By Joy P. Waltemath, J.D.

The FAIR Act—The Forced Arbitration Injustice Repeal Act—was introduced February 28, bicameral legislation designed to increase individual rights to seek justice and accountability through the court system.

House Representative Hank Johnson (D-Ga.) and Senator Richard Blumenthal (D-Conn.) introduced the FAIR Act on February 28, which supporters say would increase Americans’ rights to seek justice and accountability through the court system. The House bill, H.R. 1423, would eliminate forced arbitration clauses as a pre-condition for obtaining a product, service, or job in employment, consumer, and civil rights cases, and would allow consumers and workers to agree to arbitration after a dispute occurs. The House bill has 147 cosponsors.

Senator Blumenthal introduced the companion bill in the Senate, which has 34 cosponsors.

The bill was announced at a news conference on Capitol Hill with Senator Blumenthal, Judiciary Chairman Representative Jerrold Nadler (D-N.Y.), Chairman of the House Antitrust Subcommittee Representative David Cicilline (D-R.I.), Chairman of the Committee on Education and Labor Representative Bobby Scott (D-Va.), Representative Cheri Bustos (D-Ill.), former Fox News Anchor Gretchen Carlson, members of the American Association for Justice, Public Citizen, and victims of arbitration rulings.

Protecting workers and consumers. “Forced arbitration agreements undermine our indelible Constitutional right to trial by jury, benefiting powerful businesses at the expense of American consumers and workers,” said Representative Johnson, chair of the Judiciary Subcommittee on Court, Intellectual Property and the Internet.

Senator Blumenthal pointed out that “One of the systems that is truly rigged against consumers, workers, and the American people is our current system of forced arbitration. Forced arbitration is unfair, unjust, and un-American. One of the fundamental principles of our American democracy is that everyone gets their day in court. Forced arbitration deprives Americans of that basic right. This kind of injustice has to end. The Forced Arbitration Injustice Repeal Act is a measure whose time has come.”

The FAIR Act would “end the use of forced arbitration in consumer, employment, civil rights, and antitrust disputes,” said Judiciary Chairman Jerrold Nadler. “Victims of sexual assault, racial discrimination, and other forms of corporate abuse and misconduct deserve their day in court. As the Chairman of the House Judiciary Committee, I will not rest until we have fully restored these rights by passing historic legislation to end forced arbitration.”

Separate legislation for servicemembers. “The men and women who serve our country in uniform deserve nothing but the best,” said Congressman David Cicilline, who also introduced a separate bill on forced arbitration, the Justice for Servicemembers Act. “For all the sacrifices they make overseas, they shouldn’t worry about whether they’ll have a job when they come home.”

Public interest support. A broad coalition of public-interest groups support the legislative initiative, some of which issued separate releases endorsing the bills. For example, |”Forced arbitration is stacked in favor of corporations and shields them from being held accountable for breaking the law and other misconduct,” said George Slover, senior policy counsel for Consumer Reports. “Arbitration provides none of the fundamental safeguards that are the hallmarks of a fair, impartial, and accessible court proceeding. The FAIR Act will help restore the rights of consumers to hold corporations accountable when they have engaged in widespread abuse or marketed an unsafe product or service.”

NELP statement. The National Employment Law Project also issued a statement, saying “The Act will restore access to justice, hold corporations accountable, and let workers and consumers decide whether they want to join together to right wrongs in the courts or in private arbitration. Arbitrations are secret, paid for by the company, and have almost no oversight. The FAIR Act would prohibit the use of forced, pre-dispute arbitration clauses in employment and consumer contracts and prevent bosses from forcing workers to sign away their right to join together in a class or collective actions.

“The #MeToo movement has illuminated how crucial it is for workers to be able to voice their concerns together—and how particularly harmful forced arbitration is to women fighting sexual harassment. Forced arbitration means having to pursue one’s claims alone, before a private arbitrator hired by the company, with a low likelihood of success and little chance to appeal. As Gretchen Carlson has noted, ‘If a woman’s being sexually harassed in the workplace and she has an arbitration clause, she’s screwed.’”

To watch the news conference, click HERE.

By Ronald Miller, J.D.

Claims by an employee that he was fraudulently recruited to work as an H-2B guest worker and forced to work overtime through threats of lack of immigration status, loss of work, and false promises of sponsorship in violation of the Trafficking Victims Protection Act (TVPA) were dismissed by a federal district court in New York. As an initial matter, the court observed that under Supreme Court precedent the term “individual” as used in the TVPA encompasses only natural persons, so the Act did not impose liability against organizations. Further, because the employee was already present in the country and had visa status, and his complaint did not allege a threat to terminate sponsorship or deportation, his claim of forced labor under the TVPA against an individual defendant failed (Adia v. Grandeur Management, Inc., September 6, 2018, Sweet, R.).

Hotel employment. The employee, a Philippine citizen, entered the United States with an H-2B visa as a temporary guest worker. He was first employed at a hotel in South Carolina for a company providing housekeeping services. The employer instructed him to coordinate with a New York cleaning service company for employment, monitored his employment service record, and paid for his services at the hotel through their payroll company. The employer also advised the employee it filed an application for a change in his H-2B status to B1/B2 status. The employee was sent a copy of the notice from the immigration service acknowledging receipt of the application for the change in status. He was also allegedly promised by the employer that he would not become unlawfully present in the country, and that it would file another H-2B petition and then an H-1B petition on his behalf.

The employee was allegedly told to rely on the employer to ensure his immigration status. Further, he was allegedly advised not to look for other employment as the employer would ensure his immigration status to be in order at all times. Thereafter, the employee was transferred to work as a doorman at a New York hotel owned by the employer. The employer stated that his immigration status would depend on the employee’s continuing reliance on the employer and on his being in the employer’s good graces.

