Management Memo

Management’s inside guide to labor relations

First Circuit Reiterates Importance of Good Faith in ADA Interactive Process

LinkedIn Tweet Like Email Comment

In a case emphasizing the importance of acting in good faith in the interactive process and how an employer can do it right, on February 13, 2015, the First Circuit denied the EEOC’s petition for a rehearing en banc of the court’s decision to dismiss a lawsuit brought against Kohl’s Department Stores, Inc. by a diabetic former employee who claimed that her erratic working hours were exacerbating her condition.  EEOC v. Kohl’s Dep’t Stores, Inc., 774 F.3d 127 (1st Cir. 2014), reh’g en banc denied (Feb. 13, 2015).

Pamela Manning, a former sales associate at Kohl’s, had type I diabetes.  For two years, she worked predictable shifts as a full-time sales associate.  Following a restructuring of the staffing system nationwide in January 2010, however, Manning began working a schedule with unpredictable shifts, including some night shifts followed by day shifts (in Kohl’s parlance, “swing shifts”).  Manning alleged that the new schedule aggravated her diabetes.

After informing her supervisor that working erratic shifts was endangering her health, Manning obtained a doctor’s note requesting that she be scheduled to work “a predictable day shift.”  Manning’s store manager contacted human resources to discuss Manning’s request.  Kohl’s determined that it could not provide Manning’s preferred schedule of day-time hours only, but authorized the store manager to offer a schedule with no swing shifts.

On March 31, 2010, during a meeting with her store manager and immediate supervisor, Manning again requested a “steady shift” with mid-day hours, but was told that she could not be given a consistent schedule.  Manning stormed out of the meeting, saying that she had no choice but to quit.  Her supervisor followed her and asked what she could do to help, but she could not convince Manning to reconsider her resignation or to discuss any alternative accommodations.

Two days later, Manning contacted the EEOC to file a charge of discrimination.  On April 9, 2010, the store manager called Manning and asked that she rethink her resignation and consider alternative accommodations for both part-time and full-time work.  Manning ignored this overture and got off the phone as quickly as possible.  A week later, after hearing nothing further Manning, Kohl’s treated her departure as voluntary and terminated her employment.

Based on this record, on December 19, 2014, the First Circuit concluded that Kohl’s made earnest attempts to discuss potential reasonable accommodations.  By contrast, Manning’s conduct constituted a refusal to participate in the interactive process in good faith, warranting summary judgment in favor of Kohl’s.  In addition, the First Circuit ruled against the EEOC on Manning’s constructive discharge claim, finding that a reasonable person would not have felt compelled to resign when her employer offered to discuss other potential work arrangements with her.

In reaching its decision, the First Circuit emphasized that both the employer and the employee have a duty to engage in good faith, and that empty gestures by the employer will not satisfy this duty.  But if an employer does engage in the interactive process in good faith, and the employee refuses or fails to cooperate in the process, the employer cannot be held liable for a failure to provide a reasonable accommodation.

Employers addressing reasonable accommodation requests from their employees can learn from Kohl’s actions in this case.  Kohl’s benefited from its representatives’ diligence in documenting their response to Manning’s request (including the internal discussions) and in following up with Manning to give her an opportunity to propose alternative accommodations for her diabetes.  Thus, even though the store manager never conveyed an offer of “no swing shifts,” the First Circuit was able to find that Kohl’s made real efforts to work with Manning and that Manning unreasonably refused to continue the dialogue with Kohl’s.  And Kohl’s succeeded in winning dismissal of the ADA claim.  Employers who follow this course of conduct ensure their compliance with the ADA and, in the event an employee refuses to reciprocate discussions, may establish a defense to liability in a failure to accommodate lawsuit.

ERISA at 40: A Time to Assess Multiemployer Defined Benefit Pension Plans

LinkedIn Tweet Like Email Comment

As the 40th anniversary of the landmark Employee Retirement Income Security Act (ERISA) is noted, an article by Allen B. Roberts featured in the Winter 2014 Benefits Law Journal observes that participating employees and contributing employers – as the primary stakeholders in the fortunes of multiemployer defined benefit pension plans – may not be among the celebrants. Employees who should benefit from retirement contributions and the employers who fund the payments are encountering a world different from that anticipated with the passage of ERISA. Increasingly, employers and their employees are questioning whether the promise of retirement security can be delivered cost effectively — or at all — by defined benefit pension plans maintained under union contracts. While some employers have avoided, or moved away from, the defined benefit plan model – favoring defined contribution plans or other retirement programs – those having ongoing commitments must face the current and prospective realities of the multiemployer defined benefit plans to which they are obligated to contribute.

