MN Employment Law Report

MN Employment Law Report

The Bottom Line on Labor & Employment Law

Supreme Court Extends Time for Filing Lawsuits Over Fiduciary Duty To Monitor 401(k) Plan Investments

Posted in Employee Benefits

401k - Nest EggThe U.S. Supreme Court unanimously ruled that 401(k) plan participants may file an ERISA breach-of-fiduciary duty lawsuit more than six years after an investment was selected based upon the retirement plan’s fiduciaries’ continuing duty to monitor and review investments. See Tibble v. Edison Int’l, No. 13-550 (May 18, 2015).  The justices rejected lower court rulings that applied the 6-year statute of limitations under ERISA to the initial selection of an investment unless changed circumstances required that a new filing period should apply.

The plaintiffs in this case argued that the fiduciaries their 401(k) Savings Plan acted imprudently when they offered six higher priced retail-class mutual funds as plan investments when materially identical lower priced institutional-class funds were available.  Three of the challenged funds were selected in 1999; the other three were selected in 2002.  However, the lawsuit was not filed until 2007, prompting the lower courts to rule that the challenge to the 1999 fund selections was time-barred because there was no allegation of any change in circumstances that would have led the fiduciaries to e review and change the 1999 investments.

The U.S. Supreme Court reversed, concluding that retirement plan trustees have an on-going, continuing fiduciary duty to monitor and review the plan’s investments and remove imprudent ones.  As a result, people wishing to challenge these selections do not have to point to a change in circumstances.  As long as a lawsuit is brought within 6 years of any alleged breach of this continuing duty, the claim is timely.

The justices refused to define the precise scope of the fiduciary duty to monitor and review; they merely noted that such a duty exists and then remanded the case back to the Ninth Circuit Court of Appeals to decide if there was a proper claim for a breach of fiduciary duty within six years of any claimed breach of that duty.

While the duty to monitor has always existed, the potential for liability arising from investment decisions has increased. Troubling news indeed for people servicing in this capacity.

Court Stirs the Pot on Medical Marijuana and Drug Tests

Posted in Lesser-Known Employment Laws

Blog Pic - Medical MarijuanaLike almost half the states and the District of Columbia, Minnesota has now legalized marijuana to treat certain medical conditions.  With distribution set to begin this July, many Minnesota employers are wondering how this will affect policies regarding workplace use and possession of drugs.

A recent Michigan case warns employers that improper application of drug policies may violate the Americans with Disabilities Act (ADA).  In EEOC v. Pines of Clarkston, 2015 U.S. Dist. LEXIS 55926 (E.D. Mich. Apr. 29, 2015), an assisted living facility refused to employ a nursing administrator, Jamie Holden, after she tested positive for marijuana prescribed to treat epilepsy.  This raised the question: was  Holden rejected because of the positive drug test or for the disability that required marijuana for treatment?

Improper Questioning

After testing positive for marijuana on a pre-employment drug test, Holden divulged that she had epilepsy and was prescribed marijuana as part of her treatment.  One of the facility owners then questioned her about her epilepsy and suggested she may not be able to perform the duties of the position.  A few days later, Holden’s application was rejected.

The Equal Employment Opportunity Commission (EEOC) sued the company claiming that the positive drug test was a pretext for disability discrimination under the ADA.  The employer countered that Holden was let go for violating their zero-tolerance drug policy, not for having epilepsy.  When the company filed a motion for early dismissal, the judge declined.  He observed that while marijuana is still an illegal drug under federal law (regardless of what state laws say about legal use) and its use need not be permitted as a reasonable accommodation, using positive drug tests to screen out disabled job applicants is nevertheless a violation of the ADA and most state disability laws.

The company’s main problem in this case was their inability to get their story straight.  At various points, they presented different reasons for not retaining Holden—a zero-tolerance drug policy, her failure to disclose her medications during the interview process or a genuine concern she could not perform the duties of the job. As a result, the judge decided that a full trial was needed to flesh out the company’s reasons for their actions.  Therefore, unless the case is settled, a jury will get to scrutinize whether the company lawfully relied on the drug or merely used it as an excuse not to hire an applicant with a disability.

