By Erin Dougherty Foley and Craig B. Simonsen

Seyfarth Synopsis: In this case a home-care nurse complained about the quality of care her patient received from the patient’s family members. Subsequent review and inspections by the company found some “serious problems” with the employee’s care-giving — and ultimately led to her termination. The Sixth Circuit Court agreed with the employer’s analysis. Blair v. Maxim Healthcare Services, Inc., No. 17-5025 (6th Cir. Oct. 6, 2017).

The plaintiff, Teresa Blair, was a home-care nurse that provided medical care for a patient with cerebral palsy and mental retardation. Over the course of several years the plaintiff, as directed by her employer, reported numerous incidences of neglect of the home-care patient at the hands of the patient’s family. Blair complained that the patient’s mother was not mentally capable of caring for him.

Blair, though, exhibited her own employment issues on the job. According to the Court, Blair had shown up at a patient’s house when not scheduled to work; made errors on medical charts; failed to take a patient’s vital signs for the doctor; falsely reported that the doctor had ordered a patient quarantined and that Blair alone should care for the patient while he had the flu; and attempted to change her schedule without her supervisor’s permission.

Subsequently, Blair reported upon arriving at her home-care position, finding her patient in distress. After alerting authorities, Blair was told to call an ambulance. After arriving at the hospital, a doctor evaluated the patient and noted “normal vital signs and no clinical signs of illness or distress.” Blair’s supervisor told her to turn her patient’s care over to the hospital staff. Blair however continued to shadow hospital staff until that evening. The patient was released from the hospital the next day.

About a week later, the employer gave Blair a written warning indicating that she had failed to follow her supervisor’s instructions to let the hospital staff take over, among other things.

Then, after Blair’s patient’s release from the hospital, one of Blair’s supervisors and a registered nurse, visited the patient’s home and noted some “serious problems” with Blair’s care-giving. For instance, Blair had not placed a pulse-oximeter probe on the patient’s finger, which was a problem because “the doctor (and Blair’s supervisor) had ordered continuous use of the probe to measure [the patient’s] blood-oxygen saturation level.” Blair had also failed to place an ambu-bag at the patient’s bedside. “This device was supposed to be within arm’s reach so that, in an emergency, Blair could use it to help [the patient] breathe. The device was found in a closet on an upper shelf and the closet door was blocked by a large piece of equipment. “A month before, Blair had been reprimanded for the same mistake.” Blair was fired the next day.

Blair then sued the employer in Kentucky state court, asserting wrongful-discharge claims. The employer then removed the case to federal court under diversity jurisdiction. Blair amended her claims to assert that the healthcare employer had discharged her in violation of Kentucky’s Patient Safety Act. The district court granted summary judgment to the employer on all claims.

In discussion of the law in this case, the Court explained that the Kentucky Patient Safety Act requires that any “employee of a health care facility . . . who knows or has reasonable cause to believe that the quality of care of a patient, patient safety, or the health care facility’s or service’s safety is in jeopardy” to “make an oral or written report of the problem to the health care facility[.]” Citing Ky. Rev. Stat. § 216B.165(1). In addition, the Act also prohibits any “health care facility or service” from retaliating “against any agent or employee who in good faith reports[.]” Citing Ky. Rev. Stat. § 216B.165(3). To prevail on her claim under the Act, Blair needed to show (i) that she engaged in a protected activity under the Act, (ii) that the employer knew about her protected activity, and (iii) that the employer took an adverse employment action against her because of it.

Blair contended that a jury could find causation because in her view the employer falsely accused her of interfering with the Kentucky Protective Services investigation of the December 2013 incident that sent her patient to the hospital. The Court, though, concluded that Blair failed to present a genuine issue as to causation. “The 18 days between her complaint and termination are not enough to allow a reasonable jury to find that one caused the other.”

For employers, and especially healthcare employers, this case illuminates the need for constant vigilance in the company’s oversight of its staff, and the preparation of documentation relating to employee supervision and discipline.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Health Care Practice Group or the Workplace Policies and Handbooks Team.

 

By: Christine HendricksonLisa L. SavadjianCameron A. SmithCourtney Stieber

Seyfarth Synopsis: The New York City Commission on Human Rights (the “Commission”) recently issued additional guidance in the form of “Frequently Asked Questions” on the Salary History Law that goes into effect on October 31, 2017.  

New York City’s Salary History Law goes into effect on October 31, 2017.  It will prohibit covered employers from inquiring about a candidate’s salary history, or relying on the salary history of candidates when determining their salary, benefits, or other compensation.  For more information regarding the law, see our prior alerts herehere, and here.

With the Halloween deadline fast approaching, many employers are revising their hiring practices to comply with the law.  Recently, the Commission issued guidance, which can be found on its website in a section entitled: “Frequently Asked Questions,” and here. The FAQs respond to some key concerns employers have about the law.

Key Takeaways

  • The FAQs provide guidance regarding deferred compensation and unvested equity. They clarify that, as part of a discussion about compensation expectations, employers can ask about the value and structure of deferred compensation or equity that would be forfeited.
  • The Commission takes an expansive view regarding the geographic scope of the law’s coverage, and will apply the law to job applicants that live in New York City and interview in New York City, even if they apply for a job outside of New York City.
  • The FAQs state that employers and consumer reporting agencies must comply with the law’s requirements even when running a background check, and suggest that it is a best practice to redact or exclude salary history from such reports.
  • Employers should remove all requests for current or prior salary on their job applications, particularly where it might be sent to a candidate for a job in New York City.
  • The Commission will conduct a case-by-case analysis regarding inquiries about the salary history of independent contractors and whether the employer may consider salary history when determining compensation for an offer of permanent employment in the same position or a comparable position. The Commission will primarily consider whether the temporary employee or subcontractor qualifies as an applicant for a new position or for internal transfer or promotion.

General Scope of Coverage

There were no big surprises on the scope of coverage.

