Thursday, October 16, 2014

Microsoft and protected concerted activity under the NLRA: A chilling effect?

Employers are now well aware that the NLRB is reviewing their policies, procedures, and employee handbooks to see if there is either a direct prohibition against employee conduct protected under § 7 of the NLRA or if there is a "chilling" effect on those rights.  Employers are also finding out just how expansive the scope of protected concerted activity is under the Obama Board.  Against this backdrop, Business Week posted an article concerning comments made by Microsoft's CEO concerning female employees asking for wage increases and whether the comments might violate the Act. 

The CEO stated,  It's really not asking about a raise, but knowing and having faith that the system will actually give you the right raises as you go along.  And that, I think, might be one of the additional superpowers that quite frankly women who don't ask for a raise have.  Because that's good karma.  It'll come back, because that is the kind of person that I want to trust.  That's the kind of person I want to really give more responsibility to.  The CEO subsequently apologize and retracted his statements, noting that he was completely wrong.

Former NLRB Chair Wilma Liebman was quoted in the article as saying the comments fall into a "contentious" area.  The comments could be the basis of an argument that if you ask for a wage raise, you are not going to be trusted and if you are not trusted, you might be in jeopardy.  The article noted the  differing views on whether action taken in response would constitute concerted activity.

Employers would do well to remember a decision in which  Chair Liebman participated.  In Parexel International LLC,  an employee was terminated after complaining to a supervisor that the company favored South African employees with respect to pay raises.  The supervisor asked the employee if the employee had discussed the issue with other employees, and the employee responded that she had not. She was fired a week later.  In a 2-1 decision, the Board found that the termination was a pre-emptive strike to prevent the employee from engaging in protected concerted activity.  The termination prevented the employee from addressing the issue in the workplace and had the effect of keeping other employees is the dark about these matters, thereby preventing them from inquiring further into perceived wage discrimination.

Would there be a basis for a claim, notwithstanding the retraction, that the CEO's comments constituted a pre-emptive strike as recognized by former Chair Liebman?  Under the Bush Board, such a claim would have little chance, but under the Obama Board, the comments might be viewed as chilling protected concerted activity of seeking wage increases.  The fact the NLRA's ramifications of the comments are being discussed at all is an indication that employer actions will be viewed through the filter of the broadened interpretation of protected concerted activity.

Tuesday, October 14, 2014

Jimmy John's and non compete agreements: Secrets of the sandwich?

The Huffington Post posted a story concerning Jimmy's Johns use of non compete agreements with its employees and the filing of a proposed class action challenging the agreements.  The non compete prohibits former employees from working within 2 years of employment for any business which derives more than 10% of its business from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches within 3 miles of any Jimmy John's location.  The breadth of the geographic scope in the Greater Detroit area can be seen by accessing the on line store finder and looking at the overlap of the stores.  A former Jimmy John's employee in the suburban Detroit area would be unable to work virtually anywhere in a large area north and west of the city.  In addition, a former employee may not work for any Jimmy John's for a 12 month period following termination for any reason.

Under Michigan law, an employer may obtain a non compete agreement which protects its reasonable competitive business interest provided it is reasonable with respect to its duration, geographical area, and type of employment or line of business.  It is difficult to imagine what it is that a non manager employee might possibly know that would warrant a 2 year non compete barring employment in the restaurant industry. Secret sauce?   Imagine a former employee inquiring during an employment interview whether 10% of the business comes from selling sandwiches in question and the reaction to the question.  An employer cannot prohibit the employee's use of general knowledge or skill.  Reasonableness takes into account  the status of the employee and the competitive risk to the employer's business.

Perhaps there is something that Jimmy John's employees are exposed to that would justify the non compete agreement.  It appears, however, that the agreement is simply not reasonable or, more importantly, needed to protect the business.  Many employers incorrectly view non compete agreements as a way of keeping a former employer from working in the particular business.

The story suggested that the agreement with the limited future employee opportunities would keep employees "from rocking the boat" like trying to unionize the company.  It is more likely that the agreement will serve as an incentive to bring a union in to balance the difference in power and to remove burdensome conditions of employment.  Employees may view their situation as one where it is easier to bring in a union than to live with the specter of being sued at a new employer.

Tuesday, October 7, 2014

EEOC and wellness programs: Looking for "just right."

The EEOC recently filed its second lawsuit  challenging an employer's wellness program under the ADA.  The suit coincided with comments made by Commissioner Lipnic at a law firm's client briefing.  Commissioner Lipnic is quoted as saying that she thought it would be difficult to come with "bright line" rules for wellness programs and that employers should not expect guidance anytime soon from the agency.

According to the Complaint filed by the EEOC in the second lawsuit, an employee who was unable to complete the biometric testing and health risk assessment required for a wellness program because of his hospitalization was refused the opportunity to complete the requirements upon his return to work.  The employee was notified by letter that his health insurance was terminated because of his failure to complete requirements and was offered the opportunity to apply for insurance at the COBRA premium rate.  The employee was unable to afford the cost, and his insurance was cancelled.

