Arbitration agreements are a common tool that employers use to manage EEO and wage/hour litigation risk. Those agreements often include a provision that an employee who wishes to submit an employment-related claim to arbitration may do so only on behalf of himself or herself, and may not do so as part of a class or collective action. On January 3, 2012, Member Becker's last day on the National Labor Relations Board ("NLRB"), Members Becker and Pearce dealt a blow to employers seeking to create or expand arbitration agreements that employees are required to sign as a condition of employment. In D.R. Horton, Inc., the NLRB held that mandatory arbitration agreements that include a class action waiver are unlawful under the National Labor Relations Act ("NLRA").
In D.R. Horton, Inc., the employer (a home builder with operations in more than 20 states) instituted a corporate-wide policy that required new and current employees, as a condition of employment, to sign an arbitration agreement. The agreement required all disputes arising from each employee's employment to be resolved by an arbitrator, rather than in a judicial forum. The agreement further provided that the arbitrator had no authority to consolidate the claims of other employees, to hear any class or collective action, or to award relief to a class or group of employees.
The charging party, Michael Cuda, was a superintendent with the home building company. Cuda's attorney notified the company that his firm represented Cuda and a nationwide class of similarly situated employees. He asserted that the company was misclassifying the superintendents as exempt under the Fair Labor Standards Act ("FLSA") and gave notice that he intended to initiate an arbitration proceeding on behalf of the class of superintendents. The company responded that such a collective action was prohibited under the arbitration agreement that Cuda and other employees signed.
Cuda then filed an unfair labor practice charge with the NLRB, alleging, among other things, that the arbitration agreement violated Section 8(a)(1) of the NLRA as it prohibited employees from engaging in concerted activity for their mutual aid and protection.
The NLRB agreed with Cuda that the arbitration agreement violated Section 8(a)(1) of the NLRA. The NLRB held that employees have the right to attempt to improve their working conditions through judicial, administrative, and arbitral proceedings. The NLRB further held that employees' collective efforts to pursue rights or improve working conditions are "at the core of what Congress intended to protect" in Section 7 of the NLRA. The Board concluded that, because the arbitration agreement at issue prohibited employees from pursuing class or collective actions in either an arbitral or judicial forum, it violated Section 8(a)(1) of the NLRA.
The company argued that a decision holding its arbitration agreement to be unlawful would conflict with the provisions of the Federal Arbitration Act ("FAA") and the Supreme Court's 2011 decision in AT&T Mobility LLC v. Concepcion. However, the NLRB rejected these arguments.
The FAA was enacted to prevent courts from treating arbitration agreements less favorably than other private contracts. The NLRB reasoned that its decision was not in conflict with the FAA because it was treating the arbitration agreement no worse than any other private agreement. The NLRB stated that it would have reached the same conclusion had the agreement not mentioned arbitration, but required employees to pursue only individual claims -- rather than collective claims -- in a judicial or other type of forum.
In AT&T Mobility, a class action was brought against AT&T by a group of customers who alleged that AT&T's offer of a "free" telephone to anyone who signed up for its service was fraudulent to the extent that AT&T still charged new subscribers sales tax on the retail value of the "free" telephone. AT&T demanded that each plaintiff's claim be submitted to individual arbitration because its arbitration agreement with its customers barred class actions. The plaintiffs argued that such a class action waiver was unconscionable under California law. The Supreme Court rejected the plaintiffs' argument, and held that the class action waiver contained in the arbitration agreement was enforceable. The NLRB distinguished the Supreme Court's AT&T Mobility decision, principally on the basis that the arbitration agreement at issue in that case involved customers of AT&T rather than employees, and therefore, the issue of whether the arbitration agreement violated the NLRA was not presented.
The D.R. Horton case will likely be appealed to a U.S. Circuit Court of Appeals, and may eventually be heard by the Supreme Court. However, in the meantime, employers looking to create or expand an arbitration agreement that employees must sign as a condition of employment should be cautious not to prohibit employees from pursuing class or collective actions in an arbitral forum.
A bill has been introduced in the New York State Legislature that would, if enacted, repeal the annual wage notice requirement imposed by the Wage Theft Prevention Act ("WTPA"). The bill would leave intact the requirement that employers provide a wage notice to all new hires, as well as the requirement that employers obtain signed written acknowledgments of the new hire wage notices. At this point, the bill is in its infant stages, and no vote has been taken.
The Business Council of New York State has submitted a memorandum in support of the bill, and has created a web page for employers to join in the effort to convince the New York State Legislature to repeal the annual wage notice requirement.
