San Antonio Joins Austin in Passing a Paid Sick Leave Law—But Will These Laws Survive, and What’s Next for Paid Sick Leave?

On August 16, 2018, San Antonio joined Austin to become the second major city in Texas to pass a paid sick leave ordinance.  The law allows workers to earn one hour of paid sick leave for every 30 hours worked in San Antonio, up to a maximum of 64 hours of paid leave each year for workers at companies with more than 15 employees.  Employees at companies with 15 employees or fewer are capped at 48 hours of paid sick leave per year.  Employees who are not working the requisite number of hours in San Antonio are not eligible.

The law is set to take effect on August 1, 2019 for companies with five or more employees, but that assumes it survives a near-certain court challenge, a potential state legislative override, or changes made by San Antonio itself.  Austin’s ordinance is currently the subject of a court challenge, and on August 17, a Texas court of appeals blocked implementation of the ordinance pending the resolution of an appeal to determine whether it is preempted by state law and thus invalid.

The Bottom Line for Employers

The Austin and San Antonio ordinances are part of a much bigger trend in which paid sick leave requirements have been implemented by dozens of localities, some states, and the federal government itself (with respect to federal contractors).  This has led to a patchwork of laws that are becoming increasingly difficult for employers to track and comply with.  Federal paid sick leave legislation that would override state and local laws has been proposed in Congress, but so far the proposed bills have gained little traction.

In the meantime, employers with operations in San Antonio, Austin, and other major metropolitan areas around the country would be wise to continue to monitor developments and to consider whether to implement different paid sick leave policies by jurisdiction, or a single policy that complies with the most stringent of the applicable laws—and hope that a more stringent applicable law is not passed somewhere else in the near future.  An employer’s decision should be influenced by factors such as its risk tolerance, ability to stay on top of developments, employee morale, and the degree to which it is able to administer different policies.

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The EEOC’s Focus on Harassment in the Workplace Continues with Seven More Lawsuits Filed in August 2018

Have you visited the EEOC website lately?  Featured prominently at the top of the Home page is a section titled “What You Should Know: What to Do if You Believe You Have Been Harassed at Work” and a link that sets out detailed (but common sense) instructions for handling harassment in the workplace.  The EEOC is also backing up their outreach efforts to potential victims of harassment with a flurry of new lawsuits alleging harassment based on race, national origin, and sex, in a variety of industries including country clubs, cleaners, restaurants, airlines, healthcare, and grocery stores.  Seven of those lawsuits were filed in the second week of August 2018.  This is the second time in two months that the EEOC has coordinated multi-state actions on harassment.  A link to the EEOC press release accompanying the most recent filings may be found here.

Two of the most recent cases filed by the EEOC are out of the Houston and Dallas District offices.  The EEOC’s Houston District Office and the New Orleans Field Office sued Marion’s Cleaners in the Eastern District of Louisiana for harassment based on race and national origin and retaliation for firing the victim who complained about it.  According to the press release, “[t]he lawsuit alleges that one of the company’s employees spent months continually telling the victim that she ‘needed to go back to Mexico,’ that she ‘was nothing,’ that she was a ‘stupid Mexican,’ a ‘dirty Mexican,’ and to ‘shut up’ when speaking Spanish.  When the employee reported the comments to Marion’s Cleaners, it did nothing.  The employee asked her co-worker to stop making the comments and he responded by grabbing her by the hair, repeatedly punching her in the face, and then pressing her against an exposed steam pipe.  She suffered severe, second-degree burns and trauma as a result of the incident.  The suit alleges that Marion’s Cleaners fired the victim for reporting the incident rather than taking action against the harasser.”

The second suit was filed by the EEOC’s Dallas District Office and San Antonio Field Office in the Western District of Texas alleging that United Airlines allowed a hostile work environment of sexual harassment over a multi-year period.  According to the press release, “[a] United captain frequently posted sexually explicit images of a United flight attendant to various websites, making reference to the flight attendant’s name, home airport, and sometimes referencing the airline’s tagline ‘Fly the Friendly Skies.’  The lawsuit alleges that the posts were seen by several male co-workers and adversely affected the flight attendant’s working environment.  United failed to prevent and correct the pilot’s behavior, even after the flight attendant made numerous complaints and provided substantial evidence to support her complaints.”

The Bottom Line for Employers

The heightened activity at the EEOC demonstrates the continued commitment of the agency to investigating and remedying harassment in the workplace in the #MeToo era.  We think it also signals what many employment lawyers have been saying for a number of months now — that filings of harassment charges and lawsuits will increase as will agency and court scrutiny of harassment allegations.  If employers have not already done so, they should be auditing their anti-harassment efforts on multiple fronts including: (i) examining the scope and effectiveness of their anti-harassment policies, (ii) certifying employee awareness of the company’s anti-harassment policy and reporting avenues, (iii) committing to a meaningful and robust investigative and compliance program, including written procedures and investigator training, and (iv) ensuring that the company responds effectively and consistently if there is credible evidence of unacceptable behavior contrary to company policies.

