Thursday, June 30, 2016

Discrimination Case Against UC Regents is Heading Back to Court

Karen Natividad

Opinion By Justice Aaron
Daily Appellate Report; June 22, 2016

In February 2010, Deborah Moore became the Director of Marketing at UCSD's Marketing and Communications Dept.  In June, Kimberly Kennedy became the Executive Director of the Department.  In early September, Moore was diagnosed with a heart condition and had to temporarily wear a "LifeVest."  Kennedy allegedly became "hostile" and "snippy" and began eliminating Moore's "main responsibilities" after becoming aware of Moore's medical condition.  This led Moore to believe that Kennedy was trying to get rid of her, which Kennedy eventually did on February 5, 2011, citing "lack of work" and budgetary constraints.  Moore sued the Regents of the University of California alleging disability and retaliation claims under, among other things, the Fair Employment and Housing Act (FEHA). The trial court ultimately granted summary judgment in favor of the defense.

Reversed in part and remanded. Under the three stage burden-shifting test for FEHA discrimination claims in McDonnell Douglas Corp. v. Green, the plaintiff has the initial burden to establish a prima facie case of discrimination.  If successful, the burden shifts to the employer to demonstrate that its  action was taken for a legitimate, non-discriminatory reason.  If sustained, the plaintiff may demonstrate that the proferred reason is false or pretextual.  Here, only the last step was in dispute. The trial court rejected Moore's proffer.  However, the timing of Moore's firing despite her "rapid ascension in the Department," Kennedy's belief that Moore was not healthy enough for the job, and Kennedy's failure to follow policies or procedures provided sufficient evidence from which the trier of fact could infer that the proferred reasons for Moore's termination may have been untrue or was a pretext for disability discrimination.  Hence, summary judgment on Moore's FEHA discrimination claim was improper.  The court likewise overturned the judgment as to her other claims with the exception of the FEHA retaliation claim.

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Bank of America Settles Wage and Hour Class Action for $2.25 Million

California Labor Law News 

Oakland, CA: Final approval has been granted for a proposed settlement in a California Wage and Hour Lawsuit against Bank of America alleging improper classification of some employees. The settlement, granted final approval on January 14 of this year, is worth $2.25 million.

According to court documents, plaintiff Zelma Brawner was an employee of the Bank of America in California for almost three decades at the financial institution’s back-office facility located in Concord. Brawner alleged in her California Wage and Hour class action that the defendant misclassified dedicated service directors (DSDs) as administrative employees - denying anyone working as a DSD overtime pay.

The DSD is a kind of personal concierge available to bank customers and clients, and according to the plaintiffs, “If the customer wishes to open a new account, close out an old account or inquire about the status of a transaction in an existing account, the customer can contact the DSD and expect a personalized and prompt response,” the employees said in the motion. “The Bank did not pay any overtime premium pay to the DSDs because it classified them as ‘administrative’ employees who are ‘exempt’ from the overtime protections set forth in Wage Order 4.”

In her California wage and hour lawsuit - first brought in June 2014 - Brawner cited no fewer than five violations to California wage and hour laws: failure to pay overtime wages, failure to provide accurate itemized wage statements, willful failure to pay all wages due within 72 hours after separation from employment, violation of California’s unfair labor law, and violation of the Labor Code Private Attorneys General Act.

The defendant, Bank of America, is reported to have denied the allegations, but agreed to the settlement as a pathway to avoid a costly and lengthy litigation.

In her summation granting final approval of the settlement, the judge in the case noted that “litigation poses risks and is expensive, and an evaluation of the strengths and weaknesses of the plaintiff’s and the defendant’s cases militates in favor of settlement,” Judge Yvonne Gonzalez Rogers wrote in the order granting final approval. “Second, the settlement treats class members fairly, allocating the money to them based on a formula weighted by their annual salary, estimated overtime hours and eligible workweeks.”

The settlement is reported to cover DSDs, treasury service consultants and senior treasury service consultants numbering 133 in total and having worked for Bank of America at the Concord facility from May 9, 2010 through January 14 of this year, the date at which the California Wage and Hour Settlement was formally approved.

Following dispensation for court costs, legal fees and other deductions, some $1.6 million will be available for class members according to the judge’s distribution template, noted above.

The case is Brawner v. Bank of America National Association, Case No. 3:14-cv-02702, in US District Court, Northern District of California.

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Wednesday, June 29, 2016

Denying Transgender Extern Use of Women’s Restroom Supports Failure-to-Hire Claim

By Kathleen Kapusta, J.D.

