Category Archives: Current Affairs

October 21, 2013

Tips for Paying Wages via Payroll Cards

Offering payroll cards for the payment of employee wages may be a viable, cost effective alternative to paper paychecks. It also can be an attractive offering for workers who do not have a checking or savings account at a bank or other financial institution. Employers must be aware, however, that certain federal and state laws regulate payroll card accounts. The Consumer Financial Protection Bureau (CFPB) recently issued Bulletin 2013-10 describing the application of the Electronic Fund Transfer Act (EFTA) and Regulation E, which implements the EFTA, to payroll card accounts. Here are some tips for keeping your payroll card program in compliance with these laws.

No Mandatory Use of Payroll Cards. You may not require that employees be paid on a payroll card from a particular institution. You may offer payroll cards as a method of wage payment as long as you offer an alternative method, such as direct deposit to an account of the employee’s choosing or paper paychecks. Acceptable methods of paying wages typically are governed by state wage payment laws.
Disclosure of Fees, Transfers, and Other Payroll Card Requirements. Employees to be paid on a payroll card are entitled to be informed of any fees, limitations or requirements related to making electronic fund transfers with the card that will be imposed by the financial institution who issues the card. Clear, understandable written disclosures must be provided to cardholders in a form that the consumer may keep.
Account History Must Be Accessible. The payroll card issuer must make each cardholder’s account history available, either through periodic statements, telephone balance inquiries, internet/web-based account history, or by providing 60 days of written account history upon request of the cardholder.
Cardholder Liability for Unauthorized Use Must Be Limited. Payroll cardholders are entitled to limited liability protections for the unauthorized use of their payroll cards, however they must report any unauthorized transfers in a timely period.
Cardholders’ Rights to Error Resolution. Upon the timely report of an error regarding a payroll card account, financial institutions must respond to the cardholder. In order to ensure a response, the cardholder must report an error within 60 days of either accessing his or her payroll card account history or receiving a written account history containing the error, whichever is earlier, or within 120 days after the alleged error occurred.

In addition to the federal payroll card laws, state wage payment laws often regulate when and how payroll cards may be used to pay employee wages. For example, in Colorado, employers may deposit employee wages on a payroll card provided the employee may access the full amount on the card for free at least once during the pay period, or the employee is given the choice to receive their pay through other means, such as direct deposit to an account of the employee’s choosing or a paycheck. Be certain to check the wage payment laws in the states in which you operate to ensure compliance with any state payroll card requirements.

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.

October 14, 2013

“Pretaliatory” Firing Recognized as Wrongful Discharge Claim in Utah

By Elizabeth T. Dunning

Does an employee have to actually file a workers’ compensation claim to be protected from retaliatory termination? No, says the Utah Court of Appeals. In the recent Stone v. M&M Welding and Constr. Inc. decision, the Court ruled that an employee who was fired after expressing his intention to file a workers’ compensation claim could pursue a retaliatory discharge claim even though he failed to actually file his worker’s comp claim until eight months after he was fired.

Employee Discusses Desire to File Workers’ Compensation Claim

Terry Lee Stone was injured at a party hosted by M&M Welding and Construction in November of 2009. Within days of the injury, Stone informed the company president that he wanted to file a workers’ compensation claim. The president dissuaded Stone from doing so, instead holding his position open for two months until he could return to work. Upon his return, however, Stone’s hours were reduced. In March and April of 2010, Stone again informed the company that he intended to file a workers’ compensation claim, but failed to do so.

In early May, a customer demanded that Stone be fired, believing that he exaggerated in reporting a spill of contaminated water at the customer’s site. A few days later, Stone contacted M&M to obtain insurance information for his workers’ compensation claim. M&M fired him the following day. Stone sued, alleging that M&M terminated him in retaliation for expressing his intent to file a workers’ compensation claim. M&M argued that because Stone did not file his workers’ compensation claim until eight months after he was fired, his termination could not be in retaliation of the filing. The trial court agreed, awarding summary judgment to M&M.

Utah Court of Appeals Rules that Notifying Employer of Intent to File Workers’ Compensation Claim is Enough

On appeal, the Court pointed to the Utah Supreme Court’s decision in Touchard v. La-Z-Boy Inc. which recognized that “retaliatory discharge for filing a workers’ compensation claim violates the public policy of this state; thus, an employee who has been fired or constructively discharged in retaliation for claiming workers’ compensation benefits has a wrongful discharge cause of action.” In Stone, the Court of Appeals extended the basis for a wrongful discharge claim by concluding that conduct short of actually filing a workers’ compensation claim was protected conduct. The Court wrote that preparing a claim, notifying the employer of the intent to file a claim or discussing his claim with coworkers could be sufficient to support a claim of retaliatory discharge. In Stone’s case, he had repeatedly expressed to the company president and others that he intended to file a workers’ compensation claim so that conduct was sufficient to proceed with his retaliatory discharge lawsuit.

Policy Behind Recognizing “Pretaliatory” Discharge

The Court recognized that a rule that protected employees only after they actually filed a workers’ compensation claim “would create a perverse incentive for an employer to discharge an injured employee as soon as the employer learns of the employee’s intention to file a claim.” The Court found such a rule would contradict the important public policy embodied in the state’s workers’ compensation act.

