Search Results for: "section 7"

The change in administrations has brought a series of reversals of the Obama era’s less than employer-friendly positions by the U. S. Department of Labor (DOL) and the National Labor Relations Board (NLRB or Board). This article highlights some of the favorable recent developments from these agencies that may be a harbinger of better things to come in 2018.

DOL REINSTATES 17 FAVORABLE OPINION LETTERS WITHDRAWN BY THE PRIOR ADMINISTRATION

For many, many years, the DOL issued official written Opinion Letters in direct response to employer questions regarding the interpretation and implementation of federal labor laws. Although they do not create law, Opinion Letters set forth the DOL’s position on how the Fair Labor Standards Act (FLSA) and other laws apply to very specific circumstances presented by employers seeking the DOL’s guidance. Under the FLSA, an employer who relies in good faith upon an Opinion Letter issued by the DOL is shielded from liability for violations of the minimum wage and overtime requirements of the FLSA, so long as the facts pattern surrounding challenged practice is identical to that contained in the relied-upon Opinion Letter.

In a departure from that prior practice, in March of 2009 the Obama administration withdrew various DOL Opinion Letters issued in the waning days of the Bush administration “for further consideration by the Wage and Hour Division” of the DOL. In addition, the DOL opted to issue “Administrator Interpretations” rather than formal Opinion Letters. Administrative Interpretations are more general interpretations that will not shield an employer from liability if relied upon. In June 2017 the Trump administration DOL announced that it would revive the practice of issuing Opinion Letters, and on January 5, 2018, reinstated 17 DOL Wage and Hour Division (WHD) Opinion Letters addressing various issues under the FLSA. The return to Opinion Letters as opposed to Administrator Interpretations is a favorable development for employers.

The 17 re-issued Opinion Letters cover a wide range of topics under the FLSA, and many are industry specific with little or no application to most employers. (Click here for a complete list of the re-issued Opinion Letters).   Among those that have a broader application to all employer include:

• FLSA 2018-5, FLSA 2018-9 and FLSA 2018-11, addressing whether a salaried exempt employee who is absent for one or more full days but does not have time in his/her PTO bank to cover the absences, may be subject to a deduction of the full day’s absence from the employee’s pay by the employer. These revived Opinion Letters deemed such a practice permissible under the FLSA.
• FLSA 2018-9 and FLSA 2018-11, addressing whether non-discretionary bonuses or other payments must be included in an employee’s regular rate of pay under the FLSA.

However, employers should keep in mind that he reissued opinions do not offer anything new, but simply revive prior opinions that had been put on hold by the prior administration.
While this is a positive development for employers, a word of caution: before relying upon a DOL Letter Opinion to support a wage or other workplace practice, employers must review the situation carefully to ensure that the facts at issue are virtually identical to the facts underpinning the DOL’s guidance. Absent such conformity, the employer will unable to invoke the affirmative defense of reliance upon the DOL’s interpretive guidance, and if the practice violates the FLSA (or other law) the employer faces significant liability.

DOL DISPENSES WITH INFLEXIBLE SIX-FACTOR TEST IN FAVOR OF “PRIMARY BENEFICIARY’ TEST TO ASSESS THE LEGITIMACY OF UNPAID INTERNSHIPS UNDER THE FLSA

On January 5, 2017 the DOL announced that it was ditching its inflexible six-factor test previously used to determine if unpaid interns working for for-profit entities qualified as employees under the Fair Labor Standards Act (FLSA), in favor of a more flexible approach that may make unpaid internships more appealable to employers.

The DOL’s old six-factor test was an all-or-nothing approach, where interns were presumed to be employees entitled to minimum wage and overtime payments under the FLSA unless the employer could meet each one of the test’s six factors. Included among the factors was consideration of whether the employer derived any immediate advantage from the intern’s activities; if so, the test was not satisfied and the intern was deemed an employee entitled to minimum wage and overtime payments. The test was so stringent that many employers shied away from internship opportunities, depriving unskilled students the opportunity to gain valuable work experience to add to their resumes.

Unlike the old six-factor test, not all of the seven factors of the new “primary beneficiary test’ need to be satisfied to qualify as a legitimate unpaid internship. In addition, the seven factors are not exhaustive, and courts are free to consider other relevant factors when assisting the relationship. Under this new balanced approach, a business can fail to meet some of the factors but still meet the overall requirements. Moreover, while many factors of the new test are similar to those of the old DOL test, the primary beneficiary test dispensed with the previously disqualifying factor that considered whether the employer received any benefit from the employee’s services. Now, employers can receive benefits from an unpaid intern’s services, so long as the factors of the test establish that the primary beneficiary of the relationship is the intern.

