May 2011
The NLRB has announced that Lafe Solomon, the NLRB’s Acting General Counsel, has submitted for filing a complaint in U.S. District Court in Phoenix asking that court to declare that a recently passed constitutional amendment is preempted by the NLRA.
Arizona voters passed a constitutional amendment on November 2, 2010, prohibiting employers from engaging in voluntary recognition of unions, leaving only secret ballot elections as the means for representation elections. The NLRA allows for voluntary recognition and, in January of this year, Solomon advised the Arizona Attorney General, along with the Attorneys General of three other states, that their amendments conflicted with the NLRA and that the Board had authorized him to litigate the matter. Last month, Solomon informed the Attorneys General of Arizona and South Dakota that he would, indeed, initiate litigation; the NLRB states that litigation will soon be filed over the South Dakota amendment.
Solomon has come under fierce fire for the prospective litigation from conservative critics.
Representative John Kline, Chairman of the US House Committee on Education and the Workforce, has issued a letter to NLRB Acting General Counsel Lafe Solomon, demanding that Solomon explain the decision to issue a complaint against the Boeing Company that accused the manufacturer of retaliating against a union. Calling the complaint, “deeply troubling,” Kline asserted that the facts of the case are in dispute and drew attention to what he called “apparent inconsistencies” in the decision to issue the complaint.
The crux of the complaint is that Boeing decided to place a second production line in a non-union facility in South Carolina after the union representing workers at its Everett, Washington facility struck. According to Kline, when asked about the charge in June, 2010, NLRB Regional Director Richard Ahearn said that the case would be easier for the union if Boeing had decided to transfer operations, rather than putting new work in South Carolina. Kline also asserts that Ahearn, at that time, said that an initial ruling was weeks away. Kline notes that, when the ruling did come, some ten months later, it went against Boeing. Kline, contending that the complaint could have a “chilling effect upon businesses across the country,” is demanding that Solomon tell him what changed the apparent course of the case and provide him with all relevant documents between the National Office and the Regional Office. Kline has also asked for evidence that the work was transferred and for precedent supporting the issuance of a complaint.
Meanwhile, according to published reports, the Boeing Company has asked the NLRB to withdraw its complaint against the manufacturer, saying that the Board misquoted statements by company. According to reports, Boeing claims that the new line did not move or transfer any work from Washington State.
Responding to a growing controversy, NLRB Acting General Counsel Lafe Solomon on Monday, May 9, issued a statement about the Board's recent complaint alleging that Seattle-based Boeing unlawfully decided to transfer a second production line to a nonunion facility in South Carolina. “Contrary to certain public statements made in recent weeks, there is nothing remarkable or unprecedented about the complaint issued against the Boeing Company on April 20,” Solomon contended in a statement released by the Board.
“The complaint involves matters of fact and law that are not unique to this case, and it was issued only after a thorough investigation in the field, a further careful review by our attorneys in Washington, and an invitation by me to the parties to present their case and discuss the possibility of a settlement. Only then did I authorize the complaint alleging that certain statements and decisions by Boeing officials were discriminatory under our statute.”
“It is important to note that the issuance of a complaint is just the beginning of a legal process, which now moves to a hearing before an administrative law judge,” Solomon stressed. “That hearing, scheduled for June 14 in Seattle, is the appropriate time and place to argue the merits of the complaint. The judge’s decision can further be appealed to the Board, and ultimately to the federal courts. At any point in this process, the parties could reach a settlement agreement and we remain willing to participate in any such discussions at the request of either or both parties. We hope all interested parties respect the legal process, rather than trying to litigate this case in the media and public arena.”
Solomon made the same point today in response to a letter received earlier this month from Boeing General Counsel J. Michael Luttig.
Led by Conservative firebrand Senator Jim DeMint (R-SC), 18 Republican Senators have sent a letter to President Obama, demanding that he “fix” the NLRB. Although the letter purports to be in regards to the complaint filed by the NLRB against The Boeing Company, the Senators’ letter focuses mostly on President Obama’s appointees to positions in the NLRB.
Using the president’s own phrase, the letter charges that “recent actions by your handpicked political appointees” at the NLRB make it more difficult “for America to win the future.” The letter directly references the Boeing complaint, which it calls “unprecedented” and “an attack on millions of workers in 22 right-to-work states.” The senators suggest that, rather than an isolated complaint stemming from allegedly coercive remarks made by Boeing executives, the complaint is actually “a government-led act of intimidation against American companies that should have the freedom to choose to build plants in right-to-work states.”
The letter states that right-to-work states perform better than unionized states, then pivots to an attack on the president’s appointees to the labor board. The letter noted that Solomon has not appeared for a Senate confirmation hearing and has not had a vote. The letter also notes the recess appointment of Craig Becker, which the president was forced to make after the minority party used procedural mechanisms to deny Becker and up or down vote; the letter’s assertion that “the Senate rejected his nomination in February 2010” is not, therefore, strictly true.
Thanks to these appointments, the senators charge, “the Senate has been unacceptably denied the ability to exercise its constitutional duty of advice and consent in regards to the NLRB.” The senators propose that the president withdraw the nominations. If he does not, the senators have threatened to “vigorously oppose both nominations, vote against cloture and use all procedural tools available to defeat their confirmation in the Senate.” Such threats, doubtlessly have factored into the president’s decision to have Solomon and Becker serve in their “acting” capacities.
The NLRB has issued a complaint against Hispanics United of Buffalo, alleging that the nonprofit unlawfully discharged five employees who criticized their working conditions on Facebook. According to the complaint, shortly before a meeting with her management about working conditions, an employee of the nonprofit posted a co-worker’s allegation that the nonprofit did not adequately assist its clients on her Facebook page. That post led other employees to voice their concerns on the social network site and complaints regarding staffing issues and work load filled the Facebook post. After it learned of the complaints, the NLRB alleges, Hispanics United fired the five employees involved, claiming that their comments were harassment of the employee whose complaint was first mentioned in the post. The NLRB contends that the discussion dealt with terms and conditions of employment and, as such, was protected activity under the Act. A hearing is scheduled for June 22, 2011, in the NLRB’s Buffalo office.
This complaint marks the latest in a series of actions by the Labor Board as it explores the relationship between social media and the workplace.
Continuing its recent grappling with the employment implications of social media, the NLRB announced today, May 24, that it issued a complaint against a Chicago-area BMW dealership over what the NLRB alleges was an unlawful termination stemming from photos and comments on Facebook that criticized the dealer.
According to the news release, a car salesman employed by Knauz BMW and other coworkers were unhappy with the quality of food and beverages at a dealership event, thinking that the poor showing might negatively affect their sales. After the event, the salesman posted comments and photos of the event on his Facebook page, to which his fellow employees had access. Those comments criticized the dealership for only offering hot dogs and bottled water to customers, and when the dealership learned of the post, it asked the salesman to remove the post. Although he immediately complied, the NLRB alleges that the dealership terminated him shortly thereafter.
According to the news release, a car salesman employed by Knauz BMW and other coworkers were unhappy with the quality of food and beverages at a dealership event, thinking that the poor showing might negatively affect their sales. After the event, the salesman posted comments and photos of the event on his Facebook page, to which his fellow employees had access. Those comments criticized the dealership for only offering hot dogs and bottled water to customers, and when the dealership learned of the post, it asked the salesman to remove the post. Although he immediately complied, the NLRB alleges that the dealership terminated him shortly thereafter.
The NLRB is alleging that the posting constituted protected concerted activity under Section 7 of the NLRA because it related to an employee discussion regarding the terms and conditions of employment. The case is currently scheduled to go to hearing on July 21, 2011.
The complaint is the latest in a series of complaints filed by the NLRB over social media-related terminations. At a conference of the American Bar Association in the fall of 2010, Acting NLRB General Counsel Lafe Solomon suggested that the Board was about to take a strong position on the issue. Recent events have backed up that promise.
The NLRB and its Congressional allies are pushing back strongly against what they see as interference by the U.S. House Committee on Education and the Workforce in the NLRB’s ongoing determination of whether The Boeing Company violated the NLRA when it placed a second production line for its Dreamliner aircraft in a non-union facility.
Yesterday, in a hearing examining the Board’s handling of corporate campaign cases, U.S. Representative Rob Andrews (D-N.J.) took the opportunity to press his case that the Committee’s recent actions, which include letters and demands for internal NLRB documents on the Boeing matter, constitute undue interference in the Board’s activities. Andrews asked Jonathan Fritts, who had been called by the majority, whether the Board should “resist” efforts by the Republicans on the Committee to force the Board to turn over materials relating to the Board’s investigation of the Boeing dispute. Fritts agreed with Andrews’ assertion that the Board should resist those efforts because they may contain sensitive materials under attorney-client privilege.
“I agree that they do and I agree that they should,” Fritts answered.
