Second Court Allows Medical Marijuana User to Pursue Employment Claim

By: Karen L. Piper

Connecticut’s medical marijuana law specifically prohibits employers from refusing to hire or discharging a medical marijuana user. In Noffsinger v SSC Niantic Operating Company, LLC (Case No. 3:16-cv-01938, D. Conn., August 8, 2017), the plaintiff was offered a job as director of recreation therapy at a nursing facility. She quit her existing job to accept the new job. At a meeting to “complete paperwork and a routine pre-employment drug screen,” the candidate told the new employer that she used medical marijuana prescribed for PTSD at home in the evenings and was never impaired at work. A week later, after the candidate tested positive for [medical] marijuana, the job offer was rescinded. The candidate sued for violation of the state’s medical marijuana law.

The employer responded that federal law, including the Controlled Substances Act (“CSA”) and the Americans with Disabilities Act (“ADA”) preempted the candidate’s state law claims. The federal district court in Connecticut rejected this defense.

To establish preemption, the employer had to show there was an “actual conflict” between federal law and the state medical marijuana law. Although the CSA prohibits the use, possession and distribution of marijuana, it does not prohibit employment of a marijuana user; the CSA does not “regulate employment practices in any manner.” The court specifically distinguished Michigan’s medical marijuana case (Casias v Wal-Mart Stores, Inc., 695 F3d 428 (6th Cir. 2012)) because, unlike Connecticut’s law, Michigan’s medical marijuana law does not impose restrictions on employers.

The court also rejected the employer’s argument that the ADA preempted the state marijuana law. The employer cited several provisions of the ADA that indicate the ADA does not protect users of illegal drugs, including provisions which state: 1) an employer can prohibit the illegal use of drugs; 2) an employer may hold an employee who uses illegal drugs to the same employment standards as other employees; and 3) nothing in the ADA should be construed to encourage or prohibit drug testing. The court ruled none of these ADA provisions preempted the anti-discrimination provision in Connecticut’s medical marijuana law.

The Noffsinger case is the second case in less than 30 days to allow a medical marijuana user to pursue an employment claim. Last week this author wrote about a Massachusetts case which decided, based on Massachusetts’ disability discrimination law, the employer was  required to 1) engage in the interactive process to determine whether there were “equally effective medical alternatives to the prescribed medication whose use would not be in violation” of the employer’s policy prohibiting marijuana; and 2) if there were no equally effective alternative, to show that the employee’s use of marijuana would cause an “undue hardship to the employer’s business” to justify its failure to accommodate. Barbuto v Advantage Sales & Marketing LLC, Case No. SJC-1226, July 17, 2017.

Michigan already allows medical marijuana users to collect unemployment benefits. These cases likely will motivate medical marijuana users to expand workplace protections for medical marijuana users. When faced with an issue involving medical marijuana in the workplace, consult experienced employment counsel, such as the author.

This article was written by Karen L. Piper, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to:  http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. August 2017.

Massachusetts Medical Marijuana User’s Disability Discrimination Claim Reinstated

By: Karen L. Piper

Massachusetts has a medical marijuana law similar to Michigan’s Medical Marijuana Act (“MMMA”) that allows individuals to use marijuana for medical purposes when prescribed by a licensed physician. Massachusetts law says medical marijuana users “shall not be penalized under Massachusetts law in any manner.”

Cristina Barbuto applied for a job with a sales and marketing agency. Barbuto accepted an offer, and then was told there was a drug test. She notified her new employer that she used medical marijuana at home in the evening a few times a week for her Crohn’s disease. The employer told her it would not be a problem. She took the drug test, attended training for one day and worked the next day. That evening she was terminated for testing positive for marijuana. She sued for disability discrimination under state law. Barbuto v Advantage Sales & Marketing LLC, Case No. SJC-1226, July 17, 2017.

The employer responded that the only accommodation the employee sought – her continued use of medical marijuana – “is a federal crime” and “we follow federal law. Thus, accommodating the employee was “facially unreasonable.” It also argued that Barbuto was not discharged because of her disability, but because she failed a drug test that was uniformly required of all new hires.

The lower court dismissed her claim. On July 17, 2017, Massachusetts’ highest court, the Supreme Judicial Court, reinstated her claim. It ruled employers can be held liable for disability discrimination if they fire a medical marijuana user. The Court ruled that an exception to the employer’s drug policy would be a “facially reasonable accommodation” where the employee’s physician opined that medical marijuana was the “most effective medication for the employee’s debilitating medical condition.” And, even if the exception were facially unreasonable, the employer was obligated to engage in a two-step process: 1) engage in the interactive process to determine whether there were “equally effective medical alternatives to the prescribed medication whose use would not be in violation” of the employer’s policy; and 2) if there were no equally effective alternative, show that the employee’s use of marijuana would cause an “undue hardship to the employer’s business” to justify its failure to accommodate.