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Tips for Avoiding Form I-9 Problems in Light of Increasing ICE Audits

President Trump based his campaign platform in part on immigration reform. Early in his presidency, he authorized the hiring of 10,000 additional Immigration and Customs Enforcement (ICE) agents and promised greater enforcement of existing statutes. More recently in October 2017, Acting Director of ICE, Thomas Homan, announced that in order to eliminate the “magnet” of U.S. jobs which purportedly drives illegal immigration, ICE (through its Homeland Security Investigations unit) would increase worksite investigations of employers by “four to five” times in 2018. This was no idle threat—as of May 7, 2018, only seven months into ICE’s fiscal year, it had already conducted twice as many workplace investigations as it had completed in the preceding fiscal year. Moreover, observers are predicting that ICE will continue increasing the number of investigations throughout this year.

While an employer cannot avoid being selected for an ICE audit, there are certainly steps an employer can take to ensure they are in compliance with the law.

Tip #1: Perform an Internal Form I-9 Audit

Employers have a legal obligation to verify an employee’s identity and employment authorization, which is based on being a U.S. citizen or otherwise having government approval to work in this country. This obligation is satisfied by completing a Form I-9 for each employee within three (3) business days of the date of hire, i.e., the first day of work.

The chief way that ICE investigates a workplace for violations is by performing a Form I-9 audit. Even minor technical errors may lead to a fine if uncorrected, and substantive errors or a finding that the employer knowingly hired and employed unauthorized workers have steeper penalties, up to $16,000 per violation, loss of federal contracts, and possible criminal prosecution. According to Sue Kohlwey of the United States Citizenship and Immigration Services (USCIS), 76% of all paper Forms I-9 have at least one finable error. Consequently, it behooves employers to conduct an internal Form I-9 audit based on the increased likelihood of an ICE audit.

  • The internal audit should be performed by someone familiar with Form I-9.

The audit should be conducted by a person familiar with Form I-9 in its various iterations over the years. This person should also be familiar with the M-274 Handbook, which is a guide provided by USCIS to assist employers in properly completing Forms I-9. This person can then use their familiarity to hone in on issues that are frequently repeated (in our experience, because Forms I-9 are often completed with the assistance of the same Human Resources personnel, if there is an issue, it is typically repeated on multiple forms).

Some employers choose to engage outside counsel to perform the internal audit, which provides specific expertise, a non-biased outside reviewer, and alleviates the hassle for the employer.

  • The internal audit must be performed in a nondiscriminatory manner.

Ideally, every Form I-9 should be audited to ensure compliance, although this is not always feasible. But if not every Form I-9 will be audited, the employer should establish a neutral method of selecting forms to audit that avoids any appearance of race or national origin bias, which could implicate a discrimination claim. For example, the employer could select every fifth name on an alphabetical list of employees.

  • Identified issues must be corrected in strict compliance with the M-274 Handbook.

For example, employees are responsible for correcting errors in Section 1 of Form I-9, but employers should correct errors in Section 2. An employer should never conceal any corrections, but should follow the M-274 Handbook guidelines to correct an erroneous Form I-9 and document such corrections. The M-274 Handbook is available at:

  • The internal audit should be a regular event, preferably annually.

Employees come and go. The government revises Form I-9. Documents get lost. There are a variety of reasons why a single optimum internal audit does not mean an employer is going to stay in compliance. Employers must vigilantly review their Forms I-9 on a regular basis, preferably annually.

Tip #2: Develop or review a document retention policy.

Employers must keep Sections 1-3 of the Form I-9 for each employee currently working. When an employee is discharged, the employer must keep the Form I-9 for the longer of one year after discharge or three years after the employee’s date of hire.

Since the Forms I-9 are subject to governmental audit, it is advisable to store them separately from personnel files or any other documentation. In the event of an audit, employers should be able to provide the Forms I-9—but not documents unrelated to the audit—quickly to ICE agents.

Finally, Forms I-9 that are no longer required to be kept should be promptly disposed of. Since they contain personal information of former employees, they should be shredded.

Alternatively, some vendors are now offering approved electronic services for Form I-9 completion and storage, which could be optimal for some employers.

Tip #3: If selected for an ICE audit, do not panic!

If an employer follows the tips above, there should be no need to panic if it receives a Notice of Inspection (NOI) from ICE. Employers have three business days to produce the Forms I-9 for audit after receiving the NOI.

