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 moritz@brownwinick.com.

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.

Background

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.

Decision

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.

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.

Background

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.

Decision

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.

Have 100 or More Employees? You Need a Pay-Equity Audit STAT!

By Amanda Jansen

The EEOC announced today its plan to revise the EEO-1 report to collect data on pay ranges and hours worked, in order “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.”  If the Office of Management and Budget approves the new EEO-1, employers will have to start providing the pay/hours data in the 2017 EEO-1 collection cycle.  You can review the proposed form, as well as a Questions and Answers document and a Fact Sheet on the EEOC’s website. 

In the meantime, employers would be wise to get ahead of the game and start conducting a pay-equity self-audit.  (Better to have the house in order before the EEOC comes knocking!)  Contact a member of BrownWinick’s Employment Practice Group for assistance.

Whose Employees Are They Anyway? DOL Issues Guidance on Joint-Employer Liability

By Amanda Jansen

On January 20, 2016, the Wage & Hour Division of the Department of Labor issued an Administrator’s Interpretation providing a roadmap to liability in “situations where more than one business is involved in the work being performed.”  A very common example of this is construction projects where work is being performed by laborers and tradesmen, and various businesses are “involved”—i.e., a general contractor and various subcontractors.  Even though all parties in such a situation probably consider the laborers to be employees of their respective subcontractors (and therefore, the subcontractors’ responsibility with respect to proper payment of overtime), the DOL now says it’s not so simple.

Instead, in considering which company is (or which companies are) responsible for paying workers overtime, we are supposed to “determine whether, as a matter of economic reality, the employee is economically dependent on the potential joint employer.”  How do we do that?  By applying another multi-factor test, of course!  The seven factors are below.  (This is not a “checklist” where each factor needs to be present.)

1. Does the company control or supervise the worker “beyond a reasonable degree of contract performance oversight”?  This control/supervision can be direct or indirect through the other company (e.g., subcontractor).   
2. Does the company have the power to hire or fire the worker, modify employment conditions, or determine the rate or method of pay (again, directly or indirectly)?
3. Does the worker work on the company’s project(s) full time and/or on a long-term/ongoing basis?
4. Is the nature of the work “repetitive and rote” and/or relatively unskilled (e.g., painting)?
5. Is the worker’s work “an integral part” of the company’s business?
6. Does the company control (own or lease) the premises where the work is being performed? 
7. Does the company do things for the workers that would normally be handled by an employer—e.g., providing necessary facilities and safety equipment, tools and materials for the work, training, transportation, etc.?

The DOL provides an example to illustrate how joint employment might exist in a construction setting:

Example: A laborer is employed by ABC Drywall Company, which is an independent subcontractor on a construction project. ABC Drywall was engaged by the General Contractor to provide drywall labor for the project. ABC Drywall hired and pays the laborer. The General Contractor provides all of the training for the project. The General Contractor also provides the necessary equipment and materials, provides workers’ compensation insurance, and is responsible for the health and safety of the laborer (and all of the workers on the project). The General Contractor reserves the right to remove the laborer from the project, controls the laborer’s schedule, and provides assignments on site, and both ABC Drywall and the General Contractor supervise the laborer. The laborer has been continuously working on the General Contractor’s construction projects, whether through ABC Drywall or another intermediary. These facts are indicative of joint employment of the laborer by the General Contractor.

So what happens if you think you may be a joint employer of another company’s employees? You are responsible (along with the other company) for ensuring those workers get paid at least minimum wage and time-and-half for all time worked over 40 hours in a workweek.  And if that other company drops the ball and doesn’t pay overtime?  The DOL and/or the workers can (and will) come to you with their hands out looking to collect that unpaid overtime, as well as liquidated damages and attorney fees.  So don’t let yourself become a joint employer of someone else’s workers!  And if you do, make sure the FLSA is being followed to a T.

For more information about joint employer liability, contact a BrownWinick attorney.  It should be noted that joint employment can exist in all industries; this piece just focuses on construction because it’s the easiest example to understand and illustrate.  

You can also read the full Administrator’s Interpretation, and other guidance from the DOL, on the website:  http://www.dol.gov/whd/flsa/jointemployment.htm

NLRB Rules Broad Employer Rules Restricting Recordings in the Workplace Violates Employee Section 7 Rights

By BrownWinick Employment Law Practice Group

On December 24, 2015, in Whole Foods Market, Inc., 363 NLRB No. 87,  the National Labor Relations Board ruled in a 2-1 decision that two rules which prohibited employees from recording company’ meetings or conversations in the workplace violated section 8(a)(1) of the National Labor Relations Act.