The Court’s ruling also squares with the conduct that can underlie a retaliation claim under other employment laws. For example, retaliation claims under Title VII can be based on conduct where the employee either opposes workplace discrimination or participates in a discrimination claim, investigation or proceeding. “Opposing” discrimination can include the threat of filing a discrimination charge as well as complaining about or reporting discrimination at work. The Stone decision recognizing a retaliation wrongful discharge claim based on an employee’s expressed intent to file a workers’ compensation claim is analogous to the “opposition” retaliation claims recognized in such other employment laws.

Employer Take-Aways

Employers should be careful when making adverse employment decisions related to an employee who has either filed a workers’ compensation claim or is preparing to do so. Decisions should be unrelated to the claim or threat of claim and should be based on a reason that can be clearly articulated and is supported by thorough documentation. Anything less may lead the affected employee to conclude that the adverse action was in retaliation for the workers’ compensation claim and make it difficult to defend a retaliation lawsuit.

October 7, 2013

Home Health Care Workers to Receive Minimum Wage and Overtime Protections

By Mark Wiletsky

If your organization is in the home health field, be aware that the rules for how to pay home care workers is going to significantly change. Under a recently issued Final Rule, the U.S. Department of Labor (DOL) will extend FLSA pay protections to an estimated 1.9 million home care workers in the U.S. who currently are treated as exempt under the companionship exemption. As a result, workers who provide in-home care to ill, elderly, or disabled individuals through a third party employer will be covered by the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA) beginning January 1, 2015.

Companionship Services Exemption Narrowed

The so-called “companionship exemption,” implemented in 1975, allowed organizations employing workers who provide home care assistance to elderly, ill, injured or disabled persons to treat these workers as exempt from the federal minimum wage and overtime pay provisions. The new Final Rule narrows the exemption for companionship services in two key ways.

First, the Final Rule prohibits third party employers of health care workers, such as home care staffing agencies, from claiming the exemption for companionship services. The rule makes clear that only an individual, family or household employing a home health worker may claim the companionship exemption. This means that home care workers employed by a company that provides home health services must be paid minimum wage for hours worked and receive overtime pay as provided under the FLSA.

Second, the definition of “companionship services” is limited to only fellowship and protection services, with attendant care limited to only 20 percent of the total hours worked with that person each week. Examples of fellowship and protection services include reading, playing games, accompanying the person on walks, taking the person to appointments or social events and conversing. If the worker provides more than 20 percent of their time on activities of daily living, such as dressing, feeding, bathing, toileting, housework, managing finances and arranging medical care, the worker is not exempt under the companionship exemption.

Medically Related Services Not Included in Companionship Exemption

A direct care worker who provides medically related services is ineligible for the companionship exemption. Under the Final Rule, tasks will be considered medically related when they typically are performed by trained personnel, such as registered nurses, licensed practical nurses or certified nursing assistants, regardless of the training or occupational title of the worker actually performing the services. This means that even if a worker normally meets the companionship exemption by providing only fellowship and protection services, the worker loses the exemption for any workweek in which he or she provides medically related services and therefore, is entitled to minimum wage and overtime pay, if applicable, for that week.

Home Health Employers Should Review Pay Policies

With approximately fifteen months to prepare for the January 1, 2015 effective date of this Final Rule, employers of home health care workers should take time now to review compensation and recordkeeping practices. In particular, determine how you will track worker hours to ensure that you pay minimum wage for all hours worked and an overtime premium for all hours in excess of 40 per workweek. Learn the rules for paying in-home workers for time spent waiting, sleeping and traveling, as summarized on the DOL’s Fact Sheet 79D – “Hours Worked Applicable to Domestic Service Employment Under the FLSA.” Finally, prepare to update and communicate new pay policies to employees through your employee handbook, intranet policy portal and/or in-person training.

October 4, 2013

EEOC’s Religious Accommodation Claim Fails Despite Retailer’s Assumption that a Female Job Applicant Wore a Headscarf for Religious Reasons

By John M. Husband

Does an employer have to engage in an interactive discussion about reasonably accommodating the wearing of a headscarf (i.e., hijab) in contravention of its dress code simply because a job applicant wears a headscarf to the job interview? No, according to a recent decision by the Tenth Circuit Court of Appeals. The Court ruled that to establish a religious accommodation claim under Title VII, the plaintiff must establish that he/she informed the employer that he/she adheres to a particular practice for religious reasons and that the plaintiff needs an accommodation for that practice, due to a conflict between the practice and the employer’s neutral work rule. EEOC v. Abercrombie & Fitch Stores, Inc., No. 11-5110 (10th Cir. October 1, 2013).

In the Abercrombie case, an assistant manager named Heather Cooke interviewed Samantha Elauf, a seventeen-year old applicant for an in-store sales position. Ms. Elauf wore a headscarf to the interview. Though they did not discuss religion, Ms. Cooke assumed that Ms. Elauf was Muslim and that her Muslim religion was the reason she wore a headscarf. During the interview, Ms. Cooke described some of the dress requirements expected of Abercrombie employees but neither she nor Ms. Elauf specifically referred to or discussed the wearing of a headscarf. After the interview, Ms. Cooke believed Ms. Elauf was a good candidate for the job but was unsure whether it would be a problem for her to wear a headscarf since Abercrombie has a strict “Look Policy” that forbids wearing of “caps” and black clothing. Ms. Cooke consulted with her district manager who rejected Ms. Elauf for hire because she wore a headscarf which was inconsistent with the Look Policy.