After the audit is complete, ICE will send the employer its results: either a letter stating the employer is in compliance, or a notice indicating identified problems. Notices may identify: technical violations, in which case the employer has ten (10) business days to correct the issue; suspect documents or discrepancies, in which case the employer should either provide additional documentation refuting the discrepancies or cease employing the identified employee; or an intent to fine, in which case the employer should attempt to negotiate a settlement with ICE or request a hearing with the Office of the Chief Administrative Hearing Officer within 30 days of receipt.

Following the above tips should prevent employers from suffering an adverse ICE audit and lay the groundwork for ensuring future compliance as well.

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Four Things Every Employer Needs to Know about Texas’s Anti-SLAPP Law

In 2011, Texas Governor Rick Perry signed into law the Texas Citizens Participation Act (the “TCPA”). The TCPA is Texas’s version of a category of laws, now on the books in many states across the country, intended to curb “strategic lawsuits against public participation” (so-called “Anti-SLAPP statutes”)—in other words, lawsuits that weaponize litigation to chill or retaliate against the exercise of free speech.

So what does the TCPA have to do with litigating employment disputes? Potentially, a lot—at least according to the Texas Supreme Court and other Texas courts interpreting the TCPA. Lawyers on both sides of the employment bar are becoming increasingly savvy about using the TCPA as a powerful tool in litigation, and employers must as a result learn about Texas’s Anti-SLAPP statute and keep it in mind when defending or prosecuting employment-related claims.

Here are five things every employer should know about the TCPA:

No. 1: The TCPA was enacted to safeguard Texans’ First Amendment rights.

Under the TCPA, a defendant may, within 60 days after it is served with a lawsuit, file a motion to dismiss if the claims asserted by the plaintiff in the lawsuit are based on, relate to, or are asserted in response to the defendant’s “exercise of the right of free speech, right to petition, or right of association.” One of the authors of the statute has described its purpose as “protect[ing] the little guy, promot[ing] judicial economy, provid[ing] for tort reform and advanc[ing] the First Amendment rights of all Texas citizens.” In other words, the TCPA empowers Texas courts to summarily dismiss lawsuits filed in order to prevent or punish the exercise of speech rights. Two key proponents of the law explain its purpose this way:

“By removing the threat of abusive litigation as a weapon in the battle for public opinion, the TCPA re-levels the playing field. It penalizes the deceitful player who uses the courtroom to silence a critic who is telling the truth.”

No. 2: Courts interpreting the TCPA have found that its language is broad enough to apply in employment cases (even cases that don’t involve traditional First Amendment issues).

 Given the TCPA’s purpose, most would assume that it has no application in other than the most unusual employment disputes involving private employers. But Texas courts have construed the law otherwise. In a pair of key decisions, the Texas Supreme Court demonstrated that it will interpret the TCPA according to its plain language as broadly protecting speech, even speech that does not implicate traditional constitutional protections.

In ExxonMobil Pipeline v. Coleman, 512 S.W.3d 895 (Tex. 2017), a former employee of Exxon sued for defamation, alleging that Exxon discharged him based on a wrongful accusation that he falsified records relating to the measurement of hydrocarbons in a storage tank. Exxon moved to dismiss under the TCPA, arguing that its communications about the falsified records implicated a matter of “public concern,” i.e., “an issue related to: health or safety … [or] environmental, economic, or community well-being ….” The former employee countered that this could not be the case since the “speech” in issue was an internal communication regarding a personnel issue. The Supreme Court sided with Exxon, relying heavily on its earlier decision in Lippincott v. Wisenhut, 462 S.W.3d 507 (Tex. 2015). There, the Court ruled that the TCPA applies to communications made about a matter of public concern without regard to whether the communications are made publicly. In reaching its conclusion in Coleman, the Court criticized the court of appeals below for suggesting that the TCPA does not apply unless the communications in issue have more than a “tangential relationship” to matters of public concern and found no such requirement in the plain language of the statute.

Based on Coleman and Lippincott, and because the work of almost all employers touches on matters of “public concern” as the term is broadly defined in the statute, it appears that even garden variety wrongful discharge claims may implicate the TCPA despite the fact that such claims have little or no connection to the use of the courtroom to prevent or punish the exercise of traditional speech rights.

No. 3: TCPA motions to dismiss are routinely being filed in response to unfair competition claims asserted by employers.

Among the speech rights the TCPA is designed to protect is the right to associate freely. And based on a strictly textual interpretation of the statute, the Texas Third Court of Appeals (Austin) ruled in 2017 that the TCPA required dismissal of an unfair competition lawsuit filed by a former employer after two employees resigned to join a competitor, allegedly misappropriating trade secrets for the benefit of the competitor in the process. In reaching this conclusion, the Court reasoned that the employees who resigned were free to associate with each other and their new employer and that their disclosure of their former employer’s alleged trade secrets was a communication between individuals who were joining together to pursue common interests, falling within the TCPA’s definition of “exercise of the right of association.” Elite Auto Body, LLC v. Autocraft Bodywerks, Inc., 520 S.W.3d 191 (Tex. App.—Austin 2017).

