In a long awaited decision in the D.R. Horton case
, the 5th Circuit Court of Appeals ruled yesterday that an employer was within its rights to require employees to sign an arbitration agreement that mandated individual arbitration (i.e. not allowing for class claims). The National Labor Relations Board had taken the position that employees’ right to engage in concerted activity means that they cannot waive their right to participate in class or collective litigation or arbitration. The court disagreed, finding that the Federal Arbitration Act required that the arbitration agreement be enforced as written. This is a significant win for employers that seek to avoid class and collective actions by requiring employees to sign arbitration agreements that require that claims be brought individually. Employers using or considering such agreements should take heed, though, at the court’s finding that arbitration agreements need to make clear that they do not prohibit an employee from filing charges with the NLRB.
Author: LP
Senate Passes ENDA. House Unlikely to Follow Suit.
By a vote of 64-32, the Senate voted on November 7, 2013 to pass the Employment Non-Discrimination Act (ENDA). ENDA would prohibit employers, employment agencies, and labor unions from using an individual’s sexual orientation or gender identity as the basis for employment decisions. The scope of the protections provided and procedures for enforcement are nearly identical to those under Title VII. Interestingly, however, the legislation specifically provides that claims based on a disparate impact theory will not be permitted. Although passage by the Senate takes the legislation one step closer to becoming law, its prospects in the House appear dim. Speaker of the House Boehner has indicated that he does not intend to allow the legislation to come up for a vote. Employers in Illinois should note that the Illinois Human Rights Act already prohibits discrimination on the basis of sexual orientation and the Chicago Human Relations Ordinance and Cook County Human Rights Ordinance prohibit discrimination on the basis of both sexual orientation and gender identity.
Illinois Passes Same-Sex Marriage Bill
The Illinois legislature passed landmark legislation on November 5, 2013 that will legalize same-sex marriages in the state (The Religious Freedom and Marriage Fairness Act
). The bill is currently scheduled to be signed by Governor Quinn on November 20th and to go into effect on June 1, 2014. One state legislator has proposed an amendment that would make the legislation effective earlier in the year, but that amendment has not yet been acted upon. Employers should begin to prepare for changes in the workplace resulting from the legislation. For example, the definition of “spouse” in the Family and Medical Leave Act will now apply to same-sex spouses who reside in Illinois (see our earlier post on the FMLA guidance on this topic). Spousal benefits under medical plans and retirement plans will now be applicable to Illinois same-sex spouses and Illinois same-sex spouses will have COBRA rights. Employers should review plans, policies, forms and procedures to make sure they contemplate equal treatment for same-sex spouses. Also, keep in mind that Illinois will continue to permit couples (whether same-sex or opposite-sex) to choose a civil union over a marriage. Accordingly, to the extent federal law recognizes marriages but not civil unions, employers will need to continue to recognize this distinction in their benefit administration.
Employment Law Update: A Look Back and a Look Ahead
This year, LP’s Labor & Employment attorneys tried something different with our annual “Employment Law Update” and hosted the program as a webinar. The new format allowed us to record this year’s program and make it available for all our blog friends, colleagues and clients who were unable to participate. LP labor and employment attorneys Peter Donati, Laura Friedel and Kenneth Kneubuhler highlighted recent updates in labor and employment law and tips to keep your workplace practices current.
You can find the recording here and the presentation materials here.
To give you an idea of what topics are covered in this year’s “Employment Law Update” here are the topics we discussed:
•The impact of recent Supreme Court decisions on supervisor liability and the burden of proof for retaliation claims
• Trends involving arbitration agreements: Will they prevent class claims? Should your business be using them?
• Same sex marriage: How it affects employee rights under the FMLA and benefit plans
• Recent Illinois cases involving non-compete agreements. Will your agreements be enforceable when you need them?
• New developments at the National Labor Relations Board that affect both union and non-union workplaces
• How to properly use background checks to avoid scrutiny by the EEOC and avoid violating state laws
• Current wage and hour issues, including developments involving interns and independent contractors
• Other important state law trends, including laws on concealed weapons, medical marijuana, and social media passwords
Keeping Guns Out of Your Workplace in Illinois
In July, Illinois passed legislation permitting the concealed carry of firearms (The Illinois Firearms Concealed Carry Act, 430 ILCS 66). Under the legislation, employees with concealed carry gun permits are allowed to bring their guns with them to work unless 1) they work in a location where concealed carry is specifically prohibited under the statute, such as a school or hospital, or 2) they work in a building where the owner has posted a specific 4 inch by 6 inch sign prohibiting guns on the premises. The Illinois State Police recently released an example of the sign that must be used by building owners in this second situation. Employers that want to keep guns out of their workplaces and that own the buildings where their workplaces are located should post the approved sign at all entrances. Employers that do not own the buildings where their workplaces are located should work with the building owners to have the signs posted. Also, employers need to remember that although they may be able to keep employees from bringing guns into their workplaces by following these steps, the employees are still permitted by the legislation to keep their guns in their vehicles in the employers’ parking lots.
DOL Updates FMLA Guidance to Cover Same-Sex Spouses
Ever since the Supreme Court’s decision in U.S. v. Windsor striking down the federal Defense of Marriage Act (DOMA), employment lawyers have struggled to keep up with the implications of the ruling for various federal and state employment laws. For example, under the Family and Medical Leave Act (FMLA), same-sex spouses prior to the Windsor ruling did not have all of the same leave rights as opposite-sex spouses because federal law did not recognize same-sex marriages. Now that the DOMA has been overturned, the Department of Labor (DOL) has issued updated FMLA guidance remedying this situation, at least for some same-sex couples. Fact Sheet 28F issued by the DOL in August clarifies that “spouse” for purposes of qualifying leave under the FMLA means “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.” As a result, same-sex spouses who reside in one of the states recognizing same-sex marriage should now be entitled to the same leave rights as opposite-sex spouses. Unfortunately, same-sex spouses who move to a state that does not recognize such marriages will not benefit from this guidance. Many commentators believe that help for same-sex spouses falling in this second category will only come through a formal change to the FMLA regulations by the DOL.