Bottom Line

The need to use medical marijuana is not itself a qualifying disability under the ADA.  However, using positive drug tests as a method designed to screen out disabled job applicants would violate the law.  In addition, merely relying on the illegality of the drug will not be useful in Minnesota and most other state discrimination laws because the drug is in fact legal if prescribed, and employers must then consider whether such use can be accommodated.  If this situation arises, get help from a skilled employment lawyer in order to ensure all state and federal laws are followed.

Jury Awards $2 Million to Nurse for “Defamatory” Report to Board of Nursing

Posted in Defamation, NLRB

female doctor in front of medical groupAn Ohio jury recently awarded $2 million dollars to a nurse they felt had been defamed by a hospital that reported her to the State Board of Nursing (“BON”).  Here’s the catch — Ohio law actually requires hospitals to report such conduct and grants immunity to such reports made in good faith.  Things got worse for the hospital when the National Labor Relations Board (“NLRB”) ruled last week that the hospital’s termination of this same nurse, and the BON report, were illegally motivated by her union activities.

Background

Ann Wayt worked as a Registered Nurse at Affinity Medical Center in Massillon, Ohio.  In more than 30 years, she had never been disciplined and actually won a prestigious nursing award in 2008.  In 2012, she actively and visibly was involved in a campaign to unionize the nurses at the Hospital, which resulted in a narrow victory (100-96) for the union.

The day of the election, a nurse who worked as a “sitter” with one of Wayt’s patients the previous day complained that Wayt had not relieved her on time.  The Hospital investigated Wayt’s care for the patient and concluded that she had (1) falsified documentation on the patient’s chart by stating that she had performed a “head-to-toe” assessment when she had not; (2) failed to perform her hourly rounds on the patient; and (3) had posted several inaccuracies  in the patient’s chart.

Despite never actually interviewing Wayt, Hospital management concluded that she should be terminated but asked their Human Resources Department to review the decision.  HR responded that this was a “a weak case for termination” and asked for additional information, including Wayt’s disciplinary history and a description of how similar situations had been handled in the past. Management never responded, choosing instead to revise its description of the events in question (with several inaccuracies) and proceed to terminate Wayt for “substandard patient care and falsification of patient documentation.” Management then filed a report with the Ohio BON asserting that the patient was “not observed for an unsafe period of time.”

BON Reporting Requirements

In Ohio (like Minnesota), if a hospital believes that a nurse’s behavior would result in discipline from the state Board of Nursing, the hospital must report that nurse to the BON. By law, the hospital will not be liable for damages because of the report, unless the report is submitted in “bad faith.”

Ohio Jury and NLRB Both Find the Hospital Broke the Law

Following her termination, Wayt sued, claiming among other things that the BON report defamed her.  After a trial, the jury agreed and awarded her $800,000 in compensatory damages and $750,000 in punitive damages, while also ordering the Hospital to pay her attorney’s fees.

At the same time, the Hospital was facing Unfair Labor Practice charges stemming from the union election, one such charge being that Wayt’s termination and the BON report were retaliatory due to her involvement with the union.   An Administrative Law Judge (“ALJ”) and ultimately the NLRB found that the hospital’s actions were in fact discriminatory and violated the National Labor Relations Act for the following reasons:

  • The timing of the Hospital’s actions relative to the union election was suspect and the Hospital could not prove that their reasons were true;
  • The Hospital did not conduct “an unbiased investigation, but [rather] an inquiry . . . that was focused on getting support for the decision it had already made . . .”; and
  • Even if the Hospital’s reasons had been true, the hospital had hardly ever terminated a nurse and made a report to the BON in similar circumstances, namely “a first offense that had no bearing on the patient’s health.”

The NLRB ordered the Hospital to offer the Nurse reinstatement, make her whole for any loss of earnings or benefits, compensate her “for the adverse tax consequences, if any, of receiving a lump-sum backpay award,” formally withdraw the BON Complaint against the Nurse, and reimburse the Nurse for any legal fees that she may have incurred at the BON.  See Affinity Medical Center, 362 NLRB No. 78 (April 30, 2015).

