Employment Law Alert

Employment Law Alert

News and Updates on Employment Law

NLRB Judge Strikes Down Employee Handbook Confidentiality Policy — Including Protection of Customer and Vendor Data

Posted in Labor

An employee handbook containing policies prohibiting (1) the disclosure of confidential company information, including personnel data, (2) use of the employer’s logo or trademark except as authorized by the company and (3) obstruction and interference with government investigations, including a requirement to notify the company’s human resources representatives or law department and to obtain approval to release information for a government investigation was found to violate Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by an NLRB Administrative Law Judge (“ALJ”) in Macy’s Inc., JD(NY)-21-15. According to the ALJ’s decision, Macy’s employees when reading the policies could reasonably construe such policies to restrict their rights under Section 7 of the NLRA to engage in protected concerted activity for their mutual aid or protection. The ALJ found that these handbook policies unlawfully restricted those rights despite a “savings provision” in the employee handbook stating:

Nothing in the Code or the policies it incorporates, is intended or will be applied, to prohibit employees from exercising their rights protected under federal labor law, including concerted discussion of wages, hours or other terms and conditions of employment. This Code is intended to comply with all federal, state, and local laws, including but not limited to the Federal Trade Commission, Endorsement Guidelines and the National Labor Relations Act, and will not be applied or enforced in a manner that violates such laws.

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Supreme Court Rules ERISA Statute of Limitations Does Not Bar Breach of Fiduciary Duty Claim Challenging 401(k) Plan Investments Made More Than 6 Years Before Filing of the Claim

Posted in Employee Benefits

The statute of limitations governing breach of fiduciary duty claims brought under the Employee Retirement Income Security Act (“ERISA”) provides that such claims are untimely if not brought within 6 years after “the date of the last action which constituted the breach or violation” or “in the case of an omission, the latest date on which the fiduciary could have cured the breach or violation” (29 U.S.C. § 1113). In Tibble v. Edison International, the U.S. Supreme Court ruled that ERISA’s statute of limitations did not bar plaintiffs from pursuing their breach of fiduciary duty claim arising out of investments made by their employer’s 401(k) plan, although the investments were made more than 6 years before plaintiffs filed their claim. The Court held that ERISA plan fiduciaries have an ongoing duty to monitor plan investments and to remove imprudent investments. As long as the alleged breach of this continuing duty occurred within 6 years of suit, a claim challenging a fiduciary’s failure to act will be timely. The Court rejected the argument that only “a significant change in circumstances” triggers the duty to remove imprudent investments.

Background

At issue in Tibble was Edison International’s 401(k) Plan (“the Plan”), establishing individual retirement investment accounts for participating employees. The value of these “defined contribution” accounts depends on the market performance of employee and employer contributions less expenses, such as management and administrative fees. The plaintiffs, participants in the Plan, alleged that the Plan’s administrators violated their fiduciary duties when they had the Plan offer six high priced retail-class mutual funds even though, as a large institutional investor, the Plan could have offered lower priced, but identical institutional-class mutual funds not available to a retail investor. Plaintiff’s maintained that because the Plan offered the higher priced retail-class funds the Plan participants were charged with wholly unnecessary administrative fees.

Three of these higher priced mutual funds were added to the Plan in 1999 and three were added in 2002. Plaintiffs brought their suit in 2007. The district court concluded that plaintiffs could challenge only the decision to offer the three mutual funds offered by the Plan in 2002 because ERISA’s 6-year statute of limitations barred plaintiffs’ claim insofar as it was premised on the three mutual funds added to the Plan in 1999. The Ninth Circuit Court of Appeals affirmed. The Court of Appeals found that plaintiffs had not established “a change in circumstances that might trigger an obligation to review and to change investments within the 6-year statutory period.”
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Sixth Circuit Upends EEOC Victory in Telecommuting Case

Posted in Disability

We previously reported on a decision by a panel of the United States Court of Appeals for the Sixth Circuit in Equal Opportunity Employment Commission v. Ford Motor Co., in which the panel held that the EEOC was entitled to a jury trial on its claim that Ford discharged an employee in violation of the Americans with Disabilities Act (“ADA”) after it denied her request to work from home 4 days per week as an accommodation for her irritable bowel syndrome (“IBS”). In an en banc decision the Sixth Circuit has now reversed the original panel’s decision, concluding that the district court properly granted Ford’s motion for summary judgment on the ADA claim. In so ruling, the Court credited Ford’s business judgment that the employee’s presence in the work place was an essential function of her job, and thus her request to telecommute four days per week was not a request for a reasonable accommodation to which Ford had to accede. The EEOC had heralded the original panel’s decision as a major victory. The Sixth Circuit’s en banc reversal of that decision should be cause for equal celebration by employers.