EEOC Files Lawsuit Alleging Retailer Failed to Accommodate Applicant’s Religious Practice

In 2009, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit in federal court in Oklahoma alleging that Abercrombie violated Title VII by refusing to hire Ms. Elauf because she wore a headscarf and failing to accommodate her religious beliefs because it failed to make an exception to its Look Policy. The Oklahoma court ruled in favor of the EEOC on summary judgment, reasoning that Abercrombie had enough information to make it aware that there was a conflict between the applicant’s religious practice and its Look Policy that would require an accommodation. It emphasized that Abercrombie had made numerous exceptions to its Look Policy over the past decade or so, including eight or nine headscarf exceptions. The parties went to trial on the issue of damages where a jury awarded the EEOC $20,000 in compensatory damages.

Religious Accommodation Claim Requires Plaintiff to Inform Employer of Conflict between Religious Practice and Employer Policy

On appeal to the Tenth Circuit, Abercrombie argued that it was entitled to summary judgment because there was no dispute that Ms. Elauf never informed the company that her practice of wearing a headscarf was based on her religious beliefs and that she would need an accommodation for the practice based on the conflict between it and the Look Policy. A divided Tenth Circuit agreed. Two of the three judges on the panel ruled that the plaintiff in a religious accommodation case must establish that he or she informedthe employer of his/her religious belief that contradicts with an employment requirement and the plaintiff must request an accommodation. Because Ms. Elauf never informed Abercrombie that she wore a headscarf for religious reasons and never requested an exception from the dress code, the court reversed the grant of summary judgment to the EEOC and vacated the jury award with instructions to enter judgment in favor of Abercrombie. The majority stated that it is only after an employer is put on notice of the need for a religious accommodation that it must actively engage in a dialogue with applicants or employees concerning their conflicting religious practices and possible accommodations.

Dissenting Opinion and Conflicting Circuit Court Decisions Set Up Possible Appeal to Supreme Court

The dissenting judge strongly disagreed with his two colleagues on the panel, believing that Abercrombie should not be permitted to avoid discussing reasonable accommodations for Ms. Elauf’s religious practice when it knew that she wore a headscarf, assumed she was Muslim and wore the headscarf for religious reasons and knew that its Look Policy prohibited its sales models from wearing headwear. The dissent noted that Ms. Elauf could not inform Abercrombie of a conflict between her religious practice and its dress code because she did not know the details of the Look Policy or that headwear, including a headscarf, was prohibited. The dissenting judge would have sent the entire matter to a jury to decide if Abercrombie was liable for religious discrimination.

The dissenting opinion points out that other circuit courts of appeal have held that a job applicant or employee can establish a religious failure-to-accommodate claim if he/she can show that the employer knew of a conflict between the plaintiff’s religious beliefs and a job requirement, regardless of how the employer acquired knowledge of that conflict. Unlike the Tenth Circuit, these other circuits do not require that the plaintiff actually inform the employer of the conflict. The stage is set for the EEOC to ask the U.S. Supreme Court to resolve the disagreement between the courts to ultimately decide whether a plaintiff must actually inform the employer of the conflict between his/her religious practice and a job requirement before the duty to discuss reasonable accommodations kicks in.

Employer Lessons

This opinion is favorable for employers in the states within the Tenth Circuit’s jurisdiction, namely Colorado, Oklahoma, Kansas, Utah, Wyoming and New Mexico. That said, employers should always be cautious about making adverse employment decisions when it has knowledge or information that relates to an applicant/employee’s religious beliefs or practices.

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.

September 11, 2013

Family Medical History Request Results in First EEOC GINA Lawsuit

By Dora Lane

Employers may not request a family medical history from employees or applicants, even as part of a post-offer medical examination. In its first lawsuit alleging a violation of the Genetic Information Nondiscrimination Act (GINA), the Equal Employment Opportunity Commission (EEOC) sued an employer whose contracted medical examiner required applicants to complete a family medical history questionnaire. EEOC v. Fabricut, Inc., No. 13-cv-248 (N.D. Okla. filed May 7, 2013). Review of this case offers a timely opportunity for employers to review their employment practices for compliance with GINA.

Investigation of ADA Claim Finds Illegal Family Medical History

Temporary employee, Rhonda Jones, worked for Fabricut, a distributor of decorative fabrics, as a memo clerk for 90 days. She then applied to work in the same position as a regular employee. Fabricut made her an offer of employment, contingent on the results of a pre-employment drug test and physical. Fabricut sent Jones to Knox Laboratory, a medical examining facility that provided examination services to Fabricut on a contract basis. As part of the process, Knox Laboratory instructed Jones to complete a questionnaire that asked about the existence of heart disease, hypertension, cancer, tuberculosis, diabetes, arthritis and mental disorders in her family.

The examiner conducting Jones’ pre-employment physical concluded that Jones may be predisposed to or already suffer from carpal tunnel syndrome and recommended further evaluation. Although Jones’ personal physician conducted a battery of tests and concluded that she did not have carpal tunnel syndrome, Fabricut withdrew its offer of employment. Jones filed a discrimination charge with the EEOC alleging a violation of the Americans with Disabilities Act (ADA) on grounds that she was denied employment because Fabricut regarded her as having a disability, carpal tunnel syndrome.