Bottom Line

Although making BON reports is mandatory, Minnesota health care employers must still conduct a legitimate investigation of the matter in order to be sure that their report is in good faith and subject to the immunity that the law provides.

U.S. Supreme Court OKs Limited Review of EEOC’s Conciliation Efforts

Posted in Employment Litigation

Blog-Pic---US-Supreme-Court.jpgIn what is viewed as a partial victory for employers facing Equal Employment Opportunity Commission (“EEOC”) charges, the U.S. Supreme Court ruled today that courts may conduct limited review of the EEOC’s mandatory conciliation efforts prior to filing suit.  Then, if a court finds that the EEOC did not engage in the legally-required conciliatory efforts, the lawsuit may be stayed until conciliation has occurred.  Unfortunately, the Supreme Court did not give employers the big win that had been hoped for, namely a ruling that requires dismissal of a lawsuit if the EEOC refused to conciliate.

Mandatory Conciliation Efforts under Title VII

Title VII of the Civil Rights Act of 1964 sets out a detailed procedure through which the EEOC enforces the statute’s ban on employment discrimination.  The law first requires all potential plaintiffs to file a Charge of Discrimination with the EEOC.  If the EEOC finds merit to the Charge, EEOC then “shall endeavor to eliminate” the alleged unlawful employment practices by “informal methods of conference, conciliation, and persuasion” before filing suit.

EEOC’s Case against Mach Mining

In Mach Mining, LLC v. EEOC, No. 13-1019 (April 29, 2015), the EEOC had found reasonable cause to believe the company had discriminated against the woman whose complaint triggered the case, as well as a class of women who had also unsuccessfully applied for mining-related jobs.

The EEOC sent the employer two letters: (1) one letter notified Mach Mining of its intention to begin informal conciliation and (2) the second letter, sent about a year later, notified Mach Mining that it had determined that the conciliation process had failed.

After the EEOC filed suit, Mach Mining asserted its defense that the EEOC had failed to conciliate in good faith.  The district court denied the EEOC’s motion to dismiss, the Seventh Circuit Court of Appeals reversed, holding that courts had no legal basis for reviewing the EEOC’s conciliation efforts.

Supreme Court’s Decision

Writing for a unanimous Court, Justice Elena Kagan first declared that the EEOC’s conciliation efforts are subject to judicial review – albeit limited review.  Specifically, in order to comply with Title VII’s conciliation requirements, the EEOC must complete two tasks:

  • First, “the EEOC must inform the employer about the specific allegation” and “describe[] both what the employer has done and which employees (or what class of employees) have suffered as a result.”
  • Second, “the EEOC must try to engage the employer in some form of discussion (whether written or oral), so as to give the employer an opportunity to remedy the allegedly discriminatory practice.”

The Court decided that the EEOC can satisfy this obligation by submitting a sworn affidavit stating that these requirements have been met.  Then, only if the employer presents “credible evidence” that the EEOC did not engage in these efforts, will the court engage in fact finding in order to determine whether the conciliation efforts were properly undertaken.

If the EEOC fails to engage in the required conciliatory efforts, the Supreme Court ruled that a Title VII lawsuit should only be stayed until the EEOC complies, but should not be dismissed altogether.

Bottom Line

While the Supreme Court’s decision in Mach Mining ensures that the EEOC and its agents will engage in at least some conciliation efforts prior to bringing suit, this decision is disappointing to employers because the Court declined to authorize dismissal of the EEOC’s lawsuits if conciliation efforts were not undertaken.  Still, the next time you receive an EEOC charge, pay careful attention to whether the EEOC has complied with the conciliation obligations outlined above.

Eighth Circuit Holds Early Stage Illness Does Not Warrant FMLA Leave

Posted in FMLA

Blog-Pic---Nurses.jpgThe Eighth Circuit Court of Appeals recently ruled that a disease in its earliest stage did not rise to the level of “serious health condition” that would qualify the employee for the protections of the Family and Medical Leave Act (“FMLA”).