In February 2012, the employee inquired regarding the filing of his H-1B sponsorship, at which time the employer admitted that it had not filed any H-1B petition. The employee brought suit alleging that the employer fraudulently recruited him to work as an H-2B guest worker and forced him to work overtime through threats of lack of immigration status, loss of work, and false provisions of sponsorship in violation of TVPA and the Alien Tort Statute (ATS), as well as New York Labor Law. In response, the employer filed a motion to dismiss.

Corporate defendant. As an initial matter, the employer asserted that a corporate defendant was immune from liability under the TVPA as a matter of law, citing Mohamad v. Palestinian Authority, in which the Supreme Court held that the term “individual” as used in the TVPA encompasses only natural persons. Consequently, the Act did not impose liability against organizations.

Individual defendant. As to the individual who owned the hotels and affiliated companies, the court observed that TVPA enables individuals who are victims of forced labor or trafficking to file a civil action against the perpetrators.

In this instance, the employee was already present in the United States for an unspecified period of time, and had visa status before he ever spoke to the individual defendant. The employee’s claim of forced labor appeared to be based on his subjective feeling that he could not pester the individual defendant about his visa status, or he might risk having sponsorship withdrawn. Consequently, the complaint did not allege a threat to terminate sponsorship or deportation. Under these circumstances, the employee failed to state a claim for forced labor under the TVPA against either defendant.

Moreover, the court concluded that the employee’s claim of human trafficking under the TVPA was simply a restatement of his forced labor claim. According to the employee, the defendants “recruited, harbored, and transported” him for the purpose of subjecting him to forced labor. However, the employee was already lawfully present in this country. There were no allegations that the defendants transported him to New York or anywhere else. Rather, the employee admitted that he traveled there himself. Thus, the employee’s human trafficking claim failed.

Alien tort claim. As with the TVPA, there is no corporate liability under the ATS. Thus, the employee’s claim against the corporate defendants was dismissed. Moreover, on the merits, the allegations in the complaint fell short of what is required to state a claim under the ATS. ATS jurisdiction depends on a violation of a law of nations. “To demonstrate a violation of the law of nations, a plaintiff must prove a violation of international law norms that (1) are norms of ‘international character’ that nations abide by out of a sense of legal obligation; (2) are ‘defined with a specificity comparable to the 18th century paradigms . . .’; and (3) are ‘of mutual concern’ to nations.”

The international definition of forced labor does not cover “low wages or poor working conditions . . . .” It also does not include “situations of pure economic necessity” caused by a lack of employment alternatives. Forced labor must involve a “severe violation of human rights and restriction of human freedom.” Moreover, “the ATS has always been understood as covering torts committed abroad.” Accordingly, the court concluded that it did not have jurisdiction over a claim against either defendant under the ATS.

By Joy P. Waltemath, J.D.

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

Trump administration news

Parts of Trump executive orders reducing federal employee collective bargaining rights declared invalid by D.D.C. Provisions of three executive orders issued by President Trump on May 25, 2018, which were challenged by labor unions that represent employees of various federal agencies, were declared invalid August 25. The federal district court in D.C. concluded that many of the challenged provisions effectively reduced the scope of the right to bargain collectively as Congress has crafted it by enacting the Federal Service Labor-Management Relations Act (FSLMRS), or impaired the ability of agency officials to bargain in good faith as Congress has directed. Viewed collectively, the challenged EOs reflected a decidedly different policy choice: namely, the president’s stated view that federal employees’ right to engage in collective bargaining over the conditions of their employment is “not apropos of” an “effective and efficient Government,” and should be rendered subordinate to the agencies’ interest “in developing efficient, effective, and cost-reducing collective bargaining agreements.” As such, certain EO provisions dramatically curtail the scope of bargaining because agencies and unions would no longer negotiate over a host of significant issues, said the court, finding the orders remove these matters from the scope of the right to bargain despite the fact that Congress has made them negotiable; the removed topics are important to the functioning of labor organizations and the fairness of collective bargaining negotiations; and provisions of the EOs impede the prospect of good faith negotiations. Accordingly, the president’s subordinates were enjoined from implementing or giving effect to: Executive Order 13,836 Sections 5(a) 5(e), and 6; Executive Order 13,837 Sections 3(a), 4(a), and 4(b); and Executive Order 13,839 Sections 3, 4(a), and 4(c) (American Federation of Government Employees v. Trump).

Independence of military’s plan, report banning transgender individuals from service questioned. A little over a year ago, in July 2017, President Trump tweeted a change in U.S. government policy to neither accept nor allow transgender individuals to serve “in any capacity” in the U.S. military. Following that up, on August 25, 2017, was a formal presidential memorandum. After federal courts blocked as unconstitutional Trump’s ban on transgender people serving in the military, and following a memorandum and report submitted by the defense secretary, Trump revoked that memorandum. However, the result of Defense Secretary James Mattis’ Implementation Plan is pretty much the same: transgender individuals are generally not allowed to serve openly in the military.

Now, with litigation still pending in several districts and a nationwide injunction in place, the D.C. district court refused on August 24 to dismiss or grant summary judgment to the government—which claims its decisions regarding transgender military service are owed “great deference because they are the product of extensive deliberation, study and review.” The court refused summary judgment to the plaintiffs as well because the facts related to the process used by the government to prepare its current proposed policy—and especially how independent that process was—were disputed material facts affecting the degree of deference owed by the court to the government’s policy decisions, and the level of scrutiny to apply to the challenged policy. The plaintiffs would get discovery, too; the government had “withheld nearly all information concerning this alleged deliberation. This is not how civil litigation works,” the court reminded (Doe 2 v. Mattis).

Supreme Court news

State AGs ask justices to take up “error of national importance” in transgender discrimination case. Although August is not typically a hotbed of Supreme Court activity, this month a 16-state coalition of attorneys general has urged the High Court to take up whether Title VII protects employees from discrimination based on transgender status. The group contends that a March 2018 decision from the Sixth Circuit, which finds employers are barred from discriminating against transgender workers, was an improper expansion of the definition of “sex” in Title VII—an error of “national importance” the Supreme Court must correct.

