Category Archives: Labor Law

June 26, 2023

Religious Accommodation: SCOTUS Approaching Decision on Title VII ‘Undue Hardship’ Standard

Steven Gutierrez

On April 18, 2023, the U.S. Supreme Court heard oral arguments in a case involving a former U.S. Postal Service (USPS) worker who was denied a religious accommodation to observe his sabbath. The broad implications of a decision that favors the former worker could change the analysis for employers when assessing employee requests for religious accommodations.

Background

Gerald E. Groff is an evangelical Christian who began working at the USPS in 2012. In 2013, the USPS contracted with Amazon to deliver packages on Sundays. Read more >>

January 10, 2023

End of Year Federal Employment Law Update: 2022

Jordan Walsh

By Jordan Walsh

In 2022, there were some impactful, but relatively quiet developments in federal employment law. These developments affect confidentiality, non-disparagement, and arbitration agreements, and create protections for pregnant and nursing employees. Employers are encouraged to consult with legal counsel regarding these changes to ensure their compliance with these changes.

1. No Mandatory Arbitration of Sexual Assault or Sexual Harassment Claims:

On March 3, 2022, President Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, (2021-2022) (the “Act”), into law. The Act amends the Federal Arbitration Act by rendering all pre-dispute arbitration agreements and pre-dispute joint action waivers entered into on or after March 3, 2022 invalid and unenforceable in the context of sexual assault disputes[1] and sexual harassment disputes[2]. H.B. 4445 § 402(a). Instead, the Act leaves it up-to the claimant to elect to arbitrate such claims; the claimant may not be compelled to arbitrate sexual assault and/or sexual harassment claims. Id.

The Act applies to all claims of sexual assault and harassment, regardless of whether the matter is brought under state, federal, or local law. Additionally, the Act expressly provides that regardless of whether an arbitration agreement authorizes an arbitrator to make a determination of arbitrability concerning claims arising under the agreement, a court, not an arbitrator, has the authority to determine the enforceability of an agreement in the context of the Act. Id. at § 402(b). Read more >>

September 23, 2021

California Employers in Limbo Again on Mandatory Arbitration

Ninth Circuit Upholds AB 51, More Litigation Anticipated

By Dora Lane

Dora Lane

For years, California has looked for ways to preclude employers from requiring that employment disputes be resolved through arbitration and/or placed obstacles to the enforcement of arbitration agreements. In yet another effort to do so, in 2019 the California Legislature enacted AB 51, which makes it unlawful for employers to require that, as a condition of employment, continued employment, or receipt of an employment-related benefit, any applicant or an employee waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act or the California Labor Code, “including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.” AB 51 also makes it unlawful to threaten, retaliate, terminate, or discriminate against an applicant or employee because they refuse to consent to such a waiver. Prevailing plaintiffs can obtain injunctive relief, other remedies, and attorney’s fees. Read more >>

January 14, 2020

Summary of California Employment Law Changes for 2020

by Dora Lane and S. Jordan Walsh

Dora Lane

AB 5 (Codifies the “ABC” Test for Contractor Status)

AB 5 codifies the “ABC” Test for determining contractor status which was adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. Under the “ABC” Test, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the employer
demonstrates that all of the following conditions are satisfied:

The worker is free from the control and direction of the employer in connection
with the performance of his or her work—both in contract and in fact;
The worker performs work that is outside the usual course of the employer’s
business; and
The worker is customarily engaged in an independently established trade,
occupation, or business that is of the same nature as the work being performed.

S. Jordan Walsh

Subject to specific exceptions from the definitions of “employee” in the appropriate context, AB 5 applies to claims rooted in: (1) the California Labor Code, (2) California Wage Orders, (3) the California Unemployment Insurance Code, and effective July 1, 2020
(4) the Workers Compensation Code.

There are a number of industry-specific exceptions to AB 5, which must be evaluated on a case-by-case basis. Independent contractors who are members of these industries and meet certain conditions are exempted from AB 5. The bill also exempts business-to-business contracting relationships from the ABC Test if specified conditions are met.

