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.

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.

“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.

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):

Discrimination

• Real and Spectacular! A true Seinfeld-ian claim of sexual harassment — from Eric Meyer’s The Employer Handbook Blog
• An in-depth look at the EEOC’s new Enforcement Guidance on pregnancy — from Robin Shea’s Employment and Labor Insider
• Pregnant at work: How you’re protected — from Evil HR Lady, Suzanne Lucas
• Not a “team player” … or sex discrimination? — from EmployerLINC
• Is pregnancy a disability? The true false version — from Understanding the Americans with Disabilities Act
• Hiring Discrimination and Religion: Recent Studies — from Workplace Prof Blog
• Can My Employer Ban Me From Speaking Spanish To Co-Workers? — from Donna Ballman’s Screw You Guys, I’m Going Home

Social Media & Workplace Technology

• How NOT to Produce Facebook Evidence — from Molly DiBianca’s Delaware Employment Law Blog
• Top 10 Social Media Mistakes Made by Supervisors — from Next Blog
• Are You Googling Job Candidates? When You Do, Everyone Loses — from TLNT
• How I’m Trying to Manage My Online Brand — from You’re the Boss Blog

HR & Employee Relations

• What an Employment Lawyer Can Learn From Minecraft (or Not) — from Dan Schwartz’s Connecticut Employment Law Blog
• Work-Life Balance: PepsiCo CEO Says It's a Myth — from Employment Lawyer Blog
• No One Should Have to Choose Between Caregiving and Work — from Harvard Business Review
• Telecommuting Will Increase by 21% by 2016 — from Blogging4Jobs
• How Difficult Is It To Sue Your Employer? — from Evil Skippy at Work
• I was fired for taking a 15 Minute dump — from The Tim Sackett Project
• July BTW: Two New FCRA Class Actions & The Problem with Ban the Box — from employeescreenIQ Blog

Wage & Hour

• Employee lawsuit targeting Apple for unpaid wages gets class action status — from The Verge
• FLSA “Per Diem” Claims On The Rise — from Wage and Hour Laws Blog
• Paralegal’s suit claims law firm should have paid for overtime — from ABA Journal Daily News
• Violating the FLSA may send you to jail — from Mike Haberman’s Omega HR Solutions
• Costly Wage And Hour Mistakes — from Overtime Lawyer Blog
• Defense Appropriations “Wage Theft” Amendment May Bar Employers with FLSA Violations from Defense Contracts — from Wage & Hour Insights
• The FMLA and the “Personal Staff” Exemption — from The Employment Brief
• Obamacare Opinions Galore! — from Phi Miles’s Lawffice Space

Labor Relations

• Subway Franchise Workers Unionize — from Labor Relations Today
• NLRB Overturns Decert Election Based On Employer’s “Promises” Of 401(k) — from Labor Relations Update
• NLRB Seeks to Rewrite Legal Standard to More Easily Find Joint Employer Relationships — from Matt Austin Labor Law
• Macy’s Department Store Workers Allowed to Unionize — from All in a Day’s Work

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.

Orange is the new sexual harassment lawsuit

Orton-Bell v. State of Ind. (7th Cir. 7/21/14) [pdf] concerns allegations of sexual harassment levied by a substance-abuse counsel at an Indiana maximum security prison against her co-workers and superiors. The allegations break down into two categories:

• Other employees and correctional officers at PCF were having sex on Orton-Bell’s desk. When she complained, a supervisor told her he didn’t care as long as offenders were not involved. Another co-worker suggested she clean her desk every morning.

–and–

• Orton-Bell was called “Cinderella” and “Princess” by male employees.
• She received excessive pat-downs from female correctional officers. 
• On one occasion, Orton-Bell was required to remove her sweater in the shakedown area so that the sweater could be sent through a scanner. This caused Orton-Bell’s spaghetti-strap camisole tank top to be exposed to male employees and offenders.
• Male employees made comments about how the pat-downs were “almost like sex for them.”
• Orton-Bell was not permitted to wear jeans, but male employees were.
• Male employees engaged in a barrage of sexual banter with Orton-Bell in person and via email, including a comment from the male superintendent that “her ass looked so good that it would cause a riot.” 