The Court also rejected the employer’s argument that terminating an employee for using a prohibited drug was not discrimination based on disability. Using this logic, “a company that barred the use of insulin by its employees in accordance with a company policy would not be discriminating against diabetics because of their handicap, but would simply be implementing a company policy prohibiting the use of a medication. Where, as here, the company’s policy prohibiting any use of marijuana is applied against a handicapped employee who is being treated with marijuana by a licensed physician for her medical condition, the termination of the employee for violating that policy effectively denies a handicapped employee the opportunity of a reasonable accommodation, and therefore is appropriately recognized as handicap discrimination.”

The Court made clear that it was not deciding that the employee had suffered disability discrimination; only that the employee’s claim should not have been summarily dismissed. The employer could offer evidence at trial to meet its burden that the accommodation would pose an undue hardship, e.g., because the employee’s use of marijuana would adversely affect her job performance or might pose a significant safety risk. It should be noted that proving either of these effects would be difficult in this case. The employer had little to no data on which to make this type of showing because the employee was terminated after only one day on the job.

While not binding on other courts, lawyers and commentators have expressed concern that the Massachusetts ruling could be adopted by courts in other states and lead to requiring employers to grant exceptions to drug policies for medical marijuana users.

It should also be noted that this case was decided under state disability law, not the Americans with Disabilities Act (“ADA”). Filing a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) is a prerequisite to filing an ADA lawsuit. However, the EEOC does not accept for processing charges of disability discrimination involving medical marijuana.

There are no published decisions involving a Michigan employee suing his employer for disability discrimination after being discharged for testing positive for [medical] marijuana. In one case an employee who was discharged for medical marijuana sued for wrongful discharge and violation of the MMMA. Like Massachusetts law, the MMMA provides that a medical marijuana user shall “not be subject to penalty in any manner.” The Sixth Circuit Court of Appeals ruled the MMMA “does not impose restrictions on private employers” and dismissed the employee’s claims. Casias v. Wal-Mart Stores Inc., 695 F.3d 428 (6th Cir. 2012). If faced with a medical marijuana issue in the workplace, consult experienced employment counsel, such as the author.

This article was written by Karen L. Piper, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to: http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. August 2017.

 

OFCCP Announces New On-Line Directory

By: Karen L. Piper

On Friday, July 21, 2017, the Office of Federal Contract Compliance Program (“OFCCP”) announced a new on-line directory to assist federal contractors in identifying prospective minority, female, disabled and veteran job seekers. The directory is called the Employment Referral Resource Directory (“ERRD”). The Directory contains lists of organizations that have “agreed to be recruitment and job referral sources for contractors seeking qualified job applicants.”

The web page says employers can seek information on-line or download a directory in an Excel spreadsheet by region and/or state. The sheet for Michigan contains 32 entries. This is good news because many of the organizations identified by OFCCP in 2013 when the OFCCP set specific goals and benchmarks for hiring and retaining protected veterans and individuals with disabilities are no longer around. Hopefully, the new lists will assist federal contractors who are required to write affirmative action plans to locate qualified protected veterans and individuals with disabilities.

The web page is: https://ofccp.dol-esa.gov/errd/index.html utm_campaign=&utm_medium=email&utm_source=govdelivery\

If you have questions about affirmative action obligations, consult experienced employment counsel, such as the author.

This article was written by Karen L. Piper, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com.  For further information, go to:  http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. August 2017.

 

Important News: USCIS Issues Another New Form I-9

By: Karen L. Piper

On July 17, 2017, the U.S. Citizenship and Immigration Services (USCIS) issued a revised version of the Form I-9, “Employment Eligibility Verification,” which is used to verify the identity and work eligibility of every new employee hired, or for the reverification of expiring employment authorization of current employees (if applicable).  The newly revised form contains the date of 07/17/17 N on the lower left hand corner.

Here are the key effective dates:

Now Through September 17, 2017

  • Employers may use the new form, Form I-9 (07/17/17 N) with an expiration date of August 31, 2019, or
  • Employers may use the form with the revision date of 11/14/16 N, which is the form employers were required to start using as of January 22, 2017.

September 18, 2017 and Beyond

  • All employers must begin using the new form 07/17/17 N.
  • Employers who fail to use Form I-9 (07/17/17 N) on or after September 18, 2017 may be subject to all applicable penalties under section 274A of the Immigration and Nationality Act, 8 U.S.C. 1324a, as enforced by U.S. Immigration and Customs Enforcement (ICE).

The USCIS made no changes to the existing storage and retention rules for any previously completed Form I-9.

In addition to above Form I-9 changes, the USCIS issued a revised “Handbook for Employers: Guidance for Completing Form I-9” which includes revisions to both the Form I-9 Instructions and the List of Acceptable Form I-9 Documents sections.  The noteworthy changes are these:

The instructions on Section 2 have been modified slightly to state: “Employers or their authorized representative must complete and sign Section 2 within 3 business days of the employee’s first day of employment.”