  • The FAQs reaffirm that the law covers applicants for jobs in New York City.  The Commission acknowledges that the law will not apply where an applicant simply resides in New York City, but is interviewed and will work outside of New York City.  However, the FAQs indicate that the Commission is taking the position that if the employer asks a candidate about salary history during a job interview that occurs in New York City, even for a job based outside of the City, the law may apply.  Here, the Commission relies on the theory that the impact of the discriminatory conduct occurred in New York City.  Courts may take a narrower view when analyzing the locus of the impact of the challenged conduct and if the law applies in this situation.  Nonetheless, even employers without operations in New York City should exercise caution, particularly when interviewing in or considering applicants from New York City.
  • The law generally will not apply to former employers who disclose information about salary history to the hiring employer.  However, the Commission noted that others can be held liable if they intentionally aid and abet a violation of the law.
  • Applicants for internal transfer or promotion are not protected by the Salary History Law.
  • The salary history protections will go into effect on October 31, 2017, but they will not be retroactive to cover inquiries made prior to that date.  Nonetheless, employers should exercise caution if they are formulating or communicating offers after October 31st based on salary history obtained prior to that date.  Even if the information was lawfully obtained before the law went into effect, the law independently prohibits reliance on salary history in determining a candidate’s compensation, including the negotiation of a contract.

What Employers Can and Cannot Do to Learn About Applicants’ Salary Expectations

  • The Commission confirmed that a job application can ask an applicant to state his or her compensation expectations, as long as it does not request salary history.
  • Employers should review and revise their job applications, particularly where one might be sent to a candidate applying for a job in New York City, to remove all requests for current or prior salary.  Retaining or including a question on a job application that asks for salary history may violate the law.  Employers who use an application that requests salary history cannot avoid liability simply by adding a disclaimer stating that individuals in New York City or applying for jobs in New York City need not answer the application’s question about current or prior salary.
  • Inquiries made to a candidate’s current or former employers, or searching public records, for the purpose of learning an applicant’s salary history, are prohibited.  However, in cases of accidental discovery if, for example, an employer stumbles upon a candidate’s salary history while searching publicly available information for another purpose, the employer would not have violated the Salary History Law.  In such a situation, however, the employer may not rely on that accidentally discovered salary history to formulate the compensation details of an offer.
  • If an applicant volunteers information about his or her salary history without being prompted to do so, the employer may discuss and inquire about the applicant’s salary history, verify the applicant’s representations, and rely on the applicant’s salary history in determining an offer.
  • A voluntary disclosure of salary history is “without prompting” if the average job applicant would not think that the employer encouraged the disclosure based on the overall context and the employer’s words or actions.  While the Commission is articulating an objective “reasonable person” test, rather than a subjective standard, this “voluntary and without prompting” safe harbor remains vague.  Employers should exercise caution and train hiring managers and recruiting professionals not to prompt disclosure of salary history.

Background Checks and the Implications of the Credit Reporting Laws

  • In circumstances where an employer is legally permitted to perform a background check before a conditional offer has been made, or runs a background check after a conditional offer, the Commission recommends that employers specify to reporting agencies that information about salary history be excluded from the report.  Inquiries into salary history would violate the law regardless of whether such inquiries are made before or after a conditional offer, unless the employer makes the inquiry to verify information the applicant disclosed voluntarily and without prompting.
  • Consumer Reporting Agencies (“CRA”) should consider no longer verifying salary information for applicants in New York City or applicants for jobs in New York City.  In addition, where CRAs collect W-2 or other tax reporting forms from candidates, they should redact salary history.

Broad Definition of “Compensation”

  • The Commission has defined “salary” broadly.  The same is true of “benefits” and “other compensation,” which extend to various forms of remuneration, including, but not limited to, a car allowance, retirement plan, or bonus.  This also includes commissions an applicant earned.
  • An employer is allowed to ask about objective indicators of performance such as a book of business, or the volume, production, value, or frequency of sales.  However, an employer should not ask about an applicant’s current or former profit percentages, or information from which it can determine the applicant’s compensation earned on production or commissions (unless the applicant volunteered that information without prompting).
  • Employers may ask about the value of a counter offer or competing offer that the candidate might also be considering, because it is not “current or prior” salary.

Deferred Compensation

  • One of the most significant pieces of guidance contained in the FAQs concerns deferred compensation.  In September, the Commission’s policy counsel represented to us that it would take the position that employers should not affirmatively ask candidates whether they have deferred compensation or would forfeit deferred compensation.  The Commission stated that if the candidate offers information about deferred compensation as part of a discussion about compensation expectations, the employer can verify the value of the deferred compensation that would be forfeited, either with the prior employer or with the candidate.  However, when the Commission issued Fact Sheets in September, they were silent on deferred compensation.
  • The FAQs now state clearly that, in the context of a discussion with candidates to learn about their compensation expectations, employers may ask whether an applicant will have to forfeit deferred compensation or unvested equity upon resignation from his or her current employer, and may ask about the value and structure of the deferred compensation or unvested equity that would be forfeited.  Employers may request documentation to verify the applicant’s representations, and consider such information in making an offer.

Exemptions to the Law

  • There is no specific exemption in the law for actions taken by an employer pursuant to foreign or international law that specifically authorizes the disclosure or verification of salary history or requires knowledge of salary history.
  • Private positions for which compensation is set pursuant to procedures established by collective bargaining are not exempt. The only exemption in this area applies to public employees where compensation is set pursuant to a collective bargaining agreement.
  • Headhunters are not exempt.  Headhunters who qualify as employers, employment agencies, or agents of an employer may be liable under a direct or aiding and abetting discrimination theory.  The Commission recommends that headhunters obtain written confirmation from job candidates that they consent to disclosure of their salary history.  Employers working with headhunters should also obtain a copy of the applicant’s written consent before relying on a headhunter’s representations about an applicant’s salary history.
  • The Commission did little to clarify the debate surrounding independent contractors.  The law does apply to independent contractors.  However, the Commission hedged on whether an employer may consider the salary history of a temporary employee or a subcontractor in determining compensation for an offer of permanent employment in the same position or a comparable position.  The Commission stated that this must be assessed on a case-by-case basis. The Commission will consider whether the temporary employee or subcontractor qualifies as an applicant for a new position or for internal transfer or promotion.  The Commission suggests that if the employer is willing to concede that it is a joint employer of the subcontractor or temporary employee, then the application may be one for internal transfer or promotion, which would not be covered by the law.