Background

Jane Harris, who was employed by Ford as a resale steel buyer, suffered from IBS, the symptoms of which included fecal incontinence. Harris’ supervisor allowed her to work a flex-time telecommuting schedule on a trial basis, but considered the trial unsuccessful because Harris was unable to establish regular and consistent work hours. Also, when working from home, Harris made mistakes and missed deadlines because she could not immediately access suppliers. Although Ford permitted other resale buyers to telecommute one or two days per week on a predictable schedule, the company considered the position not suitable for telecommuting up to four days per week on an unpredictable schedule because the essence of the job was group problem-solving, which required a buyer to be available to interact with members of the resale team, suppliers and others at Ford. Harris rejected alternative accommodations offered by the company, including seeking another job within the company more suitable to telecommuting. The company continued to be dissatisfied with Harris’ performance and placed her on a performance enhancement plan. After her supervisors determined that Harris had failed to meet the objectives of the plan, the company terminated her employment.

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NYC Law Limiting Employer Use of Credit Checks Signed by Mayor

Posted in Privacy

On May 6, 2015, New York City Mayor, Bill De Blasio, signed legislation proposed by the City of New York likely to limit an employer’s ability to use credit checks when making hiring and retention decisions. The law goes into effect 120 days from May 6, 2015, or on September 3, 2015. We analyzed the new law in detail in a recent blog.

For questions about this blog or about the use of background checks and applicable policies and procedures in general, please contact an attorney in the Gibbons Employment & Labor Law Department.

Mitchell Boyarsky is a Director in the Gibbons Employment & Labor Law Department.

NYC Law Expected To Change Employer Use of Credit Checks

Posted in Privacy

The City of New York likely will tighten the reins on an employer’s ability to use credit checks when making hiring and retention decisions. The City Council approved a bill that would amend the New York City Human Rights Law, § 8-102 et seq. (“NYCHRL”) to prohibit an employer, labor organization, employment agency, or their agents from using an applicant’s or employee’s “consumer credit history” for employment purposes or to otherwise discriminate against an applicant or employee based on consumer credit history. If the legislation is signed by the Mayor – on whose desk the proposed bill now sits –  it will go into effect within 120 days after the Mayor signs.

The proposed bill contains limited exceptions listed below that permit the use of credit checks for hiring and retention decisions. The NYCHRL already contains provisions that replicate the New York State Human Rights Law, Executive Law §290 et seq. and New York Corrections Law, Art. 23-A, which require an individualized assessment of an applicant or employee before disqualifying the applicant or negatively affecting the employee based on the results of a criminal background check. Moreover, existing New York laws require that an employer’s decision to disqualify an applicant be justified using a variety of reasons and ultimately based on a direct correlation between the nature of the job and the applicant’s criminal history, an unreasonable risk to property, or the safety or welfare of specific individuals or the general public. These existing limitations stand separate from the requirements of the Federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. and the New York State Fair Credit Reporting Act, General Business Law Art. 25.

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U.S. Supreme Court Requires EEOC to Attempt Conciliation Before Suing

Posted in Discrimination

In Mach Mining LLC v. Equal Employment Opportunity Commission, the United States Supreme Court was presented with the issue of whether the EEOC must attempt to conciliate an employer’s alleged violation of Title VII of the Civil Rights Act of 1964 before initiating a lawsuit against the employer and, if so, to what extent a court may review those conciliation efforts. The Court concluded that the EEOC must attempt to engage in conciliation, but that the scope of a court’s review of the EEOC’s efforts is narrow. Post-Mach Mining, an employer that attempts to challenge a lawsuit brought by the EEOC on the grounds that the agency’s conciliation efforts were insufficient will be fighting an uphill battle.

Background

Brooke Petgas filed a charge of sex discrimination with the EEOC after her job application with Mach Mining was rejected. Title VII provides that if the EEOC find reasonable cause that a claimant’s charge is true, before bringing a lawsuit the agency “shall endeavor to eliminate any such alleged unlawful employment practice by informal methods of conference, conciliation, and persuasion.” 42 U.S.C. § 2000e-5(b). (The Americans With Disabilities Act is subject to this same provision, and the Age Discrimination in Employment Act contains a similar provision.) After finding “reasonable cause” in Petgas’ case, the EEOC notified both Petgas and Mach Mining by letter that it would soon commence conciliation efforts. About a year later, the agency sent another letter to the parties advising that the required conciliation had occurred and that further conciliation efforts would be futile. According to the Supreme Court, the record did not disclose what actually occurred between the two letters.

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NLRB General Counsel Issues Memorandum Regarding “Quickie” Election Rule

Posted in Labor

On April 14, 2015, the National Labor Relations Board’s “quickie” election rule took effect (despite pending lawsuits challenging the legality of the rule). Earlier this month, the Board’s general counsel issued a 36-page memorandum to provide guidance on the new rule, which we summarize in some detail below in an effort to help employers navigate these new waters. The memorandum serves as a reminder that non-union businesses should consider implementing a labor relations strategy now so they can effectively, lawfully, and quickly respond to a notice of petition for election if they receive one under the new rule. An in-depth discussion of the general counsel’s memorandum is provided. The highlights are as follows:

Election Petition

Under the new rule, a labor union or employee can ask an NLRB regional office to hold a union election by e-filing an election petition with the office demonstrating that at least 30 percent of employees in a certain unit of the employer’s workforce wish to have a union represent them. If the regional office processes the election petition, it will send the company a notice of petition for election, a statement of position form with a deadline for filing it, and usually a notice of election hearing. The employer must post the notice of petition for election within two days of receiving the notice of hearing. The regional office generally will schedule a pre-election hearing eight days from the notice of hearing. Or, instead of sending a notice of hearing, the regional office may send the company a notice to show cause as to whether a pre-election hearing is necessary.

