Labor and Employment

The National Labor Relations Board (“Board”) recently created another potential pitfall for employers who misclassify employees as independent contractors.  Most employers know that, if they misclassify an employee as an independent contractor, they may be subjected to fines, penalties and other types of liability.  Such employers also can be sued by the misclassified employee and potentially liable for unpaid overtime wages (among other things).  Additionally, taxing authorities may seek from the employer withholdings that should have been, but were not, applied.

To read the rest of this blog, visit the HRUSA blog at http://blog.hrusa.com/blog/more-pitfalls-for-misclassifying-employees/.

On August 23, 2016, the National Labor Relations Board (NLRB) issued a decision in The Trustees of Columbia University in the City of New York and Graduate Workers of Columbia-GWC, UAW.  The NLRB decided that graduate and undergraduate student assistants are common law “employees” within the meaning of the National Labor Relations Act (NLRA).  The NLRB has flip-flopped on this issue several times starting in 1974 (The Leland Stanford Junior University (214 NRLB 621) which first held student workers should be excluded from the statutory definition of “employees”, overruled in part in 1999 with regard to student interns, residents and fellows at a Boston Medical Center teaching hospital (330 NLRB 152). In 2000, the Board first held that university graduate student assistants were employees under the Act. In 2004, the Board decided inBrown University that graduate student assistants were not “employees”.

The impact of the NLRB’s most recent Columbia University decision is that student assistants are “employees” and, as such, they are eligible to organize and bargain collectively under federal labor law.   The Board expressly overruled its prior Brown University and Leland Stanford decisions.

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By Jessica A. Schoendienst

A new decision from the U.S. Court of Appeals for the Ninth Circuit continues to leave employers uncertain as to the enforceability of class action waivers in arbitration agreements.  The Seventh and Ninth Circuits are on one side of the issue, and the Second, Fifth, Eighth, and Eleventh Circuits on the other.  The Seventh and Ninth Circuits are following the National Labor Relations Board’s (NLRB) position that class action waivers infringe on an individual’s rights under the National Labor Relations Act (NLRA).  The new Ninth Circuit decision makes it more likely that the United States Supreme Court will grant review and end the battle between the circuits.  In the interim, class action waivers will not be enforced in federal courts in Illinois, Indiana, Wisconsin, California, Arizona, Nevada, Oregon, Idaho, Montana, Washington, Alaska, and Hawaii, the states within the Seventh and Ninth Circuits’ jurisdiction.

The Ninth Circuit, in Morris v. Ernest & Young, LLP, No. 13-16599, 2016 U.S. App. LEXIS 15638 (9th Cir. Aug. 22, 2016), became the second appellate court to invalidate mandatory class waivers in arbitration agreements.  The Seventh Circuit was the first circuit to invalidate a class or collective action waivers in an arbitration agreement in Lewis v. Epic Systems Corporation, 823 F.3d 1147 (7th Cir. 2016), where the court 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 NLRA and is unenforceable under the Federal Arbitration Act (FAA).

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It is no secret; the Disney Corporation is a marketing and merchandising powerhouse. It has achieved that reputation by capitalizing on almost every marketing and merchandising opportunity that comes its way. If you have kids, the odds are you have been subjected to the Disney Corporation’s influence on more than one occasion. In fact, even if you do not have children, I’m willing to bet, at some point, you have been influenced by Disney’s masterful marketing.

Now, many of you already know that the Disney Corporation owns Pixar Animation Studios; the studio that has brought us family classics like Finding Nemo, Toy Story, The Incredibles, WALL-E, Monsters, Inc., and Cars.  And if you’re familiar with these movies, then you know that there is no shortage of related merchandise. But have you ever wondered why you never see merchandise related to Pixar’s most iconic character and beloved mascot, Luxo Jr.? You may not know Luxo Jr. by name, but he is the desk lamp character that appears on the production logo of every Pixar Film where he hops on the screen bouncing on the letter “I” in Pixar. With such a prominent role in one of Disney’s largest subsidiary companies, it was baffling to me that Disney had not capitalized on this merchandising opportunity. After some brief research, I learned that Disney tried to exploit this opportunity in 2009, but was immediately met with a lawsuit.