Andrews’ questioning, which was largely unrelated to the ostensible topic of the hearing, is a direct response to a recent demand by John Kline (R-Minn.) the Chairman of the U.S. House Committee on Education and the Workforce. In a letter to NLRB Acting General Counsel Lafe Solomon, Kline insisted that Solomon explain the decision to issue a complaint against the Boeing Company that accused the manufacturer of retaliating against a union. In that letter, Kline alleged that, when asked about the charge in June, 2010, NLRB Regional Director Richard Ahearn said that the case would be easier for the union if Boeing had decided to transfer operations rather than putting new work in South Carolina. Kline also asserts that Ahearn, at that time, said that an initial ruling was weeks away; the eventual ruling came ten months later. Kline demanded that Solomon tell him what changed the apparent course of the case and provide him with all relevant documents between the National Office and the Regional Office. Kline has also asked for evidence that the work was transferred and for precedent supporting the issuance of a complaint.
Andrews’ questioning may have also been intended to buttress the refusal last week, by Solomon’s office, for those documents. In a May 19 response to Kline’s letter, Celeste J. Mattina, the NLRB Acting Deputy General Counsel, provided an explanation of what happened between Ahearn’s comments and the eventual decision to issue the complaint. Mattina asserted that Ahearn’s comments only “reflected an appropriate appreciation of the delicate balancing and careful scrutiny of often conflicting evidence;” they did not, said Mattina, reflect a view that no complaint was warranted. Mattina also explained that the delay between those comments and the eventual complaint was due to Solomon’s decision to allow Boeing to make a special presentation to the Board explaining its version of the comments that led to the complaint. Mattina further explained that, after Boeing made that presentation, Solomon encouraged the two sides to resolve the dispute and that only when those efforts failed did Solomon issue the complaint.
Mattina refused, however, to provide the Committee with documents and communication between the NLRB and the Regional office that conducted the initial investigation into the Boeing matter. Saying that the demand was, “to our knowledge… the first this Agency has ever received from a Committee… seeking documents within litigation filed of an open enforcement action,” Mattina contended that the documents were privileged work product. Premature disclosure could, warned Mattina, result in an unfair advantage to one litigant, presumably Boeing, over another.
The Committee has yet to respond to the Acting General Counsel’s refusal.
LEADING CASE NEWS
A union’s contractual right to the checkoff of union dues survived expiration of a collective bargaining agreement, ruled the Second Circuit, in finding that a federal district court correctly determined that the Hearst Corporation was required to arbitrate a dispute over the checkoff of union dues pursuant to the terms of the expired CBA (Newspaper Guild/CWA of Albany v Hearst Corp, May 17, 2011, Katzmann, R). Because an employee’s voluntary assignment of dues deductions remained effective until revoked by the employee, and nothing in the CBA provided Hearst with the right to unilaterally revoke the assignment, the union’s right to the checkoff of union dues survived expiration of the CBA.
The Newspaper Guild represented a bargaining unit of employees of the Hearst Corporation that published two newspapers in the Albany, New York, area. As the termination date of their collective bargaining agreement approached, Hearst and the Newspaper Guild entered into an interim agreement that extended the terms of their existing agreement, however, it provided that either party could terminate the interim agreement by giving 30 days’ notice. Hearst took advantage of the 30-day notice provision, notifying the union of its intent to end the interim agreement, including the arbitration and the dues checkoff provisions. Accordingly, Hearst stopped deducting and remitting the dues checkoff amounts to the Guild. The union filed a grievance, challenging the employer’s discontinuation of dues checkoffs, arguing that Hearst’s actions violated provisions of the CBA that required it to collect and remit dues in accordance with any unrevoked dues checkoff authorization. When the parties could not resolve the dispute, under the contractual grievance procedure, the Guild informed Hearst of its intent to seek arbitration. After Hearst declined to arbitrate the dues checkoff issue, the union filed suit to compel arbitration. The district court granted the Newspaper Guild’s motion for summary judgment. This appeal followed.
In Nolde Bros, Inv v Local No 538, Bakery & Confectionary Workers Union, the Supreme Court identified a presumption that “matters and disputes arising out of a relation governed by a contract” are subject to arbitration even after the contract expires, observed the Second Circuit. The court later explained in Litton Fin Printing Div v NLRB, that a post-expiration grievance can be said to arise under the contract only where it involves facts and occurrences that arose before expiration, where an action taken after expiration infringes on a right that accrued or vested under the agreement, or where, under normal principles of contract interpretation, the disputed contractual right survives the expiration of the remainder of the agreement.
Here, the parties agreed that Hearst’s obligation to collect and remit union dues was governed by the CBA, prior to the expiration of the agreement. Thus, the fundamental question was whether, under normal principles of contract interpretation, the disputed contractual right survived the expiration of the remainder of the agreement. First, the Second Circuit observed that, under the CBA, an employee’s voluntary written assignment remained in effect, according to the terms of the assignment, so that Hearst was required to deduct and remit the union dues as requested in the employee’s written assignment. Further, that assignment and authorization continued in effect until revoked by the employee. There was no provision in the agreement that provided Hearst with a unilateral right to revoke any assignment, nor was there any indication that Hearst’s obligation to remit dues to the union terminated upon the expiration of the CBA. Accordingly, the union’s right to checkoff of union dues survived the expiration of the CBA.
Moreover, the Second Circuit rejected Hearst’s contention that an employee’s assignment of dues did not create a contractual obligation between the employer and union. Rather, the Second Circuit observed that the dues assignment form stated that the assignment and authorization of dues may be revoked only by the employee, and was an express provision of the CBA and, thus, was part of the agreement between Hearst and the union. Therefore, Hearst was bound by the terms of the assignment, concluded the appeals court.
After Hearst conceded that the parties could lawfully agree to continue the checkoff, the Second Circuit ruled that the CBA, not the NLRA, governed the employer’s dues checkoff obligation. Additionally, the Second Circuit concluded that its decision was entirely consistent with the First Circuit’s decision in Providence Journal Co v Providence Newspaper Guild, where the sister circuit granted summary judgment to a union and directed the parties to arbitrate whether an employer’s dues checkoff obligation continued following the expiration of a CBA. The Second Circuit ruled that Hearst’s attempt to distinguish Providence was unavailing and that the First Circuit’s reasoning supported its conclusion that the dues checkoff dispute between Hearst and the union was subject to arbitration.
A reservist who was reinstated with the same title, pay, and employment terms upon his return from active duty in Iraq but was informed three days after his return that he would be terminated could not assert a viable USERRA cause of action, the Second Circuit ruled, affirming a district court’s grant of judgment as a matter of law on his Sec. 4312 claim (Hart v Family Dental Group, May 31, 2011, per curiam).
The reservist was employed as a dentist and worked under an employment agreement expressly providing that he could be terminated without cause with 30 days’ notice. During the course of his employment, he was twice called up to active duty: first in 2003, when he served for six months and was reinstated to his position without incident; and again in July 2004, when he was sent to Iraq. He returned to work from his Iraq deployment on January 17, 2005 and was reinstated with the same salary, benefits, and other conditions of employment as before his military service. On January 20, he was informed that he would be terminated in 60 days. When he challenged the legality of his termination, his notice was reduced to 30 days, the minimum notice under his contract.
The reservist filed a complaint against his employer and its president as an individual defendant in the Department of Labor’s Office of Veterans’ Employment and Training, alleging discrimination based on military service. The DOL informed the employer that under USERRA Sec. 4316(c)(2) it was required to employ the reservist for 180 days following his return from active duty. Complying with this directive, the employer extended the reservist’s employment through July 20, 2005, and the DOL closed the agency action. Upon his termination, the reservist reopened his DOL claim (in order to exhaust his administrative remedies) and then filed his USERRA suit in federal court. A jury found in the defendants’ favor on the two claims submitted to the jury; the court granted judgment as a matter of law on his other six claims. The reservist appealed only the court’s grant of judgment as a matter of law in the defendants’ favor on his claims that the employer violated his reinstatement rights under Sec. 4312(a).
The appeals court ruled that the letter notifying the reservist that he would be terminated and his subsequent termination in accordance with the terms of the letter (and his employment contract), did not violate Sec. 4312(a). It was undisputed that the reservist had been reemployed for 180 days upon his return from military service under the same terms and conditions of employment as before he was called to active duty. That is all that Sec. 4312 requires, the appeals court noted. Given that there was no reasonable basis for the lower court to have found the reservist’s reinstatement rights had been violated, the court properly granted judgment in his employer’s favor.
The National Railroad Adjustment Board properly dismissed an employee’s discharge grievance as procedurally defective because the employee was represented by the Brotherhood of Locomotive Engineers rather than the United Transportation Union, and the dispute arose while he was working under a collective bargaining agreement between Union Pacific and the UTU, the Eighth Circuit ruled (McClendon v Union Pacific RR Co, May 19, 2011, Loken, J).
Background. As railroad jobs have consolidated and the workforce reduced, locomotive engineers often work as trainmen and vice versa. Locomotive engineers were members of BLET, while conductors and trainmen were members of the UTU. While the unions have not merged, the RLA provides that an employee only needs to be a member of one union while working in any train service capacity. As a result, a member of one union may be disciplined while working under the other union’s CBA. That’s what happened in this instance: Union Pacific terminated the employee, a BLET member, while he was working under the UP-UTU agreement. BLET filed a grievance on the employee’s behalf. After Union Pacific denied the grievance, BLET filed an arbitration claim with the NRAB. The NRAB dismissed the claim as procedurally defective, and a federal district court declined to set aside the NRAB award. The employee and BLET appealed.