As New York employers should be aware, the first annual notice to employees required by the Wage Theft Prevention Act ("WTPA") must be distributed by February 1, 2012. Although the requirements of the WTPA have been grabbing recent headlines, this post addresses one unavoidable by-product of the annual notice requirement -- the reality that the distribution of these annual notices is likely to lead to workplace discussions among co-workers regarding wage and salary information. As a reminder, blanket rules -- whether formal or informal -- prohibiting employees from discussing their pay and benefits with their co-workers are unlawful under the National Labor Relations Act ("NLRA").
The NLRA provides private sector employees the right to engage in protected concerted activity regarding their terms and conditions of employment. This includes, as a general rule, employees' right to share and discuss information with their co-workers about their wages, benefits, and other working conditions. This protection extends to both union and non-union workplaces. Accordingly, employers may not promulgate or enforce any type of policy that prohibits such discussions. Even a broadly-written confidentiality policy may be found to violate the NLRA if an employee could reasonably view the policy as restricting discussions with co-workers about wages and other working conditions.
Employers should review their policies to ensure that there are no explicit or implicit prohibitions on wage discussions among employees that might be found to violate the NLRA. In addition, managers should be careful to avoid knee-jerk reactions to hearing such discussions that will inevitably arise from the distribution of the annual WTPA notice to employees.
The U.S. Department of Labor, Office of Federal Contract Compliance Programs ("OFCCP"), recently issued a proposal to revise the regulations applicable to Section 503 of the Rehabilitation Act of 1973, which requires Federal contractors to take affirmative action to hire, retain, and promote qualified individuals with disabilities. The proposed changes, if implemented, will substantially increase the obligations imposed on Federal contractors with respect to individuals with disabilities.
The OFCCP proposal includes the following requirements:
Contractors will need to annually survey their employees, providing an opportunity for each employee who is, or subsequently becomes, an individual with a disability to voluntarily self-identify in an anonymous manner. In addition, contractors will be required to invite applicants to self-identify as individuals with disabilities at both the pre- and post-offer stages, using OFCCP mandated language.
Contractors will be required to document and maintain data on ratio of jobs filled to openings, ratio of applicants with disabilities to all applicants, total number of applicants hired, and ratio of individuals with disabilities hired to all hires.
Contractors will be required to engage in mandatory outreach/recruitment efforts that involve listing all employment opportunities (with limited exceptions) with the local employment delivery service, similar to the current obligations under the Vietnam Era Veterans' Readjustment Assistance Act. Additional required outreach efforts will also be required, including entering into a minimum of three linkage agreements with specific types of outreach sources. In addition, an annual review and documentation of these recruitment efforts will be required to determine effectiveness in identifying and recruiting qualified individuals with disabilities.
Contractors will be required to establish a utilization goal for individuals with disabilities and set hiring goals for each Job Group in the workforce. OFCCP proposed a utilization goal of 7%. However, OFCCP is inviting public comments on the use of a 7% goal and appears willing to consider a goal ranging between 4% and 10%.
Contractors will be required to implement written reasonable accommodation procedures and include the written procedures in their Affirmative Action Plans.
Contractors will be required to annually review and document their personnel processes, as well as physical and mental job qualifications, instead of doing so periodically.
Contractors will be obligated to retain outreach documentation and data collection for five years.
Comments on the proposed rule from interested parties may be submitted to the OFCCP on or before February 7, 2012. OFCCP anticipates a final rule will be published around Fall of 2012.
As all public employers are aware, Section 72 of the New York Civil Service Law ("Section 72") provides both the procedure for placing a public employee on an involuntary leave when he or she is deemed unfit to perform his or her job due to illness or injury, and certain procedural protections to employees who are placed on such leave. Specifically, any public employee who is placed on an involuntary leave is entitled to written notice of the reason for the proposed leave, the proposed date on which it is to begin, and his or her rights under the statute. In addition, any such employee is entitled to a hearing concerning the employer's decision to place him or her on leave.
Historically, the protections of Section 72 have been applied only to employees who were placed on an involuntary leave from work. However, a recent decision by the New York Court of Appeals extended those protections to public employees who are prevented by their employers from returning to work from a voluntary medical leave.
In Matter of Sheeran v. New York Dep't of Transp., 2011 N.Y. Slip Op. 8229 (Nov. 17, 2011), two state employees, who had been deemed unfit for duty and placed on involuntary leaves after attempting to return from voluntary medical leaves, challenged their placement on leave without a hearing under Section 72. Their respective employers argued that 4 N.Y.C.R.R. Section 21.3, a Department of Civil Service regulation concerning sick leave, and the applicable collective bargaining agreements applied to these circumstances rather than Section 72, because the employees had been on voluntary medical leaves. The Court of Appeals reversed the Appellate Division, Third Department's dismissal of the petitions, holding that there was no basis in Section 72 for making a distinction between an "employee who has been placed on involuntary leave from a voluntary one and one forced to take an involuntary leave." In addition, the Court of Appeals noted that a different interpretation of Section 72 "would discourage employees from taking voluntary leave, since they would have greater rights if they remained on the job and waited to be involuntarily removed -- a result the Legislature surely did not intend."