Corporate Acquisitions

  • A company seeking to acquire another company may obtain salary information about the employees of the target company as part of the due diligence process because the employees of the target company are not “job applicants” under the law.
  • However, despite this corporate acquisition exemption, the FAQs explain that if employees of the target company are being asked to interview for new positions in the acquiring company, the law may apply.  Accordingly, in those circumstances, the Commission recommends that any salary information that may have been shared in the due diligence process not be shared with hiring managers making decisions about compensation.  Employers considering a corporate acquisition should assess the law’s potential applicability.

Best Practices

The Commission recommends as a best practice:

  • During the hiring process, focus questions on applicants’ salary demands, skills, and qualifications.
  • Employers and hiring managers change the tenor of the conversation around salary discussions in interviews, to move away from what the applicant is currently making, and instead focus on his or her salary demand. The Commission believes this is an important change to prevent current salary from being based on prior salary, which may be artificially depressed.
  • Ensure that job applications and other forms do not include questions about applicants’ salary history, even if such questions are framed as “voluntary.”
  • Modify written policies and educate interviewers and hiring staff to prohibit inquiries about applicants’ salary history.

Unintentional violations of the law may lead to imposition of civil penalties of up to $125,000, and the Commission may impose a penalty of up to $250,000 for a willful and malicious violation. Individual applicants may also file claims under the New York City Human Rights Law for violation of the Salary History Law, and seek compensatory damages and other relief including punitive damages and attorneys’ fees.

As always, we are available to answer any questions employers may have regarding the Salary History Law.  If they have not done so already, employers should evaluate and reassess their practices and procedures with respect to recruiting and hiring in light of this new law and guidance.

By Sam Schwartz-FenwickMichael W. Stevens, and Kylie Byron

Seyfarth Synopsis: The Department of Justice has reversed the previous Administration’s position on employment protections for transgender individuals, and issued a memorandum that will likely be relied on by private employers seeking to use their religious faith to engage in otherwise prohibited discriminatory conduct.

In a bombshell week, with significant implications for employers, the Department of Justice issued two memos setting forth its views on transgender discrimination claims and an employer’s ability to make decisions based on its religious beliefs.

On October 5th, 2017, the Department of Justice released a memorandum stating that the new position of the DOJ would be that Title VII does not protect transgender persons from discrimination in the workplace. However, somewhat confusingly, the memo specified that transgender people were still protected under Title VII’s existing formulation. This presumably means that a transgender person may sue under Title VII if their employer discriminates against them on the basis of their race or country of origin, but not on the basis of sex or gender identity. The DOJ had previously argued in Court that Title VII does not extend to claims of sexual orientation discrimination.

On October 6th, 2017, the Department issued new guidance providing that “[e]xcept in the narrowest of circumstances, no one should be forced to choose between living out his or her faith and complying with the law.” The directive explicitly states that private companies must be given the same leeway regarding religious beliefs that churches receive. This guidance may impact hiring, and could possibly give any private organization the ability to hire, fire, and discipline employees based upon the faith of the owner or supervisor. It may also lead to changes in benefit plans that expressly exclude on religious grounds transgender coverage and/or same-sex spousal benefit.

These directives were not unexpected. Nonetheless, they mark a sharp reversal of DOJ policy. Under the Obama Administration, the DOJ had held the position that transgender employees were protected from discrimination under Title VII, congruent with the EEOC’s position. Specifically, the Department’s position was that gender identity discrimination was a form of sex stereotyping and thus covered by under Title VII. The DOJ intervened in litigation throughout the country advocating this view of the statute. Likewise, the prior administration argued in Hobby Lobby v Burwell, that private companies cannot claim exemption on religious grounds from generally applicable statutes.

In addition, the DOJ’s new course puts it at odds with the EEOC. The EEOC continues to advocate for a broad interpretation of Title VII that extends to claims of sexual orientation and gender identity discrimination.   Further it remains the EEOC’s position that a business cannot defend otherwise discriminatory conduct by arguing such conduct was consistent with its religious beliefs.

The memos underscore that this is an area of law filled with uncertainty. The law on the scope of Title VII’s coverage, and the ability of religion to act as an affirmative defense to otherwise discriminatory conduct, remain unsettled. The memos do not resolve the issue. The Department of Justice has stated its viewpoint and direction, but these directives do not supersede state or federal law already in place. Further, these memos do not control the position of the EEOC.

It is anticipated that these memos will lead to an increase in targeted employment lawsuits from impact groups. How such cases will turn out is unknown.

What is known is that these issues will remain in flux until either the Supreme Court hears the issue or Congress passes clarifying legislation. This term, the Supreme Court in Masterpiece Cakeshop will be given the opportunity to provide some insight into how it views the tension between religious rights and principles of non-discrimination. The case involves whether or not a business (here a bakery) is permitted to refuse service to same-sex couples on the basis of the business-owner’s faith. The baker asserts a First Amendment rights to religious liberty and freedom of speech. A ruling in favor of the baker would be consistent with the DOJ’s October 6 memo, and could dramatically change the employment law landscape. As with the DOJ memo, such a ruling could be relied on by employers and plan sponsors to justify otherwise discriminatory actions in hiring, promotion, firing and plan design.

As the policy change by the DOJ is not binding, it is not advisable to shift employment policies based upon the Attorney General’s statements. Treating transgender employees with equality in the workplace is a best practice standard that increases employee safety and productivity and helps with recruitment, retention and morale. Further, inclusive policies mitigate against the risk of potential litigation. In addition, several states and cities have protective statutes that prohibit discrimination against transgender people in employment, and federal courts in multiple jurisdictions have found transgender claims covered by Title VII.