June 28, 2016

Allegations by a transgender woman that during her externship, her supervisor told her she could not use the women’s restroom and refused to allow her to participate in an examination of a female patient because “only females are allowed beyond this point,” and that the supervisor told others on the day before she was terminated from the externship that “he-shes . . . and gays will need to answer to Jesus some day” were sufficient to allow her Title VII and NYHRL failure-to-hire claims to survive dismissal. Because the plaintiff, however, was never actually the defendant’s employee, but rather an unpaid extern, her other discrimination claims were dismissed by the federal district court in New York (Carr v. North Shore – Long Island Jewish Health Systems, Inc., June 23, 2016, Seybert, J.).
Selected for the externship without an in-person interview, the plaintiff interviewed for a full-time position with the defendant prior to the start of the externship and was told that the successful completion of the program would result in a job offer. After she began her externship, she alleged that her supervisor consistently demeaned her in the presence of others, yelled at her numerous times, screamed “what is wrong with you,” and belittled her by making her package dog treats for a pet fair.
Use the public restroom. She also claimed she was repeatedly locked out of the bathroom used by female employees and that when she attempted to access it, she heard “chatter” and was subjected to “stares.” On one occasion, she alleged, after encountering a locked ladies room, she asked her supervisor why the bathroom was locked and was told “to use the public restroom, and not the restroom designated for the female employees in the unit where she served as an extern.” She also claimed that prior to the examination of a female patient, she was “left behind a closed door” and told by her supervisor that “only females were permitted beyond this point.”
Answer to Jesus. About a month after she started the externship, she alleged that her supervisor asked about her religion and when replied that she belonged to a church that “catered to alternative lifestyles,” her supervisor told her Jesus did not recognize such a religion. Later that day, she purportedly overheard her supervisor telling a patient’s mother that her church was “not a religion that is recognized by Jesus and people like her, and the he-shes, . . . and the gays will need to answer to Jesus some day.” The following morning, she received an email asking her not to return to the externship.
Claiming that it was the defendant’s custom and practice to offer permanent positions to externs upon successful completion of the program, she sued under Title VII and the NYHRL alleging it failed to hire her based on sex and religion.
“I’m not sure.” The court first rejected the defendant’s contention that the plaintiff’s allegations should be dismissed as “speculative” because she questioned in her final email to the defendant whether or not she was fired because of her gender, stating “was it my Gender, I’m not sure.” Whether or not she subjectively believed at the time she was terminated that she was the victim of discrimination was not dispositive with respect to the element of intent, said the court.
Failure to hire. As to her allegation that the defendant failed to hire her because of her gender, her second amended complaint provided enough circumstantial evidence of discriminatory intent to allow her claim to survive the defendant’s motion to dismiss. Although much of the alleged conduct lacked a tangible link to a discriminatory purpose, her claims that her supervisor made specific negative comments about her gender on three separate occasions together with the fact that she was terminated the day after the supervisor made her last comments about her gender and religion were sufficient to allow her failure to hire claims to proceed to discovery, said the court, denying the defendant’s motion to dismiss in part.

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U.S. Supreme Court Refuses to Hear Home Care Case

DOL home care rule stands in wake of petition denial

By Pamela Wolf, J.D.
June 28, 2016
The Supreme Court has declined to take up a challenge to the Labor Department’s revised domestic worker regulations that extend FLSA minimum wage and overtime protections to home care workers, leaving the final rule in place. On June 27, the Court denied the petition for certiorari in Home Care Association of America v. Weil (Dkt. No. 15-683), as well as several other petitions filed in labor and employment cases.
Home care rule. In Home Care Association of America, the D.C. Circuit upheld the so-called home care rule, despite a district court’s earlier conclusion otherwise. The questions that the Justices have declined to address are whether:
  • The Court intended in Long Island Care at Home, Ltd. v. Coke to allow the DOL to deprive all third-party home care employers (who employ more than 90 percent of all home care employees) of their statutory right to avail themselves of FLSA exemptions to overtime.
  • The D.C. Circuit erred in finding that Congress intended to exclude employees of third-party employers from the home care exemptions, thereby conflicting with Coke’s contrary reading of congressional intent and creating a conflict among the circuits.
  • The DOL’s new rule should be found to be unreasonable due to the agency’s failure to meaningfully address the relevant factors of unaffordability and lack of adequate state funding of the increased costs of home health care under the new rule.
Secretary of Labor Thomas Perez quickly issued a statement applauding the High Court’s decision not to take up the case: “Today’s decision by the court not to review a challenge to the Final Rule ensures that the rule can fulfill President Obama’s vision of an economy where hard work pays off and responsibility is rewarded. That will mean greater economic stability for so many hard-working people. For everything they do for our families, they deserve—and now they will get—a fair shot at being able to take care of their own. The final rule will also mean a more stable and professional home care workforce, benefitting consumers of these services and better meeting the needs of an aging population.”
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Monday, June 27, 2016

Proposed Bill to Establish Working Conditions for Indoor Workers in California

June 18, 2016

Sacramento, CA: We should know in a little more than a year what Cal-OSHA, the Division of Occupational Safety and Health for the state of California, comes up with in terms of proposals to regulate indoor working conditions with an aim to setting standards for workers who toil indoors.