The List C documents have been renumbered, the Consular Report of Birth Abroad (Form FS-240) was added as a List C document, and all the certifications of report of birth issued by the Department of State (Form FS-545, Form DS-1350, and Form FS-240) have been combined.

Takeaways

These changes indicate that the Trump administration is focused on I-9 compliance so heightened federal enforcement may be on the horizon.  Now is the time to ensure that your I-9 form policies and practices are in order, and that your Section 2 completers/representatives are properly trained, and that you are ready for any Form I-9 audit by ICE.  If you have questions about the new form, consult experienced employment counsel such as the author.

This article was written by Karen L. Piper, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com.  For further information, go to:  http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article.  July 2017.

Dropping The F-Bomb Was Protected Concerted Activity Under Federal Labor Law

By: Claudia D. Orr

Any of you who have been in a contentious union drive know how heated things can become.  In National Labor Relations Board v. Pier Sixty, LLC, 855 F.3d 115 (2nd Cir. 2017), the Second Circuit reviewed some fairly egregious postings by an employee on social media and found it to be protected concerted activity under the National Labor Relations Act (“NLRA”). If you have a non-union workplace, don’t stop reading.  The activity reviewed below does not need to occur during a union drive or even in a union shop. Concerted activity is protected under the NLRA in a non-union workplace, including your company, so it is important for you to understand just how broad concerted rights are.

For any reader who is not familiar with protected “concerted” activity under the NLRA, it allows 2 or more employees to take action for their mutual aid or protection regarding terms and conditions of employment.  Under the Obama administration, there was an advice memorandum issued by the National Labor Relations Board’s (“NLRB”) Acting General Counsel that greatly expanded how concerted activity should be viewed under the NLRA.  It was shocking to many and resulted in most employers revising their policies concerning confidentiality, social media, use of company email and electronic information systems, and privacy. Much of the challenge in the instant case concerned whether the General Counsel’s appointment had been proper under the Federal Vacancies Reform Act.  But that will not be reviewed in this article.

Pier Sixty is a catering company in New York City. In early 2011, many Pier Sixty employees began seeking union representation. The union drive was exceptionally tense and included threats from management that employees who engaged in union activity were putting their jobs on the line.  The company also told employees that if a union was voted in “bargaining would start from scratch” (meaning the employees would have to negotiate to secure their current pay and benefits) and it enforced its “no talk rule” in a discriminatory manner against the union supporters. No one contests that the company’s actions were an unfair labor practice. Clearly they were.

Two days before the election, during an event, Supervisor Bob McSweeney gave Perez and two other servers directions in a harsh tone, ordering them to stop talking, turn their heads towards the guests, “spread out and move, move.”  Perez took offense and posted the following message on Facebook 45 minutes later:  “Bob is such a NASTY MOTHER F—ER don’t [sic] know how to talk to people!!!!!! F–k his mother and his entire f—ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!”  Ten of Perez’s “friends” on Facebook were coworkers and he knew they would see his post.  Perez took down the post 3 days later. However, because the post had also been accessible to the public it came to management’s attention, and Perez was fired.

Later that day, Perez filed an unfair labor practice charge with the NLRB. A coworker who had led the union drive filed one a month or so later and the charges were eventually consolidated.  The NLRB administrative law judge (“ALJ”) reviewing the charges found that Pier Sixty had violated Section 8(a) of the NLRA when it fired Perez in retaliation for protected concerted activity. Pier Sixty filed exceptions to the rulings and a three-member panel of the NLRB affirmed the ALJ’s decision, with one dissent.  The NLRB filed an application for enforcement with the Second Circuit and Pier Sixty also sought review.

The issue presented to the court: “was Perez’s Facebook post so ‘opprobrious’ as to lose the protection that the NLRA affords union-related speech?”  For those of you who, like me, are not familiar with the term opprobrious, it means expressing scorn, contempt or criticism in an abusive, venomous, insulting manner.  There has been a four factor test from Atlantic Steel, 245 NLRB 814, 816 (1979), used when examining an employee’s use of obscenities in the workplace:  “(1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by an employer’s unfair labor practice.”

Because the Atlantic Steel test had come under fire recently, the NLRB modified it to the “totality of circumstances” test that focuses on nine factors: (1) any evidence of antiunion hostility; (2) whether the conduct was provoked; (3) whether the conduct was impulsive or deliberate; (4) the location of the conduct; (5) the subject matter of the conduct; (6) the nature of the content; (7) whether the employer considered similar content to be offensive; (8) whether the employer maintained a specific rule prohibiting the content at issue; and (9) whether the discipline imposed was typical for similar violations or proportionate to the offense.  This is the test that the NLRB applied in affirming the ALJ in the instant case. The Second Circuit expressed some concern about the totality of the circumstances test since it may not properly balance the employer’s interests, but Pier Sixty had failed to object to its use, so the court did not address the issue further. By the way, the current Sixth Circuit Court of Appeals, which hears appeals of federal claims arising in Michigan, tends to favor the employees, so don’t think that a different result would occur for a Michigan employer.