When ERISA was enacted, Congress did not foresee certain dramatic shifts that have come to affect the fortunes and allure of the multiemployer defined benefit pension plans for which unions negotiate in collective bargaining. Some iconic companies that once were bedrock industry participants collapsed and disappeared as their fortunes reversed, or they relocated or outsourced previously unionized operations or lost market share (and opportunities to maintain and create jobs) to nonunion domestic and offshore competitors. As a consequence of these and other factors, private sector union membership — on which multiemployer pension plans depend for a sustaining flow of participants — plummeted from 23.4 percent in 1974 to 6.6 percent in 2014. All the while, employers in growth sectors that remain relatively union-free have designed benefits packages that appeal to the different demographics of a workforce favoring individual elections, geographic and upward mobility, and portability. For many multiemployer defined benefit pension plans, the result has been inversion of a model that should be a broad-based pyramid in which active participants outnumber retirees; there are fewer dollars flowing in from fewer employers and for fewer active employees, while the number of individuals having vested benefits for themselves and their spouses swells.

At the start of ERISA’s fifth decade, multiemployer defined benefit pension plan trustees and actuaries, investment managers, attorneys, and the negotiators on both sides of labor-management relations face a dramatically different future to provide promised retirement security at a cost and value that makes sense for the workforce of today and tomorrow. The Benefits Law Journal article addresses the following topics:

  • The shift in fundamentals for multiemployer defined benefit pension plans
  • The value of plans relative to dollars contributed
  • The actuarial assumptions that drive the substance and appearance of plan soundness
  • Fiduciary responsibilities in the current circumstances of plans
  • Plans in “critical” or “endangered” status
  • Employer options to continue plan contributions or withdraw
  • Plan self-help and other intervention to separate historic participants, employers, and experience from the future
  • Whether an independent presence is necessary to address acute plan problems

A link to an update of the Benefits Law Journal article is available here.

NLRB’s New Election Rules Challenged As Unconstitutional

LinkedIn Tweet Like Email Comment

On January 5, 2015, less than one month after the National Labor Relations Board (NLRB) voted to adopt a Final Rule to amend its rules and procedures for representation elections, a lawsuit has been filed in the US District Court for the District of Columbia, asserting that the Board exceeded its authority under the National Labor Relations Act (Act) when it amended its rules for votes on union representation and that the new rule in unconstitutional and violates the First and Fifth Amendments of the US Constitution.

The suit was filed by the Chamber of Commerce of the United States, Coalition for a Democratic Workplace, National Association of Manufacturers, the National Retail Federation and the Society for Human Resources Management.  It seeks an order vacating the Final Rule, declaring the Final Rule to be contrary to the Act and in excess of the Board’s statutory jurisdiction and authority and to violate the First and Fifth Amendments.

The claims raised in the suit are essentially the same as those which were raised by in an action filed in the same court in 2012, in response to the NLRB’s December 2011 adoption of a very similar set of changes to its representation election procedures.  That action also challenged the Board’s action based on what it found to be the Board’s lack of a quorum at the time it adopted those rule changes in 2011. Because the Court found that the Board lacked a quorum at that time, it found it unnecessary to address the substantive arguments about the changes in the election rules that are the essence of the new lawsuit.

While the Complaint does not indicate that the plaintiffs are seeking an order enjoining the Board from implementing the new election procedures under the Final Rule while the case is litigated, the plaintiffs are likely to request such an order as the Final Rule’s effective date of April 15th nears.  In the earlier challenge to the Board’s 2011 rulemaking, the Court granted an injunction in April 2012 enjoining the Board from putting the new rules and procedures into effect, while it considered the merits of the challenge.

While Republican members of Congress have with increasing frequency indicated their desire to reign in the Board in a variety of areas where they have seen it as exceeding its mandate or moving in directions that they do not agree with, it is almost certain that President Obama would veto such legislation and it is not likely that the sufficient support would be present to override a veto. Thus as the New York Times observed  earlier this week, those who oppose administrative actions such as this are turning increasingly to the courts in hopes of relief.