In the first case filed by the agency, the complaint alleged that an employee refused to participate in a program that required medical examinations and made disability related inquiries was required to pay the entire amount for her health benefits and was subsequently fired.  The suit alleges that the employee was fired in retaliation for her good faith objections to the program.

The EEOC appears to establishing policy by litigation.  In May of 2013, the EEOC held a public meeting to address wellness programs under federal equal employment opportunity law.  The press release issued concerning the meeting stated as its headline, Employer Wellness Programs Need Guidance to Avoid Discrimination.  Commissioner Lipnic was quoted in the press release saying that the use of wellness programs will present more questions with respect to the federal laws the agency enforces and "I believe we have a responsibility where possible to let stakeholders know the Commission's position on these important questions."

To date, the EEOC has not indicated that it is not "possible" to let stakeholders know its position; apparently, however, the difficulty expressed by Commissioner Lipnic means it is not possible.  If the EEOC is having difficulty, imagine what employers are facing.  Employers are the "Three bears" to the agency's "Goldilocks."  The only way to know with certainty if a wellness program would be valid under the ADA is to have the EEOC sample it by investigation and lawsuit.

So far, the EEOC has viewed the shifting of the entire cost of health insurance to employees who choose not participate as violating the ADA.  Terminating an employee for refusing to participate will be considered retaliation.  Employers must be aware the agency's focus is on the voluntary nature of any wellness program participation.  Without guidance from the EEOC, employers have to avoid penalties for employees who do not participate and hope that the EEOC finds their wellness programs to be "just right."

Monday, September 29, 2014

Direct evidence of age discrimination and the 6th Circuit

The 6th Circuit recently reviewed an appeal from the grant of summary judgment in an action where a principal of a high school alleged his contract was not renewed because of his age.  In Scheick v. Tecumseh Public Schools , the court reversed the summary judgment and reviewed the significance of three age related statements.

One statement allegedly made during an evaluation dealt the desire of the district that the plaintiff retire. Two other statements allegedly made by the superintendent addressed the desire to have someone younger in the position.  In granting summary judgment, the district court stated that there was no direct evidence of age discrimination.

The opinion considered the statements, and with respect to the retirement comment, the court stated that to find the statement to be direct evidence, the court would have to made a inference to conclude that the use of the word "retirement" was a proxy for age as opposed to either years of service or a desire that he leave the position voluntarily.  It found the statement was not direct evidence.

The court found that the statements about wanting someone younger were not ambiguous and represent direct references to age.  In the context of circumstances they were made, the court stated that it was clear it was the board that wanted a younger person. 

The EEOC filed an amicus brief and took the position that the presentation of direct evidence of age discrimination necessarily precluded the entry of summary judgment.  The court noted that this issue had not been addressed the Supreme Court in Gross v. FBL Financial Svcs., 557 U.S. 167, 177-78 (2009). (Age must be the but for cause of the employer's decision.)  The court rejected the EEOC's position.  Even when the direct evidence has been offered, the question to be asked is whether the evidence, taken as a whole is sufficient to permit a rational trier of fact to conclude that age was the "but for' cause of the decision.  The court stated that in this case, the evidence taken  in the light most favorable to the plaintiff is sufficient to permit a juror to conclude age was the "but for" cause.

Employers will continue to be faced with allegations of age based comments.  At least in the 6th Circuit, the EEOC's position that summary judgment cannot be granted be granted in light of presentation of direct evidence is not the law.

Wednesday, September 24, 2014

The EEOC and press releases...never mind.

The EEOC uses its press room page on its website to announce the filing of lawsuits and the settlement of cases.  So far in September, the agency has issued 12 press releases announcing settlements and 17 press releases announcing the filing of litigation.  What does the agency do when it falls far short of the statements made in a press release, and the employer prevails in the litigation?  Does the EEOC issue a press release commenting on the case?  Does the EEOC retract the original press release which is now inaccurate?  The answer of course is no.

Consider the agency's litigation against Kaplan Higher Education Corp.  The agency issued a press release dated 12/21/10 announcing that it was suing Kaplan for rejecting job applicants based on their credit history since at least 2008.  The press release went on to state that the practice had an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity.  This is pretty strong stuff for public consumption.

The litigation did not go as the agency had hoped, and its attempt to overturn summary judgment was met by language from the 6th Circuit seldom seen in appellate opinions.  The court noted that the EEOC used the practice it now challenged and "brought this case on the basis of a homemade methodology, crafted by the witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself."  This is also pretty strong stuff from a court.

Being sued by the EEOC is a no small matter, and the time and cost of defense for employers is significant.  The audience that would have access to the 6th Circuit's decision is far smaller than the audience of the original press release.

  On its website in the section concerning its role, the EEOC states that its role in an investigation is to fairly and accurately assess the allegations in the charge and to then make a finding.  Since the EEOC publicizes the cases where it decides to sue based on its "investigation," shouldn't it also announce when its assessment was not accurate as determined by a court where it had already stated the employer had discriminated? 