If the ABC Test requirements do not apply to the particular situation, then the employee vs. independent contractor status will be determined by using the multi-factor test articulated in S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d
341 (1989).

February 14, 2019

U.S. DOL Eases Restriction on Tipped Employees

Katarina Harris

By Katarina Harris

Employers in the hospitality industry have long struggled to follow U.S. DOL guidance limiting circumstances under which they may take a “tip credit” toward their employees’ federal minimum wage. New U.S. DOL guidance eases that restriction.

DOL Opinion Letter Retracts “80/20 Rule”

In a new opinion letter released November 8, 2018, the U.S. Department of Labor (DOL) decided to eliminate the “80/20 Rule” which had previously limited employers’ ability to take a “tip credit” toward their employees’ federal minimum wage. This retraction comes as a relief to many employers in the hospitality industry, as the previous rule effectively required employers to track and account for the time their employees spent on non-tipped tasks, such as rolling silverware, filling salt-shakers, and other types of daily “side work.” Under the 80/20 Rule, an employer could not take a tip credit for non-tip-generating duties performed by a tipped employee if the amount of time spent on such duties exceeded twenty percent of the employee’s overall work. Tracking and monitoring this time was a tedious and difficult task for employers, resulting in higher risk from wage and hour lawsuits.

“Dual Job” and “Dual Task” Rules Sowed Confusion

Under the federal Fair Labor Standards Act (FLSA), employers must currently pay employees a minimum wage of $7.25 per hour. State wage and hour laws may impose different and higher minimum wage requirements. However, if an employee qualifies as a “tipped” employee under federal regulations, his or her employer may pay the employee just $2.13 per hour in cash wages and take a “tip credit” arising from the employee’s actual tips to cover the remainder of the federal minimum wage. This credit may total $5.12 per hour.

However, the FLSA distinguishes between tipped employees who perform non-tip-generating duties and those considered to have “dual jobs.” For employers, this distinction is critical to avoiding wage and hour lawsuits. If an employee is employed in both a tipped occupation (e.g., as a server), and in a non-tipped occupation (e.g., as a janitor), for the same employer, the employer may only take the tip credit for that employee’s work in the tipped occupation. For all work performed in the non-tipped occupation, the employer must pay the employee his or her federal minimum wage in cash wages.

The old 80/20 Rule took this functional distinction even further. It effectively distinguished between “dual jobs” and those involving “dual tasks.” Even if a tipped employee was not engaged in a “dual job”—for instance, if he or she worked solely as a server—the employer could still not take a tip credit for any work the employee performed which was related to, but not directed toward, producing tips—at least if the employee spent more than 20% of his or her time on such duties. This was the old 80/20 Rule.

Employers Found “80/20 Rule” Unworkable

Many employers found the old 80/20 Rule burdensome, if not completely unworkable. It effectively required employers to track tipped employees’ time spent on non-tip-generating duties. It also opened the door to wage lawsuits requiring detailed fact-finding in order to reconstruct exactly how much time, minute-by-minute, a tipped employee spent on particular tasks. Even worse, the rule did not specify which tasks were considered “related” to tip-generating occupations, as opposed to constituting distinct, non-tipped work. If a customer dropped silverware on the floor and asked a server for a new set, was the time spent rolling a new set of silverware related to tip-generating work? Would the answer be different if the server rolled extra sets of silverware at the beginning of his or her shift before the first customers arrived? Issues like these created a fertile field for litigation.

New DOL Opinion Letter Revives Old Guidance

In January 2009, the DOL issued an opinion letter which briefly rescinded the 80/20 Rule. However, the DOL retracted this rescission just two months later after a new administration came into office. The 80/20 Rule remained in force at all times thereafter.

In its November 2018 opinion letter, the DOL has now reissued its previous January 2009 guidance rescinding the 80/20 Rule. In this new letter, the DOL acknowledges that its previous guidance created some “confusion and inconsistent application” of the tip credit. The letter also quotes a federal circuit court’s observation that, under the old 80/20 Rule, “nearly every person employed in a tipped occupation could claim a cause of action against his employer if the employer did not keep perpetual surveillance or require them to maintain precise time logs accounting for every minute of their shifts.”