The two Whole Foods’ no-recording rules had been in effect since 2001 and were implemented in the context of its open door policy. Whole Foods global vice president for team member services (human resources) testified that the rules applied “regardless of the activity that the employee is engaged in, whether protected concerted activity or not.” The rules in question provided:

Team Meetings - In order to encourage open communication, free exchange of ideas, spontaneous and honest dialogue and an atmosphere of trust, Whole Foods Market has adopted the following policy concerning the audio and/or video recording of company meetings:

It is a violation of Whole Foods Market policy to record conversations, phone calls, images or company meetings with any recording device (including but not limited to a cellular telephone, PDA, digital recording device, digital camera, etc.) unless prior approval is received from your Store/Facility Team Leader, Regional President, Global Vice President or a member of the Executive Team, or unless all parties to the conversation give their consent. Violation of this policy will result in corrective action, up to and including discharge.

Please note that while many Whole Foods Market locations may have security or surveillance cameras operating in areas where company meetings or conversations are taking place, their purposes are to protect our customers and Team Members and to discourage theft and robbery

Team Member Recordings - It is a violation of Whole Foods Market policy to record conversations with a tape recorder or other recording device (including a cell phone or any electronic device) unless prior approval is received from your store or facility leadership. The purpose of this policy is to eliminate a chilling effect on the expression of views that may exist when one person is concerned that his or her conversation with another is being secretly recorded. This concern can inhibit spontaneous and honest dialogue especially when sensitive or confidential matters are being discussed.

Previously, the ALJ held Whole Foods’ no recording rules were lawful because they did not explicitly prohibit Section 7 protected, concerted activity, were not promulgated in response to union activity, had not been applied to restrict the exercise of Section 7 rights, and could not reasonably be read as proscribing Section 7 activity.

In reversing the ALJ’s decision, the Board’s majority held the rules at issue prohibited the recording of conversations, phone calls, images or company meetings with a camera or recording device without prior approval; and that the rules would reasonably be construed by employees to prohibit Section 7 activity. The Board reasoned that photography and audio or video recording in the workplace, as well as the posting of photographs and recordings on social media, are protected by Section 7 if employees are acting in concert for their mutual aid and protection and no overriding employer interest is present.  Examples of protected activity cited by the Board included recording images of protected picketing, documenting unsafe workplace equipment or hazardous working conditions, documenting and publicizing discussions about terms and conditions of employment, documenting inconsistent application of employer rules, or recording evidence to preserve it for later use in administrative or judicial forums in employment-related actions. The Board further noted its case law was replete with examples where photography or recording, often covert, was an essential element in vindicating the underlying Section 7 right.

The Board did, however, acknowledge that its ruling was not intended to bar all employer prohibitions regarding recording. “We do not hold that an employer is prohibited from maintaining any rules regulating recording in the workplace. We hold only that those rules must be narrowly drawn, so that employees will reasonably understand that Sec. 7 activity is not being restricted.”

In light of the Board’s Whole Foods ruling, it is suggested that you review your Employer handbooks and consult with a labor attorney before adopting any rules regarding workplace recording.

NLRB Overrules Bright-Line Rule Exempting the Production of Confidential Witness Statements

By BrownWinick Employment Law Practice Group

Under longstanding National Labor Relations Board (NLRB) precedent, witness statements obtained by an employer during an investigation of employee misconduct have been considered confidential and were not required to be produced to the union that represented an employee in a grievance. In holding that employers were not required to turn over confidential witness statements to union representatives, the Board reasoned that witness statements were fundamentally different from other types of information since their release carried a risk of potential witness intimidation and increased the likelihood witnesses would be reluctant to give statements without assurance from their employer they would be kept confidential See Anheuser-Busch Inc., 237 NLRB 982 (1978).

However, in American Baptist Homes of the West d/b/a Piedmont Gardens, 362 NLRB 139 (June 26, 2015), the NLRB overruled Anheuser-Busch and held that witness statements obtained during an employer investigation  were  no longer exempt from production to union representatives. Instead, the Board indicated that the Detroit Edison v. NLRB, 440 U.S. 301 (1979), balancing test should be used for all future matters involving confidential witness statements. The balancing test adopted by the Board in Piedmont Gardens requires that employers conduct a fact-specific analysis that balances a union’s need for the information against the employer’s legitimate and substantial confidentiality interests. 

