Labor & Employment

Let's face it. The hiring process involves mounds of regulations, disclosures, authorizations, and then more disclosures. The last thing an employer - or applicant - wants to see is a higher stack of documents filled with legal jargon. Should employers then consolidate disclosures and authorizations to simplify the hiring process? Not when doing a credit check pursuant to the Fair Credit Reporting Act (FCRA). Recent cases emphasize the importance of employers allowing disclosures to obtain background checks from consumer reporting agencies to “stand alone” from every other document. The FCRA mandates that employers who seek to procure a consumer report must present "clear and conspicuous" disclosures that are contained in a document that consists solely of the disclosure. This is known as the "stand alone" requirement. While the FCRA allows the disclosure form to also include an authorization - which is also required before procuring a report - Courts have recently cracked down on employers who include anything extraneous. For instance, in Syed v. M-I, Ltd. Liab. Co., 853 F.3d 492 (9th Cir. 2017), the Ninth Circuit Court of Appeal held that the inclusion of a liability waiver in the same document as the FCRA disclosure violated the FCRA’s “stand alone” requirement. The Ninth Circuit further held that violation of this technical requirement is enough of a “concrete harm” to allow the case to proceed in Federal Court where the plaintiff alleged he was confused about the excess language and would not have signed the disclosure otherwise. In Poinsignon v. Imperva, Inc., No. 17-cv-05653-EMC, 2018 U.S. Dist. LEXIS 60161 (N.D. Cal. Apr. 9, 2018), a District Court recently held that a FCRA disclosure that included references to state law, a URL link to a privacy policy, and an acknowledgment of another document – the “Summary of Rights under FCRA” – violated the FCRA’s “stand alone” requirement. The Court in Poinsignon underscored the importance of “[p]resenting the disclosure in a separate stand-alone document free from the clutter of other language” to call “consumers’ attention to their rights and to the significant of their authorization.” And in Lagos v. Leland Stanford Junior Univ., No. 5:15-cv-04524-PSG, 2015 U.S. Dist. LEXIS 163119 (N.D. Cal. Dec. 4, 2015), a District Court held that inclusion of seven state law notices and a sentence stating, “I also understand that nothing herein shall be construed as an offer of employment or contract for services,” plausibly violated the FCRA’s “stand alone” requirement. Against this backdrop, there has been a considerable uptick in FCRA litigation in recent years. In 2017, FCRA litigation increased over 9% from the prior year. So far in 2018, FCRA related filings are on pace to increase further. Employers have also been recent targets of FCRA class action lawsuits alleging violation of the FCRA’s “stand alone” requirement. For example, on April 20, 2018, Petco Animal Supplies, Inc., asked a Federal Court in the Southern District of California to approve a class-wide settlement of a 2016 lawsuit based on allegations that its web based application contained a FCRA disclosure containing a broad authorization for “any person” to provide “any and all information” to the consumer reporting agency, in addition to information relating to the laws of seven different states. Petco agreed to pay $1.2 million to resolve the claims of approximately 37,000 individuals. And on April 12, 2018, Frito-Lay, Inc., asked a Federal Court in the Northern District of California to approve a class-wide settlement of a 2017 lawsuit based on allegations that Frito-Lay violated the FCRA’s “stand alone” requirement by including additional language in its FCRA disclosure form including, among other things, a statement that “I have been given a standalone consumer notification that a report will be requested and used [.]” Frito-Lay agreed to a settlement of about $2.4 million to resolve the claims of roughly 38,000 class members. 2018 marks a new opportunity for employers to review and update their hiring forms to ward off FCRA lawsuits.

It is one of the nightmare scenarios for any HR Department or in-house employment counsel: A white employee directing crude, vicious, racially charged slurs at a coworker of color. Perhaps the most inflammatory of such racial epithets is so toxic that it is typically no longer even spelled out in judicial opinions; it is simply the “n-word.” But employees do not limit themselves to that word, and courts end up assessing a range of offensive statements. So, when does offensive language in the workplace create a viable hostile environment claim? From an HR perspective, insulting epithets, particularly based on race, gender, or other protected classes, are hurtful, damaging to employee morale, and prohibited by company policies. From a legal standpoint, however, the impact of such statements is more difficult to assess. Although it is beyond obvious that no one should ever refer to a co-worker in racial terms, the legal framework of “hostile atmosphere” claims requires an analysis of factors including the following: What actually was said? Who said it, and under what circumstances? How often were offensive remarks made in the workplace? How did the company respond upon learning about the problem? If the employer can demonstrate that the language, even if offensive, was not “severe and pervasive,” and that the company responded appropriately to employee complaints, the employer has an excellent chance to prevail against claims by the employee. Three recent decisions help illustrate this legal landscape: In Barbara v. Here North America, LLC, the plaintiff employee was subjected to a supervisor’s use of the “n-word,” in addition to “other racially-charged language,” a sign reading “Colored” being hung above the plaintiff’s work station, and an ineffective response from management. Not surprisingly, the employee successfully staved off the employer’s motion for summary judgment, even though there were statute of limitations problems with some of the claims. The court applied the following legal standard for a hostile environment claim: (1) unwelcome conduct or comments; (2) harassment based on race (or other protected category); and (3) the harassment was “sufficiently severe or pervasive” so as to “alter the conditions of employment and create an abusive working environment.” The court found that the conduct described above met the severe and pervasive standard and entitled the employee to a full trial of her claims. The employee was also entitled to proceed with claims that the damaging atmosphere impacted his performance, leading to his termination, and that the termination was a form of retaliation for his complaints about the racially hostile atmosphere. By contrast, the employer prevailed, at least in part, in Paul v. Saltzman, Tanis, Pittel, Levin & Jacobson, Inc. Paul was a certified medical assistant whose Spanish co-workers referred to her as the “black monkey girl.” The employer, upon being informed of the situation, advised Paul to simply “let it go.” When she continued to complain, she was eventually terminated, in part because of her refusal to “let it go.” Paul sued for both hostile environment and retaliatory discharge. The court noted that the determination of whether a hostile workplace atmosphere is sufficiently severe and pervasive is not “a mathematically precise test,” and that no single factor decides the question. The court found that the “few isolated instances” of offensive behavior here did not meet the test and dismissed the hostile atmosphere claim. However, the court did allow Paul the opportunity to amend her complaint, potentially reviving the hostile atmosphere case if she was able to provide more facts showing severe and pervasive harassment. The court also advanced the retaliatory discharge claim. Given that one reason given by the employer for the discharge was the employee’s refusal to drop a complaint of racial harassment (based on a highly offensive epithet), it is certainly no surprise that the retaliatory discharge claim had sufficient merit to proceed. Finally, in Yeboah-Kankam v. Prince William County School Board, plaintiff’s claims failed, in part because plaintiff had a lengthy and well-documented record of his own inappropriate conduct, and because the hostile atmosphere claim was based, in part, on the fact that a school district representative had referred to him as a “confident, African American male.” The court pointed out that this was not even offensive language and could not support the claim. The takeaways from these recent cases include: Offensive language is not only wrong; it is potentially the basis for a valid lawsuit. It should be prohibited by company policies and certainly never used by supervisors or management; Not every complaint identifies what courts will agree is offensive language; If instances of offensive conduct do arise, the company must assess how bad they are, how often they occurred, and how best to correct the problem. An aggressive and effective company response that makes it clear offensive statements are not tolerated is most often the best defense; By contrast, attempts to sweep the problem under the rug only make it worse: Telling a complaining employee to “let it go” is a terrible idea, and firing her for failing to drop her complaint is even worse. (Updated 9/17/2020.)

