As discussed in our earlier posts (Part 1 and Part 2), the EEOC and NLRB have in recent years targeted employers who impose restrictions on employee speech and conduct that could chill employees' exercise of their rights under the NLRA and Title VII. Whether the courts will agree to invalidate restrictions on employee speech and conduct in the context of settlement agreements is an open question and a matter of concern for employers.
Such restrictions are common in agreements resolving employment disputes. Indeed, many companies would not think of entering into a settlement in which they were not assured that the affected employee(s) would comply with the company’s confidentiality policy, maintain confidentiality of the fact and/or terms of the settlement, and refrain from disparaging the company. While policy considerations associated with settlements are arguably different from those associated with other employment practices attacked by the agencies, the employment rights at issue are largely the same. If the courts embrace the positions held by the EEOC and NLRB, employers may start to see both current and former employees challenge undesirable settlement terms by filing suit or administrative charges, or raising the issue as a defense to enforcement. Either way, if the courts invalidate such terms, employers will have a lot less incentive to settle.
Given the likelihood that agencies will continue to scrutinize both employment policies and settlement terms, employers should review all of their policies and agreements that may impact employees’ exercise of employment rights under the NLRA and Title VII. These can include policies addressing confidentiality, use of the Internet, email, and social media, disparagement, and general conduct policies (e.g., no gossip and professionalism policies) that purport regulate employee speech. Employers will need to balance the risks and benefits of including such terms going forward.
The EEOC’s recent lawsuits against employers described in Part 1 follow the NLRB’s similar attempts in recent years to rein in employer restrictions that could impact employee speech and other employment rights under federal labor law.
The focus of the NLRB and the EEOC has been primarily on invalidating employment policies that might have a tendency to chill employee rights under Section 7 of the NLRA and Title VII, such as broadly-worded confidentiality and social media policies. Section 7 entitles employees to form and join a union, and to engage in organizing, collective bargaining, and other concerted activities for mutual aid and protection. Section 8 of the NLRA prohibits employers from interfering with employees’ exercise of their rights under Section 7.
One such ruling by the NLRB was recently upheld by the Fifth Circuit, which invalidated a fairly standard confidentiality policy. The policy at issue defined “Confidential Information” as including information related to customers, suppliers, distributors; the employer’s management and marketing processes, plans and ideas, processes and plans, financial information, including costs, prices; current and future business plans, computer and software systems and processes; personnel information and documents, and the company’s logos and art work. The policy prohibited employees from sharing Confidential Information outside the organization, or from removing or making copies of any company records, reports or documents without prior management approval. The policy also provided that disclosure of Confidential Information could lead to termination and possible legal action. Although the company’s policy said nothing specific about wages, the Fifth Circuit found that the policy violated Section 8 of the NLRA because employees could interpret the policy as precluding discussions about wages. Thus, it appears that the NLRB’s expansive reading of Section 7 rights may be gaining traction in the courts, at least with respect to employer confidentiality policies.
In our next post we will address the practical implications of federal agency efforts to limit restrictions on employee speech.
The EEOC and NLRB continue to target employers who restrict employee speech and conduct, especially when those restrictions could impact employees’ rights under labor and employment laws.
The EEOC recently filed suit attacking the use of certain terms in employer settlement agreements, this time against CollegeAmerica, a private college based in Salt Lake City. The EEOC alleges that CollegeAmerica conditioned an employee’s separation benefits, among other things, on her promise not to file a complaint or grievance with any government agency or to disparage CollegeAmerica. When the employee filed a charge against CollegeAmerica with the EEOC alleging discrimination and retaliation, College America promptly filed an action against the employee in state court for breach of the agreement.
The EEOC claims that the agreement violates the employee’s right to file charges with the EEOC and that CollegeAmerica’s filed its lawsuit in retaliation for the employee’s filing of the EEOC charge. The EEOC is seeking to recover the employee’s attorney fees incurred in defending the state court action, and for injunctive relief to invalidate the employee’s separation agreement and prevent CollegeAmerica from using the offending terms in its form settlement agreements.
This follows a lawsuit that the EEOC filed in February against CVS Pharmacy, seeking to invalidate settlement terms including confidentiality and non-disparagement clauses, a general release, and a covenant not to sue, among other things. See our earlier coverage of the CVS case here.
Our next post will address similar actions against employers by the NLRB.
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.