BLET alleged that Union Pacific improperly interpreted the provision of the UP-UTU agreement governing layoffs and leaves of absence. However, while processing the grievance “on property,” Union Pacific warned that BLET was not the proper party to represent the employee because he was terminated while working under the UP-UTU agreement, observed the Eighth Circuit. During arbitration, the NRAB sought the views of the UTU. That union urged dismissal of the employee’s grievance because it was not timely presented to Union Pacific by the employee himself, as required under the UP-UTU agreement, and it was not “handled in the usual manner” under the RLA, as required by NRAB rules. The NRAB ruled that BLET had “no representational rights” for conductors who are covered by the UP-UTU agreement. Rather, the UTU had the right to represent conductors in matters involving interpretation of the UP-UTU agreement.
Representation provision. The Eighth Circuit found that the NRAB did not ignore the second sentence of the representation provision in the UP-UTU agreement, as BLET had contended. Rather, the NRAB had determined that the sentence did not apply to the employee because it dealt with taking up a personal grievance, as opposed to a claim involving an interpretation of the layoff and leaves of absence provision. Additionally, the appeals court rejected BLET’s suggestion that the NRAB’s interpretation of the representation provision violated RLA, Sec. 153 First (i), which allows the railroad and union to prescribe in the CBA the manner in which grievance proceedings would be conducted on the property. The NRAB construed the CBA as requiring that claims involving interpretation of the UP-UTU agreement be processed “on property” by the UTU. In view of the narrow standard of review prescribed by the RLA, the appeals court declined to disturb that interpretation.
Further, the Eighth Circuit found no merit to BLET’s argument that the NRAB violated its obligations under the RLA by refusing to adjudicate the merits of the employee’s claim in a “jurisdiction-type ruling.” The NRAB explicitly noted that it had jurisdiction and dismissed the employee’s claim because, procedurally, it did not progress to arbitration in the manner required by the UP-UTU agreement. The employee’s noncompliance with the rule was timely raised, and the NRAB acted well within its power to enforce it.
Also, because Union Pacific twice warned the employee that BLET was not the proper party to progress his claim, the Eighth Circuit rejected BLET’s assertion that the NRAB violated the employee’s right to due process by overlooking past instances when BLET handled “on property” conductor grievances under the UP-UTU agreement and was allowed to progress grievance denials to the NRAB. In view of these warnings, this was not a case of unfair surprise, the appeals court observed. Rather, it was well within the NRAB’s authority in construing the UP-UTU agreement to determine that the employee’s claim had not been progressed in the “usual manner” in this workplace. Thus, the district court’s judgment affirming the NRAB decision was affirmed.
A threat by a union to have its sister union picket a secondary employer did not impose liability on the union for the decision by a contractor to replace a nonunion subcontractor with a unionized subcontractor, ruled the Sixth Circuit in a 2-1 decision (Shafer v Chauffeurs, Teamsters and Helpers Local Union 7, May 5, 2011, Smith Gibbons, J). The threat of a strike was not the proximate cause of the decision to go with the unionized subcontractor because the contractor had long expressed doubts about using the nonunion contractor, held the appeals court majority in affirming summary judgment in favor of the union.
The contractor, Clark, subcontracted a portion of a casino project to a subcontractor, Grand Rapids, who in turn solicited bids and selected Shafer over Consumers Concrete because of the lower bid. One week later, Grand Rapids informed Clark that there could be labor problems over the selection of Shafer, and Clark expressed concerns that the project would now have to be dual-gated. Upon winning the bid, Shafer signed a project labor agreement to which the union, Local 7, was also a signatory. Under the PLA, unions were barred from engaging in any type of work action against any employer on the project. As the commencement of work neared, Clark continued to express reservations about using Shafer. Grand Rapids offered to remove Shafer, and Clark demurred. Shortly thereafter, Clark had a meeting with the union, and it expressed displeasure over the use of Shafer. When Clark reminded the union of the no-strike provision, it responded that a sister union, Local 164, could strike. Clark stated that any strike by Local 164 would be considered a strike by Local 7, and the union backed down. Clark did not mention the threat to Grand Rapids.
Proximate cause. The union continued to press the case for Consumers. It learned that the price discrepancy was based upon the official bid, but that Consumers had submitted a lower bid reflecting its assessment of what the work would actually cost. Consumers, which had a preferred relationship with Grand Rapids, submitted another, lower bid that matched Shafer’s, and Grand Rapids gave the job to Consumers. In a letter explaining the change, which Grand Rapids demanded, Clark explained it wanted Consumers for purposes of labor harmony. Even when the change was made, Grand Rapids still knew nothing about the union threat. Shafer filed suit, alleging that the union’s threat constituted an illegal secondary boycott threat under the NLRA. The district court granted summary judgment to the union, finding that the threat was not the proximate cause of the decision, and Shafer appealed.
The Sixth Circuit affirmed. The appeals court noted that the LMRA provides for damages for violations of the NLRA if the defendant’s conduct materially contributed to the plaintiff’s injury. Thus, Shafer had to prove that the threat was the proximate cause of Clark’s decision to give the subcontract to Consumers. Shafer failed to meet that burden, the court ruled. Clark’s letter rationalizing the change based upon labor harmony was not, the court found, a “condition precedent” to the change, but was instead mere confirmation of a change that had already been made. While Grand Rapids knew that Clark wanted a union contractor, that change was made, the court ruled, because Consumers came in with a lower bid and Grand Rapids seized the opportunity to choose a contractor more palatable to Clark. Moreover, Grand Rapids did not know of the union threat when it made the change. While Clark’s long-expressed concerns about Shafer may have influenced the decision, the court found that the union’s threat did not. Indeed, it could not have because the evidence showed that Grand Rapids was unaware of it. The mere temporal proximity between the threat and the change was not, by itself, sufficient to show that the threat was the proximate cause of the change. Thus, the court affirmed summary judgment to the union.
Dissent. Judge Kethledge dissented, finding that Clark had initially declined to remove Shafer, but that after the union threat, a change was made. Thus, Kethledge found that a reasonable jury could have found that the threat was a substantial factor behind the change.
The Auto Workers union did not breach a collective bargaining agreement by participating in a lawsuit challenging an employer’s termination of health care benefits for a group of retirees, ruled the Sixth Circuit, in affirming a district court’s dismissal of that claim (CNH America LLC v Int’l Union, United Auto Workers, May 16, 2011, Sutton, J). However, the appeals court reversed a district court judgment that found that federal law preempted the employer from bringing additional state law claims against the union.
Background. Between 1971 and 1994, the employer entered into several CBAs with the union that provided for free health insurance for retirees. In 1997, the employer advised retirees that it would be capping the company’s obligations to pay retiree health benefits and retirees would have to pay “above-cap” costs. The UAW objected to the change, claiming that the employer remained responsible for the retirees’ health care benefits. Ultimately, the parties formed a Voluntary Employees’ Beneficiary Association to fund the retirees’ above-cap costs, primarily funded by the employer. According to the parties’ “letter of understanding,” the employer would not be required to make any further contributions to the VEBA.
However, medical costs rose more sharply than expected, and the retirees exhausted the VEBA funds in 2002, two years earlier than expected. Thereafter, the union and a group of retirees filed a class action seeking lifetime, free health care benefits. That suit was voluntarily dismissed and the retirees re-filed the lawsuit without the UAW, but the union funded the action. In 2003, a federal district court enjoined the employer from discontinuing the retirees’ above-cap costs during the lawsuit. That ruling was affirmed by the Sixth Circuit. Subsequently, the employer filed suit against the UAW, claiming that its funding of the retirees’ litigation was a breach of a covenant not to sue contained in the VEBA agreement. A district court granted the UAW’s motion to dismiss. This appeal followed.
Covenant “not to sue.” Nothing in the text of the VEBA provision cited by the employer could be construed as a covenant “not to sue,” which the UAW breached by funding litigation by the retirees. Rather, everything in the agreement points to a compromise under which the employer committed $24.7 million to resolve its health care obligations to these retirees. While the agreement could provide the employer with a defense to a lawsuit, it did not preclude the union from suing. Because the VEBA agreement focused on the employer’s burdens and benefits, the district court correctly rejected the employer’s contention that the union was barred from suing under the VEBA agreement.
LMRA preemption. However, a majority of the Sixth Circuit concluded that LMRA Sec. 301 did not preempt the employer’s state law tort claims for breach of an implied warranty of authority, negligent misrepresentation and intentional misrepresentation. The appeals court observed that that same factual predicate underlay all three claims: that the UAW explicitly and implicitly represented that it had the authority to bind the retirees during the CBA negotiations. Thus, a trial court would merely have to determine whether the UAW made statements representing that it had authority to negotiate for the retirees and whether the employer reasonably relied on them. If the UAW lacked authority to bind the retirees, it did not have the authority to make this deal, leaving the employer with potentially valid state law claims, concluded the majority.
