Labor and Employment

In a long-awaited decision, the Florida Supreme Court ruled in Marvin Castellanos v. Next Door Company, et al. that the limitations on attorneys’ fees awarded under Florida’s workers’ Compensation statute violates the due process clause of both the Florida and United States Constitutions. As a result of this holding, attorneys are no longer limited to fees based exclusively on a percentage of the benefits actually secured.  They may now be awarded an hourly fee for time and effort reasonably expended on litigating workers’ compensation benefits.

To read the full blog, please visit:  http://blog.hrusa.com/blog/fee-limits-ruled-unlawful-in-florida-workers-comp-cases/ 

Conventional wisdom notwithstanding, employers are people or, if they are not, they are staffed by people. People often take short cuts. HR workers are no different from anybody else.  They are prone to take the shortest distance between two points.  It may be for that reason that I am increasingly seeing employers make a common error in responding to employee requests for “payroll records”. Labor Code section 226, among other things, requires an employer who receives a written or oral request (from a current or former employee) to inspect or copy records to comply with the request “as soon as practicable,” but no later than 21 calendar days of the request.

Let me back up a second; Labor Code section 226 requires employers to produce to employees at the time of payment of wages, a statement that contains nine specific categories of information, including the “legal” name of the employer (more on that in another blog); a description of deductions and all time worked, wages earned and paid, and all hourly rates of pay.  Failure to comply with this section can cause an employer no end of grief.

The same section requires employers to retain a copy of wage statements and a record of deductions for at least three years. In my experience not a lot of employers retain hard copies of wage statements. As an alternative to hard copy or “.pdf” storage, section 226 permits employers to produce a computer generated record that accurately shows all of the required information. Fairly read, this section requires employers to produce duplicates of wage statements provided to employees.  Even if that is not what is intended by this section, it is fair to say that many employees and their attorneys expect employers who receive a request for payroll records under Labor Code section 226 to produce a duplicate wage statement that contains all nine categories of information required by this section.

Yet, when responding to such a demand, many employers produce “payroll inquiries,” payroll summary documents or screen shots of electronic payroll system data, rather than produce a duplicate wage statement or summary that contains all of the information required by section 226.  This can be a costly and time consuming mistake.  Employers have been known to spend tens of thousands of dollars trying fix that mistake.  When an employer produces a “payroll inquiry” or other summary of wages (rather than the wage statement required by section 226), the attorney for the worker will examine the record produced in response to that demand for sufficiency under section 226.  If it fails that examination because of missing information (employer identity, hourly rates, etc.), the employer then has to explain why, when asked for “payroll records” it produced something other than the wage statement required by section 226.

I know, this is unfair.  But here is the take away as I see it: When asked by an employee (or an attorney for an employee) to produce wage statements issued to the worker pursuant to Labor Code section 226 or “payroll records required to be maintained pursuant to Labor Code section 226,” either provide duplicates of the wage statements provided to the employee or a computer generated record that contains all of the information required by Labor Code section 226.

As I say above, failure to do this, can be an expensive mistake to fix.

In November 2015, Congress enacted legislation requiring federal agencies to adjust their civil penalties to account for inflation. The Department of Labor (DOL) adjusted penalties for its agencies, including the Occupational Safety and Health Administration (OSHA).

OSHA’s maximum penalties, which were last adjusted in 1990, will increase by 78%. Going forward, the agency will continue to adjust its penalties for inflation each year based on the Consumer Price Index.

The new penalties will take effect after August 1, 2016.  Any citations issued by OSHA after that date will be subject to the new penalties if the related violations occurred after November 2, 2015.  Below is a table of the current and new penalty amounts depending on the type of violation.

While these are federal penalties that will be imposed by OSHA, states that operate their own OSHA plans are required to also adopt maximum penalty levels that are at least as effective as Federal OSHA’s.  This means that in California, employers found to be in violation of CalOSHA’s health and safety standards are also at risk of increased penalties.

Takeaway:  Employers should take this opportunity to review the effectiveness of their Injury and Illness Prevention Plan (IIPP), including, but not limited to, evaluating whether they are meeting certain safety training and safety equipment standards. IIPPs should be living, breathing documents that are regularly reviewed and updated as circumstances change in the workplace that could impact employee health and safety.  Failure to do so can result in significant penalties from CalOSHA.  If you find yourself being investigated by CalOSHA, contact the attorneys in Weintraub Tobin’s Labor and Employment Department.  They have years of experience representing employers during CalOSHA investigations and in appealing CalOSHA citations.

