Some thoughts on arbitration agreements for employees

Recently, the Cuyahoga County Court of Appeals stymied an attempt by an employer to enforce an arbitration agreement against an employee. The employer was a Burger King franchise and the employee was a former employee claiming she was raped by her supervisor in the restaurant’s men’s bathroom. The court, in Arnold v. Burger King, concluded that, for various reasons, enforcing the agreement against her and requiring her to arbitrate her claims would be unconscionable.

Arnold notwithstanding, arbitration continues to the favored method used by employers to limit their potential exposure in front of a jury. I, however, am not a fan of arbitration agreements. Conventional wisdom suggests that arbitration is quicker and cheaper means to resolve lawsuits. Research, however, suggests that the opposite may better match reality.

lf arbitration is neither faster or less expensive than court, but you still want to foster expediency and limit the risk of a runaway jury verdict, consider two possible alternatives.

Contractual Waivers of Jury Trials

First, employers can have employees sign agreements waiving the right to ask for a jury in any subsequent legal disputes. More than 20 years ago, in K.M.C. Co. v. Irving Trust Co., the 6th Circuit stated: “It is clear that the parties to a contract may by prior written agreement waive the right to jury trial.... [T]he constitutional right to jury trial may only be waived if done knowingly, voluntarily and intentionally.” The contract should clearly and unambiguously advise the employee that by signing the agreement the employee is giving up any and all rights to have any claims related to his or her employment raised by a jury. The more broadly the waiver is drafted, the more likely it will cover an employment-related claim, provided it is otherwise knowing and voluntary.

Agreements to Shorten the Statute of Limitations

Secondly, employers can attempt to limit the amount of time employees have to assert employment claims. In Thurman v. DaimlerChrysler, Inc. [pdf], the 6th Circuit held that a clause in an employment application limiting the statutory limitations period for filing a lawsuit against the employer was valid. Thurman’s employment application with DaimlerChrysler contained a clause waiving any statute of limitation and agreeing to an abbreviated limitations period in which to file suit against the employer. Specifically, the clause stated:

READ CAREFULLY BEFORE SIGNING I agree that any claim or lawsuit relating to my service with Chrysler Corporation or any of its subsidiaries must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.

The Court held that the abbreviated limitations period contained in the employment application was reasonable, and that all of Thurman’s claims against DaimlerChrysler were time barred by the six-month limitations period. The Court paid particular attention to the “read carefully before signing” language, and noted that it was in bold and placed conspicuously directly above Thurman’s signature acknowledging that she read and understood the document. It also found the specific language used was clear and unambiguous.

The advantage of using these types of clauses is that you can limit the duration of potential liabilities. For example, in Ohio employees have 6 years to file discrimination claims (other than age) under R.C. 4112.99. A clause such as the one in Thurman would shorten that time frame from 6 years to 6 months, a dramatic improvement.

“FMLA” is not a magic word

Does an employee have to invoke the letters “F-M-L-A” for an employer to offer it? Or, what if an employer fires an employee who misses work because of an FMLA-qualifying illness for which FMLA-leave was not offered? Has the employer violated the statute?

In Festerman v. County of Wayne (6th Cir. 5/8/15) (h/t: Eric Meyer), a police officer felt chest pains at left work for the emergency room. Five days later, he submitted an incident report, and, a day after that, a doctor’s note that stated, “Patient is advised to limit working hours to 8 hrs/day.”  At no time, however, did the employee specifically request FMLA leave, or invoke the statute for his time off from work.

The 6th Circuit concluded that neither the hospital visit nor the doctor’s note were individually sufficient to place the employer notice that the employee qualified for FMLA leave. However, the court concluded that, presented with the total picture, a fact issue existed as to whether the FMLA covered this employee’s leave.

This Court is confronted with a doctor’s note that expressly discloses a requirement of limiting the employee’s work hours per day, but fails to disclose the condition that gives rise to this requirement or any additional prescribed treatment. Consequently, the doctor’s note submitted by Festerman, in isolation, may not have provided sufficient notice to Wayne County of a qualifying condition under the FMLA. The circumstances surrounding Festerman’s initial qualifying leave, however, provided additional context to the doctor’s note and are evidence that Festerman’s superiors were aware of his potential FMLA-qualifying condition….

Given Wayne County’s knowledge of a serious health-related incident that occurred in the workplace and the doctor’s note which advises that Festerman’s workday should be limited to eight hours per day, a reasonable jury could find that Festerman provided sufficient notice to Wayne County of a FMLA-qualifying serious health condition.