The fact that the UAW and the employer signed an agreement did not require the court to interpret the CBA, ruled the majority. For the court’s purposes here, it mattered only that the employer claimed to have taken on additional obligations based on the union’s alleged misrepresentations, all of which occurred prior to the formation of the CBA. Thus, this dispute did not turn on or “substantially [depend] upon” the meaning of the agreement.
Partial dissent. While agreeing that the VEBA agreement did not contain a covenant not to sue, Judge Martha Craig Daughtrey dissented from that portion of the majority’s opinion, finding that the employer’s state law claims against UAW were not preempted by federal law. Judge Daughtrey argued that the majority’s decision stemmed from a misreading of the Supreme Court’s decision in Textron Lycoming Reciprocating Engine Div, Avco Corp v UAW, and that the controlling case in this instance is the Court’s earlier ruling in Allis-Chalmers Corp v Lueck and its progeny.
The NLRB was granted enforcement of its order halting an employer from refusing to bargain with a Teamsters local after it had been certified as the exclusive bargaining representative of the employer’s truck drivers, ruled the Seventh Circuit (NLRB v EA Sween Co, May 16, 2011, Lefkow, J). Although statements contained in a union flyer that was distributed on the day before an election were misleading, the appeals court determined that employees could recognize them as union propaganda, so the statements did not justify setting aside the election.
The employer distributes food to 7-Eleven food stores in the Chicago area. The Teamsters petitioned the NLRB to conduct a representation election for the company’s truck drivers. On the eve of the election, the union distributed a one-page flyer to drivers on the evening shift stating that existing terms and conditions of employment must remain the same during contract negotiations; that employees must receive raises that were due during negotiations; and that it was unlawful for managers or supervisors to tell employees that they could not receive their raises because of union activity. The union received 27 out of 38 eligible votes. The employer objected to the results of the election, contending that the flyer used forged and misrepresented documents and quotes that were falsely attributed to the U.S. Supreme Court.
Validity of election. According to the employer, the quotes in the flyer were presented in such a manner that employees would not recognize them as union propaganda. Moreover, the employer argued that it did not have sufficient time to rebut the false information. Although a hearing officer determined that the flyer contained a misrepresentation of the law, it did not interfere with the employees’ ability to make a free choice. It was also found that the employer did not offer sufficient evidence to establish that the document was a forgery. The NLRB, with two sitting members, adopted the hearing officer’s report and certified the union. Still, the employer refused to bargain. Thereafter, the union filed charges and the two sitting members of the Board found that the election was valid. When the NLRB filed an application to enforcement, the Seventh Circuit remanded in light of New Process Steel, LP v NLRB. In November 2010, a three-member panel of the NLRB found that the employer unlawfully refused to bargain, but declined to address the validity of the election. The employer has persisted in refusing to comply with the Board’s order to bargain with the union. Thereafter, the Board filed this application for enforcement.
The Seventh Circuit granted the Board’s application for enforcement of its order, rejecting the employer’s argument that the election should be set aside because the union campaign flyer was deceptive and misleading, and because the flyer was a forgery. Under Midland National Life Ins Co, the NLRB will not probe into the truth or falsity of parties’ campaign statements; however, it will intervene in cases where a party uses forged documents. Here, statements in the union flyer were clearly not a forgery. Moreover, regardless of whether the first statement in the flyer was false, the union clearly explained what it was intending to convey in the second sentence. Thus, although the statement was misleading, it did not justify setting aside the election, concluded the appeals court.
A union’s First Amendment complaint alleging that it was unlawfully denied a request to permit union members to distribute pamphlets at the entrance of a municipally owned hotel was properly disposed of in favor of the village on summary judgment, ruled the Seventh Circuit (Chicago Reg’l Council of Carpenters v Village of Schaumburg, May 2, 2011, Wood, D). The district court acted within its discretion to deny the union’s attempt to supplement an initial complaint arising out of an incident several months earlier to add new allegations that its members were denied the right to leaflet, the appeals court found, because the second incident occurred after the union filed its original complaint and the union never supplemented its pleadings to raise the incident.
When collective bargaining negotiations stalled between the hotel and the union-represented housekeeping staff, the union decided to stage demonstrations, including a mock funeral. During the “funeral” procession, village police directed the union to keep the noise level down and to follow a specific route—terms that had been agreed to by attorneys for both parties. The protest took place without incident. However, when the union members attempted to undertake a second, similar demonstration in August 2009, police refused to permit them to approach the hotel. Alleging that the village violated its First Amendment rights by restricting the demonstrators’ access to public property, the union filed suit.
While the lawsuit was pending, the village in November 2009 denied a request by the union to allow its members to distribute pamphlets at the hotel entrance. In its motion for summary judgment, the union focused solely on the more recent November refusal to allow the leafleting and did not refer to the August incident. The district court entered summary judgment in favor of the village, reasoning that because the union abandoned its claims arising under the August incident and it never amended its original complaint to include the November incident, no redressable injury remained.
The union appealed, arguing that because the two incidents were part of a single wrong by the village, the union had not either abandoned its original claim based on the August incident nor err in failing to amend its complaint to include the November incident. The appeals court affirmed. Before a complaint can be broadened to encompass subsequent events, the plaintiff must move to supplement it. However, there is no absolute right to expand a case; rather, the district court had substantial discretion either to permit or deny such a motion. In this case, the union did not ask the district court to accept a supplemental pleading until after the court denied its summary judgment motion. Because the union forfeited all arguments relating to the August incident and limited itself to claims arising from the November incident, which was not raised in the complaint, the district court correctly granted summary judgment to the village.
A union’s payments to a union official, after he was terminated by his airline employer, constituted a sort of executive compensation, not a loan in violation of the LMRDA, ruled the Eighth Circuit (Air Line Pilots Assn v Trans States Airlines, May 3, 2011, Riley, W). Because the union’s administrative manual authorized payments for union officials who were suspended or discharged due to union activities, the payment was more akin to an inducement, without which union members would not risk joining the leadership, concluded the appeals court.
The airline fired the official, a pilot, for allegedly falsifying an employee pass travel ticket. The union grieved the termination. While that grievance was pending, the union decided that the official had been fired for his union activities, and authorized payment to him for 85 hours of “flight pay loss” per month, amounting to $161,798.87. The official was required to repay the loan if he prevailed in his grievance. Thereafter, a System Board of Adjustment sustained the grievance and ordered the airline to reinstate the official and pay his lost wages and benefits. The airline refused and the union filed the instant action, seeking to enforce the arbitration award. After a district court ordered the airline to reinstate the official with backpay, the airline appealed, contending that enforcement of the award would violate the LMRDA, which prohibits loans to union officers of more than $2,000.
Airline’s standing. As an initial matter, the Eighth Circuit concluded that the LMRDA does not specifically authorize actions by employers asserting that they are being forced to repay an illegal loan, the court ruled. Nevertheless, the court determined that should the payments, in fact, constitute an illegal loan, the award would force the airline to repay that debt. Thus, the airline had standing in this instance. Further, the court ruled that an earlier arbitration award ruling that payments to another union official were not an illegal loan did not have preclusive effect. The court held that because the challenge to the instant award raised public policy questions, the court was not obliged to give the previous award any preclusive effect.
Turning to the payments, the Eighth Circuit noted that the LMRDA does not define “loan,” but accepted the System Board’s definition of a loan as a delivery by one party to another of a sum of money and the agreement by that party to repay the amount. The appeals court held that the contingency that money be repaid did not prevent it from being a loan. Indeed, the court found that requirement “comes dangerously close to violating” the LMRDA’s ban on contingency loans. Despite that, however, the court ruled that the payments were not, in fact, a loan because the parties had not intended it as such. The court found that the union’s administrative manual allowed for the payments as a way of guaranteeing that any member who joined the leadership would not lose pay or benefits because of the airline’s potential anti-union animus. The payments, ruled the court, continued the official’s salary while he was unable to work due to the unlawful termination. Consequently, the appeals court ruled that the payments were not an illegal loan and affirmed summary judgment in favor of the union.
In a decision on remand from the U.S. Supreme Court, the Ninth Circuit concluded that a federal district court did not err by denying a union’s motion to strike an employer’s jury demand and in holding that the NLRB’s decision that that a collective bargaining agreement was not ratified on a certain date did not collaterally estop the employer from relitigating the issue in the district court (Granite Rock Co v Teamsters, Local 28, May 20, 2011, per curium.)
The employer asserted a cause of action under LMRA Sec. 301(a) against the union for breach of a no-strike provision in the CBA. The issues in this case, the existence and breach of contract and the amount of damages, were traditionally legal in nature and tried by a jury. Further, the employer was seeking monetary damages, and a request for monetary damages is also generally legal in nature. Because the employer’s claim for monetary damages for a breach of contract was essentially a legal claim, the district court did not err in submitting the issue of the CBA formation to the jury.