The Second Circuit found the subject mater to focus on workplace concerns: the disrespect of management towards employees and the upcoming union election. It also found that Pier Sixty had consistently tolerated the use of similar profanity in the workplace. The slurs could be viewed as against McSweeney, rather than his family. (I view this as perhaps being similar to f–k you and the horse you rode in on …  it is really about the rider, not the horse … but I digress.) The court didn’t use my analogy, but found that all over the world groups of people find ways to insult mothers as a means of insulting the child. (Quite frankly, I like my analogy better.)

The court then found that social media is a primary means of communication for union organization in the modern world and, while it was visible to the whole world (for a few days), it was not evident to the guests at the event and did not disrupt the event. In sum, the court agreed with the ALJ.  Perez’s behavior was not so egregious to deserve discharge, even though it seemed to “sit at the outer-bounds of protected, union-related comments…”

So, what is the take away?  First, you may want to consider the language that you are permitting in the workplace.  If you generally allow the F-bomb, you will likely need to tolerate such expressions under circumstances that you would prefer not. Second, if you have a union drive, you need to engage experienced labor attorneys right away to guide you on lawful countermeasures.  Clearly Pier Sixty crossed the line in numerous ways. Third, for the most part, you should stay out of your employees’ social media posts.  While there are exceptions to this rule, I generally recommend that you allow your attorney to snoop, not you.  Keep in mind that the Michigan Social Media Privacy Act greatly restricts an employer’s ability to snoop on private pages (i.e., the employer can’t require passwords or the opportunity to view private pages and, seriously, your supervisors/managers should not be sending “friend requests” to subordinates). Finally, recognize that the right of employees to engage in concerted activities applies to your non-union employees. So, if you have not had the policies identified above reviewed by experienced employment counsel, such as the author, you should. They may be per se violations.

This article was written by Claudia D. Orr, who is Chair of the Legal Affairs Committee of Detroit SHRM, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

 Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. July 2017.

 

 

What Foreign Nationals Need to Know About the Travel Ban

  By: Alexandra LaCombe

President Trumps’s travel ban executive order is now in force against certain nationals of six restricted countries and refugees.  There are, however, broad exemptions for U.S. visa holders, lawful permanent residents, persons with valid advance parole entry documents and those with a bona fide relationship to a person or entity in the U.S.
Most employer-sponsored foreign nationals should be exempt.

The following are answers to some of the frequently asked questions about the travel ban.  The information below is based on the latest guidance from the Departments of State and Homeland Security.

  1. Who is subject to entry restrictions?

Unless exempt or granted a waiver, nationals of Iran, Libya, Somalia, Sudan, Syria and Yemen and refugees from any country are subject to the travel ban and prohibited from entering the United States for the duration of the ban.  Nationality is determined by the passport a traveler presents to enter the United States.

  1. How long will the entry ban be in effect? Could it be expanded to other countries?

Unless exempt or granted a waiver, nationals of the six restricted countries will be barred for 90 days and refugees will be barred for 120 days, starting June 29, 2017. The entry ban could be extended beyond these timeframes.  The Trump Administration is in the process of conducting a worldwide visa security review and could impose travel restrictions on other countries depending on the results of the review.

  1. Who is exempt from the travel ban?

According to the Department of Homeland Security, the travel ban does not apply to foreign nationals who were inside the United States as of June 26, 2017, who had a valid U.S. visa as of 8pm EDT on June 29, 2017 or who had a valid U.S. visa as of 5pm EST on January 27, 2017.  No visas will be revoked solely on the basis of the travel ban.  After their visa expires or they leave the United States, these foreign nationals will not be subject to the ban when they apply for a new visa or reentry, though they must still meet all admissibility requirements as usual.

The following groups of foreign nationals are also exempt:

  • S. lawful permanent residents (green card holders);
  • Dual nationals traveling on a valid passport from a non-restricted country and a valid U.S. visa (unless visa-exempt);
  • Applicants for adjustment of status with a valid advance parole document;
  • Foreign nationals with a valid A, C-2, G or NATO visa;
  • Foreign nationals granted asylum;
  • Refugees already admitted to the United States and those with travel formally scheduled by the State Department;
  • Persons who have been granted withholding of removal, parole or protection under the Convention Against Torture; and
  • Foreign nationals with a bona fide relationship to a person or entity in the United States. This includes individuals whose employers obtained nonimmigrant visa petition approval on their behalf, as well as their dependents, and students who have been admitted to study at a U.S. educational institution.  However, all these individuals should expect close questioning by U.S. consular officials.  Enhanced security screening is likely, and the wait time for a visa could be lengthy.
  1. Will an individual who is planning business travel to the United States but is a national of a restricted country be able to obtain a B-1 visa to the United States?

