By: Noah A. Finkel, David S. Baffa, Daniel C. Whang, and Andrew L. Scroggins

Seyfarth Synopsis:  In one of the most significant employment cases in memory, a sharply divided United States Supreme Court held today that employers may require employees, as a condition of employment, to enter into arbitration agreements that contain waivers of the ability to participate in a class or collective action under various employment statutes.

There is no longer any reason under the law why an employer cannot require its employees to waive the ability to bring a class or collective action under federal, state, and local employment laws.

While there are certain exceptions (explained below), the United States Supreme Court today removed the last potential legal barrier to the enforcement of class waivers in the employment sphere.  In a 5-4 decision authored by Justice Neil Gorsuch, it held in three cases consolidated for review that requiring employees to agree to arbitration agreements with class waivers does not violate the National Labor Relations Act (“NLRA”) and that such agreements are fully enforceable.

The only foreseeable barrier to enforcement of a class waiver would be federal legislation amending the Federal Arbitration Act (“FAA”) or state legislation permitting private attorney general actions such as California’s Private Attorneys General Act (“PAGA”).  Employers who maintain mandatory arbitration programs with class waivers can be assured for the time being that those waivers provide a valid defense to a collective or class action.  Employers who do not have such arbitration programs need to be aware of this significant development in the employment law landscape and at least consider whether an arbitration program with a class waiver is appropriate for them.

Be aware, however, that a class waiver in an arbitration program does not mean the end of all multi-claimant litigation.  As those with operations in California know, employees who have entered into class waivers with their employers nevertheless may bring PAGA actions in that state.  Likewise, agency-initiated actions are not impacted, leaving the Department of Labor and the Equal Employment Opportunity Commission free to pursue relief under the statutes they enforce on behalf of employees regardless of whether those employees have entered into class waivers.  Meanwhile, some plaintiff-side attorneys have become skilled at bringing dozens of single-claimant arbitration matters against an employer at the same time, which might cost an employer more than defending a collective or class action in court.

An arbitration program with a class waiver isn’t necessarily for every employer.  But this ruling certainly will cause more employers to adopt arbitration programs with class waivers, and likely will reduce the number of class and collective actions employers face.

The Path Leading to the Decision

Beginning with its 2011 decision in AT&T Mobility v. Concepcion, the Supreme Court has blessed the validity and enforceability of class waivers in arbitration agreements.  This was followed by decisions in CompuCredit Corp. v. Greenwood and American Express Co. v. Italian Colors Restaurant, where the Supreme Court forged jurisprudence that made class waivers seem unassailable in the commercial context.  But because none of the cases involving class waivers before the Supreme Court were in the employment context, uncertainty existed as to whether class waivers in mandatory employment arbitration agreements were enforceable.

This uncertainty was amplified by the National Labor Relations Board’s 2012 decision in D.R. Horton, which rejected workplace class waivers.  In the Board’s view, class waivers prevent employees from engaging in protected concerted activity in violation of Section 7 of the NLRA.  The Board continued to press its view even after the Second, Fifth, and Eighth Circuits refused to enforce the rule.  Then in 2016, the Seventh Circuit created a circuit split with its decision in Lewis v. Epic Systems Corp., which held that the right to bring a class or collective action is protected concerted activity under the NLRA, and that class waivers violate that right.  The Sixth and Ninth Circuit followed the Seventh Circuit’s reasoning, deepening the split.

The Supreme Court granted cert in three cases to resolve the issue of whether employers who require employees to arbitrate claims on an individual basis are preventing employees from engaging in protected concerted activity in violation of the NLRA.  On October 2, 2017, the Supreme Court heard oral argument, and today it issued its decision in a split that is just as close as the circuit split below.

The Court’s Reasoning

The Supreme Court began with the premise that the Federal Arbitration Act (FAA) is unequivocal in its mandate that courts enforce arbitration agreements.  The Court’s majority decision rejected the argument that the NLRA overrides that command by rendering a class waiver unlawful.  In the majority’s view, Section 7 of the NLRA does not create a right to pursue a collective or class action.  Rather, Section 7 focuses on the right to organize unions and bargain collectively and does not mention  class or collective action procedures, the majority reasoned.

Section 7’s catch-all provision that employees  must be permitted to engage in “other concerted activities for the purpose of . . . other mutual aid or protection” does not protect the right to participate in a class action because it only protects activities similar to those explicitly listed in Section 7 and thus reaches only to “things employees do for themselves in the course of exercising their right to free association in the workplace.”

