President Obama Pushes Increased Funding and High Hopes for the DOL, EEOC, and NLRB in the FY 2016 Proposed Budget

By Kristine Woliver on February 3, 2015 Posted in General

On February 2, 2015, President Obama released his proposal for the FY 2016 budget. In it he requests across the board funding increases for the Department of Labor (10.9% increase from FY 2015), the Equal Employment Opportunity Commission (2.3% increase from FY 2015), and the National Labor Relations Board (1.4% increase from FY 2015).

Considering the disparity between the increase sought for the DOL compared to other agencies, the DOL budget will likely be low-hanging fruit in the Republican-controlled Congress as members begin participating in the budget planning process. For a preview of coming attractions, consider former House Majority Whip Peter Roskam’s likening of the President’s proposed budget to the Seattle Seahawks’ unfathomable second-and-goal pass call in the final minute of last Sunday’s Super Bowl.

President Obama emphasized budgetary goals of improving governmental agency efficiency and middle class opportunities. And if any agencies could benefit from increased efficiency, the EEOC and NLRB are certainly among them. By the end of FY 2014, the EEOC faced a backlog of 73,134 private sector discrimination charges. The proposed budget [pdf] projects that the EEOC will receive more charges in both FY 2015 and 2016 than it did in FY 2014, but that the EEOC will operate at a resolution surplus with increased funding. The proposal estimates that the backlog will decrease to 68,734 charges by the end of FY 2016, and claims that the EEOC will improve efficiency with the $8.6 million boost by consolidating data resources, promoting knowledge sharing, and fostering communication to avoid duplicative efforts.

The NLRB faced different issues of inefficiency in 2014, having to deal with unwinding all of the decisions invalidated by the Supreme Court’s decision in Noel Canning (see our blog post here). So what would the NLRB do with the additional $3.8 million? The NLRB projects its financial obligations will increase for administrative law judge hearings by $1 million in 2015 and for field investigations by $4 million in 2016. The NLRB also anticipates a slight but steady influx of unfair labor practice cases and representation cases in the coming years.

Budget developments are hardly scintillating, but they are nonetheless important, as they provide an indication of the resources those agencies with workplace oversight responsibility will have at their disposal in the coming fiscal year.

End of the Week Roundup: January 30, 2015

By Daniel Pasternak on January 30, 2015 Posted in General

In case you missed it, we had a number of interesting items to discuss this past week (and a few new things to pass along, discussed below):

Ryan Sobel discussed two new decisions out of the Sixth Circuit Court of Appeals, each involving some unusual facts: the first reversing a lower court’s decision ordering a university to award a diploma to a student that engaged in a variety of unprofessional conduct, and the second where an employer terminated an employee who refused to provide his social security number for religious reasons.
Jill Kirila examined the lessons to be learned from the allegations in a recent lawsuit filed against Target involving responding to possible employee misconduct.
Lew Clark discussed several proposed amendments to employment laws that would impact employers in Arizona.
Sarah Joomun alerted employers in France to new statutory training provisions.
From our sister Global Compensation Insights blog, Greg Viviani highlighted the US Supreme Court’s apparent rejection of the Yard-Man presumption in retiree benefits cases.
Phillippa Canavan discussed the first decision interpreting the 2010 Agency Worker Regulations in the UK, providing a harsh lesson to the employer in that case.

Some new items of interest to share:

On Wednesday, Senate Republicans introduced the NLRB Reform Act. According to the sponsors, the proposed law would balance the National Labor Relations Board to return it to its intended role as a neutral umpire instead of its current perception as a partisan advocate. Among other things, the law would add a sixth member to the Board, require that the Board be comprised of an equal number of Republicans and Democrats, and that any Board decision have a four member majority.
Those new overtime exemption regulations the President directed – last March – that the Department of Labor issue, and which the DOL said would come out first in November 14, and then in February 2015? Although we still have yet to see a draft of the new regulations, which have to go through a notice and comment period that is sure to be lengthy, several reports last week signal that the DOL is leaning towards raising the salary basis component of the exemption to in the neighborhood of $50,000 per year. More to come on this when we see the proposed regulations.

