Creative Wage Structures Can Be Costly!

By:  Claudia D. Orr 

Employers often look for creative ways to save on payroll.  When I was a very new attorney, I had one client tell me they used the “50 hour rule” for overtime.  I asked what that was and was told overtime was paid after the employee worked 50 hours in a work week.  I asked one of the partners if there was such a rule and he laughed. Just to be clear… there is no such rule.  To this day, I am amazed at how creative employers can be to save a few bucks on payroll, only to have it cost so much more after the lawsuit is filed.  This article is about an employer who learned this very tough lesson after the Sixth Circuit Court of Appeals ruled last week in Stein v hhgregg, Inc.  Let’s look at the compensation plan at issue.

The defendant/employer owns over 25 retail stores in Ohio and well over 200 stores nationwide, selling appliances, furniture and electronics. Its sales employees were compensated on a “draw on commission” basis. If a sales person’s sales were insufficient for the earned commission to satisfy minimum wage, he would receive a “draw” on future commissions to satisfy the requirement.  Of course that draw had to be repaid.

So, if an employee worked 40 hours or less in a workweek, the draw would equal the difference between the amount of commissions actually earned and minimum wage for each hour worked.  If the employee worked overtime, the draw equaled the difference between “an amount set by the Company (at least one and one-half…times the applicable minimum wage) for each hour worked and the amount of commissions [actually] earned.”

Thus, an employee would “receive a draw only if the commissions earned that week [fell] below the minimum wage (in a non-overtime week) or one and one-half times the minimum wage (in an overtime week).”  Generally the draw was deducted from the following week’s commissions, assuming the amount after the deduction satisfied the minimum wage requirement.  If it did not, it would be deducted from the next commission check that was sufficient under this formula.  If an employee received too many draws or ran too great of a draw balance, he could be disciplined or fired.  Upon termination, an employee was required to repay any deficit.

The Sixth Circuit recognized that the US Department of Labor allows draw on commissions pay structures for retail employees, but this one was unique. Generally, the typical draw system has a fixed weekly draw, but this one varied from week to week.  Also, the typical draw amount bears some relationship to the usual amount of commissions that are earned, whereas this one was based on satisfying minimum wage requirements.

First the appellate court noted that the retail exemption did not apply to these employees since their regular rate of pay was not in excess of one and one-half times the minimum hourly rate of pay as required.  “The ‘regular rate of pay’ is defined as the ‘hourly rate actually paid the employee for the normal, nonovertime workweek for which he is employed.” Here the employees were only entitled to “exactly” the minimum hourly wage rate during a non-overtime workweek. Thus, the overtime exemption for retail employees did not apply.

Interestingly, the court did not find that the practice of requiring repayment of the draw from future checks to violate the “free and clear” requirement which prohibits an employer from requiring a “kick back” from wages already paid.  Here, the repayment was not from wages that had already been paid, but from future earned commissions.

However, the court found the policy’s requirement of repayment of deficits at termination to violate the FLSA.  While the employer represented to the court that it never did this and has since changed its policy, the fact remained that the employees who were subject to the policy could reasonably believe that they remained liable to the company for the deficits even after their employment terminated. The court found the proper focus to be what the policy states and not how it was implemented. Thus, the “free and clear” requirement was violated because the minimum wage that had been paid was not provided free and clear at time of termination.

There were other problems with the system as well such as approving (even encouraging) work “off the clock” including when there was a mandatory training or meeting to prevent an increase in the requisite amount of the draw caused by the increased work hours.   And, by not compensating the employees for all hours actually worked, the employer also violated the overtime requirements under the FLSA.  The Sixth Circuit remanded the case for further proceedings consistent with its opinion.

This employer was trying to find a creative way to save on payroll but, on remand, may find that the damages (and likely liquidated damages) will far exceed the savings that had been anticipated.  I am occasionally asked by clients about other “creative” compensation plans that simply don’t comply with wage laws. Whenever your company feels creative, run the compensation plan past experienced employment counsel, such as the author, before you implement it and end up facing the costly consequences.

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. October, 2017.

COURT BREAKS WITH FEDERAL LAW IN DECIDING DISABILITY DISCRIMINATION CLAIM UNDER STATE LAW

By: Carol G. Schley, Clark Hill PLC

In many instances, Michigan’s anti-discrimination laws are construed consistently with their federal counterparts.  However, the Michigan Court of Appeals recently interpreted Michigan’s Persons With Disabilities Civil Rights Act (“PWDCRA”) differently that its federal equivalent, the Americans with Disabilities Act (“ADA”), and in a manner beneficial to the employer involved in that case.

In Payment v. Department of Transportation, 2017 WL 3441453 (2017), Mary Payment claimed her employer’s decision to deny her a promotion was based upon her depression and anxiety, and that this action by the employer constituted disability discrimination under the PWDCRA.

