Category Archives: Utah

March 6, 2014

SOX Whistleblower Protection Extends to Employees of Private Contractors, According to Supreme Court

On March 4, 2014, the U.S. Supreme Court ruled that employees of private contractors and subcontractors who contract with public companies are protected under the whistleblower provisions of the Sarbanes-Oxley Act of 2002 (SOX). Lawson v. FMR LLC, 571 U.S. ___ (2014). The ruling means that private employers who have a contract with a public company may not retaliate against their employees who report a potential fraud. As pointed out in the dissenting opinion, the holding by the six-justice majority creates the potential for increased litigation as it offers private sector employees another avenue to bring retaliation claims. In addition, it implies private sector employers with such contracts may need to strengthen their corporate compliance and complaint procedures to discover and fix problems early.

Whistleblowers Reported Potential Fraud In Mutual Fund Operations

Two former employees of private companies that contracted to advise and manage mutual funds filed separate administrative complaints alleging retaliation under 18 U.S.C. §1514A, the whistleblower provision of SOX. The mutual funds themselves were public companies, but they did not have any employees. Instead, the funds contracted with private companies to handle the day-to-day operation of the funds, including making investment decisions, preparing reports for shareholders and filing reports with the Securities and Exchange Commission (SEC).

Jackie Hosang Lawson was the Senior Director of Finance for a private advisory firm that contracted to provide services to the Fidelity family of mutual funds. Lawson alleged that she suffered a series of adverse employment actions that resulted in her constructive discharge after she raised concerns about certain cost accounting methods being used with the funds. She alleged that she believed that expenses associated with operating the funds were being overstated.

The second petitioner, Jonathan M. Zang, was a portfolio manager for a different division of the company that advised Fidelity mutual funds. Zang alleged that he was fired after he expressed concerns about inaccuracies contained in a draft SEC registration statement concerning some of the mutual funds.

After pursuing their administrative complaints, both whistleblowers filed retaliation lawsuits under §1514A in federal court in Massachusetts. Their employers, collectively referred to as FMR, moved to dismiss the suits, arguing that §1514A only protects employees of public companies, and because FMR is a private company, neither plaintiff had a viable claim under §1514A. The District Court denied FMR’s motion to dismiss. FMR sought an interlocutory appeal to the First Circuit, which reversed, ruling that §1514A only refers to employees of public companies, not a contractor’s own employees. The Supreme Court agreed to hear the case to resolve a division of opinion on the issue. The question before the Supreme Court was whether the SOX whistleblower provision shields only those employed by a public company itself, or also shields employees of privately held contractors and subcontractors who perform work for the public company.

“Employee” Presumes an Employer-Employee Relationship Between the Retaliator and the Whistleblower

Section 1514A provides: “No [public] company . . ., or any officer, employee, contractor, subcontractor, or agent of such company, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of [whistleblowing or other protected activity].” FMR argued that the prohibition against retaliating against “an employee” meant an employee of the public company. The Court (in an opinion by Justice Ginsburg) disagreed. It looked at the provision as stating that “no . . . contractor . . . may discharge . . . an employee” and found that the ordinary meaning of “an employee” in that context was the contractor’s own employee. The Court stated that contractors are not ordinarily in a position to take adverse actions against employees of the public company for which they contract so to interpret the provision as FMR did would “shrink to insignificance the provision’s ban on retaliation by contractors.” The Court rejected FMR’s argument that Congress included contractors in §1514A’s list of governed parties only to prevent companies from hiring contractors to carry out retaliatory terminations, such as the “ax-wielding specialist” portrayed by George Clooney in the movie “Up in the Air.” The majority believed that Congress presumed that there must be an employer/employee relationship between the retaliating company and the whistleblower.

Purpose of SOX Supports Extending Whistleblower Protections to Employees of Private Contractors

The Court emphasized that SOX was enacted to safeguard investors in public companies and to restore trust in the financial markets after the collapse of Enron Corporation. The Court found that because outside professionals, such as accountants, lawyers and consultants, have great responsibility for reporting fraud by the public companies with which they contract, such employees of contractors and subcontractors must be afforded protection from retaliation by their employers when they comply with SOX’s reporting requirements. The fear of retaliation was a major deterrent to the employees of Enron’s contractors in reporting fraud. Consequently, the Court’s reading of §1514A extending whistleblower protection to the employees of private contractors is consistent with the purpose for which SOX was enacted.

