Employment Law Update 2015: What’s New, What’s Changed and What’s Coming
Every year, the landscape of employment law continues to evolve, along with the obligations of employers. Staying up to date on new statutes and new interpretations of existing laws isn’t always easy. But the C-suite depends on HR to take the lead and keep the company compliant, no matter how far-reaching or unexpected new employment law requirements may be.
Richard H. Block, Esq., David Katz, Esq. and George Patterson, Esq., of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. visited TemPositions’ HR Roundtable Series on Thursday, December 4, 2014 to help attendees evaluate potential compliance challenges in 2015. Together, they urged attendees to pay attention to specific areas of growing regulation—and risk.
2014 saw many clear employment law trends begin to form, Block noted in opening the session. But as always, the specific details of individual cases can make all the difference in court. If a company is ever in doubt on how these laws might apply to their situation, it’s always wise to consult a seasoned attorney.
National Labor Relations Board Developments
The National Labor Relations Board (NLRB) is the federal body that works to ensure compliance with the National Labor Relations Act (NLRA). The NLRB seeks to protect employees’ rights to communicate with one another collectively about workplace conditions and terms. This practice is commonly referred to as “protected concerted activity.”
In the past, the NLRB focused primarily on workers’ attempts to unionize and engage in collective bargaining. But the NLRA does not exclude non-unionized labor or limit its protections to unionized workforces. As Block explained it, all employees “engaging in collective activities for their self-interest” (i.e., discussing wages, working conditions, hours, conduct of supervisors, etc.) have always been protected under the act.
Over the past several years, the NLRB’s authority has broadened. It has stepped up enforcement significantly, impacting far more companies and extending its reach into uncharted territories.
The NLRA was passed in 1935, long before Facebook, Twitter, and the countless other online communication platforms we now call “social media” existed. These platforms enable people—including employees—to communicate instantaneously, often in large groups.
As the popularity of social media grew, so did many employers’ restrictions on its use, Block noted. Companies did not want their employees to go online and make negative comments about them. So some employers created broad, sweeping policies that prohibited any potentially negative mention of the company on these sites.
The NLRB responded by more aggressively guarding protected concerted activities that take place on social media. In 2011 and 2012, the board issued statements warning employers that “policies should not be so sweeping that they prohibit the kinds of activity protected by federal labor law, such as the discussion of wages or working conditions among employees.”
In general, the NLRB has always ruled consistently against employers whose policies are overbroad, Block explained. The board is highly concerned with any policy that may have a “chilling effect” on employees and their confidence in being able to participate in protected concerted activities without fear of discipline or retribution.
For example, in 2014, the NRLB ruled against the Triple Play Sports Bar and Grille for overreaching in its social media restrictions. Triple Play’s policy prohibited employees from using social media to “engage in inappropriate discussions about the company, management or co-workers.” The bar used this policy to terminate workers who criticized Triple Play on Facebook for failing to withhold proper income tax on paychecks. While one of these workers used profanity to describe leadership in their comments, another merely “liked” the conversation.
In its decision, the NLRB argued that Triple Play’s workers could too easily interpret their social media policy as “proscribing any discussions about their terms and conditions of employment [that the employer] deemed inappropriate.” The original poster was found to be working for the betterment of more than one employee by posting, and the board specified that “liking” a conversation could be considered protected concerted activity.
Even the employee who had sworn when criticizing leadership was protected. The board reasoned that while the worker’s conduct was undesirable, it did not represent such gross misconduct that the worker should be stripped of NLRA protections.
Also in 2014, the NLRB ruled against both Hoot Winc, LLC (for a social media policy that prohibited “insubordination,” and “lack of respect” or “cooperation”) and against Professional Electrical Contractors of Connecticut (for a policy that prohibited using business or personal computers “in any manner that may adversely affect company business interests or reputation”). The board determined both these policies to be in violation of the NLRA, again, due to their broad chilling effect—indirectly discouraging employees from protected actions.
