The House will be considering this bill in the fall.
Sexual Orientation and Gender Identity Discrimination Bill Introduced
Senate Bill 1053 was introduced on September 11, 2014. It would prohibit employment
discrimination on the basis of sexual orientation or gender identity or expression. It has been
referred to the Senate Committee on Governmental Operations.
Michigan Bill Could Insulate Employers from Liability for Hiring Parolees
HB 5217 was introduced on January 9, 2014. If passed, it would provide that an employer hiring
a parolee who has obtained a certificate of employability by the Michigan Department of
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Corrections could be insulated from liability in tort actions against the employer based on the
employee’s conduct.
Michigan Bill Would Ban Job Application Questions about Felony Convictions
House Bill 4366, the Employment Application Fairness Act, would prohibit employers from
asking job applicants in an "initial application for employment" if they have ever been convicted
of a felony. An exception would apply in cases in which asking such a question is necessary for
the employer to comply with state or federal law. The bill does not limit the use of criminal
records checks.
Recent Cases of Interest
Supreme Court Overturns Contraceptive Mandate for Closely Held Companies with
Religious Objections
In a 5-4 decision issued on June 30, 2014, the Supreme Court concluded in Burwell v. Hobby
Lobby Stores Inc., 134 S.Ct. 2751 (2014) that closely held corporations cannot be required to
provide insurance coverage for contraceptives over their owners’ religious objections. More
specifically, the majority concluded that the contraceptive mandate enacted as part of the
Affordable Care Act violates the private companies’ rights under the Religious Freedom
Restoration Act, which bars the government from taking actions that substantially burden the
exercise of religion unless the action constitutes the least restrictive means of serving a
compelling government interest. Less than two weeks after the Court’s decision, Senate
Democrats introduced legislation that would override it and make for-profit employers
responsible for providing contraceptive coverage regardless of religious objections.
Supreme Court To Decide Whether Employers Must Accommodate Pregnant Employees
The Supreme Court announced on July 1, 2014, that it will review Young v. United Parcel
Service, Inc., 707 F.3d 437 (4th Cir. 2013), cert. granted 134 S.Ct. 2898 (2014), and decide
whether the Pregnancy Discrimination Act requires employers to accommodate pregnant
employees. In Young, the Fourth Circuit held that UPS did not violate the PDA by limiting
light-duty accommodations to employees (1) injured on the job; (2) disabled as defined by the
ADA; or (3) legally unable to work as truck drivers due to a loss of their DOT certification.
Young’s petition argues that pregnant employees are similar to these three categories of
accommodated workers in “their ability or inability to work” and therefore should receive the
same accommodation under the PDA.
6th Circuit Upholds State Bans on Same-Sex Marriage
On November 6, 2014, the Sixth Circuit Court of Appeals rules that bans on same-sex marriages
in Michigan, Ohio, Kentucky and Tennessee should be upheld because the states and not the
federal government should make the decision as to marriage eligibility. Other federal Circuit
Courts of Appeals have ruled differently. This means it is likely that the U.S. Supreme Court
will decide the issue.
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Title VII Discrimination and Retaliation Claims have Different Standards for “Adverse
Actions.”
In both Title VII discrimination and retaliation cases, a plaintiff must prove that the employer
took an “adverse action” against the plaintiff. However, according to the Sixth Circuit Court of
Appeals in Laster v. City of Kalamazoo, 746 F.3d 714 (6th Cir. 2014), the plaintiff in a
discrimination case must show that the employer took an adverse employment action against the
plaintiff by making a substantial, material change in terms and conditions of employment. In a
retaliation case, by contrast, the plaintiff only has to show that the action was one that would
tend to dissuade a reasonable person from engaging in a protected activity under Title VII, such
as reporting a claimed act of discrimination. In this case, the alleged employer's acts of giving a
lower than normal evaluation, denying training opportunities, subjecting the employee to
increased scrutiny by supervisors and selectively enforcing work rules against him were
sufficient to establish a retaliation claim. The court also emphasized that each case is to be
viewed on its own particular facts.