I’ve previously discussed how an employer should handle an employee’s potential or questionable request for leave under the FMLA.

• If the employer fails to treat the request as one for FMLA leave, the employer assumes all of the risk. If the employer is wrong, and the employee was requesting FMLA leave, an employer is severely limited it its ability to defend an FMLA interference lawsuit.

• If, however, the employer treats the request as one for FMLA leave, the employee assumes all of the risk. The FMLA provides an employer tools  to verify the legitimacy of the request. The employer can (and should) require that the employee provide a medical certification justifying the need for the FMLA leave. Moreover, if the employer doubts the initial certification, it can require a second (and, sometimes, even a third) medical opinion. If the employer ultimately concludes that the leave does not qualify under the FMLA, it can retroactively deny the leave and treat all intervening absences as unexcused, which usually results in termination.

In other words, employers, err on the side of caution. Use the FMLA’s checks and balances. When in doubt, offer conditional FMLA leave, and confirm with the statute’s medical certification process. And, just, as importantly, train your supervisors to recognize a potential FMLA issue so that they do not get in the way of this process working.

WIRTW #367 (the “warped” edition)

In my never-ending quest to retire from law and manage my daughter’s burgeoning music career full-time, I bring you highlights from last weekend’s School of Rock Warped Tour show, with Norah singing lead vocals on “Russian Roulette” by Tsunami Bomb, and playing lead guitar on “Prosthetic Head” by Green Day.

This weekend, you have two chances to catch the SoR Warped Tour band in action. Tomorrow, they will be playing a few songs at the Relay for Life, at Pat Catan Stadium in Strongsville, at 3:30, and Sunday they will reprise the entire show at the Music Box Supper Club at 12:30. Or, if you follow me on Periscope or Twitter, you’ll likely be able to catch a song or two live from the comfort of your iPhone.

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

Discrimination

• Be Smarter than the Average Bear: ADA Accommodations at Camp — via Dan Schwartz’s Connecticut Employment Law Blog
• New Fourth Circuit Standard: Single Incident Sufficient For Title VII Hostile Workplace Harassment Claim — via The Employment Brief
• Can we stop with the age-based stereotypes? — via Robin Shea’s Employment & Labor Insider
• How 2 racial slurs in 24 hours can create a hostile work environment — via Eric Meyer’s The Employer Handbook Blog
• Same-Sex Marriage Bans As Sex Discrimination: The Potential Impact On Plan Sponsors And Employers — via Employment Law Lookout
• Growing Numbers of Americans Report Age Discrimination — via Atlanta Employment Lawyer Blog
• Proposed EEOC Rules Further Complicate Wellness Program Design — via E is for ERISA

Social Media & Workplace Technology

• Infographic: What recruiters really think of your social media photos — via Ragan.com
• A data breach is often an employee problem — via Mike Haberman’s Omega HR Solutions
• Woman fired after disabling work app that tracked her movements 24/7 — via The Verge
• Do Your Apps Violate Employee Privacy? — via Heather Bussing at HR Examiner

HR & Employee Relations

• Deflategate and the power of external investigations — via EntertainHR
• Bill Simmons and ESPN: 5 Times When It's Time to Fire Your Biggest Star — via The HR Capitalist
• Moms Should Be the Most Upset with Piers Morgan’s Paternity Leave Comments — via The Daddy Files
• Stop Punishing the Family Man — via Harvard Business Review
• Jury Awards $2 Million to Nurse for “Defamatory” Report to Board of Nursing — via Minnesota Employment Law Report
• Study: How to best manage millennials — via Ragan.com
• Employee Handbooks: Every Word Counts—A Quick Fix to Your Harassment — via Next Blog
• Providers: Beware of HIPAA and Patient Privacy Rules During Employment Disputes — via Above the Law

Wage & Hour

• The Trouble with Off-the-Clock Work — via Blogging4Jobs
• Courts continue to back employers with strong timekeeping policies, practices — via EmployerLINC
• The next labor fight is over when you work, not how much you make — via Wonkblog
• OSHA Issues Comprehensive Rule to Protect Construction Workers in Confined Spaces — via Joe’s HR and Benefits Blog
• OSHA: Inadequate Penalties, Poor Enforcement — via Workplace Prof Blog
• FMLA and Union Contracts May Be More Than We Bargained For — via The Emplawyerologist

Labor Relations

• Should you settle that pesky NLRB charge? — via HR Hero Line
• Do your confidentiality and nondisclosure agreements violate Federal law? — via Mike Haberman’s Omega HR Solutions
• Make sure your company e-mail policy passes the Purple test — via Technology for HR

NLRB offers some good news for franchisors, or does it?