The Doctor Is Out: US 6th Circuit Strips “Unprofessional” Medical Student of Diploma

By Squire Patton Boggs on January 30, 2015 Posted in Recent Cases

In a decision issued this week, the US Court of Appeals for the Sixth Circuit reversed a lower court decision ordering Case Western Reserve University to award a diploma to a medical student who had exhibited a pattern of unprofessional behavior. Though Amir Al-Dabagh received good grades, his medical school career was marked by a number of not-so-illustrious incidents that CWRU found to be unbecoming of a doctor. There was the time Al-Dabagh asked his instructor to lie about his tardiness to class. Then there was the medical school dance where, all in one night, Al-Dabagh inappropriately grabbed two female students, nearly got into a fistfight with the boyfriend of one of them, and later jumped out of a moving cab and stiffed the driver out of a $20 fare. Al-Dabagh even had the distinction of being kicked out of the room by a patient’s family because of his demeanor, during his internal medicine internship.

CWRU’s Committee on Students threatened him at one point with dismissal if he had further issues, which he apparently didn’t—that is, until just before he was to be certified for graduation. In April 2014 he was convicted in North Carolina for drunk driving after hitting a utility pole. After that, CWRU’s Committee on Students refused to issue his diploma, but still offered him a face-saving withdrawal from the university without an official dismissal. Al-Dabagh refused the offer and sued CWRU instead, claiming it had breached its state-law duties of good faith and fair dealing by declining to award him his degree.

Al-Dabagh actually won in federal district court. CWRU was ordered to award Al-Dabagh his diploma, which it did, but appealed.

The Sixth Circuit reversed that order and stripped Al-Dabagh of his diploma. The Court held that a lack-of-professionalism finding is an academic judgment to which courts owe considerable deference to academic institutions. The Court noted that Ohio treats the relationship between a university and its students as “contractual in nature.” The terms of that contract, the Court found, were supplied by the student handbook, which made very clear that professionalism is a part of the university’s academic curriculum. The Court deferred to CWRU’s determination that Al-Dabagh’s had engaged in the unprofessional conduct (he had tried to deny most of it), and on that basis found nothing “arbitrary or capricious” about the university’s academic judgment to refuse to award a diploma.

The case is Al-Dabagh v. Case Western Reserve University, No. 14-3551 (6th Cir. Jan. 28, 2015).

US 6th Circuit: “Mark of the Beast” or Not, Employers Need Not Accommodate Religious-Based Refusal to Provide Social Security Numbers

By Squire Patton Boggs on January 30, 2015 Posted in Discrimination, Recent Cases, Recruitment

Earlier this week, the US Court of Appeals for the Sixth Circuit affirmed the dismissal of a discrimination lawsuit brought by an individual who claimed that FirstEnergy Generation Corp. had illegally failed to accommodate his sincerely-held religious beliefs. And what were those beliefs? That having a social security number (or any identification number, for that matter) would cause him to have the “Mark of the Beast,” which his religion prohibits. Plaintiff Donald Yeager is a Fundamentalist Christian who disavowed his social security number when he turned 18 years old. He applied for an internship position with FirstEnergy, but the company refused to hire him after he refused to provide a social security number. US federal tax law requires employers to collect and provide the social security numbers of their employees.

The Sixth Circuit’s decision reaffirms the well-established rule that while state and federal law generally requires an employer to reasonably accommodate an employee’s sincerely-held religious beliefs, the employer need not provide an accommodation that violates federal statute.

The case is Yeager v. FirstEnergy Generation Corp., No. 14-3693 (6th Cir. Jan. 28, 2015).

Lessons from the Target “Walk of Shame” Lawsuit – Addressing Suspected Illegal Employee Misconduct

By Jill Kirila on January 29, 2015 Posted in Employment Policies, Misconduct, Recent Cases, Suspension, Termination

According to a lawsuit filed on January 22 in Los Angeles Superior Court, a young Target employee who had Asperger’s Syndrome (a high-functioning form of autism) committed suicide three days after being paraded through the store in handcuffs and taken away in a police car, allegedly as part of a Target disciplinary policy known as the “walk of shame.” The lawsuit, filed by the employee’s mother, alleges that the “walk of shame” proximately caused the employee to commit suicide, and accuses Target of false imprisonment, intentional infliction of emotional distress, negligence, and wrongful death.

The complaint states that the employee arrived early for work one day and was met at the entrance by store security and police. At the direction of two store managers, the police officers grabbed him, emptied his pockets, pulled off his hat, handcuffed him, and then led him into the store, past coworkers and store customers, to be questioned. After being questioned, he was taken to a police car and to the police department. The police later released him and he was not charged with any crime. According to the complaint, the employee was “shocked, confused and mortified,” had no idea why he was being arrested, and told his mother that it was “the worst day of his life.” He committed suicide three days later.