Individuals in this situation may be exempt from the travel restrictions if they can demonstrate a bona fide relationship with a U.S. entity that can be documented, is in the ordinary course of business and was not established to evade the travel restrictions.  The U.S. government has not specified how it will interpret this requirement with respect to business travelers.  They might qualify for an exemption if they have an invitation letter from a U.S. entity, but that is not yet clear.  When they apply for a B-1 visitor visa, they should expect close questioning about the purpose of their travel and the duration and nature of their relationship with the U.S. entity that has invited them.  They should also expect lengthy security screening.  If they do not qualify for an exemption, they may be eligible for a waiver.  If they already hold a valid U.S. B-1 visa, they should be able to use it to enter the United States for legitimate business travel, but should expect enhanced inspection at the U.S. border.

  1. How can someone qualify for a waiver if they are subject to the travel ban?

The travel ban executive order authorizes the State Department and the Department of Homeland Security to grant waivers on a case-by-case basis in limited circumstances.  To qualify for a waiver, the individual must show that it is in the U.S. national interest to admit him/her, they pose no national security threat and the denial of their entry would cause extreme hardship.  The waiver must be requested during the consular visa interview.

The executive order suggests that a waiver may be appropriate for several classes of foreign nationals, including:

  • Canadian landed immigrants applying for a visa in Canada;
  • Persons with significant business or professional obligations in the United States or with significant contacts;
  • Nonimmigrants previously admitted to the United States for a continuous period of work, study or another long-term activity who are seeking to resume that activity;
  • S. government-sponsored J-1 exchange visitors;
  • Infants, young children (including adoptees), individuals needing urgent medical care and others with special circumstances justifying a waiver;
  • Persons traveling for purposes related to a qualifying international organization or for meetings or business with the U.S. government; and
  • Persons who are or have been employed by the U.S. government and can document “faithful and valuable service.”

Waivers are highly discretionary and subject to strict eligibility criteria.  As such, they may be difficult to obtain.

  1. How does the executive order affect members of U.S. trusted traveler programs?

According to the Department of Homeland Security, U.S. lawful permanent residents who are citizens of a restricted country will not have their membership revoked solely on the basis of the executive order.

Ultimately, it is important to remember that while the travel ban has been and continues to be hotly debated, it only applies to a very specific and limited group of individuals seeking entry into the U.S.

If you need assistance with this, or any other immigration issue, please contact the author, Alexandra LaCombe, at (248) 649-5404 or alacombe@fragomen.com. Alexandra  is a Member of the Legal Affairs Committee of Detroit SHRM and a partner at Fragomen Worldwide.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. July 2017.

DOL Posits Texas Court Erred in Ruling DOL Lacked Authority to Set Minimum Salary for Exempt Employees

   By Karen L. Piper

In May, 2016, the U.S. Department of Labor (“DOL”) announced its new rule increasing the minimum salary required to be paid to employees to be exempt from the Fair Labor Standards Act’s (“FLSA”) overtime pay obligations.  The increased minimum salary of $913 per week was scheduled to take effect on December 1, 2016.  A group of states, including Michigan, filed a lawsuit in the federal district court for the Eastern District of Texas challenging the DOL’s authority to set a minimum salary level for exempt employees.  The Texas federal court ruled on November 22, 2016 that the minimum salary requirement was unlawful: The FLSA “does not grant the Department [of Labor] authority to utilize a salary level test.”  The court enjoined the DOL from enforcing the new minimum salary.

On December 1, 2016 the DOL appealed this ruling to the Fifth Circuit Court of Appeals (covering Texas, Mississippi and Louisiana).  The DOL filed its brief in support of its appeal on December 15, 2016.  The state-plaintiffs defending the injunction filed their response on January 17, 2017.  On January 20, 2017 President Trump was inaugurated.  On January 25, 2017, the DOL requested and was granted the first of several extensions of time for filing its reply brief.  On Friday, June 30, 2017, the DOL filed its reply brief in support of its appeal of the injunction that had suspended enforcement of its May 2016 overtime rule.

In its reply brief, the DOL argued that the district court erred in ruling it lacked the authority to establish a minimum salary test for exempt employees.  The DOL noted that it had included a minimum salary test for exempt employees from the FLSA’s inception in 1938.  Its most recent increase before 2016 was adopted in 2004.  If the 2016 increase in the minimum salary level was illegal, so was the 2004 increase to $455 per week.

The DOL noted that the Fifth Circuit Court of Appeals had ruled on the issue of its authority in 1966.  At that time, the Fifth Circuit ruled the minimum salary level test was legal. Wirtz v Mississippi Publishers Corp, 364 F.2d 603 (5th Cir. 1966).  The Wirtz opinion written by then-Judge Warren Burger said, in part, “[e]very circuit [court] to consider the issue has upheld the salary-level test as a permissible component of the EAP [Executive, Administrative, Professional] regulations.” DOL brief at p. 10.  Even the United States Supreme Court has approved the DOL’s requirement of a minimum salary for exempt employees. DOL brief at p. 11, citing Auer v Robbins, 519 U.S. 452 (1997).  The DOL argued that the district court erred in ruling otherwise.

