Category Archives: Current Affairs

February 7, 2014

NLRB Again Proposes Rules to Speed Union Elections

After dropping its appeal of a District Court ruling that invalidated its “ambush election” rules, the National Labor Relations Board (NLRB or Board) has proposed those rules again. By a vote of 3-2, the Board reissued proposed amendments to its representation case procedures. The Board states that the amendments are designed to remove unnecessary delays and inefficiencies in representation case procedures. The effect, however, is expected to be an increase in union wins as the union election procedures are streamlined and votes occur quicker.

Board Lacked Quorum When Rules Adopted in 2011

The NLRB first proposed its rules to speed up the union election process in June of 2011. At the time, the Board had just three members as two positions were vacant. Despite an outcry by the business community and receipt of almost 66,000 comments, two of the three Board members voted to adopt the rules. The final rules were published in December of 2011 and went into effect on April 30, 2012.

The U.S. Chamber of Commerce and other interested groups sought to stop the implementation of the ambush election rules by suing the NLRB in federal court in the District of Columbia. Just two weeks after the rules went into effect, the judge in the case invalidated the rules, finding the Board lacked a three-member quorum needed to pass the rules. Although two of the Board members voted in favor of the rules, the third Board member, the sole Republican, did not participate in the vote. Finding that the rules were invalid for lack of the statutorily-mandated quorum, the judge did not need to address the challenge to the rules’ constitutionality and the lack of authority of the NLRB to adopt the rules. In a distinct incident of foreshadowing of this week’s events, the judge specifically stated “nothing appears to prevent a properly constituted quorum of the Board from voting to adopt the rule if it has the desire to do so."

The NLRB appealed the District Court’s decision, asking the U.S. Court of Appeals for the District of Columbia Circuit to reverse the lower court’s ruling. On December 9, 2013, the NLRB withdrew its appeal pursuant to a joint stipulation by the parties. It did so in anticipation of doing exactly what the District Court judge had suggested, namely proposing the rules again so that a properly constituted quorum of the Board can vote to adopt the rules. Board Chairman Mark Gaston Pearce and Board members Kent Y. Hirozawa and Nancy Schiffer approved the re-issuance of the proposed rules.

“Ambush Election” Rules Would Speed Union Election Process

Published in the February 6, 2014 Federal Register, the proposed changes are virtually identical to those proposed in 2011. Highlights of the proposed amendments include:

A union may file its representation petition electronically, rather than by hand or regular mail.
A hearing must be held within 7 days of the union filing its petition.
Employers must provide a comprehensive “statement of position” on the union’s representation petition in advance of the hearing; any issues not included in the statement are waived.
Pre-election hearing is to determine only whether a question concerning representation exists; issues related to individual voter eligibility may be deferred to post-election procedures.
The parties right to file a post-hearing brief is discretionary as allowed by the hearing officer.
Deadline for employer to provide voter eligibility list is shortened from 7 work days to 2 work days from the Direction of Election.
Employer must provide email addresses and telephone numbers for employees eligible to vote in addition to the required names and home addresses.
Election need not wait for 25 days after the issuance of a Direction of Election.
Pre-election appeals to the Board are eliminated, leaving only a discretionary appeal of both pre- and post-election issues after the election occurs.

Two Board Members Dissented

Board members Philip A. Miscimarra and Harry I. Johnson III are not in favor of the proposed rules. Although stating that they share in the majority’s desire to protect and safeguard the rights and obligations of those subject to the National Labor Relations Act, they do not believe it necessary to adopt a “wholesale rewrite” of the Board’s election procedure.

Interested parties and the public may submit comments on the proposed rules until April 7. Electronic comments may be submitted through http://www.regulations.gov. Comments may also be mailed or hand delivered to: Gary Shinners, Executive Secretary, National Labor Relations Board, 1099 14th Street NW., Washington, DC 20570. The Board intends to hold a hearing on the amendments during the week of April 7. We will keep you informed of developments on this issue.

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February 4, 2014

Colorado General Assembly Considers Labor and Employment Bills

By John Karakoulakis

Colorado’s 2014 Legislative Session began on January 8th and nearly 400 bills have been introduced already. Below is a description of proposed legislation impacting labor and employment issues for Colorado employers. The proposed changes to the workers’ compensation system could result in one of the more controversial bills this session. We will keep you apprised of these and any other bills affecting employment matters as they progress through the legislative process.