Mutual Fund Industry Should Not Escape Ban on Retaliation

Because virtually all mutual funds are structured as public companies without any employees of their own, the Court expressed the need to protect the employees of the investment advisors who are often the only firsthand witnesses to shareholder fraud in the mutual fund industry. To rule otherwise, said the Court, would insulate the entire mutual fund industry from §1514A.

Dissent Worries About Opening the Floodgates to More Retaliation Claims

Justice Sotomayor, joined by Justices Kennedy and Alito, dissented from the majority, believing that the Court’s holding creates an “absurd result” that subjects “private companies to a costly new front of employment litigation.” According to Sotomayor, the Court’s ruling means that any employee of an officer, employee, contractor or subcontractor of a public company, including housekeepers, nannies and gardeners, can sue in federal court under §1514A if they suffer adverse consequences after reporting potential fraud, such as mail fraud by their employer’s teenage kids. The majority dispels this concern, stating that there is “scant evidence that [this] decision will open any floodgates for whistlelowing suits outside §1514A’s purposes” given that FMR did not identify a single case in the past decade in which an employee of a private contractor had asserted a §1514A claim based on anything other than shareholder fraud. Still, the dissent believes that only employees of a public company should be protected from retaliation for whistleblowing activities under §1514A.

Private Employer Take-Aways

Despite the majority’s reassurances that employers will not see a substantial increase in new whistleblower retaliation cases, only time will tell if they are right. Private employers who contract with public companies should review their employment policies to ensure that employees are protected from retaliation as a result of reporting concerns or unlawful activities involving the public companies with whom they do business. Employers also should train their managers, supervisors and human resources professionals on this new development so that decision-makers do not inadvertently expose their company to the risk of a whistleblower retaliation claim under §1514A.

Click here to print/email/pdf this article.

March 5, 2014

NLRB GC Identifies Initiatives and Policy Concerns

By Steve Gutierrez

Richard Griffin, General Counsel for the National Labor Relations Board (NLRB) recently issued a memorandum that identifies his initiatives and the areas of labor policy and law that are particularly concerning to him. The memo informs the NLRB regions which cases must be submitted to the Division of Advice at the Board’s Washington, D.C. headquarters so that the General Counsel’s office may “provide a clear and consistent interpretation of the [National Labor Relations] Act.”

The list of mandatory advice cases is split into three categories: (1) matters that are particularly concerning to the General Counsel and involve his initiatives; (2) cases involving difficult legal issues that are relatively rare in the regions and issues where there is no established precedent or the law is changing; and (3) cases that have traditionally been submitted to headquarters for legal advice. A look at the issues identified in the first two categories provides employers with useful insight into areas that will be targeted for further legal scrutiny and possible reversal of existing labor precedent.

General Counsel Initiatives and Issues of Labor Policy Concerns

GC Griffin points out a dozen labor issues that are top initiatives for him, including the following:

The applicability of Weingarten rights in non-unionized settings. (Weingarten rights provide union employees the right to have a union representative present during an employer’s investigation interview that could result in disciplinary action against the employee. In 2004, the NLRB ruled that non-union employees are not entitled to have a representative present during such meetings. IBM Corp., 341 NLRB 1288 (2004)).
Whether employees have a right to use an employer’s e-mail system for union-related communications and the standard concerning discriminatory enforcement of company rules and policies. (In 2007, the NLRB established a narrow standard for discrimination regarding company rules about solicitation and communications, ruling that an employer could make distinctions in its rules that might adversely affect employees’ NLRB Section 7 rights so long as the policies (and enforcement of the policies) did not discriminate along union-related lines. Register Guard, 351 NLRB 1110 (2007)).
Whether a “perfectly clear” successor must bargain with a union before setting the initial terms of employment. (The NLRB takes the position that in cases when it is obvious that a new employer that acquired a unionized workplace will retain all of the employees in the bargaining unit, the successor employer is obligated to bargain even over the initial terms of employment – the so-called “perfectly clear” exception.)
Whether an employer violates the NLRA when it acts with an unlawful motive in hiring permanent strike replacements. (Under NLRB precedent going back to 1964, the employer’s motive for replacing economic strikers is essentially irrelevant. Hot Shoppes, 146 NLRB 802 (1964). The GC is likely looking for an appropriate case to overrule this long-standing decision so that an employer’s desire to defeat the economic strikers’ rights to reinstatement will be deemed unlawful.