Given the practical difficulties caused by the 80/20 Rule, the DOL announced in its new opinion letter that the agency no longer “intend[s] to place a limitation on the amount of duties related to a tip-producing occupation that may be performed” by a tipped employee, at least if such non-tipped duties are performed “contemporaneously with the duties involving direct service to customers.” The related, but non-tip-producing, duties may also be performed “for a reasonable time immediately before or after” a tipped employee performs his or her direct-service duties without imperiling the credit. For employers, this means no more logging, tracking, and monitoring tipped employees’ daily activities.

The DOL’s new letter also acknowledges the need to provide front-end guidance to employers on which duties are entirely unrelated to tip-producing occupations, and thus not subject to the tip credit. To this end, the letter references a list of “core” and “supplemental” duties for certain tip-producing occupations provided by the Occupational Information Network (O*NET). Employers may consult this list to determinine whether certain tasks are related to tip-producing occupations, in which case they are subject to the tip credit. Conversely, employers may not take the tip credit in relation to any duties which do not appear on this list, unless they are very minimal in duration (i.e., “de minimis”)

Greater Clarity for Hospitality Employers

Although additional uncertainties regarding the tip credit may persist into future—e.g., what is a “reasonable time” immediately before or after a tip-producing activity for purposes of related duties?—the DOL’s new opinion letter provides much-needed guidance to employers in the hospitality industry. Employers need no longer track time spent on tip-producing versus “related” tasks in order to claim the tip credit. Nonetheless, hospitality employers should remain vigilant in distinguishing between “dual jobs,” and those with “dual tasks,” because any time spent in non-tipped occupations remains ineligible for the tip credit. When in doubt, employers should consult experienced employment law counsel for additional guidance.

August 30, 2018

Mark Gaston Pearce Nominated for Another NLRB Term

Steven Gutierrez

By Steve Gutierrez

Late on August 28, 2018, President Trump nominated Mark Gaston Pearce to serve another term on the National Labor Relations Board (NLRB or Board). Pearce was appointed to the Board in 2010 by then-President Barack Obama for a partial term. He then served a full five-year term from 2013 until this week. Due to the expiration of Pearce’s term on August 27, 2018, the Board currently sits at four members, rather than the full five-member contingent.

As with all Board nominations, the Senate must vote to approve Pearce’s nomination before he may begin to serve a new five-year term. As a former union attorney, Pearce may face some opposition from management groups that see him as too pro-union. But the make-up of the five-member Board is traditionally comprised of three members who align with the president’s political party, in the current case, Republican, with the remaining two members aligning with the minority party. Currently, the three Republican members are Chairman John Ring, William Emanuel, and Marvin Kaplan. The lone Democrat, at least until Pearce or another person is confirmed, is Lauren McFerran whose term expires on December 16, 2019.

With the Board revisiting many hot button issues, such as joint-employer status and the use of an employer’s e-mail system for union activities, the Board members wield significant influence on workplace policies and potential employer liability for both union and non-union employers alike. We will keep you informed on Pearce’s confirmation as well as any other Board developments.

August 2, 2018

NLRB Revisiting Use of Employer E-Mail Systems

Steven Gutierrez

By Steve Gutierrez

On August 1, 2018, the National Labor Relations Board (NLRB or Board) issued an invitation for interested parties to file briefs on whether the Board should change or overrule its 2014 decision in Purple Communications, Inc., 361 NLRB 1050. In that case, the Board ruled that employees who already have access to an employer’s e-mail system at work may use that e-mail system during non-working time for Section 7 communications. In other words, employees may send e-mails to their co-workers related to union organizing and concerted activities related to wages or other terms and conditions of employment via their company’s e-mail system.