Such a standard for outdoor workers has been on the books since 2005 - and regularly revisited - in an effort to protect outdoor farm and construction workers from the often intense heat and high sun associated with toiling out in the fields or within a hot construction site. Meal breaks and rest periods, the availability of water and the provision for shaded areas have all been aimed at avoiding heat exhaustion - or worse - heat-related deaths.

Now, Senator Connie Leyva (D-Chino) wants the same kind of standards for indoor workers. Leyva claims that employers such as Amazon, which boasts a climate-controlled and managed environment within its fulfillment centers, are actually in the minority.

Sun exposure within the context of an indoor working environment is not an issue. But temperature can be - either too hot or too cold, with the potential for stale air in both situations. The San Bernardino Sun (5/7/16) reports that in a 2011 survey of workers by Warehouse Workers United, a majority of respondents claimed that excessive heat and cold were a problem, with indoor temperatures reaching as high as 125 degrees Farenheit on occasion.

Critics of the proposed bill claim that such efforts would inhibit growth in the inland logistics industry and hurt the economy. But Leyva isn’t advocating that employers install expensive climate-control systems in their facilities.

Rather, she seeks a set of standards akin to those currently protecting outside workers. The timing of rest periods - and the frequency thereof - would be governed by temperatures in the building. Access to cold water would be another requirement, together with the availability of a climate-controlled “retreat area” to which a worker could retire for a few minutes for relief from excessive heat or excessive cold.

Leyva told the San Bernardino Sun that benchmarks are needed for even so-called “good” employers who advocate for their employees, and play by the rules. “Even good employers don’t have a standard - what kind of access to water, what is the acceptable temperature?” Leyva said in comments published by the San Bernardino Sun.

“The (Division of Occupational Safety and Health) would come up with and propose a standard,” Leyva continued. “I don’t believe they would say, ‘Put in a multimillion-dollar system.’”

Leyva’s bill calls for Cal-OSHA to come up with a set of proposals by July 1 of next year.

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OSHA Requires Hospitality Industry to Report Injuries Online, Allows Media to Report Bad Actors

By Valerie Butera
June 23, 2016
On May 12, 2016, the Occupational Safety and Health Administration (“OSHA”) published its long-awaited electronic recordkeeping rule (“final rule”). The final rule creates numerous new recordkeeping obligations and additional administrative burdens for hospitality and other employers. Many employers will now be required to submit injury and illness information to OSHA electronically. OSHA will then attempt to remove identifying information from the records and publish them on a searchable database on its website. The final rule also includes several new anti-retaliation provisions that provide new protections for employees reporting work-related injuries and illnesses.

The Basics

The final rule requires certain employers to electronically submit to OSHA the injury and illness information that they are already required to keep under existing regulations. Specifically, establishments with 250 or more employees that are currently required to keep injury and illness records must electronically submit information from OSHA Forms 300 (Log of Work-Related Injuries and Illnesses), 300A (Summary of Work-Related Injuries and Illnesses), and 301 (Injury and Incident Report). Establishments with 20 or more employees but fewer than 250 that conduct work in industries that OSHA considers highly hazardous must electronically submit information from Form 300A annually.
Importantly, hospitality is included in the list of industries that OSHA deemed highly hazardous. Entities within the hospitality industry subject to the requirements of the final rule include a laundry list of facilities, such as hotels, motels, casino hotels, hotel management services, health spas that offer accommodations, and tourist and motor lodges, just to name a few.
The final rule will be phased in. New anti-retaliation protections included in the final rule will become effective by August 10, 2016. All establishments required to submit electronic records must submit their annual Form 300A to OSHA by July 1, 2017. On July 1, 2018, establishments with 250 or more employees must submit Forms 300A, 300, and 301. Establishments deemed highly hazardous with 20–249 employees will continue to submit only Form 300A. Beginning in 2019, the submission deadline will change from July 1 to March 2. OSHA State Plans must adopt rules that are substantially identical to the final rule within six months of its publication.

Hospitality Employers’ Obligations to Employees

Hospitality employers must involve their employees in the injury and illness recordkeeping process by informing them of how to report a work-related injury or illness within the establishment and the procedure used by the employer to report such incidents to OSHA. Employers must establish “a reasonable procedure” for employees to report work-related injuries and illnesses promptly and accurately—that is, the procedure cannot have the effect of discouraging employees from reporting a workplace injury or illness. Accordingly, an employer must also inform employees that (1) they have a right to report work-related injuries and illnesses, (2) they will not be discharged or in any manner discriminated against for reporting work-related injuries and illnesses, and (3) the employer is legally prohibited from discharging employees or discriminating against them in any way for reporting a work-related injury or illness.