“Adverse Employment Action” Requirement for Discrimination Claims Discussed
In DeLeon v. Kalamazoo County Road Commission, 739 F.3d 914 (6th Cir. 2014), the court had
to decide if an employer took an adverse employment action against an employee when it
transferred him to a position with significant drawbacks to which he had previously sought a
promotion. He applied for the position of Equipment and Facilities Superintendent, thinking he
would obtain a $10,000 raise. He was not awarded the position. Later, the employer appointed
him to this position without a pay increase. According to Plaintiff, the work environment for this
job was filthy and unhealthy. He was ultimately discharged for absenteeism and claimed that the
transfer constituted an adverse employment action.
The court agreed with the employee’s position on this issue in the context of race, age and
national origin claims. It stated that “an employee’s transfer may constitute a materially adverse
employment action, even in the absence of a demotion or pay decrease, so long as the particular
circumstances present give rise to some level of objective intolerability.”
New Definition of “Disability” from the ADAAA Examined
In Summers v. Altarum Instrument Corp., 740 F.3d 325 (4th Cir. 2014), the Fourth Circuit Court
of Appeals interpreted the new definition of “disability” imported into the ADA in the ADA
Amendments Act. The Supreme Court had decided that under the original definition of
“disability” in the ADA, a “temporary impairment” could not qualify as a protected disability.
The ADAAA addressed that decision by amending the ADA’s definition of “disability” to say
that it “shall be construed in favor of broad coverage . . . to the maximum extent permitted.” It
also expressly stated that the new definition was overriding the Supreme Court decision. The
new ADA regulations state that “effects of an impairment lasting or expected to last fewer than
six months can be ‘substantially limiting’” so as to qualify as a protected disability. Impairments
that have a relatively short duration may be covered if they are “sufficiently severe.”
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The court in this case held that the plaintiff had a disability where he injured both legs, was
directed by his doctor not to put any weight on one leg for 6 weeks, and ultimately was not able
to walk normally for 7 months. After 6 weeks of absence, the employer discharged the
employee, ignoring his request to develop a plan by which he could collect STD benefits then
return to work. This violated the ADA because the employer failed to engage in an interactive
process to consider a reasonable accommodation for the employee’s disability.
Alcoholic Truck Driver Not Qualified for His Job Under the ADA
On June 8, 2014, in Jarvela v. Crete Carrier Corp., 754 F.3d 1283 (11th Cir. 2014), the Eleventh
Circuit concluded that an alcoholic truck driver was not qualified for his job under the ADA. A
qualified individual under the ADA is one who “satisfies the requisite skill, experience,
education and other job-related requirements of the employment position such individual holds
or desires and, with or without reasonable accommodation, can perform the essential functions of
such position.” An essential function of the position is qualifying as a commercial truck driver
as defined by DOT regulations, which specify that a person is not qualified if he has a “current
clinical diagnosis of alcoholism.” Although the plaintiff argued that a DOT medical examiner
should determine whether a diagnosis is current and clinical, the Eleventh Circuit concluded that
the employer must make the determination because DOT regulations place the burden on the
employer to ensure that an employee meets all qualification standards. As such, the plaintiff’s
employer did not violate the ADA when it fired him after he completed a one-month treatment
program for his alcoholism. The employer was entitled to conclude that his diagnosis was too
recent to allow him to return to work.
Burden on Employee to Show Reasonable Accommodation Request Made
An employee with sleep apnea had twice casually mentioned that condition to his supervisor but
never requested an accommodation until the meeting at which he was discharged for sleeping on
the job, falsifying company records and wasting time. In Parsons v. The Auto Club Group, 565
Fed. Appx. 446 (6th Cir. 2014), plaintiff’s ADA claim, alleging denial of a reasonable
accommodation, was dismissed because he did not make a timely request for such an
accommodation.