The petition for certiorari in R.G. & G.R. Harris Funeral Homes, Inc. v. EEOC (Docket No. 18-107) asks the Court to determine the scope of Title VII’s prohibition against discrimination based on “sex”—particularly, whether the statute stands as a shield against employment discrimination based on gender identity and transgender status. In their amicus brief supporting the employer in the case, the attorneys general asserted the appeals court decision should be overturned. “In rewriting Title VII to its own liking, rather than interpreting the statute based on its text, history, and purpose, the Sixth Circuit not only ignored the will of Congress, but bestowed upon itself (an unelected legislature of three) the power to rewrite congressional enactments in violation of the separation of powers,” the brief states.

Federal agency developments

DOL signals it will propose occupations subject to state drug testing for unemployment benefits. The Office of Management and Budget received a proposal from the DOL August 21, “Drug Testing by States for Purposes of Determining Unemployment Compensation Eligibility,” for the agency to identify the occupations that regularly conduct drug testing for purposes of unemployment compensation. In March 2017, President Trump signed a congressional joint resolution of disapproval (H.J. Res. 42) nullifying the prior final rule. Seen by the administration as a limitation on states’ ability to require those who apply for unemployment benefits to submit to drug testing, that rule established, for state unemployment compensation program purposes, occupations that regularly conduct drug testing. The DOL issued a statement at the time of the resolution saying “The rule contradicted clear congressional intent—it narrowly limited the circumstances under which drug testing may be carried out and constrained a state’s ability to conduct a drug testing program under the act.” Now the DOL has signaled it is prepared to act again. The resolution under the CRA, however, prevents a federal agency from implementing a rule or issuing a rule that is substantially the same without congressional authorization. Will the DOL’s proposal here be considered “substantially the same?”

DOL “public listening sessions” seek input on white-collar regs’ salary level. The DOL announced August 28 that it will conduct public listening sessions to gather views on white-collar exemption regulations under the FLSA—specifically to provide input on issues related to the salary level test. Five listening sessions are scheduled across the country in September, according to the DOL notice; for specific location details and register to attend, click here.

DOL issues six new opinion letters addressing FLSA, FMLA issues. The DOLs Wage and Hour Division issued six new opinion letters August 28, which include:

1.

Organ donors’ qualification for FMLA leave.

2.

Compensability of time spent voluntarily attending benefit fairs and certain wellness activities.

3.

Application of the movie theater overtime exemption to a movie theater that also offers dining services.

4.

Application of the commissioned sales employee overtime exemption to a company that sells an internet payment software platform.

5.

Volunteer status of nonprofit members serving as credentialing examination graders.

6.

“No-fault” attendance policies and attendance points under the FMLA.

OSHA beryllium standard compliance date delayed to December 12 for certain ancillary requirements. It’s tough to keep up with what OSHA is doing with respect to the beryllium standards. The agency published a final rule notice on August 9 extending the compliance date for certain ancillary requirements of the general industry beryllium standard to December 12, 2018. This compliance date affects certain ancillary provisions related to methods of compliance, beryllium work areas, regulated areas, personal protective clothing and equipment, hygiene areas and practices, housekeeping, communication of hazards, and recordkeeping. Note that this rule does not affect the new permissible exposure limits (PELs) for general industry, construction, and shipyards, or the general industry provisions for exposure assessment, respiratory protection, medical surveillance, and medical removal, which OSHA began enforcing on May 11, 2018. This rule also does not affect the March 11, 2019, compliance date for the provisions on change rooms and showers in the beryllium standard’s paragraph (i) (hygiene areas and practices) or the March 10, 2020, compliance date for implementation of the engineering controls required by paragraph (f) (methods of compliance). Further, the final rule does not affect the applicability of paragraph (a) (scope and application) or paragraph (b) (definitions).

FMCSA considering loosening hours-of-service restrictions for commercial truck drivers. The Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) is soliciting public comment on a proposed revision of its current hours-of-service (HOS) regulations, which limit the operating hours of commercial truck drivers. The Advanced Notice of Proposed Rule Making, published August 23, responds to what it calls widespread Congressional, industry, and citizen concerns. The agency wants public comment on whether HOS revisions may alleviate “unnecessary burdens” placed on drivers while still maintaining safety on U.S. highways and roads.

EEOC nets some big-money settlements:

Alorica, Inc., will pay $3.5 million and take remedial measures to resolve a sexual harassment lawsuit, according to the EEOC.
Giant poultry supplier Koch Foods has agreed to pay $3.75 million and furnish other relief to settle class allegations of sexual harassment, national origin, and race discrimination, as well as retaliation against a class of Hispanic workers at Koch’s Morton, Mississippi, chicken processing plant, the EEOC reported. (The EEOC’s case was later consolidated with the lawsuit previously filed by plaintiff/intervenors, Cazorla v. Koch Foods of Mississippi, LLC . Notably, that case went to the Fifth Circuit over Koch’s desire to discover employees’ attempts to acquire U visas—an immigration benefit that can be sought by victims of certain crimes (even undocumented immigrants) who have assisted government authorities in criminal investigations.)
Coca-Cola Refreshments USA, Inc., will pay $2.25M and improve its disability leave policies, practices, the EEOC announced in a news release. The agency entered into a settlement agreement as part of informal conciliation with the company, which agreed to make monetary payments totaling $2.25 million to individuals who filed charges of discrimination, and provide annual financial support to selected “non-profit entities dedicated to helping individuals with disabilities find and keep employment.”

NLRB drama continues

Board reconsidering Purple Communications employee email ruling. On August 1, the Board issued an invitation for briefs on what it should do with Purple Communications, Inc., which held that employees who have been given access to their employer’s email system for work-related purposes have a presumptive right to use that system, on nonworking time, for communications protected by NLRA Section 7. That holding overruled Register Guard, which had held that while union-related communications cannot be banned because they are union-related, facially neutral policies regarding the permissible uses of employers’ email systems do not become unlawful simply because they have the “incidental” effect of limiting the use of those systems for union-related communications. Although Purple Communications and Register Guard addressed only email systems, the Board is also inviting comment on the standard it should apply to evaluate policies governing the use of employer-owned computer resources other than email. The case in which the Board has invited briefing is Caesars Entertainment Corporation dba Rio All-Suites Hotel and Casino, 28-CA-060841.