The first issue addressed by the court was whether Ms. Payment actually had a “disability,” which it defined as “a determinable mental characteristic of an individual that substantially limits at least one major life activity and is unrelated either to the person’s qualifications for their job or ability to perform their job duties.”  On this issue, the court acknowledged that depression and anxiety can be disabilities under certain circumstances.   However, the court held that based upon the facts presented, Ms. Payment was not disabled because the medication she took for her conditions resulted in her symptoms being “pretty much in remission.”

In considering the mitigating effects of Ms. Payment’s medication in determining whether or not she was disabled, the court followed prior Michigan case law concerning the PWDCRA, and expressly rejected Ms. Payment’s argument that PWDCRA should be interpreted consistently with the ADA, under which mitigating factors are in most instances not considered.  According to the court, “[t]he PWDCRA and the ADA are not identical, and federal laws and regulations are not binding authority on a Michigan court interpreting a Michigan statute.” (citations omitted).

Even though Ms. Payment did not have an actual disability under the PWDCRA, the court held that Ms. Payment could still establish a claim if she could demonstrate she was “regarded” as disabled.  However, the court found that Ms. Payment could not prevail on this theory either because she failed to show that the alleged negative employment action (being passed over for a promotion) was due to her being regarded as disabled.  Instead, the court found that the employer’s decision, even if misguided, was based upon lawful performance metrics.  On this point, the court noted:

[E]mployers are permitted to make foolish, counterproductive, or otherwise generally bad business decisions.  The dubiousness of an employer’s business judgment does not create a question of fact whether an articulated non-discriminatory reason is pretextual.

Finally, the court rejected Ms. Payment’s claim that the employer’s decision to not promote her was unlawful retaliation for her filing of a charge with the EEOC.  The court noted that a “mere temporal coincidence” between a protected activity and an adverse employment action is insufficient to prove retaliation.  While the court noted “some unfairness” in the fact that Ms. Payment was not promoted, “the unfortunate fact is that it is normal to base hiring decisions as much on whether the interviewer happens to like the interviewee as on objective merit, however that merit is evaluated.  Perhaps it should not be so, but that is outside the scope of the PWDCRA or, for that matter, the courts.”

While the employer prevailed in Payment, its holding allowing for consideration of medication and other mitigating factors when determining the existence of a disability was limited to claims brought under Michigan’s PWDCRA.  In many instances, where an employee asserts a claim of disability discrimination, he or she will bring claims not only under PWDCRA, but also the ADA (which applies to employers with 15 or more employees).  Therefore, employers cannot “rest easy” on the Payment case when addressing alleged employee disabilities, and still should proceed with caution and pursuant to the more stringent standards governing the ADA which construes the definition of a “disability” much more broadly and without consideration of most mitigating measures.

When an employee presents issues that may involve a disability, the most important thing for an employer to do is to engage in a meaningful, fact-specific interactive process with the employee.  Given the complexities involved in handling disabilities in the workplace, it is also advisable to consult an employment attorney to help guide the process.

Carol G. Schley is a member of the Detroit SHRM Legal Affairs Committee and an attorney at the law firm Clark Hill PLC.  She can be reached at cschley@clarkhill.com or (248)530-6338. 

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. October 2017. 

EMPLOYER ESCAPES FMLA LIABILITY BUT STILL LESSONS TO BE LEARNED

By: Carol G. Schley, Clark Hill PLC

            A recent Michigan Court of Appeals case is a reminder to employers that the manner in which they handle an employee’s request for leave could result in unintended consequences, such as extending the statute of limitations for claims under the Family and Medical Leave Act (“FMLA”).

            In Artis v. Department of Corrections, 2017 WL 4015760 (2017), the employee, Michele Artis, worked at a Michigan correctional facility. She began experiencing symptoms of bipolar disorder, and was hospitalized for mental exhaustion and depression on June 28, 2012.  She contacted her supervisor around that date, and claimed she told him she was in the hospital and could not return to work until she received approval from her physician.  Artis did not inform her supervisor how long she would be out of work or in the hospital.  Artis also did not call in to her employer after this initial call.  She also admitted at her deposition that she did not tell her supervisor anything that would lead him to believe she would be absent for more than one day.

            On June 29, 2012, the employer’s human resources officer, unaware of Artis’ call to her supervisor or that Artis was in the hospital, sent Artis a letter stating that she was absent from work without authorization, had failed to report her absences each day in compliance with the employer’s call-in policy, and needed to return to work by July 1, 2012 or else be terminated.  As she failed to return to work by that date, her employment was terminated effective July 1.  The employer later received a fax from the hospital dated July 9, 2012 requesting FMLA leave for Artis and stating she was hospitalized from July 4 to July 9, 2012.

            Artis filed a lawsuit against her employer on July 1, 2015, claiming that it violated its obligation to provide FMLA leave to her, and the fact that she had taken FMLA leave in the past and had informed her supervisor that she was hospitalized triggered a duty for the employer to investigate her claim and realize she was requesting FMLA leave.  She further argued that her claim was not barred by the 2 year statute of limitations because the employer’s violation of the FMLA was “willful,” thus extending the limitations period to 3 years.