We are in the middle of class war in America, and your local fast-food restaurant is ground zero. Workers are fighting for higher wages and better working conditions. And, they are getting some help from the federal government.

Last summer, the NLRB Office of General Counsel authorized complaints against 43 different McDonald’s franchises, along with the restaurant’s franchisor, McDonald’s, USA, LLC. In each case, the franchisor did not 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 stands in their shoes, because if a franchisor is a joint employer with its franchisee, the franchisor would share liability for all the franchisee's employment and other sins.

This week, however, we received some news on this front from the same NLRB Office of General Counsel. In Nutritionality, Inc. d/b/a Freshii [pdf], the OGC issued an advice memorandum concluding that the franchisor is not a joint employer with the franchisee.

Nevertheless, it’s not all happy meals for franchisors. The OCG compared two possible legal test for “joint employers,” the Board’s current standard and the “industrial realities” test.

Under the Board’s current standard—

The Board will find that two separate entities are joint employers of a single workforce if they “share or codetermine those matters governing the essential terms and conditions of employment.” To establish such status, a business entity must meaningfully affect matters relating to the employment relationship “such as hiring, firing, discipline, supervision, and direction.” … The Board and the courts have also considered other factors in making a joint employer determination, including an employer’s involvement in decisions relating to wages and compensation, the number of job vacancies to be filled, work hours, the assignment of work and equipment, employment tenure, and an employer’s involvement in the collective bargaining process.

In Nutritionality, however, the OGC lobbied for the NLRB to apply a more liberal “industrial realities” test—

Under that standard, the Board finds joint employer status where, under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence. This approach makes no distinction between direct, indirect and potential control over working conditions and results in a joint employer finding where “industrial realities” make an entity essential for meaningful bargaining.

Ultimately, the OGC concluded that the franchisor failed as a joint employer under either test. Nevertheless, as the NLRB continues litigate against McDonald’s as a “joint employer,” this issue bears monitoring, especially as to the legal standard espoused by the NLRB. If the NLRB ultimately concludes that McDonald’s is a joint employer with its franchisees under a looser, more liberal joint-employer standard, it could be the most significant legal development of the year to come.

[Hat tip: Phil Miles]

NLRB judge strikes down termination based on HIPAA violation

HIPAA. Five letters that strike fear into the heart of anyone that handles employee medical information. That is, anyone except an NLRB judge passing judgment on whether an employer was justified in firing a union-supporting employee for clear HIPAA violations.

In Rocky Mountain Eye Center [pdf], and NLRB administrative law judge was faced with the issue of whether the NLRA protects an employee of a medical practice, Britta Brown, who accessed co-worker medical information in her employer’s Centricity database for the purpose of gathering contact info for a union-organizing campaign. The judge concluded that the employee’s HIPAA violation did not strip her of the Act’s protection.

I find the Respondent’s comingling of employee and patient data in Centricity, along with its training instructions to employees and its practices, detailed above, preclude any legitimate defense that Brown’s accessing the system to obtain employee phone numbers warranted discipline as a HIPAA violation. While the Respondent's general concerns about HIPAA compliance are unquestionably legitimate, the circumstances here lead me to conclude they were seized upon to stop Brown’s union activity.

In other words, because the employer: 1) permitted the co-mingling of non-protected employee contact information with protected patient medical information, regardless of whether the employee was also a patient, and 2) trained (or, at least, acquiesced in) employees using Centricity to access each others’ contact info for work-related reasons, such as scheduling and social events, the employer could not discipline an employee who used the same tools to access the same information for a union-organizing campaign.

HIPAA isn’t the only law that mandates the confidentiality of medical information.

• The ADA provides that information obtained by an employer regarding the medical condition or history of an applicant or employee must be collected on separate forms, kept in separate medical files, and be treated as a “confidential medical record.”
• If an employer has genetic information obtained under one of GINA’s limited exceptions, it must also keep this information separate from personnel files and treat it as a confidential medical record.

If you are a medical practice and your employees are also your patients, HIPAA adds a deep layer of complexity to these confidentiality issues. The judge’s decision in Rocky Mountain Eye Center notwithstanding, take these confidentiality requirements seriously, and train your employees on the proper handling of, and access to, confidential medical information. Otherwise, instead of an unfair labor practice charge, you might be facing a lawsuit from an employee relating to a breach of confidentiality.