It turns out that Luxo Jr. is actually based on the award-winning lamps produced by the Norwegian company Luxo. Since Pixar’s creation of Luxo Jr.’s in 1986, Pixar has maintained a mostly positive relationship with Luxo, and Luxo was seemingly happy to allow Pixar to utilize its lamp’s likeness. But all of that changed in 2009 when Pixar had the idea to package its Up Blu-rays with its own Luxo Jr. merchandise that was not manufactured by Luxo. This obviously didn’t sit well with Luxo because they immediately filed a lawsuit for trademark infringement because the Pixar lamps bore the LUXO mark. In the complaint, Luxo contended that Pixar and Disney had not used the Luxo name on the products until this point, and that the sale of these Pixar lamps would cause “devastating damage to Luxo and dilute the goodwill which Luxo has built up.” This claim resulted from the fact that although the lamps were not made by Luxo, they bore their likeness, and gave the impression that they were a Luxo lamp. These claims, if proven, constitute the epitome of trademark infringement. Frankly, if the Disney Corporation and Pixar acted without Luxo’s permission when they moved forward with this merchandising idea, it is highly likely that the Court would have found in Luxo’s favor through summary judgment if the litigation had reached that stage.

However, the case never made it that far. Luxo and Disney quickly reached a settlement agreement where Disney and Pixar agreed that they would no longer sell Luxo Jr. lamps as long as Pixar was allowed to continue utilizing Luxo Jr. as its corporate mascot. Moreover, although Disney has never offered an official explanation, the six-foot tall animatronic Luxo Jr. that once stood in Walt Disney World near the Toy Story Midway Mania attraction was removed in 2010. Several people believe that this removal was related to the Luxo Jr. litigation, but because of the confidential nature of the settlement, no one knows for certain.

On July 29, 2016, the Illinois General Assembly adopted SB 2613 – the Child Bereavement Leave Act (“Act”) which provides eligible employees with the right to take bereavement leave for the death of a child. The law went into effect immediately.

Covered Employers.  The Act defines covered employers the same way the federal Family and Medical Leave Act (FMLA) defines employers.  Therefore, a covered employer is one that is engaged in commerce or any industry affecting commerce, and employs fifty (50) or more employees for each working day of twenty (20) or more calendar weeks during the current or preceding calendar year.

Eligible Employees:  The Act defines eligible employees the same way that the FMLA defines employees.  Therefore, an eligible employee is an employee who has worked for the covered employer for at least 12 months (which does not have to be consecutive); has worked for the covered employer at least 1,250 hours during the 12 consecutive months preceding the start of bereavement leave; and works at a worksite where there are at least 50 employees within a 75-mile radius.

Leave Entitlement.   An eligible employee is entitled to use a maximum of two (2) weeks (10 work days) of unpaid bereavement leave to:

• Attend the funeral or alternative to a funeral for a child;
• Make arrangements necessitated by the death of the child; or
• Grieve the death of the child.

Bereavement leave must be completed within sixty (60) days after the date on which the employee receives notice of the death of the child.

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By: Melissa M. Whitehead

The Nevada Supreme Court recently issued a ruling that should have all Nevada employers asking an attorney to review the non-compete clauses they require their employees to sign. In Golden Road Motor Inn Inc. d/b/a Atlantis Casino Resort Spa v. Islam, 132 Nev.Adv.Op. 49 (July 21, 2016), the Nevada Supreme Court ruled a non-compete clause was unenforceable and, more importantly, the entire agreement was therefore wholly unenforceable.

Generally, Nevada courts will uphold a non-compete agreement unless it is “unreasonable,” which is defined as a restraint of trade that “is greater than required for the protection of the person for whose benefit the restraint is imposed or imposes undue hardship upon the person restricted.” In the context of an employer’s non-compete agreement, there is no formula for deciding reasonableness, but courts will look at several factors, including the time and territory covered in the agreement. For example, Nevada courts have ruled that a five-year restriction was too great a hardship for the employee and was not necessary to protect the employer’s interests, and was thus unenforceable. Another non-complete clause which restricted an employee’s future employment anywhere “within fifty miles of any area which was the ‘target of a corporate plan for expansion’ was unreasonable” and unenforceable.

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