            The court acknowledged that FMLA’s statute of limitations is extended to 3 years when an employer’s violation of the act is “willful.”  However, the court found that the circumstances did not rise to the level of willfulness and, therefore, Artis’ FMLA claim was time barred, as she filed her lawsuit after the 2 year statute of limitations had expired.  The court stated that willfulness under the FMLA required more than a showing of “mere negligence,” and instead required a showing that the “employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited” by the FMLA.  The court noted Artis’ admission that she did not inform her employer that she would be out for more than one day as one of the factors negating a finding of willfulness.  Further, the fact that she had previously taken FMLA leave “was insufficient to reasonably put defendants on notice or on constructive notice that her unexplained absence in 2012 was related to FMLA.”

            The employer was able to escape liability in this case only due to Artis filing her lawsuit after the 2 year statute of limitations had run, and this court’s finding that she failed to show the employer acted “willfully.”  However, had this issue not been decided in the employer’s favor, it is possible that the court would have held that there was sufficient evidence for Artis to proceed to trial on her FMLA claim.

            The FMLA puts the burden on the employer to make further inquiry when it is unclear whether an employee is seeking FMLA leave.  In this case, the fact that Artis reported she was in the hospital is a circumstance that should have triggered the employer to make further inquiry.   In addition, it would have been wise for the human resources officer to speak to the supervisor, and possibly follow up with Artis as well, prior to issuing the letter stating Artis would be terminated.  This case is also a reminder to employers to act reasonably and thoroughly when faced with issues that may implicate the FMLA, in order to avoid a finding of “willfulness” that would extend the time period in which the employee can sue.

            This case is also unique in that it was decided by a Michigan state court, as most FMLA claims are filed in federal district court.  Had this case been in federal court, the outcome may have been different, as the federal courts for our jurisdiction tend to be more pro-employee with respect to FMLA issues than our state appellate courts.

            Where the FMLA may be at play, it is best for an employer to act with caution and ensure that the decision maker has all of relevant facts before making a substantive employment decision such as termination.  Further, it is helpful to have legal counsel review any proposed action against an employee who may be protected by the FMLA.

Carol G. Schley is a member of the Detroit SHRM Legal Affairs Committee and an attorney at the law firm Clark Hill PLC.  She can be reached at cschley@clarkhill.com or (248)530-6338.

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. October, 2017.

 

Seventh Circuit: ADA Is Not A Medical Leave Entitlement

By: Karen L. Piper

The Seventh Circuit Court of Appeals  ruled an employer was not required by the Americans with Disabilities Act (“ADA” or “Act”) to provide several months leave of absence to an employee who needed additional medical leave after exhausting (Family and Medical Leave Act (“FMLA”) leave.  The Court said, “[t]he ADA is an antidiscrimination statute, not a medical-leave entitlement. … An employee who needs long-term medical leave cannot work and thus is not a ‘qualified individual’ under the ADA.”  (Emphasis in original.)  Severson v. Heartland Woodcraft, Inc., No. 15-3754 (7th Cir., September 20, 2017).

Raymond Severson worked as a fabricator of retail display fixtures.  The work was physically demanding.  Severson had suffered back pain even before he commenced this employment and he continued to have flare-ups during his employment.

Severson was promoted to Operators Manager but performed poorly in this position.  He was demoted from Operations Manager to Second-Shift “Lead.”  He accepted the demotion, but never worked as a Lead.  He had wrenched his back at home before reporting to work that day.  He left work early and commenced a 12-week FMLA leave to deal with “serious back pain.”

Severson was scheduled for back surgery on the last day of his FMLA leave.  He notified his employer and requested additional medical leave of two to three months to recover from surgery.  The employer denied his request, but invited him to reapply when he was “medically cleared to work.”  Severson did not reapply after he was cleared to return.  He sued his employer for violating the ADA for declining his request for extended medical leave.  The trial court dismissed his claim.  The Seventh Circuit (covering Illinois, Indiana and Wisconsin) affirmed on appeal.

The Court’s opinion started with a review of the ADA’s statutory language.  The Act protects “qualified individuals” with a disability who can perform the essential functions of the job with or without “reasonable accommodation.”  The Act says reasonable accommodation may include:

“job restructuring, part-time or modified work schedules, reassignment to a vacant position, acquisition or modification of equipment or devices, appropriate adjustment or modification of examinations, training materials or policies, the provision of qualified readers or interpreters, and other similar accommodations for individuals with disabilities.”  42 USC § 12111(9)(B).

The Court observed that a reasonable accommodation is defined as one that allows the individual with a disability to perform his job.  All of the examples listed in the Act are “measures that facilitate work.”  Severson had not requested an accommodation that would facilitate his working.  He had requested time off to recuperate from surgery.  The Court noted that an extended leave of absence “does not give a disabled individual the means to work; it excuses his not working.”