John Oliver tackles paid medical leave

Is it time for America to catch up to the rest of the world and offer paid family leave to our employees? Perhaps the best argument in favor of paid family leave is that besides Papua New Guinea, we are the only country that doesn’t offer it. Makes you think we’re a little behind the times.

Here’s John Oliver’s very funny, and poignant, take on the issue from this week’s Last Week Tonight:

Did the 6th Circuit just gut the honest-belief rule?

The only fight I’ve even been in was in 4th grade. For reasons that I can’t remember, Yale Weinstein and I squared off in the schoolyard of Loesche Elementary School. There were no winners, only losers, and the only thing that saved both of us from suspension that day was the fact that the principal knew my dad from his childhood and was friends with my grandmother. It’s not what you know, but who you know, right?

Let’s suppose you have two employees who get into a fight at work, and one happens to be white and one black. Does Title VII require you to fire both employees, or can you make an honest assessment of the instigator, and only fire the responsible party?

According to the 6th Circuit in Wheat v. Fifth Third Bank (5/7/15) [pdf], an employer potentially violates Title VII when an it fires only one participant in a workplace fight, when both are of different races.

The facts are relatively simple. Wheat (black) and Hatfield (white) first got into an argument, which later escalated into a physical altercation. The employer’s HR department immediately investigated, concluded that Wheat was the instigator, and fired him for violating its workplace violence policy.

The 6th Circuit concluded that the trial court erred in dismissing Wheat’s Title VII claim on summary judgment. Critically, the appellate court reviewed the deposition testimony and found that the evidence showed that Hatfield, and not Wheat, was the aggressor.

Even the most cursory of examinations of the evidence before the district court and this court reveals that a genuine factual dispute exists regarding Wheat’s status as the aggressor in the confrontation with Hatfield. In fact, the deposition testimony establishes that it was Hatfield, not Wheat, who pursued the altercation after the two men had separated initially and gone to their respective “corners.” Even Hatfield himself admitted that it was he who took the ill-advised step of reengaging with the plaintiff after their initial encounter. Moreover, even if the defendant’s position is premised upon its belief that Wheat was the initial aggressor when the two men met in the hallway of the bank, the argument must fail. Although Hatfield claimed that the plaintiff “put his hand in [Hatfield’s] face,” Wheat stated during his deposition that he was turning around to extricate himself from the argument when Hatfield “assaulted” him by swatting him on his arm.

Based on the appellate court’s reading of the deposition testimony, it concluded that “divergent explanations of the unfolding of the relevant events creates an obvious dispute of fact that should preclude the grant of summary judgment to the defendant at the prima-facie-case stage of the litigation.”

To that, I say hogwash. Courts have long held that they do not, and will not, sit as super-personnel departments, second-guessing an employer’s business decisions. Indeed, an employer’s “honest belief” in its decision will act as a shield from a later claim of discrimination. As another panel of this same court recognized a few years ago, in Brooks v. Davey Tree Expert (internal quotations omitted):

Under the “honest belief” rule … so long as the employer honestly believed in the proffered reason, an employee cannot prove pretext even if the employer’s reason in the end is shown to be mistaken, foolish, trivial, or baseless…. For an employer to avoid a finding that its claimed nondiscriminatory reason was pretextual, the employer must be able to establish its reasonable reliance on the particularized facts that were before it at the time the decision was made.

[W]e do not require that the decisional process used by the employer be optimal or that it left no stone unturned. Rather, the key inquiry is whether the employer made a reasonably informed and considered decision before taking an adverse employment action. Although we will not micro-manage the process used by employers in making their employment decisions, we also will not “blindly assume that an employer’s description of its reasons is honest. Therefore, when the employee is able to produce sufficient evidence to establish that the employer failed to make a reasonably informed and considered decision before taking its adverse employment action, thereby making its decisional process unworthy of credence, then any reliance placed by the employer in such a process cannot be said to be honestly held.

It seems to me that as long as Fifth-Third Bank’s HR department engaged in a reasonable-under-the-circumstances investigation of the fight between Wheat and Hatfield, a court is not in a position to second-guess the results of that investigation or the terminations that flowed therefrom. Yet, by examining the deposition testimony and reaching its own independent conclusion of which employee was responsible for the fight, hasn’t this court undermined (or, more accurately, ignored) the employer’s “honest belief?” And, if that’s the case, what does it say about the future of the honest-belief rule as a viable defense to a discrimination claim in the 6th Circuit?

For now, however, if you are faced with two employees of different races (or national origins, or religions…) fighting in your workplace, is it just best to fire them both, if your honest belief of who was the instigator won’t protect you if that “instigator” happens to be of different race?