In the weeks since allegations began to surface regarding the sexually predatory behavior of movie mogul Harvey Weinstein, sexual harassment allegations (sometimes admitted and sometimes disputed) against powerful, prominent men have been a daily feature of the headlines, involving Oscar-winning actors, sitting and would-be senators, talk show hosts, and numerous other high profile figures. Allegations against the both the current President of the United States and one of his predecessors, while not new, have been the subject of renewed focus. On social media, the “#MeToo” campaign has featured numerous women coming forward with their experiences as victims of sexual harassment. While the effect of these developments is still evolving, clearly there have been changes in how sexual harassment is perceived and understood, particularly when the alleged perpetrator is not only powerful, but famous. That being said, for an employer assessing potential liability, has the legal landscape for sexual harassment and related claims really changed all that much? The impacts of this explosion of high profile episodes is potentially far reaching, even for employers far outside the political, entertainment, and media arenas where so many of the recent cases have emerged. Public awareness of sexual harassment issues in general is certainly more pronounced. In many (but not all) situations, the public has treated the allegations as credible, even when raised years or decades after the fact. Not surprisingly, there have also been downsides to the recent uproar, including regrettable attempts to blame or attack victims who have come forward. In one bizarre episode in connection with an ongoing political campaign, a woman apparently attempted to plant false allegations of harassment in the Washington Post, precisely so that they could be shown as false, thus undermining the credibility of the Post and, by implication, of other women whose accusations had earlier been reported there. But for employers, whether they are high profile media outlets or corner drug stores, sexual harassment involves legal duties and the risk of liability if those duties are not met. Those duties haven’t really changed. The law governing sexual harassment has been developed in state and federal courts for several decades. While the law continues to evolve in certain areas, the basic legal framework and key procedural requirements are well-established. When an employer is actually sued for sexual harassment, those rules, including mundane boring procedural requirements, can be the key to winning or losing the case. Two recent decisions illustrate the fact that the old rules still apply: In Tudor v. SE. Okla. State Univ., in the United States District Court for the Western District of Oklahoma, the plaintiff’s allegations implicated some cutting edge issues, but the case was decided using fundamental precepts of employment discrimination law. The plaintiff, a college professor, contended that Southeastern Oklahoma State denied her tenure application and then fired her because of her transgender status (she was transitioning from male to female). She also claimed that the University maintained a hostile environment, and that she was retaliated against for raising concerns in the first place. The University moved for summary judgment, but the court denied the motion. First, regarding a hostile environment claim, the issue was whether the plaintiff alleged a sufficient number of incidents, with sufficient severity, to establish “a work environment permeated with intimidation and ridicule.” In other words, was the environment bad enough to support a legal claim? The plaintiff relied not only on sporadic insults and comments, but also on the fact that every day over the course of a four-year period she had restrictions on which restroom she could use, how she could dress, and what make-up she could wear. She also noted that administrators persisted in using a male pronoun to refer to her even after she considered herself to be female. The court found that that was sufficiently pervasive to survive summary judgment and preserve her hostile environment claims for trial. The court also rejected a defense based on plaintiff’s alleged failure to take advantage of preventive and corrective opportunities at the University. The plaintiff successfully countered this argument by noting that at the time, the University did not have policies prohibiting discrimination on the basis of transgender status. Therefore, there was no effective internal redress available to her. The court also denied summary judgment on the plaintiff’s claim that the tenure denial and subsequent termination were discriminatory. The court had decided in a previous ruling that transgender status is protected under Title VII. In evaluating the evidence of discrimination, the court applied the familiar three-part framework: (1) plaintiff must demonstrate a prima facie case; (2) the employer must provide evidence of a legitimate non-discriminatory reason for the employment action; and (3) plaintiff must provide evidence that the asserted legitimate reason is actually a pretext for discrimination. The primary dispute concerned evidence of pretext, which the plaintiff satisfied by showing substantial procedural irregularities in the tenure decision, including a refusal to state reasons for the denial of tenure and use of a backdated letter to elaborate on rationales for the tenure denial. Finally, with respect to the retaliation claim, the court found sufficient facts to show protected conduct followed by an adverse employment action. The application of Title VII and other gender discrimination laws to transgender status is a new and disputed legal issue, but the framework used to analyze such claims is well-established, and the court applied it to determine that the case would go forward. In another recent case, Durand v. District of Columbia Government, decided by the United States Court of Appeals for the District of Columbia Circuit, the employer prevailed, also by relying on the validity of long-established legal requirements for such claims. The plaintiff contended that he was being retaliated against for prior participation in a large sexual harassment lawsuit that had been decided some years earlier. In dismissing the retaliation and retaliatory harassment claims, the Court of Appeals relied on plaintiff’s procedural failures, including failure to file a proper administrative charge of discrimination with the EEOC and failure to proceed in a timely fashion. The case also failed in part because it was based on employer actions that were not materially adverse to plaintiff’s employment status. Finally, plaintiff failed to show severe or pervasive harassment, which would be necessary to support a retaliatory harassment claim. Both of these recent decisions confirm that while public perception and understanding of sexual harassment may be experiencing a true revolution, in litigation both the employer and the employee must comply with largely well-established legal doctrines to determine who actually wins the case.

A bartender is told by his employer, in violation of state law, that he must share tips with other employees. He refuses to comply and is fired. The state law in question says he can sue for being required to share tips, but doesn’t say anything about suing because he was fired. Does the law effectively provide a “wrongful discharge” claim for the bartender, even though no such claim is expressly written into the statute and despite Minnesota’s strong adherence to the rule of at-will employment? The answer, provided in the recent Minnesota Supreme Court decision in Burt v. Rackner, Inc., 2017 Minn. LEXIS 629 (Oct. 11, 2017), comes as something of a surprise. Its broader implications for the at-will rule, however, remain to be seen. At-will employment is so firmly established in Minnesota law that it seldom receives a second thought. The rule in Minnesota, as in the overwhelming majority of states, is that employment relationships are terminable by either the employee or the employer, at any time and without advance notice, and for any reason or for no reason at all (just not for an unlawful reason). Put another way, discharging an employee is actionable only if it implicates an exception to the general at-will rule. For the most part, the exceptions are based either on contract or statute. Contractual exceptions include individual employment contracts, collective bargaining agreements in unionized workplaces, and even employment handbooks or workplace policies (although careful drafting normally provides that handbooks and policies do not abrogate the at-will rule). Statutory exceptions include discrimination laws, “whistleblower” acts, and other laws defining employee “protected conduct.” If the conduct is protected by statute, then the law will typically state that the employee can sue if he or she is fired for engaging in such conduct. Further, some states recognize public policy exceptions to the at-will employment doctrine. But the bottom line is that at-will employment remains the norm. That norm, however, may be subtly changing in Minnesota. In Burt, a divided Minnesota Supreme Court held that the Minnesota Fair Labor Standards Act (“MFLSA”), Minn. Stat. §§ 171.21-.35, allows employees to sue for wrongful discharge when they refuse to share tips, even though the statute says nothing explicitly authorizing such a claim. The case may be viewed as the only logical way to enforce the statutory requirement that employers in service industries or with tip-generating businesses cannot require employees to share tips with each other (although employees are free to do so voluntarily). Yet the underlying rationale for the Court’s decision could have significant effects on the at-will employment doctrine in Minnesota. The plaintiff in Burt worked as a bartender, earning tips in addition to his regular wage. At some point, his employer allegedly told him “that he needed to give more of his tips to the bussers, and that there would be consequences if that did not happen.” Nevertheless, the plaintiff refused to share his tips. A few months later, he was told that his employment “was being terminated because [he] was not properly sharing his tips with other staff.” Unable to find alternative employment, the plaintiff sued for wrongful termination. The District Court dismissed his case, but the Court of Appeals reversed. In a 5-2 opinion, the Minnesota Supreme Court held that through the language of the MFLSA, the state legislature had expressly created a cause of action for employees who are terminated for refusing to share tips. Specifically, the Court relied on two provisions to find an express cause of action: Under Minn. Stat. § 177.24, subd. 3, No employer may require an employee to contribute or share a gratuity received by the employee with the employer or other employees or to contribute any or all of the gratuity to a fund or pool operated for the benefit of the employer or employees. This section does not prevent an employee from voluntarily sharing gratuities with other employees. The agreement to share gratuities must be made by the employees without employer coercion or participation . . . . And under Minn. Stat. § 177.27, subd. 8, An employee may bring a civil action seeking redress for a violation or violations of sections 177.21 to 177.44 directly to district court. According to the Court, because § 177.24 prohibits employers from requiring employees to share tips, it necessarily also prohibits employers from terminating employees who refuse to do so. The Court concluded that the mere threat of termination qualifies as “requiring” an employee to take an action. And given that § 177.27 authorizes civil actions to redress any prohibited conduct under the MFLSA, the Court held that the plaintiff had a viable claim against his employer for wrongful discharge. But even if the Court’s logic is compelling (the statute would provide little protection if any employee could be fired for refusing to share tips), it goes beyond the exact statutory wording, which does not mention termination or any action for wrongful discharge. Indeed, Chief Justice Gildea authored a dissenting opinion, taking aim at the majority’s interpretation of the relevant statutes. The dissent emphasized the majority’s apparent disregard for longstanding precedent allowing the legislature to abrogate the at-will employment doctrine only with express wording or necessary implication. This critique was particularly apt because other provisions in the MFLSA contain express language authorizing causes of action for wrongful discharge—language that Chief Justice Gildea noted was absent from §§ 177.24 and 177.27. If the Legislature had wanted to create a wrongful discharge remedy for violations of the tip-sharing law, it could have used similar language, but did not do so. So what are employers to take from Burt? For starters, they cannot require tip-sharing, nor can they terminate employees who refuse to share tips. The more difficult issue is how the decision could erode at-will employment in Minnesota generally. Although the sky is not yet falling, Burt should give employers pause. It reflects the willingness of a majority of the Supreme Court to recognize a wrongful discharge remedy (at least where there is a compelling logic for such a remedy) even if it is not explicitly described in the statute at issue. As Chief Justice Gildea wrote in dissent, Burt opens the door for employees to allege claims for wrongful discharge just by invoking “any MFLSA provision that imposes a requirement on an employer—and indeed, virtually any statutory provision that imposes a requirement on an employer.” Now, more than ever, it is critical that employers stay apprised of the legal requirements imposed on them by state and federal laws. It is equally critical that both in-house and outside employment counsel keep an eye on how Minnesota courts interpret and apply Burt in the years to come.