Employee’s Kidney Issues Lead to Multiple Absences

In Dalton v. ManorCare of West Des Moine, IA, LLC, No. 13-3743 (8th Cir. April 7, 2015), employee Lucinda Dalton began experiencing significant weight gain and fluid retention.  After multiple doctor visits, Dalton sought the opinion of kidney specialist, Dr. Robert Leisy, who diagnosed her with Stage One Chronic Kidney Disease (“CKD”) and Secondary Obesity.  Dr. Leisy later testified that Stage One CKD is not truly a disease because kidney function “is actually normal to above normal at that point.”  Instead, the kidneys simply must work harder than normal, which might eventually wear out the kidneys.  Still, with proper care, such as weight loss, a Stage One patient may avoid advancing to higher stages of CKD.

During all this time, Dalton received a series of disciplinary actions, including one for 10 attendance infractions in the space of one month, and another based on complaints from her direct reports.  Dalton raised the issue of FMLA leave but was informed that she was not eligible.  A few days after receiving her latest warning, Dalton was directed to complete several unfinished tasks as soon as possible.  She immediately left work, claiming to be ill.

Shortly thereafter, Dalton was admitted to the emergency room with complaints of “atypical chest pains.”  She was released that same day without a diagnosis but with a note excusing her from work for three days.  Upon her return, she was issued a written warning for failure to perform her job duties prior to her emergency room visit.  Consistent with ManorCare’s progressive discipline policy, this resulted in Dalton’s termination.

Employee Did Not Suffer from a Serious Health Condition

When Dalton sued for interference with her FMLA rights, ManorCare responded that Dalton was not eligible for FMLA leave because she did not suffer from the required “serious health condition.”  The lower court sided with ManorCare and dismissed the claim.  On appeal, the Eighth Circuit affirmed, explaining that while kidney disease most certainly can be a serious health condition, Dalton’s diagnosis – Stage One Chronic Kidney Disease – did not amount to an “advanced disease.”

The appeals court relied on Dr. Leisy’s testimony that Stage One CKD is simply a warning that the kidneys are working too hard.  They also pointed to the results of medical testing confirming that Dalton’s CKD had not reached an advanced stage.  The court explained that while FMLA does cover medical treatment for symptoms which are later diagnosed as a serious health condition, Dalton’s CKD never progressed past Stage One.  In other words, Dalton did not really suffer from a disease but rather demonstrated the signs that a disease might be forthcoming.

In dismissing the case, the Eighth Circuit also emphasized that the employer never interfered Dalton’s ability to take time off due to her medical issues or her need for testing.  This made it difficult for the court to accept that any actual interference took place.

Bottom Line

This was an unusual case since the employee was absent for more than three days due to medical reasons yet was not eligible for FMLA leave because the medical reasons did not add up to a “serious health condition.” Employers should watch for such situations in evaluating medical certifications. Remember, however, that if the medical issue becomes more serious and progresses to a serious health condition, the employee’s absences at the early stages would be viewed as protected under FMLA.  This sort of distinction is one of many that continues to vex employers in evaluating their rights and obligations under FMLA.

Sixth Circuit Holds Telecommuting Not Always a Reasonable Accommodation Under the ADA

Posted in Discrimination

Blog Pic - Ford MotorAdvancements in technology has expanded society’s notion of what constitutes “the workplace.”  As employers are now granting more requests to work from home, the Equal Employment Opportunity Commission (EEOC) has begun to view telecommuting as a legally required reasonable accommodation for many disabled employees who have difficulty getting to work.  Recently, however, the Sixth Circuit Court of Appeals rejected this approach, ruling that regular, in-person attendance is an essential function of most jobs.  Therefore, an employer did not violate the ADA by denying the request of an employee who had irritable bowel syndrome to telecommute from home up to four days per week.

In EEOC v. Ford Motor Co., No. 12-2484 (6th Cir. April 22, 2014), the EEOC sued Ford Motor Company, who rejected a request by a “re-sale buyer” to telecommute as an accommodation for her disability.  Ford maintained that regular and predictable attendance was essential to be a fully functional member of the resale team, as evidenced by the employee’s three previous telecommuting stints, all of which failed miserably.

