Workplace Wise - Iowa Employment Law Attorneys

Friday, March 18, 2016

New Overtime Rules One Step Closer to Final Publication

By Megan Erickson Moritz

The U.S. Department of Labor's changes to the white collar exemption regulations have moved closer to publication. Earlier this week, the DOL sent the final rule to the White House Office of Management and Budget. This means the final rule could be published and publicly available sooner than many were expecting.  Although we still don't have precise timing, this most recent development suggests the final rule could be approved as early as April -- but more likely by May of 2016. The Rule is likely to go into effect 60 days after it's published.

The DOL has flip-flopped about about expected timing.  Last fall, the Wall Street Journal reported that the Solicitor of Labor said the final rule wasn't expected until late 2016. Others surmised the final rule should be expected in July of 2016. It seems, however, the agency is likely eager to push the rule forward as soon as possible to avoid a challenge under the Congressional Review Act.  

Wednesday, March 16, 2016

Should We Fire Him for That Post?

The March edition of the Harvard Business Review ("HBR") features expert commentary by BrownWinick employment law attorney, Megan Erickson Moritz, in response to the magazine's monthly Case Study.
HBR's fictional Case Studies pose challenges faced by real business leaders, with solutions and analysis from experts in response - usually featuring two different viewpoints.
HBR invited Moritz to provide her response to the March 2016 Case Study: Should We Fire Him for That Post? This Case Study features a small business owner's reaction to an employee's questionable Facebook remarks. Moritz was one of two industry experts providing featured commentary.  
The print edition of the HBR is available on newsstands now, and the Case Study and Commentary is available online here. Clients who would like a complimentary copy of the HBR Case Study and Moritz's Commentary are welcome to e-mail BrownWinick's Marketing Coordinator, Debi Bull to request a copy. Megan may be contacted at

Friday, March 11, 2016

The Third Circuit Clarifies What Constitutes Individual “Concerted Activity” and Reminds the NLRB of the Appropriate Test for Determining Whether an Alleged Discriminatory Discharge was Lawful

By BrownWinick Employment Law Practice Group

In MCPc Inc. v. NLRB, 2016, --- F.3d ---, Case Nos. 14-1379 and 14-1731 (3d Cir. Feb. 12, 2016), the United States Court of Appeals for the Third Circuit affirmed the Board’s determination that an individual employee engaged in protected concerted activity when he complained about shared work conditions to a member of  management, in the presence of other employees during a “team building” lunch; but remanded the case for further proceedings because the Board failed to apply the correct legal test (Wright Line) for determining whether the employee was discharged for that protected activity or whether he was discharged for his alleged misconduct, irrespective of any protected activity. The Court also found that the company violated the NLRA by maintaining an "overly broad" confidentiality policy.

The case arose when a senior solutions architect (employee) of MCPc (Employer) complained to management in a “team building” lunch about his and fellow employees workloads, as well as the need need to hire more staff.  The employee further expressed how the salary ($400,000) paid to a recently hired executive could have been used to mitigate their workloads.  After the employee raised those concerns, his coworkers joined the discussion and expressed agreement.
A week later, the Employer questioned the employee about how he had obtained the confidential salary information he mentioned at the lunch. The employee’s responses were inconsistent and not candid. The Employer terminated the employee for improperly accessing and disclosing confidential salary information and dishonesty.
Following his discharged, the employee filed a complaint with the NLRB. The general counsel argued that the employee’s complaints about work load and executive pay (workplace conditions) were protected concerted activity.
The Board found that MCPc, Inc. violated the Act for discharging the employee based on his complaints about workplace conditions. In finding his discharge unlawful, the Board rejected the Employer’s claim that it discharged him for improperly accessing an executive’s confidential salary information from the company personnel system and disclosing it during the group meeting, because the alleged misconduct did not, in fact, occur.  The Board did not comment on the additional claim that the Employer discharged him for lying when MCPc questioned how he obtained the information.
MCPc, Inc. appealed the decision and order of the NLRB holding that MCPc violated the Act by discharging an employee for concerted activity, and the Board cross-appealed for enforcement of its order.