2014 Labor & Employment Legislation

Number	Title	Summary
Draft	Workers’ Compensation Benefits	The bill seeks to make changes to the following three areas of the workers’ compensation system: 1) Allow for more doctor choice for workers; 2) Address the issue of job separation when a claim is made; and 3) Add a penalty provision for employers that willfully placed employees in a dangerous situation. This last provision is drawing the most concern because it is seen as overly broad and would expose employers to litigation.
Draft	Worker Access to Employment Records	Would allow employees to have access to their personnel records and provide written rebuttal information to be added to their file. Creates a new civil cause of action for an employee to file against an employer for not complying with the provisions of the bill. The employee can seek actual damages, back pay, reinstatement, or other equitable relief, and reasonable attorney fees and costs.
SB-005	Wage Claims	Reintroduced this year after significant changes from the version of the bill that was killed by the business community last year. The bill speeds up the process by which workers can claim they did not get their full wages and creates a process by which the Colorado Department of Labor and Employment can adjudicate those claims. These changes which remove last year’s criminal penalties and a provision to require claims to be settled in district court resulted in most business associations taking a neutral stance on the bill, so it is now expected to pass.
HB-1033	Regulatory Reform	Provides relief for business under 100 employees that unknowingly violate a regulation that was put in place within the prior year and one that is defined as a “minor violation” which is mostly clerical in nature and does not affect the life safety of the public or workers. The first violation of such a rule will result in a warning and written education sent to the business.
HB-1040	Drug Testing Criminal Provisions	Establishes a level 1 drug misdemeanor for an employee who is legally required to undergo drug testing as a condition of the person's job and who uses a controlled substance without a prescription; or knowingly defrauds the administration of the drug test. Also establishes a level 2 drug misdemeanor for any other person who knowingly defrauds a drug test.

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January 30, 2014

Firing for Off-Duty Medical Marijuana Use to be Reviewed by Colorado Supreme Court

By Emily Hobbs-Wright

The Colorado Supreme Court announced that it will review last year’s lower court decision that upheld the termination of an employee who tested positive for marijuana but was unimpaired at work following his off-duty marijuana use for medical reasons. As we previously wrote on this blog (see this post), last April, the Colorado Court of Appeals ruled that using pot during non-working hours is not a “lawful activity” under the state’s lawful off-duty activity statute (C.R.S. §24-34-402.5). Coats v. Dish Network LLC, 2013 COA 62. The Court of Appeals reached its decision by relying on the fact that marijuana use remains illegal under federal law and therefore, medical marijuana use, though legal in Colorado, was not “lawful” for purposes of the Colorado lawful off-duty activity statute.

The Colorado Supreme Court will review two questions:

1. Whether the Lawful Activities Statute protects employees from discretionary discharge for lawful use of medical marijuana outside the job where the use does not affect job performance; and

2. Whether Colorado’s Medical Marijuana Amendment makes the use of medical marijuana “lawful” and confers a right to use medical marijuana to persons lawfully registered with the state.

Over the next few months, the parties will submit written briefs to the Court presenting their positions on these two questions. With the importance of this case for both Colorado businesses and the marijuana industry, watch for additional groups to ask permission to submit briefs advocating their respective viewpoints. Though the case before the Colorado Supreme Court deals with medical marijuana, the Court’s decision could establish precedent that would apply to the legal use of recreational marijuana. We will watch this case very closely and will report on any new developments as they occur.

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January 27, 2014

Union Membership: By the Numbers – 2013

By Jeffrey T. Johnson (retired)

The results are in. For 2013, the percentage of union members in the private sector ticked up slightly, to 6.7%. The percentage for 2012 was 6.6%. The total number of union members working in the private sector rose from 7.0 million in 2012 to 7.3 million in 2013.

Numbers for the public sector dipped slightly from 2012, with 35.9 percent of public sector employees reported to be union members in 2012 and 35.3 percent in 2013. The total number of public sector union members remained relatively flat, with 7.2 million union members in 2013, down just over 100,000 members from 2012.

In analyzing the data provided by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), the trend in both percentage and total number of union members has been a steady downward one. For example, in 2005, 7.8% of private sector employees were union members. In 2005, 15.7 million workers (private and public) were union members; in 2013, only 14.5 million.

The BLS report breaks down the union membership data by many categories, including by state, gender, age, industry, and occupation. It also provides comparative earnings information. Here are some highlights:

Men had a higher union membership rate (11.9%) than women (10.5%).
The age category with the highest percentage of union members was age 55-64 (14.3%).
The occupations with the highest percentage of private sector union members were protective service occupations (35.3%), utilities (25.6%), and transportation and warehousing (19.6%)
New York continues to have the highest union membership rate (24.4%), while North Carolina had the lowest rate (3.0%).