While EEOC showed that other re-sale buyers had been allowed to telecommute,  the appeals court observed that they only did so once a week and offered to come into the office on their telecommute days if needed.  In this instance, the employee sought four telecommuting days at her discretion and did not want to be required to report to the office on those days.

The court also noted that Ford had offered other accommodations (i.e. moving her desk closer to the bathroom and finding the employee another job more suitable for telecommuting), and that the employee herself admitted that she could not perform 4 of her 10 main job responsibilities from home and that her absences from work caused her to make mistakes.

Ultimately, the Sixth Circuit concluded that the re-sale buyer position was highly interactive and required extensive face-to-face interactions.  Therefore, physical attendance was an essential requirement of the job and that the employee therefore was not a qualified disabled person entitled to her requested accommodation.

Key Take Away

This decision sides with the majority of federal courts addressing this issue.  Bear in mind, however, that this decision did not determine that telecommuting is always unreasonable – it just ruled that it was not required in this particular case.

The Appeals Court gave significant weight to the fact that Ford attempted to accommodate Harris on numerous occasions, all of which failed or were rejected by Harris.  This is a signal that employers should continue to engage in the interactive process with disabled employees in an attempt to accommodate their disabilities.  While not required in the Ford case, telecommuting should certainly still be evaluated as one potential option depending on the specific job requirements.

Misclassified Employees Who Cash Settlement Checks For Unpaid Wages Can Still Pursue Claims

Posted in Wage & Hour

law gavel with cash, isolated on whiteThe Eighth Circuit Court of Appeals recently ruled that employees who settled claims with their employer for unpaid overtime could still pursue legal claims seeking more such payments even though they signed releases and cashed their settlement checks.

ActionLink designated their “brand advocates” as exempt “outside salesmen” under the Fair Labor Standards Act (“FLSA”).  They therefore did not pay them overtime even though some of them worked up to 75 hours per week.  The U.S. Department of Labor (“DOL”), after investigating a complaint, persuaded ActionLink to classify these workers as nonexempt and therefore eligible for overtime.

The company also agreed to pay back overtime wages to each brand advocate that had been misclassified. The reimbursement check given to each affected employee contained the following disclaimer:

By cashing this check, the employee to whom [this payment] is made is agreeing that he or she has received full payment [for] wages earned, including minimum wage and overtime, up to the date of the check.

A number of the brand advocates cashed the settlement checks. Thereafter, a group of brand advocates, some of whom had cashed their checks and some had not, brought FLSA claims against ActionLink in federal court for unpaid overtime.

The trial court dismissed the claims of the employees who had already cashed their settlement checks, finding that they had waived their rights to further legal recourse.  Those employees appealed and the Eighth Circuit reversed the original decision, finding that the waivers on the settlement checks were not valid because the employees cashing those checks did not have adequate notice of the rights that they were actually waiving.  The waiver “made no mention of the FLSA, waiving legal claims, or any additional damages to which the employees may be entitled,” all of which were mandatory components of a valid settlement release under the FLSA.

The case was sent back to the trial court to allow the employees who had cashed their settlement checks the chance to pursue their claims.

Bottom Line

Many federal and state employment laws have very precise requirements for a valid release of claims.  Employers using a release like the one in this case probably will not find it to be a useful short cut through these regulations; more likely, they will wind up as dead ends.  Better to call an experienced lawyer to steer you in the right direction.

New EEOC Rule Encourages Employers to Do some Spring Cleaning on Health Incentive and Wellness Programs

Posted in Employee Benefits, Patient Protection and Affordable Care Act

businessman lifting weightsThe Equal Employment Opportunity Commission (EEOC) estimates that almost 600,000 employers offer some type of employee wellness program, such as nutrition classes, smoking cessation programs and health risk assessments. EEOC has now Proposed New Rules defining the voluntary nature and permissible incentives of these programs.

The Americans with Disabilities Act (ADA) bans discrimination based on disability in regard to most facets of the employment relationship, including “fringe benefits available by virtue of employment, whether or not administered by the covered entity.” The ADA also restricts employers from obtaining employee medical information through disability-related inquiries or medical examinations.