As part of its investigation of Jones’ ADA claim, the EEOC obtained from Fabricut copies of Jones’ post-offer, pre-employment medical examination. The records revealed the family medical history questionnaire that Jones had been instructed to complete at the start of her pre-employment physical. Finding that the questionnaire included unlawful inquiries into genetic information, the EEOC notified Fabricut that its investigation would look into its compliance with GINA regarding its solicitation of family medical histories of applicants.

EEOC Pursues GINA Lawsuit

The EEOC filed suit against Fabricut in federal court alleging violations of both the ADA and GINA. GINA, which took effect in 2009, makes it illegal for employers to discriminate against employees or applicants because of genetic information, which includes family medical history, and restricts employers from requesting, requiring or purchasing such information, among other things. The lawsuit alleges that Fabricut violated GINA by requesting and requiring Jones and other applicants to indicate whether or not they had a family medical history for a variety of diseases and disorders as part of its post-offer, pre-employment medical examination as conducted for Fabricut by its agent, Knox Laboratory, who then provided the information to Fabricut for its use in hiring and employment decisions.

Lawsuit Settled for $50,000 and Additional Relief

Without admitting any violation of law, Fabricut agreed to settle the case for payment of $50,000 to Jones as compensatory damages. The settlement also requires Fabricut to post notices in its workplace stating that Fabricut will comply with all federal employment laws, including the ADA and GINA, conduct two hours of live training for all management and human resources personnel, create or revise personnel policies prohibiting discrimination and be subject to monitoring and reporting requirements for two years.

Review Practices for GINA Compliance

Although GINA has been in effect since 2009, many employers may not be familiar with its requirements and prohibitions. What may have been routine employment practices in past years, such as collecting a family medical history from employees or applicants, may now be unlawful under GINA. Employers should review their job applications, interview questions and any employment medical testing practices to ensure that no family medical history is requested. The regulations implementing GINA specifically state that a covered entity must tell health care providers not to collect genetic information, including family medical history, as part of a medical examination used to determine an individual’s ability to perform a job. 29 C.F.R. § 1635.8(d). In addition, if an employer finds out that family medical histories are being collected, it must take reasonable measures, including not using the health care provider, to prevent the information from being collected in the future.

Under certain circumstances, employers may receive genetic information that it did not request. Such inadvertent acquisition of genetic information is not a violation of GINA. To help establish that genetic information was acquired inadvertently, employers should take advantage of a safe harbor provision in the GINA regulations. When an employer needs to request health-related information, such as to support a request for sick leave or a reasonable accommodation under the ADA, the employer should warn the employee and the health care provider not to provide genetic information. The regulations suggest the following language to accompany the request for health-related information:

The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law. To comply with this law, we are asking that you not provide any genetic information when responding to this request for medical information. "Genetic information," as defined by GINA, includes an individual's family medical history, the results of an individual's or family member's genetic tests, the fact that an individual or an individual's family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual's family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services.

When employers provide this warning, any resulting acquisition of genetic information will generally be considered inadvertent and therefore, not in violation of GINA.

September 3, 2013

OFCCP Announces New Veterans and Disability Regulations for Contractors

By Brad Cave

Last week, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced Final Rules that are intended to improve job opportunities for disabled workers and veterans. Whether the rules will accomplish that purpose is uncertain; what is clear is that the new rules greatly increase affirmative action requirements and burdens on federal contractors. Under the new regulations, federal contractors and subcontractors face significantly increased documentation, data collection, recordkeeping and hiring goals.

Key Provisions of New Disability and Veterans Regulations

On August 27, 2013, OFCCP released the content of its Final Rules that change the regulations implementing Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act as amended by the Jobs for Veterans Act of 2002 (VEVRAA). Section 503 of the Rehabilitation Act of 1973 prohibits discrimination in employment decisions against individuals with disabilities and requires federal contractors and subcontractors to take affirmative action to recruit, hire, promote and retain disabled workers. VEVRAA prohibits federal contractors and subcontractors from discriminating against protected veterans and requires affirmative action in employing these veterans. The key provisions of the Final Rules that change the regulations implementing these laws include:

A 7% Utilization Goal for Qualified Individuals with a Disability. For the first time, contractors must strive to employ disabled workers at a level that reaches 7% of each job group. For contractors with 100 or fewer employees, the 7% goal applies to the contractor’s entire workforce, rather than each job group. OFCCP states that this is not a quota and failure to meet the disability utilization goal will not, by itself, constitute a violation of the regulation. However, OFCCP requires contractors to conduct an annual utilization analysis to find deficient areas and determine specific actions to rectify identified problems.

Establishing Hiring Benchmarks for Veterans. Without setting a specific utilization goal for hiring veterans, OFCCP will require federal contractors to establish hiring benchmarks each year for protected veterans. Contractors may choose to use the national percentage of veterans in the civilian labor force, as updated annually by OFCCP (currently 8%), as a benchmark, or may establish their own benchmark using a combination of data from the Bureau of Labor Statistics, Veterans’ Employment and Training Service and the contractor’s unique hiring circumstances.

Collect and Retain Comparison Data on Disabled and Veteran Applicants and Employees. Under the Final Rules, contractors must document quantitative comparisons of the number of disabled workers and veterans who applied for jobs and the number hired. The data must be compiled annually and retained by the contractor for three years in order to track trends and measure outreach efforts.