The court also rejected plaintiff’s claim that his employer should have, as a reasonable
accommodation, forgiven his repeated acts of sleeping on the job and lying about it. The court
stated that, “courts have consistently explained. . . that a ‘second chance’ or forgiveness of prior
workplace misconduct otherwise warranting termination is not a ‘reasonable accommodation.”
Employer Not Entitled to Subject Employee to Psychological Counseling for Erratic
Behavior at Work
An ambulance driver refused to assist a co-worker in administering oxygen to a patient due to a
dispute with a co-worker and was texting her boyfriend while driving an ambulance. The
employer required her to undergo a psychological evaluation as a condition of employment. She
refused and was removed from the work schedule. She sued under the ADA, claiming that this
medical exam was not work-related and justified by business necessity as required by the ADA.
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In Kroll v White Lake Ambulance Authority 763 F.3d 619 (6th Cir. 2014), the Sixth Circuit
Court of Appeals ruled in the employee’s favor because these two isolated incidents did not
constitute a “pattern of behavior” affecting the employee’s work. There was insufficient
evidence to establish that the employee was unable to perform the essential functions of her job
or that she posed a direct threat to the safety of herself or others.
Employee’s Medication-Related Urination Issues Are an Impairment, But Do Not Limit
Life Activity
In Sanders v. Judson Ctr., Inc., 2014 WL 3865209 (E.D. Mich. 2014), a federal court in
Michigan concluded that an employee’s medication-related frequent and sudden need to urinate
constituted an impairment under the ADA, but was insufficient to prove she had a protected
disability because the employee failed to show that the impairment substantially limited her in a
major life activity. The court considered cases outside the Sixth Circuit to hold that the effects of
a medical treatment for a condition can amount to an ADA impairment even where the
underlying condition itself is not an impairment. But because the employee did not show how
her urination issues substantially affected her ability to walk, stand or think, the court granted
summary judgment to her former employer that terminated her for leaving two disabled
individuals unattended while she rushed to the restroom.
EEOC’s Unreliable Statistical Analysis Fails to Show Credit Checks Had Disparate Impact
On April 9, 2014, the Sixth Circuit concluded in EEOC v. Kaplan Higher Education Corp., 748
F.3d 749 (6th Cir. 2014) that the EEOC failed to show that an employer’s use of credit checks to
screen applicants constituted disparate impact under Title VII because the statistical data the
agency provided was unreliable. The EEOC’s expert allowed five individuals with no
experience in visually determining race to classify a person as black, Asian, Hispanic, white or
“other” based on an applicant’s driver’s license photo, and if four of the five raters deemed the
person to be of a particular race, that was the race used for purposes of the expert’s statistical
analysis. The district court found this methodology unreliable, and the Sixth Circuit affirmed.
Sending FMLA Notices by Regular Mail May Not Be Sufficient
Employers are required to provide notices to employees seeking FMLA leave, informing them of
their rights under that law and designating or not designating the leave as FMLA leave. Neither
the Act itself nor the regulations under it specify how the notices are to be sent. In Lupyan v.
Corinthian Colleges, Inc., 761 F.3d 314 (3rd Cir. 2014), an employer provided testimony saying
it had placed the notices in the mail, but the employee claimed she never received it. Although
there is a presumption of actual delivery when something is sent via regular mail, the
presumption is much stronger where there is a signed receipt for the mail. Here, the court held
that the presumption of delivery was overcome by the employee’s testimony of non-delivery.
The takeaway form this decision is that employers may be better served by sending FMLA
notices by registered or certified mail. The issue of notice was important in this case because the
employee claimed not to know that she was given a 12-week leave and that she was due back to
work at the end of that period. When she failed to report to work at the end of 12 weeks, she was
discharged.