Under Piedmont Garden, if an employer seeks to challenge the production of a witness’ statements in connection with an employer investigation then it must raise its confidentiality concerns to the union in a timely manner and offer the union an accommodation. Possible accommodations may include asking the union to enter into a non-disclosure agreement, redacting the witness’ names from statements or producing a list of witness names with a summary of the information obtained without attributing the information to any particular witness. Whether a particular accommodation is appropriate will depend on the facts and circumstances of each case. The proposed accommodation will be subject to good faith negotiation with the union.

If the accommodation is rejected and the union files an unfair labor practice complaint, then the employer will need to demonstrate, it has a “legitimate and substantial” confidentiality interest in the statements.  In order to establish it has a “legitimate and substantial” confidentiality interest in the statements, the employer will need show, on a case-by-case basis, that the witness needs protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated or there is a need to prevent a cover-up, and that such interest outweighs the union’s need for the statements. If an employer is able to make this showing, then the employer may lawfully refuse to disclose a witness’ statement.

The Piedmont Gardens decision does not impact the work product doctrine, which may still be raised to object to a union’s request for witness statements where such witness statements were obtained in anticipation of litigation or for trial.

Employers should seek the advice of counsel before withholding witness statements or other potentially relevant information from union representatives on confidentiality grounds.

An early Christmas gift for Employers and Unions - Congress delays Implementation of the ACA’s “Cadillac Tax”

By BrownWinick Employment Law Practice Group

On December 18, 2015, Congress passed and the President signed $1.15 trillion fiscal year 2016 appropriations omnibus bill into law, funding the government through September 30, 2016. The bill also included several policy riders related to the Affordable Care Act (ACA) which will affect how organized labor and Employers approach collective bargaining for multi-year agreements this year and next.

First, the 2016 appropriations omnibus bill provides for a two-year delay of the ACA’s, 40 percent excise tax on high-cost employer-sponsored health plans, also known as the “Cadillac Tax.” The delay changes the effective date from 2018 to 2020. The 2016 bill also allows plan sponsors to treat any “Cadillac tax” payment as a deductible business expense.  Under the original provision of the Affordable Care Act (ACA), the “Cadillac tax” was not deductible. 

The legislation also suspends temporarily both of the other ACA taxes, which already have begun. First, it delays the 2.3 percent excise tax on medical devices for two years and next suspends the ACA’s annual tax on insurers (which began in 2014) for one year in 2017.

Some organized labor groups have opposed and seek a repeal of the tax because they collectively bargained for workers to receive more compensation through health benefits instead of higher wages. They argue the likely end-result of the “Cadillac tax” is that either Employers will offer lower-cost policies to employees or they will pass along the increased cost directly to the employee. Either way, out-of-pocket expenses will increase significantly for the household, given that lower cost policies tend to have higher deductibles, which ultimately lower employees’ total compensation. Tax payer watchdog groups also oppose the “Cadillac tax” as it impacts taxpayers who pay for the healthcare benefits of government workers, teachers, firefighters and police.

By comparison, proponents of the “Cadillac tax” argue it will help to slow the growth of national health care costs by increasing the price of excess health benefits.

It is not clear whether Congress will continue to extend implementation of the “Cadillac tax” or delete it entirely.  Likely, such change will not occur until after the next presidential inauguration. Until then, plan sponsors with high value coverage and Employers negotiating multi-year collective bargaining agreements between now and 2020 should operate under the assumption that the tax will go into effect in 2020. 

A Lump of Coal or a Surprise Christmas Gift for Employers? Iowa Supreme Court Revives Pregnancy Discrimination Lawsuit, but Notes the Iowa Civil Rights Act Does Not Impose a Duty to Accommodate Temporary Disabilities

By Amanda Jansen

In a surprising Christmas Eve decision, the Iowa Supreme Court in McQuistion v. City of Clinton tackled a pregnancy discrimination case similar to Young v. UPS decided by the U.S. Supreme Court earlier this year.  The issue before the court was whether the City violated the Iowa Civil Rights Act (ICRA) or the Iowa Constitution when it denied a pregnant firefighter, Karen McQuistion, light-duty assignments while she was pregnant.  (I focus here only on the ICRA claim, because the constitutional issues are esoteric and largely only of interest to public-sector employees.)

The City denied McQuistion’s request for light duty because the City had a policy that only authorized light duty for (1) employees injured on the job, and (2) pregnant police officers, pursuant to a collective bargaining agreement between the City and the police officers’ union (the CBA with the firefighters’ union did not contain a similar provision).  In response, McQuistion retained Roxanne Conlin and sued.