For more information on this topic, or for advice or assistance in helping your workplace comply with best practices for transgender employees, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Workplace Policies and Handbooks Team.

By Pamela Q. Devata and Jennifer L. Mora

Seyfarth Synopsis: In the last three years, employers have seen a sharp increase in the number of employment class actions under the Fair Credit Reporting Act (FCRA). Most of the reported cases involve challenges to the employer’s procedures before ordering a background report. More recently, however, we are seeing more cases against employers alleging a failure to follow the FCRA’s adverse action requirements, which must be followed any time an employer intends to take “adverse action” (revoking a job offer or terminating employment) against a job applicant or a current employee based, in whole or in part, on information contained in their background report.

A recent federal court decision demonstrates the importance of employers following these highly technical requirements when using background reports for hiring and other employment decisions. In Wright v. Lincoln Prop. Co., a judge in the Eastern District of Pennsylvania considered how an employer can comply with the adverse action process if it relies on an initial background report before revoking a job offer, but then receives a subsequent, corrected report. In Wright, the plaintiff received an employment offer that was contingent upon successful completion of a background check. The first background report, dated June 6, was a partial, in-progress report that revealed a misdemeanor conviction for driving under the influence and two separate drug-related felony convictions. A week later, on June 13, a more comprehensive, final report was provided to the employer, but it included the same substantive criminal information. The employer sent the partial June 6 report to the plaintiff but did not send the final, completed June 13 report.

Both parties moved for summary judgment. In alleging the employer violated the FCRA, the plaintiff raised two arguments. First, he argued he never “received” a copy of the June 6 report. The court summarily rejected this argument, concluding the FCRA does not explicitly require an employer “to ensure that the consumer to whom the report relates actually received the notice.” Instead, the FCRA merely requires the employer to “provide” a copy of the report. Thus, the court concluded that a jury had to decide whether the employer satisfied its obligations under the FCRA based on its evidence that it did, in fact, “provide” him with a copy of the report.

The plaintiff then argued the June 6 report did not satisfy the FCRA because it did “not contain the required information, including a summary of rights and advance notice of [the employer’s] intention to withdraw its job offer based on the report.” He also argued the employer relied on the June 13 report (which was never provided to him) and, thus, sending the June 6 report did not satisfy the FCRA. On the other hand, the employer argued in its motion that dismissal of the claim was appropriate because (a) it provided the plaintiff with a copy of the report and the FCRA summary of rights and (2) the convictions, which were listed in both reports, were not erroneous and, in fact, the plaintiff to admitted to them.

The court concluded that a jury should resolve the dispute. In so doing, the court noted that the employer revoked the offer because of the convictions listed in both reports and that while there were no material differences between the criminal history included in the two reports, the final, June 13 report “contain[ed] a more thorough summary of other types of searches run by [the background check company], such as credit report” and the plaintiff “remained unable to contest the full information upon which [the employer] relied even if he indeed received the June 6th transmittal, given that it only included his criminal history.” Because a copy of the final report was not sent to the plaintiff, the court denied the employer’s motion for summary judgment.

The court’s ruling does not equate to a blanket requirement that an employer provide all copies of background reports to rejected job applicants or terminated employees. It is possible the jury will find that, under these facts, a second pre-adverse action notice was not required. That said, employers that receive corrected or more comprehensive reports after sending the initial report should assess the new report to determine whether to send a subsequent pre-adverse action notice. As this case reflects, that both reports contained the same conviction information that caused the employer to revoke the offer did not spare the employer from the expense and burden of a jury trial.

Now more than ever, employers that conduct background checks, whether pre-hire or during employment, should consider taking steps to ensure they are complying with the FCRA’s notice requirements, including a privileged review of their background check process documents and notices and the procedures used when ordering background reports and relying on them when making employment decisions. Employers also should be mindful of other laws impacting their use of criminal history information, including the “ban-the-box” laws sweeping the nation and the Equal Employment Opportunity Commission’s interest in background screening policies that may have a disparate impact on minority workers.

Those with questions about these issues or topics are encouraged to reach out to the authors, your Seyfarth attorney, or any member of the Background Screening Compliance & Litigation Team.

Co-authored by Noah A. Finkel, David S. Baffa, and Andrew L. Scroggins

 

Seyfarth Synopsis: Following oral argument, employers should be cautiously optimistic that the Supreme Court will allow mandatory arbitration programs containing waivers of the ability to bring collective and class actions.

In Monday’s oral argument, in one of the most significant employment law cases we have seen in some time, a divided Supreme Court appeared more likely than not to give the green light to employers’ mandatory arbitration programs that contain waivers of collective and class actions. Our summary of the issues this case presents can be found here: http://www.wagehourlitigation.com/arbitration-agreements/will-the-supreme-court-finally-remove-doubt-that-an-employer-can-mandate-that-employees-enter-into-arbitration-agreements-with-class-waivers/

Reading tea leaves from oral argument is always a challenge, especially for those who have a stake in the matter.[1] But the three authors of this post attended Monday’s argument and, judging from the questions from the Court, the various Justices’ reactions to the answers to those questions, and the prior rulings from the Court, are optimistic that the Court ultimately will issue a closely-contested ruling in favor of class waivers.

Four Justices Appear Ready to Invalidate Class Waivers in Employment Cases

While our prediction is somewhat uncertain, there is one aspect in which we are completely confident: there will not be a unanimous decision. Indeed, it appeared that there are four solid votes to hold that Section 7 of the National Labor Relations Act provides an employee with a right to bring a collective or class action, that requiring an employee to waive that right as a condition of employment violates NLRA Section 8’s prohibition against employer restraint of that right, and that, therefore, an employer’s arbitration agreement including a class waiver cannot be enforced either because the class waiver is illegal or because the NLRA constitutes a contrary congressional command to the general rule that, under the Federal Arbitration Act, arbitration agreements are to be enforced according to their terms.

