Today the U.S. Department of Labor issued an Administrator’s Interpretation of the Fair Labor Standards Act, offering guidance on whether a worker should be classified as an employee or an independent contractor. The Administrator’s Interpretation signals the DOL’s desire to expand the reach of the FLSA to protect the largest possible group of workers. It rejects the common law “control test,” which analyzes whether a worker is an employee based on the employer’s control over the worker. Instead, it focuses on a broad “suffer or permit” standard.
According to the DOL, an entity ‘suffers or permits’ an individual to work if, as a matter of economic reality, the individual is dependent on the entity, as determined by a multi-factor “economic realities” test. The factors typically include: (A) the extent to which the work performed is an integral part of the employer’s business; (B) the worker’s opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer. While the Interpretation is not binding, the courts will generally defer to an agency's view of the law so long as it is not clearly erroneous.
Contact Ater Wynne's employment practice group for assistance in applying the DOL Interpretation to the circumstances of your business.
While an at-will employee may generally be discharged for any reason, a discharge may be deemed wrongful -- and will form the basis of a common law wrongful discharge claim -- if it occurred because the employee fulfilled some important public duty. Last month the Oregon Court of Appeals expanded the important-public-duty exception, holding that a domestic employee who is fired for reporting that the employer had committed a crime involving child abuse has a wrongful discharge claim.
In McManus v. Auchincloss, plaintiff was a domestic employee who reported to the police that defendant, his employer, possessed child pornography. Defendant allegedly fired plaintiff in retaliation for the police report, and plaintiff sued for wrongful discharge. The trial court dismissed, holding that the facts did not support a common law wrongful termination claim. While a state statute prohibits an employer from terminating an employee in retaliation for making a good faith report of criminal activity, that statute expressly does not protect domestic employees. Because the legislature omitted domestic employees from the statute, the trial court held that plaintiff had no common law claim based on performing an important public duty.
On review, the Court of Appeals reversed. The court noted that the legislature has expressed a general public policy in favor of protecting employees who report criminal activity. That policy supports a common law claim by the plaintiff in this case, even though he was not protected by the express language of the legislation.
Given the awkward questions, gossip, and perhaps outright discrimination that may occur when an individual comes out as transgender on the job, it would be understandable if an individual decided to resign rather than continue working through the transition.
With Caitlyn Jenner's public announcement that she is transgender, it is possible employees will be more comfortable transitioning without changing jobs. This means employers may increasingly grapple with how to accommodate an employee undergoing a transition. In some workplaces, the issues may not be particularly sticky. In others, such as workplaces in which the employees and/or customers are conservative, or in which many different cultures and religions are represented, where employees wear sex-specific uniforms, where employees share locker rooms, and where the employee bathrooms contain multiple semi-private stalls, the issues will be more numerous and more difficult.
In Oregon, transgender employees are protected from discrimination in employment. Specifically, employers cannot discriminate based on sexual orientation. Sexual orientation is defined as including gender expression (meaning the manner in which an individual's gender identity is expressed, including, but not limited to, through dress, appearance, manner, or speech, whether or not that expression is different from that traditionally associated with the individual's assigned sex at birth) and gender identity (meaning an individual's gender-related identity, whether or not that identity is different from that traditionally associated with the individual's assigned sex at birth, including, but not limited to, a gender identity that is transgender or androgynous). ORS 659A.030; OAR 839-005-0003.
One of the most sensitive issues arises with bathroom use. In Oregon, it's pretty clear. Individuals must be allowed to use the bathroom consistent with their expressed gender. OAR 839-005-0003. At times, transgender employees would prefer to make other arrangements (such as using a private bathroom (assuming one is available) for a period of time). Employers may enforce valid dress codes provided they make reasonable accommodation of an individual based on the health and safety needs on a case by case basis. It seems likely that the Oregon Bureau of Labor & Industries will require an employer to allow a transgender employee to wear the uniform consistent with the gender they are presenting.
There are many resources available on the internet to assist employers and employees in the process of accommodating a transgender employee.
Typically these resources recommend a meeting or two with the individual to come up with a plan of communication with co-workers and a date to announce the change. The employer may need to conduct training on diversity issues, including transgender transition, in order to proactively address concerns that may arise. Foreign language translators may be needed to convey complex issues.
It is advisable as part of this training to address some of the most common questions co-workers and manager may have, such as "What if I call him/her by the incorrect pronoun?" (It's understandable if it happens a few times - but not if it becomes routine. It's appropriate to apologize on-the-spot for doing it automatically out of habit). "My religion sees this as a sin, I cannot condone it" (what you believe in is up to you - we focus on behaviors in the workplace). "What if a customer makes a rude comment"? (Make note of the interaction and let your manager know immediately. We cannot allow customers to create a hostile environment). "Is he or she undergoing sex reassignment surgery" (Sorry, as with any other medical issue, that is private). Stressing that joking and teasing are not tolerated is particularly important. Of course, checking in with the transgender employee from time to time is also helpful.