The Purple Communications decision had overturned an earlier ruling in Register Guard, 351 NLRB 1110 (2007) which held that facially neutral employment policies restricting employees’ use of their employer’s e-mail system did not violate the National Labor Relations Act merely because the policies might have the effect of limiting the use of those systems for union-related communications. The Board is now considering a case that will permit it to reconsider the use of an employer’s e-mail system by employees for Section 7 purposes. In fact, the Board also seeks comments on the appropriate standard for the Board to evaluate policies that govern the use of other employer-owned computer resources, not just e-mail.

NLRB Chairman John Ring and NLRB members Marvin Kaplan and William Emanuel issued the Notice and Invitation to File Briefs over the dissent of the other two Board members, Mark Gaston Pearce and Lauren McFerran. Those wishing to file an amicus brief must submit it on or before September 5, 2018.

June 27, 2018

SCOTUS Deals Huge Blow to Government Unions

Steven Gutierrez

By Steve Gutierrez

In a 5-to-4 decision, the U.S. Supreme Court ruled that government employees who choose not to join a union cannot be forced to pay agency fees to the union. In so ruling, the Court overturns its 1977 ruling in Abood v. Detroit Board of Education which has permitted public sector unions to charge non-members a fee equivalent to union dues to cover the costs of collective bargaining, contract administration, and grievances. Janus v. AFSCME, 585 U.S. ___ (2018).

Free Speech Violated

Illinois state employee Mark Janus challenged paying agency fees to the union that represents the Illinois government employees. He alleged that he opposes many of the positions taken by the union, including positions advanced through collective bargaining. Janus argued that being forced to pay agency fees, which was authorized by Illinois law and consistent with Abood, violated his First Amendment right to free speech.

Five members of the high court agreed. In a decision written by Justice Alito, the majority ruled that “[t]he State’s extraction of agency fees from nonconsenting public-sector employees violates the First Amendment.” The Court overturned Abood, stating that neither of the two justifications for agency fees can survive First Amendment scrutiny.

First, the Court stated that the justification that agency fees promote labor peace does not pass muster. The majority pointed to the Federal Government and 28 states with laws that prohibit agency fees as evidence that conflict and disruption in represented government workforces is unfounded and “labor peace” can be achieved through less restrictive means than the assessment of agency fees.

Second, the majority dismissed the “free rider” argument that previously supported Abood. Specifically, unions argued, and the Abood Court agreed, employees who choose not to join the union without paying fees become “free riders” because as the exclusive representative for that group of employees, the union is required to represent even the non-members in collective bargaining and enforcing the terms of the collective bargaining agreement. In Janus, the Court stated that the “free rider” concern could not overcome the First Amendment issues. It again pointed to jurisdictions where agency fees are outlawed to state that unions continue to be willing to represent government employees there, despite the lack of agency fees being charged to non-members. The Court concluded that “Abood was wrongly decided and is now overruled.”

Strong Dissent

Justice Kagan wrote a strongly worded dissent, which was joined by Justices Ginsburg, Breyer, and Sotomayor. She wrote that “judicial disruption does not get any greater than what the Court does today.” The dissenting Justices see no justification for reversing Abood and its 41 years of precedent, finding that it has proved workable and is relied upon in at least 20 states that have created statutory schemes built upon its holding. The dissent stated that Abood struck an appropriate balance between public employees’ First Amendment rights and government entities’ interests in operating their workplaces with public employees paying their fair share of the cost of their union negotiating over the terms of their employment.

Practical Effect of Janus Ruling

The Court held that states and public-sector unions may no longer charge agency fees to non-member employees. In addition, it ruled that “neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay.” The Court stated that by agreeing to pay through an opt-in, nonmembers are waiving their First Amendment rights and “such a waiver cannot be presumed.” This is a big change in practical terms as it requires that employees who are union members must opt-in to having union fees deducted from their pay, instead of the previously acceptable opt-out option.

The loss of revenue from existing non-members and the potential loss of members who no longer want to pay is a huge blow to public-sector unions. By law, unions must provide fair representation to everyone in a bargaining unit, whether union members or not. Unions now will have to convince employees in their bargaining unit to pay union dues or agency fees voluntarily. The change is sure to affect the resources and viability of public-sector unions in this country.

