Employment Law Daily STRATEGIC PERSPECTIVES—Top labor and employment developments for July 2018
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Thursday, August 9, 2018

STRATEGIC PERSPECTIVES—Top labor and employment developments for July 2018

In case you missed the in-depth coverage of Employment Law Daily for July, here’s a recap of some key developments in the L&E community.

SUPREME COURT NEWS

Justices asked to decide if Title VII shields against gender identity discrimination

The Supreme Court has been again asked to determine the scope of Title VII’s prohibition against discrimination based on “sex,” this time, whether the statute stands as a shield against employment discrimination based on gender identity and transgender status. The petition for certiorari in R.G. & G.R. Harris Funeral Homes, Inc. v. EEOC follows a petition filed in June, in Altitude Express, Inc v. Zarda, asking the Justices to determine whether Title VII protects against sexual orientation discrimination.

Gender transition. The employee, who intervened in the case after the EEOC filed suit on her behalf, is a transgender woman who was “assigned male at birth.” She was hired in 2007 and presented as a man until July 2013, when she informed her employer that she intended to have sex reassignment surgery and, as the first step, would live and work full-time as a woman for one year. The funeral home fired her approximately two weeks later because she would no longer dress like a man under the funeral home’s dress code, which required all public-facing male employees to wear suits and ties and its public-facing female employees to wear skirts and jackets.

In March 2018, the Sixth Circuit ruled that discrimination against employees, either because of their failure to conform to sex stereotypes or because of their transgender and transitioning status, is illegal under Title VII. The unrefuted facts showed that the funeral home fired its transgender funeral director because she refused to abide by its stereotypical conception of her sex. The appeals court thus reversed the district court’s contrary decision, holding that the EEOC was entitled to summary judgment as to its unlawful termination claim on behalf of the employee.

WHITE HOUSE NEWS

Brett Kavanaugh nominated to replace Justice Kennedy on Supreme Court

After a selection process that started with a list of 25 potential nominees to the Supreme Court, President Donald J. Trump selected Judge Brett M. Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit as his nominee to fill Justice Anthony M. Kennedy’s seat on the Supreme Court, the White House announced.

Executive Order takes ALJs out of competitive hiring and into excepted service

On July 10, President Trump issued an Executive Order placing the position of administrative law judge (ALJ) into the excepted service. Excepted service agencies set their own qualification requirements; they are not subject to the appointment, pay, and classification rules of Title 5, United States Code.

In his Executive Order Excepting Administrative Law Judges from the Competitive Service, President Trump found that “conditions of good administration make necessary an exception to the competitive hiring rules and examinations for the position of ALJ,” including the need to provide agency heads with additional flexibility to assess prospective appointees without the limitations imposed by competitive examination and competitive service selection procedures. Making ALJs part of the excepted service will also mitigate concerns about undue limitations on their selection, reduce the likelihood of successful challenges under the U.S. Constitution’s Appointments Clause, and forestall litigation raising such concerns, the EO says.

Trump signs whistleblower protection bill into law

On July 9, the White House announced that President Trump had signed the “All Circuit Review Act,” which provides permanent authority for judicial review of certain Merit Systems Protection Board decisions related to whistleblowers.

Introduced in April 2017 by Representative Elijah Cummings (D-Md.), the bipartisan H.R. 2229 makes permanent a pilot program under the Whistleblower Protection Enhancement Act that allows federal employees who blow the whistle to file appeals wherever they work or live, rather than only in the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., a process Cummings has characterized as “overly restrictive of whistleblower rights.”

Court dismisses most of Trump Administration’s challenges to California state immigration laws

After concluding that the Trump Administration is not likely to succeed on the merits of its Supremacy Clause claims against two California immigration-related laws (S.B. 54 and A.B. 103) and the notice requirement provision of a third (A.B. 450), a federal district court in California has granted the state’s motion to dismiss those claims. However, after finding in its July 5 ruling that the United States had shown a likelihood of success on its claims against the remaining provisions of A.B. 450, as those provisions apply to private employers, the court also denied California’s bid to dismiss those claims in a July 9 dismissal order.