The majority supported its holding with other observations, including that: class and collective action procedures were “hardly known” in 1935 when the NLRA was passed; the NLRA states no rules on class or collective action, in contrast to the regulatory regime it imposes surrounding other concerted activities; and the collective action procedures under the Fair Labor Standards Act (“FLSA”) — the statute under which the employees’ underlying causes of action arise — is just like the collective action procedures under the Age Discrimination in Employment Act, which the Supreme Court previously has held does not prohibit mandatory individual arbitration.

At bottom, the Court’s majority was unwilling to infer a Section 7 right to a class or collective action based on “vague terms or ancillary provisions” that would “dictate the particulars of dispute resolution procedures in Article III courts or arbitration proceedings–matters that are usually left to, e.g., the Federal Rules of Civil Procedure, the Arbitration Act, and the FLSA.”

The reasoning of the majority, as articulated by Justice Gorsuch, is broader than some expected.  His majority opinion does not merely hold that between conflicting rights and interests of the FAA and NLRA, the FAA wins.  Rather, the majority suggests that there may not be any Section 7 right to pursue a collective or class action in the first place.  This raises the question of whether a collective or class action waiver that is not contained within an arbitration program may be enforceable.

The Dissent

As expected, Justices Ginsburg, Kagan, Sotomayor, and Breyer dissented in an opinion authored by Justice Ginsburg.  The dissent focused on the circumstances that are unique to the employment context, including what Justice Ginsburg refers to as the “extreme imbalance once prevalent in our Nation’s workplaces,” and the reasons Congress enacted the NLRA in the first place, to “place employers and employees on more equal footing.”  Of paramount importance was the NLRA’s recognition that an individual employee has unequal bargaining power against the employer, and that the right to engage in concerted activities levels the playing field.

In the dissent’s view, class and collective actions qualify as concerted activities because in these actions, employees band together to improve their working conditions by holding employers accountable for violations of employment law.

What Should Employers Do

Employers will undoubtedly be asking:  what does this decision mean for me?  The answer depends on many factors, and like arbitration agreements themselves, there is no one answer that fits all.

For employers that already maintain a mandatory arbitration agreement with a class waiver, the Supreme Court’s decision has minimal impact.  A well-drafted agreement that does not overreach will be enforced.  While there are no longer any barriers to enforcing mandatory class waivers, the Supreme Court’s decision will not save a poorly drafted arbitration agreement.  In many states, an arbitration agreement still can be found unenforceable if it is both procedurally and substantively unconscionable under state law principles.  Some courts in some states may find that an arbitration agreement that is mandatory in nature is procedurally unconscionable, which makes it imperative that there is nothing in the arbitration agreement that can be substantively unconscionable.

Employers that have a voluntary arbitration agreement with a class waiver should consider whether making the arbitration program mandatory could yield additional benefits.  If almost all employees participate in a voluntary arbitration program with a class waiver, the additional risk of a mandatory program – whether due to procedural unconscionability concerns or employee relations issues – may not outweigh the marginal benefit.  But if the number of employees who opt out of or refuse to sign a voluntary arbitration agreement with a class waiver is higher than an employer is comfortable with, a mandatory program should be considered.  This is particularly true for employers in the Ninth Circuit, which gave a hat-tip to the NLRA by permitting class waivers so long as employees could opt out of the arbitration agreement.  An opt-out procedure, however, is no longer required in light of the Supreme Court’s decision.

Employers that maintain arbitration programs without a class waiver should strongly consider revising their agreement to include a class waiver.  An arbitration agreement without a class waiver leaves open the worst possible outcome, which is class arbitration.  The potential exposure in any class action is too high to inject any uncertainty as to whether the parties intended to permit class arbitration or not.  And an employer may want a court, rather than an arbitrator with potential financial incentive, to decide whether the parties intended to permit class arbitration.  An express class waiver likely would avoid these issues.  If an employer has an arbitration agreement already in place, there is now no reason to omit a class waiver.

For everyone else who has been waiting for the Supreme Court’s decision before deciding what to do, there are various factors to consider.  The threshold question is whether to even have an arbitration program.  There are certainly many benefits to arbitration.  These include quicker resolution of claims, more predictable outcomes compared to a jury, arguably lower attorneys’ fees to take a case through completion in arbitration than in court, and greater chance of keeping the proceedings and outcome confidential.

But there also are numerous downsides to arbitration that employers have to consider.  Arbitrator fees can be very significant, and in states like California, the employer must pay all of the arbitrator fees.   Some plaintiffs’ attorneys have resorted to filing a large number of individual arbitrations to make the arbitration process exorbitantly expensive for employers.  Arbitrators also can be less likely to grant dispositive motions because they may feel a claimant has a right to take his or her claim through the evidentiary hearing (the equivalent of a trial in arbitration).