The Court agreed that time off for conditions requiring intermittent, brief periods of absence “may, in appropriate circumstances, be analogous to a part-time or modified work schedule,” which are included in the list of examples, but a medical leave spanning multiple months does not allow the employee to perform the essential functions of his job.  To the contrary, the inability to work for a multi-month period “removes a person from the class protected by the ADA.”

This decision is contrary to the Equal Employment Opportunity Commission’s (“EEOC”) long-standing position that a medical leave of absence is a reasonable accommodation.  The EEOC filed a “friend of court” brief in the Seventh Circuit in support of Severson’s appeal.  Its brief appears to acknowledge that a medical leave of absence may not be a reasonable accommodation.  In its brief, the EEOC asserted “[t]he district court misunderstood how a time-limited leave request, made in advance, should be analyzed. The court’s analysis would effectively rule out leave as a possible accommodation under the ADA.  Such a categorical exclusion is at odds with the longstanding position of the EEOC.” Emphasis added.

The majority of the EEOC’s five Commissioners are still Obama appointees.  President Trump’s nominees have not yet been confirmed by the Senate.  It is unknown whether the new Commissioners will revise its position on this issue.  In the meantime, since filing an EEOC charge is a prerequisite to filing an ADA lawsuit, the EEOC is expected to continue to take the position that the ADA requires as an accommodation a definite, time-limited medical leave of absence.

There are some older Sixth Circuit cases (covering Michigan, Ohio, Kentucky and Tennessee) that take the position that an employee who is unable to perform the essential functions of her job is not a qualified individual with a disability, so a medical leave is not required.  Some of the newer Sixth Circuit cases follow the EEOC’s position that a medical leave of absence may be a required accommodation.  For guidance in responding to an employee who has requested a multi-month medical leave of absence, 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. September 2017.

Illinois Court Ruled A LinkedIn Invitation Did Not Violate A Non-Solicitation Agreement

By: Karen L. Piper

Many companies use non-competition and/or non-solicitation agreements to protect their business interests. Traditionally, employers only had to worry about their former employees calling or meeting with current clients and/or employees. The increasing use of social media has made it more difficult for employers to limit communications and contacts by former employees who signed non-solicitation agreements. In Bankers Life & Cas. Co. v. Am. Senior Benefits LLC, No. 1-16-0687 (Ill. App. 2017), the Illinois Court of Appeals addressed whether a former employee’s request to connect on LinkedIn violated a non-solicitation clause in his employment agreement.

Gregory Gelineau worked for Bankers Life, a company that sells insurance and financial products. While employed with Bankers Life, Gelineau was subject to a non-competition agreement that included a non-solicitation clause that continued for two years after his employment ended. This non-solicitation provision prohibited Gelineau from inducing or attempting to induce Bankers Life employees to sever their relationship with the company.

Gelineau left Bankers Life to work for American Senior Benefits (“ASB”), a company that provides similar services. While with ASB, and before the two years had expired, Gelineau sent LinkedIn connection requests to three Bankers Life employees. These connection requests were an invitation to professionally connect with Gelineau and, upon viewing Gelineau’s profile, the requested employee could see a job posting for ASB.

Bankers Life filed suit against Gelineau and ASB claiming Gelineau’s activity was a solicitation in violation of his non-competition agreement. The Court of Appeals looked to the content of the communication and found that Gelineau’s invitations were sent through generic emails seeking to form a professional connection. They did not contain any discussion of Bankers Life, no mention of ASB, no suggestion that the recipient view a job description, and no solicitation to leave their place of employment and join ASB. The Court noted that, to violate his contract, Gelineau would have had to “actually directly” attempt to induce individuals to leave Bankers Life. As such, the appellate court affirmed the lower court’s ruling that Gelineau did not violate the non-competition agreement.

While the decision in Bankers Life is not binding precedent in Michigan, its analysis of social media in the employment law context relied on a Michigan case.  In Amway Global v. Woodward, the U.S. District Court for the Eastern District of Michigan, in considering whether several sales representatives’ use of their LinkedIn accounts violated their non-solicitation agreements, the court said, “it is the substance of the message conveyed, and not the medium through which it is transmitted, that determines whether a communication is a solicitation.” Amway Global v. Woodward, 744 F. Supp. 2d 657, 674 (ED Mich. 2010).  In Amway, the court found a violation of the individuals’ non-solicitation agreements based on their “three-stage strategy” to encourage other Amway sales representatives to leave Amway and join them in representing an Amway competitor. The communication included the statement, “If you knew what I knew, you would do what I do.”

The Bankers Life case dealt with a former employee’s request to connect with a Bankers Life employee.  The Court’s analysis may have been different if the former employee had attempted to connect with a Bankers Life customer.

It is important to consider a departing employee’s social media activity when that employee is subject to a non-competition and/or non-solicitation agreement.  Also, the impact of social media should be considered when working with counsel to create these types of employment policies and agreements.

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. September 2017.