The district court also did not err by denying the union’s summary judgment motion that contended that collateral estoppel precluded the employer from asserting that the union ratified the CBA on July 2, 2004. The requirements of collateral estoppel were not met where an NLRB administrative law judge did not decide the issue of whether the union held a ratification vote on the merits on that date. An issue not litigated on the merits is not subject to collateral estoppel. Further, the employer was not a party or in privity with the union in the administrative hearing. Rather, the NLRB investigated a complaint filed by the employer and brought an enforcement action against the union. Thus, the parties were the NLRB and the union.
Further, the employer and the NLRB were not in privity. Although the employer was a charging party and was allowed a significant role in the NLRB proceedings, it did not direct the course of the litigation or control theories of the case. A privity finding “necessitates” a showing that control was exercised over the litigation by the party alleged to be in privity. Because the employer could not control the NLRB’s litigation strategy, it was not in privity with the agency. Thus, the district court’s denial of the union summary judgment motion on issue preclusion was proper.
Consequently, in light of the Supreme Court’s ruling that the dispute between the employer and union over the ratification date of the bargaining agreement was a matter for a federal court to decide, the matter was remanded to the district court for further proceedings in accordance with the Supreme Court’s decision.
WAGES HOURS – FMLA
Lawyers and human resources professionals are potentially facing a flood of litigation as the result of two major developments in the world of wage-hour law. One of these developments brings existing wage-hour regulations into the current decade, and the other makes clear that employees who merely make oral complaints of wage-hour law violations are protected from employer retaliation – a holding that will likely have an expansive impact on litigation. CCH’s most recent issue of Labor Law Reports: Insight explores the ramifications of these recent wage-hour law changes.
The DOL has announced that it has recovered approximately $2.9 million in back pay for over 500 workers employed by Stanley Associates Inc. and several subcontractors at various locations in St. Albans and Essex Junction, Vermont. The companies employed the workers through a contract from the U.S. Department of Homeland Security's U.S. Citizenship and Immigration Services Vermont Service Center. That contract was subject to the prevailing wage requirements of the Service Contract Act and the FLSA’s overtime requirements. However, the DOL’s Wage and Hour Division investigated and found that the companies had, in an effort to evade those requirements, misclassified several hundred workers. The DOL alleges that the actual duties and nature of work being performed did not match the work classifications detailed in the contract's wage determination. Because of the misclassification, the DOL contends that the companies were able to pay their workers far less than they were required to pay under the prevailing wage rates guaranteed them under the terms of the federally-funded contract and many were denied proper overtime compensation in violation of the FLSA.
The companies will now pay $2,898,214 in back pay. They have also committed to properly classifying all their employees in the future and to compensate all workers for the hours they actually work. That promise was a key part of the agreement, according to the DOL.
“The Labor Department is committed to ensuring that taxpayer dollars are being used properly and workers on publicly funded projects are paid their full wages,” said Secretary of Labor Hilda L. Solis. “I am pleased that these workers will be appropriately compensated for the work they performed for Stanley Associates and its subcontractors. The laws governing prevailing wages on federal contracts provide important protections for workers, and the Labor Department will continue to ensure companies performing work for the federal government are held to these standards.”
The Department of Labor on Monday, May 9, launched its first smartphone application: a timesheet to help employees independently track the hours they work and determine the wages they are owed. According to the agency's statement announcing the new app, this new technology is significant because workers now can keep their own records instead of relying on their employers' records. “This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records,” the DOL also noted.
Available in English and Spanish, users conveniently can track regular work hours, break time, and overtime hours for one or more employers. Glossary, contact information and materials about wage laws are easily accessible through links to the Wage and Hour Division.
Users also will be able to use the app to add comments on information related to their work hours; view a summary of work hours in a daily, weekly and monthly format; and email the summary of work hours and gross pay as an attachment.
Currently, the free app is compatible with the iPhone and iPod Touch. The DOL will explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.
Both the app and the calendar can be downloaded from the Wage and Hour Division's home Web page at http://www.dol.gov/whd.
“I am pleased that my department is able to leverage increasingly popular and available technology to ensure that workers receive the wages to which they are entitled,” said Secretary of Labor Hilda L. Solis. “This app will help empower workers to understand and stand up for their rights when employers have denied their hard-earned pay.”
For workers without a smartphone, the Wage and Hour Division has a printable work hours calendar in English and Spanish to track rate of pay, work start and stop times, and arrival and departure times. The calendar also includes easy-to-understand information about workers' rights and how to file a wage violation complaint.
LEADING CASE NEWS
Defining a $2 curbside check-in fee charged for handling passengers’ baggage as a “service charge” under the Massachusetts tips statute was preempted by the Airline Deregulation Act, ruled the First Circuit, because the law directly regulated how an airline service was performed and how its price was displayed to customers (DiFiore v American Airlines, Inc, May 20, 2011, Boudin, M). Consequently, a jury award of damages in favor of the skycaps whose tip income fell dramatically after American Airlines instituted the curbside check-in fee was reversed and remanded.
After American Airlines began charging passengers a fee of $2 for each bag checked at curbside, the tip income earned by skycaps fell significantly. Skycaps at Logan Airport filed suit claiming that the curbside check-in fee violated Mass Gen Laws ch 149, Sec. 152A, which governed tips. The skycaps asserted that the $2 fee was a “service charge” under state law and must go to the skycaps because customers “reasonably expected” it to be given to them. After a jury trial on this issue, the jury awarded judgment for the skycaps. The district court temporarily set aside the jury award but reinstated it after the Massachusetts Supreme Judicial Court answered a certified question not germane to the disputed issues on appeal. The district court also rejected American Airlines’ post-trial motion that the suit was preempted by the Airline Deregulation Act. This appeal ensued.
To ensure that a deregulated airline industry would not be trammeled by state re-regulation, the 1978 Airline Deregulation Act preempted state laws “relating to rates, routes, or services.” Here, the tips law did more than simply regulate the employment relationship between the skycaps and the airline, observed the First Circuit. Rather, the tips law had a direct connection to air carrier prices and services and could be fairly said to regulate both. The Supreme Court’s decision in Rowe v New Hampshire Motor Transport Assn provides for an expansive treatment of “service” to include steps that occur before and after the airplane is actually taxiing or in flight. To avoid having the state law deem the curbside check-in fee a “service charge” would require changes in the way the service was provided or advertised. This application of the state law could result in the multiplication of state rules the Congress sought to avoid for national enterprises operating in different states. Consequently, the judgment of the district court granting recovery to the skycaps was reversed and remanded for entry of judgment in favor of American Airlines.
A district court’s denial of a motion to amend class certification does not constitute “an order granting or denying class-action certification” under Rule 23(f), ruled the Second Circuit, rejecting as untimely a motion to file an interlocutory appeal brought by nurses in a wage-fixing class action suit against several hospitals (Fleischman v Albany Med Ctr, May 3, 2011, per curiam). In so ruling, the Second Circuit joined several of its sister circuits “who have unanimously pronounced on the question.”
The underlying class action suit alleges that various hospital systems in the Albany, New York metropolitan region conspired to depress nurses’ wages in violation of the Sherman Antitrust Act. The nurses sought to certify a class of an estimated 2,300 members. A district court granted the nurses’ class certification motion in part, finding they satisfied their burden with respect to the requirements of Rule 23(a), but they did not make a showing, as required under Rule 23(b)(3), that common questions of law or fact predominate. While the nurses asserted a common violation of antitrust law among the proposed class members and alleged the type of injury that the antitrust laws were intended to prevent, the court concluded that issues of injury-in-fact and damages were not sufficiently common among the proposed class members, and so should be considered separately. After completion of discovery, the court denied the nurses’ motion to amend the class certification order as to impact and damages solely as to a smaller class comprised of a core group of staff registered nurses. The nurses sought leave to file an interlocutory appeal of the denial of their motion to amend.
Measured from the initial partial grant of class certification, or even from a subsequent court ruling on a motion to reconsider, the motion was filed well outside the 14-day limitations period set forth in Rule 23(f). However, the motion was filed within 14 days of the district court’s denial of the motion to amend. At issue was whether such a denial constituted “an order granting or denying class-action certification” under Rule 23(f). The Second Circuit concluded that it does not. Noting that Rule 23(f)’s 14-day filing requirement has been described as “rigid,” “inflexible,” “strict,” “mandatory,” and “deliberately small,” and also pointing out that the appeals court is expressly barred from extending the time to file a petition for permission to appeal, the Second Circuit concluded that construing Rule 23(f) to authorize an interlocutory appeal of a denial of a motion to amend a class certification order filed outside the 14-day window “would eviscerate its deliberate and tight restriction on interlocutory appeals.” It also would be contrary to the Rule’s aim of confining the opportunity for interlocutory appeal within narrow limits in order to avoid disruption and delay to the underlying proceedings. Finally, the court noted that if the denial of an amendment to an order granting class certification were enough to reset the clock for such an appeal, a litigant would be too easily able to circumvent the Rule 23(f) deadline.