On May 26, 2016, the U.S. Court of Appeals for the Seventh Circuit in Lewis v. Epic Systems Corporation, held that when an employer conditions continued employment upon the signing of a class or collective action waiver in an arbitration agreement, the agreement violates the National Labor Relations Act (NLRA) and is unenforceable under the Federal Arbitration Act (FAA). The decision creates a split with other circuit courts, including the Second, Fifth and Eighth circuits.

Employers in the Seventh Circuit will have to re-evaluate how to minimize the risk of class and collective action liability.  The ruling arose out of an arbitration agreement seeking to prevent class and collective actions on wage and hour claims.  Increasingly, employers are being hit with class and collective action wage and hour lawsuits trying to force settlements, despite having named plaintiffs who worked at one location and are often unfamiliar with the employer’s actual policies and practices on a class-wide basis. The Seventh Circuit’s decision makes it more difficult for employers to curb these abuses.

The employer in Lewis provided employees with an arbitration agreement via email that stated any wage and hour claims could only be brought through individual arbitration and that the employees waived the right to participate in, or receive money from, any class, collective or representative proceeding.  The agreement further provided that employees were deemed to have accepted the terms of the arbitration agreement through their continued employment with the company, but also requested that employees acknowledge their receipt of the agreement.

Although the plaintiff in Lewis had acknowledged his receipt of the arbitration agreement, he later filed an action in federal court on behalf of himself and other similarly situated employees contending that the employer had misclassified employees and failed to pay overtime in violation of the Fair Labor Standards Act.  The district court denied the employer’s motion to compel arbitration, finding that the arbitration clause violated the NLRA because it interfered with employee’s rights to engage in concerted activities for mutual aid and protection.

In affirming the district court’s denial of the motion to compel arbitration, the Seventh Circuit first determined that the employer’s arbitration provision violated Section 7 of the NLRA, providing that “[e]mployees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or  other mutual aid and protection.”  Although not specifically including class and collective actions, the Seventh Circuit interpreted “concerted activities” to include such proceedings, reasoning that “[g]iven Section 7’s intentionally broad sweep, there is no reason to think that Congress meant to exclude collective remedies from its compass.”  In support of its ruling, the Court relied on the much-criticized National Labor Relations Board’s decision in D.R. Horton, holding that arbitration agreements prohibiting class or collective actions violate Sections 7 and 8 of the NLRA.

In finding that the employer’s arbitration violated the NLRA, the Seventh Circuit made a significant distinction worth considering for employers.  The Seventh Circuit specifically distinguished rulings from other circuits, including the Ninth Circuit, finding that provisions mandating individual arbitration may be enforceable, where the employees had the right to opt out of the agreement without penalty.  However, because the agreement specifically provided that the employees were “deemed” to have consented to the agreement by continuing with their employment, the court avoided addressing whether an agreement with an opt out provision would be enforceable.

The Seventh Circuit also independently held that the arbitration agreement was unenforceable under the FAA.  In doing so, the Seventh Circuit noted that it was creating a split among circuit courts, on whether the FAA mandates enforcement of individual arbitration provisions over any conflict with the NLRA.

The Seventh Circuit found no conflict with the FAA as the NLRA generally favors arbitration and a violation of Section 7 would not have occurred if the arbitration agreement had permitted class or collective arbitration.  The Court also relied on the FAA’s savings clause in finding no conflict. While the FAA generally favors arbitration, its saving clause provides that arbitration agreements are “enforceable save upon such grounds as exist at law or in equity for the revocation of any contract.”  The Seventh Circuit reasoned that because the arbitration provision violated the NLRA, that illegality rendered it unenforceable under the savings clause.

Notably, the Fifth Circuit, in D.R. Horton, Inc. v. NLRB, has previously rejected the claim that the FAA savings clause could be used to invalidate a class action waiver, as it results in disfavoring arbitration, by eliminating its streamlined convenience and cost savings.  The Fifth Circuit also rejected the argument that that NLRA was exempted from application of the FAA.

Takeaway for Employers:

It remains to be seen when the United States Supreme Court will address the split among circuits on whether class action waivers in arbitration agreement are enforceable under the FAA or violate the NLRA.  However, employers in the Seventh Circuit should now review their arbitration agreements to see if they comply with Lewis.  A class action waiver entered into as a condition of employment will be found invalid by district courts in that circuit.

However, it does not necessarily follow that all class arbitration waivers will be deemed to be per se invalid.  The Seventh Circuit left open the question of whether a class action waiver in an arbitration agreement would comply with the NLRA if the employee were given the choice of opting out in connection with their continued employment.