Unpaid Internships – Turning up the heat
The summer of 2013 is likely to be remembered as the year the unpaid interns pushed back. For years, eager students and recent graduates have taken unpaid positions. However, with companies’ bottom lines tightening, workloads burgeoning and more experienced workers looking for a way to open doors, the line between unpaid intern and entry level employee have begun to blur. This summer, some of those interns have fought back — and won. In June, interns who worked on the movie Black Swan won a verdict against Fox Starlight Pictures that has sent shockwaves around the business community. Cases have also recently been filed by interns against Conde Nast Publications and Sony Records, and two interns who lost their case before the Court of Appeals have asked the Supreme Court to rule on when an intern has a legal right to minimum wage.
The fact is that, regardless of whether they are called employees or interns, workers are entitled to minimum wage and overtime unless they can properly be classified as “trainees” or “non-employees.” And contrary to popular opinion, the fact that an intern is receiving credit for their internship doesn’t automatically exempt them from wage and hour requirements. Companies that improperly fail to pay interns face damages under state and federal law.
We have been talking about the risk of unpaid interns for years, but the cases this summer have turned up the heat. As you begin putting together 2014 budgets, take a closer look at what – if anything – interns are set to be paid to confirm that your company is in compliance.
Tide Continues in Favor of Class Action Waivers in Arbitration Agreements
On Friday, the U.S. Court of Appeals sitting in New York handed down its decision in Sutherland v. Ernst & Young, giving employers yet another leg up in enforcing requirements that their employees forego class actions and pursue their claims individually in arbitration.
Since the Supreme Court’s decision two years ago that a class action waiver in an arbitration agreement was enforceable (which, practically, means that a party can avoid class actions if it’s agreed to in advance in an arbitration agreement), plaintiffs’ attorneys and government agencies have been trying to find exceptions to the Court’s holding in the employment context. The three primary arguments have been (1) that the National Labor Relations Act gives employees an unwaiveable right to participate in collective litigation, (2) that the Fair Labor Standards Act’s special provisions for collective (opt-in) actions trump the Federal Arbitration Act, and (3) that plaintiffs can’t be required to arbitrate individually if their claims are so small that individual actions are impractical. The third of these arguments was rejected by the Supreme Court this June in the Amex decision. In the Sutherland decision last week, the Second Circuit Court of Appeals joined the majority of courts in rejecting the first and second arguments as well.
What does this mean for your business? It means that you should seriously consider implementing a mandatory arbitration policy that requires individual arbitration of employee claims. Arbitration isn’t perfect – and a requirement that cases be arbitrated individually could be turned against an employer if a large group of employees each files an individual claim – but in many cases the downsides of arbitration are far outweighed by the ability to avoid class actions.
EEOC Suffers Setback in Efforts to Clamp Down on Use of Background Checks
The EEOC’s efforts to clamp down on the use of criminal record information were dealt a significant setback on August 9, 2013 when the U.S. District Court of the District of Maryland threw out a case that had been brought against Freeman, a service provider for corporate events with offices around the country (EEOC v. Freeman [09-2573] Memorandum Opinion and Order 8.9.13). The case grew out of the EEOC’s longstanding concern that the indiscriminate use of criminal record information by employers to screen out applicants has a disparate impact and is therefore unlawful under Title VII. The EEOC believes employers using criminal record information must disregard arrest information and only use conviction information after considering the age of the offense, the seriousness of the offense, and the relationship of the offense to the position being sought. Applicants also must be given an opportunity, in the EEOC’s view, to explain or correct the information in their records before being rejected. However, in the Freeman case, the court said the EEOC had failed to show any disparate impact as a result of the company’s hiring practices. The court tore apart the EEOC’s expert reports, calling them “rife with analytical errors” and “laughable.” Even if evidence of a disparate impact had been present, the court said that the EEOC failed to link such evidence to any particular practice of Freeman and could not simply rely on the “collective results” of Freeman’s hiring process. “The story of the present action,” according to the court, was “that of a theory in search of facts to support it.” The Freeman decision is an embarrassing outcome for the EEOC that will undoubtedly make the agency’s enforcement activities in this area more difficult and provide a road map to victory for future defendants.
Medical Marijuana Legalized in Illinois – Employers Beware
This morning Illinois became the 20th state to legalize medical marijuana use, though use is allowed only in very limited circumstances as part of a 4-year trial program. The law includes a number of provisions specifically relating to employment.
- Employers can’t discriminate against a person solely for being a “registered qualifying patient” or a “registered qualifying caregiver” (unless federal law requires otherwise).
- Employers could also face liability if they take action against an employee for using medical marijuana off premises and outside of working hours unless the employee was impaired at work.
The law doesn’t prohibit employers from adopting reasonable rules regarding the consumption and storage of medical marijuana, from enforcing drug testing, zero tolerance and drug free workplace policies (provided they are applied in a non-discriminatory manner), or from disciplining a “registered qualifying patient” for violating a workplace drug policy, but employers will need to take extra care in disciplining employees for violation of such policies. The medical marijuana law takes effect on January 1, 2014.
The Employment Lawyers 