Another question is what the scope of the arbitration program should be.  Given the costs associated with arbitration, some employers may want to limit an arbitration program to just wage and hour claims, which have the greatest likelihood of being brought as class claims.  In addition, current federal and state legislative headwinds are pushing against mandatory arbitration of sexual harassment and other Title VII claims.  Certain Department of Defense contractors have long been banned from imposing such agreements, and the State of New York recently passed legislation that seeks to prohibit private employers from requiring arbitration of sexual harassment claims.  While state laws of this type are susceptible to preemption by the Federal Arbitration Act, federal bans have been proposed, and employers may wish to sidestep the controversy altogether by considering wage-hour only arbitration agreements.  In this way, discrimination claims, which usually are brought on a single-plaintiff basis, could then be excluded from the arbitration program if the additional costs associated with arbitration exceed the confidentiality benefit of arbitration.

Employers considering implementing an arbitration program also need to be aware of the various exceptions.  The FAA does not apply to certain employees, most notably transportation workers.  In California, PAGA representative actions are not subject to class waivers and cannot be arbitrated.  Complaints and charges filed with governmental agencies are not subject to arbitration agreements.

While there are many factors to consider, the Supreme Court’s decision today assures employers that arbitration agreements with class waivers remain a valuable option for employers interested in reducing potential class and collective action exposure.

*Seyfarth Shaw LLP is counsel for Epic Systems Corp. in the Lewis case at the district and appellate courts and is co-counsel for Epic at the Supreme Court.

By Adam R. Young

Seyfarth Synopsis: Employers are widely installing AEDs to protect employees and visitors, but some states require strict compliance with AED regulations to insulate employers from tort liability.

Employers are Installing AEDs

Reports indicate that over 350,000 Americans suffer from sudden cardiac arrest each year, and approximately 95% of sudden cardiac arrest victims die before reaching the hospital. The majority who receive a defibrillation shock within four minutes of the event survive. Perhaps based in part on this data, federal and state laws have mandated the installation of Automated External Defibrillators (AEDs) in public and government buildings. Employers across the United States are installing AEDs to protect their employees, customers, and visitors. Many employers are promoting the business case for installing AED devices, particularly as key management employees across the workforce age and become statistically more likely to suffer such an event.

Tort Liability

Plaintiffs’ lawyers consistently seek new ways to sue American businesses, especially with regard to novel tools for medical treatment. Adding AEDs at your workplace can have the unintended effect of new liabilities — tort liabilities based on an employees’ (1) failure to use the AED when an employee suffers a sudden cardiac arrest, or (2) failure to administer aid with the AED properly.

Imagine: your company has purchased an AED. A visiting customer suffers a cardiac arrest event and your employees scramble to retrieve the AED. Your employee calls 911 and uses the AED as he waits for paramedics to arrive. Unfortunately, the customer goes into a coma and passes away two days later. One year later, you learn that the late customer’s estate has sued the Company and you personally, alleging that you and the Company have been negligent in installing the AED and allowing an employee to operate it “improperly.”

Limited Civil Immunity

Most states have passed laws making employers immune for lawsuits related to the provision or omission of care with an AED. However, many of those laws, such as the Illinois AED Act, only provide immunity if the employer complies with each and every requirement in each statute’s laundry list of AED rules. Some examples of these mandatory rules include:

  • Training Requirements — anticipated rescuers need to be properly trained by certified instructors. Rescuers and instructors needs to be retrained periodically.
  • Settings and Maintenance — employers must select AEDs from an approved government list. AEDs must be set in the appropriate modes. They must be properly maintained and tested.
  • Notification — Employers must notify the proper authorities with specific data on their AEDs. After use in a medical emergency, employees must activate the emergency response system.

Limited Room for Error

The bullets above are examples of common requirements under state AED laws. Recent case law in Illinois, for instance, provides that if employers fail to comply with any single AED requirement, they could lose all immunity from negligence claims. Accordingly, courts have ruled that Illinois employers must comply with all training and notification requirements, or they face potential lawsuits related to employees’ misuse of AEDs.

All 50 states have their own requirements, which may vary considerably. Employers should consult with legal counsel to ensure that they comply with their state’s AED laws.

Seyfarth Synopsis: This morning our panel from Seyfarth’s Workplace Safety team led a briefing on OSHA regulation and enforcement under the Trump Administration. 

One year into the Trump Administration, employers’ expectations for a more business-friendly Agency have not yet materialized, as the still-leaderless Agency proceeds ahead with widespread aggressive enforcement. The panel addressed recent developments and trends our Group has seen from federal OSHA, including the stalled nomination of Scott Mugno to head the Agency.  The panel also discussed:

  • Continued Aggressive Enforcement Trends Under the Trump Administration
  • Ongoing OSHA Initiatives such as Electronic Reporting
  • Workplace Violence
  • The Rise of Whistleblowers
  • Best Practices for Managing an OSHA Inspection

Finally, the panel discussed practical tips to guide employers in this new regulatory environment.