We will continue to monitor and report on developments in this closely watched case.

OSHA’s Revised Recordkeeping and Reporting Rules for Retail in 2015

LinkedIn Tweet Like Email Comment

Very often OSHA complaints go hand in hand with union organizing campaigns and other concerted activity protected under the National Labor Relations Act, at union and nonunion operations.

Our colleague Valerie Butera has prepared a thoughtful analysis concerning OSHA’s revised recordkeeping and reporting requirements in retail: “What Do OSHA’s Revised Recordkeeping and Reporting Rules Really Mean for Retailers?”

Below is an excerpt of Valerie’s tips for retail employers:

  • Train your safety and human resource professionals and your managers on the new reporting requirements.  Again, all retailers must promptly report to OSHA any fatalities, amputations, loss of eye incidents, or in-patient hospitalizations.
  • Be aware that you can report to OSHA by:
  1. Calling OSHA’s free and confidential number: 1-800-321-OSHA (6742)
  2. Calling your closest Area Office during normal business hours
  3. Using the new online form that will soon be available on OSHA’s website
  • If you have retail establishments in one or more of the jurisdictions with a state plan, contact the state plan’s office to determine when you must comply with the rule and if the state plans’ reporting rules have additional requirements.  OSHA has encouraged state plans to require compliance by January 1 but recognizes that not all plans will be able to do so.
  • Contact counsel for advice on how to best navigate an OSHA inspection to ensure your preparedness should OSHA decide to investigate the circumstances leading to a reportable injury or illness.
  • To the extent that any of these newly reportable incidents have taken place at any of your retail establishments in the past, review the details of the incident and audit that facility and others that you believe may pose safety concerns.  Identify safety hazards and address any possible health or safety hazards that you discover.
  • If you are among the newly identified retail industries required to complete OSHA’s injury and illness recordkeeping, seek assistance from counsel in navigating these very complex requirements.  Ensure that safety and human resource professionals in your organization are properly trained and fully understand how and when to record an occupational illness or injury in your OSHA logs.
  • Retailers that have already been subject to the recordkeeping standard should review their logs to spot potential trouble spots, and provide refresher training to safety and human resource professionals in order to help ensure full compliance with the rules.

NLRB Issues 13 Complaints Alleging McDonald’s and Franchisees Are Joint-Employers

LinkedIn Tweet Like Email Comment

On December 19, 2014, the National Labor Relations Board published a public notice stating that the NLRB General Counsel has issued 13 unfair labor practice complaints against McDonald’s USA, LLC, and McDonald’s franchisees alleging that McDonald’s and the franchisees are joint-employers, and as such, are jointly  responsible for alleged violations of the National Labor Relations Act. What’s at stake in these cases is not only shared responsibility for these alleged violations of the Act, but possibly also shared responsibility in collective bargaining should those unions organize the franchisors’ workers.

In addition to the public notice, the Board has also created a separate webpage on its website with the header “Organizations of Interest” specifically addressing these complaints. The 13 complaints arise out of 291 charges filed since November 2012. Though the actual complaints have not yet been made public, the Board hinted that they involve claims that unlawful “statements and taking actions against”  workers who participated “in nationwide fast food worker protests … during the past two years” including alleged “discriminatory discipline, reductions in hours, discharges, and other coercive conduct directed at employees in response to union and protected concerted activity, including threats, surveillance, interrogations, promises of benefit, and overbroad restrictions on communicating with union representatives or with other employees about unions and the employees’ terms and conditions of employment.”

While the General Counsel’s actions are alarming, particularly for businesses that rely upon a franchise model, the issuance of these complaints comes as little surprise because, as we reported in July of this year, the General Counsel had previously announced the decision to take this action and pursue claims of joint-employer liability. What is somewhat surprising about the announcement is its timing because the Board has not yet issued its decision in Browning-Ferris, 32-RC-109684, where the Board invited interested parties to opine in amici briefs on the benefits and drawbacks of the current standard relied upon by the Board to determine if two employers are a joint-employer and to propose a new standard and factors the Board should consider in such cases. Similar to its recent repudiation of Register Guard, the Board may use Browning-Ferris to moot the thirty years of joint-employer case law that followed TLI, Inc. 271 NLRB 798 (1984).