Private Sector Unions Not Affected – Yet

Because free speech rights under the First Amendment exist to protect citizens from government actions, the Janus decision applies only to public-section unions and non-member employees. Unions representing employees in the private sector will not be subject to this ruling. That said, opponents of unions and mandatory agency fees will likely look for arguments to attack private sector unions in the future. The Court’s positions may be used to promote enactment of right-to-work laws in those states that do not currently have such laws.

March 20, 2018

Settlements Reached in Joint-Employer Case That Could Have Affected Franchisors Nationwide

Steven Gutierrez

By Steve Gutierrez

Franchisor McDonald’s USA LLC has agreed to settle the high-profile labor disputes over whether it is a joint employer with its franchisees. Although the settlement still needs to be approved by the administrative law judge overseeing the litigation, McDonald’s and its franchisees negotiated settlement agreements with the National Labor Relations Board (NLRB) to settle allegations of unfair labor practice charges without admitting liability or wrongdoing. In doing so, McDonald’s avoids prolonged litigation and a potentially adverse decision that would have had sweeping ramifications for franchisors and their franchisees nationwide.

Protracted Litigation Over Joint-Employer Status

In 2012, multiple McDonald’s employees filed unfair labor practice charges against their employer, seeking to improve their working conditions. In 2014, former NLRB General Counsel, Richard Griffin, approved filing dozens of unfair labor practice complaints against the larger franchisor, McDonald’s USA, under a theory that McDonald’s USA is a joint employer of the employees of McDonald’s franchises. By pursing the franchisor, the 2014 NLRB signaled that it was attempting to hold the larger, nationwide entity responsible for treatment of its franchisees’ employees.

McDonald’s USA, along with many restaurant, industry, and employer groups, vigorously objected, arguing that a franchisor is not a joint employer with its franchisees and therefore, cannot be held liable for any labor law violations made by a franchisee. The joint-employer test at the time was based on whether the putative employer exercises direct control over the employees and McDonald’s USA argued that it did not exercise such control over its franchisees’ employees.

In 2015, the NLRB issued its controversial decision in Browning-Ferris Industries that significantly broadened the joint-employer test so that an entity could be deemed a joint employer if it reserved contractual authority over some essential terms and conditions of employment, allowing it to have indirect control over the employees. (See our post here.) Under that expanded test, McDonald’s USA faced higher scrutiny from the NLRB as to whether it was a joint employer and whether it retained some indirect control over the employees of its franchisees.

Due to changes in the makeup of the NLRB under the Trump Administration, as well as a new NLRB General Counsel, the NLRB has sought to reverse Browning-Ferris Industries and return to the former joint-employer test that required direct and immediate control. In December 2017, the NLRB overturned Browning-Ferris in its Hy-Brand decision, only to have to vacate Hy-Brand in February 2018 because new Board member William Emanuel should not have participated in that decision. As a result, the 2015 Browning-Ferris joint-employer test is still the standard used to determine joint-employer status under the National Labor Relations Act.

Leaving The Status Quo on Joint-Employer Status – For Now

By settling these cases, both McDonald’s USA and the current NLRB avoid having to litigate and have a judge rule on whether franchisors like McDonald’s can be deemed a joint employer under the current Browning-Ferris test. Although the Board (and Congress) continue to seek to overturn Browning-Ferris, the McDonald’s settlement will push the issue down the road to another day.

According to the NLRB’s March 20, 2018 announcement, the settlement will provide a full remedy for the employees who filed charges against McDonald’s, including 100% of backpay for the alleged discriminatees. The settlement also will avoid years of potential additional litigation.

Take Aways

Franchisors, staffing companies, and other entities who have some contractual authority or obligations related to employees of a second entity need to use caution to ensure that the second entity complies with all applicable labor laws. With the broad Browning-Ferris test in place, entities with reserved contractual control or indirect control of another entity’s employees may be found to be a joint employer under the NLRA. This could open the door to liability for labor law violations as well as union organization and collective bargaining obligations related to joint employees. If in doubt about your exposure, consult with an experienced labor attorney.