The seven factors of the “primary beneficiary test” identified by the DOL are:

1. The extent to which the intern and the employer understand that there will be no compensation, express or implied, for the services.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including clinical and other hands on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provided the intern with beneficial learning.
6. The extent to which the intern’s work complements rather than displaces the work of paid employees, while providing significant educational benefits to the intern.
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The DOL emphasized that no single factor is determinative, and the decision of whether an intern is an employee under the FLSA will be determined on a case-by-case basis. However, on balance the employer must show that the intern, not the employer, is the primary beneficiary of the relationship.

The DOL’s shift to the “primary beneficiary test” is by no means a green light for employers to avoid minimum wage and overtime requirements by characterizing employees as unpaid interns, but it may pave the way for more unpaid internship programs that are highly beneficial students and employers. Employers must still carefully evaluate each of the factors to determine if the “primary beneficiary test” is met, and should consult with employment counsel before deciding to initiate an unpaid internship program.

NLRB CHANGES COURSE ON RECENT ANTI-EMPLOYER DECISIONS

Under the Obama administration, the NLRB issued numerous decisions that sparked considerable controversy among employers. Thankfully, last week the newly-constituted Board issued a series of opinions aimed at invalidating certain anti-employer decisions that were at the heart of the controversy, some of which are discussed below.

Browning-Ferris Joint Employer Test Abandoned. In a previous newsletter, we expressed concern about the Board’s decision in Browning-Ferris, which created a new “joint employer” test that greatly expanded the potential for a joint employer finding. Under Browning-Ferris, two or more business entities could be conferred joint employer status if they reserved potential joint control, indirect or limited, over the other employer’s workers, even if that control was never actually exercised. That 2015 ruling departed from the previous Board standard that was in effect for over 30 years.

In Hy-Brand Industrial Contractors, 365 NLRB No 156 (2017), the Board reverted to the pre-Browning-Ferris standard, declaring that joint employer status requires proof that i) the putative joint employer actually exercised joint control; ii) the control was direct and immediate rather than indirect; and iii) the control exercised was not “limited and routine” control. The Board emphasized that return to its prior test “provided certainty and predictability” to long-standing third-party business relationships that include subcontracting, outsourcing and temporary staffing that were being jeopardized by the discarded Browning-Ferris test.

In light of this decision, it remains to be seen whether the Senate will move forward with pending legislation already passed by the House of Representatives aimed at negating the Browning-Ferris holding.

Lutheran Heritage Standard for Assessing Legality of Employer Handbooks Abandoned. In its 2004 decision in Lutheran Heritage Village-Livonia, the Board announced a new standard for determining whether an employer’s facially-neutral rules, handbooks or policies addressing workplace conduct unlawfully restricted employees’ Section 7 rights under the National Labor Relations Act (NLRA) to engage in protected concerted activity. Under the Lutheran Heritage standard, even facially-neutral employer policies were deemed illegal if the Board determined that employees could “reasonably construe” them to “chill” employees’ free exercise of Section 7 rights. As addressed is several of our previous newsletters, in recent years even the most innocuous employer policies were subject to the Board’s contorted analysis that found nearly every effort to control employee conduct (e.g., policies restricting recording devices, speaking to the media, civility rules, social medial policies) were unlawful, without regard for the employer’s rationale for the policy.

Thankfully, in The Boeing Company, 365 NLRB No. 154 (2017) the newly-constituted Board recognized that the Lutheran Heritage standard did not give adequate weight to the employer’s interests and eliminated the standard in favor of a more balanced approach. Under the new standard, when analyzing a facially-neutral rule, policy or handbook that had the potential to interfere with Section 7 rights, the following two factors must be considered: i) the nature and extent of the potential impact on employees’ NLRA rights; and ii) the employer’s legitimate justifications associated with the rule. The Board also laid out the following three categories by which it will classify employer rules:

Category 1: Rules that cannot be reasonably construed to interfere with Section 7 rights, or any potential interference is outweighed by the business justification for the rule. Examples of category 1 rules include those requiring “harmonious interactions and relationships,” and other rules requiring employees to observe basic standards of civility in the workplace.