An exception exists in the law for employee health programs, which the EEOC contends must be voluntary; penalties for employees who do not participate are forbidden.  The EEOC’s new rules seek to clarify precisely what they mean by “voluntary”, especially in regard to incentives to encourage participation.  These proposed rules apply to all programs that require the disclosure of disability-related health information.

The Proposed Rules provide:

  • Purpose: employee health programs, including any disability-related inquiries and medical examinations that are part of such programs, must be reasonably designed to promote health or prevent disease.
  • Incentives: Incentives for participation are limited to 30% of the total cost of employee-only coverage for both health-contingent wellness programs and participatory wellness programs.
  • Voluntariness:  A three part test where (1) employees are not required to participate; (2) coverage under any group health plans or particular benefits packages within a group health plan are not restricted or limited due to non-participation; and (3) there is no  adverse employment action or retaliation against employees who choose not to participate.
  • Notice: If the program is offered as part of, or provided by, a group health plan, an employer must provide a notice that clearly explains what medical information will be obtained, who will receive the medical information, how the medical information will be used, the restrictions on its disclosure, and the methods the covered entity will employ to prevent improper disclosure of the medical information.
  • Disclosure: Medical information collected through an employee health program may only be provided to an employer in aggregate terms that do not disclose, or are not reasonably likely to disclose, the identity of specific individuals, except as needed to administer the health plan.

Although public comment is still to come, these proposed rules are likely to become final.  Therefore, now is the time to take a fresh look at your company policies.

Supreme Court Revives Pregnant Employee’s Claim

Posted in Discrimination

Lowsection Of Pregnant Businesswoman With BriefcaseThe U.S. Supreme Court revived a pregnant employee’s discrimination claim against UPS, ruling that the employer’s policy of providing light-duty work only to employees meeting certain specifications (but not necessarily pregnant employees) may violate the Pregnancy Discrimination Act (“PDA”).

Background

Peggy Young’s doctor restricted her to lifting no more than 20 pounds during her pregnancy.  As a UPS driver, however, her job required that she be able to lift parcels weighing up to 70 pounds.

UPS did have several reserved “light-duty” jobs that could have accommodated Young’s restriction but by internal policy, these jobs were limited to three classes of employees:

  • Those injured on the job,
  • Those with disabilities as defined by the Americans with Disabilities Act, and
  • Those who have lost their certification to drive commercial motor vehicles.

Since Young did not fall within any of these categories, UPS denied her a light duty position, leading her to sue UPS for violating the PDA.  UPS responded that its policy was “pregnancy-blind” in that the company’s limits on accommodation applied to everyone and did not single out pregnant workers for less favorable treatment.

The trial court granted UPS’s motion for dismissal and the U.S. Fourth Circuit Court of Appeals affirmed, leading to the Supreme Court’s review.

EEOC Issues Guidance Advocating Reversal

We reported in July 2014, that the Equal Employment Opportunity Commission (EEOC) issued Enforcement Guidance advocating that policies limiting light duty to workers injured on the job and/or to employees with disabilities under the ADA violate the PDA.  The Guidance contends that such policies ignore the PDA’s clear admonition that pregnant workers must be treated the same as non-pregnant workers similar in their ability or inability to work. Therefore, pregnant employees must be accommodated in the same manner as non-pregnant employees.

As a result, the case became a battle of two extremes – the EEOC Guidance contending that  pregnant employees must always be accommodated like other disabled employees, and UPS’s “pregnancy blind” policy that essentially excludes pregnant employees from such accommodations.  After all, the ADA excludes pregnancy from the definition of disability and it is highly unlikely that an employee would become pregnant on the job.

Supreme Court Forges Middle Ground

As is often the case, the U.S. Supreme Court took the middle ground in ruling that a “pregnancy-blind” policy may violate the PDA where a plaintiff can show that the policy “impose[s] a significant burden on pregnant workers, and that the employer’s ‘legitimate, nondiscriminatory’ reasons are not sufficiently strong to justify the burden . . . .”  According to the Court, a plaintiff can make such a showing where she can show that “the employer accommodates a large percentage of non-pregnant workers while failing to accommodate a large percentage of pregnant workers.”