To Pay or Not to Pay Union Dues – That is the Question under Right To Work

By: Claudia D. Orr

In February I wrote about the Michigan Court of Appeals’ decision in Taylor School District and Taylor Federation of Teachers v Rhatigan, involving a ten year union security clause that would remain in effect until July 1, 2023, while the remainder of the collective bargaining agreement (“CBA”) would expire in 2017.  Why was the union security clause negotiated for a ten year term?  Because Michigan law was amended in 2012 to give employees the right to refrain from joining or assisting unions or paying any dues to a union and making it unlawful for employers and unions to interfere with those rights (often referred to as right-to-work law, MCL 423.14 and MCL 423.209). The amendments became effective March 28, 2013.

So, recognizing that it would soon be an employee’s right to opt out of the union, the union pushed for a union security clause that would require all of the employees holding union positions to either join the union or pay a service fee “in an amount determined by the union” for the next 10 years!  The appellate court agreed with the Michigan Employment Relations Commission (“MERC”) that the 10 year term was excessive and unreasonable, depriving employees of their right to opt out, and effectively nullifying the state law for the next ten years.

Since then the Michigan Court of Appeals has issued two more decisions concerning the right to work law.  In Saginaw Education Association v Eady-Miskiewicz, the court examined a union security clause that provided an annual one month “window of opportunity” to opt out of union membership. Specifically, the union membership application stated above the signature line: “Membership is continued unless I reverse this authorization in writing between August 1 and August 31 of any year”.  Further, next to the payroll deduction box it stated “I authorize my employer to deduct … dues, assessments and contributions as may be determined from time to time, unless I revoke this authorization in writing between August 1 and August 31 of any year.”

The court upheld MERC’s decision striking the clause, holding “where employees have a right to refrain from union activity, the union may not make rules interfering with or restraining employees in the exercise of that right.” The court noted, however, that the “right to discontinue financially supporting a union may be waived if the waiver is clear, explicit, and unmistakable” but the agreement at issue did not pass muster.

Now, in an unpublished decision, the Michigan Court of Appeals has approved of a union dues agreement.  In Teamsters Local 214 v Beutler, employees were provided a union membership application that stated:

This authorization and assignment shall be irrevocable for the term of the applicable contract between the union and the employer or for one year, whichever is the lesser, and shall automatically renew itself for successive yearly or applicable contract periods thereafter, whichever is lesser, unless I give written notice to the company and the union at least sixty (60) days, but not more than seventy-five (75) days before any periodic renewal date of this authorization and assignment of my desire to revoke same.

(Emphasis added). The collective bargaining agreement expired on June 30, 2013 and, in anticipation of the right to work legislation, the newly negotiated agreement did not contain a union security clause or authorization for the employer to deduct dues from employees’ wages.

Pauline Beutler provided the union with written notice in September 2013 that she intended to exercise her right under the right to work act and withdraw from union membership.  MERC found that her letter was sufficient to withdraw from union membership, but not to avoid her obligation to continue to pay union dues.  That obligation was separate from the collective bargaining agreement, contractual in nature, and found on her union application. By agreement the employee was only permitted to terminate the obligation to pay dues during that 15 day window of opportunity. The obligation to pay dues was for a specified period, regardless of her union membership, and “constituted a binding waiver of her right to discontinue her financial support of the union at will.”

It is unclear how this agreement and the court’s ruling squares with the right to work law which also makes it unlawful for an employer or union to require an individual, as a condition of employment, to “pay any dues, fees, assessments, or other charges or expenses of any kind or amount or provide anything of value to a labor organization.” MCL 423.14 (1)(c). However, the court has ruled and we should expect to see more dues check off forms containing language similar to the above.  Unions may not be able to force membership, but apparently they can throw obstacles up that will make it easier for them to continue collecting dues.

When was the last time your company utilized legal counsel to negotiate your collective bargaining agreement?  If it has been awhile, there may be terms that continue to be perpetuated that are now unlawful, or that can be renegotiated to be more favorable to the company. If you need assistance, contact experienced labor counsel, such as 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 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. September 2017.

Coordinating the CBA Grievance and the EEOC Charge *

By: Claudia D. Orr

What happens when an employee has a grievance under the collective bargaining agreement (“CBA”) and files a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) because she feels the employment action at issue was discriminatory?

Let’s look at the CBA at issue and what happened in Watford v Jefferson County Public Schools, a 2:1 decision, hot off the press from the federal Court of Appeals for the Sixth Circuit.  It is important to pay attention to this case, especially if you have a CBA, because this is the federal appellate court that hears the appeals from federal courts in Michigan, Ohio, Kentucky and Tennessee.

A CBA was negotiated between the Jefferson County Board of Education and the Jefferson County Teachers Association (the union).  As with most CBAs, it contained a grievance procedure.  This one begins with a discussion with the immediate supervisor or appropriate administrator and culminates with an appeal to the school superintendent followed by arbitration.

Significantly, the CBA also provides that “[t]he Association and the aggrieved party will be required to exhaust this Grievance Procedure including arbitration before seeking alternative remedies, provided that by doing so they will not be deemed to have waived or otherwise prejudiced any constitutional, statutory, or other legal rights that they may have.”  It also states that,“[i]f the employee opts to pursue a complaint using another agency, the parties agree to hold the grievance in abeyance until the agency complaint is resolved.”