Statistics for 2013 union membership in the primary states served by Holland & Hart’s offices were as follows:

Nevada – 14.6% unionized, total of 169,000 members
Montana – 13.0% unionized, total of 52,000 members
Colorado – 7.6% unionized, total of 171,000 members
New Mexico – 6.2% unionized, total of 751,000 members
Wyoming – 5.7% unionized, total of 15,000 members
Idaho – 4.7% unionized, total of 29,000 members
Utah – 3.9% unionized, total of 49,000 members

Note: Above figures are private and public sectors combined

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January 16, 2014

(Un)Happy New Year for NLRB

By Brad Williams

The National Labor Relations Board began 2014 on a sour note, conceding defeat on its controversial “Poster Rule” and facing skeptical Supreme Court justices in the blockbuster Noel Canning case testing the president’s power to appoint NLRB members under the Constitution’s so-called “Recess Appointments Clause.”

“Poster Rule” Challenge Dropped

On January 6, 2014, the NLRB announced that it would not appeal two federal circuit court decisions that had rejected the Board’s controversial “Poster Rule.” The rule, originally issued in 2011 under the NLRB’s long-neglected rulemaking power, required 6 million private employers to post a government-issued notice advising employees of their rights under the National Labor Relations Act. Business groups excoriated the rule as requiring posting of unbalanced information, and as violative of their free speech rights. Two federal circuit courts broadly agreed, holding that the Board lacked authority to issue the rule, and that its enforcement mechanisms were incompatible with the NLRA.

Although the Board obtained extensions of time in which to appeal these decisions to the Supreme Court, it announced on January 6th that it had “decided not to seek Supreme Court review.” The Board urged that the poster could still be displayed “voluntarily,” but effectively conceded defeat in the litigation. A similar rule issued by the Department of Labor in 2010, and applicable only to federal contractors, remains on the books. However, one of the parties behind the successful challenge to the NLRB’s “Poster Rule” recently filed a lawsuit challenging the DOL’s rule on similar grounds. The DOL has not yet responded in that litigation.

Skeptical Questioning in Noel Canning

On January 13, 2014, the NLRB faced skeptical Supreme Court justices in oral argument in the blockbuster Noel Canning case. The case arose from a Board order finding that an employer had violated the NLRA by refusing to sign a collective bargaining agreement after orally agreeing to the contract. The employer, Noel Canning, appealed the Board’s decision to a federal circuit court on the basis that three of the Board’s members had been improperly appointed by President Obama, and that the Board’s unfair labor practice decision was accordingly void.

The federal circuit court agreed, holding that the Board appointments had violated the Constitution’s so-called “Recess Appointments Clause.” That clause, which has never before been interpreted by the Supreme Court, provides that the president may “fill up all Vacancies that may happen during the Recess of the Senate.” President Obama had appointed the three Board members during a 2012 intra-session break in which the Senate had been convening every three days in pro forma sessions, but had been conducting no business. The federal circuit court held that the Recess Appointments Clause only permits presidential appointments between the Senate’s annual official “sessions,” and only for vacancies that have arisen during these inter-session breaks, not before. Because the federal circuit court found that the Board members’ appointments had been improper, it vacated the NLRB’s decision against Noel Canning.

On January 13th, the Supreme Court held oral argument in the case which implicates such technical questions as whether presidential recess appointments are only permitted during inter- (as opposed to intra-) session breaks; whether the vacancies must arise during Senate recesses, not before; and whether the Senate is in recess when it conducts pro forma sessions every three days. Practically, these questions address the political struggle between presidents and the Senate over appointments, and threaten to eliminate a workaround presidents have increasingly used to place officials in top positions where their appointments would otherwise be delayed or rejected by the Senate.

During the oral argument, the justices seemed broadly skeptical of the NLRB’s position that a robust recess appointment power is needed as a “safety valve” to deal with Senate intransigence; that the president (as opposed to the Senate) may decide when the Senate is actually in “recess;” and that a long history of presidential appointments seemingly at odds with the plain text of the Recess Appointments Clause justifies President Obama’s appointments in 2012. In particular, some justices seemed unpersuaded that there was an intelligible “limiting principle” that would permit a president to decide, on his own, whether the Senate was actually in “recess.” For instance, Justice Kennedy raised the prospect of “lunch break” appointments given the NLRB’s position.