Trump takes action to better prepare workers to compete successfully, address ‘skills crisis’

On July 19, President Trump issued an Executive Order he said would provide a coordinated process for developing a national strategy that will ensure American students and workers have access to “affordable, relevant, and innovative education and job training” designed to equip them to compete in a global economy, and monitor and implement that strategy.

“Skills crisis.” The “Executive Order Establishing the President’s National Council for the American Worker” is aimed at the “skills crisis” in the United States, which currently has more than 6.7 million unfilled jobs. American workers need skills training to fill them, according to the EO. The economy is changing rapidly because of technology, automation, and artificial intelligence that is shaping many industries, from manufacturing to healthcare to retail. Our country’s education and job training programs have prepared Americans for “the economy of the past,” the EO observes.

IN THE FEDERAL COURTS OF APPEAL

1st Cir.: Right to ‘inspect’ CBAs negotiated by union didn’t include right to take notes

A union member’s statutory right to “inspect” collective bargaining agreements negotiated by her union with employers other than her own did not encompass a right to take notes while doing so, ruled the First Circuit. The appeals court first took the standard definition of “to inspect” as the statutory meaning. Thus, to “inspect” did not mean to take notes. That conclusion was buttressed by two features of the LMRDA itself. The legislative history of a neighboring provision made clear that Congress did not intend the term to include the right to take notes. Secondly, Congress gave employees whose rights were directly affected by a CBA the right to a copy of that CBA. Accordingly, Congress did not invest the member with a right to take notes of other CBAs (Acosta v. Local Union 26, UNITE HERE, July 11, 2018, Souter, D.).

3d Cir.: Failure to report harassment may have been reasonable where employer turned blind eye to past complaints

Because fact questions existed as to whether an employee reasonably failed to avail herself of her employer’s procedure for reporting sexual harassment, her Title VII complaint should not have been dismissed on summary judgment, held the Third Circuit. After years of unwanted sexual advances by her supervisor, a secretary brought a sexual harassment claim against him and her employer. The district court held that the employer was not liable because it exercised reasonable care to eliminate the harassing behavior and that by not reporting the supervisor’s behavior, the employee had failed to take advantage of the safeguards put in place by the employer. But the appeals court found that disputed fact issues should have permitted the claim to go to a jury—including evidence of prior harassment complaints against the supervisor, and the employee’s genuine fear of reprisal and belief that her complaint would be futile (Minarsky v. Susquehanna County, July 3, 2018, Rendell, M.).

4th Cir.: African-American secretary fired after complaining of harassment can proceed with reprisal claim

An African-American employee whose absences were continuously monitored by her supervisor (including while going to the bathroom), who was disciplined for tardiness despite a previous agreement concerning her arrival time, who was physically attacked, and then fired the day after she stated her intention to file a grievance could proceed with her Title VII retaliation claim, the Fourth Circuit ruled. Reversing and remanding the district court’s grant of summary judgment in favor of her employer, the appeals court found the lower court erred given the substantial evidence of the supervisor’s bias, including senior management’s admission that she harbored racial animus (Strothers v. City of Laurel, Maryland, July 6, 2018, Gregory, R.).

5th Cir.: Burger chain’s public image didn’t justify ‘Fight for $15’ button ban

The Fifth Circuit enforced an NLRB order finding that In-N-Out Burger violated Section 8(a)(1) of the NLRA when it barred employees at an Austin, Texas, restaurant from wearing buttons supporting the “Fight for $15″ movement. The company could not overcome the presumption that blanket bans on such insignia are unlawful under the Act, failing to convince the court of appeals that public image considerations or food safety concerns constituted “special circumstances” justifying the prohibition (In-N-Out Burger, Inc. v NLRB, July 6, 2018, Graves, J., Jr.).