Justice Ginsburg asserted in her questions that “the driving force of the NLRA was the recognition that there was an imbalance, that there was no true liberty of contract,” which is why concerted activity — including, in her apparent view, class and collective action — is protected against employer interference. She further contended that the Court’s prior precedents regarding the FAA concerned only commercial contracts and did not involve NLRA rights. (As the employers’ counsel Paul Clement rightly pointed out, however, the Court has twice reviewed the propriety of arbitration agreements between employers and employees, and neither time did the Court reason that arbitration agreements in the employment context are entitled to any less weight than those in the commercial context.)

Justice Kagan relied on the Court’s prior precedent to argue that the NLRA protects “employees seeking to improve working conditions through resort to administrative and judicial forums” and thus implied that filing a class action also is protected by the NLRA. But the employers’ counsel retorted that Court precedent merely protects “resort to” courthouses, and that “there is no right to proceed as a class once you get there.” Once in court, nothing prohibits an employer from asserting all available defenses to class treatment, including moving to enforce an agreement between an employer and employee to arbitrate all disputes on a bilateral basis.

Justice Sotomayor questioned that argument by maintaining that an employer cannot enforce a contract that is “illegal” even under the FAA. In response to that, employers’ counsel Clement retorted that the Court has decided two other cases (Circuit City v. Adams and Gilmer v. Interstate Johnson/Lane Corp.) in which employees had agreed to bilateral arbitration and in which it could have been argued that the NLRA makes such an agreement unlawful. “But no dog barked at that point . . . and that’s because the NLRA in no other context extends beyond the workplace to dictate the rules of the forum,” Clement told the Court.

The most vigorous questioner was Justice Breyer, who appeared offended by the idea of a class waiver. He went so far as to say that he is worried that the employers’ position “is overturning labor law that goes back to, for FDR at least, the entire heart of the New Deal” and that “I haven’t seen a way that you can, in fact, win the case, which you certainly want to do, without undermining and changing radically what has gone back to the New Deal.” Clement explained, however, that “for 77 years” — from the passage of the NLRA until its 2012 D.R. Horton decision — “the [NLRB] did not find anything incompatible about Section 7 and bilateral arbitration agreements” and the NLRB’s General Counsel issued a memorandum on the issue in 2010 in which it found that a mandatory class waiver does not violate the NLRA.

But From Where Does the 5th Vote Come?

Despite these fairly clear votes to invalidate class waivers, four votes does not a majority make.  And in questioning of counsel for the NLRB and counsel for the employees, it appeared that it will be difficult to find that fifth vote. Justice Thomas, in keeping with his usual demeanor, did not ask a question, but he has been in the Court’s majority in other cases enforcing arbitration agreements and is regarded as generally receptive to employer’s views. Nor did Justice Gorsuch ask a question. He, however, thus far has joined the Court’s conservative majority in all decisions in which he has been a part.

Chief Justice Roberts and Justice Alito clearly were skeptical of the NLRB’s position. Indeed, in questioning its General Counsel Richard Griffin, Chief Justice Roberts and Justice Alito led Griffin into a significant admission, providing the most dramatic moment of the morning. They asked Griffin a series of questions that led Griffin to agree that it would not be an unfair labor practice for a mandatory arbitration program to require use of a forum whose rules did not allow class arbitration. Justice Alito quickly realized the significance of this point: “if that’s the rule, you have not achieved very much because, instead of having an agreement that says no class, no class action, not class arbitration, you have an agreement requiring arbitration before the XYZ arbitration association, which has rules that don’t allow class arbitration.” Griffin did not dispute this.  He commented that “the provisions of the [NLRA] run to prohibitions against employer restraint.”

Interestingly, counsel for the employees, Daniel Ortiz of the University of Virginia School of Law, did not agree with that concession, thus highlighting fundamental dissent from the NLRB’s position. These cases at the Supreme Court already were notable because the Solicitor General took a position opposite that of the NLRB. Oral argument added another layer of disagreement: even the employees urging the Court to adopt the Board’s view of the NLRA don’t agree with the concession made by Griffin. In other words, the employees and the NLRB are asking the Supreme Court to recognize a right that overrides the FAA, but they cannot agree on what that right is.

As in any close case recently at the Supreme Court, most eyes were on the swing vote, Justice Kennedy. Going into the argument, he appeared to be the Justice most likely to join Justices Ginsburg, Sotomayor, Kagan, and Breyer, the four justices who dissented from the Court’s enforcement of a bilateral arbitration agreement in the consumer context in AT&T Mobility v. Concepcion. Justice Kennedy did not tip his hand as much as the other Justices. But he did appear to be interested in the concession that NLRB General Counsel Griffin made (and clarified Chief Justice Roberts’ question that induced that concession), and his questioning of the Board and the employees’ counsel suggested that he believed that, even with a collective and class action waiver, employees still can exercise Section 7 rights in various ways, and that he did not wish to “constrain[] employers in the kind of arbitration agreements they can have.”

Little of the argument focused on the FAA and the nature of its saving clause or what constitutes a “contrary congressional command.” The Justices seemed more interested in exploring whether the NLRA contains a right to a class action in the first place.

What Next?

Our predicted close victory for the employers is just that: a prediction. After all, even the Justices who appeared to favor permitting class waivers did not strongly signal how they might reach that result or whether any guidelines or restrictions might accompany the rule. We do not recommend that employers bank on our prediction, because one never knows what is in the minds of the Justices or how they will come out after discussing the cases with each other. Until a decision is issued — which likely will be early 2018 — there will be no definitive answer as to whether a class waiver in an arbitration program provides a defense to an employment class or collective action. Employers should continue to consider whether an arbitration program with a class or collective action waiver is right for them and, if it is, be ready to implement one if the Supreme Court rules in the employers’ favor in these cases.

[1] Seyfarth Shaw LLP is counsel for Epic Systems Corporation — one of the three companies whose arbitration programs are at issue in the three consolidated cases at the Supreme Court — and represents Epic at the district court in this case, was counsel for Epic in the appellate court, and is co-counsel for Epic at the Supreme Court.  The views expressed in this blog post are Seyfarth Shaw’s and not necessarily those of Epic.