On October 13, 2010, the day she was terminated, Plaintiff Watford filed a grievance under the CBA.  On February 24, 2011, she initiated a charge of discrimination with the EEOC. While, Watford’s grievance concerning the termination had been tentatively scheduled for arbitration to begin in July 2011, it was held in abeyance because of the EEOC charge.

Watford, disappointed that the arbitration did not occur as scheduled, filed a second EEOC charge claiming the arbitration had been held in abeyance in retaliation for filing her initial charge.  A year later, the EEOC issued a finding of cause (i.e., that it believes Title VII was violated) on the retaliation charge and, several months later in January 2013, the EEOC issued the Notice of Right to Sue letter and dismissed the original charge.

Arbitration of the union grievance was rescheduled because the EEOC had completed its processing of the charges.  But on April 24, 2013, the second day of the arbitration hearing, Watford filed her lawsuit in federal court alleging violations of Title VII. In response, the Board of Education asked the arbitrator to adjourn the arbitration until the federal lawsuit was resolved.  The arbitrator granted the request under the terms of the CBA quoted above.

Of course, this triggered another retaliation charge at the EEOC by Watford on October 25, this time against the Board of Education.  The Right to Sue letter on the retaliation charge was issued December 31, 2014.

The union and the Board of Education both filed motions to dismiss the retaliation claims, arguing that holding the arbitration in abeyance was not retaliatory; indeed the CBA provided for this action.  The federal district court agreed and dismissed those claims.  A few months later, Watford stipulated to a voluntary dismissal of the remaining claims and her appeal of the court’s dismissal of the retaliation claims followed.

So, here we are, in the Sixth Circuit Court of Appeals, nearly seven years after Watford was discharged. That is a lot of legal fees for the employer (and the union). Incidentally, the EEOC filed amicus curiae briefs with the appellate court. This tells you the interaction between this CBA grievance process and the EEOC charge is an important issue to the EEOC.

The appellate court first addressed whether the union could be held liable and found that it could.  But the more interesting, meaty issue addressed by the court was whether holding the grievance proceedings in abeyance was an “adverse” action upon which the Title VII retaliation claim could be based.  It found that it was.

Remember, an adverse action for a retaliation claim only needs to be an act that would “dissuade a reasonable worker from making or supporting a charge of discrimination.”  The appellate court had previously ruled in EEOC v Sundance Rehabilitation Corp, 466 F3d 490, 498 (CA 6, 2006), that the termination of grievance proceedings was an adverse action. Thus, the dispositive issue for the court was “whether there is a material difference between terminating a grievance and holding it in abeyance.”

The court found that there was not because both actions made “the availability of remedies contingent on not filing an EEOC charge. Singling out employees or union members on this basis ‘discriminate[s]’ against them because they ‘opposed any practice made an unlawful employment practice by’ Title VII… And ‘[a] benefit that is part and parcel of the employment relationship may not be doled out in a discriminatory fashion, even if the employer would be free…not to provide the benefit at all.’”  The court noted that the effect on an employee was “not softened merely because grievances are held in abeyance rather than terminated. Employees avail themselves of the grievance process at least in part because grievances are supposed to ‘be processed as rapidly as possible.’”

Watford’s EEOC charges had to be filed within 300 days of the employment termination.  However, a grievant (like Watford), on average, waited 399 days after initiating the grievance to receive an arbitration award.  Here, because the grievance was held in abeyance, Watford had to wait 923 days until arbitration even started. So Watford was faced with a decision: either a speedy resolution of her claims through the grievance process or file an EEOC charge.  Thus, the terms of the grievance process in the CBA, violated the anti-retaliation sections of the federal civil rights laws.

What does your CBA say about the interaction between the grievance procedure and other means of redress?  What does it say about the interaction between the CBA and the employee handbook?  These are strategic legal issues that should be discussed with an experienced labor/employment attorney, such as 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 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. September, 2017.

Coordinating the CBA Grievance and the EEOC Charge

By: Claudia D. Orr

What happens when an employee has a grievance under the collective bargaining agreement (“CBA”) and files a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) because she feels the employment action at issue was discriminatory?

Let’s look at the CBA at issue and what happened in Watford v Jefferson County Public Schools, a 2:1 decision, hot off the press from the federal Court of Appeals for the Sixth Circuit.  It is important to pay attention to this case, especially if you have a CBA, because this is the federal appellate court that hears the appeals from federal courts in Michigan, Ohio, Kentucky and Tennessee.

A CBA was negotiated between the Jefferson County Board of Education and the Jefferson County Teachers Association (the union).  As with most CBAs, it contained a grievance procedure.  This one begins with a discussion with the immediate supervisor or appropriate administrator and culminates with an appeal to the school superintendent followed by arbitration.