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Pennsylvania’s Paid Sick Leave Ordinance May Be Put On Permanent Bed Rest but Trenton’s Ordinance Survives Court Challenge

Posted in Employee Benefits

In response to the growing trend of municipalities enacting paid sick leave ordinances, business groups are trying to fight back. On April 15, 2015, the Pennsylvania Senate passed a bill that would overturn Philadelphia’s new paid sick leave law. In New Jersey, however, a court challenge to Trenton’s paid sick leave ordinance has hit a roadblock.

The City of Philadelphia paid sick leave law ─ the Promoting Healthy Families and Workplaces Ordinance ─ was signed on February 12, 2015 making Philadelphia the first, and thus far only, municipality in Pennsylvania to pass such a law. The Ordinance requires employers with 10 or more employees to provide full- and part-time employees who work at least 40 hours per year in Philadelphia to accrue paid sick leave at a rate of one hour for every 40 hours worked, up to a maximum of 40 hours per year. The Ordinance, which is set to take effect on May 13, 2015, is now in jeopardy after the Pennsylvania Senate has passed Senate Bill 333, by a 37-12 vote. The bill would prevent municipalities in Pennsylvania from adopting paid sick leave ordinances and only require business owners to offer workers paid sick leave in accordance with state or federal law. The bill’s sponsor, Senator John Eichelberger, R-Blair, stated that the intent of the bill was to promote statewide uniformity as opposed to allowing each municipality to create its own leave laws. Currently, legislation requiring paid sick leave is pending at the state level.

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U.S. Supreme Court Reinstates Pregnant Worker’s Discrimination Case

Posted in Discrimination

In Young v. UPS, the United States Supreme Court reinstated a UPS worker’s pregnancy discrimination lawsuit under the Pregnancy Discrimination Act, finding that both the District Court and the Court of Appeals for the Fourth Circuit had applied the wrong standard in upholding UPS’s light-duty-for-injury policy, under which the company refused a light-duty accommodation to a pregnant employee back in 2006. While the Court did not determine whether the employee suffered any actual discrimination, or whether UPS’s policy was impermissible under the PDA – those issues were remanded to the Fourth Circuit – the Court did adopt a modified version of the familiar burden-shifting framework of McDonnell Douglas for analyzing pregnancy discrimination claims under the PDA. The Court’s decision in Young is also noteworthy in that it declined to give deference to the EEOC’s July 2014 guidance on pregnancy discrimination, which we have previously discussed, and, in fact, rejected the argument that the PDA creates “an unconditional favored nations status” for pregnant workers.

Factual Background

Peggy Young worked as a part-time driver for UPS, and her job duties included picking up and delivering packages. In 2006, Young became pregnant and her doctor told her that she should not lift more than 20 pounds during the first 20 weeks of her pregnancy or more than 10 pounds thereafter. UPS, however, required its drivers to lift packages weighing up to 70 pounds (and up to 150 pounds with assistance). After informing UPS of her lifting restriction, Young sought a transfer to a “light-duty” position pursuant to UPS’ light-duty-for-injury policy, which limited such assignments to employees who (1) had been injured on the job; (2) had lost their U.S. Department of Transportation certification; or (3) were disabled under the ADA. As Young did not qualify for a light-duty assignment for any of these reasons, she was forced to stay home without pay and eventually lost her employee medical coverage.

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Supreme Court Upholds Department of Labor’s Authority to Issue Interpretive Rules Without Public Notice or Comment

Posted in Wage & Hour

Rules promulgated by agencies of the federal government can be divided into those which have the force and effect of law and those which are merely “interpretative” or provide general statements of policy concerning the agency’s view of the law. When an agency wishes to promulgate rules having the force and effect of law it must comply with the requirements of the Administrative Procedures Act (APA) by, among other things, publishing the proposed rules in advance, allowing sufficient time for public comment and responding to significant comments received. In Perez v. Mortgage Bankers Association, the United States Supreme Court addressed the issue of whether the Department of Labor (the “DOL”) was free to reverse itself about the proper interpretation of the laws over which it has enforcement responsibility without giving notice or allowing public comment of the proposed change. The Court unanimously held that the DOL was free to do so.

At issue in Perez was the proper interpretation of the “administrative exemption” of the Fair Labor Standards Act (“FLSA”), which exempts employers from the overtime provisions of that statute for those employees meeting the definition of “administrative employee.” In 2006, the DOL issued an opinion letter finding that mortgage loan officers fell within the administrative exemption. Four years later, however, the DOL reversed course and issued an Administrator’s Interpretation, which, in relevant part, concluded that mortgage loan officers were primarily salespersons who did not qualify for the exemption. It made this change without public notice and without allowing for public comment.

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