7th Cir.: Supervisor’s use of N-word to deny he was racist helps revive officer’s hostile environment claim

Vacating and remanding in part, the Seventh Circuit revived the hostile environment claim of one university police officer who was called the N-word by his supervisor and the retaliation claim of another officer who, after refusing to implement the supervisor’s retaliatory treatment of the first officer, was slapped with unwarranted disciplinary notices and then demoted for his trouble. There was plenty of admissible evidence to send these claims to a jury, said the appeals court, finding they should not have been dismissed on summary judgment. Although the district court refused to award any attorneys’ fees to the first officer, whose retaliation claim against his supervisor was the only claim to get to a jury, the appeals court now revived two claims, and if either a trial or a settlement resulted in more than nominal damages, the attorneys’ fee analysis would need to be revisited as well (Robinson v. Perales, July 2, 2018, Rovner, I.).

8th Cir.: NLRB misapplied Wright Line when it failed to tie discharge to anti-union animus

The NLRB misapplied Wright Line when it held the General Counsel need not establish a nexus between an employee’s discharge and an employer’s antiunion animus, the Eighth Circuit ruled, denying the Board’s petition for enforcement in a case involving an employee who was fired for internet surfing and sleeping on the job. The appeals court also rejected the Board’s finding that the employer separately violated the Act when it interviewed the employee’s coworker in preparation for the hearing, noting it had previously rejected the agency’s “per se” rule that interviews conducted of another employee in preparation for a Board hearing are unlawfully coercive (Tschiggfrie Properties, Ltd. v. NLRB, July 24, 2018, Benton, W.).

9th Cir.: Taco Bell policy requiring discounted meals to be eaten on-site, without pay, upheld

In a putative class action against Taco Bell concerning employee meal breaks, the Ninth Circuit found that the fast-food chain’s policy of requiring employees to stay on the premises to eat discounted meals did not violate the California Labor Code since they were relieved of all duties during their meal break, were free to use the 30 minutes in any way they wished, and were only subject to the stay-on-the-premises restriction if they voluntarily chose to purchase a meal at a discount. Affirming dismissal of the plaintiff’s claims on summary judgment, the appeals court also rejected the plaintiff’s assertion that the value of the discounted meals must be added to the regular rate of pay for overtime purposes (Rodriguez v. Taco Bell Corp., July 18, 2018, Schroeder, M.).

11th Cir.: Black employees get renewed chance to prove state minimum wage law was discriminatory

Employees in Birmingham, Alabama, who alleged that the state’s Minimum Wage Act had the purpose and effect of discriminating against the city’s black citizens, in violation of the Equal Protection Clause, stated a plausible claim, the Eleventh Circuit ruled, reversing dismissal of that claim by a district court. The lawsuit came about after Governor Bentley signed the Minimum Wage and Right-to-Work Act, which mandated a uniform minimum wage throughout the state, currently sitting at $7.25 per hour, and preempting all local labor and employment regulation, in response to a city ordinance raising the minimum wage to over ten dollars per hour. The lower court’s decision was affirmed in part, reversed in part, and remanded (Lewis v. Governor of Alabama, July 25, 2018, Wilson, C.).

OTHER DECISIONS OF NOTE

Cal. Sup. Ct.: De minimis defense doesn’t (usually) apply to California wage claims

Under California law, employees’ off-the-clock time, no matter how minimal, must be compensated, a unanimous California Supreme Court ruled in a significant decision for California employers. Addressing a question from the Ninth Circuit in a wage suit brought by a Starbucks shift supervisor, the state high court rejected the FLSA’s de minimis defense, holding that it does not apply to claims for unpaid wages under the California Labor Code or state wage orders. Nor does the legal doctrine otherwise apply to wage-hour claims as a matter of state law—at least on the facts here. In this case, the $8-an-hour employee’s off-the-clock work, a few minutes per shift, added up to $102.67 of uncompensated time over a 17-month period. “That is enough to pay a utility bill, buy a week of groceries, or cover a month of bus fares,” the court wrote. “What Starbucks calls ‘de minimis’ is not de minimis at all to many ordinary people who work for hourly wages.” The matter is now in the Ninth Circuit’s hands, where the litigation is still pending (Troester v. Starbucks Corp., July 26, 2018, Liu, G.).