In fact, the Second Circuit wrote, the case at hand serves to demonstrate why the Rule 23(f) filing limit is essential. Here, the nurses sought permission to take an interlocutory appeal more than 18 months after the original decision to grant certification in part. Allowing them to do so would render the Rule 23(f) deadline “toothless,” the appeals court reasoned. Therefore, it dismissed the nurses’ petition for leave to file an interlocutory appeal.
An employee who admitted that he incorrectly recorded his work hours was still entitled to the lenient “just and reasonable inference” of hours worked because he alleged that he had falsified the timesheets at the employer’s direction, the Second Circuit ruled, reversing a district court’s grant of summary judgment on an employee’s off-the-clock claim (Kuebel v Black & Decker (US), Inc, May 5, 2011, Parker, B). However, finding the continuous workday rule did not apply to administrative tasks performed before and after the employee’s shift, the appeals court affirmed the lower court’s ruling in the employer’s favor on the employee’s commute-time claims. Remanding the case, the Second Circuit also left it for the lower court to decide in the first instance whether the employee’s FLSA retaliation claim should be reinstated in light of the Supreme Court’s recent ruling in Kasten v Saint-Gobain Performance Plastics Corp.
Background. The employee, a retail specialist, filed suit on his own behalf and on behalf of similarly situated employees alleging that Black & Decker violated federal and state law by failing to pay for commute time and for off-the-clock work that was not recorded on his time sheets. Retail specialists are assigned to particular Home Depot stores within a specified territory and are responsible for product merchandising and marketing at the stores. The named plaintiff was assigned to six Home Depot stores, ranging from 20 minutes to three hours from his home by car. He did not report to a central office; rather, he used his home as a base.
The employee was required to use PDAs to record entry and exit times at his assigned stores. The in-store time was electronically communicated to his manager when he synchronized his PDA with the company’s server. To synch his PDA, he plugged it into a cradle attached to his home computer, which he was expected to do six times per week. He typically synched his PDA five or six times per week, usually in the evening; it almost always took him less than a minute to synch his PDA, and it was not uncommon for him to synch his PDA fairly late at night, around 10:00 pm. In addition to synching his PDA, the employee performed several other tasks at his home office, including responding to company emails, checking voicemail, printing and reviewing sales reports, organizing “point-of-purchase” materials, making display signs, taking online training courses, and loading and unloading his car. He was not required to perform all of these activities at home or at any particular time of day.
While the employer estimated these functions to take an average of 30 minutes per day, the employee testified that it took him 30-60 minutes to complete these activities — 15-30 minutes in the morning before driving to his first store of the day, and 15-30 minutes in the evening, after returning home from his last store. According to the employer, retail specialists were instructed to record the time they spent working at home, and its policy was to pay them for that time. However, the employee contended that his supervisor instructed him not to record all the hours he worked, so he falsified his timesheets. According to the employee, it was Black & Decker’s position that retail specialists should be able to accomplish their work in a 40-hour workweek — a contention that resulted in retail specialists not recording any hours worked over 40 each week.
Off-the-clock work. The district court had rejected the employee’s off-the-clock claims, reasoning that he could not set forth the amount of uncompensated work he actually performed given his deliberate failure to accurately record his work time. Nor could he show that Black & Decker had actual or constructive knowledge of the amount of time that he was working off the clock. Because he had admittedly falsified his timesheets, the lower court declined to grant the employee the more lenient burden of proof set forth in the Supreme Court’s 1946 decision in Anderson v Mt Clemens Pottery Co, which entitles employees to a “just and reasonable inference” of hours worked. Any timekeeping inaccuracies were “self-created,” the court noted, and thus it applied a heightened standard under which the employee was required to prove with specificity the amount of time he worked off the clock. Since he could not prove his damages with precision, the district court granted summary judgment to the employer.
The appeals court reversed, noting first that an employer’s duty under the FLSA to maintain accurate records of employees’ hours worked is nondelegable. Further, once an employer knows or has reason to know that an employee is working overtime, it can’t simply refuse to pay overtime because the employee did not record his overtime hours. “Accordingly, the fact that an employee is required to submit his own timesheets does not necessarily preclude him from invoking Anderson’s standard where those records appear to be incomplete or inaccurate,” the appeals court wrote. “At least where the employee’s falsifications were carried out at the instruction of the employer or the employer’s agents, the employer cannot be exonerated by the fact that the employee physically entered the erroneous hours into the timesheets.”
Falsified timesheets. The employee admitted that he falsified his own timesheets, notwithstanding official company policy requiring accurate recordkeeping. “But his testimony — which must be credited at the summary judgment stage — was that he did so because his managers instructed him not to record more than forty hours per week,” wrote the appeals court. The employee specifically testified that at company meetings and during discussions with one of his supervisors, it was conveyed to him that he was not to record overtime no matter how many hours he actually worked. Therefore, although it was he who purposefully rendered the timesheets inaccurate, he did so at his managers’ direction. In order words, he testified that it was the employer, acting through its managers, that caused the inaccuracies in his timesheets. Whether his testimony should be credited was a determination that should made at trial, not on summary judgment.
“A contrary conclusion would undermine the remedial goals of the FLSA,” the appeals court reasoned, “as it would permit an employer to obligate its employees to record their own time, have its managers unofficially pressure them not to record overtime, and then, when an employee sues for unpaid overtime, assert that his claim fails because his timesheets do not show any overtime.”
Moreover, applying the lenient standard of proof set forth in Anderson, the appeals court found the employee presented sufficient evidence of uncompensated hours worked. While there was some dispute over the frequency with which the timesheets had been falsified, and the employer presented evidence of official company policies requiring accurate timekeeping, these may detract from the employee’s credibility at trial, but they did not entitle the employer to judgment as a matter of law in light of the employee’s testimony that he was instructed not to record all of his hours, the Second Circuit found. Further, the employee raised a triable issue as to whether the employer knew or should have known that he was working off the clock.
Commute time. The district court properly granted summary judgment on the employee’s commute-time claim, however, rejecting his contention that he was entitled to compensation for all of his commute time under a continuous workday theory based on the administrative work he performed at home. While the employee asserted that the administrative tasks he performed at home were integral and indispensable to his principal job activities, and that his workday therefore began and ended at home and encompassed his morning and evening drives between home and the Home Depot store, the Second Circuit found that even if his at-home activities were integral and indispensable to his principal activities, they did not render the entirety of his commute time compensable under the FLSA.
Here, applying the reasoning used in the waiting-time context, in which employers are not required to compensate employees who are relieved of duty for substantial periods of time, the appeals court noted that the employee had considerable flexibility to determine when to perform his required administrative functions; there was nothing in the record to indicate that he was mandated to perform them immediately before leaving home or immediately after returning home, so the continuous workday rule did not apply. “That [he] may have frequently chosen to perform his at-home activities immediately before and after his commutes does not mean that B&D must pay him for the first hour of those drives — time that was not part of his continuous workday and that was, in the end, ‘ordinary home to work travel’ outside the coverage of the FLSA.” Thus, on the commuting-time claim, the lower court properly ruled for the employer.
Retaliation. The district court had granted summary judgment to the employer on the employee’s retaliation claims under both the FLSA and New York Labor Law, finding the employee had abandoned them by failing to respond to the company’s arguments concerning those claims in opposition to the summary judgment motion. On appeal, despite conceding that he had abandoned his retaliation claims below, he requested that the district court’s order be modified to make the dismissal of those claims without prejudice in light of the then-pending and now-decided case of Kasten v Saint-Gobain Performance Plastics Corp, which held oral complaints constitute protected activity under the FLSA. Because it remanded on another ground, the Second Circuit left it to the district court to decide whether the employee would be entitled to reassert his retaliation claims following the Supreme Court’s abrogation of circuit precedent on this issue.
An account manager for a software company was an exempt administrative employee under the FLSA, the Seventh Circuit held, affirming a district court’s grant of summary judgment for the employer in a suit for overtime pay (Verkuilen v MediaBank, LLC, May 27, 2011, Posner, R).
The employer provides computer software to advertising agencies. As account manager, the employee acted as a bridge between the software developers and clients, helping clients to determine their needs and relaying those needs to the developers so that they could customize the software accordingly. The employee also assisted the customers in the use of the software, responded to customer questions, and resolved problems with the product. The software is quite complex, the appeals court noted, and each client’s needs varies. Account managers must learn about the client’s business in order to help developers determine how software can be best adapted to those particular business needs. As such, the account manager’s primary duty was directly related to the general business operations both of her employer and her employer’s customers, the appeals court concluded, so the administrative exemption applied. In fact, “our plaintiff is a picture-perfect example of a worker for whom the Act’s overtime provision is not intended,” Judge Posner wrote.
The white-collar regulations define administrative employees in part as “acting as advisers or consultant to their employer’s clients or customers,” a role that the account manager clearly performed. While certain administrative functions outlined in the regulation, such as negotiating contracts, did not apply to the account manager’s duties (the regulatory provision outlining the administrative exemption “goes on and on,” Posner noted), “below the highest executive level a modern business is a congeries of specialists,” and the account manager would not have been able to perform her role as intermediary if she also had been responsible for negotiating contracts, the appeals court reasoned. Therefore, the Seventh Circuit affirmed summary judgment in the employer’s favor.