The Court rejected Young’s (and EEOC’s) argument, expressing doubt that the PDA was intended to “grant pregnant workers an unconditional most-favored-nation status.”  In fact, they rejected outright the idea that the PDA requires pregnant employees to be treated the same as other people.

However, the Court also rebuffed UPS’s position that so-called “pregnancy-blind” policies are immune from PDA scrutiny.  The Court explained that an employee could still claim that denial of an accommodation constituted discriminatory treatment under the PDA, requiring that the employer defend with “legitimate, nondiscriminatory” reasons for denying the accommodation.  The Court made it very clear that such reasons must be more than simple claims that the accommodations would be expensive or less convenient.  For this reason, the Court suggested that a pregnant employee could prevail by showing that “the employer accommodates a large percentage of non-pregnant workers while failing to accommodate a large percentage of pregnant workers.”

The Court remanded the case back to the lower court to determine whether Young came forward with sufficient evidence that UPS’s policy violated the PDA.

Bottom Line

The Court’s decision can be viewed as a win for both sides.  On the one hand, employers can no longer rely on “pregnancy-neutral” policies to avoid liability under the PDA.  On the other, the EEOC’s position that all such policies violate the PDA must go back to the drawing board.

While this case is significant generally, Minnesota employers are less affected by it for two reasons: (1) the Minnesota Human Rights Act has required accommodation of pregnancy for many years; and (2) the recently enacted Women’s Economic Security Act extended that protection to require certain accommodations even in the absence of a doctor’s note.

NLRB Issues Guidance on Employer Handbooks

Posted in NLRB

NLRB---GIF.gifOver the past few years, much has been written about the National Labor Relations Board’s (the “Board”) drive to scrutinize the provisions of employee handbooks.  The Board’s aggressive strategy rests on its holding in Lafayette Park Hotel, wherein the Board stated “[w]here the rules are likely to have a chilling effect on Section 7 rights, the Board may conclude that their maintenance is an unfair labor practice, even absent evidence of enforcement.”  326 NLRB 824, 825 (1998), enfd. 203 F.3d 52 (D.C. Cir. 1999).   Thus, if the Board finds that an employee could “reasonably construe” an otherwise innocuous work rule in such a way as to limit that employee in pursuit of his or her rights under Section 7, the rule will be declared unlawful.

New General Counsel Memorandum

On March 18, 2015, the Board’s Office of the General Counsel released a Memorandum providing employers guidance as to what the Board deems lawful and unlawful handbook language.  The Memorandum reflects the Board’s continued interest in policies addressing employee use of social media, workplace conduct and decorum toward managers and co-workers, and employee confidentiality obligations.  However, the Memorandum also finds unlawful a number of novel policy areas that have not previously received such close scrutiny, including media and other outside communications; use of employer logos, copyrights or trademarks; restrictions on personal electronic devises, photography and recordings; restrictions on employee rights to leave work; conflict-of-interest policies; and handbook disclosure policies.  Some examples of Employer policy language deemed unlawful by the Board, includes:

  • Media Relations/Communications – “Employees are not authorized to speak to any representatives of the print and/or electronic media about company matters unless designated to do so by HR, and must refer all media inquiries to the company media hotline.”

The Board explained that the language is unlawful because employees “would reasonably construe the phrase ‘company matters’ to encompass employment concerns and labor relations, and there was no limiting language or other context in the rule to clarify that the rule applied only to those speaking as official company representatives.”

  • Company Name and Logo Use Restrictions – “Company logos and trademarks may not be used without written consent . . . .”

The Board explained that the language is unlawful because it contains broad restrictions that employees would reasonably read to ban fair use of the employer’s intellectual property in the course of protected concerted activity.  By “fair use” the Board means referencing company names, logos, etc. on picket signs, leaflets or other “non-commercial” communications.

  • Restriction on Electronic Media – “No employee shall use any recording device including but not limited to, audio, video, or digital for the purpose of recording any [Employer] employee or [Employer] operation . . . .”