Social media has created a minefield of concerns for both employees and employers. The news is full of stories of employees documenting their questionable off-duty conduct on social media, or posting comments containing racist or derogatory remarks. Often, the employer—or sometimes, the rest of the online community—will demand that the employee be fired. In such a scenario many employers may be wondering: What could prevent an employer from lawfully terminating an employee based on social media activity, and what steps can employers take to best handle these situations? Recent examples abound: Last year an employee of a large corporate bank was terminated following a racist rant on Facebook. Throngs of customers contacted the bank, threatening to close their accounts if the employee was not fired. The employee was promptly terminated for her “reprehensible” comments. Many readers may remember the notable case of a public relations director in 2013, who, before boarding a flight to South Africa, tweeted: “Going to Africa. Hope I don’t get AIDS. Just kidding. I’m white!” Despite her 170 followers, her tweet immediately went viral worldwide. By the time she landed in South Africa eleven hours later, her manager had informed her that she’d been fired. Most recently, on October 31, 2017, a marketing director for a government contracting firm was terminated after a photograph of her flipping off President Trump’s motorcade went viral on social media. In the wake of the September “white nationalist” marches, numerous Twitter accounts were created to identify and draw attention to the participants. Many employers have been inundated with demands that these individuals be terminated, and have been quick to distance themselves from the employees. In this situation, there are several things employers should consider. First, be aware of state and federal laws which may affect the way you might react to employee social media use. For example: Off-duty Conduct Laws. Some states have laws prohibiting employers from disciplining or firing employees for activities pursued in their personal time—including the use of lawful substances such as medical marijuana and tobacco. Protection of Political Views. A few states (and some cities and counties) protect employees from discrimination based on their political views or affiliation. In such a state, terminating or disciplining an employee for purely political social media activity or for political conduct outside the workplace could be illegal. NLRB Protections. The National Labor Relations Act and similar state laws protect employees’ rights to communicate with one other about their employment. More specifically, employees have the right to engage in “protected activity” regarding their workplace—sharing grievances and organizing online in protected activity. Under these laws, an employee who is fired for posting online complaints about their wages, benefits, tip sharing, management, or hours, etc. could have a strong legal claim. As we noted in a recent post, this protection can be quite robust, leading to the reinstatement of a union employee fired after posting: “F*** his mother and his entire f***ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!” (He was saved by the last sentence, which linked the rant to his union activities.) Prohibitions on Retaliation. Beyond NLRB protections, many employment laws protect employees from retaliation for claiming that their rights have been violated. If an employee complains online about workplace discrimination, harassment, or other legal violations, that employee may be protected. However, at the end of the day most states are “at-will” employment states, meaning both employers and employees are free to terminate the employment relationship at any time with or without reason. Therefore—if an employer determines that an employee’s speech outside the workplace runs counter to the employer’s values or public image, the employer could have solid grounds for termination. While this is not the case in all states (for example, Montana), in the vast majority of states employment is considered at-will. So long as the aforementioned laws are taken into account, chances are good that an employer can safely terminate an employee for objectionable conduct online. While consulting with legal counsel prior to any such termination is recommended, employers can take the following affirmative steps to provide proper procedure in the event of an employee’s worrisome or unacceptable online behavior. Social Media Use Policy. Adopt a policy, included in your handbook, informing employees that their personal social media accounts, online networking account, blogs, and general online posts could get them in trouble at work. Explain what types of content could create problems, including harassing and bullying behavior or discriminatory or offensive language. This can include online conduct that may be associated with the company or which could cause serious interpersonal problems in the workplace. Be Consistent. As with all employment policies, be consistent when enforcing your social media policies. If a female employee is terminated for posting objectionable material on the internet but a male employee is not for the same or similar conduct, the female employee may have a cause of action for sex discrimination. Always enforce your policies consistently to protect your company.

As a general rule, of course, Human Resources Departments and company management want to be – and should be – well-informed about issues in the workplace, including employees unhappy enough to have raised claims of discrimination or harassment. If key people at the company are unaware of such complaints, the employer might leave itself open to charges of sloppiness, indifference, or even tolerance of harassing or discriminatory conduct. But is it ever better not to know about an employee’s complaint? Two recent cases illustrate how ignorance can sometimes be bliss in employment litigation. When the employer is accused of retaliation, i.e., firing an employee because of his or her complaint, the employer may have a defense if the decision-maker did not know anything about the complaint, because the employer cannot retaliate based on something it does not know. Summary judgment based on lack of knowledge In both McKnight v. Aimbridge Employee Service Corp., Case No. 16-3776 (3rd Cir. October 26, 2017) and Esker v. City of Denton, Texas, Case No. 02-17-200003-CV (Tex. App. October 26, 2017), an employee complained of discrimination or harassment and was shortly fired thereafter. The employee then sued for both the original discrimination or harassment and retaliatory discharge, but in each case the retaliation claim was dismissed because the person making the termination decision had no knowledge of the discrimination or harassment complaint. Jamie McKnight was an African American food service worker at a hotel managed by Aimbridge. He felt that he was denied training opportunities and a desirable transfer because of his race, so he complained to the hotel’s general manager about discrimination and also filed a charge with the EEOC. He was given a negative evaluation, put on a development plan, and eventually terminated. But the Aimbridge supervisors who took these actions against McKnight were different individuals from the general manager to whom he had complained. At summary judgment, McKnight was unable to provide any evidence that the decision makers knew about his earlier discrimination complaints. In the absence of substantial, credible evidence to prove knowledge, the court held that McKnight could not possibly prove that the reason for his termination was his discrimination complaint. Summary judgment was granted. Wander Esker was a duty officer in the Denton, Texas police department. She complained to an HR employee that a co-worker had sent her inappropriate text messages and had tried to kiss her, but Esker refused to give details or disclose the name of the offending co-worker. The HR employee informed her that he needed more information in order to help. At about the same time, Esker’s supervisor noticed that she had apparently stolen a toy donated to the Police Department’s annual toy drive. He began monitoring her more closely and learned that she was claiming to have worked many hours when she was not at her desk. Esker claimed that the hours reporting discrepancies were an honest mistake, but the Police Department investigation concluded otherwise, and she was terminated. She claimed both sex discrimination and retaliation. Once again, the employee’s retaliation claim failed because the individuals to whom she had complained (two people in the HR department) were not the individuals who decided to terminate her. Esker was terminated by the Chief of Police. Even when she met with the Chief to discuss her termination, she did not bring up her harassment complaints in that meeting. Esker admitted in her testimony that she had no evidence that the Chief was aware of her harassment complaints. Because she was unable to provide evidence that the actual decision maker knew of her earlier complaints, and her retaliation claim was dismissed on summary judgment. Points to remember The cases illustrate the following key points: Identify the decision maker: both employers were able to prevail because they could clearly identify which individual or individuals had made the termination decision. In any case in which there is a claim of discrimination or retaliation, the focus will be on the decision maker, and the employer must be clear as to who that person is. From the employee’s perspective, follow through on complaints: Ms. Esker raised a complaint about sexual harassment, but refused to provide details or identify the individual involved. HR specifically told her that it could not do an investigation without more information, but she still declined to provide any. While it is not entirely clear from the case what would have happened had she provided more information, it is likely that a more thorough investigation into her complaint would have had a higher profile within the company, perhaps negating the defense that the Chief was unaware of it. Summary judgment is time to “put up or shut up”: whatever the specific issues are on a summary judgment motion, courts expect both parties to provide actual evidence in support of their position, not mere speculation or argument. The courts in both Esker and McKnight recognized the speculative possibility that the decision maker knew of the complaint, but they based their decision on the lack of actual evidence to that effect.