A federal agency was within its discretion when it converted an employee’s FMLA leave to absent without leave status (AWOL) before terminating her for failure to provide sufficient information to support her request for leave (Lewis v USA, May 26, 2011, Alarcon, A).
Background. The employee, the director of a child development center on an air force base, requested 120 days of leave without pay pursuant to the FMLA. In response to her employer’s request for medical certification to support her leave request, the employee submitted three documents: a prescription, a letter from her psychiatrist, and a WH-380 form. When told by her supervisor that the documents she submitted were insufficient to support her request, the employee refused to submit more information and told the supervisor that, according to her doctor, she had provided all the information necessary under the FMLA. The supervisor converted the employee to AWOL status until she was finally terminated.
The employee appealed her removal to the Merit Systems Protection Board. An administrative law judge ruled that the employee was AWOL for the entire period and that her employer had acted within its discretion in removing her from her position. The ALJ also ruled that the employee failed to show the basis for her removal was discriminatory or retaliatory. The employee filed suit, alleging discrimination and retaliation under Title VII and unlawful removal from employment pursuant to 5 U.S.C. Sec. 7702. The district court affirmed the MSPB decision.
MSPB got it right. In affirming the district court, the Ninth Circuit concluded the MSPB’s finding was supported by substantial evidence. The employee’s WH-380 form stated only that she was diagnosed with post-traumatic stress disorder and needed therapy, medical treatment, bed rest, two prescription medications, and 120 days off work. The form failed to provide medical facts in support of the diagnosis. There was no explanation as to why the employee was unable to perform her work duties and no discussion about whether additional treatments would be required for her condition. The employee’s documentation failed to meet the minimum statutory requirements, and her refusal to submit any further documentation caused her medical certification to remain deficient.
The court also rejected the employee’s argument, based on Dias v Department of Veterans Affairs, that the adequacy of an employee’s medical certification can be resolved only by the employer’s requiring the employee to submit second and even third opinions. The need for second or third opinions is triggered only when an employer “has reason to doubt the validity” of the medical certification, wrote the court. Here, the employee’s supervisor testified, and the ALJ credited, that she doubted the sufficiency, not the validity, of the documentation.
Further, the employer did not violate the employee’s FMLA rights by making a request for medical documentation after she provided a WH-380 form. Because she failed to submit the minimal mandated certification, which requires even less detailed information than the information sought by the Agency, the employee could not show any harm arising from the Agency’s request for more documentation than was required under the FMLA, continued the court.
Additionally, the record showed the employee had adequate time to provide the requested medical certification. Her employer requested certification no later than November 20, 2006 and, because the employee’s doctor was unavailable, she was given until December 13, 2006, to provide sufficient medical certification. The employee failed to give any reason why this 22-day period did not meet the regulatory requirements that she be provided “a reasonable period of time under the circumstances involved.”
State employment laws and regulations, wages-hours/labor relations, May update
Arizona Maximum Hours and Overtime
Through January 1, 2014, the director of the department of public safety is authorized to establish alternative work periods, in accordance with federal law, for the
purpose of determining overtime compensation for public safety employees. Ch. 200 (H.B. 2474), L. 2011, effective April 19, 2011. See Section 23-392. AZ ¶3-44,012.
Arizona Wage Payment
Effective July 1, 2011, employers will be able to pay employees using a payroll card account. The following methods may be used for payment of wages: (1) lawful U.S. currency; (2) negotiable bank checks; (3) in the case of the state or its political subdivisions, warrants payable on demand and bearing even date with the payday; (4) with the employee's written consent, by direct deposit at an FDIC member financial institution or comparable federal or state agency; or (5) if the employer has offered direct deposit and the employee does not provide consent and does not designate a financial institution, by deposit on to the employee's credit to a payroll card account. When using direct deposit or deposit into a payroll card account, the employer must provide the employee with either a written or electronic wage statement of the employee’s earnings and withholdings. Employees must be provided with at least one free withdrawal for each deposit. Employers must also provide a list of all fees associated with the use of a payroll card account to an employee who receives wages in this manner. Sections 23-350 and 23-351 are amended by Ch. 193 (H.B. 2151), L. 2011, enacted April 19, 2011, and effective July 20, 2011. AZ ¶3-46,001 and 3-46,002.
Arizona Wage Payment
Effective July 20, an employer is not to withhold wages past the date specified by an employee in a written revocation of an authorization to withhold wages, unless the withholding is to resolve a debt or obligation to the employer or a court orders otherwise. Section 23-352 is amended by Ch. 153 (S.B. 1363), L. 2011, enacted April 18, 2011, and effective July 20, 2011. AZ ¶3-46,003.
Arizona Wage Payment
For wage deductions made after October 1, 2011, a public or private employer is not to deduct any payments from an employee’s paycheck for political purposes unless the employee annually provides written or electronic authorization for the deduction. If a deduction is made from an employee's paycheck for multiple purposes after that date, the employer must obtain a statement from each entity that indicates the payment is not used for political purposes or, if it is, that indicates the maximum percentage of the payment that is used for political purposes. The employer is not to deduct any payment beyond that specified for nonpolitical purposes without the annual written or electronic permission of the employee. The employer shall have one pay period to process the rescission. Section 23-361.02, added by Ch. 251 (S.B. 1365), L. 2011, effective April 26, 2011. AZ ¶3-46,012b.
Arizona Labor Relations
Arizona is considered a "right-to-work" state, providing that a person can not be denied or excluded from employment or continued employment based on nonmembership in a labor union. Senate Bill 1363, enacted on April 18, 2011, strengthens this law by allowing employers to file for injunctions against and seek relief from defamation, picketing, trespassory assembly, mass assembly, concerted interference with the lawful exercise of a business activity, and boycotts and also establishes a “no trespass public notice list.” Sections 23-1321, 23-1322, 23-1323 and 23-1324 are amended and Sections 23-1325 through 23-1329 are added by Ch. 153 (S.B. 1363), L. 2011, enacted April 18, 2011, and effective July 20, 2011. AZ ¶3-63,010 through 3-63,013e.
Arizona Labor Relations
New law is enacted to prohibit a department, institution, board or commission of the state from accepting federal monies for a construction project if acceptance of the monies is conditioned on preference being given to union labor. Section 41-4801 is added by Ch. 319 (H.B. 2644), L. 2011, enacted April 28, 2011, and effective July 20, 2011. AZ ¶3-63,021.
Arizona Injunctions
Arizona law provides that a person may file for an injunction to stop harassment in the workplace. The definition of “harassment” is amended to include unlawful picketing, trespassory assembly, unlawful mass assembly, concerted interference with lawful exercise of business activity, engaging in a secondary boycott, and defamation.
Unlawful picketing, trespassory assembly, unlawful mass assembly, concerted interference with lawful exercise of business activity and engaging in a secondary boycott, defamation, or any actual or threatened misrepresentation, fraud, duress, violence or breach of the peace would not be protected labor activities exempt from being subject to an injunction against harassment. Sections 12-1809 and 12-1810 are amended by Ch. 153 (S.B. 1363), L. 2011, enacted April 18, 2011, and effective July 20, 2011. AZ ¶3-63,302 and ¶3-63,303.
Arkansas Drug and Alcohol Testing
Arkansas law prohibits employers from passing on to employees the cost of medical examinations, physicals or drug tests that the employer requires as a condition of employment or continued employment. This law is amended to clarify language. Section 11-3-203 is amended by Act 980 (S.B. 244), L. 2011, enacted April 1, 2011, and effective July 26, 2011. AR ¶4-53,029.
Arkansas Military Leave
Laws relating to leaves of absence and reemployment of military personnel called to active duty are amended. Effective July 26, a person called to active duty as a member of the armed forces of this or any other state, including the National Guard, a reserve component of the armed forces, or as a member of the militia, is to be afforded the same employment and reemployment rights, protections and benefits as if the person had been called to active duty in the service of the United States and is not to be denied hiring, retention in employment, promotion or other incidents or advantages of employment because of any obligation as a member of the armed forces. Employees who are members of the armed forces of this or any other state, including the National Guard or a reserve component of the armed forces, are to be granted a leave of absence at the rate of 15 days per calendar year plus the necessary travel time for annual training requirements or other duties. For school personnel, a teacher, administrator, or noncertified personnel who is employed by a public school in Arkansas is entitled to take a leave of absence for 15 days plus necessary travel time in any fiscal year to participate in (1) military training programs or other official duties made available by the armed forces of this or any other state, including the National Guard or a reserve component of the armed forces, or (2) civil defense and public health training programs made available by the United States Public Health Service. Sections 12-62-413, 21-4-212 and 6-17-306 are amended by Act 1164 (H.B. 1024), L. 2011, enacted April 4, 2011, and effective July 26, 2011. AR ¶4-58,001, ¶4-58,004 and ¶4-58,027.