Most unfair competition disputes involve the “right of association”—at least as the right is expansively defined by the TCPA. As a result, Elite Auto Body has resulted in a flood of TCPA motions to dismiss being filed in response to unfair competition claims including trade secret misappropriation claims and claims asserting breaches of non-compete and non-solicit agreements. Though most agree that this is likely an overstatement, some commentators and practitioners are predicting that the TCPA may undermine materially the enforceability of restrictive covenants under Texas law and fundamentally change the complexion of unfair competition litigation in the state.

No. 4: A TCPA motion to dismiss is a powerful procedural tool.  

While a detailed discussion of TCPA procedure is beyond the scope of this post, employers should be aware that the summary dismissal procedure available under statute is powerful. Most significantly:

  • In most cases, the filing of a TCPA motion stays all discovery in a case while the motion is pending or being appealed. In cases where discovery is permitted while a motion is pending, the discovery must be targeted to the issues presented by the motion.
  • So long as the defendant filing the TCPA motion can prove by a preponderance of the evidence (typically, through affidavits) that the claims in issue relate to its right of free speech, right to petition, or right of association, the burden shifts to the plaintiff to establish, by clear and specific evidence, a prima facie case for each essential element of each claim asserted. If the plaintiff cannot meet this burden, his claims must be dismissed.
  • The TCPA requires an award of defense costs to a defendant that prevails on a TCPA motion; it permits, but does not require, an award of costs and attorney’s fees to a plaintiff only if a finding is made that a TCPA motion is frivolous or is filed solely for purposes of delay.

The Bottom Line

Given the way Texas courts have interpreted the TCPA, motion practice under the statute is likely to becoming increasingly routine in employment disputes, particularly in cases in which unfair competition claims are asserted. As a result, employers must become familiar with the TCPA—both as a potential arrow in the defense-strategy quiver and as a potential obstacle to successfully prosecuting claims against current and former employees. With respect to the latter, employers must consider the TCPA before filing suit, and if the decision to file is made, be prepared to devote substantial time and money to marshaling the evidence necessary to overcome an anti-SLAPP motion.

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FMLA vs. FLSA: The DOL Weighs in on Whether Employers Need to Compensate FMLA-Protected Rest Breaks

After a nine year hiatus, the Wage and Hour Division of the Department of Labor (“DOL”) recently resumed its longstanding practice of issuing opinion letters to help employers in interpreting laws like the Family and Medical Leave Act (“FMLA”) and the Fair Labor Standards Act (“FLSA”). In an April 12, 2018 press release issued by the DOL, Secretary Acosta stated that an opinion letter is an “official document authored by the [Wage and Hour Division] on how a particular law applies in specific circumstances presented by the person or entity requesting the letter.” The purpose of the opinion letter is to “provide clarity,” which should help increase employer compliance.

A recently-issued opinion letter tackled a unique question about the interaction between the FMLA and the FLSA in the context of FMLA-protected rest breaks. The question presented was whether 15-minute breaks taken every hour for an employee’s serious health condition must be paid or unpaid. In the scenario presented in the opinion letter, the 15-minute breaks qualified as intermittent FMLA leave.

The DOL opined that the FMLA-qualifying breaks (totaling 2 hours per 8-hour shift) were “not compensable.” In reaching this conclusion, the DOL pointed out that under the FLSA, short rest breaks up to 20 minutes in length generally must be paid because the DOL views these breaks as primarily benefitting the employer because they “promote the efficiency of the employee.” However, the DOL said that in some circumstances, short rest breaks may primarily benefit the employee and therefore are not compensable. Under the facts presented in the opinion letter, the DOL opined that because the 15-minute breaks were required 8 times per day and were attributed solely to the employee’s serious health condition, the breaks predominantly benefited the employee and therefore did not need to be paid despite the general rule on paid breaks under 20 minutes contained in the FLSA regulations. The opinion letter relied in large part on a federal case, Spiteri v. AT&T Holdings, Inc., 40 F. Supp. 3d 869 (E.D. Mich. 2014), where the court found an employee was not entitled to frequent (or unlimited) paid breaks to accommodate the employee’s back pain because the breaks predominantly benefitted the employee. The DOL also noted in the opinion letter that because the breaks were FMLA-protected, they did not need to be paid.