The Board found this rule unlawful because employees would reasonably construe it to preclude, among other things, documentation of unfair labor practices, which it considers an essential part of the recognized right under Section 7 to utilize the Board’s processes.

  • Restriction on Electronic Media –  “Prohibition from wearing cell phones, making personal calls or viewing or sending texts ‘while on duty.’

The Board found this rule unlawful because it considers the limitation on personal recording devices to time “on duty” to be insufficient.  Specifically, the Board asserts that employees “reasonably” would understand “on duty” to include breaks and meals during their shifts, as opposed to their actual work time.

  • No-Call/No-Show/Job Abandonment Provision – “Failure to report to your scheduled shift for more than three consecutive days without prior authorization or ‘walking off the job’ during a scheduled shift is prohibited.

The Board concluded that this provision could be understood by employees to unlawfully limit the employees’ protected right to engage in lawful strikes and walkouts.

  • Conflict of Interest Policy – “With this in mind, you should recognize your responsibility to avoid any conflict between your personal interests and those of the Company. A conflict of interest occurs when our personal interests interfere—or appear to interfere—with our ability to make sound business decisions on behalf of [the Company].”

Here, the Board inferred that an employee may believe his or her own interests (e.g., to form or join a union, or to discuss low wages, etc.) may be inconsistent with the company’s interests, and, therefore, found the rule unlawful because it was phrased broadly and did not include any clarifying examples or context that would indicate that it did not apply to Section 7 activities.

  • Handbook Disclosure Provision – “No part of this handbook may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or information storage and retrieval system or otherwise, for any purpose without the express written permission of [management].”

The Board concluded that this provision was unlawful because it prohibited disclosure of the Employer’s handbook, which contains policies relating to the terms and conditions of employment, to third parties such as union representatives or the Board.

In summary, it is clear from the Memorandum that the Board will scrutinize every word of every policy document, handbook provision, form document, disciplinary communication, or any other written communication between an employer and its employees in an effort to uncover language that may unlawfully restrict employee Section 7 rights.

Implications of Maintaining Unlawful Policies

If an employer’s policy is found to be unlawful, the Board will typically require that the employer change the problematic handbook or policy and post a notice to employees explaining their rights.  Additionally, an employer who terminates an employee based upon overly-broad policies may be required to reinstate the employee with backpay.  See Hispanics United of Buffalo, Inc., 359 NLRB No. 37 (Dec. 14, 2012).

The stakes are even higher for employers facing a union election.  Imagine that you’ve worked hard to prepare your organization to respond to an ambush election.  Even better, imagine that you’ve won that election.  Now imagine that the union files objections asserting that one or more of your company policies are unlawfully overbroad or restrictive.  After review, the Board agrees with the union and throws out the election results.  That’s exactly what happened in Jurys Boston Hotel, 356 NLRB No. 114 (2011), where the Board overturned the “no” vote of a majority of employees who voted because a handbook policy that had never been enforced or even at issue in the campaign was deemed unlawful by the Board.

Bottom Line

Employer’s should take the time necessary to review and revise policy documents, handbooks, etc. to reduce the risk that such documents contain language the Board would deem unlawful.  In reviewing policies, employers should be mindful of several major themes that consistently appear in Board decisions and guidance regarding the elements of lawful and unlawful policies:

  • Understand Protected Concerted Rights:  It will help you immeasurably to read your handbook like an investigator from the Board would by keeping the idea of “protected concerted activity” top of mind.  Most policy provisions can be revised to avoid the pitfalls described above, if you understand the rights conferred by Section 7.
  • Provide Examples of Prohibited Conduct: Providing examples of plainly egregious unprotected behavior to provide context and eliminate ambiguity about whether the policy could be interpreted to limit the exercise of Section 7 rights.
  • Define Confidential Information: Defining what types of confidential information should not be disclosed – i.e., business financial or trade secret information, or customer financial information, and not information about employees.
  • Include Limiting Language: While the Board has made clear that an otherwise unlawful policy cannot be cured by a general “disclaimer,” employers should consider including limiting language in any potentially offending policy or provision itself.