The NLRB does find some limits on social media use to be reasonable, Block stressed. Companies are expected to protect themselves from “sabotage.” So it’s permissible to prohibit employees from disclosing confidential company information or competitive trade secrets. And in one case (regarding a company called Landry’s Inc.), the board approved social media policy language that prohibited “postings…likely to create morale problems.” This language was permitted because the company did not discourage all postings about working conditions.
There is also room to discipline workers for gross misconduct on social media. The NLRB decided in favor of Richmond District Neighborhood Center, which withdrew two job offers after the new hires posted details of extreme insubordinate acts they intended to commit upon commencement of employment. The misconduct they threatened was so severe, and their threats appeared so credible, the board determined these workers had forfeited their NLRB protections.
The solution, Block counseled, is to carefully draft new social media policies, or revisit existing ones, to ensure their compliance. These policies should reflect the NLRB’s most recent decisions and priorities (avoiding any boilerplate versions available online, as they’re already likely to be outdated) while also protecting the company to the extent permissible by law.
The NLRB is sensitive to employer intent, so it may be helpful to introduce the company’s policy with a simple statement clarifying its purpose: to safeguard confidential company information/operations and to discourage online posts that are false, threatening or offensive. After listing any prohibited activities (whether performed using company equipment or personal technology), it may also be beneficial to conclude with a “savings” clause—a description of the protected concerted activities under the NLRA that the policy does not restrict.
To a certain degree, companies must develop thicker skins and disregard the online nature of social media, Block noted. Just as employees are protected when they meet in closed rooms to discuss low wages, poor/unsafe working conditions, and even complaints about management, they must be permitted to discuss these topics in the far more public venue of social media. Lawful restrictions must be few and specific, aimed only at minimizing legitimate business risks.
This balance can be hard to strike, and it’s important to “get it right” given the NLRB’s new vigilance. If in doubt, Block stressed, consult an experienced attorney with extensive knowledge of the NLRA and current, relevant case law.
Joint Employer Liability
The NLRB is also extending its authority into joint employer relationships, as evidenced by a 2014 ruling against fast food chain McDonald’s for (in part) unlawful actions taken by independent franchise locations. The case is notable, Block explained, because it marks a “clear departure from established law.”
Traditionally, a joint employer is defined as an entity that wields direct decision-making power over essential terms and conditions of employment: hiring/firing, working conditions and schedules, rates of pay and compensation methods, maintaining employment records, etc. In the past, privately-owned franchises were considered legally independent, on the basis that the company did not operate from their locations or manage day-to-day decision-making.
In the McDonald’s case—marking a significant new interpretation—the NLRB looked at what it called “the totality of the circumstances” and ruled there was a clear joint employer relationship between McDonald’s and its franchises. Employees across the brand’s network of restaurants—those owned by the corporation and independently-owned—claimed they suffered retaliation for attempting to unionize. The NLRB agreed and found McDonald’s liable.
McDonald’s objected to this decision, claiming its franchisees operate with such a degree of independence, it would only be appropriate to find them individually liable. But the NLRB found McDonald’s franchise regulations so detailed, specific and strict, that it ruled that franchise owners did not have the independent decision-making power over wages, working conditions and other factors that McDonald’s claimed.
“The implications of this case are potentially far-reaching,” Block stated. If courts adopt the NLRB’s new, broad, totality-of-circumstances standard, companies that work with vendors or independent contractors could be held responsible for the unlawful practices of these parties. Unions may become bolder as they seek inroads into new national companies or industries, as their path may now be far easier.
“As a takeaway, be careful how much control you exert over any other employer that you contract with,” Block counseled. “If you exercise a lot of control over them, you may end up with a finding that you are in a joint employer relationship.”
Bellwether Cases & New Legislation
Each year, there are important cases that indicate coming trends in the law, along with new statutes or first-time implementations. As both courts and legislatures consider the intent behind laws, they may prescribe updated practices.