The district court agreed with the City that neither the policy, nor the City’s actions in denying McQuistion light duty, discriminated on the basis of pregnancy.  Instead, ruled Judge Henry Latham, the City merely made a distinction between (a) employees injured on the job, and (b) employees needing light duty for any other reason.  (Pregnant police officers, the district court concluded, were a completely different ballgame because they had specifically negotiated the pregnancy-light-duty provision in their CBA, whereas the firefighters had not done so.)

The Iowa Supreme Court, however, reversed the lower court’s conclusion that no pregnancy discrimination occurred.  The Court, just like the Court in Young, said that a policy that excludes pregnant employees from an employment benefit (e.g., light duty) is only prima facie evidence of unlawful discrimination—that’s only the first step in the analysis.  The employer still gets to articulate a legitimate (non-anti-pregnancy) reason for denying the benefit to pregnant employees while allowing it to other, temporarily disabled employees.  Finally, the employee has a chance to rebut the employer’s reason and show the reason is just a pretext—a smokescreen—to treat pregnant employees worse than others.  Chief Justice Cady, writing for the Court, explained that what happens at this third step in the analysis is weighing of “the burden imposed on pregnant employees by exclusion from the policy and the strength of the neutral reason for the employer to justify the exclusion of pregnant employees.”  If the employer’s reason is “weighty” enough, then excluding pregnant employees is legal.  The Supreme Court had to remand the case back to the district court to make this determination, so we will have to wait and see how the weighing process comes out. 

The really interesting part of McQuistion is the Court’s (rather gratuitous) footnote 5, which provides in pertinent part:

[I]n order to eliminate discrimination against the disabled, the law generally requires an employer to provide reasonable accommodations that permit the person to perform the essential duties of the job.  We have not extended that requirement to temporary disability cases.  The extension of a duty to reasonably accommodate to include temporary disabilities, including pregnancy, is laden with policy considerations normally reserved for the legislative branch of government.  

(Emphasis added; citations omitted.) 

Why is this interesting, you ask?  Because until now, it appeared the Court was adopting the federal Americans with Disabilities Act Amendments Act (ADAAA), into Iowa law by judicial fiat—i.e., without the Iowa General Assembly amending the ICRA like Congress amended the ADA—to broaden legal protections for individuals with physical or mental impairments, and as a result, to broaden employers’ legal obligations.  For example, in Goodpaster v. Schwan’s, a case under the ICRA, the Court significantly referenced the ADAAA in concluding the employee’s multiple sclerosis was a disability.  But in McQuistion’s footnote 5, the Court sharply diverges from one of the ADAAA’s key principles:  that a condition can be a disability even if it is temporary—even if it lasts less than six months.  That is, the Court says that its old, pre-ADAAA precedent is still controlling under the ICRA.  Specifically, Vincent v. Four M Paper Corp. stands for the proposition that no legal disability exists when a “condition, although serious, [i]s only temporary and not expected to have a long term impact on [the employee’s] work capabilities.”

Now, does this mean employees should stop providing accommodations to employees with temporary medical conditions?  NO, the rule of thumb should still be “Assume Disabled Always.”  But if you are a small employer (fewer than 20 employees) and providing accommodations is taking a toll, definitely reach out to a member of BrownWinick’s Employment and Labor Law Practice Group to discuss your options.  The McQuistion decision may offer a window of relief for small businesses managing through “worker with a health problem” issues.

OSHA Penalties are Going Up, Up, Up

By Brent Soderstrum

On November 2, 2015, President Obama signed the bipartisan budget bill which permits OSHA to institute a “catch-up adjustment” effective August 1, 2016.  The increase that starts on August 1, 2016, and the subsequent annual adjustments for which the bill provides are to be based upon the Consumer Price Index (“CPI”).

The big question is what the exact amount of the “catch-up adjustments” will be.  Apparently, the CPI is approximately 80% higher than it was back in 1990, which is when OSHA penalties were last increased.  However, this first increase in OSHA penalties could be much higher than 80% because the Act sets the “maximum adjustment” at 150% of the current penalty structure.  Thus, the potential penalty structure for maximum fines could be as follows: 

                 Other than serious:  $12,600-$17,500.  The maximum is currently set at $7,000.

                 Serious:  $12,600-$17,500.  The maximum is currently set at $7,000.

                 Repeat:  $126,000- $175,000.  The maximum is currently set at $70,000.

                 Willful :  $126,000-$175,000.  The maximum is currently set at $70,000.