The EEOC Special Task Force (“Task Force”) has spent the last 18 months examining the myriad and complex issues associated with harassment in the workplace. Thirty years after the U.S. Supreme Court held in the landmark case of Meritor Savings Bank v. Vinson that workplace harassment was an actionable form of discrimination prohibited by Title VII of the Civil Rights Act of 1964, the Task Force concludes that “we have come a far way since that day, but sadly and too often still have far to go.”

The Task Force was comprised of 16 members from around the country, including representatives of academia from various social science disciplines; legal practitioners on both the plaintiff and defense side; employers and employee advocacy groups; and organized labor. The Task Force reflected a broad diversity of experience, expertise, and opinion. From April 2015 through June 2016, the Task Force held a series of meetings – some were open to the public, some were closed working sessions, and others were a combination of both. In the course of a year, the Task Force received testimony from more than 30 witnesses, and received numerous public comments.  The Task Force focused on learning everything about workplace harassment – from sociologists, industrial-organizational psychologists, investigators, trainers, lawyers, employers, advocates, and anyone else who had some useful information.

Below is a summary of the Task Force’s key findings.

• Workplace Harassment Remains a Persistent Problem. Almost fully one third of the approximately 90,000 charges received by EEOC in fiscal year 2015 included an allegation of workplace harassment on the basis of sex (including sexual orientation, gender identity, and pregnancy), race, disability, age, ethnicity/national origin, color, and religion.
• Workplace Harassment Too Often Goes Unreported. Common workplace-based responses by those who experience sex-based harassment are to avoid the harasser, deny or downplay the gravity of the situation, or attempt to ignore, forget, or endure the behavior. The Task Force found that roughly three out of four individuals who experienced harassment never even talked to a supervisor, manager, or union representative about the harassing conduct.
• There Is a Compelling Business Case for Stopping and Preventing Harassment. When employers consider the costs of workplace harassment, they often focus on legal costs. In 2015 alone, the EEOC recovered $164.5 million for workers alleging harassment. However, beyond the cost to the company, workplace harassment affects all workers, and its true cost includes decreased productivity, increased turnover, and reputational harm.
• It Starts at the Top – Leadership and Accountability Are Critical.Workplace culture has the greatest impact on whether harassment occurs or not. An organization must have systems in place (at all levels and across all positions) that holds employees accountable. Accountability systems must ensure that those who engage in harassment are held responsible in a meaningful, appropriate, and proportional manner, and that those whose job it is to prevent or respond to harassment should be rewarded for doing that job well.
• Training Must Change. Much of the training done over the last 30 years has not worked as a prevention tool – it’s been too focused on simply avoiding legal liability. Training must be part of a holistic culture of non-harassment that starts at the top. Similarly, one size does not fit all: Training is most effective when tailored to the specific workforce and workplace, and to different cohorts of employees. Finally, when trained correctly, middle-managers and first-line supervisors in particular can be an employer’s most valuable resource in preventing and stopping harassment.
• New and Different Approaches to Training Should Be Explored. The Task Force reviewed several new models of training that may show promise for harassment training. “Bystander intervention training” – increasingly used to combat sexual violence on school campuses – empowers co-workers and gives them the tools to intervene when they witness harassing behavior, and may show promise for harassment prevention. Workplace “civility training” that does not focus on eliminating unwelcome or offensive behavior based on characteristics protected under employment non-discrimination laws, but rather on promoting respect and civility in the workplace generally, likewise may offer solutions.
• It’s On Us. The Task Force made clear that harassment in the workplace will not stop on its own – it’s on all of us to be part of the fight to stop workplace harassment. For this reason, the Task Force suggests exploring the launch of an “It’s On Us Campaign” for the workplace. Originally developed to reduce sexual violence in educational settings, the “It’s On Us Campaign” is premised on the idea that students, faculty, and campus staff should be empowered to be part of the solution to sexual assault, and should be provided the tools and resources to prevent sexual assault as engaged bystanders. According to the Task Force, while launching a similar campaign in workplaces across the nation – large and small, urban and rural – is an audacious goal, doing so could transform the problem of workplace harassment from being about targets, harassers, and legal compliance, into one in which co-workers, supervisors, clients, and customers all have roles to play in stopping such harassment.

The EEOC Task Force’s final report includes detailed recommendations and a number of helpful tools to aid in designing effective anti-harassment policies; developing training curricula; implementing complaint, reporting, and investigation procedures; creating an organizational culture in which harassment is not tolerated; ensuring employees are held accountable; and assessing and responding to workplace “risk factors” for harassment.