While the General Counsel issued the complaints based on charges filed in 13 Regional Offices  across the country, including, among others, Region 2 (Manhattan), Region 10 (Atlanta), Region 13 (Chicago) and Region 31 (Los Angeles), the Board has agreed to consolidate the hearings at six Regional Offices, with the first scheduled to commence, absent settlement, on March 30, 2015.

Stay tuned.

NLRB’s Expedited Election Rules Favor Labor, Not Employers

LinkedIn Tweet Like Email Comment

In our new Act Now Advisory, “NLRB Adopts Expedited Election Rules, Effective April 15, 2015,” we report on the National Labor Relations Board’s new rules for representation elections. These rules will substantially shorten the time between the point when a union files a petition for a vote and the timing of the vote, severely limit the right of employers to litigate important issues before an election is held, and are expected to result in more union wins in representation votes. We include steps that employers may want to consider taking in advance of April 2015, in order to adapt to the new reality of ambush elections.

Following is an excerpt:

After a series of false starts, on December 12, 2014, the National Labor Relations Board (“NLRB” or “Board”) adopted a 733-page final rule (“Final Rule”) that will significantly change the Board’s longstanding union election procedures and eliminate many of the steps that employers have relied on to protect their rights and the rights of employees who may not want a union. Cumulatively, the amendments in the Final Rule, which will take effect on April 15, 2015, will tilt the scales of a union election in labor’s favor by expediting the election process. Among the most important changes contained in the Final Rule are the following …

Read the full advisory here.

NLRB Holds Employees Have the Right to Use Company Email Systems for Union Organizing

LinkedIn Tweet Like Email Comment

Updated, 12/12/14 — In its Purple Communications, Inc., decision, the National Labor Relations Board (“NLRB” or “Board”) has ruled that “employee use of email for statutorily protected communications on nonworking time must presumptively be permitted” by employers that provide employees with access to email at work.  While the majority in Purple Communications characterized the decision as “carefully limited,” in reality, it appears to be a major game changer.  This decision applies to all employers, not only those that have union-represented employees or that are in the midst of union organizing campaigns.

Under this decision, which applies to both unionized and non-union workplaces alike, if an employer allows employees to use its email system at work, use of the email system “for statutorily protected communications on nonworking time must presumptively be permitted . . . .” In other words, if an employee has access to email at work and is ever allowed to use it to send or receive nonwork emails, the employee is permitted to use his or her work email to communicate with coworkers about union-related issues.

In Purple Communications, the NLRB rejects its analysis in its 2007 decision in Register Guard, which the Board now finds “was clearly incorrect.” In Register Guard, the Board held that “employees have no statutory right to use the[ir] [employer’s] e-mail system” to participate in pro- or anti-union activity protected under the National Labor Relations Act (“Act”) (emphasis added).

Register Guard’s reasoning was based on principles respecting the right of employers to control access to, and use of, their property.  In Purple Communications, the Board majority not only argues that the use of email systems is not a matter of property but  goes on to say that Register Guard gave “too much weight to employers’ property rights” and “undervalued employees’ core Section 7 right to communicate in the workplace about their terms and conditions of employment.”

Purple Communications establishes a new presumption that employees who have access to email at work must be permitted to utilize the systems for communication about terms and conditions and otherwise exercise their Section 7 rights during “nonworking” times. This presumption, however, ignores the likelihood that such emails, which may have been written or sent outside of working time, will likely be opened or read during working time.  The decision also suggests that if employees are allowed to use their employers’ email systems for nonwork emails during working time, they must be able to use the systems for communication about unions and the terms and conditions during working times as well.  Further, if an employer is inconsistent in the application of such policies (e.g., permits other nonwork emails to be sent during working time, but does not permit union-related emails to be sent during this time), it is likely to be found to have violated employees’ rights under the Act and have committed an unfair labor practice.

The decision is also a major departure from established Board law that considered, on the one hand, employees’ need for access to or use of employer property (whether real property or business equipment) for the exercise of their Section 7 rights, against, on the other hand, the employer’s right to limit access to or use of its property.  Not only does the decision hold that employees are presumptively permitted to use their employers’ email systems to communicate in a union organizing campaign or concerning terms and conditions, it allows employees, in most circumstances, to use company email systems to send documents—such as authorization cards, videos, flyers, and other attachments—in most circumstances.