The court concluded that the sex-on-desk allegations could not support a claim for sexual harassment because she could not prove the conduct, while egregious and offensive, was because of her sex.

The notion that night-shift staff had sex on her desk because she was a woman is pure speculation.… If there were evidence that the night-shift staff were using her office because she was a woman, and her supervisors were indifferent, that would be enough. If there was evidence that night-shift staff similarly used a man’s office, and her supervisors intervened in that circumstance but not in her circumstance, that would be enough. There is neither. Her supervisors’ insensitive and inattentive responses were callous mismanagement; but absent evidence that this inaction was based on her sex, it did not violate Title VII.… 

The conduct was certainly sexual intercourse on her desk, but that does not mean that night-shift staff had sexual intercourse on Orton-Bell’s desk because she was of the female sex. There is no evidence to indicate that, had her conveniently private and secure, but accessible, office belonged to a man, it would not have been used in the same manner. Accordingly, this incident, while egregious, does not support a hostile work environment claim. 

The remaining allegations, however, painted a different story.

The constant barrage of sexually charged comments, however, was clearly pervasive, offensive, and based on Orton-Bell’s sex.… 

The record does reveal an instance where, in an email conversation with a co-worker named Bruce Helming, she participated in vulgar banter. However, while that may lead a jury to conclude that she was not subjectively offended by the environment, one private conversation via email is not enough for us to conclude, as a matter of law, that she was not subjectively offended by the many other public, unwelcome sexually charged comments in the environment.

What does this case teach us?

1. Apparently, after-hours sex on workplace desks between co-workers is a real thing.
2. “Because of sex” has real teeth to it. No doubt, the desk-sex is gross and offensive. Yet, Orton-Bell could not offer any evidence that the use of her desk was for any reason other than the fact that it was located in a private office. Absent evidence that the use of her desk was sex-based, that allegation could not support a harassment claim.
3. An employee’s participation in some sex-based joking can, under the right circumstances, show that the work environment was not subjectively hostile. One email containing vulgar banter with a co-worker, however, likely is not enough. 

Let me leave you with this thought. If your workplace is sexually charged, it will catch up with you eventually. I cannot fathom the difficulties managing employee behavior in a maximum security prison. Nevertheless, Title VII does not stop at the door just because the workplace is inherently hostile. 

[Hat tip: Indiana Law Blog, via Andrew Cohen]

President signs Executive Order banning LGBT discrimination by the federal contractors and government

Yesterday, President Obama amended two prior Executive Orders, adding new protections against sexual orientation and gender identity discrimination. Executive Order 11246, which extends anti-discrimination obligations to federal contractors, now also includes prohibitions against sexual orientation and gender identity discrimination. Executive Order 11478, which already banned sexual orientation discrimination by the federal government, now also includes a prohibition against gender identity discrimination. The provisions affecting federal employees takes effect immediately. Those impacting federal contractors will take effect within 90 days, after the Secretary of Labor implements regulations.

Currently, only 18 states prohibit employment discrimination based on sexual orientation and gender identity. Ohio is not one of them. These amendments will extend these protections to 28 million federal employees and employees of federal contractors. Thus, if you are an Ohio company with federal contracts, this prohibition will apply to you.

It is time for employers to stop invidious discrimination against LGBT employees. According to the White House, 91% of Fortune 500 already prohibit discrimination based on sexual orientation, and 61% already prohibit discrimination based on gender identity. Yet, according to President Obama, “In too many states and in too many workplaces, simply being gay, lesbian, bisexual or transgender can still be a fireable offense.… I firmly believe that it’s time to address this injustice for every American.” 

I agree. It’s incomprehensible and unjustifiable for an employer to discrimination on the basis of sexual orientation and gender identity. It’s antithetical to what this country stands for — government of the people, by the people, for the people, and justice for all (no matter with whom they happen to go to bed at night). Eventually, Congress will act, pass ENDA, and make LGBT discrimination a thing of the past. Until then, do right by your employees. Enact policies prohibiting this type of discrimination in your workplace. Send a message that you are an employer of inclusion, and not exclusion.