The DOL observed that the district court did not rule that the $913 per week salary level was arbitrary and capricious or unsupported by the administrative record; only that the DOL lacked authority to set a minimum salary level for exempt employees.  The DOL did not advocate to keep the $913 per week minimum salary level because it “intends to undertake further rulemaking to determine what the salary level should be” once the litigation is concluded. DOL brief at p.17.  The DOL is not going to initiate rulemaking on what the minimum salary level should be until the issue of its authority to establish a minimum salary level is settled.  In the meantime, the DOL “soon” will publish a “request for information seeking public input on several questions that will aid in the development of a proposal” on the “appropriate” salary level. DOL brief at p. 18.

The Fifth Circuit Court of Appeals had originally indicated that it would schedule oral argument on the DOL’s appeal as soon as possible following the filing of the DOL’s reply brief.  To date, the Fifth Circuit has not scheduled oral argument.

At the moment, based on the Texas federal court’s order, the DOL cannot enforce the $913 per week minimum salary.  For further information and updates check with employment counsel, such as the author.

This article was written by Karen L. Piper, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com.  For further information, go to:  http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article.  July 2017.

“SHAVING TIME” INFLICTED FINANCIAL WOUNDS FOR AN EMPLOYER

By: Claudia D. Orr

We all know that collective actions under the Fair Labor Standards Act can be costly to employers.  These “class action” wage claims provide a means of redress by employees when their own individual claims may not be worth pursuing.  This case involves allegations of a company-wide policy of requiring employees to systematically underreport their overtime hours that was brought by 293 technicians of FTS USA, LLC, a cable television company, and UniTek USA, LLC, its parent company.  It would be impossible to summarize all of the points in this nearly 50 page opinion by the Sixth Circuit Court of Appeals, so we will focus on aspects that are reasons for concern about the growing use of “representative evidence”.

This case has been kicking around since 2008 when it was filed in the federal District Court for the Western District of Tennessee.  Following a trial, a jury returned verdicts in favor of the employees, which was upheld by the district court when challenged by defendants.  The district court then calculated the damages at nearly $3.9 million dollars including liquidated damages. The case was challenged at the Sixth Circuit, which upheld the class certification and the jury’s verdict, but reversed the district court’s calculations of the damages.  The defendants then sought certiorari (permission for review) by the US Supreme Court which granted the defendants’ request for review, vacated the Sixth Circuit’s opinion and remanded the case back to it to reconsider the ruling in light of Tyson Foods, Inc v Bouaphakeo, 136 S Ct 1036 (2016), which had been decided after the Sixth Circuit had issued its opinion.

Now back at the Sixth Circuit, the appellate court decided on June 21, 2017, that its rulings the first time were correct, and again remanded the case back to the district court to recalculate the damages.  So, let’s look at what happened and the plaintiffs’ use of “representative evidence” in this case so you can see just how dangerous these collective actions have become.

FTS contracts with cable companies (such as Comcast and Time Warner) to install cables and provide support.  The parent company, UniTek, is primarily involved in wireless communications, satellite services, etc., but it provides the human resources and payroll functions to FTS.

The technicians in Tennessee, Alabama, Mississippi, Florida and Arkansas have similar job duties and are subject to the same compensation and timekeeping system. At the beginning of their day, technicians report to their local office where they receive their assignments which are to be performed during specific two-hour blocks of time. The technicians primarily do the same work over and over, every day —they install cable.  “FTS Technicians are paid pursuant to a piece-rate compensation plan, meaning each assigned job is worth a set amount of pay, regardless of the amount of time it takes to complete the job.  … Technicians are paid by applying a .5 multiplier to their regular rate for overtime hours.”  Time is recorded by hand and their weekly time sheets are sent to payroll.

Evidence showed that a company-wide “time-shaving” policy was in place, whereby managers told or “encouraged” techs to underreport time or falsified the timesheets themselves.  Technicians routinely started work earlier than they reported, worked during lunch hours or stayed working after the recorded time.  There was also evidence that this policy was started at the FTS corporate offices, which encouraged managers to find a way to reduce overtime and fuel costs. Management at the corporate offices scrutinized the overtime and questioned local management why overtime was worked.  The human resources director testified that she had received complaints from technicians about being required to underreport their overtime.

The Sixth Circuit spent considerable time reviewing the standard for certification for collective actions and an employee’s burden of proof in establishing damages.  The court referred to the employee’s burden as “relaxed” since employees rarely keep time records because that is the employer’s duty. Once an employee presents “some” credible evidence that he performed work for which he was not properly compensated, the burden shifts to the employer to produce evidence showing it did not violate the FLSA.  Where that proof is lacking, the court may award damages to the employee, even if the calculation is only approximate, provided it is based on a just and reasonable inference from the plaintiff’s evidence.