Significantly, the CBA also provides that “[t]he Association and the aggrieved party will be required to exhaust this Grievance Procedure including arbitration before seeking alternative remedies, provided that by doing so they will not be deemed to have waived or otherwise prejudiced any constitutional, statutory, or other legal rights that they may have.”  It also states that,“[i]f the employee opts to pursue a complaint using another agency, the parties agree to hold the grievance in abeyance until the agency complaint is resolved.”

On October 13, 2010, the day she was terminated, Plaintiff Watford filed a grievance under the CBA.  On February 24, 2011, she initiated a charge of discrimination with the EEOC. While, Watford’s grievance concerning the termination had been tentatively scheduled for arbitration to begin in July 2011, it was held in abeyance because of the EEOC charge.

Watford, disappointed that the arbitration did not occur as scheduled, filed a second EEOC charge claiming the arbitration had been held in abeyance in retaliation for filing her initial charge.  A year later, the EEOC issued a finding of cause (i.e., that it believes Title VII was violated) on the retaliation charge and, several months later in January 2013, the EEOC issued the Notice of Right to Sue letter and dismissed the original charge.

Arbitration of the union grievance was rescheduled because the EEOC had completed its processing of the charges.  But on April 24, 2013, the second day of the arbitration hearing, Watford filed her lawsuit in federal court alleging violations of Title VII. In response, the Board of Education asked the arbitrator to adjourn the arbitration until the federal lawsuit was resolved.  The arbitrator granted the request under the terms of the CBA quoted above.

Of course, this triggered another retaliation charge at the EEOC by Watford on October 25, this time against the Board of Education.  The Right to Sue letter on the retaliation charge was issued December 31, 2014.

The union and the Board of Education both filed motions to dismiss the retaliation claims, arguing that holding the arbitration in abeyance was not retaliatory; indeed the CBA provided for this action.  The federal district court agreed and dismissed those claims.  A few months later, Watford stipulated to a voluntary dismissal of the remaining claims and her appeal of the court’s dismissal of the retaliation claims followed.

So, here we are, in the Sixth Circuit Court of Appeals, nearly seven years after Watford was discharged. That is a lot of legal fees for the employer (and the union). Incidentally, the EEOC filed amicus curiae briefs with the appellate court. This tells you the interaction between this CBA grievance process and the EEOC charge is an important issue to the EEOC.

The appellate court first addressed whether the union could be held liable and found that it could.  But the more interesting, meaty issue addressed by the court was whether holding the grievance proceedings in abeyance was an “adverse” action upon which the Title VII retaliation claim could be based.  It found that it was.

Remember, an adverse action for a retaliation claim only needs to be an act that would “dissuade a reasonable worker from making or supporting a charge of discrimination.”  The appellate court had previously ruled in EEOC v Sundance Rehabilitation Corp, 466 F3d 490, 498 (CA 6, 2006), that the termination of grievance proceedings was an adverse action. Thus, the dispositive issue for the court was “whether there is a material difference between terminating a grievance and holding it in abeyance.”

The court found that there was not because both actions made “the availability of remedies contingent on not filing an EEOC charge. Singling out employees or union members on this basis ‘discriminate[s]’ against them because they ‘opposed any practice made an unlawful employment practice by’ Title VII… And ‘[a] benefit that is part and parcel of the employment relationship may not be doled out in a discriminatory fashion, even if the employer would be free…not to provide the benefit at all.’”  The court noted that the effect on an employee was “not softened merely because grievances are held in abeyance rather than terminated. Employees avail themselves of the grievance process at least in part because grievances are supposed to ‘be processed as rapidly as possible.’”

Watford’s EEOC charges had to be filed within 300 days of the employment termination.  However, a grievant (like Watford), on average, waited 399 days after initiating the grievance to receive an arbitration award.  Here, because the grievance was held in abeyance, Watford had to wait 923 days until arbitration even started. So Watford was faced with a decision: either a speedy resolution of her claims through the grievance process or file an EEOC charge.  Thus, the terms of the grievance process in the CBA, violated the anti-retaliation sections of the federal civil rights laws.

What does your CBA say about the interaction between the grievance procedure and other means of redress?  What does it say about the interaction between the CBA and the employee handbook?  These are strategic legal issues that should be discussed with an experienced labor/employment attorney, such as 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 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. September, 2017.

To Pay or Not to Pay Union Dues – That is the Question under Right To Work

By: Claudia D. Orr

In February I wrote about the Michigan Court of Appeals’ decision in Taylor School District and Taylor Federation of Teachers v Rhatigan, involving a ten year union security clause that would remain in effect until July 1, 2023, while the remainder of the collective bargaining agreement (“CBA”) would expire in 2017.  Why was the union security clause negotiated for a ten year term?  Because Michigan law was amended in 2012 to give employees the right to refrain from joining or assisting unions or paying any dues to a union and making it unlawful for employers and unions to interfere with those rights (often referred to as right-to-work law, MCL 423.14 and MCL 423.209). The amendments became effective March 28, 2013.