As a result of this decision, public employers must be prepared to follow the procedural requirements of Section 72 any time they deem an employee unfit for duty, regardless of whether the employee was placed on an involuntary leave or was prevented from returning from a voluntary leave.
On January 4, 2012, President Obama announced his intent to make three recess appointments to the National Labor Relations Board (“NLRB”), restoring the quorum that the NLRB had lost a day earlier when Member Becker’s recess appointment expired. The three recess appointees are: (1) Sharon Block, a Democrat who is currently the Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor; (2) Richard Griffin, a Democrat who is currently General Counsel for the International Union of Operating Engineers; and (3) Terence Flynn, a Republican who is currently Chief Counsel to NLRB Member Hayes.
Republican Senators have complained that these recess appointments bypass the Constitutionally-mandated Senate confirmation process for Presidential nominees. According to a press release issued by Senator Mike Enzi (R-Wyo.), two of the three nominees were presented to the Senate on December 15, 2011, only one day before the Senate adjourned for the year, which provided the Senate with little time to consider and review the nominations.
Just in time for the Winter Solstice, the Occupational Safety and Health Administration ("OSHA") issued a press release on December 21, 2011, advising that the agency launched a web page devoted to hazards workers may face during winter storm response and recovery operations.
OSHA's new web page contains guidance on how employers and workers who are involved in cleanup and recovery operations can avoid injuries and illnesses related to snow storms and other weather conditions. For example, OSHA offers advice on how to prepare a vehicle for the winter season, how to avoid back aches and heart attacks while shoveling snow, how to safely walk on ice, etc. Industry-specific guidance on the new web page includes a section on utility workers' repair of downed or damaged power lines.
The web page also identifies several hazards that are associated with working in winter storms, including: being struck by falling objects, such as icicles, tree limbs, and utility poles; driving accidents; carbon monoxide poisoning; dehydration, hypothermia, and frostbite; and falling while walking on slippery walkways.
The new web page also includes links to guidance from OSHA, the Federal Emergency Management Agency ("FEMA"), the American Red Cross, the National Weather Service, the National Oceanic and Atmospheric Administration, the Centers for Disease Control and Prevention, the National Safety Council, and other agencies and organizations.
The National Labor Relations Board ("Board") announced today that it has agreed to postpone the effective date of its rule requiring employers to post a notice of employee rights under the National Labor Relations Act until April 30, 2012. This is the second postponement of the effective date of this rule, which was initially scheduled to take effect on November 14, 2011. After lawsuits were filed against the Board in September challenging the Board's authority to implement the rule, the Board announced in October that it was postponing the effective date of the rule to January 31, 2012. This most recent postponement to April 30, 2012 comes at the request of the U.S. District Court Judge who recently heard oral arguments with respect to one of those lawsuits.
As anticipated, the National Labor Relations Board ("Board") adopted a final rule amending the procedures applicable to union representation elections, just before losing its quorum when Member Becker's recess appointment expires at the end of this year. Members Pearce and Becker approved the final rule without the endorsement of Member Hayes. The final rule will be published in the Federal Register today (December 22, 2011), and will become effective on April 30, 2012.
The amendments to the union representation election procedures, which are summarized in a prior blog post regarding the November 30, 2011 Board resolution to proceed with the drafting of the final rule, are intended to shorten the time period between the filing of a representation petition and the election.
The U.S. Chamber of Commerce and the Coalition for a Democratic Workplace filed a lawsuit on December 20, 2011 in the U.S. District Court for the District of Columbia, challenging the Board's authority to adopt the final rule, and seeking an order enjoining the Board from enforcing the final rule. We will keep you posted on any significant developments in that litigation.
Although the data for 2011 is not yet final, OSHA expects problems related to employees falling off scaffolds, roofs, ladders, and other high places to be the top violations cited in 2011. In addition, the most frequently violated standard subsection is expected to be the rule covering residential construction (29 C.F.R. Section 1926.501(b)(13)). Other top violations are expected to include: hazard communication; respiratory protection; lockout/tagout; electrical, wiring methods; powered industrial trucks; electrical, general requirements; and machine guarding.