Block introduced fellow presenter Patterson to share the details of two cases before the US Supreme Court. These cases are significant, Patterson explained, because they address an employer’s obligation to provide “reasonable accommodations” to two very large groups—pregnant women and workers who wear clothing that reflects their religious faith.
Cases Before the Supreme Court
In the first case, Young v. UPS, the plaintiff sued after being placed on an unpaid seven-month leave (including loss of wages, pension, health benefits, and disability payments) following the disclosure that she was pregnant. Young’s doctor instructed her to avoid any heavy lifting, and she asked her employer to accommodate her with “light duty.” UPS refused, and Young filed suit, claiming discrimination under the Pregnancy Discrimination Act (PDA).
As Patterson described it, UPS’s policy on accommodating lifting restrictions was “facially neutral,” revealing no clear intent to discriminate against pregnant women. Per this policy, UPS offered temporary light duty (such as desk work) to workers who injured themselves while working. UPS’s attorneys argued that Young was denied accommodation not because of her pregnancy, but because her lifting restriction did not derive from an on-the-job injury.
On March 25, 2015, the Supreme Court vacated a lower court’s ruling against Young, referencing the McDonnell-Douglas burden shifting framework typically applied in discrimination cases. The court put the onus back on UPS to establish that its legitimate business concerns for denying accommodation to Young were not a pretext for discrimination.
As Patterson had noted during his presentation, whatever decision the court made would be significant. Women make up 47% of the American workforce and many plan to work late into their pregnancies. By reviving Young’s case, the court may have just made it easier for pregnant workers to bring suits over an employer’s failure to provide workplace accommodations.
The second case, Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, concerns applicant Samantha Elauf. Elauf applied to work at Abercrombie & Fitch wearing a headscarf in observance of her Muslim faith. While her interviewer noted that her qualifications and demeanor were impressive, Elauf was not hired on the grounds that her scarf violated the store’s “Look” policy (dress code). The EEOC sued, alleging religious discrimination.
According to the EEOC, Abercrombie & Fitch should have accommodated Elauf’s religious beliefs by permitting an exception to their dress code policy. But the company insisted its “Look” policy was central to the company’s brand, to the point that sales associates are called “models.” Further, the brand’s attorneys argued that Elauf failed in her obligation to inform the company that she would need an accommodation in relation to the “Look” policy.|
In this case, the court’s ruling could set an interesting precedent, Patterson explained. Early signs are that the court will side with Elauf, and if it does, companies will need to be “more perceptive”—and better-educated—about employees’ needs for faith-driven dress/grooming accommodations. Potentially, such a decision could eventually affect how employers address a wide range of workplace accommodation needs.
Increasing Intern Protections Fellow presenter Katz stepped forward to discuss the lawful engagement of interns. In recent years, the courts have seen an influx of wage and hour class action suits filed on behalf of unpaid interns.
To avoid these wage and hour suits, employers should take great care whenever they engage interns that are unpaid, Katz explained. Many companies are tempted, especially in a poor job market, to welcome candidates who may agree to work without compensation to get a “foot in the door.” But unless very specific conditions are met, the courts are likely to reclassify many common internship arrangements as employment relationships, subject to all relevant regulation.
To be lawful, an internship must clearly benefit the intern—not the company—to the extent that the intern’s presence may even hinder the organization’s ability to go about its normal operations. Expecting the intern to contribute substantively to daily business, Katz warned, may lead to a finding that they should be classified as an employee.
The internship experience must provide education and training, similar to what the intern might receive at a school. The intern should not replace any worker, but instead perform distinct duties under the close supervision of company staff. Their classification quickly becomes muddied if they are asked to perform any “overflow” tasks typically performed by employees.
Finally, it’s important that both the intern and the employer maintain a clear understanding that there will be no wages paid for the internship period. It must be equally clear that once the internship concludes, the intern is not entitled to employment.
Wage and hour laws aren’t the only concern. In 2014, perhaps in response to internship-related cases rising in prominence, the New York City Council voted to extend the anti-discrimination protections of the New York City Human Rights Law to all interns, paid and unpaid.