 

 

 

By Karla Grossenbacher and Christopher W. Kelleher

Seyfarth Synopsis:  A string of recent class action lawsuits regarding businesses’ use of employees’ biometric data should put employers on heightened alert regarding compliance with various state biometric privacy laws.

As biometric technology has become more advanced and affordable, more employers have begun implementing procedures and systems that rely on employees’ biometric data. “Biometrics” are measurements of individual biological patterns or characteristics such as fingerprints, voiceprints, and eye scans that can be used to quickly and easily identify employees.  However, unlike social security numbers or other personal identifiers, biometrics are biologically unique and, generally speaking, immutable.  Thus, unlike a bank account or a social security number, which can be changed if it is stolen, biometric data, when compromised, cannot be changed or replaced, leaving an affected individual without recourse and at a heightened risk for identity theft.  Given the serious repercussions of compromised biometric data, a number of states have proposed or passed laws regulating the collection and storage of biometric data.  And plaintiffs’ attorneys are taking notice, as the number of class action lawsuits in this area has surged in recent months.

Currently, there are three states that have statutes regulating the collection and storage of biometric data: Illinois, Texas, and Washington.  In 2008, Illinois passed the Biometric Information Privacy Act (“BIPA”).  Texas followed suit in 2009, and Washington passed its biometric privacy law in 2017.

Covered Biometric Data. All three laws place restrictions on the collection and storage of “biometric identifiers,” such as eye scans, fingerprints, and voiceprints. However, BIPA and the Washington law also cover data that is converted into some type of code or template.  In addition to biometric identifiers, BIPA applies to “biometric information” which is “any information, regardless of how it is captured, converted, stored, or shared,” that is “based on an individual’s biometric identifier” and is “used to identify an individual.”  The Washington law places restrictions on the “enrollment” of biometric identifiers, which is defined as “capturing” a biometric identifier or “convert[ing] it into a reference template.”  Therefore, in Illinois and Washington, if an employer converts an employee’s biometric identifier into a mathematical code or other template and retains only the code or template and not the underlying biometric data, the employer must still meet the laws’ requirements with respect to the collection and storage of that information.  The Texas law only protects biometric identifiers and does not contain a broader “biometric information” provision.

Notice and Consent. All three laws require employers to provide notice and obtain consent before collecting and storing biometric data. BIPA requires the employer to obtain a “written release,” but the Texas and Washington laws do not specify that consent must be given in writing.  BIPA further specifies that, in the employment context, a written release is one  “executed by an employee as a condition of employment.”  This language is significant for employers who routinely collect and store biometric information of employees and are struggling with what to do if an employee refuses to provide consent.

Washington’s law also contains an exception the others do not: The law’s notice and consent provisions do not apply to biometric data collected and stored by an employer for “security purposes,” which is defined in the statute as biometric data that is stored for “the purpose of preventing shoplifting, fraud, or any other misappropriation or theft of a thing of value.”

Standard of Care. All three laws require that employers exercise reasonable care to protect biometric data: BIPA specifies that employers should use a “reasonable standard of care within the industry, and in a manner that is the same as or more protective than the manner in which the business stores, transmits, and protects other confidential and sensitive information.”  The Texas law similarly requires employers to store, transmit, and protect the data from disclosure using reasonable care and in the same way the company treats other confidential information. Washington’s law requires employers to take reasonable care to guard against unauthorized access to and acquisition of biometric data.

Retention. Each of the laws has requirements concerning when, and in some cases how, the biometric data must be destroyed: BIPA’s requirements are the strictest, dictating that employers must establish a written, publicly available policy that contains a retention schedule for biometric data and guidelines for “permanently” destroying the data.  BIPA has the most stringent retention requirements in that it states the information must be destroyed when the purpose for obtaining such data has been satisfied or within three years of the individual’s last interaction with the employer, whichever occurs first.  The Texas law requires only that employers destroy biometric data “within a reasonable time,” but not later than one year after the biometric data is no longer needed.  In Texas, if biometric data was collected for “security purposes,” the purpose for collecting the data is presumed to expire on termination of the employment relationship.  Finally, Washington’s law requires employers to retain biometric data “no longer than is reasonably necessary” to comply with certain legal requirements and to provide the services for which the biometric data was collected.

Cause of Action. All three laws provide civil penalties for violations, but BIPA is the only one of the three laws that provides a private right of action that allows for plaintiffs to recover liquidated damages and attorneys’ fees. In Texas and Washington, only the state attorney general may bring suit to enforce those laws.  It is this distinction that accounts for the fact that lawsuits filed under the Illinois law have been grabbing headlines as of late.

Biometric Data in the Other 47 States. Several other states (including Alaska, Massachusetts, Montana, and New Hampshire) have introduced similar legislation with varying levels of success. But even in states where no law governing the collection and storage of biometric data exists, employers should still take caution when collecting and storing biometric data because the practice could lead to invasion of privacy or negligence claims.

Best Practices. In addition to obtaining prior written consent from employees for the collection and storage of biometric data, employers should consider doing the following:

