DOL: It Takes a Village to Raise a Child, so the Village Gets FMLA Leave

Yesterday, the Department of Labor issued its third Administrative Interpretation since jettisoning the decades-long practice of issuing Administrator Opinion Letters based on specific facts. This time, the Interpretation concerns the FMLA instead of the FLSA. In it, the DOL reminds the public that the FMLA is available not only to parents due to the birth, adoption or serious medical condition of their own biological, adopted , step, or foster children (as well as their legal wards), but also to individuals who stand "in loco parentis" to the child. Then, the DOL informs the public that "in loco parentis" can include an unlimited number of unmarried heterosexual and same sex roommates, significant others, partners and other relatives of the biological parents. Administrator's Interpretation No. 2010-3. There has already been a significant amount of litigation of whether grandparents can take FMLA leave to care for grandchildren within their care (when the FMLA does not provide grandparent leave). The DOL states that additional guidance was needed "regarding whether employees who do not have a biological or legal relationship with a child may take FMLA leave for birth, bonding, and to care for the child." However, the determination remains dependent upon all the facts and circumstances and the new Administrative Interpretation does little to clarify the situation and could conceivably cover family babysitters under the loose standard announced yesterday. Yet, while the specific recognition that the FMLA can extend to unmarried partners who care for children has generated significant media attention, the real legal controversy involved with the DOL's new interpretation is that it disregards the regulatory standard for "in loco parentis" in order to expand who is covered by the FMLA.

"Black's Law Dictionary defines the term in loco parentis as "in the place of a parent." The DOL recognizes that "[w]hether an employee stands in loco parentis to a child is a fact issue dependent on multiple factors" which can include "the age of the child; the degree to which the child is dependent on the person claiming to be standing in loco parentis; the amount of support, if any, provided; and the extent to which duties commonly associated with parenthood are exercised." The FMLA regulations provide that "in loco parentis" means someone "with day-to-day responsibilities to care for and financially support a child, or, in the case of an employee, who had such responsibility for the employee when the employee was a child. A biological or legal relationship is not necessary." 29 C.F.R. § 825.122(c)(3) (emphasis added). However, in yesterday's Interpretation, the DOL chose to deliberately ignore the regulation's minimal standard:

It is the Administrator's interpretation that the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child. For example, where an employee provides day-to-day care for his or her unmarried partner's child (with whom there is no legal or biological relationship) but does not financially support the child, the employee could be considered to stand in loco parentis to the child and therefore be entitled to FMLA leave to care for the child if the child had a serious health condition. The same principles apply to leave for the birth of a child and to bond with a child within the first 12 months following birth or placement. For instance, an employee who will share equally in the raising of a child with the child's biological parent would be entitled to leave for the child's birth because he or she will stand in loco parentis to the child. Similarly, an employee who will share equally in the raising of an adopted child with a same sex partner, but who does not have a legal relationship with the child, would be entitled to leave to bond with the child following placement, or to care for the child if the child had a serious health condition, because the employee stands in loco parentis to the child. (emphasis added).

In other words, even though the FMLA regulations provide that an employee cannot be "in loco parentis" unless they have daily responsibilities to both care for AND financially support the child, the DOL believes that the a person is sufficiently "in loco parentis" as long as they provide daily care for the child even though they are NOT also financially supportive.

Moreover, the DOL finds that there is no restriction on how many individuals could qualify for "in loco parentis" with respect to a single child:

It should be noted that the fact that a child has a biological parent in the home, or has both a mother and a father, does not prevent a finding that the child is the "son or daughter" of an employee who lacks a biological or legal relationship with the child for purposes of taking FMLA leave. Neither the statute nor the regulations restrict the number of parents a child may have under the FMLA. For example, where a child's biological parents divorce, and each parent remarries, the child will be the "son or daughter" of both the biological parents and the stepparents and all four adults would have equal rights to take FMLA leave to care for the child. (emphasis added).

The DOL seems to confuse the fact that the regulation specifically covers step-parents (of which there can only be a maximum of four at any given time) with the concept that there is no numerical limitation under the new DOL standard for how many "in loco parentis" a child could now have. This is particularly troubling when a person's "in loco parentis" status can change weekly and requires little proof:

Where an employer has questions about whether an employee's relationship to a child is covered under FMLA, the employer may require the employee to provide reasonable documentation or statement of the family relationship. A simple statement asserting that the requisite family relationship exists is all that is needed in situations such as in loco parentis where there is no legal or biological relationship. . . .

While the DOL indicates that the "in loco parentis" should live with the child, that requirement is not made explicit – and thus – could include babysitters who provide daily care (albeit not babysitters who only periodically take care of the child while the parents are travelling). The DOL is specifically silent of the status of grandparents and other relatives where an extended family lives together and all family members share child-raising responsibilities. Are all grandparents, aunts, uncles, cousins, girlfriends, boyfriends, etc. included in the "in loco parentis" when they are all sharing in the daily care of the children?

Examples of situations in which an in loco parentis relationship may be found include where a grandparent takes in a grandchild and assumes ongoing responsibility for raising the child because the parents are incapable of providing care, or where an aunt assumes responsibility for raising a child after the death of the child's parents. Such situations may, or may not, ultimately lead to a legal relationship with the child (adoption or legal ward), but no such relationship is required to find in loco parentis status. In contrast, an employee who cares for a child while the child's parents are on vacation would not be considered to be in loco parentis to the child.

While the DOL rushed to expand FMLA coverage to political allies, it unnecessarily jettisoned controlling regulatory language in issuing the Interpretation by expanding FMLA coverage to any regular caregiver with only minimal responsibilities for the child. A more focused interpretation of the existing regulation could have achieved the same political result without violence to the minimal regulatory requirements.