If you were able to attend, thank you very much. If not, see you next time. Either way, here are our presentation slides. Feel free to contact us if you have anyOSHA COMPLIANCE, OSHA ENFORCEMENT questions on the materials.

For more information on Seyfarth’s Workplace Safety and Environmental team, see our recent blog posts and articles.

By Paul Galligan and Samuel Sverdlov

Seyfarth Synopsis: “Thank you for your email, I will be out of the office from….” New York City employers might soon be seeing a lot more of these “out-of-office” emails from their employees if a recently proposed “Right to Disconnect” law is enacted.

In September 2017, Apple created an iPhone commercial in advance of the iPhone X release, which advertised all of the many new features of this smartphone, including: paying for goods with facial-recognition software, creating “animojis,” and taking professional-quality photographs. The new smartphone is being marketed as a traveling computer, bank, camera, video game console, mp3 player, and also, telephone. Interestingly, Apple did not advertise what else the smartphone has essentially become — a mobile workspace, which allows employees to be reached at anytime, anywhere.

At least one New York City lawmaker, New York City Council Member Rafael Espinal, has lofty ambitions to combat the purportedly growing demand on employees to make themselves available to their employers at all hours of the day. On March 22, 2018, Mr. Espinal introduced a potentially landmark piece of legislation, Int. 0726-2018, which is modeled after a similar law in France, and would prevent employers with more than ten employees from requiring employees to access work-related communications outside of normal working hours. Although the legislation excludes certain employees from this requirement [i.e, any employees whose terms of employment require them to be on call twenty-four hours a day on days when they are working (under this scenario the law shall only apply to such employees’ days off, including paid time off), work study program employees, employees compensated through qualified scholarships, and independent contracts], employers would be prohibited from retaliating against employees who exercise their rights under this legislation.

Further, the law would mandate that employers give written notice to employees of their rights under this law, and adopt a written policy regarding the use of electronic devices to send or receive work-related communications during non-working hours, the usual working hours for each class of employees, and the various categories of paid time off that employees are entitled to. Employers who violate this statute must pay employees compensatory damages, and are subject to financial penalties ranging from $50 for failing to notify employees of their rights to $2,500 for retaliating against employees.

If this law does pass, New York City will be the first jurisdiction within the United States with a right-to-disconnect bill. It goes without saying that this legislation would have a monumental impact on the workplace for New York City employers, and would cause them to, for the most part, rethink and overhaul their entire workplace. As always, we will monitor this legislation and update you accordingly.

If you have any questions regarding this area or need assistance evaluating whether to grant or deny long-term or indefinite leave requests, please contact the author, your Seyfarth Attorney, or a member of the Firm’s Workplace Policies and Handbooks or Absence Management and Accommodations Teams.

Seyfarth Synopsis: On Tuesday, May 15, 2018, a panel from Seyfarth’s Workplace Safety team will lead an interactive Breakfast Briefing on OSHA regulation and enforcement. 

One year into the Trump Administration, employers’ expectations for a more business-friendly Agency have not yet materialized, as the still-leaderless Agency proceeds ahead with widespread aggressive enforcement. The panel will address the new developments and trends we have seen from federal OSHA, including the stalled nomination of Scott Mugno to head the Agency.  The panel will also discuss:

  • Continued Aggressive Enforcement Trends Under the Trump Administration
  • Ongoing OSHA Initiatives such as Electronic Reporting
  • Workplace Violence
  • The Rise of Whistleblowers
  • Best Practices for Managing an OSHA Inspection

Finally, the panel will discuss best practices for managing an OSHA inspection, with practical tips to guide employers in this new regulatory environment.  To register for the Breakfast Briefing, follow the link below.

Tuesday, May 15, 2018
8:00 a.m. – 8:30 a.m. Breakfast & Registration
8:30 a.m. – 10:00 a.m. Program

Seyfarth Shaw LLP
233 S Wacker Dr., Suite 8000
Chicago, IL, 60605

Register Here

For more information on Seyfarth’s Workplace Safety and Environmental team, see our recent blog posts and articles.

By Kevin A. Fritz

Seyfarth Synopsis: The U.S. Supreme Court’s decline of a Seventh Circuit appellate decision solidifies that where an employee is medically unable to return to work within a very short time period following a leave of absence, the employer has no additional federal legal obligation to provide additional leave, or hold the employee’s job open.