Concerted Activity - Upon review, the Third Circuit held the employee had engaged in concerted activity and not mere griping. The Court found that the employee engaged in protected, concerted activity “when he communicated his dissatisfaction about shared working conditions . . . during the ‘team building’ lunch that provided a group forum within which [he] could relay to management complaints shared by other employees about workplace conditions they wished to see improved.” The Court stated that it was not necessary for the employee to have organized with employees before or after the lunch at which he voiced his complaints. The Court stated that “the touchstone for an individual’s concerted activity . . . remains whether the employee intends to induce group activity or whether the employee’s action bears some relation to group action in the interest of the employees.” 

Wright Line - The Court found the employee’s misconduct did not take place during his protected discussion with management. As such, the Burnap & Sims test used by the Board and ALJ did not apply. The Burnap & Sims test applies to misconduct “arising out of” protected activity and misconduct occurring “in the course of” protected activity. See NLRB v. Burnap & Sims, 379 U.S. 21 (1964).  The court held that the "mixed motive" or "dual motive" discharge test of Wright Line, 251 N.L.R.B. 1083 (1980) is the appropriate test for determining whether an employee is discharged for engaging in protected concerted activity unrelated to his/her protected activity. The court further noted that, while the Board may have meant to invoke Wright Line as the appropriate test, it did not note the applicability of Wright Line or apply it in the case. Accordingly the Court remanded the case to the Board for application of the correct test.

Under Wright Line, the General Counsel must demonstrate that protected activity was a “motivating factor” in an employer’s challenged action. Molon Motor & Coil Corp. v. NLRB, 965 F.2d 523 (7th Cir. 1992); Wright Line, 251 NLRB at 1089 (1980). To carry this burden, the General Counsel must demonstrate that the employee was engaged in protected activity, the employer had knowledge of that activity, and the employer bore animus toward that activity. Once the General Counsel establishes a prima facie case, the burden then shifts to the employer to show by a preponderance of the evidence that it would have taken the same action even absent the prohibited motivation. If unable to make this showing, the employer is in violation of Section 8(a)(1). Wright Line, 251 NLRB at 1089.

Confidentiality Policy - The Court found that the company violated the NLRA by maintaining an "overly broad" confidentiality policy. MCPc's confidentiality policy stated that "dissemination of confidential information within, such as personal or financial information, etc., will subject the responsible employee to disciplinary action or possible termination." 

Take Away
  1. The activity of a lone employee can constitute “concerted activity” where the individual employees seek to initiate or to induce or to prepare for group action;" and where the "individual employee truly brings group complaints to the attention of management."
  2. The "dual motive" discharge test established in Wright Line is the appropriate test where an employer argues that it discharged an employee for reasons unrelated to his/her protected activity.
  3. Employers should continually review their Employee handbooks to ensure their policies are not over-broad and infringe on employee rights protected by the NLRA.
Should you have any questions about the NLRA and protected concerted activity or Employee handbooks, contact your own legal counsel or any of our Employment & Labor Law Practice Group members.

Thursday, March 3, 2016

NLRB Determination in Independent Contractor Case is Overruled by the U.S. Court of Appeals for 11th Circuit

By BrownWinick Employment Law Practice Group

In Crew One Productions, Inc. v. NLRB, --- F.3d ---, Case No. 15–10429 (11th Cir. Feb. 3, 2016), the United States Court of Appeals for the Eleventh Circuit vacated a decision by the National Labor Relations Board (NLRB) and concluded that stagehands were not employees of Crew One, Inc. (stagehand referral service), but independent contractors.


Crew One Productions, Inc. (Crew One) referred stagehands to event producers for concerts, plays, sporting events, trade shows and various other productions and events. Stagehands completed a questionnaire about their skills and availability to be included in Crew One’s database. After submission of the questionnaire the stagehands attended a brief orientation and received an information packet but no physical exam, testing or training. The information included client policies and best practices, as well as procedure for accepting or declining work offered. Additionally, stagehands signed Independent Contractor Agreements with Crew One, completed a W-9 and provided their own tools and supplies. The stagehands reported exclusively to tour personnel except for reporting with Crew One to record their attendance at the beginning and end of the event for payment purposes. At the request of clients Crew One maintained a workers’ compensation insurance policy, paid by clients. Crew One paid Stagehands on an hourly rate basis, provided no benefits or reimbursement for incidental expenses.