Hospitality Employers’ New Challenges and Concerns

The final rule presents numerous challenges and concerns for hospitality employers. First, OSHA has stated that it will use the information that it collects as employers comply with the rule to identify new bad actors—if an employer has a higher-than-average injury and illness rate, the chances of its establishment being visited by compliance officers will dramatically increase.
Second, although hospitality employers are required to submit the recordkeeping forms to OSHA on a secure web-based application, if the application is hacked, the personal information of countless employees could be exposed before OSHA has the opportunity to remove such information from the records. Once the forms are received by OSHA, the agency will “scrub” any personal identifiers from them and place them on a publicly available searchable database on OSHA’s website. This step also opens the door to an inadvertent disclosure of private employee information.
Third, the public exposure of work-related injury and illness information gives OSHA another avenue with which to continue its campaign of shaming employers that it believes are bad actors before they are able to defend themselves, as the press will have access to this information.
Fourth, the public dissemination of work-related injury and illness information will aid unions in targeting businesses for unionization—that is, unions will have unfettered access to the lists of businesses that have higher injury and illness rates and may, therefore, find employees more interested in becoming unionized.
Last, the final rule gives OSHA a new weapon against employers—broad discretion to issue citations if the agency considers any part of an employer’s procedures for reporting a work-related injury and illness to be “unreasonable.”
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Friday, June 24, 2016

Labor And Unions Can Agree On This: Congress Should Act On Immigration

Marilyn Geewax

June 23, 2016 

Businesses and unions often disagree on public policy.  But after the Supreme Court's tie vote on immigration Thursday, company executives and labor leaders united to call on Congress to settle the issue. 

The high court's 4-4 deadlock means President Obama's plan to defer deportation for millions of workers who are in the country without visas has been blocked.  A majority of justices would have been needed to overturn a lower court's ruling that Obama's plan was beyond the power of the executive branch.  But the Supreme Court stalemate did not establish a precedent, leaving the door open for lawmakers to step up.  Without the Obama policy on deportations in place and no comprehensive immigration plan completed by Congress, employers have been left confused about which workers might suddenly be deported.  "Congress must tackle the underlying issues that keep our system from working for our country and our economy," said Motorola Solutions CEO Greg Brown, speaking on behalf of the Business Roundtable. 

Business groups point to a 2013 study by Harvard's Center for Immigration Studies.  It said immigrants added $1.6 trillion to the annual U.S. gross domestic product.  And unions worry that without legal clarity, people working in the country without proper documents aren't able to assert their rights on the job, and that makes them more open to exploitation.  "This is far from over," Rocio Saenz, executive vice president of the Service Employees International Union, said in a statement.   To win immigration reform in Congress, "we will continue to mobilize voters to elect leaders – from the highest office to the down-ballot."  The administration had wanted to defer deportation for those who have lived in the U.S. for five years, have clean records and are the parents of children who are either U.S. citizens or legal permanent residents. 

At a briefing at the White House, Obama said the Supreme Court's tie vote brings "frustration to those who seek to grow our economy and bring a rationality to our immigration system."  Getting Congress to settle immigration questions has long been a top priority for the tech industry, which hires many foreign-born workers., a group of executives from companies like Google and Netflix, bemoaned the high court stalemate, and condemned congressional inaction.  "More than ever, Congress must step up and do its job to fix our badly broken system.  We will work tirelessly to ensure that they do," President Todd Schulte said in a statement. 

The White House Council of Economic Advisors issued a report in late 2014 that said the Obama approach to deportation would expand the labor force by nearly 150,000 workers and real GDP by $90 billion over a decade.  House Speaker Paul Ryan, called the Supreme Court tie "a win for Congress."  At a press conference, he said "the president doesn't write laws; Congress writes the laws."  AFL-CIO President Richard Trumka promised in a statement that to get Congress to act, "we will redouble our organizing efforts."  Noting that Congress also has not voted on Obama's Supreme Court nominee Merrick Garland, Trumka said deadlocked vote confirms "our systems are broken and will remain so until U.S. senators do their job." 