Importantly, the DOL reminded employers that employees who take FMLA-protected breaks must still be compensated for the same number of breaks taken by coworkers. For example, if an employer generally allows all of its employees to take two paid 15-minute rest breaks during an 8-hour shift, an employee needing 15-minute rest breaks every hour due to a serious health condition should likewise be paid for two 15-minute rest breaks during his or her 8-hour shift. The remaining six breaks need not be paid.

Bottom Line

Although not binding, this opinion letter provides guidance for employers dealing with FMLA-mandated breaks. Employers should comply with the requirements of both the FMLA and FLSA when dealing with these types of breaks, and keep track of these breaks for purposes of calculating intermittent FMLA leave.  In addition, prior to considering whether FMLA-mandated breaks are paid or unpaid, a careful review of the break schedules of employees in the same job position or group should be conducted to ensure that employees who take FMLA-mandated breaks are receiving the same number of paid breaks as their coworkers.

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Being on Leave Makes Current Employees Unemployed: Texas Supreme Court’s Counterintuitive Unemployment Act Decision

Usually disputes over unemployment focus on whether a former employee was fired for work-connected misconduct or quit for a good enough work-connected reason. But when exactly is a person unemployed, so that he or she can file for unemployment in the first place? The Texas Supreme Court’s answer: an individual “qualifies as unemployed so long as her wages are low enough,” even if the individual continues to have an employment relationship with the employer, for example when out on FMLA leave. TWC v. Wichita Cty., Tex., No. 17-0130, 2018 WL 2375140, at *4 (Tex. May 25, 2018).

Unemployment Act’s definition of “unemployed.”

The Court based its conclusion on that statute’s plain language. That language starts by defining a benefit amount based on the person’s recent wages (very roughly, it is 1% of annual wages). The 2018 maximum benefit amount is $494 a week (so roughly based on someone earning $49,400 or more a year).

The statute then says that a person is totally unemployed, if in a given week, he or she “does not perform services for wages in excess of $5 or 25% of the benefit amount,” whichever is greater. Tex. Lab. Code § 201.091(a). This means that someone earning enough in recent wages to earn the maximum benefit amount of $494 will be “totally unemployed” if he or she earns less than 25% of $494, or $123.50, a week.  And a person is partially unemployed (and eligible for partial benefits) if he or she earns between that 25% amount and 125% of the benefit amount in a week. For a person eligible for maximum benefits, this would be between $123.50 and $617.50 a week.

Leave can cause wages to drop enough to make an employee “unemployed.”

When would someone who recently has been earning $49,400 a year earn less than $617.50 a week? Typically, this happens when the person has been discharged or quit. But the Court found that the statute does not actually require “a formal severance of the employer-employee relationship.”

The upshot is this: if your employee is on FMLA leave, short-term disability, long-term disability, or other leave, and is therefore not earning wages for “performing services,” that employee is unemployed for unemployment-benefits purposes. While it may be common sense that a person who is on leave from his or her job with the employer cannot be unemployed, the statute says otherwise.

Employees on leave are ineligible for benefits because they are unavailable for work.

So what should an employer do if faced with a claim for unemployment by an employee on leave? The employer should respond to any unemployment proceedings based on the employee’s ineligibility for benefits, not his or her status as “unemployed.”

In Wichita County, the Court noted that being unemployed is not enough to entitle someone to unemployment benefits—the person must also be “eligible.” And a person is not eligible if they are not “able to, available for, and actively seeking work.” So in an unemployment response or hearing where an employee is seeking benefits while on leave, the employer should point out that the employee is not able to work and is not available for work. This inability and unavailability should follow directly from the underlying reason for the leave—after all, if the employee could work and was available to work, he or she would be working for the employer, not on leave.

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Recent Case Shows Risks When Employers Fail to Sign Their Own Signature Blocks

Employment agreements—such as employment contracts, confidentiality agreements, restrictive covenant agreements, arbitration agreements, and others—often contain signature blocks for both the employee and employer.  Even when employers procure the employee’s signature, in many cases the employer signature block is left blank.  Does this pose a problem when the employer attempts to enforce the agreement?

A recent Fifth Circuit decision says that under Texas law, the answer is “yes” if language in the agreement or other circumstances indicate that the employer’s signature is necessary to form the agreement.   The case of Huckaba v. Ref-Chem, L.P., 2018 WL 2921137 (5th Cir. June 11, 2018) involved an employer’s attempt to enforce an arbitration agreement with an unsigned employer signature block.  The court noted that whether a signature is required to form an agreement is dependent on the parties’ intent.  Signatures are not required when the employee and employer have given their consent to the agreement and there is no evidence that the parties intended that both signatures would be required.

In the case at hand, the court found that the arbitration agreement indicated that both signatures were required based on the following evidence:

  • A statement that “[b]y signing this agreement the parties are giving up any right they may have to sue each other”;
  • a clause prohibiting modifications unless they are “in writing and signed by all parties”; and
  • the employer signature block itself.