Category 2: Rules where the Board determines that maintenance of the rule is unlawful after conducting individualized scrutiny in its adverse impact on Section 7 rights that is not outweighed by any of the employer’s business justifications.

Category 3: Rules that limit Section 7 rights in such a way that they will be unlawful in all cases. An example of a Category 3 rule is one prohibiting employees from freely discussing wages or benefits with each other.

In light of The Boeing Company ruling, employers may want to revisit those workplace rules and handbooks that were likely revised to comply with the Lutheran Heritage standard and the Obama administration’s vigorous attack upon handbooks under this discarded precedent.

Specialty Healthcare Abandoned. In 2011 the Board departed from decades of precedent and announced a new standard for determining whether a bargaining unit proposed by a union was appropriate. The ruling ditched the traditional “community of interests” standard for one that made it easier for unions to target a smaller number of employees to creating multiple “micro-units” that employers would have to negotiate with. Employers claimed the new standard opened the door for gerrymandering larger workforces to create smaller units that were more likely to succeed in an organization drive.

In its December 15, 2017 decision in PCC Structurals, Inc., the Board announced that it was abandoning the Specialty Healthcare standard and returning to the prior “community of interests” standard for determining the proper scope of a bargaining unit, a standard that will diminish the number of units employers will have to deal with during organization.

Call for Comment on the “Quickie Election” Rule: In 2004 the Board adopted what is commonly referred to as “the quickie election” rule that accelerated the timeline for union elections, and significantly reduced the time period historically available to employers to campaign against unionization.

On December 11, 2017 the Board asked for public comment on whether the rule should be i) rescinded; ii) retained without change; or iii) modified, and if so, what modifications should be made. In addition, the Board seeks the public’s comments on whether, if rescinded, the Board should return to the election rules previously in place; or whether those rules should be modified.

Bottom Line: Both the DOL and the Board’s previous eight years saw many changes in long-established agency precedents, actions that were accompanied by vigorous opposition in the business community. The DOL’s and Board’s return to their respective prior standards certainly signals a more employer-friendly environment going forward, but only future actions by the DOL and the Board will show whether such optimism was justified.

Employment Law Newsletter

In a decision that may ultimately negate any post January 2012 decisions issued by the National Labor Relations Board (NLRB), the D.C. Circuit Court of Appeals in January 2013 struck down as unconstitutional three controversial “recess” appointments to the NLRB by President Obama. The court held that the presidential power to make appointments when Congress is in “recess” (and therefore unavailable to vote on the nominations) does not apply to a generic break in Congressional proceedings for several days. The President’s nominations were made in January 2012 when the Senate was not in recess but was meeting in sessions every three days and thus were unconstitutional from their inception.

Although the issue is far from settled – the U.S. Supreme Court has decided to hear the recess appointments issue – the questionable status of the currently constituted Board may be fatal to a slew of decisions issued under the recess appointees. At issue in many of these rulings was whether employer policies and practices infringed upon employees’ rights under Section 7 of the National Labor Relations Act (NLRA) to engage in “concerted activity,” including discussion of the terms and conditions of employment with coworkers. Although the NLRA was historically implicated in unionized workplaces, its protections apply to non-unionized workplaces as well, and non-unionized employers are increasingly targeted by the NLRB for violations of the Act. These decisions have created a firestorm among employers, who view the NLRB’s recent pronouncements as pro-union attacks upon employers’ abilities to reasonably manage their workplaces. Below is a summary of some of the Board’s more controversial rulings:

Company rules precluding employees from disparaging the employer, disclosing confidential information or communicating with third parties continue to be struck down by the NLRB. In , the Board reiterated that its determination of whether employee conduct policies unlawfully restrict Section 7 rights turns on whether 1) employees would reasonably construe the language as prohibiting protected Section 7 activity; 2) the rule was promulgated in response to union activity; or 3) the rule was applied to restrict the free exercise of Section 7 rights. Applying this test, the Board concluded that a provision of Costco’s employee handbook requiring employees to use “appropriate business decorum” when communicating with others was simply an effort to promote a civil workplace and could not reasonably be construed to prohibit protected communications. Conversely, the handbook’s rule prohibiting messages that “damage the Company, defame any individual or damage any person’s reputation” could reasonably be interpreted by employees as prohibiting protected communication critical of the employer or its terms and conditions of employment, and thus could “reasonably tend to chill employees” in their exercise of Section 7 rights.

