Supreme Court Skeptical of EEOC's Attempt to Avoid Sanctions

The EEOC has appealed an order that would require it to pay about $4.7 million in sanctions to a trucking company that the EEOC had sued for an alleged "pattern or practice" of sex bias.  The district court dismissed 67 claims and found that the case was "frivolous, unreasonable or groundless."  The fee award continued on appeal and the EEOC actually won a reversal before the Eighth Circuit Court of Appeals and the matter was appealed to the Supreme Court.

However, the EEOC did not follow the reasoning at the court of appeals level in arguing before the Supreme Court.  Instead, the EEOC claimed that there was no "prevailing party" that would allow fees to be awarded to the trucking company.

During oral argument, the Supreme Court seemed unimpressed with the EEOC's arguments.  Two liberal justices appeared to disagree with the EEOC.  Given the current vacancy on the Supreme Court, it will be interesting to see the final decision.

Transcript: CRST Van Expedited v. EEOC, Supreme Court, No. 14-1375

For the First Time, EEOC Sues Private Employers for “Sex Discrimination” Based on Sexual Orientation.

On March 1, 2016, the Equal Employment Opportunity Commission (EEOC) filed two lawsuits against Baltimore and Pittsburgh based companies claiming those employers discriminated against employees based on sexual orientation.  This marks the first time that the EEOC has sued a private employer under the theory that “sexual orientation” discrimination is a form of “sex discrimination.”  This lawsuit forms a part of the EEOC’s continuing effort to seek judicial recognition for its argument that sexual orientation discrimination is unlawful under Title VII of the Civil Rights Act of 1964,

Under the plain language of Title VII only “sex” discrimination is considered illegal.  So far, however, the Sixth Circuit Court of Appeals, where Michigan resides, has consistently ruled that “sexual orientation is not a prohibited basis for discriminatory acts under Title VII” and that a plaintiff cannot “bootstrap protection for sexual orientation into Title VII.”  The new EEOC lawsuits were filed in district courts in the Third and Fourth federal circuits in the Northeast.  If the EEOC is successful on its lawsuits, it could take some time before the existing precedent changes in the Sixth Circuit.

Employers, however, should be aware that the EEOC continues to accept charges of discrimination relating to sexual orientation in all jurisdictions.  Furthermore, numerous counties and municipalities have local rules that prohibit discrimination based on sexual orientation.  Given that this area of law remains in flux, employers should consider contacting counsel regarding any questions or policy updates.

Was Yelp Employee “Talia Jane” Fired Illegally?

Recently, Yelp employee “Talia Jane,” (not her real name) who goes by the twitter handle “Lady Murderface,” was fired shortly after posting an open letter to her CEO on Medium.com that lamented her low pay, high cost of living in the San Francisco Bay area, and her dissatisfaction with her job.  The post, and the subsequent termination of the employee, set of a debate in the blogosphere with some feeling she was fired unfairly and others accusing her of being an entitled millennial.  But there has been very little legal analysis of her post and its aftermath.  That raises the question, was Talia Jane for unlawful reasons?

The rule laid down in National Labor Relations Board (NLRB) decisions is that an employee cannot be fired for engaging in protected “concerted activity” under the National Labor Relations Act.  Concerted activity is that which is “engaged in with or on the authority of other employees, and not solely by and on behalf of the employee himself.” Meyers Industries, 268 NLRB at 497 (Meyers I). In a subsequent case, the Board expanded this definition to include those “circumstances where individual employees seek to initiate or to induce or to prepare for group action, as well as individual employees bringing truly group complaints to the attention of management.” Meyers II, 281 NLRB at 887.  This reasoning was relied on in 2012 when the NLRB found that posting certain concerns on social media qualified as a protected concerted activity. Hispanics United of Buffalo, 59 NLRB No. 37 (Dec. 14, 2012).

In reviewing her Medium.com post, most of her open letter is related to her own complaints about her wages and inability to pay her $1,245 per month rent or buy groceries.  There are, however, several sections of the letter that would concern me if I had been advising Yelp in this case.  Consider the following:

Every single one of my coworkers is struggling. They’re taking side jobs, they’re living at home. One of them started a GoFundMe because she couldn’t pay her rent. She ended up leaving the company and moving east, somewhere the minimum wage could double as a living wage. Another wrote on those neat whiteboards we’ve got on every floor begging for help because he was bound to be homeless in two weeks. Fortunately, someone helped him out. At least, I think they did. I actually haven’t seen him in the past few months. Do you think he’s okay? Another guy who got hired, and ultimately let go, was undoubtedly homeless.