Notably, the fact that the agreement also contained a statement that the employee’s continued employment constituted consideration for the agreement was not enough for the court to conclude that no employer signature was required.  The court indicated, however, that had the agreement contained language indicating that continued employment constituted the employee’s acceptance of the agreement (not merely consideration), the result might have been different.

The Bottom Line for Employers

The Huckaba decision involved Texas contract law, and other states’ laws on this issue may be different.  But as to agreements covered by Texas law, and in the wake of this decision, employers should carefully consider whether an employer signature block in its agreements is needed.  Texas law is clear that an employer may bind an employee to an agreement without the company’s signature as long as there are other indications that the employer intended to be bound, such as when the employer offers the agreement to the employee and indicates that either the employee’s signature or continued employment will equal acceptance of the offer, thereby creating a binding agreement.

If the employer deems it necessary to include an employer signature block, it should implement protocols to assure that an employer representative actually signs the agreement—either before the agreement is provided to the employee or after the employee returns a signed copy.

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Employee Handbooks: Some Welcome Guidance from the NLRB On What Your Handbook Should (and Should Not!) Say

On June 6, 2018, the General Counsel’s Office of the National Labor Relations Board (“NLRB”) issued its “Guidance on Handbook Rules Post-Boeing” (“Guidance”).  The Guidance follows up and clarifies the recent Board decision in The Boeing Company, 365 NLRB No. 154 (Dec. 14, 2017) and may be accessed here.

Refresher on the Boeing decision: The Boeing decision set out a new standard for evaluating workplace policies and discussed when those policies might run afoul of an employee’s Section 7 rights under the National Labor Relations Act (“NLRA”) to engage in protected concerted activity.  The gist of the Boeing decision was to divide workplace policies into three categories: (1) policies that are generally lawful because the policies, as reasonably interpreted, do not interfere with an employee’s Section 7 rights or because the potential adverse impact on those rights is outweighed by a business justification associated with the policy, (2) policies warranting individualized scrutiny because they are not obviously lawful or unlawful, and (3) policies that are generally unlawful because they would prohibit or limit NLRB-protected conduct, and the adverse impact on the rights guaranteed by the NLRA outweighs any justifications associated with the policies.

The post-Boeing Guidance issued on June 6 provides specific advice on the placement of some common workplace policies in the three categories noted above.  The following is a summary of the policies discussed in the Guidance and placement of those policies within the respective categories.  Also included are some examples of common policy verbiage cited by the NLRB in the Guidance.

Category 1 Policies: Policies That Are Generally Lawful To Maintain

  1. Civility Rules: “Rude, discourteous or unbusinesslike behavior is forbidden”
  2. No-Photography Rules And No-Recording Rules: “Employees may not record conversations, phone calls, images or company meetings with any recording device without prior approval”
  3. Rules Against Insubordination, Non-Cooperation, Or On-the Job Conduct That Adversely Affects Operations: “Being uncooperative with supervisors . . . or otherwise engaging in conduct that does not support the [Employer’s] goals and objectives is prohibited”
  4. Disruptive Behavior Rules: “Disorderly conduct on [Employer] premises and/or during working hours for any reason is strictly prohibited”
  5. Rules Protecting Confidential, Proprietary, And Customer Information Or Documents: “Do not disclose confidential financial data, or other non-public proprietary company information. Do not share confidential information regarding business partners, vendors, or customers”
  6. Rules Against Defamation Or Misrepresentation: “Do not email messages that are defamatory”
  7. Rules Against Using Employer Logos Or Intellectual Property: “Do not use Company logo, trademark, or graphic [without] prior written approval”
  8. Rules Requiring Authorization To Speak For Company: “The company will respond to media requests for the company’s position only through the designated spokespersons”
  9. Rules Banning Disloyalty, Nepotism, Or Self-Enrichment: “Employees may not engage in conduct that is disloyal . . . competitive, or damaging to the company such as illegal acts in restraint of trade or employment with another employer”

Category 2 Policies: Policies Warranting Individualized Scrutiny

  1. Broad conflict-of-interest policies that do not specifically target fraud and self-enrichment;
  2. Confidentiality rules broadly encompassing “employer business” or “employee information” (as opposed to confidentiality rules regarding customer or proprietary information);
  3. Policies regarding disparagement or criticism of the employer;
  4. Policies regulating use of employer’s name (as opposed to logo/trademark);
  5. Policies generally restricting speaking to the media or third parties (as opposed to rules restricting speaking to the media on the employer’s behalf);
  6. Policies banning off-duty conduct that might harm the employer (as opposed to rules banning insubordinate or disruptive conduct at work);
  7. Policies against making false or inaccurate statements (as opposed to rules against making defamatory statements).