In March 2014, the International Alliance of Theatrical Stage Employees (IATSE) petitioned the NLRB to represent stagehands who contracted with Crew One. The Board determined that the stagehands were employees of Crew One, directed an election and certified the union as the exclusive bargaining representative of the stagehands. After Crew One refused to negotiate with the union, the Board filed an unfair labor practice complaint.  The Board entered summary judgment against Crew One, and the company appealed.
Upon review the Eleventh Circuit at the outset noted the Board has no authority whatsoever over independent contractors; and that the common law of agency governs status determinations. The Court then cited to the Restatement (Second) of Agency and listed the relevant factors to determine whether a worker is an employee or independent contractor. The Court noted it gave special attention to the factor of control. The factors listed by the Court from the Restatement (Second) of Agency are as follows:
(a) The extent of control which, by the agreement, the master may exercise over the details of the work;
(b)  Whether or not the one employed is engaged in a distinct occupation or business;
(c)  The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
(d) The skill required in the particular occupation;
(e) Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f)  The length of time for which the person is employed;
(g)  The method of payment, whether by the time or by the job;
(h)  Whether or not the work is a part of the regular business of the employer;
(I) Whether or not the parties believe they are creating the relation of master and servant; and
(j)  Whether the principal is or is not in business.

Restatement (Second) of Agency § 220(2)

Applying the Restatement (Second) of Agency factors, the Court found the Board erred in applying law to facts and by giving improper weight to certain facts. More specifically, the Court found:

1.  The regional director failed to establish that Crew One had the right to control the manner, means, and details of the stagehands’ work.  The Court found that the actual work performed by the stagehands was controlled by the event producers. The requirement that the stagehands check in and check out with the Crew One supervisor at the beginning and at the end of the event, was solely for the purpose of calculating their hours worked and pay for the day, which did not evidence control of the means of work, only its end.  The Court further found that stagehands had entrepreneurial interest because they were free to accept or reject work without retaliation and free to accept work from other labor providers.

2.  The Board did not give enough weight to the fact that social security or income taxes were not withheld from Crew One’s payments to the stagehands.  The Court noted the fact a company did not deduct social Security or incomes taxes from worker’s receipts was a strong indication of the absence of an employment status within the Eleventh Circuit, but acknowledged sister circuits would give this factor less weight.

3.  The Court found the regional director incorrectly discounted the significance of the independent contractor agreement signed by each stagehand. The Court noted that absent evidence of fraud, duress, or some other defense to formation, the independent contractor agreement the stagehands executed with Crew One was evidence of the parties’ intent to create an independent contractor relationship. The Court also noted that the fact that Crew One required each stagehand to sign such an agreement was not a valid defense to the formation of the agreements.

4.  The Board erred in considered bargaining power over pay as evidence of employee status. Under the common law, negotiation, or lack thereof, over pay is not a factor to be weighed in determining whether an individual is an employee or independent contractor. 

5.  The Board misapplied the law when it considered whether the stagehands performed essential functions of Crew One’s operations. According to the Court the relevant inquiry is “whether or not the work is a part of the regular business of the employer,” Restatement (Second) of Agency § 220(2)(h), not whether the work is essential to the business of Crew One. The Court found Crew One’s business was referring stagehands to event producers.  It did not itself perform stagehand work.  Therefore, stagehand work was not the “regular business” of Crew One which supported a finding of independent contractor status.

6.  The Board’s findings of fact supported a finding that the parties intended to form an independent contractor relationship   The Board found stagehands provided their own job supplies, received no benefits from Crew One and workers' compensation insurance was provided by Crew One at the behest of Crew One’s clients, with costs charged to the clients.

7.  The Board correctly found that payment by the hour supported a determination of employee status.

Considering all factors, the Court concluded the stagehands were independent contractors, not employees of Crew One.

Take Away

The Crew One, Inc. decision is a good reminder that the NLRB does not have the last word on labor law matters.

Should you have any questions about whether your workers are properly classified, contact your own legal counsel or any of our Employment & Labor Law Practice Group members.