Additional issues that are on the GC’s list include cases where the possible remedies for unfair labor practices related to an organizational campaign include access to nonwork areas, access to the employer’s electronic communications systems and equal time for the union to respond to captive audience speeches.

Difficult Labor Issues or Cases Without Clear Precedent

Griffin also instructs the regions to submit to headquarters cases that involve difficult legal issues or those without clear, established legal precedent. Some of those issues include:

Mandatory arbitration agreements with class action waivers not resolved by D.R.Horton
Cases involving “at-will” provisions in employer handbooks that are not resolved by existing advice memoranda.
Cases concerning undocumented workers where the issues are unresolved.
Union access to lists of employee names and addresses during an organizing campaign where the employees are widely dispersed or have no fixed work location.
The validity of partial lockouts.
Cases involving novel conduct, such as excessive use of loudspeakers, coordinated “shopping” or corporate campaigns.

Don’t Be The Precedent Setting Case

Employers should review and become familiar with the GC’s list of priority issues. If any of the noted issues arise in your workplace, you’d be wise to consult with legal counsel early on because if the NLRB gets involved, the regional directors and officers will be forwarding your case to Washington for advice from the GC’s office. Proper handling of the matter from the start may help avoid your case being the conduit for the GC to establish new precedent that furthers his initiatives.

A copy of the memorandum may be found here.

Click here to print/email/pdf this article.

February 20, 2014

EEOC Challenges Separation Agreements

By Mark Wiletsky

If you use standard separation agreements to secure a release and waiver of claims from employees who are laid off, fired, or who otherwise threaten a claim, you might want to review your agreement. In a lawsuit filed recently in Illinois federal court, the EEOC alleges that a company with national operations interfered with its employees’ right to file charges with the EEOC and state fair employment practices agencies by conditioning the employees’ receipt of severance pay on signing an overly broad separation agreement.

According to the EEOC, five separate paragraphs (which are commonly found in separation agreements) are improper:

Cooperation: Employee agrees to promptly notify the Company’s General Counsel by telephone and in writing if the employee receives a subpoena, deposition notice, interview request or other process relating to any civil, criminal or administrative investigation or suit.
Non-Disparagement: Employee will not make any statements that disparage the business or reputation of the company or any of its officers or employees.
Non-Disclosure of Confidential Information: Employee agrees not to disclose to any third party or use for him/herself or anyone else Confidential Information without the prior written authorization of the company.
General Release of Claims: Employee releases company for any and all causes of action, lawsuits, charges or claims, including any claim of unlawful discrimination, that the employee may have prior to the date of the agreement.
No Pending Actions; Covenant Not to Sue: Employee represents that he/she has not filed or initiated any complaints prior to signing the agreement and agrees not to initiate or file any actions, lawsuits or charges asserting any of the released claims.

Disclaimer Allowing Workers to Bring Claims to the EEOC Not Enough

Recognizing that employers may not prevent workers from filing charges with the EEOC or participating in EEOC or state agency investigations, the paragraph containing the covenant not to sue contained a sentence stating “[n]othing in this paragraph is intended to or shall interfere with Employee’s right to participate in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws, nor shall this Agreement prohibit Employee from cooperating with any such agency in its investigation.” In its complaint, the EEOC says this disclaimer is insufficient as it is contained in only one of the paragraphs that contain limits on the employees’ rights.

What does this mean for employers?

It’s important to remember that the Court has not agreed with the EEOC’s allegations—and, in fact, it might reject them outright. Regardless, the risk of such actions is enough to justify a closer look at your standard separation or release agreement. Even an agreement that has been repeatedly reviewed and revised can likely be improved for clarity. Make sure the agreement is understandable, does not contain excessive “legalese,” and it should not contain provisions that interfere with an employee’s right to file a charge with the EEOC or state agency.