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Thursday, June 23, 2016

Uber Settlement Maintains Drivers are Contractors, not Employees

Tracey Lien
April 23, 2016
After a morning spent driving for Uber in his Huntington Beach neighborhood last October, James Welton returned from lunch to find he couldn't get back into the ride service app. Without warning, he'd been deactivated.
"I wasn't expecting it," said Welton, 44, who had been driving for Uber full-time for a month.
Uber was Welton's only source of income. How was he going to make rent? Pay the bills? Pay the loan on his car?
When he contacted Uber, the company told him his driver rating had fallen too low. His only reprieve was to take a $60 driver training class, and even then there was no guarantee he would be allowed back on the platform.
This week, as part of a $100-million class-action lawsuit settlement with drivers who sought to be classified as employees rather than contractors, Uber agreed to be more transparent in its discipline. The policy changes include alerting drivers if their rating falls, no longer terminating drivers without warning, and instituting appeal panels that consist of highly rated drivers. The San Francisco start-up, which is valued at $62.5 billion, also agreed to pay for an arbitrator to hear appeals not settled by the panels.
The move could prove useful to drivers like Welton who have been deactivated, and, according to plaintiff attorney Shannon Liss-Riordan, will make a "significant difference to drivers' livelihood and pay."
"I've been in touch with Uber drivers every day for the last three years, so I'm very aware of what their concerns are," she said. "That's why I'm proud of these non-monetary changes, in particular the parts regarding tips and termination."
If a judge approves the settlement, Uber drivers in California and Massachusetts could receive payments of $8,000 or more from the settlement, based on miles driven. In another concession, they will for the first time be able to solicit tips.
But the settlement does not change their employment status as independent contractors — meaning they will not receive any protections commonly reserved for employees, such as health insurance, expense reimbursement or overtime wages.
This has spared Uber and other companies in the on-demand economy the financial burden of offering benefits to their growing ad hoc workforces. But it has also left labor lawyers and on-demand workers wondering what this means for the future of workers' rights in the burgeoning gig economy.
He wishes, for example, that Uber would listen to drivers when they say fares are too low."Uber calls us partners, but we don't have any influence at all on policy, and I'd like to see that change," said Michael Goodman, 59, of Northridge, who has been driving for Uber since December 2014.
As part of the settlement, the company is helping drivers form an association that will meet with Uber management to air grievances. The association is not the same as a union, but Liss-Riordan said it is hoped to be an avenue through which drivers' voices are heard. Drivers will elect leaders who will meet quarterly with Uber management for "good faith" discussions.
It remains to be seen how effective the association will be in lobbying the interests of drivers. A bill introduced to the California legislature that would have given gig workers the right to organize was nixed this week after receiving strong pushback. Assemblywoman Lorena Gonzalez (D-San Diego), who introduced the bill, plans to bring it back next session.
From a legal perspective, Richard Reibstein, an attorney who heads up the independent contractor practice at law firm Pepper Hamilton, said the settlement is a huge victory for Uber because the company gets to keep the business model — the same model that made it one of the most valuable private companies in the world. He believes that most of the changes are cosmetic, and that the policies that affect drivers day-to-day — such as how fares are determined and how drivers should conduct themselves — still fall under Uber's control.
Since the settlement doesn't actually decide the case, the proper classification of Uber drivers as independent contractors or employees remains up in the air. This leaves a lot of questions, according to Todd B. Scherwin, a partner at law firm Fisher & Phillips, and a lot of room for more lawsuits."It's still very much 'Play by my rules if you want to be an Uber driver,'" Reibstein said. "This is very valuable to Uber, and well worth the $84 [million] to $100 million they're paying."
"Most other companies in the gig economy were hoping Uber would fight this thing all the way, win it, and give everyone peace of mind," Scherwin said. "So this leaves a lot of unsettled questions. Someone eventually is going to have to fight it and get a court ruling on it."
At the very least, the changes Uber implemented represent a new floor for worker protections in the gig economy, according to Steve Hirschfeld of law firm Hirschfeld & Kraeme, who advises on-demand start-ups in the Bay Area. In consulting with companies, he says many firms are already looking for ways to improve their relationship with workers in order to avoid costly litigation.
For Welton, Uber's changes come a bit too late. After he was deactivated last year, with no way to appeal the decision, he went looking another job. Uber might have the coffers to settle lawsuits. The smaller "Uber for food" or "Uber for laundry" start-ups do not.
He now drives for on-demand delivery company DoorDash. Like Uber, it also classifies its drivers as independent contractors. And it's also being sued.
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Employees May Soon Have the Right to Sue Their Employers Without Forced Arbitration