  1. Have a written policy in Illinois and distribute to employees along with the written release form. BIPA requires a business in possession of biometric data to have a publicly available, written policy stating the business’s retention schedule for the data and rules governing its destruc­tion — and the business must adhere to such policy. Thus, employers in Illinois need to make sure they have such a policy.
  2. Ensure biometric data is not sold or disclosed. All three laws generally prohibit a business from selling, leasing, or otherwise disclosing biometric data it collects or possesses. Companies should ensure that neither the company nor any vendor storing biometric data on the company’s behalf sells or discloses the data in violation of these laws. The laws contain exceptions to this prohibition on disclosure where the individual consents to the disclosure, the disclosure completes a financial transaction requested by the individual, or the disclosure is permitted by law, order or warrant. Again, outside of Texas, Washington, and Illinois, reasonableness would dictate that an employer should not disclose an employee’s biometric data to others without consent under an invasion of privacy or negligence analysis.
  3. Have protocols for protecting biometric data. Employers should protect biometric data in the same manner as they do with other confidential and sensitive information in their possession. Protocols for protecting biometric data can be covered in a general information security policy or in a specific biometric data policy.
  4. Have appropriate provisions in vendor contracts to protect biometric data. In contracts with vendors who store or collect biometric data on behalf of an employer, employers should require that the vendor comply with applicable laws governing the collection and storage of biometric data and provide the same level or higher level of protection to the data that the employer does. The employer should also retain the right to request information on the vendor’s information security protocols, conduct periodic audits of the vendor’s security protocols, and to be notified in the event of any breach or suspected breach of the biometric data the vendor holds for the company (regardless of whether such notification is required by a breach notification statute).
  5. Comply with applicable data breach notification statutes in the event biometric data is compromised. Biometric data is considered “personal information” under a number of state data breach notification laws, including Illinois, Iowa, Nebraska, New Mexico, North Carolina, Wisconsin and Wyoming. Employers storing biometric data (and their vendors) must follow the requirements of these laws with regard to informing affected individuals of breaches/suspected breaches.

With biometric privacy legislation pending in Massachusetts and New Hampshire, and the passing of a biometric privacy law in Montana in 2018 a virtual certainty, we have only just begun to see the impact of this type of privacy legislation. Stay tuned.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Policies and Handbooks Team.

By Gena B. Usenheimer and Kaitlyn F. Whiteside

Seyfarth Synopsis: The Supreme Court of the State of New York, Appellate Division, Second Judicial Department (“Second Department”) joined the First Department in finding that home healthcare employees who work 24-hour shifts are entitled to pay for all hours present in a client’s home, including sleeping and meal periods.  With this holding, the Second Department became the second appellate court in New York to reject the previously accepted interpretation of New York law, consistent with federal law, that allowed employers to pay home health care employees for 13 hours out of a 24-hour shift, so long as specified meal and sleep periods were provided. 

We previously wrote about the New York appeals court decision in Tokhtaman v. Human Care, LLC, in which the New York State Supreme Court, Appellate Division, First Judicial Department (Manhattan and the Bronx), held that a “non-residential” home healthcare employee must be paid for all hours present at a client’s home, including meal periods and time spent sleeping. The First Department opined that “non-residential” employees are those employees who, like the plaintiff in Tokhtaman, “maintain[] [thei]r own residence, and d[o] not live in the homes of [] client’s.”

On September 13, 2017, the Second Judicial Department (Dutchess, Kings, Nassau, Orange, Putnam, Richmond, Rockland, Suffolk, and Westchester) issued two decisions in line with Tokhtaman, holding that non-residential home healthcare employees must be paid for all 24 hours in a 24-hour shift, regardless of meal and sleep periods.  The Second Department did not provide any further clarity as to what constitutes a “residential” home healthcare employee.

These decisions reflect a departure from the rationale set forth in a 2010 New York Department of Labor (“DOL”) Opinion Letter, which interpreted the DOL Regulation 12 NYCRR § 142-2.1(b) to allow “live-in employees” — whether or not they are residential employees — to be paid for 13 hours for a 24-hour shift so long as the employee was afforded at least 8 hours for sleep (and actually received 5 hours of uninterrupted sleep), and 3 hours for meals.

With both the First and Second Departments in agreement on the issue, however, employers in New York should be aware of these changing and increasingly onerous pay obligations for employees working 24-hour shifts.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Labor & Employment or Workplace Policies and Handbooks Teams.

By David J. Rowland and Cheryl A. Luce

Seyfarth Synopsis: The Seventh Circuit sent shockwaves through the EEOC and through the employer community by concluding that multi-month leaves of absence, even those that are definite in term and sought in advance, are not required by the ADA.

To the surprise of many observers, and undoubtedly the EEOC, the Seventh Circuit held last week in Severson v. Heartland Woodcraft, Inc., — F. 3d — Case No. 14-cv-1141 (7th Cir. Sept. 20, 2017) that “a long-term leave of absence cannot be a reasonable accommodation” under the ADA. Id. at 7. Judge Sykes, on behalf of a power panel that included Chief Judge Wood and Judge Easterbrook, analyzed the language of the ADA and concluded that it “is an antidiscrimination statute, not a medical-leave entitlement.” Id. at 2.

The facts of the case are straightforward. Severson had a chronic back condition that pre-dated his employment at Heartland that would occasionally flare up and affect his ability to walk, bend, lift, sit stand, move and work.  In June 2013, Severson experienced such a flare-up and took a leave from work.  Over the summer months, he submitted periodic notes from his doctor informing Heartland that he was receiving treatment and could not work.

Heartland approved his request for 12 weeks of FMLA leave. Two weeks before his leave expired, he informed Heartland that his condition had not improved and that he would need surgery the date that his leave expired, and that the typical recovery time for this surgery was at least two months.  Heartland notified Severson the day before his surgery that his employment with Heartland would end when his FMLA leave expired the following day and invited him to reapply with the company when he recovered from surgery and was medically cleared to work. He recovered several months later and, instead of reapplying, filed a lawsuit.  The district court awarded summary judgment in favor of Heartland on Severson’s ADA claims and the Seventh Circuit affirmed.

The EEOC filed an amicus brief and participated in oral argument.  In its opinion, the court took special care to explicitly reject the EEOC’s argument that a long-term medical leave of absence should qualify as a reasonable accommodation when the leave is of a definite, time-limited duration, requested in advance, and likely to enable to perform the essential functions of his job when he returns.  The court found the EEOC’s reading of the statute to equate “reasonable accommodation” with “effective accommodation,” a concept rejected by the Supreme Court in U.S. Airways, Inc. v. Barnett, 535 U.S. 391 (2002). Severson at 9.  More importantly, the court found that by the EEOC’s logic, the length of the leave did not matter and therefore transformed the ADA into a medical leave statute—“in effect, an open-ended extension of the FMLA”—which the court found “untenable.” Id.