A decision in the Noel Canning case is expected by this June. The Supreme Court might avoid some of the case’s stickier questions, including whether the legal acts of improperly appointed officials dating back to the Washington administration are somehow void, by deciding the case on the narrow question of whether recess appointments are proper when the Senate is convening every three days in pro forma sessions. Curtailment of the president’s recess appointment power will have limited short-term effects following the Senate’s elimination of the filibuster for most presidential appointments last November. That change made President Obama’s need for the power far less pressing because Democrats currently control the Senate. However, any curtailment of the power is likely to have significant longer-term effects, particularly when different parties once again control the Senate and the presidency.

Of course, should the recess appointment power be significantly curtailed come this June, future presidents may still always fall back on that old constitutional standby: “Advice and Consent of the Senate.”

Disclaimer: This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

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December 26, 2013

ERISA Plan’s Limitation Period Is Enforceable, Says U.S. Supreme Court

By Elizabeth Nedrow

The U.S. Supreme Court recently issued a decision that provides some welcome guidance to insurers and employers sponsoring ERISA employee benefit plans. The Court upheld a three-year limitations period in a long term disability plan. The terms of the plan required participants to file a lawsuit to recover benefits within three years after “proof of loss.” Heimeshoff v. Hartford Life & Accident Ins. Co.,No. 12-729, 571 U.S. ___ (Dec. 16, 2013). The Court ruled that because ERISA itself does not specify a limitations period, the plan’s three year deadline was reasonable and therefore enforceable.

Benefit Plan Participant Filed Lawsuit After Benefits Were Denied

Julie Heimeshoff, a senior public relations manager for Wal-Mart Stores, was a participant in a long term disability plan administered by Hartford Life & Accident Insurance Company (Hartford). In 2005, she filed a claim for disability benefits following a diagnosis of lupus and fibromyalgia. On her claim form, her rheumatologist listed her symptoms as extreme fatigue, significant pain and difficulty in concentration. Hartford denied her claim after her rheumatologist failed to respond to its requests for more information. In 2006, Heimeshoff provided Hartford with an evaluation from another physician who also determined that she was disabled. Hartford retained a physician to review Heimeshoff’s records who concluded that she was able to perform the activities of her sedentary job. Hartford again denied her disability claim.

After granting Heimeshoff an extension to the appeal deadline to provide additional evidence and retaining two additional physicians to review her claim, Hartford issued its final denial of benefits on November 26, 2007. On November 18, 2010, Heimeshoff filed suit in district court seeking review of her denied claim under ERISA’s judicial review provision, known as ERISA Section 502. Hartford and Wal-Mart asked the court to dismiss her suit because she did not file the case within the limitations period provided for in the plan, namely within three years after the time that written proof of loss is required to be furnished to Hartford. The district court agreed that the lawsuit was untimely and dismissed her case. On appeal, the Second Circuit affirmed. The U.S. Supreme Court agreed to hear the case in order to resolve a split among the Courts of Appeal on the enforceability of an ERISA plan’s contractual limitations period.

ERISA Contractual Limitations Provisions Should Be Enforced As Written

The long-term disability plan at issue stated that legal action against Hartford could not be taken more than three years after the time that written proof of loss is required to be furnished according to the terms of the policy. Written proof of loss is necessarily due before Hartford and the participant complete the internal review process and before a plan participant is notified of a final denial of benefits which is necessary before filing a lawsuit in court. The result of this contractual limitations period is that a participant has less than three years to file a lawsuit in court after learning that their benefit claim has been finally denied.

In reviewing whether to enforce this limitations period, the Supreme Court relied on well-established precedent which states that in the absence of a limitations period provided by a controlling statute, a provision in a contract may validly limit the time for parties to bring an action on such contract to a period less than that prescribed in the general statute of limitations as long as the shorter period is reasonable. The Court noted that ERISA does not specify a statute of limitations. Consequently, the Court ruled that a participant and a plan may agree by contract to a particular limitations period as long as it is reasonable.

Heimeshoff argued that the contractual limitations period at issue was not reasonable because it began to run before a claimant could exhaust the internal review process which is required before seeking judicial review. The Court unanimously disagreed, concluding that the three-year limitations period from the date that proof of loss is due was not unreasonably short and therefore, was enforceable. Although Hartford’s administrative review process took longer than usual, Heimeshoff still had approximately one year to file suit before the limitations period was up. Because Heimeshoff filed her lawsuit more than three years after her proof of loss was due, as required contractually by the plan, her complaint was time barred. Therefore, the Court upheld the dismissal of Heimeshoff’s suit.