In the classic 1955 movie, Mister Roberts, Henry Fonda plays Doug Roberts, a frustrated Naval officer aboard a supply ship in a backwater area of the Pacific during World War II. Roberts desperately seeks a transfer to a combat ship more directly involved in the war, but he is continually – and maliciously – turned down by Captain Morton, portrayed by Jimmy Cagney: Doug Roberts: “I'm asking for it! If I can't get transferred, I'll get court martialed off! I'm fed up!” Capt. Morton: “No. You're a smart boy, Roberts. But I know how to take care of smart boys. I hate your guts, you smart college guys! . . . now YOU can take it for a change! The worst thing I can do to you... is to keep you right here, Mister, and here is where you're going to stay. Now, GET OUT!” Although Roberts eventually gets his transfer to a combat ship, many employees share his frustration when their employer denies a transfer to another location or position. If the requested, but denied, transfer involves no additional money and is not a promotion, has the employee suffered the type of adverse employment action that will support a lawsuit?  Many types of employment lawsuits require an adverse action by the employer. The classic example is firing the employee for an illegal reason, such as racial discrimination. Other examples include refusing to hire a qualified applicant, denying a promotion, or refusing to grant a raise. However, when there is no tangible benefit to the requested action, at least some precedent holds that the employee has no basis to sue, even if the denial of the requested action is based on race or another protected status. A recent decision from the Court of Appeals for the D.C. Circuit demonstrates that even an allegedly discriminatory action can fail to provide the basis for a lawsuit, if it involves only “subjective” injury to the employee. In Samuel Ortiz-Diaz v. Dep’t of Housing and Urban Development, Mr. Ortiz-Diaz had worked as an investigator in Washington D.C. under a supervisor named McCarty. Ortiz-Diaz came to believe that McCarty had issues working with Hispanic males and sought a transfer to Albany, New York or Hartford, Connecticut. His request was denied. The transfer would not have been a promotion; indeed, some evidence suggested that it might require Ortiz-Diaz to take a pay cut or reduction in job grade. Ortiz-Diaz sued, alleging unlawful race and national origin discrimination. The district court granted the government employer summary judgment, on the grounds that a purely lateral transfer was not an “adverse employment action.” On appeal, a divided D.C. Circuit court affirmed the dismissal. The majority ruled that the purely “subjective” injury of working for a supervisor who dislikes you is not a basis for a federal discrimination claim. The Court also rejected Ortiz-Diaz’s argument that a transfer would enhance his future opportunities for promotion, on the ground that that was mere speculation. The case provoked two concurring opinions and a vigorous dissent. One concurrence specifically noted that the requirement of a tangible injury would not apply to harassment cases. A second stated that the result was based only on adherence to prior precedent, and expressed his “skepticism” about the wisdom of the ruling. A third judge dissented, arguing that the evidence was disputed as to whether the transfer would actually enhance Ortiz-Diaz’s career prospects, so summary judgment was improper. The dissent also noted that other federal courts of appeal have looked more favorably on claims based on lateral transfers. The case presents several important points for the employer to bear in mind: At least in some circumstances, an employee’s claim of discrimination is not sufficient for a lawsuit, where the employer has not taken any actual (and harmful) action against the employee based on the alleged discrimination; However, any actions in the workplace based on discriminatory motives present problems and risks for employers. Ortiz-Diaz’s claims might have fared better in a different federal court, and harassment claims do not require an adverse employment action; The case also illustrates, for both employers and employees, the importance of presenting cogent, non-speculative evidence at the summary judgment stage. If Ortiz-Diaz had been able to present better evidence that the requested transfer would help his career prospects, he might well have prevailed. So unlike Mister Roberts in the movie, Ortiz-Diaz did not get his transfer and remained stuck working for McCarty in D.C. On the other hand, Mister Roberts’ transfer did not produce the desired tangible benefits either; he is killed in a kamikaze attack aboard his new ship. Be careful what you wish for.

A recent decision from the Sixth Circuit Court of Appeals highlights the distinction between firing an employee for personal or politically expedient reasons (which may be entirely legal) and firing an employee because of his or her protected status or for exercising protected rights (which is typically illegal). The decisive question answered in this case was can an employer terminate an employee currently on medical leave if the motivation for the firing is distasteful but unrelated to the leave? In Mullendore v. City of Belding, Mich., the city council may have acted less than courageously by quickly firing a controversial city manager while she was out of the office for medical reasons and therefore not around to defend herself. But there was no real evidence that her medical condition actually motivated the firing (as opposed to permitting the council to fire her without having to face her), so there was no violation of the Family Medical Leave Act (“FMLA”). Margaret Mullendore was the city manager of Belding, Michigan, working for a city council whose operations “are fairly described as being somewhat fraught with political drama.” Mullendore herself was a somewhat controversial figure, having fired a city police officer who was later reinstated, generating vocal criticism of Mullendore’s original decision. Mullendore was also an at-will employee who could be terminated at any time by a vote of the city council. In November 2014, one of Mullendore’s supporters on the city council lost a recall election to a candidate who had already openly criticized Mullendore and urged a change in the city’s administration. The new representative quickly sent the rest of the council an email advocating Mullendore’s termination. Approximately a month later, Mullendore was forced to take time off from work due to an ankle injury that required surgery. Mullendore informed the city of her need for time off, although it was a point of dispute in the case whether she had actually invoked her legal rights under the FMLA. The city was aware of her plans to take medical leave and raised no objections, even purchasing a laptop for her to make it easier to work from home during her absence. However, at a city council meeting shortly after Mullendore’s leave began, the new council member moved to terminate her employment immediately, even though there was no agenda item regarding her employment for the meeting, and Mullendore herself was not present to defend her record. The motion passed, although at least one council member was clearly reluctant to proceed in that manner. Mullendore claimed violations of the FMLA, contending that she was fired for exercising her rights under that statute. This raised two key legal questions: (1) Whether Mullendore had in fact invoked her FMLA rights or whether she was simply taking a more informal medical leave; and (2) Whether the actual reason for her termination was her FMLA-protected leave. The district court, granting summary judgment to the city, found both that Mullendore had failed to properly invoke FMLA rights when announcing her leave and that there was no evidence of illegal motive on the city’s part, i.e., that Mullendore was not fired because of her alleged exercise of FMLA rights. On appeal, the Sixth Circuit affirmed summary judgment in the city’s favor, but only on the grounds that there was no evidence of illegal motive. The Court of Appeals found that there was a factual dispute as to whether Mullendore’s actions properly invoked the FMLA, but it did not matter, since there was simply no proof that taking FMLA leave was the actual reason for Mullendore’s firing. This is often the central issue in discrimination, retaliation and other statutory employment claims: Was the protected conduct or protected status of the employee the actual reason for the adverse employment action? Mullendore tried to rely on the fact that the action occurred while she was on medical leave, but timing, while important, is not everything. This was particularly true because the new council member who spearheaded Mullendore’s firing had announced his intention to do so even before her medical condition arose. The council may have found it expedient to get rid of Mullendore while she was not present at the meeting to defend herself, but that also does not prove illegal motivation: “At best, the evidence demonstrates that the members of the City Council terminated her when she was not at their meeting because it was personally or politically expedient to do so behind her back.” That was simply not enough. The case illustrates several key features of employment claims that require proof of motive: A credible bad reason for firing someone is not a violation of the law. The court’s description of the evidence places the city council in a somewhat poor light. They appear as obsessed with political “drama,” and terminating Mullendore “behind her back” is not a particularly courageous action. But the evidence strongly – indeed, decisively – demonstrated that political drama was the basis for Mullendore’s termination and that the timing arose from the desire not to confront Mullendore rather than from any animus towards the exercise of FMLA rights. The council does not look good in this case, but it did not act illegally. Suspicious timing is often not enough. Mullendore’s strongest point was probably that the firing occurred precisely while she was on a medical leave. She argued that this at least strongly suggested that the medical leave was the (illegal) motivation for her firing. But the city council was able to point to evidence that the termination was under consideration before the medical situation arose. This made the city’s version of events (a desire to terminate Mullendore behind her back) credible and merely suspicious timing was not enough to defeat summary judgment. Two grounds for summary judgment are often better than one. In the trial court, the city won the case for two separate reasons, both the failure to formally invoke FMLA rights and the lack of evidence of illegal motive. The Sixth Circuit did not agree with the first reason, finding that there was a dispute as to whether Mullendore had properly invoked the FMLA. But the second reason stood up to appellate review, and that one reason, the lack of motive, was sufficient to preserve the city’s victory in the case.