ALJs are validly appointed because the Board is a “Department,” Members collectively are “Head of Department.” Unified, for once, on a significant issue of Board law or procedure, the five Members of the NLRB agreed August 6 that the Board’s appointment of administrative law judges is constitutionally valid under the Appointments Clause because the Board itself is a “Department” and the Board’s Members collectively are a “Head of Department.” Although the employer here argued that the ALJ assigned to its case was an inferior officer who was not constitutionally appointed under the Appointments Clause, the Board pointed to Supreme Court precedent finding the SEC to be a “freestanding component of the Executive Branch, not subordinate to or contained within any other such component,” and as such, a Department for the purposes of the Appointments Clause. That holding applied equally to the NLRB as a “freestanding component of the Executive Branch,” the Board reasoned, noting the same precedent also held that that the SEC’s Commissioners collectively constitute a Head of Department under the Appointments Clause, and this similarly applied to the Board’s Members. In Lucia v. SEC, the High Court reiterated this holding, which was good enough for the Board here, and it dismissed the employer’s challenge to the complaint (WestRock Services, Inc ., August 6, 2018).

Meanwhile, 38 employees take Board up on voluntary retirement or separation offer. On August 22, the Board announced that 38 agency employees holding positions eligible for the Voluntary Early Retirement Authority (VERA) and Voluntary Separation Incentive Payments (VSIP) programs have submitted applications to participate in the opportunity for voluntary early retirement and separation. Earlier in the month, on August 7, the Board announced that it was offering voluntary early retirement and voluntary separation to certain employees under the VERA and VSIP programs. The window to submit applications for these programs closed on August 21. The NLRB stressed that applying for the VERA and VSIP opportunities was “entirely voluntary.”

And Trump re-nominates Pearce. On August 28, the White House quietly announced that President Trump’s re-nomination of Mark Gaston Pearce to be a Member of the NLRB was being forwarded to the Senate. If the re-nomination is confirmed, Pearce will serve for a term of five years expiring August 27, 2023. The news came the day after Pearce’s current term expired, leaving a 3-1 Republican majority on the Board.

OFCCP announces five new policy directives

New directive protects “religion-exercising” federal contractors. OFCCP announced two new policy directives on August 10 focused on protecting the religious freedoms of “religion-exercising organizations and individuals” and on ensuring compliance with equal employment opportunity provisions enforced by the agency. The religious freedom directive (DIR 2018-03) protects the rights of “religion-exercising” federal contractors, according to the agency—effectively expanding a religious freedom defense for contractors faced with discrimination allegations.

The most pressing question likely to emerge will be the tension between protecting the exercise of religious freedoms and current protections based on sexual orientation. Since 2015, EO 11246 explicitly covers both sexual orientation and gender identity bias, following the issuance of EO 13672 by President Obama in 2014. (In 2015, the OFCCP issued Directive 2015-01, “Handling Individual and Systemic Sexual Orientation and Gender Identity Discrimination Complaints,” setting agency policy on accepting and investigating individual and systemic complaints based on gender identity or sexual orientation.) Shortly after his inauguration, as questions arose whether he might rescind Obama’s expanded protections based on sexual orientation, President Trump announced that EO 13672 would remain in force. In March 2017, he issued an Executive Order revoking Obama’s Fair Pay and Safe Workplaces EO 13673; section 3 of EO 13683 and EO 13738, which amended the Fair Pay and Safe Workplaces EO. However, EO 13672 was left intact.

Restoring focused reviews. Noting that the OFCCP is undertaking a comprehensive compliance initiative, DIR 2018-04 announces the agency’s intent to undertake focused reviews. The aim, according to the directive, is to ensure compliance with all EEO and anti-discrimination regulations in all of its protected groups—particularly, compliance with Section 503, which addresses disability discrimination.

Other directives. Three additional directives were announced on August 24, including new procedures for reviewing contractor compensation practices, a program to verify that contractors are in compliance with federal affirmative action program (AAP) requirements, and an initiative establishing a recognition program for contractors with high-quality and high-performing compliance programs and initiatives. They include:

Directive 2018-05: Analysis of Contractor Compensation Practices during a Compliance Evaluation. This directive further clarifies and provides additional transparency to contractors about OFCCP’s approach to conducting compensation evaluations; supports compliance and compensation self-analyses by contractors under applicable law and OFCCP regulations and practices; and improves compensation analysis consistency and efficiency during compliance evaluations. It rescinds and replaces OFCCP DIR 2013-03 (known as Directive 307) and is accompanied by Frequently Asked Questions.
Directive 2018-07: Affirmative Action Program Verification Initiative. This new OFCCP initiative establishes a program for verifying compliance by all contractors with AAP obligations.
Directive 2018-06: Contractor Recognition Programs. This directive establishes a contractor recognition program that will include awards that highlight implementable best or model contractor practices, a contractor mentoring program that uses contractors to help their peers improve compliance, and other initiatives that provide opportunities for contractors to collaborate or provide feedback to OFCCP on its compliance assistance efforts.

In the federal courts of appeals

D.C. Cir.: NLRB properly allowed stationary picketing outside nonemergency hospital entrance. The D.C. Circuit upheld the NLRB’s determination that off-duty hospital employees holding picket signs on hospital property, next to a nonemergency entrance, were engaged in protected activity. The Board correctly applied the framework set forth in Republic Aviation Corp. v. NLRB to reject the hospital’s attempt to stop the employees’ stationary display of picket signs. The medical center argued that picketing should be treated differently than leafletting so that the Republic Aviation presumption would not apply. The NLRB properly rejected that argument, the appeals court found on August 10: Stationary picketing is less confrontational than leafletting because those holding picket signs did not have direct contact with nonemployees. The NLRB did not hold that picketing must always be permitted on premises to the same degree as handbilling or soliciting. Instead, it noted that where picketing disrupts operations or interferes with patient care, Republic Aviation would permit a hospital to bar it. The NLRB’s application of Republic Aviation was therefore sustained as reasonable, not only as to solicitation and handbilling, but as to the picketing in this case. Note, though, that General Counsel Peter Robb has signaled his intent to revisit the Obama Board’s reasoning in this case (Capital Medical Center v. NLRB).