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“Caretaking” under FMLA Protected, Even in Vegas
An employee was clearly the primary caretaker of her elderly and terminally ill mother, with
whom she lived. The mother wanted to take a family vacation to Las Vegas before dying and the
employee accompanied her there for 6 days, while continuing to care for her basic daily needs.
The employer declined to grant FMLA leave and discharged the employee for her absence, on
the theory that the employee was not “caring for” a seriously ill family member on a trip to Las
Vegas. The Seventh Circuit Court of Appeals in Ballard v. Chicago Park District, 741 F.3d 838
(7th Cir. 2014) held that “care” in the FMLA means attending to an immediate family member's
“basic medical, hygienic or nutritional needs.” Because the employee was continuing to bath,
dress and dispense medications to her mother, she was eligible for FMLA leave and was deemed
to have been illegally discharged in violation of the FMLA.
Employee Reinstated without Back Pay Did Not Qualify for FMLA Coverage
In Ouellette v. Fountainview of Monroe, 2013 WL 5423084 (E.D. Mich. 2013), an employee
requested FMLA leave only a few days after being reinstated to her job by an arbitrator, who
ordered that she be returned to work with no back pay. At the time of the employee’s FMLA
request, she had worked only 114 days in the previous 12 months, so was well short of the 1,250
hours of service needed to qualify for coverage under the FMLA. She claimed that the time she
was improperly denied the opportunity to work should also have counted toward her FMLA
coverage. The court disagreed, stating that she had to have actually worked 1,250 hours, which
she had not done.
The Right to Participate in FLSA Class Actions Can Be Waived in Arbitration Agreements
In Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326 (11th Cir. 2014), the 11th Circuit
Court of Appeals, consistent with decisions from other Circuits, ruled that where an employee
signs an agreement to arbitrate disputes with his employer, a provision in the agreement by
which he agrees to individually arbitrate FLSA claims is enforceable. This means that he cannot
join a class action lawsuit, but must litigate his FLSA claims in front of an arbitrator.
Employer Not Guilty of an Unfair Labor Practice for Suing Union
An employer, believing two of its unions had violated the secondary boycott provisions of the
National Labor Relations Act, sued those unions in federal court. The lawsuit was dismissed as
lacking merit. The unions then filed unfair labor practice charges against the employer, claiming
that the filing of the lawsuit was an illegal act of retaliation against the unions for engaging in a
protected activity.
The Sixth Circuit Court of Appeals, in NLRB v. Allied Mechanical Services, 734 F.3d 486
(2013), held that the employer had a protected First Amendment right to petition the government
for redress – even if the lawsuit was without merit – unless the suit was “objectively baseless”
and its motive was retaliatory.
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NLRB Finds Company Rules on Employee Conduct Illegal
The NLRB examined a number of employment rules promulgated by a transit company in First
Transit, Inc., 360 NLRB No. 72, on April 2, 2014. It found a rule to be overbroad where it
prohibited “discourteous or inappropriate attitude or behavior to passengers, other employees or
members of the public, as well as disorderly conduct during working hours.” The Board felt
such a rule could be construed by employees as restricting their rights under Section 7 of the
National Labor Relations Act.
The Board also found to be overbroad company rules barring the disclosure of “any company
information,” which included wage and benefit information; making statements about workrelated accidents to anyone other than the police or company officials; and making false
statements about the company. As to the last point, the Board stated the policy would have been
enforceable if it had barred “maliciously false” statements instead of “false” ones.
NLRB Judge Concludes that Social Media Policy Concerned with Morale Did Not Prohibit
Protected Activity
In Landry’s Inc. v. Flores, 199 L.R.R.M. 2103, 2014 WL 2888333 (N.L.R.B. Div. of Judges
June 26, 2014), an NLRB Administrative Law Judge ruled that Landry’s now-expired social
media policy did not violate the NLRA. The policy cautioned workers not to post information
regarding the company, their jobs, or personal information about other employees that could lead
to morale issues in the workplace or detrimentally affect the company’s business. The judge
concluded that the policy did not prohibit protected activity, as employees were not explicitly
prohibited from posting their own job-related information or discussing issues pertaining to their
job with co-workers. Instead the modifying language regarding morale could be understood by
employees to mean that the policy is not concerned with postings’ job-related subject matter, but
rather the manner in which the subject matter is articulated.
