The EEOC has filed suit in Chicago against pharmacy giant CVS to stop it from using certain terms in its settlement agreements with employees. The EEOC claims that the company unlawfully violated employees' rights to communicate with the EEOC and to file discrimination charges, in violation of Section 707 of the Civil Rights Act of 1964.
According to the EEOC, CVS conditioned the receipt of severance benefits for certain employees on an overly broad severance agreement set forth in five pages of small print. The agreement purportedly interferes with employees' right to file discrimination charges and/or communicate and cooperate with the EEOC. The terms objectionable to the EEOC include the following:
1. A cooperation clause that requires employees to notify CVS' general counsel upon receipt of a subpoena, deposition notice, or inquiry in connection with a suit or proceeding, including an administrative investigation;
2. A non-disparagement clause prohibiting employees from making statements that disparage the business or reputation of the company, its directors, officers, or employees;
3. A confidentiality clause prohibiting the disclosure of Confidential Information, including personnel data revealing the skills, abilities or duties of employees, wage and benefits structures, succession plans, and information pertaining to affirmative action plans and planning;
4. A general release of claims; and
5. A covenant not to sue that encompasses any claims, actions or proceedings and requires the employees to reimburse the company for any attorney fees incurred as the result of a breach of the agreement. The covenant not to sue contains a qualification explaining that it is not intended to interfere with an employee's right to cooperate with or participate in a state or federal agency proceeding to enforce discrimination laws.
CVS reportedly used the foregoing terms in more than 650 agreements in 2012 alone. All of the foregoing types of clauses are common in employment-related separation agreements, and often provide much of the incentive for employers to enter into such agreements. Consequently, the EEOC's case against CVS is one that employers will want to monitor closely.
A copy of the EEOC complaint is available here.
The National Labor Relations Board (NLRB) announced this week that it will not seek U.S. Supreme Court review of two Court of Appeals decisions invalidating its controversial posting rule. The rule required most private sector employers to post a notice advising employees of their rights under the National Labor Relations Act, including the right to:
Since the initial injunction barring the NLRB from enforcing the posting requirement, the NLRB has increased its scrutiny of employer rules and policies that could be interpreted as chilling employees' rights to engage in concerted activity. The policies and rules that tend to be problematic are those that could be construed as limiting employee communication about working conditions and terms of employment, including social media, confidentiality, and non-disparagement policies. Such policies routinely come under review when the NLRB receives a charge alleging an unfair labor practice (ULP), even when the ULP does not implicate the particular rule or policy. Given the NLRB's decision to abandon the posting rule, its scrutiny of employer policies is likely to continue in 2014.
Last month, in Cejas Commercial Interiors, Inc., v. Torres-Lizama, the Oregon Court of Appeals adopted the “economic realities test” for determining whether an individual is an employee under Oregon's minimum wage statute. The statute, ORS 653.025, provides that “no employer shall employ * * * any employee” at a wage lower than the “Oregon minimum wage.” A challenge for courts is to determine whether a worker is an employee of the purported employer.
Before last month’s ruling, trial courts in Oregon applied two different tests to determine whether an individual is an “employee” for purposes of the minimum wage statute. One test, called the “right-to-control test,” looks at whether the presumed employer has formal control over the individual workers. A second test, the one adopted by the Court of Appeals, focuses more broadly on whether “an entity has functional control over workers even in the absence of the formal control.” The goal of the economic-realities test is to determine whether, “as a matter of economic reality,” the worker is dependent on the alleged employer.
In Cejas Commercial Interiors, Inc., v. Torres-Lizama, the workers alleged that Cejas, a drywall contractor, was their employer while they did drywall work that Cejas had subcontracted to Viewpoint Construction, LLC. The workers sought compensation from Cejas when Viewpoint disappeared without paying them, claiming that Cejas and not Viewpoint was their employer. The Court of Appeals agreed with the trial court that, even applying the broader economic-realities test, the workers were not “employees” of Cejas, and therefore Cejas did not owe them minimum wages. The court found that Cejas “neither formally nor functionally controlled the terms and conditions of employment.” Further, the court found that the workers were not economically dependent on Cejas and Cejas was a “mere business partner” of the workers' direct employer, Viewpoint.
State Representative (and Ater Wynne attorney) Shemia Fagan is hosting a free Cover Oregon training for businesses and individuals interested in learning about the new online health insurance marketplace. This hands-on training will be more extensive than the presentations Cover Oregon has conducted, as attendees can bring their laptop computers, connect to Wi-Fi ,and walk through the website and options during the training. A representative from Cover Oregon will be on hand to answer questions and guide the training.