EEOC charges are a fact of life for employers.  Even with comprehensive equal employment policies, top-notch human resources personnel, and a great workplace culture, many employers will at some point encounter a charge of discrimination or retaliation.  While any charge is an unwelcome event, the stakes increase even further if the EEOC decides to take the employer to court.  The prospect of litigating against the EEOC can be daunting.  So employers tend to breathe a sigh of relief when they learn that the EEOC has issued a right-to-sue letter in response to a pending charge, because this typically signals the end of the EEOC’s investigation (and involvement in the matter).  Although the charging party may still sue, after the EEOC issues a right-to-sue letter, is it safe for employers to assume the EEOC is safely in the rear view mirror? On August 15, 2017, the United States Court of Appeals for the Seventh Circuit decided EEOC v. Union Pacific Railroad Company, adding to current uncertainty about when the EEOC’s authority to act comes to an end.  Prior court of appeals decisions had split over the question of whether the EEOC can continue investigating after issuing a right-to-sue letter.  The Seventh Circuit sided with the Ninth Circuit in holding that the EEOC can continue to investigate, and go on to file its own enforcement action, even after issuing a right-to-sue letter.  This conflicts with an older decision from the Fifth Circuit—which held that such action exceeded the agency’s authority.  As with any circuit split, there is a chance the Supreme Court might weigh in. The underlying facts are straightforward, but the procedural history is not.  In 2011, two African-American men began entry-level jobs with Union Pacific.  They unsuccessfully applied for promotions and were eventually terminated in October 2011, when their positions were eliminated.  Both men filed EEOC charges alleging discrimination and retaliation (they had filed earlier charges after being denied the promotions).  Union Pacific grudgingly responded to the charges and to the EEOC’s first request for information, requiring an EEOC subpoena and enforcement action.  The EEOC eventually issued a right-to-sue letter pursuant to 42 U.S.C. § 2000e-(5)(f)(1), which requires the agency to issue notice of a charging party’s right to sue within 180 days after receiving a charge.  The charging parties sued in federal court.  But they ultimately lost on summary judgment, and the Seventh Circuit affirmed.  Case closed, right? Not so fast.  While the lawsuit was pending in the district court, the EEOC issued a second request for information.  When Union Pacific refused to respond, the EEOC filed suit to enforce its subpoena.  Union Pacific moved to dismiss, arguing that the EEOC lacked authority to continue investigating given that it had already issued a right-to-sue letter.  The district court denied the motion, and Union Pacific appealed. The Court of Appeals framed the legal question as “whether the EEOC is authorized by statute to continue investigating an employer by seeking enforcement of its subpoena after issuing a notice of right-to-sue to the charging individuals and the dismissal of the individuals’ subsequent civil lawsuit on the merits.”  The answer, at least in the Seventh Circuit, is “yes.” The court noted that the EEOC’s governing statutes give it the authority to request information or records only in the context of investigating a charge.  In other words, the EEOC cannot simply call up employers and ask to sift through their personnel files.  Although the EEOC must issue a right-to-sue letter within 180 days of receiving a charge, the governing statutes are silent as to what effect such a letter has on the agency’s investigative powers. With no clear-cut statutory answer, the Seventh Circuit looked to analogous cases, including the Supreme Court’s decision in EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).  In Waffle House, the Supreme Court held that a charging party’s agreement to arbitrate the claims giving rise to a charge did not prevent the EEOC from pursuing victim-specific judicial relief on behalf of the charging party.  In other words, the EEOC could go to court even though the employee could only go to arbitration.  Following Waffle House, the Seventh Circuit itself addressed a similar issue, holding that even when a charging party withdraws a charge, the EEOC can continue its investigation.  See Watkins Motor Lines, Inc. 553 F.3d 593 (7th Cir. 2009).  These decisions, buttressed by the EEOC’s own regulations, see 29 C.F.R. § 1601.28(a)(3), led the Seventh Circuit to conclude that the agency can continue investigating employers and subpoenaing their records even after issuing a right-to-sue letter. But what about the fact that the charging parties’ underlying case had been decided on the merits?  Union Pacific argued that this resolution terminated the EEOC’s authority to investigate.  Once again, the Seventh Circuit disagreed.  According to the court, the EEOC’s authority does not derive from a charging party’s claims; a valid charge irrevocably triggers the agency’s investigative and enforcement powers.  Tethering the EEOC to the private interests of the parties would undermine the agency’s mission to serve the public interest.  In short, the court held that the EEOC gets to decide when it is done investigating, not the parties. This decision has at least two important implications for employers.  First, EEOC charges are serious matters with potentially significant consequences.  Whether employers respond to charges themselves or engage outside counsel, they should ensure that their submissions to the agency are comprehensive and persuasive.  The same goes for responses to requests for information.  In 2016, the EEOC issued its first-ever nationwide procedures on how to effectively respond to charges, outlining the elements that the agency considers most important.  See U. S.  Equal Empt. Opportunity Comm’n, Effective Position Statements.  Employers are well advised to familiarize themselves with these expectations to achieve the best possible result at the agency level. Second, employers should consider pursuing a “no probable cause” finding, even after the EEOC issues a right-to-sue letter.  The agency rarely pursues an investigation after issuing a right-to-sue letter, but Union Pacific proves that—at least for now—it can still happen.  Employers and their outside counsel may want to request findings of no probable cause as a matter of course for every EEOC charge, even after the agency issues a notice of right-to-sue. Given the disparate views among the circuit courts regarding the scope of the EEOC’s authority, employers should stay tuned for future developments in this key area.  Employers should also be aware of how courts view this issue in their jurisdictions to ensure they understand the potential consequences after a right-to-sue notice issues.  Finally, employers should consider seeking legal guidance when responding to any agency charge—given the high stakes involved.

Some of the trickiest employment decisions can involve employees who have made accusatory complaints against the company they work for. Many state and federal laws protect “whistleblowers” who try to bring to light illegal behavior by their employers. But in many instances employers legitimately wonder whether the complaint was made in “good faith,” or just to stir up trouble, or even to give a soon-to-be-fired employee who was about to be fired for some other reason, an excuse to bring a lawsuit. So, is the employee’s complaint of employer wrongdoing really whistleblowing if the company already knows about the alleged wrongdoing?  How can the employee really “blow the whistle” if someone else has blown it already? An opinion issued by the Minnesota Supreme Court on August 9, 2017, answers this question favorably to the employee, expands the type of complaints that will be regarded as good faith whistleblowing, and may become the basis for more lawsuits by employees accusing employers of retaliating against them for reporting alleged wrongdoing. Previously, under Minnesota’s Whistleblower Act, Minn. Stat. §§ 181.931-.935 (2016), an employee terminated for making a complaint of illegal conduct had to demonstrate that his complaint had been made in good faith, which meant not only that the employee believed in the report he was making, but also that his purpose was to “expose an illegality.” Since the you can’t “expose” something which is already known, Minnesota law did not protect employees who complained of illegal (or allegedly illegal) conduct that the employer already knew about. But in 2013, the Minnesota Legislature amended the statute to provide a specific definition of “good faith,” which focused on the employee’s belief that his report was true, but said nothing about intending to expose an illegality. In Friedlander v. Edwards Lifesciences, LLC, et al., A16-1916 (Minn. Aug. 9, 2017) (“Friedlander”), the Minnesota Supreme Court held that the Legislature intended to get rid of the requirement of exposing an illegality, and that whistleblowing activity is protected even if it is just the same old tune that the employer had heard before. Although the statute was amended in 2013, until Friedlander it was not clear whether the “expose an illegality” requirement remained part of the law, as that mandate did not appear in the text of the 2013 Whistleblower Act. In Friedlander, an employee sued his former employer in the federal court under the Minnesota Whistleblower Act, claiming that his superiors had been engaged in legal violations, which the employee had reported directly to the superiors prior to his termination. The employer moved to dismiss the lawsuit, arguing that because the employer reported the allegedly wrongful conduct to people who already knew about the conduct, he had not “exposed” the allegedly illegal conduct to anyone. The success of the employer’s motion therefore turned on whether the 2013 amendments eliminated the Whistleblower Act’s “expose an illegality” requirement. Because no court had yet addressed that issue, the Minnesota District Court referred the question to the Minnesota Supreme Court, which ruled unanimously in favor of the employee. In Friedlander, the Minnesota Supreme Court concluded that the 2013 amendments eliminated the “expose an illegality” requirement. Following Friedlander, a whistleblower’s report is made in “good faith” if the report is “not knowingly false or made with reckless disregard of the truth.” Friedlander therefore simplifies what an employee has to prove in order to sue under the Whistleblower Act. It serves as a reminder to employers that firing an employee who has complained about possibly illegal activities at the company must be addressed with care. It remains perfectly legal to fire such employees for other, legitimate reasons, but not because their whistleblowing. Employers should therefore take care to ensure that any termination, demotion, pay cut, or other personnel action being considered for an employee who has reported actual or suspected illegal conduct is taken for legitimate business reasons, not because of the employee’s report.