So, recognizing that it would soon be an employee’s right to opt out of the union, the union pushed for a union security clause that would require all of the employees holding union positions to either join the union or pay a service fee “in an amount determined by the union” for the next 10 years!  The appellate court agreed with the Michigan Employment Relations Commission (“MERC”) that the 10 year term was excessive and unreasonable, depriving employees of their right to opt out, and effectively nullifying the state law for the next ten years.

Since then the Michigan Court of Appeals has issued two more decisions concerning the right to work law.  In Saginaw Education Association v Eady-Miskiewicz, the court examined a union security clause that provided an annual one month “window of opportunity” to opt out of union membership. Specifically, the union membership application stated above the signature line: “Membership is continued unless I reverse this authorization in writing between August 1 and August 31 of any year”.  Further, next to the payroll deduction box it stated “I authorize my employer to deduct … dues, assessments and contributions as may be determined from time to time, unless I revoke this authorization in writing between August 1 and August 31 of any year.”

The court upheld MERC’s decision striking the clause, holding “where employees have a right to refrain from union activity, the union may not make rules interfering with or restraining employees in the exercise of that right.” The court noted, however, that the “right to discontinue financially supporting a union may be waived if the waiver is clear, explicit, and unmistakable” but the agreement at issue did not pass muster.

Now, in an unpublished decision, the Michigan Court of Appeals has approved of a union dues agreement.  In Teamsters Local 214 v Beutler, employees were provided a union membership application that stated:

This authorization and assignment shall be irrevocable for the term of the applicable contract between the union and the employer or for one year, whichever is the lesser, and shall automatically renew itself for successive yearly or applicable contract periods thereafter, whichever is lesser, unless I give written notice to the company and the union at least sixty (60) days, but not more than seventy-five (75) days before any periodic renewal date of this authorization and assignment of my desire to revoke same.

(Emphasis added). The collective bargaining agreement expired on June 30, 2013 and, in anticipation of the right to work legislation, the newly negotiated agreement did not contain a union security clause or authorization for the employer to deduct dues from employees’ wages.

Pauline Beutler provided the union with written notice in September 2013 that she intended to exercise her right under the right to work act and withdraw from union membership.  MERC found that her letter was sufficient to withdraw from union membership, but not to avoid her obligation to continue to pay union dues.  That obligation was separate from the collective bargaining agreement, contractual in nature, and found on her union application. By agreement the employee was only permitted to terminate the obligation to pay dues during that 15 day window of opportunity. The obligation to pay dues was for a specified period, regardless of her union membership, and “constituted a binding waiver of her right to discontinue her financial support of the union at will.”

It is unclear how this agreement and the court’s ruling squares with the right to work law which also makes it unlawful for an employer or union to require an individual, as a condition of employment, to “pay any dues, fees, assessments, or other charges or expenses of any kind or amount or provide anything of value to a labor organization.” MCL 423.14 (1)(c). However, the court has ruled and we should expect to see more dues check off forms containing language similar to the above.  Unions may not be able to force membership, but apparently they can throw obstacles up that will make it easier for them to continue collecting dues.

When was the last time your company utilized legal counsel to negotiate your collective bargaining agreement?  If it has been awhile, there may be terms that continue to be perpetuated that are now unlawful, or that can be renegotiated to be more favorable to the company. If you need assistance, contact experienced labor counsel, such as 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 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. September 2017.

OMB Suspends EEO-1 Pay Data Reporting Requirement

By: Karen L. Piper

On August 29, 2017, the Office of Management and Budget (“OMB”) notified the Equal Employment Opportunity Commission (“EEOC”) that it was suspending indefinitely the requirement that employers and federal contractors include compensation data in their next EEO-1 Reports.

The EEOC has long required employers with 100 or more employees and federal contractors with 50 or more employees to file annual reports about their workforce by race, ethnicity and gender in each of 10 occupational categories.  On September 29, 2016, the EEOC issued a revised EEO-1 Report form which would have required employers to add compensation data in 12 pay bands in each occupational category, along with a summary of hours worked to their reports.

Employers expressed concern about the new requirement.  They expected that compiling the pay data would be time-consuming and expensive.  They also were concerned about the confidentiality of their compensation data.  On August 29, based on its authority under the Paperwork Reduction Act, the OMB suspended the requirement while it reviews the effectiveness of the collection of compensation data.

EEOC’s Acting Chair Victoria Lipnic announced the OMB’s plans.  She also explained that the collection of compensation data was designed to assist the EEOC in enforcing equal pay laws.  Despite the change, Ms. Lipnic reiterated the EEOC’s commitment to enforcing equal pay laws.

The OMB’s suspension of the collection of pay data does not change the date for submission of the next EEO-1 Report.  No report is required in 2017.  EEO-1 Reports without compensation data must be filed by March 31, 2018, based on a snapshot of the employer’s workforce on a payroll date between October 1 and December 31, 2017.

Any employer with questions about the EEO-1 reporting requirements should contact 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. September 2017.