Recently, the U.S. Supreme Court declined review of a Seventh Circuit Court of Appeals decision establishing a rule that leave of more than a few weeks in duration falls outside an employers’ reasonable accommodation obligations under the Americans with Disabilities Act (ADA). The case is Severson v. Heartland Woodcraft, Inc.

Plaintiff took Family Medical Leave Act (FMLA) leave for multiple herniated discs in his back. He notified his employer that he was scheduled for back surgery the same day his FMLA leave expired, and he requested another three months of medical leave to allow him to return to work. The employer denied this request and discharged his employment. Plaintiff sued, claiming that his employer failed to provide reasonable accommodation by denying him the additional leave.

What is interesting about this case is that the Equal Employment Opportunity Commission filed an amicus brief in support of Plaintiff’s claims. The agency argued that any fixed period of post-FMLA leave can constitute a reasonable accommodation the ADA, and that employers have the burden of demonstrating this additional leave poses an undue hardship.

The Seventh Circuit rejected the argument, affirming summary judgment for the employer. In its decision, the Court concluded that leave requests beyond FMLA that extend for more than a brief period of time are never required under the ADA. The Court never answered the question of whether the additional leave request constituted an undue hardship because once it found that employees who are unable to perform their duties for extended periods of time are “not qualified” as defined by the ADA, the inquiry stops.

Now, the Supreme Court’s decline to review this holding establishes that, at least in the Seventh Circuit, employers do not have to provide significant additional leave following expiration under the FMLA because doing so would convert the ADA to a medical leave entitlement statute. Which it is not. The Seventh Circuit stands in opposition to four other federal appellate circuits and the Equal Employment Opportunity Commission, which treat leave in the same manner as any other requested medical accommodation. Other appellate courts, including the Fourth Circuit and Eleventh Circuit have not litigated this issue up to the appellate level.

As the workforce continues to change its makeup, and individuals continue to take leaves of absences to attend to their personal needs, this area will surely continue to develop.

If you have any questions regarding this area or need assistance evaluating whether to grant or deny long-term or indefinite leave requests, please contact the author, your Seyfarth Attorney, or a member of the Firm’s Absence Management and Accommodations Team.

By Joshua M. Henderson, Ilana R. Morady, Brent I. Clark, and Craig B. Simonsen

Introduction: We are posting our colleagues’ California Peculiarities Employment Law Blog post on workplace violence. While this particular topic is California centric, the principles discussed below are universal, and appropriate to publish widely. For instance, workplace violence under federal OSHA is generally citable under the General Duty Clause of the Occupational Safety and Health Act. Many states, including California, also enforce workplace violence under their own versions of the General Duty Clause. Additionally, local authorities generally will not get involved in a situation where employment workplace violence is feared — such as where one employee makes threatening statements about a co-worker/manager. But where the employer/employee has obtained a restraining order, the police are more likely to intercede.

By Christopher Im and Minal Khan

Seyfarth Synopsis: Workplace violence is a major concern that can take the form of intimidation, threats, and even homicide. But fret not: California employers can arm themselves with restraining orders, to prevent a modern version of the “Fight Club” at work.

Rule Number 1: If There’s a Workplace Violence Threat, DO Talk About It—In Court

Being at work during a scene reminiscent of “There Will Be Blood” is not an ideal situation. Yet incidents of workplace violence are alarmingly common. According to the Occupational Safety and Health Administration, nearly two million Americans report that they have witnessed incidents of workplace violence, ranging from taunts and physical abuse to homicide. The recent Long Beach law firm shooting by an ex-employee serves as a chilling reminder of what forms such violence can take.

While there is no surefire way to stop unpredictable attacks against employees—whether by a colleague, client, or stranger—California employers can avail themselves of measures to reduce the risk of workplace threats. One such measure is a judicial procedure: a workplace violence restraining order under California Civil Procedure Code section 527.8.

Rule No. 2: Understand What a California Restraining Order Looks Like

A California court can issue a workplace violence restraining order to protect an employee from unlawful violence or even a credible threat of violence at the workplace. A credible threat of violence simply means that someone is acting in such a way or saying something that would make a reasonable person fear for the person’s own safety or that of the person’s family. Actual violence need not have occurred. Many actions short of actual violence—such as harassing phone calls, text messages, voice mails, or emails—could warrant issuing a restraining order.

Restraining orders can extend beyond just the workplace and protect the employees and their families at their homes and schools. A California court can order a person to not harass or threaten the employee, not have contact or go near the employee, and not have a gun. A temporary order usually lasts 15 to 21 days, while a “permanent” order lasts up to three years.