The complaint alleges that the treatment is a disciplinary measure employed as part of Target policy that is called the “walk of shame”, designed to “cause shame, embarrassment and emotional distress”, and that it has happened numerous times to employees suspected of stealing. The complaint alleges that the employee was subjected to the walk of shame not for stealing, but because of an argument with another coworker at a bar outside of work hours several months earlier. Target denies having a “walk of shame” policy, and said in a statement that the allegations in the lawsuit of a Target policy or practice are not true, but would not comment further.

The case serves a reminder to employers to review policies and procedures for dealing with employee misconduct, including theft, and to ensure that supervisory personnel are properly educated on and consistently apply those policies and procedures.

An effective disciplinary policy consists of several components: (1) establishing a fair system of work rules and expected standards of conduct, and making sure employees are aware of them, (2) consistently enforcing those rules, and (3) documenting the rules and the steps taken to enforce them. Where misconduct is suspected, the first step is to conduct an investigation. If an employee engages in behavior so egregious that immediate action is necessary, best practice is generally to inform the employee of the suspected behavior and let them know that they are suspended, effective immediately, while the company investigates. Care should be taken at all times to avoid embarrassing the employee in front of others. Human Resources should be informed of the situation immediately; consider involving legal counsel from the outset, particularly in cases involving serious misconduct.

The investigation should be done discreetly and confidentially, and should be well‑documented. The employee should be informed that cooperation with the investigation is mandatory and failure to cooperate can subject them to termination. The company should interview the employee as part of the investigation, however, the employee should, at all times, be free to leave of his or her own accord. Never threaten the employee or in any way impede the employee’s ability to leave. During the interview, do not accuse the employee of theft. Explain the reasons for the investigation, and allow the employee to explain his or her behavior. Consider asking the employee to confirm his or her statements in writing.

If the decision is ultimately made to terminate the employee, care should be taken at the termination meeting as to the reason given for the termination. In some jurisdictions, accusing someone of a crime is per se defamatory and can result in the employer being practically forced to prove that the employee in fact committed that crime. Use language expressing a lack of trust in the employee, i.e., loss of confidence, or failure to follow store policies, if applicable. The reason for the termination should not be broadcast to other employees. Finally, make sure that the termination meeting is documented in writing.

Where theft or other illegal conduct is suspected, the decision must be made as to whether or not to involve the local police department. Many police departments will not do more than write a report for theft of less than a few hundred dollars of merchandise, so it may not be worth it to involve them. If you do decide to call the police, ensure that no one accuses any particular person of committing a crime—allow the police to conduct their own investigation. Pointing a finger, even where the evidence points to only one employee, puts your company at risk for a claim of malicious prosecution. Also, keep in mind that if the police do decide to prosecute, the company will have to cooperate with the investigation and prosecution, which can come at a cost in the form of lost man-hours.

Arizona Lawmakers Propose Paid Sick Leave, Meal & Rest Breaks, and Discrimination Law Changes

By Lew Clark on January 28, 2015 Posted in Discrimination, Employment Policies, Flexible Working, Health & Safety, Leave, Mental Health & Wellbeing, Termination, Wage and Hour

Earlier this month, Democrats in the Arizona legislature introduced three measures that would significantly change the legal landscape for Arizona employers. While none of the bills are likely to be passed by the Republican-controlled Legislature or be signed by newly-elected Republican Governor Doug Ducey, the proposed laws nonetheless have gotten Arizona employers’ attention.

Most recently, on January 20 – and perhaps not coincidentally on the same day as President Obama’s State of the Union Address, in which the President called for paid sick leave for US employees (see our post here) – Arizona House Representatives introduced HB 2505. This bill would change the law to require Arizona employers to provide one hour of paid leave for every 30 hours an employee works, up to 72 hours in a year. The paid leave would be available to employees for sick time or for “safe time” relating to domestic violence or time away necessitated by employees’ experiencing sexual assault or stalking. The proposed law resembles other local laws enacted in US cities, such as Seattle, San Francisco and New York.

On January 15, Democratic House Representatives introduced HB 2502, a measure that would require that Arizona employers provide a 30-minute meal break to each employee working continuously for 8 hours and a 10-minute rest break for every 4 hours of labor performed.

On January 12, a Democratic Senator introduced SB 1013, which would amend Arizona’s employment discrimination law to extend the statute of limitations for filing civil cases from 1 year to 2 years and add the ability for plaintiffs to recover punitive damages, but capping recoverable damages based on the number of employees employed by the employer.

As noted above, these bills are unlikely to pass in the near term, but their introduction could be signal that change is on the horizon for Arizona employers.

New Statutory Training Scheme for Employees in France

By Squire Patton Boggs on January 28, 2015 Posted in Employment Relations, Legislation

In France, employees have in the past accrued each year 20 hours of Individual Right to Training (“droit individuel à la formation” or “DIF”) up to a maximum of 120 hours.