Significance for Employee Benefit Plans

The Court’s decision is welcome news for insurers and employers who want efficient resolution of ERISA claims disputes. Plan documentation should be reviewed, and where appropriate, language should be added or clarified to provide a reasonable limit on the time a participant has to bring a lawsuit to challenge a denied claim for benefits.

December 17, 2013

Colorado Raises Minimum Wage for 2014: Checklist for Complying with New Employment Developments

By Jude Biggs

A new year is just around the corner. Along with champagne toasts and resolutions to lose weight, January 1 typically brings new laws and regulations in Colorado. 2014 is no different. Colorado employers should plan now for the changes going into effect in 2014. It is also a good time to make sure you are in compliance with the new laws that took effect in 2013. Here is a checklist to help you stay on the right side of the law.

Colorado Minimum Wage Goes Up to $8.00 per Hour on January 1. The Colorado Division of Labor has adopted Minimum Wage Order 30 which raises the state minimum wage from $7.78 (2013) to $8.00 per hour, effective January 1, 2014. The state minimum wage for tipped employees increases to $4.98 per hour, also effective January 1, 2014. Colorado’s minimum wage is adjusted annually for inflation pursuant to the Colorado Constitution. If this applies to any of your workforce, update your payroll practices to comply with the new rate on the first of the year.
Marijuana may be Legally Purchased and Possessed on January 1. Adults may legally buy, use and possess small amounts of marijuana in Colorado beginning January 1st. Because marijuana is still illegal under federal law, Colorado employers may continue to have workplace policies banning its use by employees and prohibiting possession of marijuana on company premises. Review and if necessary, update your policies to reflect that use of controlled substances and drugs that are illegal under either state or federal law are not permitted. The new year is a good time to communicate this to your employees.
Rules Implementing Employment Opportunity Act (Credit History Law) Effective January 1. Colorado’s Employment Opportunity Act, section 8-2-126, C.R.S., was enacted last spring and went into effect on July 1, 2013, restricting an employer’s use of credit history information on employees and applicants. (See our post on that new law.) The Division of Labor has adopted new rules, 7 CCR 1103-4, that go into effect on January 1 to implement the provisions of the act. The new rules include a couple of new definitions and clarifications not found in the act itself, including that “consumer credit information” does not include income or work history verification and that “prevailing party” means the employee who successfully brings, or the employer who successfully defends, the complaint. The new rules also describe the enforcement mechanism for violations, including how complaints must be filed, the investigation process, initial decisions and appeals.
Rules Implementing Social Media and the Workplace Law Effective January 1. Last spring, Colorado enacted a law, found at section 8-2-127, C.R.S., that restricts an employer’s access to personal online and social media sites of employees and applicants. (We previously wrote on that law here.) The law went into effect on May 11, 2013 but new rules implementing the law go into effect on January 1, 2014. In large part, the rules, 7 CCR 1103-5, mirror the act itself but add that it is OK for an employer to access information about employees and applicants that is publicly available online. The new rules also detail the complaint, investigation, decision, appeals and hearing process.
2013 Family Care Act Extends FMLA Coverage to Care for Civil Union and Domestic Partners. Effective August 7, 2013, Colorado’s Family Care Act, section 8-13.3-201 et seq., C.R.S., extends leave benefits under the federal Family and Medical Leave Act (FMLA) to eligible employees to care for their civil union and domestic partners with a serious health condition. If you are a covered employer under the FMLA, ensure that your FMLA forms, policies and practices provide that eligible employees may take leave to care for a seriously ill or injured civil union or domestic partner. Also, for multi-state employers subject to the FMLA, remember that if you have employees in states that recognize same-sex marriages, the FMLA definition of “spouse” will include employees’ same-sex spouses due to the U.S. Supreme Court’s decision in United States v. Windsor (further discussed here).
Age 70 Cap on Colorado Age Discrimination Claims Eliminated in 2013. Colorado’s legislature enacted changes to the Colorado Anti-Discrimination Act (CADA). Effective August 7, 2013, there is no longer an upper age limit of 70 years old for age discrimination claims under CADA, section 24-34-301, et seq..C.R.S. This brings Colorado’s age discrimination law in line with the federal Age Discrimination in Employment Act which makes it unlawful to discriminate against employees and applicants on the basis of age 40 or older with no upper age limit.
Prepare for Changes in Remedies Available for Colorado Discrimination Claims Beginning January 1, 2015. Colorado added new remedies, including punitive damages, that may be recovered for violations of CADA for claims alleging discrimination or unfair employment practices that accrue on or after January 1, 2015, section 24-34-405. C.R.S. With a year to prepare, now is the time to get policies in place to address reasonable accommodations, complaint procedures and other good faith measures to resolve workplace discrimination issues.