Statute of Limitations Reductions
Statutes of limitations—the amount of time that plaintiffs have to file lawsuits after an alleged violation occurs—can vary state by state. Two recent and somewhat overlooked court decisions support an employer’s right to set their own statutes of limitations for suits against the company. While the cases may continue through the courts, these decisions stand until further notice.
Both cases involved furniture retailer Raymour & Flanigan, one location in New Jersey and the other in New York. Plaintiffs objected to a section on the company’s employment application that read, “I agree that any claim or lawsuit relating to my service with Raymour & Flanigan must be filed no longer than six (6) months after the date of employment action that is the subject of the claim or lawsuit. I waive any statute of limitations to the contrary.”
The company’s waiver sets a bold new limit. New Jersey’s statute of limitations for employment discrimination lawsuits is two years, Katz explained, and New York’s is three years. But both courts found the practice to be lawful and the term of six months to be reasonable.
To add a statute of limitations waiver to an application form, Katz counseled, be sure to use “clear and uncomplicated language.” The courts want employers to make best efforts to ensure applicants read that language—so place it prominently on the page and use eye-catching formatting of some kind (e.g., bold type, larger font size, etc.). Finally, allow the applicant sufficient time to review their form, ideally taking it home to complete. Companies should provide for a period of at least six months, as found acceptable by the court.
Consistency in employment documentation is also advised. The waiver, or very similar language, should appear in offer letters, employment agreements, employee handbooks, documents related to arbitration policies, and severance/separation agreements.
In December 2014, the New Jersey Supreme Court granted the plaintiff’s petition for certification, agreeing to review the June 2014 appellate court decision. So employers may want to consider tracking this case before revising their job applications to abridge limitations periods (at least in New Jersey).
New York Wage Theft Prevention Act
The New York Wage Theft Prevention Act requires employers to issue letters to new employees at the time of hire, as well as distribute annual notices to continuing employees, containing specific details of their compensation. Details include pay rate, schedule, regular payday, etc.
Since the law went into effect in 2011, issuing annual notices has created an “administrative headache” for HR departments, Katz noted. Many hoped that New York Governor Andrew Cuomo would sign a new law repealing parts of the act and relieving them of this burden.
That repeal has been enacted. Governor Cuomo signed a partial repeal bill on December 29, 2014, effective immediately. Employers are still required to share specific wage information at the time of hire, but the annual notice requirement has been eliminated.
New York City Earned Sick Time Act
Newly enacted in April 2014, the New York City Earned Sick Time Act is one of the most buzz-worthy new statutes among businesses that operate in the city. But in spite of the law’s seeming complexity, Katz noted, employers who already offer some form of paid time off should find it relatively easy to comply.
According to the act, employers with more than five workers (who work more than 80 hours per calendar year and were hired to work in New York City, specifically) are required to provide eligible employees with a maximum of 40 hours of paid sick leave per year. Employers with fewer than five workers are required to offer the same maximum in unpaid sick leave per year.
Employees are deemed eligible when they have worked in New York City for more than 80 hours in a given calendar year. The law protects nearly every category of employee (though notably, not correctly-classified independent contractors), from managers and supervisors to temporary employees to part-time and per diem workers. Even those who telecommute for companies based outside the city are covered for the hours they physically work in NYC.
Employees accrue one hour of sick leave for every 30 hours they work, and can earn up to the maximum of 40. Workers begin to accrue sick leave, paid or unpaid, upon commencement of employment, and they can begin using accrued leave after 120 days. Once they reach this 120-day mark, they can use additional sick time as it accrues.
Sick leave can be used for a variety of health-related reasons, not all of them limited to the employee. The time can of course be used to attend to personal injuries and physical/mental illness, see doctors (including for preventative care), etc. But workers can also use it to care for broadly-defined “family members,” which include everyone from parents, grandparents, siblings (including half, step or adopted), spouses and children of domestic partners, and their children.