NLRB Finds Information Security Rule Illegal
In a 2-1 decision, the NLRB concluded in Fresh & Easy Neighborhood Market, 361 N.L.R.B.
No. 8 (July 31, 2014) that a California grocery store chain violated the NLRA when it instructed
workers to keep employee information “secure,” as employees would reasonably understand the
rule as a ban on discussing employee wages and employment conditions. The majority found
that the chain’s instruction that employee information be used “only for the purpose for which it
was obtained,” reinforced its conclusion, as the chain’s business purpose does not include
protected discussions of wages or working conditions. Dissenting Member Johnson found that
employees who read the rule in context would understand that the company was primarily
addressing ethical concerns rather than trying to preclude them from talking about wages and
employment conditions, and warned that the majority may be moving toward a presumption that
some rules are unlawful unless they include an explicit exception for NLRA-protected activity.
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NLRB Concludes that Weingarten Rights Apply to Employees Facing Drug Tests
In Ralphs Grocery Co. and United Food and Commercial Workers Union, Local 324, 361
NLRB No. 9 (July 31, 2014), the NLRB ruled that Ralphs Grocery Co. violated the NLRA by
firing a produce manager who refused to take a drug test without being allowed to consult a
union representative first, saying the refusal was intertwined with the worker’s assertion of his
Weingarten rights. Weingarten rights allow employees to insist on having a union representative
present for an investigatory interview that the employee reasonably believes could lead to
disciplinary action.
NLRB Notifies McDonald’s That It Can Be “Joint Employer” with Franchisees
The NLRB’s General Counsel issued a directive on July 29, 2014 authorizing the Board to move
forward a number of unfair labor practice charges from McDonald’s workers claiming that
McDonald’s Corp. is a “joint employer” with its franchisees. In response, McDonald’s issued a
statement announcing plans to contest the decision, which the franchisor labeled “wrong” in light
of precedential law. The decision was made by the NLRB General Counsel as the Board reviews
the test for determining joint employer status in an unrelated case involving a waste services
company and a staffing agency. Although it doesn’t carry the force of a full-board decision, the
directive could have wide-reaching effects on other industries that rely on the franchise model.
Two NLRB Decisions Provide Guidance on Micro-Unit Bargaining Groups in Light of
Specialty Healthcare Ruling
The NLRB ruled in Macy’s Inc., 361 NLRB No. 4 (July 22, 2014) that a group of cosmetics and
fragrance sales workers at a Macy’s store in Massachusetts can organize, despite the retailer’s
argument that the 41-person unit was too narrow. In its controversial 2011 Specialty Healthcare
ruling, the NLRB raised the bar for challenges to narrow units by requiring the employer to show
that the proposed bargaining unit excludes workers who share an “overwhelming community of
interest” with those in the proposed group. In the 3-1 Macy’s decision, the Board held that the
employees in the petitioned for unit are a readily identifiable group who share a community of
interest, and that Macy’s failed to demonstrate that the other selling and non-selling employees
required inclusion based on sharing an overwhelming community of interest.
Days later, however, the NLRB unanimously rejected a bargaining unit made up of Bergdorf
Goodman’s shoe salespeople in The Neiman Marcus Grp., Inc., 361 NLRB No. 11 (July 28,
2014). The rejected unit consisted of all women’s shoes associates in a second floor designer
shoes department and a fifth-floor “contemporary shoes” department at the 754 Fifth Avenue
store. The NLRB noted that the designer shoes employees on the second floor made up their
whole department, while the contemporary shoes employees were carved out from the
contemporary sportswear department. In contrast, the Macy’s unit that was approved conformed
to employer-established departmental lines.