A mere three weeks later in , the Board considered an employee handbook rule stating “Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.” Applying the three factors discuss above, the Board found that the broad prohibition against “disrespectful” behaviors and “language which injures the image or reputation of the dealership” could be construed by employees to encompass protected Section 7 activity, such as employee complaints about management and working conditions to co-workers, supervisors or other third parties in an effort to secure support for changing these workplace conditions.

Finally, on the day that the D.C. Circuit struck down the President’s recess appointments, the Board audaciously issued its decision in , once again striking down several employer policies. The first attack was on the employer’s policy instructing employees not to contact the media about company matters. Whereas the rule did not carve out unprotected communications, the Board concluded that the restriction could be construed as prohibiting employees’ communications with the media about labor disputes in violation of Section 7. The second policy to fall required employees to refer all workplace inquiries by law enforcement to management for further handling. The Board found the policy overly broad because employees could reasonably conclude that investigations into NLRA violations by NLRB agents would be included within the “law enforcement” encounters to be referred to management. Lastly, the Board stuck down the company’s confidentiality rule instructing employees to never discuss “details about your job, company business, or work projects with anyone outside the Company” and to never “give out information” about the company’s customers. The Board reasoned that these restrictions were a violation of Section 7 rights because they could be reasonably be interpreted by employees as barring employee discussions about wages, discipline, performance ratings and other terms of conditions of employment.

Blanket policy requiring employers to keep workplace complaints confidential unlawfully interfered with employee’s Section 7 rights. In (July 2012) the NLRB ruled that the employer’s routine policy to warn employees involved in HR investigations to refrain from discussing the investigation with other employees violated Section 7 rights. The Board reasoned that such blanket confidentiality policies preclude employees from discussing problems in the workplace amongst themselves. Although many HR professionals agree that such confidentiality directives are warranted by best practices, the NLRB announced that before imposing confidentiality requirements, an employer must conduct a case-by-case analysis to determine if confidentiality was necessary to 1) protect witnesses; 2) prevent the destruction of evidence; 3) prevent fabricated testimony; or 4) prevent a cover-up. If one or more of these factors were present, the employer would have a “legitimate business justification for the confidentiality expectation” that trumped employees’ Section 7 rights to discuss the investigation.

Employers may be required to surrender confidential statements secured during workplace investigations to unions. Traditionally, confidentiality of witness statements secured by employers has been a key component of investigations into workplace harassment and other misconduct. Along the lines of the decision, in (Dec. 2012), the NLRB overruled 34 years of Board precedent that categorically exempted written witness statements from an employer’s production obligations to a union seeking information under the NLRA. Rather, the Board adopted a “flexible approach” that “adequately protects the interest of the employer and witnesses, while preserving the general right of requesting unions to obtain relevant information.” Under the new ruling, an employer refusing to produce a witness statement must prove “that a legitimate and substantial confidentiality interest exists” that outweighs the union’s need for the information. As a result, unions are encouraged to request all statements related to workplace investigations, while employers face the prospect of ineffective investigations because witnesses to misconduct will likely be discouraged from being candid for fear that their statements will be disclosed.

Employees’ Facebook venting about a co-worker’s criticism of their job performance was protected concerted activity. In (Dec. 2012), the NLRB considered whether the termination of five employees for their off-duty Facebook posts complaining about a co-worker’s habit of criticizing them for not doing enough work was a violation of Section 7 rights. The target of the employees’ comments complained that she was being harassed by her co-workers, who were then terminated for violating the employer’s “zero tolerance” policy against bullying and harassment in the workplace. The employees filed charges with the NLRB claiming that their off-duty posts constituted protected concerted activity under Section 7. The NLRB agreed, notwithstanding the fact that the posts were about a co-worker and not a member of management, and the posts by the employees did not appear to indicate that these co-workers intended to do anything about the situation. The Board reasoned that merely expressing a similar viewpoint or discussing terms and conditions of employment with co-workers may be protected because a mutual aid object can be “implicitly manifested” from the surrounding circumstances. The lone dissenting member of the Board noted that the employees’ comments appeared to be more like “venting” rather than a “call for action” protected by the NLRA.