Ask Applicants and Employees to Self-Identify as Individuals with a Disability and as a Veteran. The Final Rules mandate that employers invite applicants at both the pre-offer and post-offer stage to self-identify themselves as individuals with a disability and as veterans. The Final Rules further require that contractors invite their current employees to self-identify at least every five years. OFCCP offers sample self-identification language.

Mandated Equal Opportunity Clause in Subcontracts. Under the Final Rules, contractors must include specific language to incorporate the equal opportunity clause into subcontracts so that subcontractors know their responsibilities as federal contractors.

Provide OFCCP Access to Records. The Final Rules specify that contractors must allow OFCCP to review documents related to a focused review or compliance check either on-site or off-site, at OFCCP’s option. OFCCP can request that contractors reveal all formats in which they maintain records and then request the records in whatever format OFCCP chooses.

Updates to Comply with the ADAAA. The Final Rule related to the disability regulations updates the regulations in light of the revised definition of “disability” and certain nondiscrimination provisions under the ADA Amendments Act of 2008 (ADAAA).

Still Burdensome, But Some Proposals Slightly Watered Down

Federal contractors were critical of the many regulatory changes first proposed by the OFCCP in 2011. OFCCP received many comments in response to the proposed rules and made some modest improvements based on those comments. For example, the proposed rules sought to impose a five-year recordkeeping requirement. The Final Rules reduced that requirement to three years. The proposed disabilities rule sought to require contractors to review their physical and mental job qualifications on an annual basis while the Final Rule allows contractors to establish their own schedule for reviewing job qualifications. Despite these and other small revisions from the proposed to the final regulations, the Final Rules add significant burdens on contractors who must revamp their employment policies and documentation practices to comply with the new regulations.

So, Are You Sure You’re Not Disabled?

The new hiring quota for disabled individuals places employers in a very awkward position. For the first time, employers are required to ask and need to know whether applicants and employees consider themselves to be disabled. Under these rules, employers are expected to meet the 7% “goal” by workgroup. But some employees who meet the definition of disabled will not consider themselves to be disabled or be reluctant to disclose their status to their employer. The OFCCP recognized that a study has shown that only about 50% of those with disabilities are likely to self-identify. The OFCCP is not concerned about this high degree of inaccuracy. According to its preamble to the new rules, even inaccurate data which greatly underreports the number of disabled applicants and employees will still assist the contractor and the OFCCP to evaluate the contractor’s hiring and selection process! Stated differently, the OFCCP does not care if the data is faulty by as much as 50% as long as it has some data on which to base its enforcement decisions.

The OFCCP also suggested that employers should designate individuals as disabled, even if they decline to self-identify, where the disability is obvious or the employer knows about the disability. Of course, for years we have cautioned employers to never label an employee as disabled to avoid “regarded as” claims under the ADA. Now, employers who are federal contractors will have an incentive to identify employees as disabled to meet the goal, and have the OFCCP’s permission to do so. In an interesting twist, the OFCCP’s permission for employers to designate employees as disabled was explained in the preamble to the new rule, not in the new regulations. Since the preamble does not have the force and effect of law, the OFCCP’s permission is not likely to have much value as a defense to an employee’s allegation that the employer regarded them as disabled when the employer designates the employee for purposes of complying with this rule. While federal contractors may have little choice if a disabled employee declines to self-identify, it will continue to be very important for employers to keep all such designations strictly confidential and out of the hands of supervisors and managers.

Effective Date of the Disability and Veterans Affirmative Action Final Rules

The Final Rules become effective 180 days after they are officially published in the Federal Register which is expected to occur in the next two weeks. Consequently, contractors have about six months to get policies and procedures in place to comply with the new regulations. Contractors subject to written affirmative action plan requirements are allowed to continue with the plan they have in place on the effective date of the Final Rules. However, the next cycle of their affirmative action plan must be drafted to comply with the new regulations.

OFCCP will be hosting webinars on the new regulations. Information about the webinars and the Final Rules may be found on the OFCCP website: http://www.dol.gov/ofccp/.

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.

August 29, 2013

DOJ Will Not Challenge State Marijuana Legalization Laws – New Federal Enforcement Policy Unlikely to Affect Colorado Employers

By Emily Hobbs-Wright

On August 29, 2013, the U.S. Department of Justice (DOJ) announced that it will not challenge the state ballot initiatives in Colorado and Washington that legalize the possession and use of small amounts of marijuana under state law. The DOJ makes clear, however, that marijuana remains an illegal drug under the federal Controlled Substances Act. This clarification means Colorado employers may still enforce their drug-free workplace policies and take appropriate action when an employee or applicant tests positive for marijuana.

DOJ Expects States to Enforce Strict Regulatory Schemes

In its August 29, 2013 Guidance Regarding Marijuana Enforcement, the DOJ identifies eight enforcement priorities for federal law enforcement and prosecutors, such as preventing distribution of marijuana to minors, preventing the diversion of marijuana from states where it is legal to other states, and preventing drugged driving and the exacerbation of other public health consequences of marijuana use. The DOJ states that it expects that states and local governments to not only establish, but also enforce robust controls in their marijuana regulatory schemes to meet its federal objectives. The guidance instructs federal prosecutors to review marijuana cases on an individual basis, weighing all available information and evidence but to no longer “consider the size or commercial nature of a marijuana operation alone as a proxy for assessing whether marijuana trafficking implicates the Department’s enforcement priorities . . .” The DOJ further stated that if states fail to develop or enforce a strict regulatory scheme and the stated harms result, federal prosecutors will step in to enforce federal marijuana priorities and may challenge the regulatory schemes in those states.