This first increase is not the end of it.  The budget bill also requires OSHA to annually increase the monetary penalties based upon the percentage increase in the CPI from the previous year.  As a result, every January 15 OSHA will set new penalty amounts; and thus, employers need to pay attention.

OSHA’s increased penalties are intended to increase employers’ attention to the safety regulations by putting some teeth into the monetary penalties.  Regardless of the penalty increases, employers need to be prepared for OSHA to show up at their door and be prepared to handle an OSHA inspection.  It has been easy in the past for employers to accept OSHA citations when the dollar amounts are reduced.  However, with the increase in the penalty structure, a repeat violation can be quite devastating to a company.

Look over your safety manuals and be prepared for a work accident and/or an OSHA inspection.  Also, don’t be too quick to settle an OSHA case even now before the new penalty structure goes into place, since a possible repeat violation will have much more punch to it after August 1, 2016.

If you  have any questions about the OSHA penalty adjustments, how to handle an OSHA inspection or how to comply with OSHA’s regulations, please do not hesitate to contact BrownWinick attorney Brent Soderstrum.

Comment on Recent Iowa Public Employment Relations Board Negotiability Decisions

By BrownWinick Employment Law Practice Group

In a series of recent negotiability dispute decisions, the Iowa Public Employment Relations Board ("PERB") has left public employers wondering whether the Board’s 2010 legislative grant of authority to interpret Iowa Code chapter 20 and demonstrated tendency to discard long-standing case precedent will continue to erode the common and ordinary meaning of a mandatory subject of bargaining within the context of Iowa Code section 20.9.

In 2010, Iowa Code Chapter 20 was amended to provide PERB with the power to “interpret, apply, and administer the provisions of [the] chapter.” Iowa Code § 20.6.

Iowa Code section 20.9 contains a limited list of subjects over which an employer and the duly certified employee organization are required to negotiate; including, wages, insurance, supplemental pay, and procedures for staff reduction. Bargaining proposals that fit within one of these enumerated categories are considered mandatory subjects of bargaining. Waterloo Educ. Ass’n v. Iowa Pub. Employment Relations Bd., 740 N.W.2d 418, 422 (2007) (citing City of Fort Dodge v. Iowa Pub. Employment Relations Bd., 275 N.W.2d 393, 395 (Iowa 1979). All other proposals, for which the employer and the employee organization may agree to negotiate, are considered permissive. Id.

The classification of a proposal as either mandatory or permissive is significant. If a proposal is considered mandatory, then the parties may utilize statutory impasse procedures when agreement is not reached. Id. (citing Decatur County v. Pub. Employment Relations Bd., 564 N.W.2d 394, 396 (Iowa 1997)). If a proposal is permissive, the employer may refuse to bargain over the matter and unilaterally implement its desired change. Id.

In Waterloo Educational Association v. Pub. Employment Relations Bd., 740 N.W.2d 418 (Iowa 2007) (Waterloo II) the Iowa Supreme Court rejected the management rights balancing test and reaffirmed the two-prong definitional test. 740 N.W.2d at 429. First, PERB must determine whether a proposal fits within the scope of a specific term listed within section 20.9. Id. In making this threshold determination, PERB must consider the “common and ordinary meaning [of section 20.9 topics] within the structural parameters imposed by section 20.9.” Id. at 430. Once a proposal has been properly classified as a mandatory subject of bargaining, PERB must then consider whether the proposal is otherwise preempted by or inconsistent with a provision of law.Id.

The Court in Waterloo II did not abandon decades of case law establishing the narrow parameters of section 20.9, nor did it expand the scope of mandatory subjects of bargaining. The Court simply reaffirmed a long-standing legal test requiring PERB to first determine whether a proposal fits within one of the enumerated categories.

In Fort Dodge Community School District, No. 8512, slip op. (PERB July 2, 2012), PERB elected to exercise its statutory authority to interpret chapter 20 and reevaluated long-standing legal precedent defining the term “supplemental pay. ” PERB held that the common and ordinary meaning of supplemental pay is “a payment of money or other thing of value that is in addition to compensation received under another section 20.9 topic and is related to the employment relationship.” Id. at 24. PERB emphasized that while supplemental pay is not limited to cash payments, “[t]here can be no question that chapter 20 deals strictly with collective bargaining in the public sector in Iowa; thus, in the context of section 20.9, any ‘supplemental pay’ proposal must be related to the employment relationship between bargaining unit members and the public employer.” Id. at 23.