A recent case from the Fourth Circuit illustrates the risks for employers posed by the obligation to reasonably accommodate religious objections to workplace rules and practices under Title VII.  How should an employer handle accommodation requests based on religious beliefs that the employer views as misguided or even crazy?  A sincere religious belief, even if non-traditional or highly idiosyncratic, must often be reasonably accommodated by the employer, as recently demonstrated in EEOC v. Consol Energy, Inc., Case No. 16-1406, a case decided by the Fourth Circuit on June 12, 2017. “The Mark of the Beast” The case arose out of what defendant Consol Energy surely regarded as a non-controversial upgrade of its attendance monitoring system.  The coal mining company began using a biometric hand-scanner to record attendance, believing the system would be more reliable and accurate than an old-fashioned time clock or a requirement to report to a supervisor. However, one of its miners, Beverly Butcher, who had worked at Consol for 37 years without incident, was a life-long evangelical Christian (and ordained minister) who believed that the biometric scanner would place the “Mark of the Beast” on his hand.  The Mark of the Beast (sometimes called the Number of the Beast) is a concept from the Book of Revelation that has been the subject of widely varying interpretations.  Mr. Butcher apparently regarded it as a brand possessed by followers of the Antichrist which allows the Antichrist to manipulate them.  He maintained that using the biometric scanning system would place the Mark of the Beast on him, even though the system leaves no actual “mark” of any kind.  He also insisted that this problem would persist even if he was allowed to use his left hand for scanning purposes (the Bible speaks of the Mark of the Beast only on the right hand).  Mr. Butcher’s beliefs were certainly idiosyncratic; his own pastor declined to fully endorse them when asked by the company.  But they were also sincere beliefs; no one questioned that Mr. Butcher actually believed that the biometric scanner would imperil his salvation. Butcher sought permission to record his attendance in other ways.  After considerable discussion back and forth between Butcher and Consol, Consol simply insisted that he use the scanner or be subject to discipline, which would eventually include termination.  Butcher retired instead, even though he would have preferred to continue working. Subsequently, however, Butcher learned that Consol was willing to allow two other employees to avoid using the scanner.  Two employees with hand injuries could not use the scanner, so they were allowed to enter their employee number on a key pad, an accommodation which imposed no cost or inconvenience.  Butcher complained of religious discrimination (since accommodations to the scanner were readily available for non-religious reasons).  The EEOC brought suit on his behalf, claiming failure to accommodate sincerely held religious beliefs, a violation of Title VII. Sincere Belief and Reasonable Accommodation Butcher prevailed at trial and was awarded $600,000 in compensatory damages and lost wages.  His claim for punitive damages was denied, however, on the grounds that Consol’s behavior was not egregious enough to warrant that relief.  The Fourth Circuit affirmed the verdict on appeal.  The court noted that the elements of a religious accommodation claim are (1) the employee holds sincere religious beliefs; (2) the employee informs the employer of the beliefs; and (3) the employer nevertheless takes adverse action against the employee based on the religious beliefs. As the Fourth Circuit viewed the case, the central problem was that Consol simply disagreed with the substance of Butcher’s religious beliefs.  The company did not think that its scanner placed the Mark of the Beast on Butcher.  Consol relied on the fact that the hand scanner system did not make any physical mark on the employee and therefore could not actually brand him with the Mark of the Beast.  But that was not what Butcher sincerely believed.  Similarly, even though the Bible discusses the Mark of the Beast as something found on the right hand, Butcher sincerely believed that scanning his left hand would cause the same problem.  Consol believed he was wrong in his beliefs, but that is not the test.  He was sincere. The court also noted that Consol was perfectly willing to accommodate non-religious inability to use the scanner system; the other two employees with injury issues were allowed to enter their employee numbers on a key pad; and this caused no problems and imposed no costs, as the company itself admitted.  Therefore, Butcher had a sincere religious objection, and an easy, effective accommodation was available.  The company’s refusal to extend this accommodation to the employee based on his religious objections violated Title VII. Compensatory Damages, Lost Wages, and Punitive Damages The case also illustrates how Title VII claims can produce substantial damage awards.  Butcher found replacement employment after some time and also began drawing his pension from Consol, since he had technically retired from the company.   Consol claimed that the pension should be an offset to his lost wage claim.  The court disagreed, finding that the pension was a “collateral” source of income and did not reduce the lost wages portion of the employee’s recovery.  Butcher also recovered $150,000 in “compensatory” damages, which are independent of the direct economic impact of the violation. However, Consol did prevail on the question of punitive damages.  The court found that even though the company violated Title VII by failing to Butcher, it took his concerns seriously, engaging in lengthy discussions in an attempt to find a mutually acceptable accommodation. Lessons Learned The case illustrates the following key points: The duty of religious accommodation does not depend on the employer’s opinion of the merits of the employee’s religious belief. The test is the employee’s sincerity in his or her beliefs. In virtually any discrimination case, the employer’s inconsistency is likely to be fatal to its defense. Here, Consol readily accommodated employees who had non-religious issues with the scanner.  The court thus had no difficulty in concluding that the only reason for the refusal to accommodate Butcher was his religious beliefs. When a requested accommodation is extremely simple and inexpensive, courts tend to have little sympathy for an employer unwilling to apply it. Here, the keypad system was already in place for the two other employees and imposed no cost or inconvenience.  There was no issue of “undue hardship.” Title VII damages can be substantial and can greatly exceed the pure economic loss suffered by the employee. Butcher recovered $150,000 in “compensatory” damages and was able to recover lost wages even though he was also drawing his company pension for the same time period.

Use of profanity by employees, whether in the workplace, outside the workplace, or on social media, presents difficult legal issues for the employer, as highlighted by a recent Second Circuit Court of Appeals decision overturning the firing of an employee who engaged in a highly profane Facebook rant against a supervisor. Although an employer has a justifiable interest in keeping profanity out of the workplace, its interest does not overshadow an employee’s Section 7 protected rights to engage in concerted activity under the National Labor Relations Act (“NLRA”). In yet another NLRA-social media decision (see here and here), the court considered whether the vulgar and offensive language – directed at a supervisor – in an employee’s statement advocating for unionization is protected activity under the NLRA. See NLRB v. Pier Sixty, 855 F.3d 115 (2d Cir. 2017).  The court held that language was protected and overturned the company’s termination of the employee in question. Two days before a union election, an employee posted the following statement on Facebook: Bob is such a NASTY MOTHER F***ER don’t know how to talk to people!!!!!! F*** his mother and his entire f***ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!! The post was visible to the public for three days before the employee took it down. Company management saw the post before it was removed and terminated the employee. An unfair labor practice charge followed shortly afterward, alleging a violation of section 8(a)(1) of the NLRA. Section 7 of the NLRA guarantees employees the right to “self-organization, to form, join, or assist labor organizations . . . and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  29 U.S.C. § 157 (emphasis added).  Section 8(a)(1), in turn, protects these rights by prohibiting employers from interfering with, restraining, or coercing employees in the exercise of these rights.  29 U.S.C. § 158(a)(1).  Ordinarily, an employer is prohibited from discharging employees for participating in union-election activity, and the employee’s Facebook post did explicitly call for a pro-union vote in the upcoming election.  But the protections of the NLRA are not absolute.  The National Labor Relations Board (“NLRB” or “Board”) has long held that an employee engaged in “ostensibly protected activity may act in such an abusive manner that he loses the protection” of the NLRA. See NLRB v. City Disposal Sys., Inc., 465 U.S. 822, 837 (1984). Here, the NLRB had ruled in favor of the employee. The Second Circuit upheld the Board, agreeing that the statement came close to, but did not cross, the line.  The Board and the court applied a “totality-of-the-circumstances” test.  Although the court gave considerable deference to the Administrative Law Judge’s factual findings (which were upheld by the Board), employers can find some comfort in the court’s note that the post seems “to sit at the outer-bounds of protected, union-related comments.” The court provided several reasons for its decision: First, although the post can be characterized as “dominated by vulgar attacks” on the supervisor, the message addresses the workplace concern of how management treats employees, qualifying the post as “concerted activity for the purpose of collective bargaining.” Second, profanity among employees had been consistently tolerated by the employer, so it could reasonably be inferred that the employee was not fired for mere profanity, but for the protected, union-related content of the comment. Third, the employer had engaged in other unlawful, anti-union conduct as the election approached, including threatening pro-union employees with the loss of their jobs or benefits, and by implementing a “no talk” rule prohibiting discussion of union issues. Fourth, the court gave some weight to the fact that this post was made on Facebook—“a key medium of communication among coworkers and a tool for organization in the modern era,” and that the employee apparently (although erroneously) believed the post would not be publicly available. The court found that the Facebook posting was different from an outburst in the presence of customers. Accordingly, there are a few takeaways for employers to keep in mind. Implement a Clear, Written Policy. To effectively discipline employees for using offensive or vulgar language at the workplace, employers should have a clear written policy against profanity that informs employees of the rules regarding the use of profane or vulgar language in their interactions with colleagues and customers. The policy should specify the consequences for violations. Enforce the Policy Consistently and Uniformly. Employers should be consistent in enforcing any policy against profanity in the workplace. Past failures to enforce or to impose appropriate sanctions may tie the employer’s hands in future situations where a sanctionable activity may arguably be clothed with NLRA-protection. (Consistency would necessarily include, for example, applying the policy to profanity by supervisors and managers as well as by line employees. The employer’s tolerance of profanity by supervisors was cited by the court as proof of inconsistent enforcement.) Consistent and uniform enforcement of the policy is key. Be Careful Not to Limit Protected Activities. The enforcement of a policy against profanity or other inappropriate conduct must be balanced against an employee’s right to engage in protected activities under the NRLA. The employer’s other anti-union conduct in the Pier Sixty case was a factor in the decision. The Pier Sixty court has made clear that not all offensive language loses NLRA-protection. This decision confirms courts’ willingness to broadly construe the coverage of the NLRA, especially when considering employee activities on social media. Employers should carefully consider the context of potential profanity policy violations before taking disciplinary actions. When faced with the question of whether to fire an employee who uses vulgar and offensive language in a Facebook post directed at a supervisor and her family, you should first determine whether the subject matter of the Facebook comment touches on any workplace concerns. If not, there may not be NLRA- protected conduct. But if the subject matter—notwithstanding the vulgarity—is arguably related to working terms and conditions, you should take extra caution to make sure that any discipline will not run afoul of the NLRA. Consider the company’s practice with regard to policing profanity at work. If the company has tolerated profanity use among its employees in the past, you may not be in a good position to sanction an employee for a statement that, although offensive, may be protected under the NLRA.