A full copy of the Report can be found at:
Select Task Force on the Study of Harassment in the Workplace

On June 14, 2016, the Office of Federal Contract Compliance Programs (OFCCP) announced publication of a Final Rule in the Federal Register that sets forth the requirements that covered contractors must meet under the provisions of Executive Order 11246 prohibiting sex discrimination in employment. This Final Rule updates sex discrimination guidelines from 1970 with new regulations that align with current law and address the realities of today’s workplaces. The Final Rule deals with a variety of sex–based barriers to equal employment and fair pay, including compensation discrimination, sexual harassment, hostile work environments, failure to provide workplace accommodations for pregnant workers, and gender identity and family caregiving discrimination.

The Final Rule addresses the following subjects:

• Brings the sex discrimination guidelines up to date. The Final Rule aligns OFCCP’s regulations with current law and addresses the realities of today’s workplaces. It, therefore, provides more accurate and relevant guidance to contractors than the outdated guidelines.
• Provides protections related to pregnancy, childbirth, and related medical conditions. The Final Rule protects employees against discriminatory treatment because of pregnancy, childbirth, or related medical conditions, including loss of jobs, wages, or health care coverage. The Final Rule requires that contractors provide workplace accommodations, such as extra bathroom breaks and light-duty assignments, to an employee who needs such accommodations because of pregnancy, childbirth, or related medical conditions, in certain circumstances where those contractors provide comparable accommodations to other workers, such as those with disabilities or occupational injuries.
• Promotes fair pay practices. Contractors may not pay workers differently because of their sex. For instance, contractors may not deny opportunities for overtime work, training, better pay, or higher-paying positions because of a worker’s sex. The rule also includes a provision that enables employees to recover lost wages any time a contractor pays compensation that is the result of discrimination, not only when the decision to discriminate is made.
• Provides equal benefits to male and female employees participating in fringe-benefit plans. The rule prohibits discrimination on the basis of sex with regard to fringe benefits such as medical, hospital, accident, life insurance, and retirement benefits; profit-sharing and bonus plans; leave; and other terms, conditions, and privileges of employment.
• Prohibits sexual harassment. The rule prohibits unwelcome sexual advances, requests for sexual favors, offensive remarks about a person’s sex, and other verbal or physical conduct of a sexual nature when such conduct unreasonably interferes with an individual’s work performance, becomes the basis for employment decisions, or creates a hostile working environment.
• Gives men and women equal access to jobs and workforce development opportunities. A contractor may not set requirements for jobs or training that are based on an applicant’s or employee’s sex unless the contractor can meet the high bar of demonstrating that such requirements are a bona fide occupational qualification. Additionally, a contractor may not set requirements, such as height or weight qualifications, that adversely affect applicants because of their sex unless it demonstrates that the qualifications are job-related and consistent with business necessity.
• Safeguards workers who provide caregiving to their loved ones. Contractors may not treat female or male employees or applicants differently based on the stereotypical assumption that women are more likely to have caregiving responsibilities. For instance, contractors may not deny mothers employment opportunities that are available to fathers based on the faulty assumption that mothers’ childcare responsibilities will conflict with their job performance. Similarly, contractors may not deny fathers flexible workplace arrangements that are available to mothers based on the faulty assumption that men do not have and do not assume childcare responsibilities.
• Protects transgender workers. The rule makes clear that sex discrimination includes discrimination because of an employee’s gender identity. Also, the rule requires contractors to allow workers to use bathrooms, changing rooms, showers, and similar facilities consistent with the gender with which the workers identify. In addition, the preamble to the rule notes that an explicit, categorical exclusion of coverage for all care related to gender dysphoria or gender transition is facially discriminatory because such exclusion singles out services and treatments for individuals on the basis of their gender identity or transgender status.
• Prohibits discrimination based on sex stereotypes. Contractors may not treat employees or applicants adversely because they fail to comply with expectations about how women and men should look or act or what kinds of jobs they should do.
• The Final Rule is consistent with the Religious Freedom Restoration Act and other protections for religiously affiliated contractors. While there is no formal process for invoking the Religious Freedom Restoration Act (“RFRA”) as a basis for an exemption from E.O. 11246, the preamble to the Final Rule states that insofar as the application of any requirement under this part would violate RFRA, such application shall not be required. OFCCP also notes that E.O. 11246 specifically allows religiously affiliated contractors (religious corporations, associations, educational institutions, or societies) to favor individuals of a particular religion when making employment decisions. In addition, OFCCP follows Supreme Court precedent recognizing that the First Amendment to the Constitution requires a “ministerial exception” from employment discrimination laws, which prohibits the government from interfering with the ability of a religious organization to make employment decisions about its “ministers.”