Courts in Colorado Uphold Employer Terminations for Employee Marijuana Use

In April 2013, the Colorado Court of Appeals ruled that terminating an employee who tested positive for marijuana following his off-duty, off-premises use of medical marijuana did not violate Colorado’s lawful activities statute. Coats v. Dish Network LLC, 2013 COA 62. Brandon Coats, a quadriplegic who obtained a license to use medical marijuana under Colorado’s Amendment 20, was fired for violating his employer’s drug policy after testing positive for marijuana. Coats asserted that he never used marijuana on his employer’s premises, was never under the influence of marijuana at work and never used marijuana outside the limits of his medical marijuana license. He sued his employer, Dish Network, alleging that his termination violated Colorado’s lawful off-duty activities statute, CRS § 24-34-402.5(1), which prohibits an employer from discharging an employee for engaging in “any lawful activity off the premises of the employer during nonworking hours.”

The Coats court looked to the plain meaning of the term “lawful” in the statute and decided that “for an activity to be ‘lawful’ in Colorado, it must be permitted by, and not contrary to, both state and federal law.” Because marijuana was, and remains, illegal under federal law, the court held that marijuana use is not a “lawful activity” under the Colorado lawful activities statute and therefore, the employer did not violate the statute when it terminated him for testing positive for marijuana.

Earlier this week, the federal district court in Colorado ruled that enforcement of a drug-free workplace policy is a lawful basis for an employer’s decision to terminate an employee who tests positive for marijuana, whether from medical or any other use. Curry v. MillerCoors, Inc., No. 12-cv-2471 (Order Granting Motion to Dismiss, D.Colo. Aug. 21, 2013). In granting the employer’s motion to dismiss, the federal court rejected all of the former employee’s claims related to his medical use of marijuana that resulted in a positive drug test and his termination under the employer’s drug policy. Significantly, the court dismissed his disability discrimination claim under Colorado’s anti-discrimination statute as a matter of law, finding that it was lawful for the employer to discharge the employee under its drug-free workplace policy despite the employee’s allegation that he was terminated because of using medical marijuana to treat disabling medical conditions. Judge John L. Kane wrote “anti-discrimination law does not extend so far as to shield a disabled employee from the implementation of his employer’s standard policies against employee misconduct.” In dismissing the employee’s claim for violation of Colorado’s lawful activities statute, Judge Kane relied on the Coats decision and similarly ruled that because marijuana use is illegal under federal law, the employee’s medical marijuana use was not a “lawful activity” under the statute.

DOJ’s Announcement Should Not Change Workplace Decisions

The DOJ’s announcement of relaxed marijuana enforcement in states that have legalized marijuana does not alter employers’ ability to enforce their drug-free workplace policies. On the contrary, because the DOJ reinforced that marijuana remains an illegal drug under federal law, the analysis used by courts in Colorado to uphold termination decisions based on positive drug tests should continue to apply. Employers should create or revise their drug policies to state that use of any drug that is illegal under state or federal law will violate the policy. Employers then should enforce their policies in a consistent and uniform manner, regardless of the legalization of marijuana use in Colorado.

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.

August 26, 2013

Ninth Circuit Joins Growing Trend – Declines to Follow D.R. Horton and Upholds Arbitration Agreement Prohibiting Class Claims

By Jeffrey T. Johnson

On August 21, 2013, the Ninth Circuit Court of Appeals, in Richards v. Ernst & Young, LLP, Case No. 11-17530, became the third federal Circuit – together with the Second and Eighth – to reject the National Labor Relations Board’s (NLRB’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. The Richards Court also rejected the plaintiff’s argument that Ernst &Young had waived its right to arbitrate her claims by waiting to seek arbitration until after discovery and several rulings by the court. Therefore, the Court held that the arbitration agreement between Richards and Ernst &Young was enforceable, even though it precluded class arbitration.

Federal Courts of Appeal Reject NLRB’s D.R. Horton Decision

Decided in January 2012, the NLRB’s D.R. Horton ruling attempted to thwart efforts by employers to reduce their risk of class action claims through the use of arbitration agreements containing a class/collective action waiver. In re D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012). Despite D.R. Horton, employers have continued to argue for the enforceability of such agreements, and like Ernst & Young, have often prevailed in court. In fact, the overwhelming majority of courts that have considered the enforceability of mandatory arbitration agreements with class waivers subsequent to the D.R. Horton decision have rejected the NLRB’s reasoning and refused to follow its holding.

In addition to numerous district courts so ruling, the Ninth Circuit becomes the third federal appellate court to reject D.R. Horton. In January 2013, the Eighth Circuit Court of Appeals held that a class arbitration waiver in the employer’s mandatory arbitration agreement did not preclude arbitration of the employee’s claims under the Fair Labor Standards Act (FLSA). Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013). The Eighth Circuit found that without a congressional mandate under the FLSA indicating that a right to engage in class actions overrides the mandate of the Federal Arbitration Act in favor of arbitration, the NLRB’s rationale in D.R. Horton must be rejected.