OSHA's data serves as a reminder to employers that falls are the leading cause of deaths among construction workers. They account for approximately one-third of all construction fatalities. Generally speaking, OSHA's fall protection standard requires that anyone working at heights of six feet or more be provided with fall protection. OSHA does not necessarily mandate the type of fall protection that must be used in any given situation, but rather offers many methods to achieve compliance. A combination of different fall protection measures are often appropriate. Fall protection strategies may include some of the following measures:
Fall prevention methods, such as the use of guardrails, warning lines, controlled access zones, hole covers, or safety monitoring systems;
Fall arrest systems, including the use of safety nets or full-body harnesses;
Fall protection plans, which are administrative controls that rely on special training and specific work practices and protocols; and
Employee training, which focuses on identifying hazards and demonstrating proficiency in the use of fall protection systems.
As we head into 2012, we are reminded of the words of Dr. Carl Sagan: "You have to know the past to understand the present." Employers can certainly learn from this past OSHA data by reviewing the adequacy of their fall protection measures, so that they can avoid potential OSHA violations in the future.
The resolution authorizes the Board to prepare a final rule to be published in the Federal Register containing six elements that were found in the originally proposed rule. The goal of the scaled down proposal is to decrease the delays that Board Members Pearce and Becker have argued are impediments to unions winning representation elections. The six elements of the final rule would eliminate pre-election litigation and appeals over a number of issues. The six amendments to the existing representation election process are summarized below:
The first amendment would limit the issues that may be raised at a pre-election representation hearing only to those issues that are relevant to whether a question of representation exists that should be resolved by an election. In other words, issues pertinent to the scope of the proposed bargaining unit, the supervisory status of certain individuals, and other issues that do not affect whether or not a representation election should be held would only be permitted to be raised after the election.
The second amendment would give the hearing officer at a pre-election representation hearing the discretion to determine whether or not post-hearing briefs may be filed.
The third amendment would eliminate the right to seek Board review of a Regional Director's pre-election rulings prior to the election, leaving only the possibility of a post-election review of any such rulings that have not been rendered moot by the election.
Because pre-election requests for review to the Board would be eliminated, the fourth amendment would end the practice of delaying the scheduling of a representation election for purposes of giving the Board the opportunity to rule on requests for review.
The fifth amendment would clarify the standard for seeking special permission to appeal to the Board.
The sixth amendment would give the Board full discretion to determine whether or not it will consider requests for review of a Regional Director's or Administrative Law Judge's disposition of post-election objections to the election.
These proposed amendments, while not as broad as those originally proposed in June, will nevertheless have the effect of speeding up the election process. This will have a significant impact on the manner in which employers react to the filing of a representation petition.
At this point, the Board will draft the language of the final rule, which must then be approved by a majority of the Board. The Board currently has a quorum of three members, but will be down to two members when Member Becker's recess appointment expires at the end of this year. It is clear that Members Pearce and Becker will do everything they can to get the final rule drafted and approved before the Board loses its quorum.
Recent complaints filed by the Office of Federal Contract Compliance Programs ("OFCCP") and the Equal Employment Opportunity Commission ("EEOC") against employers suggest that those federal agencies are aggressively pursuing allegations of discriminatory hiring practices.
On November 29, the OFCCP filed an administrative complaint against Cargill Meat Solutions, a federal contractor, alleging that the company violated Executive Order 11246, by favoring Asian and Pacific Islander applicants over applicants of other races and by favoring male applicants over female applicants. In the complaint, the OFCCP alleges that over 4,000 qualified applicants were unlawfully rejected based only on their race or sex. Significantly, the OFCCP seeks cancellation of the company's government contracts worth more than $550 million.
In the last several months, the EEOC has also filed two high-profile lawsuits against employers for alleged discriminatory hiring practices. In September, the EEOC filed a lawsuit against Bass Pro Shops in the U.S. District Court, District of Massachusetts, alleging that the company engaged in a pattern or practice of failing to hire African-American and Hispanic applicants. In the lawsuit, the EEOC alleges that managers made overt racist comments acknowledging the company's discriminatory hiring practices, and stated that African-American applicants did not fit their corporate profile.
In October, the EEOC filed a lawsuit against Texas Roadhouse in the U.S. District Court, Southern District of Texas, alleging that the company systematically failed to hire individuals over 40 years of age for "front of the house" positions. In the lawsuit, the EEOC alleges that only 1.9% of the "front of the house" employees are over 40 years of age (which the EEOC believes is a statistically significant disparity when compared to the general population, industry statistics, and the applicant pool) and that the company instructed managers to hire younger employees by emphasizing youth in its hiring training.
At this point, these enforcement actions by the OFCCP and EEOC have not resulted in any final determinations or judgments. Nevertheless, these enforcement actions serve as a useful reminder for employers of all sizes to continually monitor their hiring practices and periodically train managers who have hiring responsibilities to ensure compliance with federal, state, and local laws.