The Final Rule becomes effective on August 15, 2016.  A copy of the Final Rule can be obtained at https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-13806.pdf.

Take Away:  All employers who are federal contractors (or subcontractors to a federal contractor) should review their EEO and Affirmative Action documents and work with their legal counsel to take the necessary steps to ensure they comply with the OFCCP’s Final Rule on Sex Discrimination by the August 15, 2016 effective date.

Employers in Pennsylvania may or may not be enjoying high times as that state’s Medical Marijuana Act (“MMA”) went into effect on May 17, 2016.  This new law allows patients to use marijuana to treat autism, cancer, HIV/AIDS, and post-traumatic stress disorder, among other ailments.  Governor Tom Wolf signed the MMA into law on April 17, 2016, just three days before one of the most important dates on the calendar for marijuana enthusiasts.

The MMA does not allow all Pennsylvania citizens who feel under the weather to ingest marijuana however they like.  On the contrary, the MMA allows medical marijuana to be dispensed only to individuals who both have been issued an identification card from the Pennsylvania Department of Health and obtained a certification from a medical provider.  Nonetheless, Pennsylvania employers (like those in other states that have enacted similar laws) now will face some hazy dilemmas in terms of their drug-free workplace policies.

That is because the MMA contains some potent anti-discrimination provisions but also creates some cloudy ambiguities.  For instance, the new law makes it illegal for an employer to refuse to hire, threaten, or discharge a prospective or current employee “solely on the basis of such employee’s status as an individual who is certified to use medical marijuana.”  On the other hand, the MMA does not specify whether employers may rely upon a positive drug test to impose an adverse employment action.

Meanwhile, the MMA does not require employers to refrain from imposing discipline “when the employee’s conduct falls below the standard of care normally accepted for that position.” The MMA also allows employers to discipline an employee who is “under the influence” of medical marijuana at work, yet it does not clarify whether a positive drug test could be used as evidence of impairment on the job.

This new law gives some latitude to employers with safety-sensitive work environments.  In particular, employers may prohibit employees from performing a number of tasks while under the influence of marijuana.  Such tasks include operating or controlling certain chemicals or high-voltage electricity, performing duties in dangerous places, or performing tasks that may put the life of the employee or the lives of others in jeopardy.  The law also states that employees in certain safety-sensitive positions may not have more than ten nanograms of active tetrahydrocannabis per milliliter of blood in serum.

Still, this list of exceptions could be interpreted as barring employers from restricting employees covered by the MMA in other common-sense ways.  Another budding problem stems from the lack of clarity as to how employers can ascertain whether an employee is impaired by the influence of marijuana while on the job.  Some observations may be helpful, but few appear to offer anything conclusive.  For instance, an employee who reeks of marijuana smoke might be subject to discipline.  That is because smoking marijuana in Pennsylvania will remain illegal; the MMA allows marijuana to be ingested only through alternative delivery systems such as pills or ointments.

Other observations might be helpful, such as the tell-tale red or glassy eyes or some level of confusion or distraction on the part of the employee.  But such circumstances may not conclusively identify the presence or cause of impairment.  And while blood-alcohol tests may be helpful in confirming how inebriated a worker is at the time of the test, drug tests for marijuana are not so precise in measuring the individual’s level of impairment at the time of the test.

For example, urine testing may reveal that the employee used marijuana at some point in the weeks prior to the test, but such tests typically cannot pinpoint whether such use occurred on a specific day.  Similarly, saliva testing may be able to detect more recent use – albeit without providing a absolute confirmation as to whether the employee was under the “influence of marijuana” on the job.

Beyond the ambiguities created by the MMA, its very enforceability may be subject to challenge – since it appears to be in direct conflict with federal laws that illegalize the use of marijuana.  Until the tension between federal law and Pennsylvania law is resolved by the courts, employers in the Keystone State should take some steps to keep their worksites from going up in smoke.

The first step would be to review and, if necessary, revise applicable handbooks and employment policies to make sure that they are compliant with both federal and Pennsylvania law.  At the same time, employers should consider reviewing their job descriptions for safety-sensitive positions.  Likewise, it would be advisable for employers to determine how positive marijuana tests will be handled.  In that regard, when an employee tests positive for marijuana, it might be wise to have appropriate managers designated and trained to communicate with the employee to ascertain whether he or she has the necessary documentation to be covered by the MMA.  Of course, it also would be prudent to consult with legal counsel to ensure that workplace policies and contemplated disciplinary actions do not run afoul of this new law.