D. Kan.: UPS Freight policy of paying disabled drivers less for non-driver work, formalized in CBA, violates ADA

The EEOC won its bid for a permanent injunction barring UPS Freight from continuing its facially discriminatory policy of paying disabled drivers only 90 percent of what nondisabled drivers earned while temporarily performing non-driving jobs. Granting the agency’s motion for judgment on the pleadings, a federal court in Kansas ruled that the facially discriminatory policy, which was contained in its soon-to-expire collective bargaining agreement with the Teamsters union, violated the ADA as a matter of law (EEOC v. UPS Ground Freight, Inc., July 27, 2018, Robinson, J.).

AT THE NLRB

Union waived right to intervene by opposing Board motion to remand case in Ninth Circuit

In a five-member decision by the NLRB, a divided Board denied a union’s motion to intervene in proceedings to which it was not a party. Additionally, the Board dismissed the union’s motion for reconsideration. The Board ruled that under the circumstances presented in this case, its rules did not provide for intervention. After the Board overruled Lutheran Heritage Village-Livonia in its Boeing decision issued December 14, 2017, it filed a motion in the Ninth Circuit to remand Caesars Entertainment dba Rio All-Suites Hotel and Casino, a decision in which the union was involved. The Board concluded that the union sacrificed its right to be heard in this case when it opposed the Board’s motion to remand Rio All-Suites in the appeals court. Members Pearce and McFerran filed a separate dissenting opinion (The Boeing Co., July 17, 2018).

Dissent. In a dissenting opinion, Members Pearce and McFerran argued that because the union correctly asserted that its interests were directly affected by the decision, due process demanded that its motion be granted. The dissent observed that the union seeking intervention here was the charging party in Rio-All Suites, but had no notice that the Board intended to reverse the 2015 decision in its favor—and no reason to suspect that the Board would do so: no party in Boeing had asked the Board to overrule Lutheran Heritage. Moreover, the dissent pointed out that Section 10(b) provides that in the discretion of the Board, any person may be allowed to intervene in the proceeding. Accordingly, the dissent argued that intervention was clearly warranted.

Employer lawfully closed outdated facility and relocated production

Finding that an employer had met its Wright-Line rebuttal burden, a three-member panel of the NLRB concluded that it did not violate Section 8(a)(3) and (1) of the NLRA by closing an outdated facility and relocating production. Here, the Board found the employer established that it would have closed the outdated plant and relocated the production for compelling economic reasons regardless of the union’s presence there. Additionally, the Board overturned an administrative law judge’s determination that the employer unlawfully promulgated a confidentiality/nondisclosure agreement in response to union activity. The Board also reversed the ALJ’s finding that a unilateral $9 reduction in the value of a Thanksgiving gift was unlawful (Dura-Line Corp., July 12, 2018).

Review of archived video footage constituted unlawful surveillance of employee union activity

An employer engaged in unlawful surveillance of its employees’ union activities by reviewing archived video footage of two employees distributing union literature in an employee breakroom, and by searching employees’ clipboards for union authorization cards, ruled a three-member panel of the NLRB. The employer also interrogated one of the employees regarding the union activity of a coworker. Moreover, the Board found that the employer’s solicitation of employees to revoke their union authorization cards violated Section 8(a)(1) because they occurred contemporaneously with serious violations that went to the heart of the card-signing process and began immediately after the employer learned of the union’s organizing campaign (Advance Pierre Foods, Inc., July 19, 2018).

Enforcing work rules to fire employee for his Facebook post was unlawful interference

An electrical cooperative violated Section 8(a)(1) when it fired an employee after he posted comments in a Facebook forum that in the employer’s view, displayed a “poor attitude” and riled coworkers. The Facebook comment at issue, made pursuant to an online discussion about safety concerns in the lineman industry, was clearly protected concerted activity; and even if it wasn’t, the employer separately violated Section 8(a)(1) by enforcing two work rules when it cited them as the basis for his discharge, thus rendering those rules unlawful (North West Rural Electric Cooperative, July 19, 2018).