Law 2014-288 of 5 March 2014 has now come into force and has substantially amended the previous law, notably by replacing the DIF with a Personal Training Account (“compte personnel de formation” or “CPF”).

Under these new provisions, all French companies must implement the following actions:

Before 31 January 2015: inform employees of their accrued but unused training time rights as at 31 December 2014. Planned training granted prior to 31 December 2014 but due to be conducted in 2015 must be classed as “consumed” in advance and so need not form part of the information to be given to the employee.
Before 7 March 2016: conduct career development interviews with all employees hired before 7 March 2014. The meeting aims to review the progression prospects of each employee and take stock of training undertaken with the general intention of putting self-advancement back on the agenda of both employers and employees to the hoped-for benefit of both. For employees hired after 7 March 2014, the deadline for the first interview is two years after their date of hire.
Every 2 Years: to maintain career momentum at an individual level and upskill the French workforce as a whole, each employee should have a self-development session of this sort with his employer at least once every two years. If the employer does not arrange this, the employee may be credited with additional training hours off work.

In addition:

Employees are now entitled to a minimum of 24 hours’ training per year (rather than 20) up to 120 hours. Once this limit is reached, they gain an additional 12 hours of training per year up to a maximum of 150 hours. Note: accrued but unused DIF hours are not taken into account for the 120 and 150 hour limits and can be used until 1 January 2021.
As the rights are now attached to the person, not the job, employees retain their rights to time off for training even through dismissal or resignation and into their successive employers.

As of 5 January 2015, employees are responsible for opening their personal training account on the website: “moncompteformation.gouv.fr” and should include their number of DIF hours. The website contains details of training courses approved for these purposes.

U.S. Supreme Court Issues Decision Affecting Retiree Benefits

By Daniel Pasternak on January 28, 2015 Posted in Contracts, Employee Welfare, Employment Contracts, Employment Policies, Trade Unions

From Greg Viviani via our Global Compensation Insights blog:

In M&G Polymers USA, LLC v. Tackett, the U.S. Supreme Court has opened the door for many employers to re-examine their ability to alter or amend retiree benefit plans.

The Court rejected a long-standing presumption in the Sixth Circuit of the U.S. Court of Appeals (Michigan, Kentucky, Ohio, and Tennessee) that retiree benefits in collective bargaining agreements are vested lifetime benefits that cannot be changed. In doing so, the court stated that the Sixth Circuit erred because it had erroneously “placed a thumb on the scale” in favor of the retirees. Instead, ordinary contract interpretation principles should apply.

Since a collective bargaining agreement will inevitably have a durational clause (e.g. often, three years), this ruling by the court would seem to effectively lead to a 180 degree turn in the applicable presumption. Now, it would appear that the initial presumption is that retiree benefits were only promised only for the duration of the contract.

If that is so, the positions of the parties in litigation over this type of issue will have dramatically shifted. To overcome that presumption, retirees will have to introduce legal arguments based on other language in the contract and/or extrinsic evidence to show that the parties intended the benefits to be lifetime benefits.

For example, a concurring opinion joined by four justices indicated that evidence of a lifetime promise of benefits might be derived from commonly seen bargaining agreement provisions that tie receipt of retiree medical benefits to entitlement to a company pension, or that provide lifetime benefits for surviving spouses. Both the majority and concurring opinions also pointed to “industry practice” as being potentially relevant extrinsic evidence.

Nevertheless, in an instance where the relevant negotiations may have occurred many years ago (e.g. 20 – 30 years), it may be very difficult for a plaintiff to demonstrate an intention to provide lifetime benefits. Thus, many U.S. employers may be re-examining whether they can later or amend their retiree benefit plans.

Teaching agency gives School a hard lesson on UK worker liabilities

By Squire Patton Boggs on January 27, 2015 Posted in Agency Workers, Contracts, Equal treatment, Legislation, Recent Cases, Recruitment

The 2010 Agency Worker Regulations require that once an agency worker has been in post for 12 weeks, he should receive the same pay as would a permanent employee of the hirer in the same role. This is the principle of equal treatment.

Regulation 14(3) makes the agency liable for any breach of equal treatment with respect to basic working and employment conditions (e.g. pay) unless it has, in summary:

(a) taken reasonable steps to obtain relevant information from the hirer;

(b) once that information was received, determined what those basic working and employment conditions are; and then

The AWR also states that the agency and the hirer shall be liable for any breach “to the extent that each is responsible”, so accepting that the blame may at least to some extent lie with the hirer.