The defendants challenged the verdict form which allowed the jury to determine whether the employer applied a single, company-wide time-shaving policy to all technicians, including those who did not testify. The defendants also challenged the plaintiffs’ reliance on the testimony of only 17 technicians, without any statistical expert, as insufficient under the Tyson case for use as “representative evidence”. [1]

The Sixth Circuit disagreed, stating that Tyson does not require expert statistical analysis; it just reviewed it in Tyson because that is what had been introduced in that case.  The only issue is whether the evidence introduced here is legally sufficient, and it is.  There were 17 technicians who testified, six managers and supervisors and time sheets and payroll records.

In rejecting the defendants’ challenge to certification as a collective action, the Sixth Circuit identified two guiding principles for its analysis:  “plaintiffs do not have to be ‘identically situated’ to be similarly situated, and the FLSA is a remedial statute that should be broadly construed.”  Here the technicians performed the same work, regardless of location, and were all subject to the same timekeeping system (by hand), compensation plan (piece rate) and company wide policy requiring them to underreport hours.  And, if the technicians failed to follow the under-report directive, the managers would change their time sheets.  The Sixth Circuit majority rejected the dissent’s reasoning that would have required separate collective actions for those who worked off the clock before hours, those who worked without compensation during lunches and those that continued to work after they had signed out, citing the Supreme Court’s warning that “such a ‘narrow, grudging’ interpretation of the FLSA”… would weaken “its ‘remedial and humanitarian’ purpose”.

The Sixth Circuit disagreed with defendants’ claim that the use of representative evidence in this case deprived them of the ability to use defenses, finding that “defenses successfully asserted against representative testifying technicians were properly distributed across the claims of nontestifying technicians.”  The jury’s partial acceptance of the defenses actually resulted in a lower average of hours worked for the nontestifying technicians.   The court noted that “sister circuits” overwhelmingly allowed “representative testimony to establish a pattern of violations that include similarly situated employees who did not testify”.

The court also rejected the defendants’ objection to the use of an “estimated average of overtime worked” because it would result in some technicians receiving more than they are owed and some less. The court noted that “[d]isapproving of an estimated-average approach simply due to lack of complete accuracy would ignore the central tenant of the [Supreme Court’s holding in Anderson v Mt Clemens Pottery Co, 328 US 680 (1946)]—and inaccuracy in damages should not bar recovery for violations of the FLSA or penalize employees for an employer’s failure to keep adequate records.”  In fact, the estimated-average approach actually worked as it should; the jury was able to reasonably infer the average weekly unpaid hours by each technician who testified and apply the average of these averages to the nontestifying technicians.

Finally, the defendants argued that the district court erred by calculating damages (rather than the jury) because that violated the Seventh Amendment, and erred by failing to recalculate each technician’s hourly rate and by applying a 1.5 multiplier (i.e., time and a half the regular rate of pay) for overtime hours. The court noted, however, that defense counsel had actually previously argued against the jury calculating the damages.

The Sixth Circuit agreed with defendants on one point – the 1.5 multiplier should not have been utilized by the district court. When an employee is paid by a piece rate system the employee is entitled to “a sum equivalent to one-half this regular rate of pay [all earnings for the workweek, divided by the number of hours worked]multiplied by the number of hours worked in excess of 40 in the week. …Only additional half-time pay is required in such cases where the employee has already received straight-time compensation at piece rates or supplementary payments for all hours worked.”  (Emphasis added)  Thus, the district court was again reversed on its use of the 1.5 multiplier and the case was remanded back to the district court where it began.

While the nearly $3.9 million judgment will be reduced when recalculated, the legal fees incurred during nine years of litigating the collective action could actually exceed the eventual judgment.  And, the defendants are responsible not only for their own defense costs but will be paying the legal fees of the team of attorneys for the plaintiffs. Keep in mind that Employment Practices Liability Insurance policies only pay the cost of defense in FLSA claims, not a judgment or opposing party’s attorneys’ fees.  This will be a very costly case to the defendants.

If you have not reviewed your wage policies and practices lately, you should involve experienced employment counsel, such as the author, to assist you in doing so. These are not easy legal issues and mistakes can be very costly.

This article was written by Claudia D. Orr, who is Chair of the Legal Affairs Committee of Detroit SHRM, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. July 2017.

DID THE 2016 OVERTIME RULE TAKE EFFECT?

By: James M. Reid

In a class action complaint filed on June 7, 2017, in federal court in New Jersey (Alvarez v. Chipotle Mexican Grill, Inc.), a group of workers at Chipotle Mexican Grill Inc. (Chipotle) allege that their employer owes them time-and-a-half pay under the Obama administration overtime rule that a federal judge in Texas put on hold last year.  This case demonstrates that employers that pay exempt employees an annual salary of less than $47,476 may be at risk for an overtime claim under the Fair Labor Standards Act (FLSA) despite the preliminary injunction that enjoined the Department of Labor (DOL) from enforcing the increased salary threshold.