Start the year off right by making sure you comply with these new developments in Colorado employment laws. We wish you a happy, healthy, prosperous and compliant 2014!

For more information, contact Jude at 303-473-2707 or jbiggs@hollandhart.com.

December 9, 2013

Holiday Party Checklist—Plan Ahead to Minimize Employer Risks

By Mark Wiletsky

Delicious food, fine wines, music, camaraderie, laughter – all ingredients for a great holiday get-together. What could go wrong? Too much, unfortunately. Employees may drink too much, act inappropriately, offend co-workers or guests, hurt themselves or others, or even start a brawl. Depending on the circumstances, your company may find itself potentially liable for the inappropriate or unlawful actions of your employees at company-sponsored parties. You can help minimize the risks associated with holiday parties by following these five tips.

Avoid or Limit Alcohol

Employers face potential liability when providing alcohol at a company holiday event when someone gets hurt due to drunk driving, falling down, etc., or when inappropriate behavior crosses the line from embarrassing to unlawful, such as sexual harassment or violence during an argument. You can limit your company’s exposure for such conduct by either banning alcohol entirely (we know that may not be well-received in some situations), or limiting each person’s consumption through the use of drink tickets or a 2-drink limit. If you choose to allow alcohol at your events, don’t allow free access to the alcohol (e.g., open bar, self-serve beer or unlimited wine bottles). Instead have a professional, licensed bartender serve the alcohol as they are trained not to over-serve patrons. Be sure to offer plenty of food and non-alcoholic beverages. Arrange for taxis or hotel stays if someone over-indulges. Schedule the event during the week so folks are less inclined to get carried away. Set an end time for the party and shut down the bar at least a half hour before the event closes. Do not authorize or condone “after parties.” Finally, designate some supervisors or managers to refrain from drinking alcohol to make sure things don’t get out of hand.

Keep Harassing Behavior in Check

Make sure that your sexual harassment policy is up-to-date and that it applies to company parties, even if held off company premises. Send out a reminder to employees in advance of the party that all company policies, including those prohibiting harassment and other inappropriate conduct, apply to the party. Consider making the event a family party where employees may bring their spouse, significant other, or children as the presence of family members and children often deters inappropriate behavior which could give rise to a harassment complaint. Make sure that supervisors and managers watch out for potentially harassing conduct and are trained to intervene as necessary.

Respect Religious Differences and Keep the Party Neutral

Although many holidays toward the end of the year are religious in nature, be sensitive to your employees’ varying religious beliefs and avoid any conduct that could be construed as favoring one religious group over another. Refrain from calling your party a “Christmas Party” and stick with the neutral “Holiday Party” instead. Do not make attendance at the company-sponsored events such as parties, volunteer activities, food drives or other holiday outings mandatory. Make sure the timing of the company party does not exclude any employees for religious reasons. For example, because the Jewish Sabbath starts on Friday night, a party on a Friday evening may exclude Jewish employees. Avoid decorating with religious symbols, such as nativity scenes, menorahs or angels. There are plenty of neutral decorations, such as snowflakes, holly and reindeer, that can be used instead.

Be Wary of Gift Exchanges

Gift exchanges between employees may seem innocuous enough, but consider the potential issues a gift exchange may cause. Employees may not be able to afford to participate, even within a recommended cost guideline. Other employees may give sexy or “funny” gifts that end up offending others. The best practice is to avoid a company or department sponsored gift exchange altogether. If you decide to allow one among your employees, make sure it is entirely voluntary and no one is pressured or made to feel uncomfortable for not participating. Set cost guidelines and remind participants that gifts must be appropriate for the workplace.

Remember Wage and Hour Laws

If you assign any non-exempt employees to plan, prepare for and staff the party, their hours are likely work hours for which they must be paid. For example, if your office receptionist is required to be at the door of your holiday party to greet guests and hand out name tags, that individual is likely working and you need to include those hours in his or her weekly work hours when determining regular and overtime wages. You do not need to pay employees who are attending the party if their attendance is voluntary and they are not expected to provide services that benefit your organization.

Follow this checklist and you’ll avoid last minute holiday headaches and keep your organization out of trouble.