Speaking of that whole training thing, do you know what the average retention rate of your lowest employees (like myself) are? Because I haven’t been here very long, but it seems like every week the faces change. Do you think it’s because the pay your company offers is designed to attract young people with no responsibilities, sort of like the CIA?

Moreover, at one point, while discussing the company’s decision to stop stocking coconut water, she notes it is “because they taste like the bitter remorse of accepting a job that can’t pay a living wage.” 

Thus, Talia Jane has discussed her own concerns but also those of other “struggling” coworkers, employee turnover, and twice uses the buzz-phrase “living wage.”  So that raises the question, was this open letter one where an individual is “bringing truly group complaints to the attention of management”?  If so, then Talia Jane’s firing could be found to violate the NLRA.  

It is important to note that Yelp denies terminating Talia Jane because of her open letter.  Yelp’s CEO quickly took to Twitter and denied involvement in her termination pointing out there are two sides to every story and stated that her firing "was not because she posted a... letter directed at me".

Talia Jane posted shortly after her termination that her manager and HR told her she was terminated for writing the letter as it violated the Yelp terms of conduct.  She then posted that: 

i'm on the phone with HR going over my severance now.

— Lady Murderface (@itsa_talia) February 20, 2016

I can only assume that any severance came with a release of claims (that would not protect an employer from an unfair labor practice charge filed with the NLRB by the way). Regardless, one thing is certain, employees will not stop posting negative things about their employers anytime soon.  Employers should make sure they have up to date social media policies and are aware that that the NLRB is on the lookout for the next Talia Jane.

Inclement Weather Policies

It's winter in Michigan and clients are wondering what is the best way to handle inclement weather. For those of you who live in an area where severe weather can impact your work, you should consider having some type of inclement weather policy.  An online search will find numerous sample policies you can use.  But a few key points should be considered when drafting a policy:

·         How will you handle payroll issues after closing the office due to inclement weather?  Remember, exempt employees cannot have salaries docked for “absences occasioned by the employer.”  Non-exempt employees, on the other hand, do not have to be paid for hours they are not working.  The policy should address whether non-exempt employees will be paid for the day or can use vacation/PTO while the office is closed.  Some employers pay non-exempt employees a fixed number of paid inclement weather days.

·         Who has authority to decide that the office should be closed?  Will the policy list the criteria for a decision on closure (i.e. snow emergency declared, temperatures below a certain point, x inches of snow, etc)?

·         How will employees be informed that the office is closed?

·         Are there certain essential personnel who are expected to be at the office even if it closes?

·         Can employees work remotely when the office is closed due to weather?  If so, how will you track hours worked for non-exempt employees?

·         Is there a plan for inclement weather that arises during the workday, including how non-exempt employees will be paid?  Many employees can become resentful if they have to drive through a blizzard only to find out the office is closing early and they will only be paid for part of the day.

If you have questions about how to handle inclement weather issues, please feel free to contact me.

Interns or Employees? Courts Continue to Wrestle with Internships under the FLSA

Interns continue to create confusion for employers.  A recent lawsuit highlights the risk posed by utilizing unpaid student interns.  In Schumann v. Collier Anesthesia, P.A., No. 14-13169, (11th Cir, 2015), the U.S. Court of Appeals for the Eleventh Circuit overturned a dismissal of an action brought by 25 former students in a nursing master's degree program and remanded the case back to the trial court to determine whether these student interns were actually employees under the Fair Labor Standards Act.

According to the Department of Labor (DOL), there are six factors to consider to determine whether an individual is an intern or employee:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

DOL, Wage & Hour Div., Fact Sheet #71, Internship Programs Under The Fair Labor Standards Act (April 2010).