1st Cir.: Retaliatory acts and pretext were not enough to show teacher’s discipline was due to her advocacy for disabled students. A divided First Circuit panel on August 21 upheld the judgment of a district court, following a five-day bench trial, that although a kindergarten teacher had established both a prima facie case of retaliatory treatment and that the school’s rationale for putting her on a performance improvement plan and transferring her was pretextual, she had not proven that the actions taken against her by the superintendent, the principal, and vice principal were a result of her advocacy on behalf of students with disabilities in her classroom. Dissenting, Judge Torruella would have held this to be “that rare case in which the district court’s finding that there was no retaliatory animus was clearly erroneous” based on questions concerning the motivations of not just the superintendent, but other “crucial actors”—the principal and vice principal (Richard v. Regional School Unit 57).

1st Cir.: Porn-possessing fired employee needed expert to prove screen-capture software was “interception” under ECPA. Expert testimony was necessary to establish whether a fired employee could show a contemporaneous interception of an electronic communication under the Electronic Communications Privacy Act (ECPA) had occurred when his employer installed screenshot-capturing software on his computer after it discovered evidence he was viewing child pornography on the job. Although the majority of lay persons likely would understand both email and the concept of screenshot capturing, to prove an ECPA contemporaneous “interception” would require expert testimony explaining what the screenshot-capturing software actually did when it captured a screenshot, the timing of it, what a web browser’s progress bar actually indicates, and how exactly the email system the employee was using auto-saves emails as a user drafts them. Because the employee lacked this expert testimony, the appeals court agreed on August 21 that his claims against his employer failed (Boudreau v. Lussier).

2d Cir.: Healthcare employer that “laundered” housekeepers to divest them of CBA-negotiated rights violated NLRA. When the healthcare employer in this appeal “laundered” its housekeeping workers by first moving them over to the payroll of a third party, and then bringing them back in as employees without contractual rights under the CBA, it violated the NLRA, the Second Circuit explained, denying on August 23 the employer’s petition for review of an NLRB decision. In fact, the record supported the conclusion that the employer’s “dominant (if not sole) purpose” in using a subcontractor was to mask a “quasi alter-ego scheme.” The appeals court also agreed with the Board that the employer committed additional violations by unilaterally changing policies related to holiday pay and by refusing to “rehire” two senior housekeepers. The employer’s petition for review was denied and the Board’s application for enforcement was granted (HealthBridge Management, LLC v. NLRB).

3d Cir.: Dispute over retiree benefits not subject to arbitration; retirees not “employees” under CBA. In an appeal raising important questions of appellate jurisdiction and contract interpretation, the Third Circuit ruled August 29 that where a district court had compelled arbitration, dismissed a union’s substantive claims, and administratively closed the case, the district court’s order was an appealable final order. And the appeals court agreed with the employer that a dispute over retiree healthcare benefits was not subject to arbitration because retiree health benefits were not covered under the CBA, reasoning that former employees who retired before the CBA went into effect were not “employees” under the agreement. Further, the appeals court found that a single mention of retiree healthcare benefits in the CBA was insufficient to incorporate a memorandum of agreement on the subject of retiree healthcare into the CBA absent an express intent to incorporate the MOA (Cup v. Ampco Pittsburgh Corp.).

4th Cir.: No § 10(j) injunction for NLRB; effectiveness of Board’s remedial power was not in jeopardy. Finding no abuse of discretion in a district court’s denial of an NLRB motion for preliminary injunctive relief under NLRA § 10(j), a divided Fourth Circuit held on August 28 that the Board failed to demonstrate sufficiently that the “effectiveness of its remedial power was in jeopardy” in its adjudication of unfair labor practice charges against two hospitals. Three and a half years after RNs voted for union representation at the two hospitals, and just less than a year after negotiations began, the union filed charges alleging that the hospitals had failed to bargain in good faith, and six months later, the Board sought the § 10(j) injunction. The district court found no irreparable harm. Chief Judge Gregory dissented because the district court failed to analyze irreparable harm in the proper context—preserving the Board’s remedial power (Henderson v. Bluefield Hospital Co., LLC).

6th Cir.: Common law “tender-back” doctrine does not apply to claims brought under Title VII or Equal Pay Act. In a question of first impression, a divided Sixth Circuit panel held that an employee is not required to “tender back” consideration received under a severance agreement before bringing claims for violations of Title VII or the Equal Pay Act. The appeals court expressed its concern that requiring recently discharged employees to return their severance before they can bring claims under Title VII and the EPA would serve only to protect malfeasant employers at the expense of employees’ statutory protections at the very time that those employees are most economically vulnerable. The August 16 case involved a pregnant employee whose supervisor made negative comments about her pregnancy and her prenatal doctor appointments, and who was fired and pressured to sign a severance agreement without benefit of counsel. In addition, she did tender back the $4,000 in severance she received, but the employer would not accept it (McClellan v. Midwest Machining, Inc.).