The NLRB explained that the Specialty
Healthcare’s community of interest test looks “almost exclusively at how the employer has
chosen to structure its workplace.”
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Opposing Briefs Filed in NLRB’s Review of Director’s Ruling that Northwestern’s
Scholarship Football Players Can Unionize
In a July 31, 2014 reply brief filed with the NLRB, Northwestern University challenged a
regional director’s determination that football players receiving grant-in-aid scholarships are
“employees” under the NLRA, such that they could vote on whether to form a union. The school
argued that its relationship to its athletes is not an economic one, and there is no basis in
common law or NLRB precedent to support the conclusion that scholarship athletes are
employees for purposes of federal labor law. The College Athletes Players Association, a union
group that has led efforts to organize Northwestern’s players, also filed a reply brief, arguing that
the school and the NCAA has “enormous self-interests” in maintaining a system in which the
schools “share multimillions in revenue generated by the players’ labor.”
Retaliation Cases Are More Difficult to Defend Than Discrimination Cases
A recent federal court decision in Michigan shows why it is more difficult for employers to
defeat retaliation claims than discrimination claims. In Worthington v. Brighton Ford, 2014
WL 555186 (E.D. Mich. 2014), the plaintiff claimed that she had been sexually harassed at work
(which the harasser admitted during the internal investigation) and that the employer retaliated
against her for raising a harassment complaint. The harassment complaint was dismissed
because the employer immediately investigated the complaint once it was received and
suspended the wrongdoer. However, the plaintiff also claimed that actions were taken against
her at work because she had made the complaint. The employer admitted it took the actions, but
said they were taken for legitimate business reasons. The court allowed the retaliation claim to
go forward because there were genuine issues of material fact for a jury to consider as to the
motives of the employer.
Former Employer’s Letter to New Employer about Non-competition Agreement Not Illegal
Plaintiff worked for defendant at the worksite of one of defendant’s customers. He ended up
working for both of them simultaneously for 6 months. When defendant learned of this, it
discharged him. A month later, defendant sent the employee a letter, reminding him of the terms
of his non-competition agreement, and asked him to confirm that he was in compliance with it.
Defendant copied the letter to the new employer, which promptly discharged the employee out of
a concern that it might be sued.
Plaintiff sued defendant for tortious interference with his employment relationship with his new
employer, but lost. In Bonds v. Philips Electronic North America, 2014 WL 222730 (E.D.
Mich. 2014), the court held that defendant had the right to send such a letter unless it was sent
with the improper motive of seeking to interfere with the employment relationship. There was
no proof of malice in this case.
Contract Non-renewal Not a WPA Violation
An employee with a fixed term employment agreement made several complaints to law
enforcement agencies about alleged criminal violations of members of the employer’s board of
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directors. When his contract expired, it was not renewed and he claimed the non-renewal was an
act of retaliation in violation of Michigan’s Whistleblower Protection Act. In Wurtz v. Beecher
Metropolitan District, 495 Mich. 242 (2014), the Michigan Supreme Court ruled that “the statute
only applies to individuals who currently have the status of ‘employee’” and that “if a contract
employee alleges only that the employer declined to renew the employee’s contract, and not
some action taken against the employee with respect to an employee’s service under the contract,
the WPA has no application.”
Cat’s Paw Theory of Liability Applied by Michigan Court of Appeals
The Michigan Court of Appeals upheld a $1 million verdict against an employer for race
discrimination even though there was no evidence of bias by the decision-makers as to Plaintiff’s
discharge. Plaintiff was a white employee whose supervisor submitted a report blaming Plaintiff
for a confrontation with an African-American co-worker. Based on this report, Plaintiff was
discharged. Even though the managers who made the discharge decision were not biased, the
report they relied upon was prepared by a supervisor who the jury felt was biased in favor of the
African-American employee because he was afraid that employee would label him as being
racist if he did not file the report. Clum v. Jackson National Life Insurance Company, 2013
WL 5925989 (Mich. App. 2013).