Sick leave can also be used for basic child care in case of school closures (or childcare provider closures) related to any form of public health emergency. The same applies if the employer’s business closes for a public health emergency.
Employees can use their sick time against any hours they are required/scheduled to work, including overtime hours, Katz noted. But employers can formalize a “reasonable minimum increment” no greater than four hours/day to keep productivity on track. (A worker who comes and goes for shorter periods may be more disruptive to scheduling than one who leaves less frequently, but for longer stretches.)
Requiring notice and especially documentation for use of sick leave is permitted only within certain guidelines. A worker with a “foreseeable” reason to take leave (e.g., a scheduled annual check-up) can be required to provide advance notice of up to seven days. For sick leave needs that are unforeseeable, the employer can only require notice “as soon as practicable.” Documentation cannot be required until an employee has missed three consecutive days.
If employees do not use all of their sick leave by the end of a year, they can carry it over, though the total sick leave hours per year that an employer is required to provide will never exceed 40. Hours that carry over remain immediately available for use (there is no new 120-day waiting period). Employers are permitted to pay their workers for unused sick leave hours if they wish. Notably, they are not required to pay for unused sick time upon termination.
All that said, Katz stressed, a surprising number of companies may find it easier than expected to comply with this act. Many employers already offer some form of paid time off (PTO), from accrued vacation time to personal days. As long as the PTO offered either meets or exceeds the minimums prescribed by this law, and as long as the employer allows its workers to use that PTO for sick leave, the company will be in compliance.
The NYC Department of Consumer Affairs requires employers to distribute and post standard notices regarding sick leave. Templates and guidelines for employee communications can be found on the department’s website.
The Year in Wacky Employment Cases
To conclude the session, Patterson stepped forward to review some of the most unusual recent employment cases. No matter how unique the circumstances that brought each case to court, he explained, the decisions set precedents for all employers.
Barker v. The Boeing Company
When three Caucasian Boeing employees donned makeshift KKK costumes and posed for a photo in the workplace, the company promptly terminated their employment. But the three workers sued, claiming that because they were white, their supposed joke had been judged too harshly. They pointed out that an African-American employee had also “participated” in the activity and had not been terminated.
As it turns out, the participating African-American employee was the party who took their picture—then complained to the company about their conduct. The court determined swiftly that bias against Caucasians was not a factor in the employees’ firing, and that their termination on the grounds they had created a hostile work environment for other employees was lawful.
Lester v. NY Parks & Recreation
The NY Parks & Recreation Department requires all male lifeguards to wear Speedo-style bathing suits as their official uniform. But one employee, a 61-year-old former triathlete named Roy Lester, refused. Lester’s employment was then terminated, and he sued—claiming age discrimination. Lester’s attorney argued that older lifeguards would not be comfortable in such a bathing suit, and that the policy was therefore intended to eliminate older employees.
The case ended up in the New York Appellate Court, but the original New York court’s decision was upheld: the courts found no age discrimination in the uniform requirement, and Lester’s termination was found lawful. Disappointed, the plaintiff memorably said, “There should be a law prohibiting anyone over the age of 50 from wearing a Speedo.”
EEOC v. Dynamic Medical Services
According to employees at Dynamic Medical Services, their employer routinely forced them—as a condition of employment—to engage in religious activities related to the Church of Scientology. These practices included taking part in Scientology “audits,” staring at walls, screaming at ashtrays, or looking at one another without moving for hours on end.
Two employees refused to participate in these activities, and the company terminated them. Their case was taken up by the EEOC, which argued the company created a hostile work environment and failed to accommodate the workers’ religious beliefs (essentially by forcing them to join a different religion).
The company chose to settle out of court (while protesting the claims were false, and that they merely settled to avoid the cost of a trial). Dynamic Medical Services paid $170,000 in damages and pledged to put an end to all such practices.
Hudgens v. Prosper, Inc.