Wednesday, October 30, 7:30am - 9:00am
Monarch Hotel, Pacific Ballroom, 12566 SE 93rd Ave Clackamas, OR 97015
Bring your laptop! Wireless access is available, and a Cover Oregon representative will be on hand to walk you through the process of getting signed up.
RSVP to firstname.lastname@example.org
Ater Wynne invites you to attend its next employment law seminar, on Thursday, September 19, 8 a.m. to 10 a.m., at Portland's World Trade Center. A panel will discuss Gender Equality: Emerging LGBT Issues in the Workplace. For details and on-line registration, go to the Ater Wynne Resources Page.
Starting in November 2013, a new Seattle ordinance will severely restrict when and how a private employer may ask about and use the criminal conviction history of its job applicants and employees. The new law applies to all employees who spend at least 50% of their time in Seattle. Under the law, employers will no longer be able to ask about a job applicant’s criminal history at the initial application stage. No longer can an employer’s job advertisements or postings automatically or categorically exclude individuals with any arrest or conviction records.
The ordinance allows employers to perform a criminal background check on a job applicant or require a job applicant to provide criminal history information only after the employer has completed an initial screening of applications or resumes to eliminate unqualified applicants. Before taking any adverse employment action based on an applicant’s criminal history, an employer must identify the source of the criminal records and give the applicant a reasonable opportunity to explain or correct the information. Employers must hold a conditional job offer open for two business days to allow an applicant time to respond, correct, or explain the information.
The ordinance allows employers to inquire about conduct related to an arrest. Employers may not take an adverse employment action based on an employee’s or applicant’s arrest record unless the employer has a legitimate business reason. The ordinance defines “legitimate business reason” as an employer’s good-faith belief that the nature of the criminal conduct underlying the charge or conviction will either have a negative impact on the employee’s or applicant’s fitness or ability to perform the position or will harm people, property, or the business reputation or business assets of the employer. Employers must consider factors such as: the seriousness of the underlying criminal conviction or pending criminal charge, the number and types of convictions or pending criminal charges, the time elapsed since the conviction or charge, rehabilitation and good conduct, the duties and responsibilities of the position, and the place and manner in which the position will be performed.
The ordinance does not create a private right of action for an applicant to sue a prospective employer if the applicant is not hired for the position. Violation of the ordinance may subject employers to monetary penalties of up to $750 to $1,000, depending on the number of violations, and payment of the City’s attorney’s fees.
Employers should to review their job application forms and remove questions about criminal history in order to comply with the ordinance. Job postings should also be reviewed to eliminate any language such as “felons need not apply.” Background checks are still useful, but employers must be wary of how they are used.
Following in the footsteps of Seattle, San Francisco, and others, the City of Portland enacted a sick leave ordinance on March 13, 2013, applicable to employees who work at least 240 hours per calendar year within the City limits. Employees who work in the City intermittently accrue benefits under the ordinance only for the hours they are paid to work within the City.
The ordinance requires small employers – those with five or fewer employees – to provide one hour of unpaid sick time for every 30 hours of work performed by the employee. Employers of six or more employees must provide one hour of paid sick time for every 30 hours of work performed. Salaried executive, administrative or professional employees who are exempt from overtime under state and federal law are presumed to work 40 hours per week for purposes of accruing sick time under the ordinance, unless their regular work week is less than 40 hours.
Employees may accrue a maximum of 40 hours of paid sick time per year unless the employer provides or is contractually obligated to provide more. Employees may carry over up to 40 hours of unused sick time from year to year. An employer with an established sick leave or PTO policy that provides for the accrual of sick time that equals or exceeds the requirements of the ordinance need not provide additional time off.
Employees may use sick time accrued under the ordinance for:
The required sick time may be used for all of part of a shift in increments of no less than one hour, unless the employer allows a smaller increment to be used. Employees may not use sick time if the employee is not scheduled to work in the City for the shift for which the sick time is requested. Employees are also prohibited from using sick time in the first 90 days of employment, unless the employer allows it.
Employers must allow employees to trade shifts to avoid using sick time if the employer allows shift trading. Employees must otherwise use their accrued sick time whenever an absence qualifies for it.
Employees must notify employers of their need to use sick time. Employers are required to establish a written policy or standard to inform employees how that notice should be provided. For absences of more than three consecutive days, employers may require reasonable documentation that sick time has been used for a permissible purpose. Employers must pay the cost of any verification required from a health care provider that is not covered by insurance.
Employers are not required to pay employees for unused accrued sick time on termination of employment.
Employers may not count the use of sick leave as an unexcused absence under an attendance policy. In addition, employers are prohibited from interfering with or retaliating against employees who exercise or attempt to exercise their rights under the ordinance. Employers must post a notice informing employees of their rights under the ordinance.