Friday, September 12, 2014

The Ravens' Tale: Investigations

The Baltimore Ravens are not your typical employer. The NFL is not your typical industry.  That being said, the Ravens' handling of the Ray Rice matter is a lesson in what not to do.  In hindsight, the organization realized its initial reaction was inappropriate and was able to use the release of a video as the excuse to take a "do over" and terminate Rice's contract.

As one columnist wrote, the video did not disclose anything new.  The victim was dragged out of an elevator.  Apparently Rice was candid about his actions and his striking of his now wife.  The owner of the Ravens has sent an open letter to the fans and the public explaining the team's actions.  In the letter, the owner stated, "We should have pursued our own investigation more vigorously.  We didn't and we were wrong."

The admission highlights the fact that employers need to conduct their own independent investigation even where there is a parallel criminal investigation.  There are a number of reasons why a criminal investigation may not result in the accused being charged, much less tried, as was the case here.  An employer who relies on a criminal investigation has a difficult time taking any action where there is no judicial determination because it has deferred to the criminal judicial system. The owner stated in his letter that the team had decided to defer action until the completion of court proceedings and halted its own fact finding which he acknowledged was a mistake. 

 In any event, an employer has an interest in pursuing its own investigation of whether conduct, especially off duty conduct, violates a policy or is otherwise subject to action.  As important as it is to conduct an independent investigation, it is also important to assess the result of the investigation and to determine what if any action is warranted based upon the facts.  In this case, the employer decided to defer to the actions of the NFL.

An employer who is signatory to a collective bargaining agreement would be unlikely to get a "do over" after taking action.  It would be difficult to convince an arbitrator that the "newly discovered" evidence warranted an increase in the penalty when the relevant facts were already known and disciplinary action taken.  While the Ravens made a mistake in not conducting their own investigation, they compounded it by seizing on the video to take action which was warranted from the outset.

Sunday, August 31, 2014

Loyalty: Extinct under the NLRA?

§8.01 of the Restatement Third of Employment Law states that employees owe a duty of loyalty to their employers in matters related to the employment relationship.  Employers realize that under the Obama Board, the inclusion of that statement would violate the act because it is overly broad and would chill employees in the exercise of § 7 rights.  The Board has recently decided a case where it has reviewed terminations because of employee activity that could be considered disloyal.

In MikLin Enterprises, Inc. , the Board upheld a finding of a violation of the Act in the employer's termination and disciplining of employees who took part in a union sponsored sick days campaign.  The employer was a Jimmy John's franchisee.  The employer did not provided sick days and required employees to find their own replacements if calling in sick.  The union assisted the employees in a campaign utilizing press releases and posters placed in local businesses and at the employer's stores.

The posters contained side by side pictures of sandwiches with the notation that one was made by a healthy employee and one was made by a sick employee.  The poster asked if the viewer could tell the difference and stated that the Jimmy John employees do not get sick days.  The poster stated, "We hope your immune system is ready because you are about to take the sandwich test..."  The union's contact information was on the posters.

In a 2-1 decision, the majority stated that the test in deciding whether employee communications to third parties was protected is set forth in NLRB v. Electrical Workers Local 1229(Jefferson Standard), 346 U.S. 464 (1953).  The Jefferson Standard test focuses on whether the communications indicate that they are related to an ongoing labor dispute and whether they are so disloyal, reckless or maliciously untrue to lose protection.  The majority stated that the Board also considers whether the communication is made at a critical time in the initiation of the company's business and whether they are reasonably calculated to harm the company's reputation and reduce its income.  Concerted activity that is otherwise proper does not lose its protected status simply because it is prejudicial to the employer.

The majority rejected the argument that the standard should be different in the food industry than other businesses.  The majority  noted that although the public may be alarmed by a potential health threat in the food industry, they could not say the public would be any less sensitive to inferences of safety problems in school buses. 

In addressing the issue of disparagement, the majority stated that the press releases and posters did not allege that any sandwiches were actually contaminated or that customers had become ill.  Rather, there was only the suggestion of the realistic potential for illness resulting from the handling of food by workers who are sick.  Indeed, there is no lack of data establishing that the preparation and handling of food by sick workers poses a danger to public health.

The naiveté of the majority is breathtaking.  As they acknowledged, there is a very real public concern for the public health risk in consuming contaminated food.  The posters pointed out that there is no way of telling the difference between contaminated and uncontaminated food.  So what would be the reasonable reaction of the consumer?  Avoid the stores.  Go to a competitor.  That is precisely what the reasonable impact would be.  As the dissent recognized, the posters were clearly designed to attack the reputation of the employer in the eye's of the public and the employer's income.  At the very least, the dissent noted the posters demonstrated a reckless disregard for the inevitable, detrimental  consequences.

It will be interesting to see what the Board's position will be if the employees are laid off due to the loss of business and allege retaliation that they were laid because of their concerted activity which caused the loss.  Urging the public to avoid the employer's sure looks like disloyalty, whatever that means today.