December 3, 2013

Divided Fifth Circuit Overturns D.R. Horton on Enforceability of Employer’s Arbitration Agreement Prohibiting Class Claims

By Jeffrey T. Johnson

In a much-anticipated decision, the Fifth Circuit Court of Appeals rejected the National Labor Relations Board’s controversial D.R. Horton decision, which held that an arbitration agreement requiring an employee to waive his or her right to bring class claims violated the National Labor Relations Act (NLRA). Agreeing with its sister circuit courts, the Fifth Circuit held that the NLRA did not override the Federal Arbitration Act (FAA) meaning the employer’s arbitration agreement must be enforced according to its terms, including the agreement’s preclusion of class claims. D.R. Horton, Inc. v. NLRB, No. 12-60031 (5th Cir. Dec. 3, 2013). The Court upheld, however, the NLRB’s finding that the arbitration agreement could be misconstrued by employees as precluding the filing of unfair labor practice charges which violates Section 8(a)(1) of the NLRA.

Arbitration Agreement Prohibiting Class Claims Does Not Violate NLRA

The Fifth Circuit’s ruling puts to rest a thorny issue for employers who have struggled with the Board’s D.R. Horton decision. The controversy arose in early 2012 when the NLRB concluded that home builder D.R. Horton violated Sections 7 and 8(a)(1) of the NLRA by requiring employees to sign a Mutual Arbitration Agreement that precluded employees from filing class or collective claims related to their wages, hours or other working conditions. In re D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012). The Board found that the agreement interfered with the exercise of employees’ substantive rights under Section 7 of the NLRA which allows employees to act in concert with each other for their mutual aid or protection.

Two of the three judges on the Fifth Circuit panel disagreed. First, the majority found that the use of class action procedures is not a substantive right but is instead a procedural device. Then, the judges analyzed whether there is a conflict between the NLRA and the FAA that would preclude application of the FAA to enforce the arbitration agreement according to its terms. Relying on the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), the Fifth Circuit determined that requiring a class mechanism is an impediment to arbitration and violates the FAA so the Board’s attempt to fit its rationale into the FAA’s “savings clause” failed. The Court then concluded that neither the NLRA’s statutory text nor its legislative history contains a congressional command to override the FAA. Failing to find an inherent conflict between the NLRA and the FAA, the Court ruled that the arbitration agreement must be enforced according to its terms under the FAA.

The Fifth Circuit pointed out that every one of its sister circuits to consider this issue had refused to defer to the NLRB’s rationale in D.R. Horton, and had held arbitration agreements containing class waivers enforceable. The two judges in the majority stated, “we are loath to create a circuit split.” Judge Graves dissented, stating that he agreed with the Board that the arbitration agreement interfered with the exercise of employees’ substantive rights under Section 7 of the NLRA.

Agreement Violates NLRA Because Employees Might Believe it Prohibits Filing Unfair Labor Practice Charges

The arbitration agreement used by D.R. Horton required that employees agree to arbitrate “without limitation[:] claims for discrimination or harassment; wages, benefits, or other compensation; breach of any express or implied contract; [and] violation of public policy.” Although the agreement provided four exceptions to arbitration, none of the exclusions referred to unfair labor practice charges. All three judges found that this could create a reasonable belief that employees were waiving their administrative rights, including the right to file unfair labor practice charges under Section 8(a)(1) of the NLRA. Therefore, the Court enforced the Board’s order that D.R. Horton violated Section 8(a)(1) because an employee would reasonably interpret the arbitration agreement as prohibiting the filing of a claim with the Board, validating the need for D.R. Horton to take the ordered corrective action.

Challenges to Composition of the Board Rejected

While this case was on appeal to the Fifth Circuit, the D.C. Circuit issued its Noel Canning decision which vacated an order of the three-member panel of the Board by ruling that recess appointments of the panel members were invalid. Noel Canning v. NLRB, 705 F.3d 490 (D.C.Cir. 2013) cert. granted 133 S.Ct. 2861 (U.S. June 24, 2013)(No. 12-1281). Because the panel that decided the D.R. Horton case included a member appointed by recess appointment, the Fifth Circuit asked the parties to submit briefs on whether it must consider the constitutionality of the recess appointments. The Court ultimately decided it need not consider the issue, finding that it retained jurisdiction to resolve the dispute at hand and leaving it to the U.S. Supreme Court to decide the constitutionality of the Board’s recess appointments. The Fifth Circuit also rejected D.R. Horton’s challenges that Board Member Becker’s recess appointment expired before the Board issued its decision, and that the Board had not been delegated authority to act as a three-member panel.