While the majority opinion in Purple Communications states that employers may be able, in certain circumstances, to restrict or prohibit the use of the systems for communications concerning terms and conditions where such a restriction is necessary to “maintain production and discipline,” the burden will be on an employer to establish why such a prohibition or restriction is necessary.  That burden is likely to be a heavy one.

As the Board has stated, while an employer may rebut the presumption (of the right to use the email systems) “by demonstrating special circumstances necessary to maintain production or discipline justify restricting its employees’ rights,” the burden will be steep.  “It will be the rare case where special circumstances justify a total ban on nonwork email use by employees,” and an employer seeking to meet that burden “must demonstrate the connection between the interest it asserts and the restriction.”

The Board has declared today’s email systems to be “the primary means of workplace discourse,” and that Register Guard “undervalued employees’ core Section 7 right to communicate in the workplace about their terms and conditions of employment, while giving too much weight to employers’ property interests.”  Although the Purple Communications decision appears to try and explain why the holding in Register Guard was “wrong,” the majority’s reasoning is actually based on the notion that “everyone uses email.” Further, emailing at work is an important means of communication for workers to communicate with one another and, therefore, the Board members think that they should be allowed to use it to “talk” about their terms and conditions of employment, including union organizing and a broad range of other topics.

As the decision points out, an important challenge that employers will now face is the balancing of, on one hand, their responsibilities for monitoring content and usage of their systems to ensure adherence to workplace rules and policies concerning compliance matters and inappropriate and prohibited uses of the email system with, on the other hand, possible claims of unlawful surveillance stemming from efforts to ensure that employees do not violate legitimate rules and standards relating to their use of the email systems.

In this regard, the Board states that the “decision does not prevent employers from continuing, as many already do, to monitor their computers and email systems for legitimate management reasons, such as ensuring productivity and preventing email use for purposes of harassment or other activities that could give rise to employer liability.”  While the Purple Communications decision states that “an employer’s monitoring of electronic communications on its email system will . . . be lawful so long as the employer does nothing out of the ordinary, such as increasing its monitoring during an organizational campaign or focusing its monitoring efforts on protected conduct or union activists,” it is easy to foresee the burdens that employers are likely to face in defending against unfair labor practice charges alleging such discriminatory monitoring.

At least the Board still recognizes that an employer is not “ordinarily prevented from notifying its employees, as many employers also do already, that it monitors (or reserves the right to monitor) computer and email use for legitimate management reasons and that employees may have no expectation of privacy in their use of the employer’s email system.”

While the majority in Purple Communications noted that the rule only applies to email systems at this time and that they are not addressing other systems and means of communication, it is almost certain that when the Board looks at instant messaging and other electronic communications systems in the workplace, it will reach the same conclusion.  If employees are given access to instant messaging and other tools, such as Microsoft Lync and the like and they are allowed to send nonwork related messages, then the Board will likely apply its Purple Communications rationale to those modes of communication as well.

One thing that is obvious is that every employer that uses and allows its employees to use email at work will now need to review its policies and practices concerning access to and use of email systems and the manner in which it carries out such policies.

What Employers Should Do Now

The Purple Communications decision will be applied retroactively to pending charges and representation cases involving issues of employee email use.  The ruling means changes for every company that uses email.  There are a number of steps that employers should take now:

  • Review all existing policies and practices concerning use of and access to email, and revise as necessary to conform to the new realities.
  • Determine not only what the policies and practices say but how they are being applied and enforced throughout the company.
  • Review and consider all policies and practices that involve the monitoring and preservation of email and other electronic communication.
  • Confirm that the company’s policies and practices clearly notify all employees that the company reserves and exercises its right to monitor and review all communications and attachments that are sent from or received on its email systems both internally and externally.
  • Make sure that employees are on notice and understand that they do not have a right to privacy with respect to emails and attachments and that they understand what this means.
  • Consider what the company’s policy should be on limiting the sending, receiving, and reading of nonwork messages during “work time.”
  • Determine whether there are positions within the company where restrictions on the use of email for nonwork purposes is necessary to maintain productivity and discipline.  If such positions exist, consider what restrictions are truly needed, how broad they really need to be, and, perhaps most importantly, how the company would meet its burden to prove that the restrictions are truly necessary and as narrowly drawn as they can be.
  • Train supervisors and managers about these policies and practices and how to communicate with employees about them.