The City has yet to adopt administrative rules for interpreting or implementing the ordinance, which will be subject to a public review process. Enforcement is likely to be governed by ORS Chapter 659A.800, which sets forth the procedures for enforcement and remedies for violation of many of Oregon’s employment-related statutes.
Employers have the rest of the year to beef up their sick leave policies or otherwise comply with the new ordinance. Stay tuned for further developments.
The Oregon Supreme Court in Cocchiara v. Lithia Motors, Inc., (discussed in our earlier blog post here) opened up the possibility of a promissory estoppel or fraud claim against an employer who withdraws an offer of at-will employment. The Supreme Court found no conclusive presumption against recovery for lost at-will employment where the plaintiff was never hired or allowed to start work.
The anomaly created by this case – and the one noted in other cases involving this issue – is that the employer may not have been subject to suit if it had allowed the employee to start work in the at-will position, and then terminated his employment soon thereafter. Short of that, employers seeking to avoid claims in connection with offers of employment will want to be clear about any contingencies that must be met before employment begins, and must insure that any representations they make to induce the employee’s reliance on a job offer are accurate.
The Oregon Supreme Court this month held that a person offered at-will employment may be able to state a claim for promissory estoppel and fraud when the prospective employer retracts the offer.
In Cocchiara v. Lithia Motors, Inc., according to the facts put forward by plaintiff in response to a summary judgment motion, plaintiff was a long-time employee of defendant who, after suffering a heart attack, asked defendant for a transfer to a less stressful position. Defendant offered plaintiff a transfer to a new position, and plaintiff as a result turned down a job offer from another prospective employer. Soon thereafter, and before plaintiff made the transfer, the employer retracted the offer. Plaintiff sued for promissory estoppel and fraud.
The trial court and Court of Appeals held that plaintiff could not state a claim as a matter of law. Because the employment offered to him was at-will and could have been terminated at any time, those courts concluded he could not prove either reasonable reliance on the promise or damages. The Supreme Court disagreed, finding nothing in the law to support the conclusion that "a promisee's reliance is per se unreasonable if the underlying promise is for a contract at will." Reasonableness is an issue for the jury, considering all relevant circumstances. Likewise, the fact that the offered job was terminable at will does not mean as a matter of law that plaintiff cannot prove associated damages.
On election day, voters in Washington decriminalized the production, processing, sale, and possession of marijuana under state law by approving Initiative Measure No. 502 (I-502). Effective December 6, 2012, Washington law will no longer prohibit the possession of specified amounts of marijuana by people who are 21 years of age or older. Adults in this age category will be permitted to possess not more than one ounce of dried marijuana flowers, 16 ounces of marijuana-infused products in solid form, or 72 ounces of marijuana-infused products in liquid form. Also effective December 6, 2012, the state’s driving-under-the-influence law will set forth a THC concentration limit for drivers who are 21 or over of 5.00 nanograms per milliliter of blood. There will be zero tolerance for drivers under 21.
I-502 does not set an effective date for the legalization of the production, processing, and sale of marijuana. Instead, the state liquor control board has until December 1, 2013 to adopt rules that will govern the market for recreational marijuana. These rules will, among other things, establish licensing requirements, marijuana inventory limits, and advertising restrictions.
Although the state liquor control board has more than a year to issue its rules, it is unclear how the board will go about its task given the fact that federal law, which supersedes state law, is inconsistent with I-502. In response to a similar initiative that passed in Colorado, the United States Attorney’s Office for the District of Colorado issued a statement that noted, “The Department of Justice’s enforcement of the Controlled Substances Act remains unchanged. In enacting the Controlled Substances Act, Congress determined that marijuana is a Schedule I controlled substance.” Under the Controlled Substances Act, Schedule I substances are those that have a high potential for abuse and no currently accepted medical use in treatment in the United States. Possession of a Schedule I substance is a federal crime, and a first conviction is punishable by up to one year in prison and a minimum fine of $1,000.
Most, if not all, prospective marijuana producers, processors, and retailers will likely stay out of the market for recreational marijuana as long as they face potential criminal prosecution by the federal government. This reality means that I-502 may end up having little practical effect on the availability of marijuana in Washington. The Department of Justice is reviewing both I-502 and the Colorado initiative and will presumably issue a report at the conclusion of its review.
Unless and until the federal government changes the classification of marijuana or the enforcement of the Controlled Substances Act, employers in Washington may continue to test applicants and employees for THC and take adverse employment actions based on the results of those tests. The possession of marijuana remains illegal under federal law, and I-502 does not require Washington employers to permit illegal drug use by their employees. That said, employers may consider whether their drug use policies should be amended to prohibit the use of any drug that is illegal under state or federal law.