Specifically, the workers allege that the company is required to comply with the FLSA regulation, which would have made about 4.2 million workers newly eligible for overtime pay, according to a DOL estimate. The rule more than doubled the salary threshold under which employees are automatically eligible for overtime. The DOL rule, which was to become effective on December 1, 2016, increased the minimum salary for the white-collar exemptions under the FLSA.  The DOL’s new rule would increase the salary requirement from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).  Anticipating this change, many employers planned accordingly, and in many cases had to restructure job duties, alter payment arrangements, reclassify jobs, etc.  In this case, many assistant managers started to receive overtime pay since Chipotle did not want to raise salaries to the increased salary threshold.  After the injunction, Chipotle stopped paying overtime to such assistant managers and paid them under the old salary threshold.  As a result, many employees felt like they received a pay cut and were disgruntled.

The workers at Chipotle argue that the regulation went into effect as scheduled on December 1, 2016, even though the U.S. District Court for the Eastern District of Texas granted a preliminary injunction, which enjoined the DOL from enforcing the new rule. In the complaint, the Chipotle employees argue that, in general, the DOL does not implement rules, but instead rules go into effect automatically and without any specific enforcement by the DOL.  Furthermore, because the injunction is only preliminary, as opposed to a final decision, the DOL rule of December 1, 2016, has not been vacated and still stands.

Employers should stay tuned to developments in this case, noting that the Trump administration is reviewing the rule as well.  In the interim, you may also want to consult with employment counsel to evaluate potential risks if you pay exempt employers an annual salary of less than $47,476.  Likewise, employers should consider keeping time records for such workers in case such classification is challenged.  Lastly, employers should always consider how morale will be impacted when employees’ payment arrangements and/or duties are restructured.

This article was written by JAMES M. REID, a member of the Legal Affairs Committee of Detroit SHRM, a Resource Partner and Director of MISHRM, and a shareholder of the law firm of Maddin Hauser Roth & Heller PC located in Southfield, Michigan. He can be reached at (248) 351-7060 or jreid@maddinhauser.com. Detroit SHRM encourages members to share these articles within their organizations; however, members should refrain from forwarding them outside their organizations or printing for mass distribution without written permission of the Detroit SHRM Executive Committee. June 2017

What’s up at the DOL? Pulling Guidance and Changing Standards

 

 

 

By:  Claudia D. Orr

It is time to provide you with a couple of quick updates from the Department of Labor (“DOL”).  Spoiler alert…this is good news!

First, in January 2016, I wrote an article about the then new DOL guidance concerning joint employer relationships (both “horizontal” and “vertical”). Opinion Letter Fair Labor Standards Act, Administrator’s Interpretation No. 2016-1.  The article cautioned that “the mere fact that an employee works for two completely separate companies (as many workers today do) does not make those companies ‘joint employers.’ But, where a joint employment relationship exists, the employers may be held equally responsible for ensuring compliance for all provisions of the FLSA including overtime pay, and the DOL may seek to hold both employers responsible for any violation.” For my prior article click here.

While the DOL guidance was a tad confusing it made clear, at least to me, that the DOL intended to stretch the joint employer relationship principle as far as it could so there would be many deep pockets to reach into when a wage violation occurs. Well, the DOL has now pulled that guidance (and the guidance it had issued concerning independent contractors/employment relationships, Opinion Letter Fair Labor Standards Act, Administrator’s Interpretation No. 2015-1).  But a word of caution –the fact that the guidance was pulled does not change the law and employers should remain watchful for potential joint employer relationships.  However, pulling the guidance removes the ability to cite to, or rely on, the guidance when there is a wage dispute. Since the guidance was beneficial to employees’ wage claims, this is good news for employers.

The other DOL tidbit involves the application of the fiduciary standard to financial advisors working with ERISA (retirement) plans.  In short, the fiduciary standard would require advice that is in the best interest of the plan and its participants and prevent an advisor from pushing financial products because they are the most lucrative for the advisor.  For my prior article from March 2017 click here.

The fiduciary standard was to take effect on April 10, 2017, but soon after he took office, President Trump signed an executive order requiring the DOL to take another look at the issue. It did.

The DOL has now concluded that the fiduciary rule should be implemented.  The rule was given partial effect on June 9, with full implementation set for January 1, 2018.  While there is a lot of anxiety in the financial services industry, and a lot of false information being spread (like this will take away an investor’s choice), this is absolutely good news.  The only products that may become unavailable to investors are those that were not in their best interests because advisors may no longer be able to recommend them.

It is not often that I am able to report good news from the DOL to employers, so this pleases me.  If you need further information about joint employment relationships or the fiduciary rule, please consult with an experienced labor/employment attorney, like the author.

This article was written by Claudia D. Orr, who is Chair of the Legal Affairs Committee of Detroit SHRM, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM).  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go click here.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. June 2017.