Michigan Court of Appeals Concludes that Stuffed Gorilla Is Not Evidence of a Racially
Hostile Work Environment
In Perry v. Dep’t of Human Servs., 2014 WL 2934690 (Mich. Ct. App. June 26, 2014), the
Michigan Court of Appeals concluded that the placement of a five-foot stuffed gorilla on a
cubicle wall was not evidence of a racially hostile work environment, and reversed a $21,000
punitive damages award to the alleged victim. Crystal Perry, a black woman, began working for
the Michigan Department of Human Services in 2003. In 2009, one of her co-workers placed the
gorilla on Perry’s cubicle wall around the time her supervisor gave her a negative evaluation.
Perry complained to DHS’s office of Equal Employment Opportunity, which told her the gorilla
would be removed immediately. However, the gorilla was not removed until three weeks later.
The Court of Appeals concluded that there was no evidence that the placement of the gorilla was
racially motivated, pointing to a lack of racial comments, threats, or other prejudicial displays,
and that the conduct was isolated to only three weeks during the course of Perry’s six years of
employment.
In Michigan, Offer of Severance Pay is Not Binding Where Nothing is Required of
Employees
According to the Michigan Court of Appeals’ decision in Klein v. HP Pelzer Automotive
Systems, 306 Mich. App. 67 (2014), an employer’s letter stating that key employees would get
severance pay if their jobs ended in any manner is best understood as creating a revocable policy
rather than a binding contract. More specifically, no contract was formed because there was no
consideration from the employees who were not required to do anything to vest their rights to
severance pay. The Court distinguished the case at issue from those where employees were
required to work a specific amount of time in order to earn their severance pay.
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Contractor/Employee Distinction for Workers’ Comp Purposes Clarified
An “employee” injured on the job is limited to the recovery of workers’ compensation benefits
from his employer unless the employer intentionally causes the injury (the “exclusive remedy”
provision of the Workers’ Comp Act). The test for whether an individual is an employee or
independent contractor was recently clarified in Auto-Owners Insurance Co. v. All Star Lawn
Specialists, 303 Mich. App. 288 (2013). In order for an individual to sue an employer for
damages arising from an on the job injury, he must establish that he is a contractor by proving
that he maintains a separate business, holds himself out to and renders services to the public
AND is an employer subject to the Workers Comp law. If any of these three criteria do not exist,
he is an employee covered by the Act.
MERC Judge Rules Against MEA’s Window Period for Opting out of the Union
In Saginaw Education Association, (MERC Case No. CU13 I-054), an Administrative Law
Judge has ruled that the Michigan Education Association must allow members to resign from the
union at any time and may not limit resignations to a one-month window period. Currently, the
MEA only allows members to resign from the union during the month of August. This is only a
Recommended Order, not a final decision. Assuming the union files Exceptions to the Judge’s
ruling, the Michigan Employment Relations Commission will have to decide to accept, reject or
modify the Judge’s decision.
Conflict between the Employment Security Act and the Medical Marijuana Act Resolved
The Michigan Employment Security Act provides that an employee fired for a positive drug test
is not eligible for unemployment benefits. The Michigan Medical Marihuana Act, however,
states that registered medical marijuana users are not “subject to a penalty in any manner”
because of their use of medical marijuana. In Braska v Challenge Manufacturing,
(10/23/2014), the Michigan Court of Appeals decided that this provision of the MMA preempts
the drug testing disqualification provision of the Employment Security Act. Accordingly, the
claimants, who were discharged for positive drug tests for marijuana, were held to be eligible for
unemployment benefits.
Indiana’s Supreme Court Finds the Indiana Right to Work Law to be Constitutional
On November 6, 2014, the Indiana Supreme Court reversed a lower court decision that had
found the Indiana Right to Work law to be an unconstitutional invasion of the rights of labor
unions under the Indiana Constitution.
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