Alan pyke
may 26, 2016
Workers cannot be prohibited from bringing class-action lawsuits against their employers, an appeals court panel ruled Thursday, even if the boss makes them sign away that right in order to keep their job.
The case involves Epic Systems, one of the largest medical software companies in America. Founded in the late 1970s, the billion-dollar business only recently began making workers agree to so-called “forced arbitration” clauses in which they forswear their rights to go to court either individually or collectively.
By doing so, the judges found, Epic violated its workers’ federal labor rights to take collective action, making the clauses unenforceable.
The decision breaks a pattern of appeals courts repeatedly validating such forced arbitration clauses, bringing America closer to a reckoning over a deep and pervasive imbalance of power. Corporations of all kinds could soon lose their ability to tie the little guy’s hands and effectively guarantee they’ll never face serious legal challenges to potentially abusive business practices. In addition to Thursday’s rejection of arbitration clauses in the workplace, federal regulators are also working to annihilate them from all consumer finance products — the other major area of the law where they hold sway.
Epic is one of the titans of the digital medical systems industry. The Wisconsin-based company has enjoyed the kind of media buzz that's become cliche out in Silicon Valley: a lighthearted workplace culture with freewheeling, well-paid young staff that's revolutionizing the world for everyone else's benefit.
But the past couple years have been tough for Epic. It missed out on a multi-billion-dollar contract to build health records for the Pentagon and had another large deal with Veterans Affairs suspended recently.
And in late 2013, a group of workers sued the company demanding back pay and arguing they were eligible for overtime. At that point, Epic didn't require workers to waive their courtroom rights.
Epic only imposed its forced-arbitration clause for employees in April 2014, sending an email notifying workers that if they continued in their positions they agreed to be bound by the new contract conditions. Lewis' lawyers say he would have been fired if he had tried to refuse the arbitration clause. The firm later paid $5.4 million to settle the 2013 lawsuit that appeared to have prompted the new arbitration clauses now at issue in 2016.
Thursday's ruling doesn't necessarily mean the workers suing Epic today will get a similar payday. Their claims for overtime pay will ultimately hinge on a different corner of the employment law landscape, involving the exact nature of their duties and specific statutory language about what kinds of salaried workers do and don't have a right to overtime.
But even if Epic's writers do not ultimately score a big payday, they have already helped workers across the country. The legal ground underneath forced arbitration clauses just started to quake.
Until Thursday, American bosses were undefeated in the appeals court system on forced arbitration clauses with their workers, despite years of effort from the National Labor Relations Board (NLRB). The agency argues that taking away workers' right to sue as a class over workplace abuses is a direct violation of labor law, which protects collective action whether or not the workers have a union. But the past few years have been whack-a-mole: The board bangs a company for depriving workers of collective action rights through arbitration, the company appeals, and judges take the company's side.
By breaking that pattern on Thursday, the Seventh Circuit created a dispute within the appeals court system -- one of the very things the Supreme Court exists to address. The decision means that Epic can either yield and take the narrower questions of overtime law to court as Lewis wants, or ask the Supreme Court to vindicate their forced-arbitration clauses.
The outcome of such a high-court showdown over employment contract arbitration clauses is hard to guess. Some employment lawyers write derisively about the NLRB's legal argument that class-action suits are a protected form of substantive collective action. Analysts who are more friendly to labor interests see a lot of good reasons for the Supreme Court to validate the agency's interpretation of how labor and arbitration law intersect here.
And if the court were to take on the case before a ninth justice is seated, and come back in a 4-4 tie, then the Seventh Circuit ruling striking down employment arbitration clauses would carry the same precedential weight as the previous anti-worker rulings in other parts of the country. That would make it easier for the NLRB to keep going after bosses who threaten to take away somebody's job unless they sign away their right to go to court.
At the same time the legal system weighs the future of workplace arbitration rules, the Consumer Financial Protection Bureau (CFPB) is getting ready to wipe out the other main category of arbitration clauses. Sen. Elizabeth Warren's (D-MA) brainchild announced this month that it intends to outright ban forced arbitration language from all consumer financial products, from credit cards to checking accounts to nearly every type of loan a person can take out.
The CFPB's action alone would affect tens of millions of Americans. If combined with a potential unraveling of workplace arbitration rules, there could soon be a staggering rebound in the sheer number of people who stand a chance of exposing and punishing corporate wrongdoing.
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Tuesday, June 21, 2016

Senate Committee Hearing Examines Job Creation Under NLRB Joint-Employer Standard

By Joy P. Waltemath, J.D.