In an unexpected decision, on Tuesday, November 22nd, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against implementation of the Department of Labor’s (“DOL’s”) controversial final Rule expanding overtime eligibility for millions of workers, which was set to take effect on December 1st. The DOL’s new Rule, issued on May 18, 2016, nearly doubled the salary threshold for the so-called “white collar exemptions” from the Fair Labor Standards Act’s (“FLSA’s”) minimum wage and overtime requirements. Under the old Rule, employers satisfied the minimum salary threshold if they paid exempt employees a salary of $23,660 annually (or $455/week). The new Rule increased this requirement to $47,476 annually (or $913/week). According to the DOL, this new threshold was set based on the salary level at the 40th percentile of earnings for full-time workers in the lowest-wage Census Region (which currently is the South). See DOL Factsheet, Final Rule to Update the Regulations Defining and Delimiting the Exemption for Executive, Administrative, and Professional Employees, available at https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm. Since the 1940s, the DOL’s regulations have required employers to satisfy both a “salary” and a “duties” test in order to classify employees as exempt executive, administrative, or professional employees. The DOL last updated the minimum salary requirement in 2004. When it issued the new minimum salary requirement in May 2016, the DOL stated that in focusing on the salary component in its new Rule, its intent was to “simplify the identification of overtime-protected employees, thus making the [executive / administrative / professional] exemption easier for employers and workers to understand and apply.” See DOL Factsheet, supra. The DOL observed that—absent an upward salary adjustment by their employers—the new Rule would expand the right to receive overtime pay to approximately 4.2 million workers currently classified as exempt. See id. Despite this lengthy regulatory history, in deciding to issue a nationwide preliminary injunction, U.S. District Judge Amos Mazzant held that while Congress delegated significant authority to the DOL to define exempt duties, it did not authorize the DOL to limit application of the white collar exemptions based on salary level. The District Court noted: “While [Congress’s] explicit delegation would give the [DOL] significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing in the [executive / administrative / professional] exemption indicates that Congress intended the [DOL] to define and delimit with respect to a minimum salary level.” As such, in promulgating the May 2016 final Rule, “the [DOL] exceed[ed] its delegated authority and ignore[d] Congress’s intent by raising the minimum salary level such that it supplants the duties test.” Although the District Court stated that its decision applies only to the DOL’s May 2016 final Rule – and expressly disclaimed an intent to make a “general statement on the lawfulness of the salary-level test for the [executive / administrative / professional] exemption” – proponents of the DOL’s final Rule likely will continue to argue that the District Court’s decision runs counter to an established understanding of the state of the law and considerable judicial precedent across the country enforcing the DOL’s minimum salary requirement for decades. Indeed, despite the District Court’s attempt to limit its holding, the court’s rationale would appear to have considerably broader implications than an injunction only against the new minimum salary requirement. Yesterday’s preliminary injunction is a welcome development for employers concerned about the DOL’s abrupt and significant increase in the minimum salary requirement for the white-collar exemptions. It is clear that the new minimum salary requirement will not go into effect for U.S. employers on December 1, 2016, as anticipated. However, employers should not assume that the DOL’s final Rule is dead. The District Court’s order only imposes a preliminary injunction, which the District Court could lift itself after further litigation, although that outcome seems relatively unlikely at present. The DOL also could appeal any final injunction to the United States Court of Appeals for the Fifth Circuit, a possibility that also is uncertain given the imminent change in presidential administrations. Further, future litigation will determine whether the Eastern District of Texas’s rationale could be adopted more broadly to have a more sweeping effect on the longstanding salary basis test. While the future of the DOL’s new minimum salary requirement is now uncertain, employers should remember that the duties requirements for the FLSA’s white collar exemptions remain intact. Employers should remain diligent in ensuring that only those employees whose primary duties satisfy one or more of the applicable exempt duties tests are treated as exempt from overtime requirements. Employers also should remain aware of exemption requirements under applicable state law, which are unaffected by developments at the federal level. For example, employers must remember that during the period the injunction is in effect, they still must comply with varying state-level minimum salary requirements that are higher than the existing federal minimum. For example, California requires that white-collar exempt employees be paid a monthly minimum salary of at least twice the state’s minimum wage. California’s minimum wage will increase starting January 1, 2017, with annual increases thereafter. As of January 1, 2017, the California salary minimum will be $43,680, lower than the $47,476 proposed requirement at issue but far above the current federal salary requirement.