Rule Number 3: Employer Requests Only, Please

The court will issue a workplace violence restraining order only when it is requested by the employer on behalf of an employee who needs protection. The employer must provide reasonable proof that the employee has suffered unlawful violence (e.g. assault, battery, or stalking) or a credible threat of violence, or that unlawful violence or the threat of violence can be reasonably construed to be carried out at the workplace.

So how does an employer request and obtain protection for their employees?

Rule Number 4: Document the “Fight”

The employer must complete the requisite forms and file them with the court. Though the forms do not require it, it often is helpful to include signed declarations from the aggrieved employee and other witnesses.

If a temporary restraining order is requested, a judge will decide whether to issue the order within the next business day, and if doing so will provide a hearing date on a permanent restraining order. A temporary restraining order must be served as soon as possible on the offender. The order becomes effective as soon as it is served. Temporary restraining orders last only until the hearing date.

Rule No. 5: Keep Your Eyes on the Prize at the Hearing

At the hearing, both the employee needing the restraining order and an employer representative should attend. Employers may bring witnesses, too, to help support their case. The person sought to be restrained also has a right to attend, so the employee needing the restraining order should be ready to face that person. If necessary, the employer or the employee can contact the court or local police in advance to request that additional security or protective measures be put in place where there is a threat of harm.

During the hearing itself, the judge may ask both parties to take the stand for questioning. Upon hearing the facts, the judge will either decide to deny the requested order or decide to issue a permanent restraining order, which can last up to three years.

Restraining orders are a serious matter, as employers are essentially asking the court to curtail an individual’s freedom. But such an order is a powerful tool that an employer may find necessary to protect the safety of its employees.

Workplace Solutions: Even though it may relatively easy to demonstrate a credible threat of violence and thus obtain a protective order, know that California courts protect all individuals’ liberty, including their freedom of speech. Obtaining an order to restrain that liberty requires a detailed factual showing.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of Seyfarth’s OSHA Compliance, Enforcement & Litigation Team.

By Jennifer L. Mora and Pamela Q. Devata

Seyfarth Synopsis: Michigan Governor Rick Snyder recently signed a bill that will prohibit counties and cities from enacting “ban-the-box” ordinances or other restrictions on the ability of private employers to inquire about criminal history early in the hiring process.”

On March 26, 2018, Michigan Governor Rick Snyder signed Senate Bill 0353, which amends existing state law that limits the powers of local governmental bodies regarding the regulation of terms and conditions of employment for private sector employers (the “Local Government Labor Regulatory Limitation Act”), by providing that:

A local governmental body shall not adopt, enforce, or administer an ordinance, local policy, or local resolution regulating information an employer or potential employer must request, require, or exclude on an application for employment or during the interview process from an employee or a potential employee.

In other words, Michigan cities and counties are prohibited from passing ban-the-box-ordinances for private sector employers or other laws that regulate hiring decisions made in the private sector. As a practical matter, this means that local government bodies in Michigan cannot require employers to wait until later in the hiring process, such as after an interview or a conditional offer, to ask job applicants, “Have you ever been convicted of a crime?”.

The law goes on to state that it does not prohibit an ordinance, local policy, or local resolution “requiring a criminal background check for an employee or potential employee in connection with the receipt of a license or permit from a local governmental body.”

The amendment is effective 90 days after it is enacted into law.

In the last few years, nationwide employers have struggled to keep up with the onslaught of state and local ban-the-box laws. Fortunately, for the time being, Michigan employers, and nationwide employers with a presence in Michigan, do not have to worry about this jurisdiction being added to the growing list of such laws, including, most recently, California and Washington. That said, existing Michigan law restricts employer use of criminal history in some respect by making it unlawful for an employer to request information regarding a misdemeanor arrest, detention or conviction that did not result in a conviction.

Employers that hire in Michigan should consider reviewing their background screening policies to ensure that misdemeanor non-convictions are not being requested or considered. All employers should continue to be mindful of other laws regulating criminal records checks and screening policies, including the Fair Credit Reporting Act (a consistent source of class action litigation) and state and local employment and ban-the-box laws.

If you would like further information, please contact the authors, your Seyfarth attorney, or any member of the Seyfarth Background Screening Compliance & Litigation Team.

By John P. Phillips and Linda Schoonmaker

Seyfarth Synopsis: In recent months, sexual harassment has seized national headlines and raised significant questions about company policies, procedures, and culture. In response, many companies and HR personnel have questioned how to appropriately respond to complaints of sexual harassment. A recent decision out of the Western District of Wisconsin provides a helpful summary of the state of Title VII, the federal anti-discrimination and harassment law, and the appropriate company response to harassment. Given the national debate and this recent decision, now is a good time for employers to implement some best practices to (1) prevent harassment before it occurs and (2) take appropriate remedial action if it does.