While working at Prosper, Inc., employee Chad Hudgens worked under a supervisor who engaged in extreme motivational practices. This manager intimidated his team by striking desks and worktables with a large wooden paddle. When they failed to meet sales targets, he drew on their faces with permanent marker. Once, he even approximated waterboarding on Hudgens, telling the team afterwards that they should fight to sell just as Hudgens had fought to breathe.
Hudgens was later terminated. He promptly sued the company for wrongful termination, while also claiming a series of what Patterson called “common law” offenses: intentional infliction of emotional distress and assault and battery.
Incredibly, a lower court dismissed the case, arguing that the company’s only goal was to motivate Hudgens, not actually harm him. But the Utah Supreme Court reversed that decision and permitted the case to move forward.
Several HR Roundtable attendees expressed shock that Hudgen’s action had met with any resistance at all. But as Patterson explained, it can be very difficult to win cases involving only non-statutory claims in the employment context. The bar for proving “intentional infliction of emotional distress” can be extremely high, as nearly all manager-subordinate relationships can lead to stress, and many include some level of intimidation intended to motivate better performance.
McMiller v. Metro
Eartha McMiller claims that while she was an employee at Metro, her supervisor developed a sexual interest in her and made ongoing advances, which she rejected. On one occasion, he reportedly called her into his office to request she use tweezers to remove an ingrown hair from his chin. She refused, and he responded that he could ensure she lost her job. Then he kissed her, assuring her he would keep her position secure. She rejected him once more before leaving.
The company eventually terminated McMiller for poor work performance. Interestingly, she did not dispute that her work had been unsatisfactory. But she chose to bring a claim against her former supervisor for “quid pro quo” sexual harassment. Representing herself (and having successfully navigated appeals up to the Eighth Circuit), she was permitted to present her case to a jury.
What’s interesting about this case, both Patterson and Block noted, is that McMiller’s termination is not at issue. The court is concerned with the supervisor’s attempts to establish a quid pro quo relationship with her (while he was tolerating her poor performance).
Caparanis v. Ford Motor Co.
Ford employee Robert Caparanis dressed differently than his co-workers at the assembly plant. He admitted to wearing “weird” clothing, and also liked to pretend that he was pregnant whenever he was wearing his work apron. Other employees, he claimed, played “obscene sexual pranks” on him and teased him about his gender identity. He maintained that he brought his grievance to management many times, but that they did not discipline the other workers.
Ford eventually terminated Caparanis for an unrelated incident: bringing a container of his own urine to work and placing it in a container of work gloves. Caparanis claimed the container of his urine was properly discarded in a trash can, not a container of work gloves. He also questioned the sincerity of the company’s concern over sanitary conditions, as another worker had once urinated in an inappropriate location and was not terminated for it.
Caparanis sued Ford, claiming that “retaliation” and “harassment based on gender stereotyping” had caused him “emotional distress” and were the true motivations behind his termination. An Ohio federal court denied Ford’s motion for summary judgment permitted Caparanis to proceed to trial.
As strange as Caparanis’s case may be, Patterson stressed, it’s telling how seriously the courts are taking his claims. Sexual pranks and any harassment that relates to gender or gender identity can lead to exposure, even if the circumstances are unusual.
2015 Sure to Bring New Changes
Block, Katz and Patterson closed their session by urging attendees to keep current with employment law updates, whether by attending events hosted by their firm, reading newsletters or signing up for email blasts. Like any other year, 2015 is sure to see trending litigations, new statutes, and new interpretations. It will certainly see important pending cases decided.
In response, attendees should expect to revise their companies’ policies and even recommend brand new practices. After all, compliance is an evolving challenge—one that companies will always rely on their HR departments to ensure.
Anne DeAcetis is a freelance writer based in New York. Reach her at firstname.lastname@example.org.
The HR Roundtable is a breakfast forum for human resources professionals in New York City sponsored by The TemPositions Group of Companies. TemPositions, one of the largest staffing companies in the New York tri-state area with operations in California, has been helping businesses with their short- and long-term staffing needs since 1962. Visit them online at www.tempositions.com or email them at email@example.com.