Prior to Waterloo II, the Iowa Supreme Court held that “supplemental pay refers to pay for services rendered. . . it is pay based upon extra services and directly related to the time, skill, and nature of the additional services.” Fort Dodge Community School District vs. Pub. Employment Relations Bd., 319 N.W.2d 181, 184 (Iowa 1982); See. e.g., W. Hills Educ. Agency 12 & Prof’l Staff Ass’n of Area Educ. Agency 12, No. 2337, slip op.at 15 (PERB Feb. 4, 1983) (severance pay held permissive).

Notwithstanding the long-standing precedent that defined supplemental pay, PERB ruled that the Education Association’s proposals for severance pay fell within the common and ordinary meaning of supplemental pay as redefined by PERB. PERB reasoned the Education Association’s proposals, which provided for cash payments, were “related to the employment relationship in that the payment is made upon termination, is conditioned upon length of service, and is calculated based on unused, accumulated sick leave. Moreover, the proposals incentivize employees to remain in the [employer’s] employ while refraining from using their contractually agreed-to sick leave.” Fort Dodge Community School District at 24.

The Court of Appeals affirmed the District Court’s affirmation of PERB’s ruling on the grounds PERB was vested with the authority to interpret chapter 20; and that the interpretation of supplemental pay was not irrational, illogical, or wholly unjustifiable. Fort Dodge Community School District v. Pub. Employment Relations Bd., 855 N.W.2d 733 (Iowa App. 2014).

Similarly, in State of Iowa (Board of Regents) & UE Local 896/COGS, No. 100058 slip op.(PERB February 25, 2015), the Board elected to exercise its statutory authority to interpret chapter 20 and ruled that a Union proposal for reimbursement of mandatory student fees (paid by all undergraduate and graduate students enrolled at the University of Iowa) was a mandatory subject of bargaining (supplemental pay) for enrolled graduate students who also had part-time appointments to teach classes and assist with research at the University.

In reaching its decision, the Board appropriately analyzed the question of negotiability pursuant to the two prong approach inWaterloo II. The Board engaged in a definitional exercise to determine whether the proposal fit within the scope of either the mandatory topic of wages or supplemental pay.  It correctly determined that the proposal to reimburse mandatory student fees was not a wage because the employer’s obligation to make the required payment was not triggered by an employee providing a service. Instead, the Board stretched precedent and ruled the payments contemplated by the proposal fit the definition of supplemental pay as redefined by the Board in Fort Dodge Community School District v. Iowa Pub. Employment Relations Bd., 855 N.W.2d 733 (Iowa App. 2014).  Specifically, the Board found the Union’s proposal for student fee reimbursement was a payment related to the employment relationship and was therefore supplemental pay and mandatory.  As reasoned by the Board, “They [student fee reimbursement payments] are, under a literal reading, triggered by the relationship’s very creation ? the receipt of an appointment to a bargaining unit position – and are akin to a hiring bonus.” Id. at 7.

On appeal to District Court, the employer argued PERB Board’s application of “related to employment relationship,” in the context of mandatory student fees, overextended prior precedent [supplemental pay definition], rendered other section 20.9 topics superfluous and created open scope bargaining in direct contravention of legislative intent. The employer further argued that student fees did not relate to the employment relationship whatsoever, but were related solely to their enrollment as students at the University. The District Court rejected the employer’s arguments, deferred to PERB’s statutory authority to interpret chapter 20 and affirmed PERB’s ruling as not irrational, illogical, or wholly unjustifiable.  State of Iowa (Board of Regents) v. Iowa Public Employment Relations Board, No. CVCV049496 (Polk County District Court July 31, 2015).

PERB willingness to exercise its interpretative authority and reexamine decades old precedent should give public employers pause to question whether PERB’s recent decisions indicate a trend by PERB, which if unbridled, will have the effect of abolishing limited scope bargaining in Iowa.

However, all hope should not be lost. In City of Camanche and City of Camanche Police and Fire, Case No. 100058, slip op. (PERB August 5, 2015), the Board declined the Union’s invitation to exercise its statutory authority to interpret Iowa Code chapter 20 and rule that prescription and health insurance for retirees was not an illegal subject of bargaining, but mandatory under the category of insurance. Instead the Board correctly and appropriately followed long-standing case precedent and ruled the proposal was illegal. See City of Mason City v. PERB, 316 N.W. 2d 851 (Iowa 1982) (retiree health insurance proposal directly augments or supplements the benefits a public employee would receive under a retirement system under other provisions of the Code and is therefore an illegal subject of bargaining).