Sexual harassment has been around for a long time, but recently it has garnered national headlines. Movements such as #MeToo and Time’s Up have appropriately focused the spotlight on company policies and procedures. It is important for companies to continue to improve workplace culture and their responses to harassment when it does occur. At the same time, it is important for companies to understand the legal framework for a harassment claim, and their legal responsibilities.

A recent decision out of the Western District of Wisconsin provides an important reminder on the state of the federal law prohibiting sexual harassment in the workplace, and an employer’s responsibility to prevent and correct any harassing behavior.

Background on the Case

In Lee v. Dairyland Power Cooperative, the plaintiff alleged that several of her co-workers sexually harassed her, and that the company failed to take adequate steps to prevent the harassment. After an analysis of the applicable framework for sexual harassment under Title VII, the Court dismissed the plaintiff’s case, finding that she could not prevail on her harassment claim as a matter of law.

The facts of the case were largely undisputed and simple: on one occasion, the plaintiff overheard her immediate supervisor, a co-worker, and a security contractor—all male—discussing their desire for her to wear her “spring outfits.” They also compared her physically to another employee, who they described in a sexually suggestive manner; and they discussed the sex life of yet another employee. These facts were undisputed, and the plaintiff complained to Human Resources the same day. HR immediately investigated the incident and concluded that the sexually demeaning conversation had occurred.

The plaintiff’s supervisor personally apologized to the plaintiff and promised that the action would never happen again; that he would not engage in any further sexual harassment; and that he would protect the plaintiff from retaliation. The company asked the plaintiff to return to work, but she refused, believing the company’s response was inadequate. The company followed-up, explaining that there were no positions to which she could be transferred to be away from the supervisor. Feeling that the company had not fixed the situation, the plaintiff quit her employment. That same day, the company suspended the supervisor for two weeks without pay, and ordered him to attend retraining on the company’s sexual harassment policy.

Application of Title VII

The Court laid out the legal standard for maintaining a sexual harassment claim under Title VII (the federal law prohibiting harassment in the workplace): the plaintiff must prove that (1) she experienced unwelcome harassment, (2) the harassment was based on sex, (3) the harassment was so severe or pervasive that it altered the conditions of her employment and created a hostile or abusive environment, and (4) a basis exists for holding the employer liable. Here, it was undisputed that the plaintiff had experienced unwelcome harassment based on her sex. However, the Court found that she could not meet the third and fourth prongs of the test.

First, the Court found that overhearing the statements on only one occasion did not create an abusive working environment. Indeed, the Court applied Seventh Circuit precedent for the proposition that “verbal harassment limited to a one-time incident that was overheard, rather than intentionally inflicted, does not rise to the severe or pervasive standard under Title VII.”

Second, the Court found that the employer could not be held liable for the wholly inappropriate conduct of the supervisor. The company maintained an anti-harassment policy, which the supervisor violated. And as soon as the company learned that harassment had occurred, it initiated an investigation pursuant to its no harassment policy; and the company instituted discipline reasonably calculated to end the harassment. The Court found that the two-week suspension, apology, promise to protect the plaintiff from any harassment, and retraining on sexual harassment issues were sufficient for the company to meets its legal burden to resolve the problematic work environment. Accordingly, the company could not be held liable under Title VII.

Takeaways and Best Practices

When sexual harassment occurs in the workplace, nobody wins. And as the Dairyland Power case makes clear, even companies that have and enforce no harassment policies can face costly litigation. Given the current national debate over harassment, now is a good time for employers to review and reevaluate their sexual harassment policies and procedures.

Employers should consider several proactive steps—to help prevent sexual harassment on the front-end and then to appropriately handle the situation if it were to arise—including: (1) ensuring the company’s no harassment policy and reporting structure is up-to-date and clear; (2) providing harassment and employment law training to supervisors and managers; (3) taking all allegations and complaints of harassment in the workplace seriously; (4) immediately performing a thorough and complete investigation of any harassment complaints; and (5) implementing swift, appropriate, and proportional remedial action, including termination or suspension if necessary.

Above all, employers should strive to ensure that their company’s culture is one where sexual, or any other form of harassment, is simply not tolerated. Instead, each employee should enjoy a safe and respectful work environment, and feel empowered to raise any workplace harassment issue with his or her supervisor, manager, or HR. At the same time, the company should feel secure that taking proactive action on the front-end to eliminate any harassment before it occurs, and taking immediate action to stop and remedy any harassment after it occurs, is sufficient to satisfy its legal obligations under Title VII. Fortunately, the Dairyland Power decision continues to apply this legal standard.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Workplace Policies and Handbooks Team or the Labor & Employment Team.