The Federal Government's own guide on accommodating an employee's transition is an example available to employers approaching this question for the first time. View the guide here.
Some employers have been accommodating transgender employees in the workplace for years. Others are more recently being asked to help an employee stay on the job through this important life transition. Employers that are new to this process should seek out educational materials, consultants, and of course, their legal counsel, to ensure compliant and positive transition for all.
This blog post has been prepared for clients and friends of Ater Wynne LLP and should not be relied upon as legal advice. For more information please contact Leslie Bottomly, Partner, Ater Wynne Labor and Employment Group.
1 The issue of whether transgender individuals qualify as "disabled" for purposes of accommodation under the Americans with Disabilities Act and the similar Oregon disability law, and issues pertaining to insurance coverage for medical treatment associated with sex reassignment are complex and beyond the scope of this article.
The decade-old Zubulake v. UBS case set off a seismic shift in electronic discovery that many lawyers and litigants still don't fully comprehend. One lesson many have learned the hard way is that the electronic discovery rules and practices that have been developed post-Zubulake must be a regular part of every organization's document management plans.
Zubulake was a standard employment discrimination lawsuit in the U.S. District Court for the Southern District of New York that is now seen as a turning point in electronic discovery. This article provides an excellent summary of Zubulake and its impact.
Increasingly, courts are disinclined to tolerate a party's failure to work cooperatively to minimize the cost of eDiscovery, as this plaintiff painfully discovered.
Give just a moment to consider your organization’s electronic document protocols. Processes should be in place long before any subpoena or request for records arrives. When your organization is hit with a lawsuit, what is the plan for preserving, requesting, organizing and producing documents?
The Litigation Technology Team at Ater Wynne manages electronic documents and eDiscovery for clients in litigation of all sizes, from small document collections with just one or two file types to large, complex sets involving terabytes of data, millions of documents, and dozens of file types. We utilize protocols and best practices developed in-house and multiple eDiscovery software platforms, keeping document management practices up-to-date and satisfying the courts' requirements.
In matters of eDiscovery, an ounce of prevention is better than a pound of cure. For more information about Ater Wynne’s Litigation Technology Team, contact Kara Lindsay, Chief Litigation Technology Specialist at firstname.lastname@example.org.
On March 18, 2015, the General Counsel for the NLRB issued a new memo providing guidance on common employer rules and policies that run afoul of Section 7 of the National Labor Relations Act. The memo is divided into two parts. In the first, the NLRB compares rules it found lawful with those that are unlawful, and provides its reasoning for both conclusions. The section includes employer rules that are frequently at issue before the agency, addressing issues such as:
The second section of the memo addresses handbook rules from a recently settled unfair labor practice charge against Wendy's International LLC, which followed an initial determination by the NLRB that several of Wendy's handbook rules were unlawful.
Consistently with prior GC memos, the differences between rules and policies the NLRB found lawful and unlawful were not always obvious, or even consistent with each other or past interpretations. Nevertheless, the memo is worth reviewing as a summary of the NLRB's current thinking and should serve as a reminder to employers that, if they have not updated their handbooks in a while, this is a good time to do it.
Employers that take such advice to heart should also keep in mind the NLRB's recent reversal of the longstanding precedent under which employers were permitted to ban employees from using the company's email system for non-business purposes. In Purple Communications, Inc., decided December 11, 2014, the NLRB held that employers given access to the company's email system must be permitted to use the system for communications protected under Section 7 during non-working time, unless the employer can show that special circumstances exist (most will not be able to make the required showing).
You can review our previous coverage of NLRB actions on rules, policies, and settlement terms here and here and here. You can also find more in depth coverage on our website, here (see part 7, Employer Confidentiality Policies Under Attack by Federal Agencies).
California recently became the second state to pass a law acknowledging the problem of workplace bullying. The first state to do so was Tennessee.
Effective January 1, 2015, California’s existing law mandating sexual harassment training for supervisors must include training on the prevention of abusive conduct. For the purpose of the new California law, "abusive conduct" means
conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer's legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person's work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious.
Tennessee’s law, passed earlier this year, requires the Tennessee advisory commission on intergovernmental relations (TACIR) to create by March 15, 2015, a model policy for employers to prevent abusive conduct in the workplace. Employers who adopt the TACIR or an equivalent policy are immune from suit for any employee’s abusive conduct that results in negligent or intentional infliction of mental anguish.
Since 2003, 26 states have introduced some version of the Healthy Workplace Bill (HWB), the anti-bullying legislation being promoted by social psychologist Gary Namie and his wife, who was a victim of workplace bullying and, thereafter, suffered from depression. To date, no states have enacted the HWB. However, recognizing the serious harmful effects of bullying, many schools have already implemented anti-bullying policies. It may just be a matter of time before anti-bullying legislation extends to the workplace.
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.