Friday, August 1, 2014

WIRTW #330 (the “be careful what you post” edition)

You’d think that people would know better than to post a private conversations with one’s attorney over a public social network. Kaiser v. Gallup, Inc. (D. Neb. 7/8/14) (h/t We Know Next) is an ADA case. During discovery, the employer learned that the plaintiff had communicated, via Facebook, with her cousin-lawyer about her termination. The plaintiff claimed that the attorney-client privilege shielded the communications from discovery. The employer argued that the plaintiff waived the privilege through the public nature of the discussion on Facebook. When the plaintiff couldn’t show otherwise, the court ordered the communication to be produced.

No one should ever share confidential information on social media. Posting something on Facebook (or Twitter, etc.) is tantamount to publishing it on the front page of your local newspaper.  If something is a secret, keep it that way by keeping it off social media.

Here’s the rest of what I read this week:


Social Media & Workplace Technology

HR & Employee Relations

Wage & Hour

Labor Relations

Thursday, July 31, 2014

6th Cir. invalidates individual waivers of FLSA collective action participation

The wage-and-hour class or collective action lawsuit is one of, if not the, greatest risk facing employers. Many of these lawsuits are filed by disgruntled ex-employees. And, many employers seek to limit their risk by securing waivers from employees, in which employees covenant not to participate in such a lawsuit, typically in exchange for severance pay or some other consideration. Increasingly, however, these waivers have come under fire.

The most recent attack comes from the 6th Circuit, which, in Killion v. KeHE Distributors (6th Cir. 7/30/14) [pdf], held that severance-agreement waivers of one’s right to participate in an FLSA collective action are invalid.

The key facts of Killion are simple. KeHE distributes specialty ethnic and health foods to retailers. In early 2012, it discharged 69 sales reps as part of a restructuring. KeHE offered a severance package to each affected employee, in exchange for a release a claims, in addition to a promise “not to consent to become[ ] a member of any class or collective action in a case in which claims are asserted against the Company that are related in  any way to [their] employment or the termination of [their] employment with the Company.”  As part of a later-filed FLSA collective action seeking unpaid overtime, the plaintiffs sought to include the 69 laid-off sales reps and invalidate the collective action waivers set forth in their severance agreements.

The 6th Circuit held that the waivers were invalid. It concluded that any agreement that deprives one of his or her rights under the FLSA is invalid. Because the waiver deprived the employees of their right to participate in the collective action, it was invalid.

The employer argued that the at-issue agreement does not deprive anyone of any rights, since each employee is free to pursue and individual claim against the company for FLSA violations. The court, however, was not persuaded. Instead, the court concluded that because each employee’s potential claim for unpaid overtime was relatively small, the only real opportunity to pursue the alleged FLSA violation was via a collective action.
Requiring an employee to litigate on an individual basis grants the employer [a] competitive advantage…. And in cases where each individual claim is small, having to litigate on an individual basis would likely discourage the employee from bringing a claim for overtime wages.
As the Killion court points out, this decision now creates a split of authority between the 6th other Circuits. The Killion court also pointed out, however, that every other circuit that has decided this issue in the employer’s favor has done so because the agreements also contained arbitration clauses; the agreement in this case lacked that mechanism. It will be interesting to follow if this employer pursues this matter to the Supreme Court, and if that Court is interested in this important issue, or if other circuits follow Killion’s lead in the non-arbitration context.

For now, at least in the 6th Circuit, it appears that individuals waivers of the right to join wage-and-hour collective actions are dead.

Wednesday, July 30, 2014

NLRB seeks to supersize its joint-employer standard

The NLRB is waging war on employers, and it’s drawing its latest battle line at the McDonald’s drive-in. Yesterday, the NLRB Office of General Counsel announced that it has authorized complaints against 43 different McDonald’s franchises; it also announced that in each case it will issue a complaint against the franchisor, McDonald’s, USA, LLC. The problem, however, that in no case does McDonald’s own the restaurant or employ the workers. Instead, McDonald’s merely licenses its trademarks and operating procedures to the local franchisees. The franchisees, in turn, hire, fire, discipline, pay, and take all other responsibilities for the employees. As a “joint employer,” however, McDonald’s will share liability with the direct employer as if it stood in their shoes.

This announcement by the NLRB is its latest salvo in a war it is waging against employers. In May, the NLRB asked for interested parties to file briefs on the issue of whether the NLRB should revisit its joint-employer standard.

Under the current joint-employer standard, to which the NLRB has adhered for at least 30 years, the Board looks to whether the employer exerts direct and meaningful control over matters related to the employment relationship, such as hiring, firing, discipline, supervision, and direction. The current iteration of the NLRB, however, seeks to loosen the rules to find joint employment whenever one wields sufficient influence over the working conditions of the other entity’s employees. The operational requirements of a franchise relationship will likely trigger this significant-influence test.

According to the New York Times, McDonald’s plans to contest these decisions. Frankly, it has no choice. If a franchisor is a joint employer with its franchisee, the franchisor would not only share liability for the franchisee's unfair labor practices, but also its wage-and-hour violations, acts of discrimination, and other employment sins, not to mention claims related to employees’ negligence, such as slip-and-falls and food-related claims. This liability will be a tough nut for franchisors to swallow, since they exercise no control and bear no responsibility for the employees.

These cases are far from over. In fact, they are just at their beginning. All that has happened so far is that the NLRB has authorized complaints to issue. Hearings will be held, ALJ decisions will be written, appeals will be taken to the NLRB in Washington, and, ultimately, appeals to federal circuits courts and the Supreme Court. This issue is years from a resolution, but nevertheless warrants notice, as it serves as further evidence of the aggressive pro-union position the current iteration of the NLRB is putting forth.