 

What is disturbing for employers is the fact that the Schumann Court expressly rejected the lower court's reliance on the factors above and the guidance contained in the DOL's Field Operations Handbook.  Further, the court distinguish the U.S. Supreme Court decision of Walling v. Portland Terminal Co., 330 U.S. 148 (1947) that formed the basis for the above six factor test. The Schumann Court, however, held that long-term "intensive modern internships that are required to obtain academic degrees and professional certification and licensure in a field are just too different from the" facts of the Portland Terminal case in the 1947.  The court went on to explain that “courts reviewing cases involving students and trainees … have, for the most part, concentrated on evaluating the ‘primary beneficiary' of the training or school program to determine whether participants constituted ‘employees' under the FLSA” because this approach “reveals the ‘economic reality' of the situation.”

In the case of the students in the nursing program, the court noted that "both the intern and the employer may obtain significant benefits.” Consequently, it decided “to focus on the benefits to the student while still considering whether the manner in which the employer implements the internship program takes unfair advantage of or is otherwise abusive towards the student.”

The court, following the lead of a recent Second Circuit decision, held that the following non-exhaustive list of factors should be used:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.

2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.

3. The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit.

4. The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar.

5. The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning.

6. The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.

7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

See also, Glatt v. Fox Searchlight Pictures, Inc., 791 F.3d 376 (2d Cir. 2015).

Based on these factors, the court ordered the case to go back to the trial court so that the Judge could consider the case based on the above seven-factor test.

Different courts are handling internship issues in different ways.  If, however, the recent Second and Eleventh Circuit decisions are any indication of a trend, companies should review their relationships with interns to ensure compliance with the FLSA.

EEOC Must pay Nearly $1M in Fees for Background Check Case

The EEOC has recently been pursuing cases against companies for allegedly discriminating in its use of background checks.  In the recent case of EEOC v. Freeman, 2015 BL 288334, D. Md., No. 8:09-cv-02573, 9/4/15, the EEOC pushed its position too far.  The Court in Freeman summarized the facts of the case as follows:

Freeman, as a regular part of its hiring process, conducted criminal background checks on all applicants who were offered a position, and conducted credit background checks on applicants who were offered financially sensitive positions. EEOC v. Freeman, 961 F. Supp. 2d 783 , 787 (D. Md. 2013). Importantly, applicants were not turned away for any negative information. Rather, Freeman limited in scope the type of negative information that would disqualify an applicant. For example, as to the criminal background check, Freeman generally did not consider arrests, but only convictions that had occurred within the past seven years. Id. at 788 . Furthermore, Freeman did not consider all convictions, but only those for certain crimes. Id . Similarly, with regard to credit checks, only certain negative items would exclude an applicant from being hired. Id. at 789 .

Freeman rejected a job applicant for a position based on information on her credit report and the applicant then filed a charge of discrimination with the EEOC.  The EEOC took the position that Freeman’s use of background checks had a disparate impact on Arica-American, Hispanic, and male applicants. In support of this claim, the EEOC relied on statistical evidence from an “expert.”  The court found that the expert’s statistical analysis was “inexplicably shoddy,” and dismissed the case for lack of any evidence of disparate treatment.  Freemen then moved for attorneys fees against the EEOC.  The Court found that the EEOC statistics were “divorced from any reference to” the allegations against Freeman and therefore required the EEOC to pay Freeman’s attorneys fees for defending the case.  Freeman was awarded nearly a million dollars in fees.

The EEOC has had issues with its statistical analysis before.  In EEOC v. Kaplan Higher Education Corp., 748 F.3d 749, (6th Cir. 2014), the Sixth Circuit upheld the exclusion of EEOC expert statistics as well.

But, the EEOC has also had success in pursuing litigation based on background checks.  The EEOC recently settled a case against BMW for $1.6 million and is continuing to litigate against Dollar General.  Employers should contact their employment counsel to review their credit and criminal background check policies.

FTC Issues Cyber Security Guidance: Good Advice for Employers and Business

The Federal Trade Commission has issued a guide for businesses that sets forth cyber security practices based on lessons learned from FTC cases.  Regardless of industry, the FTC guide can be used to help assess the cyber-security posture of an entity.  Employers should be aware that not all cyber security risks occur from distant hackers trying to break into a network.  In fact, many cyber issues begin with an "inside job" and can lead to huge liability.  The FTC's guide is a free resource that applies regardless of company size or sector.