June 21, 2016
The Senate Committee on Small Business and Entrepreneurship held a hearing June 16 to examine the impact of the NLRB’s joint-employer standard on small businesses. According to Chair David Vitter (R-La), the committee has held numerous hearings this year “to highlight the need for regulatory reform in light of how federal agencies have issued new rules and regulations that cause undue burden on small businesses.”
In his published remarks, Vitter described the NLRB’s ruling in Browning-Ferris Industries that merely “indirect control” or even “unexercised potential” to control working conditions will now make two separate employers a joint employer. “This means that multiple employers will now have to jointly negotiate working conditions with unions and share liability for labor law violations,” he pointed out, noting that the ongoing litigation between McDonald’s and the NLRB over a joint-employer labor dispute is certain to have huge ramifications for many small businesses that operate as franchises.
“Despite the fact that franchisors are not responsible for hiring employees or even overseeing their day-to-day operations, they are still responsible for protecting the franchisee’s workers from any labor violations under the new standard that is being aggressively litigated by the NLRB’s General Counsel,” Vitter remarked, stressing the high level of uncertainty created by the NLRB’s decisions.
Franchise rule “Catch-22.” Testimony from Ms. Ciara Stockeland, Founder and COO, MODE, a discount retailer of designer fashions that operates under a franchise model, highlighted some of the challenges faced by franchisors under the joint-employer standard. She said that the Federal Trade Commission’s Franchise Rule requires her, as the franchisor, to exert significant control over her franchisees in order to qualify as a franchise and to ensure brand quality. The Franchise Rule operates in tandem with the federal Lanham Act, which requires persons holding a trademark to police and control third party licenses who are operating under the trademark (or brand name) to ensure brand consistency.
“Under these rulings, an action by a federal agency–such as the new joint employer standard–that prevents a franchise business from protecting its brand standards not only undermines the value of the owner’s trademark, it may also interfere with the small business owner’s ability to comply with the FTC’s Franchise Rule. Thus, on one hand, federal trademark law requires franchisors to protect their brand standards; but due to expanded joint employer policy, now federal labor law effectively prohibits franchisors from protecting their brand standards through any action or even potential action. What an extremely frustrating Catch-22 for small business job creators across the country.”
A modest decision. Mr. Keith R. Bolek, partner at the union-side law firm of O’Donoghue & O’Donoghue LLP, took issue with the hearing’s title: “The Challenge to Create Jobs under the NLRB’s New Joint Employer Standard.” He stated that the idea that the new standard will make it more difficult for small businesses to create jobs “is certainly not the case.” Rather, he characterized the Board’s decision as “a modest, carefully crafted decision that keeps pace with the evolving nature of employer and employee relationships.”
Not an attack on franchise model. More specifically, he called fears of the impact of the Board’s joint employer decision on various employer relationships other than the one at issue in that case “enormously overblown. The Board expressly stated that it was not addressing relationships such as contractor-subcontractor and franchisor-franchisee.” Bolek also pointed out that the General Counsel’s complaint against McDonald’s was made under the old joint employer standard because of evidence that “McDonald’s controlled the terms and conditions of employment for its franchisees’ employees to an extraordinary degree. Such control goes far beyond the typical franchisor-franchisee relationship.”
At the same time, Bolek emphasized that the General Counsel refused to issue a complaint involving the franchisor Freshii because it did not exert sufficient control over the terms and conditions of employment of the franchisee’s employees. “The differing treatment of McDonald’s and Freshii shows that the NLRB is not looking to upend the traditional franchise model, but to ensure that workers that choose to organize can meaningfully engage in collective bargaining where a franchisor decides to go beyond the traditional franchise model and exert control over the wages, hours, and working conditions of its franchisees.”
Business-to-business contracting at risk. Mr. James Sherk, a Research Fellow in Labor Economics at The Heritage Foundation, speaking on his own behalf, also testified at the hearing. Most of the media attention on the joint-employer standard has focused on its considerable implications for franchised businesses, he said, but his focus was on the equally large effect on non-franchise businesses. “This new standard will considerably impede business-to-business contracting,” he stressed, pointing out that the Board decision in Browning-Ferris itself had nothing to do with franchising but involved a standard businesses service contract. “Virtually all such contracts specify quality standards and prices. By law every company has potential control over another firm’s employees operating on their premises. The NLRB has ruled that these standard service contract provisions create a joint employment relationship. This will make business contracting significantly more difficult.”
Sherk suggested that the new joint-employer standard would undermine one of the major innovations in business management: the shift to having businesses focus on their core competencies and contract out for the services necessary to support these operations. “The NLRB’s new joint employer standard threatens all these business arrangements. ‘Indirect’ and ‘potential unexercised’ control are very vague and elastic terms that could encompass most business services contracts.” Consequently, businesses will no longer know whether contracting creates a joint employment relationship or not, Sherk pointed out, but if the NLRB decides it does, they will lose most of the benefits of business contracting, which he posited “will reduce American businesses’ competitiveness and their productivity.”
Threat to unionized contractors. Another point made by Sherk was that the new joint employer changes also threaten many existing unionized contractors, since the new doctrine “only has practical effects on contractors that are or may become unionized. It has little effect on businesses that hire non-union contractors. They would have no obligation to bargain over re-bidding their contracts. Nor would they have to engage in multi-employer collective bargaining negotiations. As long as employers do not do business with unionized contractors they do not risk semi-permanent entanglement with them. This will strongly incentivize firms to hire only non-union contractors, and to change contractors if they suspect their current contractor may unionize,” Sherk concluded.
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Friday, June 17, 2016