By Gerald L. Maatman, Timothy F. Haley, and Ashley K. Laken

Seyfarth Synopsis: True to his word, the Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice has announced the first of a number of anticipated no-poach enforcement actions.  While this was a civil proceeding, the Department of Justice has said that in some cases it may treat the conduct as criminal.  Many executives and HR professionals are unaware that the antitrust laws apply to the employment marketplace.  Thus, if they have not done so already, employers should consider the implementation of compliance programs to make sure that appropriate employees are aware of these developments and risks.

In January 2018, Makan Delrahim, the Assistant Attorney General for the Antitrust Division, said that the Department Of Justice (“DOJ”) had been very active in reviewing potential antitrust violations resulting from agreements among employers not to compete for workers.  (We previously reported on this announcement here.)  He said that he was “shocked” at how many there were and that in the coming months there would be announcements of enforcement actions.  He also mentioned that if the conduct occurred or continued after issuance of the October 2016 joint DOJ and Federal Trade Commission (“FTC”) Antitrust Guidance for Human Resource Professionals (the “Joint Guidance”), the DOJ may treat those agreements as criminal.

On April 3, 2018, the first of these announcements was made.  See “Justice Department Requires Knorr and Wabtec to Terminate Unlawful Agreements Not to Compete for Employees,” available at (“News Release”).  The DOJ advised that it filed a complaint in which it alleged that Knorr-Bremse AG (“Knorr”), Westinghouse Air Brake Technologies Corporation (“Wabtec”) and Faiveley Transport S.A., before it was acquired by Wabtec, entered into agreements not to compete for each other’s employees (“no-poach” agreements).  The DOJ contends that these were naked agreements – i.e., not reasonably necessary for a separate, legitimate business transaction or collaboration – and amounted to per se violations of Section 1 of the Sherman Act.  With the Complaint DOJ also filed a Competitive Impact Statement; Explanation of Consent Decree; and Stipulation and Proposed Final Judgment.  (See News Release.)

As noted, Mr. Delrahim stated that there were a number of these investigations ongoing, and in the News Release said that this Complaint was “part of a broader investigation by the Antitrust Division into naked agreements not to compete for employees.”  So more of these announcements can be expected, and some may be announcements of criminal prosecutions.

Many Employees Are Unaware That the Antitrust Laws Apply to the Employment Market

Often some business executives and human resource professionals are unaware that the antitrust laws apply to the workplace.  Executives who would never consider discussing prices with their competitors are unaware that discussing wages or salaries could have antitrust risks.  Similarly, employee covenants not to compete are commonplace and many executives have them in their own employment contracts.  So unless they have received specific training, an executive may be unaware of the antitrust risks associated with no-poaching agreements.  And up until recently even the most elaborate and detailed antitrust compliance policies that strictly prohibited discussing prices rarely addressed the exchange of wage and salary information or prohibited no-poaching agreements.

But the DOJ and FTC have now greatly ratcheted up their enforcement efforts with respect to alleged restraints in the employment market.  And with the DOJ and FTC taking the position that naked no-poaching agreements are per se unlawful and subject to criminal prosecution, the antitrust risks have been greatly increased — not to mention the costly class actions that are likely to follow any settlement with the DOJ.

Employers Should Investigate and Implement Compliance Programs

Thus, employers can no longer ignore the risk.  If they have not already done so, employers should consider:

  1. Conducting an internal investigation to determine whether the company is engaging in the informal gathering of wage, salary or benefit information; or whether it has entered into any no-poach agreements.  The investigation should be conducted or closely supervised by counsel with steps taken to preserve the attorney-client privilege.  Also, if it is discovered that the company has engaged in any “naked” wage-fixing or no-poaching agreements on or after October 25, 2016, then criminal counsel should be consulted as DOJ may treat such conduct as criminal.
  2. Implementing an antitrust compliance program that ensures that all management and human resources personnel are aware that they cannot: (1) engage in a naked wage, salary or benefits-fixing agreement with any other unrelated employer; (2) engage in the gathering or exchange of wage, salary or benefits information without full compliance with the Joint Guidance; or (3) enter into any no-poach agreement without prior approval of counsel.  Such individuals should, on an annual basis, be required to acknowledge in writing that they are aware of these prohibitions.  Also, anyone hired or transferred into any of these positions should be made aware of these prohibitions at the time they are hired or transferred.  These employees should also be advised that the DOJ is likely to treat naked wage/salary/benefit-fixing and no-poaching agreements as criminal and employees could be sentenced to prison for engaging in such conduct.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Labor & Employment Team.