6th Cir.: Reasonable for jury to have found Dollar General discriminated against a diabetic employee fired for violating “anti-grazing” policy. In a case brought by the EEOC on behalf of a diabetic Dollar General sales associate, the Sixth Circuit found on August 7 that a jury permissibly determined that the discount retailer discriminated on the basis of disability when it fired the employee after discovering she drank orange juice from the store’s cooler during hypoglycemic episodes. Prior to her promotion to lead sales associate, when she experienced hypoglycemic episodes at work, she typically went to the break room, where she kept orange juice in a cooler. After her promotion, she often worked alone in the store. To avoid the risk of a hypoglycemic episode, she asked if she could keep orange juice at her register, but her manager refused, telling her it was against store policy. When she experienced two hypoglycemic episodes in late 2011 and early 2012, she took a bottle of orange juice from the store cooler, drank it, paid the $1.69 she owed for each bottle, and told the store manager. Finding that these two events violated Dollar General’s “grazing policy,” which forbids employees from consuming merchandise in the store before paying for it, the company fired her. All that mattered, said the appeals court, is whether the jury had a legally sufficient basis to conclude that Dollar General failed to provide the employee reasonable alternatives to keeping orange juice at her register. “Ample evidence supported that conclusion.” The appeals court also upheld the district court’s award of $445,322 in attorneys’ fees to the intervening employee’s attorneys (EEOC v. Dolgencorp, LLC dba Dollar General Corp.).

7th Cir.: Butcher’s trial evidence established that the sexual taunting, touching he endured was directed only at males and was based on sex. Because the Seventh Circuit found that “ample” trial evidence presented by a butcher who claimed sexual harassment did show that the genital grabbing, buttock groping, and sex pantomiming he experienced from male coworkers behind the meat counter did not extend to female employees in the small store’s mixed-sex workplace, it was reasonable for the jury to have concluded that the butcher was subjected to a Title VII hostile work environment based on sex. On August 2, the appeals court also affirmed the jury’s favorable decision on the butcher’s Section 1981 retaliation claim; although the store argued that no retaliation could have occurred because there was no evidence his coworkers even knew he filed an EEOC race bias charge, the court found the store forfeited this argument by focusing in post-trial motions only on whether the butcher’s decision to quit amounted to a constructive discharge (Smith v. Rosebud Farms, Inc., dba Rosebud Farmstand).

7th Cir.: FCRA class action revived because lost opportunity to respond to background check was concrete injury. A job applicant whose employment offer was rescinded after a background check, and whose class action lawsuit against the employer was dismissed based on a district court’s finding that she lacked Article III standing, had part of her suit reinstated by the Seventh Circuit on August 29. The employer’s action in rescinding the job offer without first providing the applicant a copy of the report denied her the chance to review it and present her side of the story, the court explained, which was the “very reason” the FCRA obligated employers to produce such reports before taking adverse action. However, the appeals court agreed that the employee did not have standing to bring a notice claim (Robertson v. Allied Solutions, LLC).

9th Cir.: Divided en banc court allows unionized flight attendant to pursue state-law claim for use of vacation time to cover medical leave, no RLA preemption. In an en banc decision, a deeply divided Ninth Circuit held that the Railway Labor Act did not preempt a flight attendant’s claim premised on a state-law right to reschedule accrued vacation leave, which she had already scheduled for later in the year, for family medical purposes to care for her son when that right to vacation leave was covered by a collective bargaining agreement. The CBA did not allow scheduled vacation days to be moved for family medical reasons. The employee alleged a violation of the Washington Family Care Act’s independent right to use banked vacation days, and her claim did not require interpretation of the CBA. The appeals court voted for en banc rehearing, reasoning that the fact that a state-law cause of action is conditioned on some term or condition of employment that was collectively bargained, rather than unilaterally established by the employer, did not itself create a CBA dispute. Judge Ikuta dissented in the August 1 decision, joined by Judges Tallman, Callahan, Bea and M. Smith (Alaska Airlines Inc. v. Schurke).

9th Cir.: Future attorneys’ fees recoverable by statute or contract must be included in assessing CAFA’s amount in controversy. Assessing whether CAFA’s amount-in-controversy requirement is met, a court must include future attorneys’ fees recoverable by statute or contract, the Ninth Circuit ruled August 8. Applying that rule here, it vacated a lower court order remanding an employee’s wage-hour class action complaint to state court. Because the employee demanded attorneys’ fees permitted by California law, and the law entitled him to an award of fees if successful, future attorneys’ fees were at stake in the litigation. Thus, the lower court’s conclusion that, as a matter of law, the amount in controversy included only attorneys’ fees incurred up to the time of removal and could not include any future fees was incorrect (Fritsch v. Swift Transportation Co. of Arizona, LLC).

9th Cir.: BNSF violated ADA by requiring an applicant it perceived had a back impairment to pay for MRI, and revoking his job offer when he refused. BNSF perceived an applicant for a senior patrol officer position as having a back impairment at the time it asked for an MRI and at the time it revoked his job offer, the Ninth Circuit determined August 29. BNSF could not hide behind its argument that there was some uncertainty as to the actual state of his back when it assumed he had a back condition that disqualified him for the job. Finding that he was qualified and that BNSF impermissibly conditioned his job offer on his procuring an MRI, at his own expense, because it assumed he had a back impairment, the appeals court affirmed the judgment imposing liability on BNSF under the ADA. It vacated, however, the lower court’s nationwide injunction that prohibited BNSF from engaging in certain hiring practices, finding the court below needed to make adequate factual findings to support the injunction’s scope (EEOC v. BNSF Railway Co.).

10th Cir.: Overturning precedent, 10th Circuit concludes that filing an EEOC charge is not a jurisdictional prerequisite to suit. Overturning nearly 40 years of precedent holding that filing an EEOC charge is a jurisdictional prerequisite to suit, the Tenth Circuit declared that a plaintiff’s failure to file an EEOC charge regarding a discrete employment incident merely permits the employer to raise an affirmative defense of failure to exhaust, but it does not bar a federal court from assuming jurisdiction over a claim. Acknowledging that as an individual panel, it could not overrule Tenth Circuit precedent, the panel first circulated its opinion to all active members of the court, who concurred in its conclusion that its prior precedent was no longer correct. Accordingly, on August 17, the appeals court reversed the district court’s dismissal for lack of jurisdiction of several parts of the ADA claims of two BNSF employees who alleged that a tank car spill rendered them partially and permanently disabled and prevented them from working outdoors (Lincoln v. BNSF Railway Co.).