The court left open the possibility that “intermittent time off or a short leave—say, a couple of days, or even a couple of weeks—may, in appropriate circumstances, be analogous to a part-time or modified work schedule.” Id. at 8.  But, relying upon prior precedent from Byrne v. Avon Prods., Inc., 328 F.3d 379, 381 (7th Cir. 2003), the court found that the “[i]nability to work for a multi-month period removes a person from the class protected by the ADA.” Id.

This decision is the firmest and most comprehensive rebuke of the EEOC’s long-held and vigorously pursued position that long-term leaves are a required form of reasonable accommodation. The Chicago office of the EEOC, in particular, has leveraged multi-million dollar settlements in the past after suing employers that actually had long term, “multi-month” extended leave policies in place, but were unwilling to extend leaves beyond six months or even a year.  This avenue of ADA attack now appears blocked in the Seventh Circuit.

Employers must proceed with great caution in this area for several reasons. First, the Seventh Circuit’s decision arguably conflicts with decisions in the First, Sixth, Ninth and Tenth Circuits (at least according to the EEOC’s amicus brief at pp. 15-16 ).  As a result, employers with a national footprint cannot assume this same rule will apply outside of the Seventh Circuit.  Second, Severson could seek rehearing en banc, likely with the EEOC’s support.  Given the panel in Severson, though, a rehearing bid may be an uphill battle.

For more information on this topic, please contact the authors, your Seyfarth Attorney or a member of the Firm’s Absence Management and Accommodations Team.

By Kelsey P. Montgomery and Dawn Reddy Solowey

Seyfarth Synopsis:  Telling African-American employees “that if they had ‘n—– rigged’ the fence, they would be fired” may be enough, standing alone, to state a hostile work environment claim.  The Third Circuit clarifies that “severe or pervasive” discrimination is the correct standard for hostile work environment claims.   

The Third Circuit recently held that a single word or incident, if severe enough, may create an actionable hostile work environment claim. The Court clarified that in hostile work environment cases, the proper legal standard is not whether the objectionable conduct in question is “pervasive and regular,” but rather whether it is “severe or pervasive.”

The plaintiffs in Castleberry v. STI Group, both African-American men, are pipeline workers who worked for defendants as general laborers on an all-white crew.  In their complaint, they alleged that despite having more experience than their white counterparts, the plaintiffs were assigned to clean around the pipelines, but were not permitted to work directly on them.  Moreover, on multiple occasions, a colleague anonymously wrote “don’t be black on the right of way” on the pipeline workers’ daily sign-in sheets.  The plaintiffs alleged that after working on a fence removal project, a supervisor told them “that if they had ‘n—– rigged’ the fence, they would be fired.”  They reported this final incident, and were terminated two weeks later without explanation.  The complaint alleged that although they were briefly rehired, the defendants’ terminated their employment a second time, claiming a “lack of work.”

The plaintiffs subsequently brought harassment, discrimination, and retaliation claims against the defendants. At the outset of the case, the defendants moved to dismiss on the grounds that a single, isolated incident could not constitute a hostile work environment.  The trial court agreed, dismissing the plaintiffs’ hostile environment claims, holding that a single use of a racial slur was not “pervasive and regular” discrimination.

On appeal, the Third Circuit reversed. After acknowledging inconsistent precedent in the Circuit, the appellate court clarified that “severe or pervasive” was the correct standard for hostile work environment claims – not “pervasive and regular” or even “severe and pervasive.”  The Third Circuit explained:

Indeed, the distinction means that severity and pervasiveness are alternative possibilities: some harassment may be severe enough to contaminate an environment even if not pervasive; other, less objectionable, conduct will contaminate the workplace only if it is pervasive.

The Third Circuit relied on U.S. Supreme Court precedent to support the “severe or pervasive” standard.

Having clarified the hostile work environment standard, the Court in Castleberry found that “it is clear that one such instance [of a supervisor using the ‘n-word’] can suffice to state a claim.”  Moreover, as alleged here, the plaintiffs’ supervisor threatened to terminate their employment (and then actually did) at the same time that he used the derogatory racial epithet.  Thus, the Court held that this allegation was sufficiently severe to state a hostile work environment claim.

Notably, the Court also found that the plaintiffs’ allegations could have alternatively satisfied the “pervasive” part of the clarified standard; not only did their supervisor allegedly make the racially derogatory comment, but they were also allegedly exposed to racial hostility when on several occasions their sign-in sheets bore discriminatory comments and because they were relegated to menial tasks while their white colleagues were allowed to perform more complex work.

Few words are more malicious than the “n-word,” but employers should be alert to the fact that the Third Circuit’s reasoning would logically extend to isolated discriminatory remarks about religion, gender, or any other protected classification. It is, therefore, imperative that employers maintain strong anti-discrimination policies, require and encourage employees to report discrimination, and promptly investigate and remediate any alleged discriminatory remark or other conduct, even if the allegation is of a single remark or incident.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Policies and Handbooks Team.

 

 

 

 

 

Seyfarth Synopsis: Seyfarth’s Chicago Office hosted its Third Quarter Breakfast Briefing — an extremely well attended event. 

On Tuesday, September 12, 2017, five attorneys from our Chicago Labor and Employment team presented to a packed house of guests.  The group offered an overview of, and their insights on, new and pending legislation impacting Illinois employers, generally, and those within the Chicago Metropolitan area, more specifically.  The topics included Kin Care, Amendments to the Illinois Human Rights Act, The Chicago and Cook County Minimum Wage Ordinances; and the Chicago and Cook County Paid Sick Leave Laws, among others.   As you can imagine, the audience had a lot of questions, which made for a very lively discussion.  Our thanks to all who were able to join us at the briefing.

Checkout the slides from the Breakfast Briefing.  Should you have questions on any of these topics, please contact your Seyfarth attorney.

Seyfarth’s next quarterly Breakfast Briefing will be held on Wednesday, December 13, 2017.  Hold the date and be on the lookout for further details.