Law judge rejects proposed settlement in McDonald’s joint employer litigation

An NLRB administrative law judge rejected a proposed settlement that would have resolved Board charges that McDonald’s USA, LLC, as a joint employer along with its franchisees, committed unfair labor practices in response to employees’ involvement in Fight for $15 protests in 2012 and 2013. The case was to be a key litmus test of joint employer status under the Obama Board’s push to hold related entities accountable as joint employers for labor law violations—applying joint employer principles to the franchise business model, in particular. Then-General Counsel Richard Griffin signaled he would pursue charges against the national restaurant chain alongside the 30 or so franchise restaurants across the country alleged to have interfered with employees’ rights under the Act and to have discharged workers for exercising those rights. However, the Trump NLRB under new General Counsel Peter Robb retreated, hoping to resolve the dispute without addressing the essential question of the corporation’s status as a joint employer. But the Board ALJ wouldn’t have it (McDonald’s USA, LLC, July 17, 2018, Esposito, L.).

New pilot aimed at increasing ADR program participation

The NLRB is launching a new pilot program aimed at increasing participation opportunities for parties in the Board’s Alternative Dispute Resolution (ADR) program and helping to facilitate mutually satisfactory settlements. Under the pilot program, the Board’s Office of the Executive Secretary will “proactively engage” parties with pending cases to determine whether their cases are appropriate for inclusion in the ADR program. Parties may also contact the Office of the Executive Secretary to request that their case be placed in the ADR program. There are no fees or expenses charged for using the program.

New advice memos address non-disclosure, social media, confidentiality rules, other issues

On July 13, the NLRB released seven Division of Advice memoranda that deal with topics such as non-disclosure provisions, social media policies, intellectual property and confidentiality rules, withdrawal of union recognition, outsourcing bargaining unit work, retaliation against the union, and interest arbitration.

OTHER AGENCY NEWS

DOJ NEWS—Sessions rescinds more guidance, including on Obama-era affirmative action

On July 3, Attorney General Jeff Sessions announced the rescission of 24 guidance documents he considers unnecessary, outdated, inconsistent with existing law, or otherwise improper, consistent with his November 2017 memorandum prohibiting the Justice Department from making rules without following procedures required by Congress. The now-rescinded guidance documents addressed topics such as the treatment of juvenile offenders, housing discrimination, and race discrimination in education.

DOL NEWS—New guidance addresses whether caregiver registries are ‘employers’

On July 13, the Department of Labor issued Field Assistance Bulletin No. 2018-4 to Wage and Hour Division field staff to help them determine whether home care, nurse, or caregiver registries are employers under the FLSA. Acting WHD Administrator Bryan Jarrett noted that a “registry” is an entity that typically matches people who need caregiving services with caregivers who provide the services—usually nurses, home health aides, personal care attendants, or home care workers with other titles. The FAB treats all of these as “caregivers.”

DOL and NLRB get budget cuts under draft FY 2019 appropriations bill

On July 11, the House Appropriations Committee approved the draft fiscal year 2019 Labor, Health and Human Services, and Education (LHHS) funding bill that includes funding for programs within the DOL, which would see an $88.8 million budget drop if the measure is passed, according to a summary. The LHHS funding legislation also provides funding for the NLRB, which would get a $12.9 million budget cut.

FEDERAL REGULATIONS

Beryllium rule enforcement delayed to August 9, DFR confirmed

On July 3, OSHA announced a delay in its enforcement of certain requirements of the final rule on occupational exposure to beryllium in general industry. These requirements will not be enforced until August 9, 2018. The requirements include beryllium work areas, regulated work areas, methods of compliance, personal protective clothing and equipment, hygiene areas and practices, housekeeping, communication of hazards, and recordkeeping, OSHA said in a release.

DOL rescinds ‘persuader rule’

Nearly a year after being urged to do so by a 17-state coalition of Attorneys General led by Texas Attorney General Ken Paxton, the DOL has rescinded the so-called 2016 “persuader rule.” In November 2016, a federal district court in Texas entered a permanent, nationwide injunction, ruling that the persuader rule was unlawful and would have required attorneys to publicly disclose confidential information protected by attorney-client privilege. Paxton was behind that lawsuit.