11th Cir.: Citrus grove owner not a joint employer of migrant workers under common law. The owner of a citrus grove that utilized migrant workers under the H-2A visa program to harvest citrus fruit was not the workers’ joint employer under common law, ruled the Eleventh Circuit August 2. The Immigration and Nationality Act governed the H-2A visa program, and Congress intended this statute to carry the definition of the term “employer” from the common law of agency, the appeals court concluded. Applying the common-law definition in this case, the appeals court concluded that the grove owner was not an “employer” and, as a result, it was not the migrant workers’ joint employer for purposes of their breach of contract action (Garcia-Celestino v. Ruiz Harvesting, Inc.).

By Ronald Miller, J.D.

Given an arbitrator’s extensive examination of a Basic Labor Agreement (BLA) and his acknowledgement of a no-add provision, the Ninth Circuit concluded that his arbitration award was grounded in his reading of the BLA, and as such, the court was bound to enforce it. Because the arbitrator’s award drew its essence from the BLA, the appeals court found that he was authorized to reform the parties’ agreement upon a finding that they were mutually mistaken about terms to which they had agreed. Judge Ikuta filed a separate dissenting opinion (ASARCO, LLC v. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, June 19, 2018, Gettleman, R.).

Copper price bonus. The employer is a mining company whose employees are represented by the union, and they were parties to a BLA. The BLA has been modified and extended through two Memorandum of Agreement (MOAs) negotiated in 2010 and 2011. A provision of the BLA provided for a copper price bonus, paid quarterly, to employees who participated in the employer’s pension plan. The 2011 MOA modified the BLA to make employees hired on or after July 1, 2011, ineligible for the pension plan; that also made them ineligible for the bonus.

The union, unaware of the link between the pension plan and bonus, filed a grievance disputing the employer’s refusal to pay the bonus to employees hired after July 1, 2011. The case proceeded to arbitration.

Mutual mistake. The union claimed there was a mutual mistake in the 2011 MOA: the parties failed to recognize that the BLA tied eligibility for the bonus to participation in the pension plan, and both parties intended for all employees to remain eligible for the bonus when they negotiated the 2011 MOA. Accordingly, the union argued that reformation of the BLA was the appropriate remedy. For its part, the employer offered no evidence to the contrary, but it argued that the arbitrator lacked authority to reform the BLA because the agreement contained a no-add provision.

Following a hearing, the arbitrator concluded that neither party anticipated that the 2011 MOA modification would impact new hires’ eligibility for the bonus. Because he found that the parties were mutually mistaken as to the terms of the 2011 MOA, he ordered the BLA be amended to provide that new hires remain eligible for the bonus.

No-add provision. The employer filed a petition to vacate the arbitration award. It did not challenge the findings of fact or conclusions of law, but argued that the no-add provision deprived the arbitrator of authority to amend the BLA. The district court confirmed the arbitration award, concluding that the arbitrator did not violate the no-add provisions because the reformation corrected a defect in the BLA, which was the product of a mutual mistake, to reflect the terms the parties had agreed upon.

This appeal involved the validity of the arbitration award that the employer asserted was invalid because the arbitrator reformed the CBA between the parties in contravention of the no-add provision in the agreement.

Jurisdiction of arbitrator. As an initial matter, the appeals court considered the union’s argument that the employer had waived its right to contest the arbitrator’s jurisdiction. According to the union, the employer waived its right by conceding that the grievance was arbitrable and failing to expressly preserve the right to contest jurisdiction in a judicial proceeding. The appeals court agreed with the union, observing that “a claimant may not voluntarily submit his claim to arbitration, await the outcome, and, if the decision is unfavorable, then challenge the authority of the arbitrators to act.” In this case, the employer did not exercise its options to expressly preserve the jurisdictional question for judicial review. Instead, it conceded that the grievance was arbitrable, then argued to the arbitrator that he lacked jurisdiction to reform the BLA in crafting a remedy. By its conduct, the employer evinced clearly its intent to allow the arbitrator to decide not only the merits of the dispute but also the question of jurisdiction.

Merits. The employer argued that the arbitration award did not warrant deference because: (1) the award did not draw its essence from the BLA; (2) the arbitrator exceeded his authority in reforming the BLA; and (3) the award was contrary to public policy. Specifically, the employer argued that the no-add provision deprived the arbitrator of authority to reform the BLA, and the arbitrator’s award did not draw its essence from the BLA because it ignored that provision.

The appeals court limited its review to whether the arbitrator’s solution could be rationally derived from some plausible theory of the general framework or intent of the agreement.  The arbitrator recognized that new hires were not entitled to the bonus under the plain language of the BLA and he could not find for the union based solely on that language. He also recognized that arbitrators do not generally have the authority to rewrite bargaining agreements or ignore their provisions. He noted, however, that arbitrators can reform a contract to correct an obvious mutual mistake and absent a finding of a mutual mistake, he would not have the authority to reform the BLA.

Given the arbitrator’s extensive treatment of the BLA and acknowledgement of the no-add provision, the appeals court agreed with the district court that the arbitrator’s decision was grounded in his reading of the BLA, and the court was bound to enforce the award. Upon concluding that the parties were mutually mistaken as to the impact of the 2011 MOA on new hires’ eligibility for the bonus, the arbitrator was authorized to reform the CBA despite the employer’s protest.

Public policy. Finally, the appeals court rejected the employer’s argument that the arbitrator’s award should be vacated because it distorted the product of the parties’ bargaining and thus violated public policy. The court pointed out that “a court may vacate an arbitration award that ‘runs contrary to an explicit, well-defined, and dominant public policy, as ascertained by reference to positive law and not general considerations of supposed public interests.’” The employer’s argument failed, though, because the arbitrator did not distort the BLA; he reformed it so that it no longer distorted the agreement that the parties had made during collective bargaining.