Earlier this month, the Second Circuit Court of Appeals also upheld an arbitration agreement containing a class action waiver in another FLSA case brought against Ernst & Young in New York. Sutherland v. Ernst & Young LLP, No. 12-304-cv, 2013 U.S. App. LEXIS 16513 (2d Cir. Aug. 9, 2013). Despite the employee’s argument that the class action waiver removed the financial incentive for her to pursue a claim under the FLSA, the Court ruled that the arbitration agreement must be enforced. Like the Eighth Circuit, the Second Circuit declined to follow the D.R. Horton decision.

NLRB ALJ’s Bound by D.R. Horton Precedent

Despite employer victories in court, arbitration agreements with class action waivers are still being invalidated by the NLRB and its Administrative Law Judges (ALJs). Just this week, an NLRB ALJ found that the employer violated the NLRA with its mandatory class waiver arbitration agreement of employment claims. Despite the employer’s attempt to distinguish its agreement from the one at issue in D.R. Horton and to point out how courts have rejected the D.R. Horton rationale, the ALJ stated that he was bound by the D.R. Horton decision and required to apply it unless it is overturned by the Supreme Court or reversed by the NLRB itself.

Fifth Circuit to Decide D.R. Horton Appeal

The D.R. Horton decision is currently on appeal in the Fifth Circuit. Union and non-union employers alike will be watching to see whether the Fifth Circuit will follow the other circuits that have rejected the NLRB’s rationale, and overturn the D.R. Horton ruling. If, on the other hand, the Fifth Circuit affirms the D.R. Horton decision, the split between the Circuit Courts could result in the Supreme Court taking up the issue. We will continue to monitor these cases and keep you informed.

August 20, 2013

NLRB Judge Strikes Down Employer’s Dress Code Following “Slave” Shirt Discipline

By Brian Mumaugh

What is wrong with an employer’s dress code that prohibits clothing that displays vulgar or obscene phrases, remarks or images which may be racially, sexually or otherwise offensive as well as clothing that displays words or images that are derogatory to the Company? It is overly broad and interferes with employees’ Section 7 rights under the National Labor Relations Act (NLRA or Act) to engage in union and/or protected concerted activity, according to an Administrative Law Judge (ALJ) for the National Labor Relations Board (NLRB). The ALJ’s review of the dress code came after the employer disciplined an employee who wore a T-shirt with the word “slave” on it next to a picture of a ball and chain and the employee’s time clock number. Dismissing the employer’s argument that the shirt would be racially offensive to visitors who toured its facility, the ALJ found that the employer violated the Act by sending the employee home without pay to change his “slave shirt.”

The History of the “Slave Shirt”

Mark Gluch was a long time employee of automotive parts manufacturer Alma Products Company and a vigorous supporter of the union representing his bargaining unit. The 2012 incident that gave rise to this case occurred when Gluch wore the “slave shirt” to work during a period of contentious negotiations for a new union contract. The origin of the shirt, however, dated back to 1993 when company employees developed and paid for the “slave shirts” to send the company a message during an earlier round of difficult contract negotiations. The shirts resurfaced in 1996 when the bargaining unit employees wore them while picketing during a strike. Immediately following the strike, as many as 30% of the unit employees wore the “slave shirts” to work on any given Friday. No discipline or policy infraction was noted or enforced at that time.

Company Seeks to Avoid Racially Offensive Shirt

When a new president and CEO, Alan Gatlin, took over for Alma Products in 2005, he noticed employees wearing the “slave shirt.” Finding the shirts to be racially offensive, he felt embarrassed that customers and visitors to the facility would see employees wearing the shirt and be offended. He testified that in his view, the shirts did not reflect well on the Company with customers as they tried to get new business. Gatlin asked the human resources manager to draft a dress code policy which was implemented in early 2006. The dress code policy did not specifically reference the “slave shirt” but included general prohibitions against clothing that displayed “vulgar/obscene phrases, remarks or images which may be racially, sexually or otherwise offensive and clothing displaying words or images derogatory to the Company . . .” The policy also stated “[i]f you are uncertain whether an article of clothing is appropriate under this policy, follow the old adage of better safe than sorry and refrain from wearing it at work.”

After implementing the dress code in 2006, it appears that employees seldom wore the “slave shirt” to work. However, during difficult union contract negotiations in April 2012, Gluch and other employees began wearing pro-union shirts and pins and Gluch wore the “slave shirt” to work. Gluch’s supervisor gave Gluch the option of removing the shirt or turning it inside out so that the writing would not be visible. When Gluch refused to do so, he was sent home without pay for wearing the shirt.

ALJ Rejects Company’s Concerns About Racial Discrimination

The union filed an unfair labor practice charge claiming, among other things, that the policy and the Company’s enforcement of the policy, violated the Act. The Company argued that the shirt’s “slave” reference was offensive to African-Americans due to the history of slavery in the United States. Noting that an important buyer from Chrysler was African-American as was a new production supervisor at the facility, the Company asserted that it was entitled to discipline Gluch for wearing the racially offensive shirt. The ALJ rejected this argument, stating that the NLRB has repeatedly found employees to be protected even when they displayed messages that likened their working conditions to those of a slave. The ALJ noted that the dictionary definition of “slave” does not reference race, but instead focuses on the condition of servitude or being subject to a person or influence. In addition, given the shirt’s history that it had been worn to work over the past two decades as support for the union, the ALJ determined that it would not be seen as carrying a racial message. Moreover, the Company had a policy prohibiting racial discrimination since the 1990s, yet had failed to take any action to prohibit wearing the “slave shirt” as racially offensive prior to Gluch’s wearing of the shirt in 2012.