Clearly, this decision places employers in the no-win situation of risking NLRB action for enforcing workplace conduct policies, or alternatively, taking no action and risking negligent retention, workplace bullying and emotional distress claims from the victim of the workplace behaviors. This latest decision addressing Facebook firings serves as an additional caution signal to employers contemplating discipline for violations of workplace conduct rules in employee’s social networking activities.

Non-union employer’s mandatory arbitration agreements interfere with employees’ Section 7 rights. Bucking the trend of recent U.S. Supreme Court decisions heavily favoring arbitration as a means to resolve employment disputes, the NLRB continues to invalidate arbitration agreements that, in the eyes of the Board, interfere with employees’ Section 7 rights. In (Jan. 2012) , the employer required employees to execute an arbitration agreement mandating arbitration of all employment related disputes, and waiving class action claims in any forum. The NLRB ruled that an agreement precluding collective actions by employees unlawfully interfered with employees’ rights to engage in “concerted action for mutual protection.” Whereas this decision appears to violate several recent decisions of the Supreme Court permitting arbitration and class action waivers of employment disputes, the decision is currently subject to a hotly contested appeal before the 5th Circuit Court of Appeals.

Undaunted by the fact that most federal courts have rejected the NLRB’s rationale in in favor of the Supreme Court’s sanction of mandatory arbitration agreements, the NLRB once again kyboshed an agreement mandating arbitration of employment disputes. (Dec. 2012) involved a challenge to the termination of several employees who refused to execute the employer’s alternative dispute policy requiring arbitration of all employment related disputes, but containing a disclaimer permitting employees to file charges with a “government agency” (which arguably included the NLRB). The Board found that the policy on the whole was ambiguous because it did not include an express carve-out reference to the NLRB or actions under the NLRA, and thus could reasonably be interpreted by employees as limiting access to the Board for violations of the NLRA.

Pending further review of the NLRB’s aversion to enforcing agreements to arbitrate employment disputes in non-union workplaces, employers should consider revising their alternative dispute agreements to include a statement that employees are free to pursue claims before the NLRB to vindicate alleged violations of Section 7 rights.

The rulings discussed above are consistent with the Board’s prior attacks on commonplace provisions in codes of conduct, social networking policies, confidentiality requirements and other rules found in employee handbooks and policies. Although a seemingly reasonable solution to these dilemmas would be the inclusion of language indicating that the rule would not be applied to concerted conduct protected by Section 7, such disclaimers were deemed insufficient to cure the policy’s infringement on protected activity in guidance issued by the NLRB’s Acting General Counsel earlier this year.

The NLRB has indicated that it has no intention of staying its hand while the D.C. Circuit’s recess appointment ruling is challenged before the U.S. Supreme Court. Although the Board’s rulings may be nullified if the Supreme Court agrees that the recess appointments were unconstitutional, the Administration has resubmitted the nominations of two of the recess appointees, urging that they be subject to a simple up or down vote before the Senate. Ultimately, the take away from the NLRB’s recent activity is that employer policies restricting employee conduct or communications must be very narrowly tailored to survive NLRB scrutiny and its recent interpretations of employee rights under the NLRA. Employers should consult with employment counsel to assess whether their handbooks and policies should be revised to avoid being in the cross-hairs of the current or future NLRB.

Employment Law Newsletter

In , the Appellate Division of the New Jersey Superior Court recently upheld Jennifer O’Brien’s termination for conduct unbecoming a teacher by posting the following comments on Facebook: “I’m not a teacher – I’m a warden for future criminals!” and “They had a scared straight program in school – why couldn’t [I] bring [first] graders?” First, the court agreed with the finding below that O’Brien was not commenting on a matter of public concern, namely student behavior in the classroom, in which case the comments may have been protected by the First Amendment. Rather, the court reasoned that O’Brien was making personal statement driven by her dissatisfaction with her job and her students’ conduct. Finally, the court observed that even if the comments were on a matter of public concern, O’Brien’s First Amendment rights to make such comments was outweighed by the school district’s interest in the efficient operations of its schools.

Although this decision has limited application outside of the public sector because First Amendment rights do not extend to private sector employment, it nonetheless serves as a heartening sign that under the right circumstances the courts will uphold the termination of an employee who makes damaging comments about the workplace on social media. While this decision did not involve a challenge of O’Brien’s communications as commentary about workplace conditions protected by Section 7 of the NLRA, it would be interesting to see how far the NLRB would push the boundaries of protected activity under these circumstances.