Category 3 Policies: Policies That Are Unlawful To Maintain

  1. Confidentiality Rules Specifically Regarding Wages, Benefits, Or Working Conditions: “Employees are prohibited from disclosing salaries, contents of employment contracts . . .”
  2. Rules Against Joining Outside Organizations Or Voting On Matters Concerning The Employer: A policy that would be interpreted as restricting membership or work for a union or requiring employees to remove themselves from discussing or voting on any matters concerning the employer

The Bottom Line for Employers: Employers should take this opportunity to review their employee handbooks in light of the Guidance.  The Guidance provides some welcome stability following the pre-Boeing precedent in which many common policies were challenged and often struck down by the NLRB.  It also provides employers with some confidence as to what policies generally will not run afoul of the NLRB and where they may have some risk.  That said, there are still a number of outstanding questions the Guidance does not address, such as how will the NLRB treat rules regarding mandatory participation in workplace investigations, use of an employer’s e-mail systems, and confidentiality of workplace investigations and/or arbitration proceedings.  And, of course, the Boeing decision itself was limited to the maintenance of facially neutral policies.  Policies that specifically ban protected concerted activity, or that are enforced in an unlawful manner (e.g., in response to organizing or other protected concerted activity), remain unlawful.

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“But We Can’t Do That” — Documenting Undue Hardship Can Help Protect Employers Against ADA Claims

When a disabled employee requests an ADA accommodation, employers should have an interactive discussion to determine what accommodations might work. And a big part of that discussion is asking the employee to suggest possible accommodations.

But if an employee suggests an accommodation that would cause the employer an “undue hardship,” the employer can reject that accommodation. A requested accommodation that creates a hassle or minor burden is not an undue hardship. Instead, an accommodation creates an undue hardship if it subjects the employer to significant difficulty or expense. Courts take into account an individualized assessment of not only the nature and cost of the requested accommodation but also the employer’s resources and the potential impact of granting the requested accommodation on the employer’s operations. This is a high bar to meet, because it requires the employer to identify specific and significant difficulties or expenses the suggested accommodation would create.

Often, employers reject requested accommodations based on a sense that the suggested accommodation “just would not work.” But because the ADA requires a particular showing of the difficulty or expense the requested accommodation would create, the employer should carefully document and justify the underlying reasons why the accommodation “would not work.”  Failing to identify these underlying reasons—and to document them—can increase the chance that an employer has failed to carry its burden to show that an undue hardship existed, and so can have significant consequences later on if there is litigation.

For example, a court denied an employer summary judgment in part because it had failed to document its reasons why the employee’s request for “at least three more months” of leave after FMLA leave was exhausted would be an undue hardship. Bernhard v. Brown & Brown of Lehigh Valley, Inc., 720 F. Supp. 2d 694, 702–03 (E.D. Pa. 2010). Similarly, a court rejected the argument that 29 absences in 18 months and an absence for an entire additional month created an undue hardship because the employer failed to offer evidence backing up how these absences impacted the employer’s operations. Pearson v. Univ. Hosps. of Cleveland, Inc., No. 1:06-cv-1974, 2008 WL 1808797, at *8 (N.D. Ohio. Apr. 21, 2008).

And the EEOC has recently begun to focus on the lack of undue hardship documentation in numerous internal rulings on charges brought by federal employees against federal agencies. (In the past, such rulings have hinted at the EEOC’s future enforcement priorities in actions against private employers.) For example, one agency denied an employee’s request to work from home for additional days each week because it said that that would hurt productivity. But the EEOC found the accommodation denial to be improper because the agency failed to document how additional work from home would hurt the employee’s productivity. Doria R. v. Nat’l Sci. Found., EEOC Appeal No. 0120152916 (Nov. 9, 2017). Similarly, the EEOC rejected a denial of additional work from home when the employee’s managers argued that her job required face-to-face interactions and there would not be enough remote work to keep her busy because—again—the agency failed to document how there would be insufficient remote work to keep her busy. Alejandrina L. v. Dep’t of State, EEOC Appeal No. 0120152145 (Nov. 16, 2017).

So what should an employer do? One example comes from a case where the employee suggested that the employer move her workstation to the first floor of its building to accommodate post-surgery problems with her ankle. The court granted the employer summary judgment because the employer documented specific reasons why her requested move would create an undue hardship: 1) the filing cabinets her position as an Accounts Receivable Clerk required her to use were on the second floor, 2) the first floor lacked a safe, where she was expected to store customer payments, 3) the first floor lacked the ledger books where she was expected to securely log customer payments, and 4) the first floor had customers and non-administrative employees present, making it an unsecure location for handling financial records. Frumusa v. Zweigle’s, Inc., 688 F. Supp. 2d 176, 191–92 (W.D.N.Y. 2010).