Favorable Result for Employers

Although there are pros and cons to using arbitration agreements in the employment context, today’s ruling by the Fifth Circuit (absent review by the Supreme Court) removes the impediment to incorporating class action waivers in employment arbitration agreements. The decision reinforces, however, that certain language within an arbitration agreement may violate the NLRA if it is reasonably seen as limiting an employee’s right to file an unfair labor practice charge. Employers should consult with employment counsel to review whether arbitration agreements are appropriate for their workforce, and if so, to ensure the wording of the agreement is enforceable.

November 14, 2013

No Age Discrimination Established by “Shelf Life” Comment

By Mark Wiletsky

An HR manager asks about an employee’s “shelf life” in an instant message to another HR manager. Evidence of age discrimination? The employee argued it was, but the Tenth Circuit Court of Appeals ruled it was not. In Roberts v. IBM, the Court recently held that the comment did not amount to direct evidence of age discrimination and “was nothing worse than an inartful reference to [the employee’s] queue of billable work.” The employee’s alternative argument that the term “Project Blue” somehow constituted evidence of age discrimination similarly failed.

Employee Terminated For Poor Performance

George Roberts worked for IBM and was assigned to provide technical assistance to one of IBM’s clients, the Williams Companies (Williams). Williams’ employees repeatedly complained about Roberts’ work, resulting in a critical performance review. Although a subsequent review reflected some improvement, he later received more criticism. IBM offered Roberts the option of resigning with a severance package or committing to a 60-day performance improvement program with the understanding that failure to show sustained improvement would lead to termination. Roberts chose to complete the program. Once again, although he showed some improvement, the client continued to complain. IBM terminated Roberts for his continued negative performance.

Absence of Direct Evidence of Age Discrimination

Roberts sued IBM in federal court, alleging that instant messages between two HR managers showed that IBM fired him because of his age. The HR managers were discussing whether IBM should eliminate Roberts’ position because he did not have enough billable work to do. One of the HR managers questioned Roberts’ “shelf life,” which he argued referred to his age. The Court, however, disagreed, finding that the fair reading of the comment within the context of their discussion was that it referred to his workload, not his age. The Court found that any inference related to the “shelf life” comment would, at most, be circumstantial rather than direct evidence of age discrimination.

Roberts then asserted that the name “Project Blue,” which was IBM’s program of eliminating positions that were not cost-justified, constituted direct evidence of age discrimination. Surmising that Roberts believed that “blue” referred to older people who sometimes have blue hair, the Court rejected the argument, stating that the HR department’s use of the color blue cannot reasonably be taken as a reference to anyone’s age, especially in light of the fact that IBM is itself often called “Big Blue.” Moreover, because Roberts was not terminated as part of that project but through a different process months later, the project name could not lead to the conclusion that IBM fired him because of his age.

No Evidence of Pretext

Leaving no stone unturned, the Court then considered whether Roberts’ claim could proceed as a circumstantial case of age discrimination. Under the McDonnell Douglas burden-shifting analysis, if a terminated employee can establish a prima facie case of discrimination, the burden shifts to the employer to provide a legitimate, non-discriminatory reason for firing the employee. Upon such showing, the employee can still succeed on his or her claim by establishing that the employer’s reason is a mere pretext for discrimination. In this case, assuming (without deciding) that Roberts could establish a prima facie case of discrimination, the Court held that Roberts could not show that IBM’s legitimate, non-discriminatory reason for terminating him was pretext.

Roberts’ poor performance was well-documented and even if there were times where his performance improved, the prior improvements were not sufficient to show that later unsatisfactory evaluations were pretextual. Roberts also tried to show pretext by pointing to a handful of other employees for whom IBM received customer complaints but who were not disciplined for it. The Court found that some of the other employees were not similarly situated as they were not supervised by the same HR manager as Roberts. In addition, none of the other employees had the extensive history of performance issues as Roberts. Therefore, the Court held that Roberts failed to establish any sign of pretext.

The Court went on to reject Roberts’ state law claims as well.

Even Informal Communications Can Land You in Court

While IBM won this case, it also serves as an important reminder for managers and human resources personnel to be careful when discussing employees via e-mail and instant messaging. Avoid using words or phrases that can be taken out of context or have multiple meanings. It is sometimes easy to use shorthand or be informal when communicating via e-mail, or text or instant messaging. But such communications are discoverable, and when taken out of context or misinterpreted, they can turn an otherwise legitimate termination into a hotly contested case. To avoid that from happening, train your managers, supervisors and HR personnel to draft all communications carefully and deliberately, even if using more informal communication technology.