Click here to print/email/pdf this article.

February 19, 2014

Utah Rejects Multi-Employer Worksite Doctrine: General Contractor Not Responsible for Occupational Safety of All Workers on Worksite

By Cole Wist (formerly of Holland & Hart) and Trey Overdyke

In a significant break from federal rulings, the Utah Supreme Court recently rejected the multi-employer worksite doctrine as incompatible with the Utah Occupational Safety and Health Act (UOSH Act). Hughes General Contractors, Inc. v. Utah Labor Comm., 2014 UT 3. Generally, the multi-employer worksite doctrine makes a general contractor responsible for the safety of all workers on a worksite, including the safety of employees of subcontractors and other third parties. In rejecting the legal doctrine (which has developed under the federal Occupational Safety and Health Act (OSH Act)), the Utah Supreme Court held that Utah’s state occupational safety and health law regulates conduct between employers and employees and does not permit a general contractor to be held liable for the safety violations of a subcontractor.

General Contractor Appealed Safety Violations by Subcontractor

Hughes General Contractors oversaw a construction project at Parowan High School involving over 100 subcontractors. One of the subcontractors, B.A. Robinson, performed masonry work on the project. The Utah Occupational Safety and Health Division found that scaffolding used and erected in connection with the masonry work violated the UOSH Act. The UOSH compliance officer determined that Hughes was responsible for the safety conditions for B.A. Robinson’s employees under the multi-employer worksite doctrine. The Division cited and fined both Hughes and B.A. Robinson for the scaffolding violation.

Hughes contested the citation, arguing against the legal viability of the multi-employer worksite doctrine under the UOSH Act. An Administrative Law Judge upheld the citation under the doctrine and the Utah Labor Commission’s Appeals Board affirmed. The Appeals Board looked at the governing Utah statute, section 34A-6-201, found that it “mirrored its federal counterpart” and applied federal case law that recognized the multi-employer worksite doctrine to hold Hughes liable for the safety violations of a subcontractor. Hughes appealed to the Utah Court of Appeals which asked the Utah Supreme Court to decide the applicability of the multi-employer worksite doctrine under the UOSH Act.

Workplace Safety Obligations Extend Only to Employers under the UOSHA

Similar to its federal OSHA general duty clause counterpart, the UOSH Act requires each Utah employer to provide “a place of employment free from recognized hazards that are causing or are likely to cause death or physical harm to the employer’s employees and comply with the standards promulgated under this chapter.” Utah Code § 34A-6-201(1). At the trial level, the Utah Labor Commission read this provision broadly to extend the safety responsibilities to anyone with supervisory control over a particular worksite. The Utah Supreme Court instead interpreted this provision as focused on the employment relationship. The Court held that the duty to furnish a workplace free from recognized hazards and to comply with the UOSH Act standards is one that extends between employer and employee. The Court stated “the relevant control is not over the premises of a worksite, but regarding the terms and conditions of employment.” In determining whether an employment relationship exists, the relevant factors include the existence of covenants or agreements, the right to direct and control the employee, the right to hire and fire, the method of payment (i.e., wages versus payment for a completed job or project) and the furnishing of equipment.

Applying its analysis, the Court found Hughes was not an “employer” in connection with the work done by B.A. Robinson’s workers. B.A. Robinson was the sole employer involved in the masonry work and controlled the workers involved in the scaffolding problems that resulted in the citations. Hughes did not have any of the rights of control that would deem it an employer in connection with the work done by B.A. Robinson’s employees (e.g., no right to hire or fire, no payment of wages, etc.).

Utah Safety and Health Act Distinguished from Federal Law

Numerous federal courts have recognized the multi-employer worksite doctrine under the federal OSH Act. However, the Utah Supreme Court analyzed the structure of the federal OSH Act and found that it sets forth the duty to comply with certain safety standards in separate sub-sections of the statute. By contrast, the Court held that Utah law requires “each employer” to provide a safe workplace and to comply with promulgated standards in a single provision of the statute.