The reasons why a requested accommodation would be an undue hardship may seem or feel obvious, at least to management, at the time the employer denies the accommodation. But courts and the EEOC are often suspicious of reasons that the employer fails to document at the time but relies on later. And courts and the EEOC will strictly scrutinize the stated reason for the hardship.  So if a requested accommodation would in fact meet the threshold for undue hardship, there will be significant, identifiable reasons why this is so, and an employer should document those reasons as specifically as possible as part of the interactive process.

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An EPIC Day for Employers Utilizing Arbitration Agreements

The United States Supreme Court recently issued a decision in Epic Systems Corporation v. Lewis, – S. Ct. –, 2018 WL 2292444 (2018) resolving a circuit split in favor of upholding employers’ ability to enforce arbitration agreements with employees requiring individualized proceedings.

In each of the underlying consolidated cases below, employees sought to litigate Fair Labor Standards Act (“FLSA”) and state law wage and hour claims on a collective action and Rule 23 class action basis, despite being parties to an arbitration agreement with their respective employers mandating arbitration of all claims on an individualized basis. The employees argued to the Court that such arbitration provisions violated the National Labor Relations Act (“NLRA”), and as such, courts need not enforce the arbitration provisions under the savings clause of the Federal Arbitration Act (“FAA”).

The five justice majority, in an opinion authored by Justice Gorsuch, rejected these arguments. First, the majority noted that the FAA’s savings clause only precludes enforcement of arbitration agreements that are invalid “upon such grounds as exist at law or equity for the revocation of any contract.” 9 U.S.C. § 2. Even if the provisions were illegal under the NLRA, the majority found that the savings clause would be inapplicable because this was not the type of generally applicable defense—such as fraud, duress, or unconscionability—that would apply to any contract. Second, the majority held that, contrary to the employees’ position, the NLRA did not invalidate the agreement because it does not speak to class or collective actions, and the more specific statutes (such as the FLSA) do not proscribe individualized arbitrations. Finally, the majority held that the National Labor Relations Board was not due Chevron deference because it was seeking to interpret the FAA, a statute outside its administrative authority, and because the government was taking inconsistent positions through the Board and the Solicitor General.

Impact on Employers

Does this mean that employers are free to implement or continue to use arbitration agreements requiring individualized arbitration for employment issues? While the Epic decision certainly eliminates the previous uncertainty around the use of arbitration to resolve employment disputes filed on a class or collective basis, there are still a number of factors that employers should consider if they are considering implementing or have already implemented an arbitration program in their workplace:

Contract Based Arguments: Justice Gorsuch’s opinion left open the door for arguments that an arbitration agreement need not be enforced under the FAA due to violations of generally applicable contract defenses such as fraud, duress, or unconscionability. While these are not new defenses to enforcement of an arbitration agreement, the Epic opinion highlights the need for employers to carefully consider and draft arbitration provisions to minimize the potential for such arguments.

Costs: Enforcement of arbitration on an individualized basis can still result in multiple, sometimes expensive individual arbitrations. The costs of arbitration vary substantially between employers and employees under different association rules, with employers often bearing a significantly greater portion of the filing and administrative fees. Employers should carefully consider not only the potential costs and fees of arbitration but also whether certain types of employment issues may be more cost effective to litigate or to arbitrate on a class-wide or consolidated basis.

Legislation: Though not directly related to the Epic decision, as employers consider their arbitration agreements, it is important to note that in the wake of the #MeToo movement, several state legislatures have taken steps to limit arbitration for sexual harassment claims and although similar legislation is currently stalled in Congress, that could change after the upcoming midterm elections. Certain federal contractors may also be subject to limits on the use of arbitration to resolve certain workplace claims, including sexual harassment and sexual assault.

Executive Orders: In response to the Epic decision, Governor Inslee of Washington issued Executive Order 18-03 which requires state agencies to give preference in contracting to companies that do not require employees to sign mandatory individual arbitration clauses or class or collective action waivers. It is possible that other states may follow suit.

The Bottom Line 

The Epic decision is definitely a “win” for employers who utilize arbitration agreements and may face wage and hour or other claims that are often brought on a class or collective basis.  As for the “what next”—employers who do not have arbitration agreements should consider post-Epic whether arbitration is an appropriate and cost-effective dispute resolution tool for their workplace, especially if they are vulnerable to class or collective action claims. For employers with arbitration agreements already in place, the Epic decision serves as a reminder (i) to consider inclusion of class waiver language if it is not currently part of their arbitration agreement, and (ii) to review the actual language and scope of their arbitration agreements to minimize other challenges to enforcement that may be pursued post-Epic as well as compliance with other recently-enacted laws.

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