Dissent. Judge Ikuta wrote that, by adding to the BLA’s pension provision to permit employees hired after July 1, 2011, to receive a bonus, the arbitrator clearly exceeded the authority granted him by the CBA. The dissent argued that without discussing the no-add provision, the arbitrator here ordered that the pension provision be amended. According to Ikuta, the arbitrator dispensed his own brand of industrial justice by exceeding the scope of his delegated powers and modifying the agreement.

By Ronald Miller, J.D.

Finding that it has never read a right to class actions into the NLRA, a deeply divided U.S. Supreme Court has ruled that in the Federal Arbitration Act (FAA), Congress instructed federal courts to enforce arbitration agreements according to their terms—including terms providing for individualized proceedings. The court ruled 5-4 in an opinion authored by Justice Gorsuch, the Court’s newest member, that neither the FAA’s savings clause nor the NLRA provided a basis to challenge the lawfulness of mandatory arbitration agreements that require employees to waive their right to class or collective actions in any forum. Justice Thomas filed a separate concurring opinion. Justice Ginsburg, joined by Justices Breyer, Sotomayer and Kagan, filed a separate dissenting opinion (Epic Systems Corp. v. Lewis, May 21, 2018, Gorsuch, N.).

Individualized arbitration proceedings. In each of three cases, an employer required, as a condition of employment, a contract providing for individualized arbitration proceedings to resolve employment disputes between the parties. However, each employee sought to litigate FLSA and related state law claims through class or collective actions in federal court. The FAA generally requires courts to enforce arbitration agreements as written, but the employees argued that its “savings clause” removes this obligation if an arbitration agreement violates some other federal law.

Although the FAA and NLRA have coexisted for over 80 years, the suggestion that they might conflict is of a more recent vintage, observed the majority. Courts more or less agreed that arbitration agreements like those here must be enforced according to their terms. Things shifted in 2012, when the NLRB for the first time asserted in D. R. Horton, Inc. that the NLRA effectively nullifies the FAA in cases like the ones at issue. That decision ultimately led to a split in the circuit courts. The Supreme Court granted certiorari to clear the confusion.

Congress adopted the FAA in 1925 in response to a perception that courts were unduly hostile to arbitration, so Congress directed courts to abandon their hostility and instead treat arbitration agreements as “valid, irrevocable, and enforceable.” Not only did Congress require courts to respect and enforce arbitration agreements, it also specifically directed them to respect and enforce the parties’ chosen arbitration procedures.

Class actions as concerted activity. In the majority’s view, the parties before the Court contracted for arbitration; they proceeded to specify the rules that would govern their arbitrations, including the intention to use individualized rather than class or collective action procedures. But the employees suggested that the FAA’s saving’s clause created an exception for cases like theirs. By its terms, the savings clause allows courts to refuse to enforce arbitration agreements “upon such grounds that as exist at law or in equity for the revocation of any contract.” According to the employees, that provision applied here because the NLRA renders their particular class and collective action waivers illegal. The employers countered that the FAA protects agreements requiring arbitration from judicial interference and that neither the savings clause nor the NLRA demands a different conclusion.

FAA savings clause. The Court concluded that the savings clause could not save the employees’ cause because the clause recognizes only defenses that apply to “any” contract, establishing a sort of “equal-treatment” rule for arbitration contracts. The clause offers no refuge for “defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” Under Court precedent, this means that the savings clause does not save defenses that target arbitration either by name or by more subtle methods, such as by “interfer[ing] with fundamental attributes of arbitration.”

According to the Court, the employees’ argument failed when they objected to the mandatory agreements precisely because they required individualized arbitration proceedings rather than class or collective ones. By attacking only the individualized nature of the arbitration proceedings, their arguments attempted to interfere with one of arbitration’s fundamental attributes. Examining its decision in AT&T Mobility LLC v. Conception, the Court noted that courts may not allow a contract defense to reshape traditional individualized arbitration by mandating classwide procedures without the parties’ consent. The employees’ efforts to distinguish Concepcion fell short.

Statutory conflict. The Court next examined the employees’ contention that the NLRA overrides the guidance of Concepcion. For a party to suggest that two statutes cannot be harmonized, and that one displaces the other, must be shown by a “clear and manifest” intention. In approaching a claimed conflict, the Court noted a strong presumption that repeals by implication are disfavored and that “Congress will specifically address” preexisting law when it wishes to suspend its normal operations in a later statute.

Seeking to demonstrate an irreconcilable statutory conflict, the employees pointed to Section 7 of the NLRA. They asked the Court to infer that class and collective actions are “concerted activities” protected by Section 7, which guarantees employees “the right of self-organization, to form, join or assist labor organizations, to bargain collectively … and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” According to the employees, by requiring individualized proceedings, the agreements violated the NLRA.

However, the Court interpreted Section 7 to focus on the right to organize unions and bargain collectively. It does not express approval or disapproval of arbitration; nor does it mention class or collective action procedures or even hint at a clear and manifest wish to displace the FAA. The term “other concerted activities for the purpose of collective bargaining or other mutual aid or protection” appears at the end of a detailed list of activities speaking of self-organization, stressed the Court. Where a more general term follows more specific terms in a list, the general term is usually understood to “embrace only objects similar in nature to those objects enumerated by the preceding specific words.”

This suggested to the Court that the term “other concerted activities” would only protect things employees “just do” for themselves in the course of exercising their right to free association in the workplace. None of the preceding, more specific terms speaks to the procedures judges or arbitrators must apply in disputes that leave the workplace, the Court concluded.

Dissent. Justice Ginsburg’s dissent answer with a resounding “No” to the question whether the FAA permits employers to insist their employees, whenever seeking redress for commonly experienced wage loss, go it alone, despite their rights secured by the NLRA “to engage in … concerted activities” for their “mutual aid and protection.” The dissent argued that the Court subordinated employee protective labor legislation to the FAA. In so doing, Ginsburg argued that the majority opinion forgot the labor market imbalance that gave rise to the Norris-LaGuardia Act and NLRA, and ignored the destructive consequences of diminishing the right of employees “to band together in confronting an employer.”

LabourStart headline – Source: Newsweek