Tuesday, July 29, 2014

Will the Ohio Supreme Court eliminate manager and supervisor liability for discrimination?

Ohio’s discrimination is unique in that it allows for the imposition of individual liability against managers and supervisors for their personal acts of discrimination. The case, Genaro v. Central Transport (1999), is the bane of defense lawyers and employers alike. Aside from adding a complicating element to cases by including employees in the matrix of sued parties, it also permits plaintiffs lawfully to add a non-diverse parties and keep cases from being removed to federal court.

There is hope, however, that Genaro may go the way of the dodo. Currently pending before the Ohio Supreme Court is Hauser v. City of Dayton. The specific question presented by this sex discrimination case is whether, under Genaro, Ohio’s employment discrimination statute imposes civil liability upon a manager or supervisor of a political subdivision, or whether such individual enjoys immunity as an agent of such subdivision. If the Supreme Court holds that Revised Code Ch. 4112 specifically imposes liability upon an individual manager or supervisor, then immunity cannot hold. Thus, the Court will have to decide whether Genaro is a valid interpretation of the definition of “employer” under R.C. 4112.01(A)(2).

The oral argument in Hauser offered few hints on how the Court might rule. For companies that have operations in Ohio, Hauser is the most important decision currently pending before the Ohio Supreme Court. To decide this issue of political subdivision immunity, the Court will necessarily have to pass judgment on the continued validity of Genaro and its imposition of individual liability. A ruling against the employee in this case would be a huge win for employers. The elimination of Genero would bring not only bring Ohio in line with federal law, but also with the overwhelming majority of states. It would bring a halt to the gamesmanship of adding individual defendants to lawsuits to keep claims away from federal court. My fingers are crossed that the Court does right by employers in this case. When the Court issues its decision, I’ll report back.

Monday, July 28, 2014

“Unionism” as a protected class?

Way back in 2012, the New York Times published an op-ed titled, A Civil Right to Unionize, which argued that Title VII needs to be amended to include “the right to unionize” as a protected civil right. At the time, I argued that including “unionism” as a protected class was the worst idea ever. Apparently, at least one Congressman disagrees with me.

MSNBC is reporting that later this week Rep. Keith Ellison (D-Minn) “plans to unveil legislation that would make unionization into a legally protected civil right,” on par with “race, color, sex, religion and national origin.” His goal is to make it “easier for workers to take legal action against companies that violate their right to organize.”

I agree with Representative Ellison that employees should never be fired for “expressing an intent to support union activity.” The problem with his idea, however, is that this is a right that the law already protects. Sec. 8(a)(3) of the National Labor Relations Act makes it an unfair labor practice for an employer … by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization.”

So there is no mistake on how I feel about this proposal, here’s what I said in March 2012, in response to the Times’s op-ed on this issue:

With apologies to union supporters, there is no reality in which “unionism” exists on the same level as race, sex, disability, or the other protected classes. The “greatest impediment” to unions isn’t “weak and anachronistic labor laws.” It’s intelligent and strong-willed employees who understand that whatever benefit they might receive from a labor union is not worth the dues that come out of their paychecks.

And, the reality is that despite all of this pro-union rhetoric, labor unions are doing just fine without any additional help. Unions wins more than two-thirds of representation elections. All this proposal does is increase the burden for employers, without providing any appreciable benefit to employees — which is why I feel comfortable asking if this proposal is the worst idea ever.

There is no chance this bill will go anywhere but the legislative trash heap if it’s introduced as promised. Nevertheless, it serves as a good reminder that there exists legislators who want to make you job as an employer harder than it already is.

Friday, July 25, 2014

WIRTW #329 (the “amicus” edition)

The ABA Journal has opened nominations for its annual list of the best legal blogs, known as the Blawg 100. I’ve been fortunate enough to be selected the past four years. The ABA Journal is soliciting opinions for whom to include this year. I’ve already submitted my list. Please take a few moments of your time and do the same. The nomination form is available here, and the deadline for nominations is August 8.

Here’s the rest of what I read this week (and last week):


Social Media & Workplace Technology

HR & Employee Relations

Wage & Hour

Labor Relations

Thursday, July 24, 2014

Customer preference and race discrimination—when the customer isn’t right

The EEOC has sued a Chicago auto parts retailer for race discrimination after it fired an African-American store manager. The store was located in a heavily Hispanic Chicago neighborhood. THe company decided to eliminate or limit the number of non-Hispanic employees working at the store, believing that its Hispanic customers preferred to interact with Hispanic employees. When the manager refused to report to another store, the EEOC claims he was fired.

John Hendrickson, the EEOC’s regional attorney in Chicago, explains in a news release why the agency filed suit.
Fifty years after the adoption of the Civil Rights Act, a major employer transferring an employee simply because of his race and then firing him for not going along is unacceptable. When the employer is a major national brand and a leader in its industry, it’s even worse. Everyone must understand that supposed customer preference is no excuse for discrimination—it’s still illegal, and the EEOC will step in to challenge it.
Mr. Hendrickson is correct. As one federal court explains, “It is now widely accepted that a company’s desire to cater to the perceived racial preferences of its customers is not a defense under Title VII for treating employees differently based on race.” Avoid the trap of acting on a mistaken belief that customers will only deal with like-skinned employees. Simply, the customer can never choose the race of the person working for you. The customer might be right about a lot things, but discrimination is not one of them.

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