OSHA proposes new exemptions for railroad work in cranes and derricks final rule

Following up on a settlement agreement with the Association of American Railroads, OSHA is proposing to expand several exemptions and issue clarifications affecting work on or along railroad tracks in its final rule for cranes and derricks in construction, published on August 9, 2010. OSHA’s proposed rule was published in the Federal Register July 19, 2018.

OSHA proposes electronic recordkeeping rule revision

On July 26, the day after a new lawsuit was filed to challenge its suspension of parts of the final electronic recordkeeping rule, OSHA announced plans to issue a Notice of Proposed Rulemaking (NPRM) “to better protect personally identifiable information or data that could be re-identified with a particular individual” by removing certain provisions of the rule. The complaint alleged that the agency violated the Administrative Procedure Act when it previously suspended these same requirements without public notice and an opportunity to comment. OSHA’s NPRM was published in the Federal Register on July 30.

FEDERAL LEGISLATION

House lawmakers introduce bill to replace H-2A program, require E-Verify use

A group of Republican, plus two Democratic, lawmakers have teamed up to introduce and co-sponsor the “AG and Legal Workforce Act,” which would replace what sponsors called the “outdated and broken H-2A agricultural guestworker program” with a new H-2C program. The move is intended to ensure that America’s farmers and ranchers have access to a reliable workforce. Among other things, the bill, H.R. 6417, would expand employer eligibility and the number of visas available, make housing and transportation provision optional, and make Affordable Care Act subsidies unavailable to guestworkers, but require them to have health insurance.

House approves bipartisan health care-related tax packages

The House has cleared two bipartisan health care-related tax packages. The packages, combining several bills, aim to expand health savings accounts (HSAs) and the health insurance premium tax credit, as well as delay the so-called “health insurance tax,” among other things.

HSAs. The Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Bill of 2018 (H.R. 6311) was approved by the House on the evening of July 25 by a 242-to-176 vote. The measure, among other things, would delay the annual fee for health insurance providers through 2021 and increase access to catastrophic “copper” plans as well as allow coverage to be used with HSAs.

IN THE NEWS …

AG coalition takes aim at franchise no-poaching agreements

A coalition of 11 state Attorneys General are taking on the practice by franchisors of using “no-poach” agreements in franchise contracts—a practice said to hurt low-wage workers and limit their ability to get better jobs. The AGs are seeking information and documents from eight national fast food franchisors concerning these agreements, which restrict a franchisee’s ability to recruit or hire employees of another franchisee of the same chain. The move is likely intended to spark a dialogue about ending the practice.

DOL’s 80/20 provision, ‘dual jobs’ rules for tip credit challenged

The Restaurant Law Center (RLC) and the Texas Restaurant Association (TRA) have filed a lawsuit against the DOL challenging the so-called “80/20″ rule on the availability of the tip credit based on tipped and non-tipped duties. According to their complaint, not only was the provision quietly slipped into an internal agency handbook without notice to the public or an opportunity for comment, the DOL has tried to elevate this subregulatory pronouncement to the force of law through repeated amicus curiae briefs arguing that courts should defer to its rule. But the DOL’s action is ultra vires, contrary to the pertinent statute, and illegal, the plaintiffs contend.

Dramatic decline in enforcement found at many federal agencies

During the Trump Administration’s first year, there has been a dramatic decline in enforcement against corporate crime and wrongdoing, with total penalties for such violations plummeting from the final year of the Obama Administration, according to a new report from Public Citizen.

Notably, at the Department of Justice, total penalties against corporations fell 90 percent from $51.5 billion in the Obama Administration’s final year to $4.9 billion in Trump’s first year, and the number of enforcement actions against corporations fell by 22 percent from Obama’s final year. Plea deals dropped to 50 compared to 117 in Obama’s last year.

ICE focuses on I-9 compliance: 5,200 businesses served notices of inspection

U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) has served I-9 audit notices to more than 5,200 businesses around the country since January in a two-phase nationwide operation, according to the agency. A notice of inspection (NOI) informs business owners that ICE is going to audit their hiring records to determine whether they are complying with existing law.

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