Photo credit: AP2013/Jon Elswick

December 14, 2017

NLRB Overturns Controversial Standards on Joint-Employer Status and Neutral Employment Policies; Questions Quickie Election Rule

By Steve Gutierrez

In a series of decisions that affect both union and non-union employers, the National Labor Relations Board (NLRB or Board) has overruled numerous controversial standards that had broadened the coverage of employee rights in recent years. On December 14, 2017, the Board returned the standard for determining joint-employer status to the pre-Browning-Ferris standard as well as walking back the standard for determining whether facially neutral employment policies infringe on employees’ section 7 right to engage in protected concerted activities. The return to more employer-friendly standards will help ease the risk of engaging in unfair labor practices under the National Labor Relations Act (NLRA). Here are the highlights of the new developments.

Joint-Employer Status Depends on Control

In its 2015 controversial decision in Browning-Ferris Industries, the NLRB significantly broadened the circumstances under which two entities could be deemed joint employers for NLRA purposes. In that case, the Board ruled 3-to-2 that Browning-Ferris Industries was a joint employer with a staffing company that provided workers to its facility for purposes of a union election because Browning-Ferris had indirect control and had reserved contractual authority over some essential terms and conditions of employment for the workers supplied by the staffing company.

Today, in a 3-2 decision, the now Republican-majority Board overruled Browning-Ferris, now requiring that two or more entities actually exercise control over essential employment terms of another entity’s employees and do so directly and immediately in a manner that is not limited and routine, in order to be deemed joint employers under the NLRA. This returns the joint-employer standard to the pre–Browning Ferris standard. Consequently, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine, will no longer be sufficient to establish a joint-employer relationship.

This doesn’t mean that the Board will no longer find two or more entities to be joint employers under the NLRA. In fact, in the current case in which it overturned Browning-Ferris, it applied the tougher standard and still ruled that two construction companies were joint employers and therefore jointly and severally liable for the unlawful discharges of seven striking employees. Still, the requirement that entities have direct control that is exercised over the workers in question is a more workable and beneficial rule for employers.

New Standard For Facially Neutral Policies

In recent years, the NLRB has ruled that many types of standard employee policies unlawfully interfered with employees’ section 7 rights. That scrutiny went back to the 2004 decision in Lutheran Heritage Village-Livonia which ruled that employer policies that could be “reasonably construed” by an employee to prohibit or chill the employees’ exercise of section 7 rights violated the NLRA, even if such policies did not explicitly prohibit protected activities or were not applied by the employer to restrict such activities. Consequently, a series of Board rulings deemed certain language in employer policies unlawful even when facially neutral on their face, including policies on confidentiality, non-disparagement, recording and video at work, use of social media and company logos, and other typical employment rules.

In its recent decision, the Board ruled 3-to-2 to overturn Lutheran Heritage Village-Livonia and its standard governing facially neutral workplace rules. The new standard for evaluating employer policies will consider: (1) the nature and extent of the potential impact on NLRA rights, and (2) legitimate justifications associated with the rule. To provide greater clarity for employers, employees, and unions, the Board announced that prospectively, it will categorize workplace rules into three categories depending on whether the rule is deemed lawful, unlawful, or warrants individualized scrutiny. This change should significantly relieve the uncertainty that has existed under the “reasonably construed” standard.

Quickie Elections Being Reconsidered

In another move to reverse recent Board rules, the Board published a Request for Information (RFI) asking for public input on the 2014 representation election rule that changed the process and timing of union elections. In particular, the Board seeks public input on whether the 2014 quickie election rules should be retained, changed, or rescinded. The deadline for submitting responses is February 12, 2018. This RFI signals that the quickie election rule could be on its way out.

Conclusion

We will continue to monitor these and other Board developments. If you have any questions or concerns about these changes and how they may affect your workplace, you should reach out to your labor counsel.