Second, the Utah Supreme Court distinguished its decision because of the lack of administrative deference that applied in interpreting Utah law. The Court noted that when federal courts resolve ambiguity in a statute, the courts look to the interpretation of the statute provided by the relevant federal agency and defer to the agency’s viewpoint as long as it is based on a permissible construction of the statute. The Court wrote that federal courts typically have not rendered an independent assessment of the meaning of the relevant OSH Act provision and instead have deferred to the federal agency’s regulation that construes the statute to allow for the multi-employer worksite doctrine. However, Utah has not adopted a similar standard of judicial deference to an agency’s resolution of a statutory ambiguity so the Court conducted its own independent determination to find that the Utah law did not allow for the multi-employer worksite doctrine.

Important Victory for General Contractors

It is unclear what broader impact this decision may have. For now it is a significant victory for general contractors overseeing projects in Utah. Time will tell if state courts in other occupational safety and health state plan jurisdictions will follow Utah’s lead in rejecting the multi-employer worksite doctrine. Should these courts flirt with the idea, they may find the Utah Supreme Court’s analysis to be a helpful road map. Further, it will be interesting to watch the impact this may have on the multi-employer worksite doctrine in federal OSHA jurisdictions. We will keep you posted on any new developments on this issue.

Click here to print/email/pdf this article.

February 7, 2014

NLRB Again Proposes Rules to Speed Union Elections

By John M. Husband

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.

Click here to print/email/pdf this article.

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

Click here to print/email/pdf this article.

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.

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 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.

July 29, 2013

The Battle Over Background Checks Continues — State AGs Accuse EEOC of “Gross Federal Overreach”

By Mark Wiletsky

Is it discriminatory if an employer does not hire anyone with a particular criminal conviction, regardless of that person’s race, gender, religion, or other protected characteristic? According to the EEOC’s April 2012 Enforcement Guidance, it might be. But in a July 24, 2013 letter sent to EEOC Commissioner Jacqueline Berrien and the four EEOC Board Members, nine state Attorneys’ General (AGs) disagree. The AGs chastise the EEOC for filing recent lawsuits against BMW Manufacturing Co., LLC and Dolgencorp (Dollar General), in which the EEOC alleges that these employers violated Title VII’s disparate impact prohibition by using a bright-line screening policy that rejected all individuals with past convictions in certain categories of crimes, such as murder, assault, reckless driving and possession of drug paraphernalia.

The letter then criticizes the EEOC’s April 2012 Enforcement Guidance on Arrest and Conviction Records, stating that the EEOC’s policy guidance incorrectly applies the law and constitutes an unlawful expansion of Title VII. The AGs argue that if Congress wishes to protect former criminals from employment discrimination, it can amend the law, but it is not the EEOC’s role to expand the protections of Title VII under the guise of preventing racial discrimination.

The Republican state AGs from Colorado, Montana, Utah, Kansas, Nebraska, West Virginia, Alabama, South Carolina and Georgia joined in this missive to say “enough is enough” on the EEOC’s background check lawsuits. Citing the burden on businesses to undertake more individualized assessments of an applicant’s criminal history, the AGs urge the EEOC to rescind its April 2012 Enforcement Guidance and dismiss the lawsuits against Dollar General and BMW. Not likely, but it may get the attention of federal lawmakers who may try to rein in the EEOC’s position on this issue.

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.

July 22, 2013

Myriad of Social Media Privacy Laws Create Havoc for Multi-State Employers

By Elizabeth Dunning

Does your company request that your employees and applicants provide user names and passwords to their personal social media accounts? Do you require applicants to log onto their online accounts in your presence so that you can view their content? Perhaps you ask employees to “friend” their supervisors. If you haven’t followed new developments in state employment laws, you may not realize that such activities are unlawful in some states. In just two years, eleven states have passed social media privacy laws that prevent employers from accessing employees’ and applicants’ personal online accounts. Each state law differs in certain respects, making it difficult for multi-state employers to adopt a uniform and consistent social media policy. To help sort things out, we highlight here the primary differences in the state social media privacy laws.

States with Workplace Social Media or Internet Privacy Laws

The eleven states that have enacted social media or internet privacy laws affecting employers to-date are: Arkansas, California, Colorado, Illinois, Maryland, Michigan, Nevada, New Mexico, Oregon, Utah and Washington. All but one of these states protect the access information for both current and prospective employees, with New Mexico only protecting the log-in information of applicants.