Stevens v Northolt High School is the only reported case we have seen on this point. The School agreed to pay agency Teach 24 for Miss Stevens’ services as a music teacher. She successfully passed the 12 week qualifying period and so became entitled to equal treatment. Teach 24 contacted the School on at least 5 occasions outlining in no doubt increasingly insistent tones that:

the School should provide Teach 24 with details of the salary/allowances that would have been paid to Miss Stevens if she had been directly employed by it;
Miss Stevens’ pay had to be adjusted to remain compliant with the AWR; and
It was both Teach 24’s and the School’s responsibility to ensure Miss Stevens was paid appropriately and there would be legal implications and penalties for failing to do so.

On the facts, the Tribunal concluded that Miss Stevens should have received an additional £94 a week over 111 weeks; she therefore suffered a total loss of £10,878 gross. Who should be responsible for this?

Had Teach 24 taken reasonable steps to obtain the relevant information from the School as required under Regulation 14(3)(a)? Or should Teach 24 have done more to determine the appropriate pay rate, e.g. by searching its databases/the internet for the School’s old permanent vacancy adverts and taking a view on that basis? The Tribunal concluded that Teach 24’s actions to chase the School were reasonable and so it had satisfied Regulation 14(3)(a). It was unnecessary to consider limbs (b) and (c) because the School had not provided the requested information. The School was therefore found liable for the whole sum.

In this case, the Tribunal did not criticise Teach 24 for its failure to pay Miss Stevens any increase because her entitlement could not be quantified due to the lack of information provided by the School. What is not clear, however, is who would have been liable (or how liability would have been shared) if the hirer had provided the information, but the agency had no contractual right to increase its fee, and the hirer would not agree to it?

One could argue that the agency would be responsible for the breach by failing to include a clause allowing for an increased fee. Alternatively, you could argue that the hirer who is aware of the worker’s rights under the AWR but refuses to agree to the increased fee anyway is responsible. Sorry, agencies, but in my view liability would wholly lie with the agency as the agency’s duty under limb (c) to ensure the worker receives equal treatment should extend to ensuring that its contract with the hirer provides for an increase in the fee in light of the AWR and/or to meeting the extra out of its margin.

Lessons from this case:

agencies should persevere with repeated written information requests of a hirer both during and after the first 12 weeks of an assignment; making one or two requests is unlikely to satisfy the “reasonable steps” test so as to shift the liability on to the hirer. It makes sense to start those requests as soon as it becomes clear that the worker will get past the 12 week point. It must make sense also for the agency to retain the evidence of the requests – read-receipts on emails, signed-for deliveries of hard copy letters, etc.;
agencies should ensure they have the contractual right to increase their fee where required in order to satisfy the AWR;
hirers should treat agencies’ requests for information seriously and respond promptly (and ensure their staff are aware of the risks of not doing so); but

there is no suggestion from the Stevens case that agencies are required to conduct their own external or independent research as to what comparable packages at the hirer might look like, or to rely on a guess (even an informed one) as to what the hirer pays.

End of the Week Roundup – Paid Sick Leave and 2014 Unionization Rates

By Daniel Pasternak on January 23, 2015 Posted in Employment Policies, Flexible Working, Leave, Trade Unions, Wage and Hour

Two brief items to pass along as we head into the weekend:

In his State of the Union address earlier this week, President Obama urged passage of the Healthy Families Act, a measure that would require private sector US employers to allow employees to accrue up to seven paid sick days per year (see our post here). In response, Congressional Republicans have already proposed, or intend to propose, alternative legislation. On January 22, representatives from Alabama and Utah reintroduced the Working Families Flexibility Act, which passed in the House of Representatives but was not passed by the Senate during the previous congressional session. Rather than requiring paid sick leave, this bill would allow employers to offer employees up to 160 hours of compensatory time off in lieu of overtime wages for hours worked in excess of 40 hours in a workweek, provided they have worked at least 1,000 hours in the previous 12 months. Another lawmaker has announced intentions to introduce legislation that would offset the cost of paid sick leave by providing tax incentives to those employers who provide sick leave benefits to their workers.
The Department of Labor’s Bureau of Labor Statistics issued its annual report setting forth union membership data for 2014. In the private sector, union density in 2014 was 6.6%, down 0.1% from the prior year. Unionization continued to vary widely by state, with 30 states having union membership rates below the US average (primarily the southern states), and nine states with union density below 5.0%. The report further indicated that more than half of all US union members live in only seven states – with more than half of those in California and New York.

Check back next week for more developments.