Arkansas Arbitration
The Arkansas Arbitration Act is amended. The Act, covering procedures for arbitration, generally, is revised with new provisions added. Sections 16-108-201 through 16-108-224 is amended/revised and new Sections 16-108-225 through 16-108-230 are added, by Act 695 (H.B. 1438), L. 2011, enacted March 24, 2011, and effective July 26, 2011. AR ¶4-61,009 through 4-61,038.
Florida Minimum Wage
The Florida minimum wage will increase from $7.25 to $7.31 per hour effective June 1, 2011. The minimum wage applies to all employees in the state who are covered by the federal minimum wage. Employers of "tipped employees" who meet eligibility requirements for the tip credit under the Federal Labor Standards Act (FLSA) may count tips actually
received as wages under the Florida minimum wage but must pay "tipped employees" a direct hourly wage of $4.29 as of June 1 ($7.31 minus the federal tip credit of $3.02). See Section 24 of Article X of the Constitution of the State of Florida. FL ¶10-41,001.
Idaho Child Labor
Idaho’s child labor law is amended to ease restrictions for minors under the age of 14 to allow a student to be employed by the public schools of the district for up to 10 hours a week, provided such employment is voluntary and with the consent of the student’s legal guardian. Section 44-1301 is amended by Ch. 199 (S.B. 1147), L. 2011, enacted April 5, 2011, and effective July 1, 2011. ID ¶13-45,001.
Maryland Wage Payment and Collection
Maryland’s wage payment law is amended to provide that any agreement to work for less than the required wage under the state’s Wage Payment and Collection Law is void. Section 3-502 is amended by Ch. 118 (H.B. 298), L. 2011, enacted April 12, 2011, and effective October 1, 2011. MD ¶21-46,002.
Minnesota Maximum Hours and Overtime
Minnesota law requiring payment of overtime at one and a half times the employee’s regular rate for hours worked over 48 hours in a workweek is amended to provide that this requirement does not apply to employees of air carriers subject to the provisions of Title II of the Railway Labor Act when the hours worked by an employee in excess of 48 hours in a workweek are not required by the carrier but rather are arranged through a voluntary agreement among employees to trade scheduled work hours. Section 177.25 is amended by Ch. 11 (S. 488), L. 2011, effective April 8, 2011. MN ¶24-44,002.
[Editorial note: For Minnesota Maximum Hours and Overtime, Section 177.25 is amended by Ch. 11 (S. 488), L. 2011. Summary is correct but full text has the wrong bill number cited. This has been corrected but the correction will not appear until a later date.]
Montana Maximum Hours and Overtime
Overtime requirements for workers in underground mines, smelter workers, and employees at strip mines, cement plants and quarries is amended to provide that such workers may not work more than eight hours a day unless the employer and employee agree to a workday of more than eight hours either (a) through a collective bargaining agreement when a collective bargaining unit represents the employee or (b) by mutual agreement when a collective bargaining unit is not recognized. Sections 39-4-103, 39-4-104, 39-4-107 and 39-4-109 are amended by H.B. 300, L. 2011, enacted April 18, 2011, and effective October 1, 2011. MT ¶27-44,013, ¶27-44,014, ¶27-44,017 and ¶27-44,019.
New Mexico Drug and Alcohol Testing
Health care providers hired to provide direct care to patients in a state health care facility will be subject to preemployment, random and reasonable suspicion drug and alcohol testing under a new law enacted by Section 1 of Ch. 90 (S.B. 295), L. 2011, on April 6, 2011. The new law becomes effective June 17, 2011. NM ¶32-53,002.
North Dakota Maximum Hours and Overtime
Effective August 1, 2011, a motor carrier may not permit or require any intrastate driver to drive and an intrastate driver may not drive: (1) more than 12 cumulative hours following 10 consecutive hours off duty; (2) for any period after the end of the 16th hour after coming on duty following 10 consecutive hours off duty; or (3) after having been on duty for 70 hours in any period of 7 consecutive days. Exceptions for hours of service limitations for drivers operating a commercial vehicle to provide emergency relief during an emergency declared by the governor are clarified and certain documentation requirements removed. Also, an intrastate driver is exempt from maintaining a record of duty status if operating the vehicle within a 150 mile radius of the worksite; at least 10 consecutive hours (changed from 8 hours) off duty separate each 12 hours on duty; the driver (other than driver salesperson) returns to the work-reporting location and is released from work within 12 consecutive hours; and the motor carrier retains for a 6-month period accurate time records showing the time the driver reports for and is released from duty each day. Section 39-32-02 is amended by S.B. 2244, L. 2011, enacted April 20, 2011, and effective August 1, 2011. ND ¶35-44,023.
North Dakota Wage Payment
When an employee voluntarily separates from employment, an employer may withhold payment for accrued time off if (1) at the time of hiring, the employer provided the employee written notice of the limitation on payment of accrued paid time off; (2) the employee has been employed with the employer for less than one year; and (3) the employee gave the employer less than five days’ notice. New law is added to Chapter 34-14 by S.B. 2138, L. 2011, enacted April 26, 2011, and effective August 1, 2011. ND ¶35-46,016a.
North Dakota Military Leave
New law is added providing for up to 24 working hours of paid leave in a calendar year for state employees in classified service to participate in an honor guard for a funeral service of a veteran. A governmental entity may grant a request for honor guard leave even if the absence of the employee might interfere with the normal operations of the agency. This law applies to each governmental entity that employs an individual in a position classified by human resource management services. New law, added to Chapter 54-06 by S.B. 2060, L. 2011, enacted April 20, 2011, and effective August 1, 2011. ND ¶35-58,003.
Oregon Military Leave
Military leave for public employees is amended to include initial active duty for training as a type of military leave that a public employee may take a leave of absence for. For military leave and reemployment rights affecting both private and public employment, “uniformed service” is redefined to match the federal description to mean the Armed Forces of the United States, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training or full-time National Guard duty, the commissioned corps of the United States Public Health Service and any other category of persons designated by the President of the United States in time of war or national emergency. Sections 408.290 and 659A.082 are amended by H.B. 2241, L. 2011, effective April 14, 2011. OR ¶38-58,007 and ¶38-58,012.
South Carolina Labor Relations
A constitutional amendment guaranteeing the fundamental right of an individual to vote by secret ballot for the designation, selection or authorization for employee representation by a labor organization is ratified effective April 6, 2011. The secret ballot amendment was originally approved by voters in the November 2010, General Election. Constitution of South Carolina, Article II, Section 12, ratified by Act 4 (S. 277; Ratification No. R 14), L. 2011, effective April 6, 2011. SC ¶42-63,046.
Utah Wage Payment
Provisions of law covering wage payment requirements are amended to comply with rules of statutory construction applicable to the Utah Code. The changes made are nonsubstantive. Sections 34-28-14 and 34-32-4 are amended by H.B. 213, L. 2011, effective May 10, 2011. UT ¶46-46,014 and ¶46-46,024.
Vermont Employer Job References
Effective July 1, 2011, employees whose job duties may place the person in a position of power, authority or supervision over or permit unsupervised contact with a minor or vulnerable adult must sign a preemployment waiver authorizing the disclosure of job-related information from current and previous employers to prospective employers. Also, prospective employers must request in writing, and current or former employers must promptly disclose, all factual information that would lead a reasonable person to conclude that the prospective employee engaged in conduct jeopardizing the safety of a minor or vulnerable adult. Current and former employers are to provide a copy of the disclosure or a statement that there is nothing to disclose to both the prospective employer and employee. Affected employees are to be given the opportunity to review and respond to the information. Section 307, amended by Act 5 (H. 431), L. 2011. VT ¶47-64,052.
Washington Wage Payment
Garnishment provisions are amended with respect to exemption rights to provide (under “other exemptions” allowed) that certain property may be exempt, including money in a bank account up to $200 for debts owed to state agencies, or up to $500 for all other debts and certain other property such as household furnishings, tools of the trade, and a motor vehicle (limited by differing dollar values). Also, law covering exemptions from garnishment for retirement benefits is amended to expand the definition of employee benefit plan to include custodial accounts, individual retirement annuities, and health savings accounts. Sections 6.27.140, 6.15.010 and 6.15.020 are amended by Ch. 162 (H.B. 1864), L. 2011, enacted April 22, 2011, and effective July 22, 2011. WA ¶50-46,054a, ¶50-46,108 and ¶50-46,109.
Washington Prevailing Wages
Any employer, contractor, or subcontractor who fails to provide requested prevailing wage records, or fails to allow adequate inspection of such records in an investigation by the Washington Department of Labor and Industries within 60 calendar days of service of the department's request may not use the records in any proceeding to challenge the correctness of any determination by the department that wages are owed, that a record or statement is false, or that the employer, contractor, or subcontractor has failed to file a record or statement. A new section is added to Chapter 39.12 by Ch. 92 (S.B. 5070), L. 2011, enacted April 15, 2011, and effective July 22, 2011. WA ¶50-50,014b.