Differences in State Social Media Laws

Generally, all of these states prohibit an employer from requesting or requiring an employee or applicant to disclose his or her user name, password or other means of accessing his or her personal social media accounts. Many of these states also make it unlawful to discipline, discharge, discriminate against or penalize an employee, or fail to hire an applicant who refuses to disclose his or her access information to personal social media accounts. However, that’s where the uniformity in the laws generally ends. The following chart highlights numerous key differences between the state laws.

Legal Provision	States Recognizing Provision
Prohibits employers from requesting that employee add employer representative or another employee to his or her list of contacts (e.g., “friend”)	Arkansas, Colorado, Oregon and Washington
Prohibits employers from requesting employee to access his or her personal social media account in the presence of the employer (“shoulder surfing”)	California, Michigan, Oregon and Washington
Prohibits employers from requesting employee to change the privacy settings on his or her personal social media accounts	Arkansas, Colorado and Washington
Specifically permits employers to view and access social media accounts that are publicly available	Arkansas, Illinois, Michigan, New Mexico, Oregon and Utah
Exception when access required to comply with laws or regulations of self-regulatory organizations	Arkansas, Nevada, Oregon and Washington
Exception for investigations of employee violation of law or employee misconduct	Arkansas, California, Michigan, Oregon, Utah and Washington (Colorado and Maryland limit this exception to investigation of securities or financial law compliance)
Exception for investigation of unauthorized downloading of employer’s proprietary, confidential or financial data	Colorado, Maryland, Michigan, Utah and Washington
Inadvertent acquisition of personal log-in information while monitoring employer systems not a violation but employer not permitted to use the log-in information to access personal social media accounts	Arkansas, Oregon and Washington

As you can see, the differences in the laws exceed the similarities, making it difficult for an employer operating in more than one covered state to comply with all applicable provisions. Even the definition of covered social media accounts varies by state, creating even more inconsistencies.

Would a Federal Law Help?

With eleven laws in place and almost 20 additional states considering social media privacy bills, the issue seems ripe for a federal bill that would bring some uniformity to the protections offered to employees and applicants. In February 2013, the Social Networking Online Protection Act, which offers such workplace protections, was introduced into the U.S. House of Representatives. Unfortunately, it has languished in committee and is not expected to pass. In addition, a federal law on the issue will likely only simplify the web of state laws if it specifically preempts state law. Without federal preemption, we might face two sources of law on the issue, federal and state, which might muddy the waters even more. In any event, it does not appear that a federal law will be enacted before additional states enact their own laws, leaving employers to struggle with the variances in state law.

Best Practices for Complying with Social Media Privacy Laws

With the vast amount of information available on social media and the increased use of social networking platforms for business purposes, it is likely that most employers will at some point need to access or review content on an employee’s or applicant’s social media account. Perhaps it will be for an investigation of an employee who downloaded proprietary information or perhaps it will be to confirm derogatory statements about the company made by an employee. Whatever the reason, the first step is to recognize that these laws exist and you will need to review which, if any, apply to your company and/or the employee involved. Remember that you are generally free to access publicly available social media content. However, if one of these state laws applies, consult with legal counsel before accessing (or requesting access to) any personal social media accounts to determine what restrictions and exceptions are applicable to your particular circumstances.

Establish a social media policy specifying that employees are not permitted to disclose or post proprietary or confidential company information on their personal social media accounts. Make a clear delineation between company/business-related social media accounts where you control who speaks on behalf of your organization, and personal accounts where employees do not represent the views of the company. Be careful that your social media policy does not run afoul of the National Labor Relations Act by interfering with employees’ right to discuss their wages and working conditions in a concerted manner. Communicate your policy to your employees through normal channels, such as your employee handbook, online policy/intranet, etc.

Train your supervisors, managers and human resources staff on these laws. Sometimes supervisors or HR folks think it is acceptable to ask an employee to “friend” them online, or to ask for their log-in information to view pictures or other benign posts. Despite good intentions, company representatives could get you into legal trouble so advise them of these laws and your restrictions on requesting access to personal social media accounts.