Key to the ALJ’s analysis of the dress code policy was its general prohibition of words or images that are derogatory to the Company. The ALJ found that the policy interfered with employees’ Section 7 activity, such as protected statements to coworkers, supervisors or third parties who deal with the Company, because it would prohibit employees from objecting to their working conditions and seeking the support of others in improving them. The dress code policy was found to be unlawfully overbroad because it prohibits all communications derogatory to the company regardless of whether the words are racially or sexually discriminatory or are protected as concerted activities under the National Labor Relations Act. In addition, by directing employees to be “safe” not “sorry,” the ALJ stated that the policy directs employees to construe the prohibition on derogatory comments such that it prohibits Section 7 activity.

Dress Code Policies That Do Not Restrict Section 7 Activity

With the NLRB (and its ALJs) striking down a variety of employer policies relating to both union and non-union employees, it is difficult to draw a bright line to determine which policies pass scrutiny and which do not. That said, employers can learn lessons from this recent decision that may help keep their dress code policy away from NLRB review. First, use specific examples of acceptable versus unacceptable attire rather than general statements that require interpretation. Second, if your workplace warrants different dress standards for different segments of employees (e.g., public-facing employees vs. behind the scenes employees), make those standards clear and justified by business necessity. Third, if you include a statement that prohibits derogatory words or images on clothing, include a statement that communications protected by Section 7 are permissible under the dress code. Finally, enforce your policy in a uniform and consistent manner, so that all dress code violations are treated similarly regardless of the employee or supervisor involved.

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.

August 14, 2013

DOL Updating FMLA Guidance to Reflect DOMA Decision

By Brad Cave

New Labor Secretary, Tom Perez, indicated that the Department of Labor (DOL) has updated departmental guidance regarding spousal leave provisions of the Family and Medical Leave Act (FMLA) to reflect the Supreme Court’s recent decision that struck down certain provisions of the Defense of Marriage Act (DOMA). As the DOL updates its policies, employers too need to examine and update their FMLA policies. Here is what you need to know.

Unconstitutionality of DOMA Means FMLA Spousal Leave Applies to Legally Married Same-Sex Couples

The Supreme Court’s decision in United States v. Windsor focused on Section 3 of DOMA which defined “spouse” as a husband or wife of the opposite sex for purposes of federal laws or regulations. Because of that definition, legally married same-sex couples were not entitled to federal benefits or rights. As a result, FMLA leave benefits did not extend to employees needing time off to care for a same-sex spouse with a serious health condition.

In finding Section 3 of DOMA unconstitutional, the Court stated that the regulation of marriage traditionally rests exclusively with the states and the federal government violates equal protection principles by denying rights and benefits to same-sex couples who are legally married under state law. The result is that federal rights and benefits, including FMLA spousal leave benefits, now apply equally to state-sanctioned same-sex couples and heterosexual couples.

DOL Implementing Court’s Decision

Secretary Perez affirmed the availability of spousal leave under the FMLA based on same-sex marriages. He indicated that the DOL has removed references to DOMA from some of its guidance documents and will continue to take steps to implement the Court’s Windsor decision.

When Do Employers Need to Recognize Same-Sex Marriages for FMLA Purposes?

With some states legally recognizing same-sex marriages and others not, a key question for employers is which state’s law applies for FMLA spousal leave purposes? According to the DOL’s 2009 FMLA regulations, “spouse” means a husband or wife as recognized by the state where the employee resides. This means that the employer must determine if same-sex marriages are lawful in the state where the employee requesting FMLA leave lives, not where the employer is located or where the employee actually works. At present, 13 states plus the District of Columbia recognize same-sex marriages as lawful: California, Connecticut, Delaware, Iowa, Massachusetts, New Hampshire, Maine, Maryland, Minnesota, New York, Rhode Island, Vermont and Washington.

Some groups are urging the DOL to adopt a rule that would recognize FMLA rights based on the state where the marriage was celebrated, not the state of residency. Although the DOL has not yet proposed any rule changes on this issue, we will keep an eye on it and will let you know if any changes to the marriage recognition rules are proposed.

Update Your FMLA Policy for Same-Sex Spousal Leave

If you have employees living in one or more states that recognize same-sex marriages (or in the District of Columbia), update your FMLA policy, forms and practices to incorporate spousal leave benefits for recognized same-sex marriages. This includes FMLA leave for an employee who needs to care for a same-sex spouse with a serious health condition, leave because of a qualifying exigency due to the employee’s same-sex spouse being on “covered active duty” and FMLA military caregiver leave for an employee who needs to care for a same-sex spouse who is a “covered servicemember” or “covered veteran.” Be sure to look at the state where the employee resides when determining whether same-sex marriage is deemed lawful and recognized for FMLA purposes. If you use an FMLA tracking mechanism, make sure the system properly tracks for same-sex spousal leave. As always, train your managers, supervisors and human resource professionals on this change in FMLA benefit coverage.