Supreme Court Holds That Time Spent in Security Screening Is Not Compensable Time

LinkedIn Tweet Like Email Comment

Regarding the Supreme Court’s Integrity Staffing Solutions v. Busk opinion, issued yesterday, our colleague Michael Kun at Epstein Becker Green has posted “Supreme Court Holds That Time Spent in Security Screening Is Not Compensable Time” on one of our sister blogs, Wage & Hour Defense.

Following is an excerpt:

In order to prevent employee theft, some employers require their employees to undergo security screenings before leaving the employers’ facilities. That is particularly so with employers involved in manufacturing and retail sales, who must be concerned with valuable merchandise being removed in bags, purses or jacket pockets.

Often in the context of high-stakes class actions and collective actions, parties have litigated whether time spent undergoing a security screening must be compensated under the Fair Labor Standards Act (“FLSA”). On December 9, 2014, a unanimous United States Supreme Court answered that question – no.

The Court’s decision in Integrity Staffing Solutions v. Busk may have a far-reaching practical and legal impact. Not only may it make more employers comfortable conducting security screenings of their employees, but it may bring an end to most class actions and collective actions filed against employers seeking compensation for employees’ time spent in such screenings.

ACA Update: DC Circuit Stays Halbig, Upholds Accommodation for Contraceptive Coverage

LinkedIn Tweet Like Email Comment

Our colleague Stuart Gerson of Epstein Becker Green posted “DC Circuit Stays Halbig Action Pending SCOTUS Review of King, Upholds Accommodation for Contraceptive Coverage” on the Health Law Advisor blog. Following is the full text:

Only last week, we informed you of the Supreme Court’s somewhat surprising grant of cert. in the Fourth Circuit case of King v. Burwell, in which the court of appeals had upheld the government’s view that the Affordable Care Act makes federal premium tax credits available to taxpayers in all states, even where the federal government, not the state, has set up an exchange.

The Administration has taken something of a PR buffeting in the week following, after its principal ACA technical advisor’s comments on this issue were made public.

In any event, we suggested that the scheduled DC Circuit en banc argument in Halbig v. Burwell, which raises the same issue as the King case, would never take place. We were correct. The DC Circuit yesterday stayed action in its case pending Supreme Court resolution of King. We’ll continue to follow related developments.

Speaking of the DC Circuit, a panel of its most liberal judges today upheld religious organization accommodation for contraceptive coverage under the ACA, holding under Hobby Lobby that opt-out procedure does not substantially burden employer’s religious beliefs. Priests for Life v. U.S. Dep’t of Health & Human Services. There will be similar cases brought in other federal circuits, and we’ll report on those as well.

Complimentary Webinar – Eye on Ebola: Issues Impacting Health Care Providers

LinkedIn Tweet Like Email Comment

WHEN: November 17, 2014

TIME:    2:00pm – 3:30pm EST

To register for this webinar, please click here.

Please join us for a complimentary webinar addressing the professional and business challenges encountered by health care providers dealing with Ebola and other infectious diseases. This webinar will offer a clinical overview as well as a review of the guidelines which offer protocols for addressing concerns over Ebola and similar diseases, the health regulatory and risk management issues providers might consider in developing a response strategy, and the resulting labor and employment considerations facing health care employers. A question and answer period will follow the program.

Topics will include:

  • Clinical Overview and Emergency Management Issues
  • Health Regulatory Considerations for Providers
  • Risk Management Concerns
  • Employment Issues Confronting the Health Care Industry including Labor Management Relations

Speakers:

  • Bruno Petinaux, M.D. – Associate Professor, Co-Chief of the Emergency Management Section, Department of Emergency Medicine, George Washington University Medical Faculty Associates
  • George B. Breen – Member, Epstein Becker Green, Chair, Health Care and Life Sciences Practice Steering Committee
  • Frank C. Morris, Jr. – Member, Epstein Becker Green, Employment, Labor and Workforce Management Practice
  • Amy F. Lerman – Associate, Epstein Becker Green, Health Care and Life Sciences Practice

To register for this webinar, please click here.

If you have questions regarding this event, please contact Whitney Krebs at (202) 861-0900, or wkrebs@ebglaw.com.