Question:  We operate a financial services firm that employs account executives who execute investment trades on behalf of clients.  One of our brokers recently resigned to move to a competitor firm.  With his resignation letter, he included a list of clients he plans to solicit at his new firm.  This list includes clients with whom the broker may have had some association, but it’s not clear he ever executed commission-generating trades for them.  The broker signed a non-solicitation agreement with us when he started.  Can we stop him from soliciting these clients at the new firm? Answer: By Dorsey & Whitney Enforcement of restrictive covenants like non-compete, non-solicit, and non-disclosure agreements is highly dependent upon the industry in which the covenant is sought to be enforced. Nowhere is that more true than in the financial services industry.  As a result of an agreement initially signed a dozen years ago by a handful of the largest financial firms and now having over 1,000 firm signatories, there exists an established methodology for a financial advisor or broker to depart a firm which, if followed, protects the broker and the new firm from litigation over the departure while protecting client privacy. The methodology is found in the Protocol for Broker Recruiting, which applies only to broker moves between Protocol signatories. (The Protocol applies to “registered representatives” – we’ll use the shorthand “broker” here.)  Frequently, however, brokers and firms either mistakenly or deliberately disregard the Protocol, so financial firms must remain vigilant in protecting their valuable confidential information, client relationships, and goodwill.  Thus, the first necessary piece of information to answer your question is whether you and the competitor are Protocol signatories. The Protocol itself is rather simple. A broker transitioning between signatory firms may take only the following information:  “client name, address, phone number, email address, and account title of the clients that they serviced while at the firm.”  The broker is prohibited from taking any other information or documents.  To gain protection under the Protocol, the broker must resign in writing, deliver the resignation to local branch management, and include with the resignation letter a copy of the client information that will be taken, including account numbers.  The broker’s compliance with the Protocol need not be perfect – s/he need only exercise “good faith” and “substantially comply” with the requirements. The Protocol also places obligations upon the broker after leaving the prior firm, and upon the new firm. The information taken by the broker may be used only for solicitation of the former clients by the broker, and only after the broker has actually joined the firm.  In other words, the broker may not start soliciting clients to move to the new firm while the broker is still engaged with the old firm (but planning to move), nor may client information be shared at the new firm for solicitation by other brokers.  The Protocol also contains requirements regarding the movement of broker teams or partnerships and governing trailing commissions. Many brokers have executed agreements with firms containing terms prohibiting solicitation of customers or retention of customer lists. So long as the old and new firms are signatories to the Protocol and the broker substantially complies in good faith with its terms, the Protocol protects the broker from liability to the old firm for retaining the information identified in the Protocol or soliciting clients on behalf of the new firm.  But if a broker or new firm violates the Protocol, the former firm may be in a good position to file suit and seek immediate injunctive relief barring the broker and the new firm from irreparably damaging the former firm’s business. There are several points to consider when analyzing potential legal action when the Protocol is at play. First, not all firms are Protocol members. Over 1,000 firms have joined the pact, including almost all of the major financial services companies, but many smaller brokerages are not. And those smaller brokerages frequently seek to poach successful brokers from more established signatory firms.  If the new firm is not a Protocol signatory, then a broker taking client information, even under the Protocol’s methodology, could violate the broker’s non-compete or non-solicitation obligations and subject the broker and the new firm to liability.  Firms should beware of the situation of a broker claiming she acted in “good faith” because she thought the new firm was a Protocol signatory.  If the new firm misled the broker into that mistaken belief, liability may lie against the new firm for claims like tortious interference with contract or misappropriation of trade secrets. Second, only “good faith” compliance with the Protocol provides protection. There continue to be examples when brokers purport to comply while secretly violating the Protocol, often by stealing confidential client or firm information beyond the information disclosed with the broker’s resignation letter (e.g., detailed client account history).  This theft can occur in any number of ways – emailing a personal email account, copying information to thumb drives, or simply walking out the door with confidential hard copy documents.  Firms should establish best practices for when brokers depart, including review of the broker’s email activity in the months preceding the resignation.  If the firm suspects wrongdoing, further investigation may be warranted, such as forensically examining the broker’s computer for electronic evidence of wrongdoing, reviewing office copy machine electronic records, or even watching building surveillance tapes. Third, and more specifically to your question, client information that permissibly may be taken covers only clients that were actually serviced by the broker at the former firm. This issue recently was litigated before a Connecticut federal court in Westport Resources Management v. DeLaura (June 23, 2016), with the broker arguing that client “service” included any efforts the firm made on behalf of the clients. In that case, the broker was employed by two related entities, and when he resigned both to move to a new firm, he included with his resignation letter clients of one entity even though the services he provided were through the other entity.  The former entity sued under the broker’s non-solicit agreement.  The court held that “services” under the Protocol meant “what clients pay registered representatives to do on their behalf” – in other words, something for which the broker normally would receive a commission.  The court held that because the broker had not received any commissions from the entity with which the clients were associated, they were not clients that the broker serviced at that entity.  Applied to your question, you may have a claim against your former broker since it sounds like he never performed work for certain clients he included with his resignation letter. Fourth, solicitation of former clients is permissible only after the broker has joined the new firm. Brokers are often tempted to start priming the pump before they depart, either secretly or overtly (and increasingly through social media) telling clients of their plans to move firms and inviting the clients to follow.  This sort of pre-move solicitation is explicitly prohibited under the Protocol, is typically forbidden under non-solicitation agreements, and should be investigated by firms in the same manner described above. Fifth, the Protocol does not immunize corporate raiding, i.e., one firm targeting another firm to steal a group of employees. Raiding claims can be challenging to prove, and often rely on some evidence that the new firm used the former firm’s confidential information or trade secrets to aid in its improper recruitment, or that the new firm has undertaken a deliberate pattern of soliciting a competitor’s key employees with the purpose of damaging the competitor’s ability to compete.  Firms may therefore have reason to be concerned when several brokers move to another firm, even when the competitor is a Protocol signatory. Finally, whether the Protocol is implicated or not, firms must be mindful that legal claims will be governed by applicable state or federal laws. States take a variety of approaches to enforcement of non-compete, non-solicit, and non-disclosure agreements, and both state and federal law may apply to a trade secret misappropriation claim.  In addition, agreements frequently contain clauses dictating where litigation may occur and what law applies.  These issues should be fully investigated before a firm decides whether to bring suit against a former broker or competitor firm.

QUESTION: We conduct drug testing whenever an employee is injured at work or in involved in an accident. I recently read that this may violate OSHA’s anti-retaliation rule. How can that be? I would think OSHA would want employers to drug test to keep workplaces drug-free and safe. Short Answer: Rebecca Bernhard Drug testing raises complex issues, which the law addresses in complex ways. Although safe workplaces are in everyone’s interest, drug testing also implicates privacy concerns and, specifically in the case of OSHA, concerns that employees might conceal important health and safety concerns in order to avoid a drug test. As a further complication, workplace drug testing implicates both state and federal law, and multiple state and federal agencies regulate it. You can still test your employees under appropriate circumstances, but you will need to be careful to comply with all applicable laws. Detailed Answer: Before addressing your specific question about the Occupational Safety and Health Administration (“OSHA”), we need to emphasize that multiple statutes and regulations govern drug testing in the workplace. As an example, in Minnesota workplace drug testing is governed by Minn. Stat. §§181.950-957, which impose detailed requirements on workplace drug testing. Various federal agencies, including the Department of Transportation, the Department of Defense and others, have their own drug testing requirements. The details of these programs are beyond the scope of this post, but you will need to conform your drug-testing program to all applicable legal requirements. OSHA does require employers to provide safe workplaces for its employees but it does not require employers to drug-test. Your question was likely prompted by reading about OSHA’s new electronic reporting Rule, which takes effect on January 1, 2017. As part of this new rule, OSHA also prohibits employers from discouraging workers from reporting an injury or illness. This anti-retaliation provision of the new rule took effect on August 10, 2016, but OSHA has delayed enforcement until November 1, 2016, to allow it time to provide outreach to employers. The new Rule provides that employers must, among other obligations, establish a “reasonable procedure” for employees to promptly and accurately report work-related injuries and illnesses. The Rule prohibits this procedure from “deterring or discouraging” a reasonable employee from accurately reporting a workplace injury or illness, and it also requires employers to proactively advise employees that they will not suffer any retaliation for such reporting. Although the final Rule does not specifically mention drug-testing policies, OSHA commentary makes clear that such policies will now face scrutiny because, according to OSHA, post-injury/accident testing has the potential to deter injury reporting. The Administration has indicated that such testing will pass muster only if (1) it is limited to circumstances where employee drug use likely contributed to the underlying incident; and (2)testing methods are tailored to identify impairment during the incident (as opposed to identifying general prior drug use). It is important to note, however, that when it announced the new Rule, OSHA emphasized that drug testing performed by employers to comply with federal or state laws or regulations does not run afoul of OSHA regulations See our earlier article for an overview of the relevant Rule provisions and more complete discussions of the practical implications of the same in order to help employers prepare for their pending new, and somewhat ambiguous, obligations: https://www.dorsey.com/newsresources/publications/client-alerts/2016/07/new-osha-rule-effective-next-month . Employers who wish to continue testing employees for drug use following an accident or workplace injury should consider reviewing their drug-testing policies to confirm that their post-accident/post-injury testing will conform to OSHA’s guidance. In accordance with applicable state law, employers could fold their post-accident/injury testing into their reasonable-suspicion testing, with language clarifying that post-injury/accident testing will take place only where circumstances suggest the employee’s conduct has caused the accident or injury in question. In addition, employers should consider adding policy language clarifying that—at least for post-accident/injury testing—they will utilize tests that measure only very recent drug use. The foregoing measures arguably should, as required under the new Rule: (1) reasonably tailor testing to those workplace incidents where there is reason to suspect drugs and/or alcohol may have played a role; and (2) ensure related testing methods are designed to show whether the employee was in fact impaired at the time. More specifically, by limiting testing to those circumstances where there is reason to believe the employee’s conduct was responsible for an accident or injury, employers are precluded from testing in any circumstance where it is clear the incident was caused by factors unrelated to employee conduct (e.g., faulty equipment, force majeure, etc.). By further tailoring testing methods to measure only very recent use, employers may demonstrate that they are not testing with any over-reaching motive to “catch” employee drug use that is remote in time and thus unrelated to the incident in question. Finally, employers should confirm that their reporting procedures contain the required provisions of informing employees of their right to report work-related injuries and illnesses free from retaliation.