Microsoft Opposes U.S. Labor Board Ruling on Contract Workers

Deborah Todd & Robert Iafolla
June 15, 2016
Microsoft Corp has asked a federal court to throw out a ruling by a U.S. labor board extending the responsibility of companies for contract workers, arguing that the case would have big implications for the technology company.
An August 2015 decision by the National Labor Relations Board expanded the definition of a "joint employer", which could require more companies to bargain with and have liability for workers hired by contractors.
The decision expanded the test for joint employment beyond whether a company had “direct and immediate” control over employment conditions of another company’s workers, to consider indirect or unexercised control. The case is now before the U.S. Court of Appeals for the D.C. Circuit.
Microsoft and industry group HR Policy Association submitted a joint brief on Tuesday opposing the NLRB ruling in a case involving California waste management company Browning-Ferris Industries, a subsidiary of Republic Services Inc.
In its brief Microsoft said the 2015 ruling was too broad and the decision would discourage Microsoft and others from directing contractors to provide benefits to their employees, for fear the directive would make Microsoft a joint employer under the new standard.
Business groups say the ruling has the potential to disrupt a range of business-to-business relationships, including those that companies have with vendors, staffing agencies, subcontractors and subsidiaries, as well as franchisees.
Silicon Valley companies frequently use contract workers for tasks from security to writing software.
Microsoft had nearly 113,000 employees at the end of last year, it said. A spokeswoman declined to say how many temporary and contract workers it employed, but the Seattle Times quoted an unnamed source as saying there were 81,000 at one point in 2015.
In the labor board's 2015 ruling, it said Browning-Ferris was a joint employer of workers hired through a staffing agency at a recycling facility and had to negotiate with workers.
Browning-Ferris has said the U.S. labor board standard for "joint employment" is so broad and vague that it makes it impossible for employers to structure their business relationships with contractors.
Microsoft has been praised by President Barack Obama for restricting its work contracts to suppliers who give employees at least 15 days of paid leave annually, part of its so-called Corporate Social Responsibility, or CSR, policy.
"Companies with existing CSR initiatives now have a strong incentive to terminate them, and others considering such policies will be more likely to table their plans," Microsoft said of the consequences of the 2015 ruling.
Some labor law experts told Reuters that such corporate social responsibility policies calling for minimum employee benefits are unlikely to make companies a joint employer under the NLRB’s ruling in Browning-Ferris.
“The board’s decision could use some clarification but does not jeopardize a company’s corporate responsibility policy for its vendors and suppliers, providing Microsoft or other brands do not control or purport to control day-to-day labor and personnel decisions of the suppliers,” said Samuel Estreicher, director of New York University’s Center for Labor and Employment Law.
In any event, Microsoft argued, the court should make clear that such CSR plans did not make a company a joint employer.
An NLRB spokesman was not immediately available for comment.
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Wednesday, June 15, 2016

It's Not Illegal to Fire Someone for Being 'Too Cute,' Manhattan Trial Court Rules

Attractive women are not a protected class under employment laws, even the expansive laws in place in New York City, the New York Law Journal reported Friday.

Lorelei Laird

May 20, 2016

Dilek Edwards had sued her former employer for gender discrimination, alleging she was fired because her boss, Stephanie Adams, was concerned that her husband found Edwards attractive.

Edwards was hired as a yoga instructor and massage therapist by chiropractor Charles Nicolai. She says their relationship was strictly professional, and she had met Adams—Nicolai’s wife and co-owner of the practice—on one occasion. That encounter was cordial, Edwards says.
More than a year after Edwards started the job, Nicolai told Edwards his wife might be jealous because Edwards was “too cute.” Four months later, Adams sent Edwards a text telling her she was no longer welcome at the business and to “stay … away from my husband and family. And remember I warned you!”
Adams also allegedly reported to police that Edwards had made threatening phone calls, leading Edwards to make a defamation claim.
The lawsuit argued that under New York City’s Human Rights Law, the firing was gender discrimination because gender includes “a person’s gender identity, self-image, appearance, behavior or expression.” But Manhattan Supreme Court Judge Shlomo Hagler found this applies only to matters involving gender identity or transgender issues.
Hagler was unable to find a case in the city or state New York holding that spousal jealousy alone constitutes gender discrimination. In other jurisdictions, the judge wrote, courts have held that attractive females are not a protected class under anti-discrimination laws.
“With respect to whether appearance can be the basis of a discrimination claim under other statutory authority, courts have not found discrimination when the subject conduct or policy was not applied differently to men and women,” Hagler wrote.
The Iowa Supreme Court ruled in 2012 and 2013 that a dentist from Fort Dodge was within the law when he fired his assistant of 10 years, after growing worried that he might have an affair with her. That court rejected a claim that this was gender discrimination because the assistant “did not do anything to get herself fired except exist as a female.”
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