The cynical readers among you may wonder why the DOL thinks that it can overrule a regulation passed through the formal comment and rulemaking process under the Administrative Procedures Act – and contained in the Code of Federal Regulations – with a mere Administrative Interpretation. The Interpretation seems oblivious to Christensen v. Harris County, 529 U.S. 576 (2000) where the Supreme Court found that a similar administrative interpretation by the DOL was not entitled to judicial deference because there had been no formal prerequisites to its issuance.

In any event, the DOL contends that its Administrative Interpretations are entitled to the same judicial deference as Administrative Opinion Letters rulings (issued for decades) and may be the basis of an employer’s good faith defense under 29 U.S.C. § 259 to an allegation that it has violated the FLSA. The FLSA comes into play because employers may deduct periods of FMLA leave which are less than a full day as long as the employee qualifies for FMLA leave. If the employee does not qualify for FMLA leave, the employer must pay exempt/salaried employees for the full day even if the employee took some time off for covered purposes. If, for instance, an exempt employee is granted “in loco parentis” leave under this Interpretation, but then later challenges the deductions from his or her paycheck as violating the FLSA – and maybe even the employee’s exempt status – then the employer could avoid liquidated damages, longer limitations period and liability altogether by citing reliance on this Interpretation.

Of course, the more salient issue for employers is how this new Interpretation will be abused by chronic malingerers who have found ingenious ways to avoid ever working overtime or on weekends or on holidays by creative manipulation of the FMLA. (No conscientious or reasonable employer has any particular interest in denying FMLA leave to a genuine in loco parentis employee who needs it; it is only a genuine need to control FMLA abuse which prompts dismay at Interpretations with no enforceable standards to control their abuse). In my deep, dark past, I had an FMLA question arise about what an employer was to do when two potential fathers sought time off for the birth of the same child. Both thought that they were the biological father and one was the current boyfriend of the mother, while the other was not. I have even had situations arise where the biological parents both lived with different significant others as well as their parents – creating a situation where there were the possibility of two parents and six other people simultaneously claiming in loco parentis. If the child has asthma or even the flu, this extended family could force their employers to grant them time off work under this Interpretation for every major family celebration and holiday as long as they could claim that the child was sick (intermittently, of course) and required their care. This could be true even if the employer had heard their employee state any number of times that s/he disliked the child, refused to spend money on the child or wanted to send the child to boarding school for the indefinite future.

Thus, conservative and weary employers may elect to rely instead on the clear language of the FMLA regulation and put it on the plaintiff to convince a judge to give more weight to the Interpretation than the regulation despite the Supreme Court’s instruction in Christensen. While Interpretations may be persuasive authority and create the basis of a good faith defense for certain employers, Interpretations still do not carry the force of law like statutes, regulations passed under the APA or court decisions as far as the Christensen Supreme Court is concerned:

Here, however, we confront an interpretation contained in an opinion letter, not one arrived at after, for example, a formal adjudication or notice-and-comment rulemaking. Interpretations such as those in opinion letters–like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law–do not warrant Chevron-style deference. See, e.g., Reno v. Koray, 515 U.S. 50, 61 (1995) (internal agency guideline, which is not “subject to the rigors of the Administrative Procedur[e] Act, including public notice and comment,” entitled only to “some deference” (internal quotation marks omitted)); EEOC v. Arabian American Oil Co., 499 U.S. 244, 256—258 (1991) (interpretative guidelines do not receive Chevron deference); Martin v. Occupational Safety and Health Review Comm’n, 499 U.S. 144, 157 (1991) (interpretative rules and enforcement guidelines are “not entitled to the same deference as norms that derive from the exercise of the Secretary’s delegated lawmaking powers”). See generally 1 K. Davis & R. Pierce, Administrative Law Treatise §3.5 (3d ed. 1994). Instead, interpretations contained in formats such as opinion letters are “entitled to respect” under our decision in Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), but only to the extent that those interpretations have the “power to persuade,” ibid. See
Arabian American Oil Co., supra, at 256—258. As explained above, we find unpersuasive the agency’s interpretation of the statute at issue in this case.
. . . .
Seeking to overcome the regulation’s obvious meaning, the United States asserts that the agency’s opinion letter interpreting the regulation should be given deference under our decision in Auer v. Robbins, 519 U.S. 452 (1997). In Auer, we held that an agency’s interpretation of its own regulation is entitled to deference. Id., at 461. See also Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). But Auer deference is warranted only when the language of the regulation is ambiguous. The regulation in this case, however, is not ambiguous–it is plainly permissive. To defer to the agency’s position would be to permit the agency, under the guise of interpreting a regulation, to create de facto a new regulation. Because the regulation is not ambiguous on the issue of compelled compensatory time, Auer deference is unwarranted.

Thus, the even more cynical readers may ask if the Obama Administration were sincere about wanting to make this Intepretation stick and survive judicial challenge, why not open the rule to revision through the formal (albeit expensive and lengthy) APA rulemaking process? Couldn’t this new Interpretation be changed as easily as it was implemented if there is not a formal regulation adopted? Is it not more likely that a court will refuse to defer to the Interpretation in that it contradicts the clear requirements of the regulation without any explanation of an ambiguity or need for clarification?

The DOL indicates that this Interpretation addresses only FMLA leave and not military caregiver or military exigency leave which are governed by a different regulatory standard.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Supreme Court: Ohio Law Does Not Require Mandatory Maternity Leave

This morning, the Ohio Supreme Court (in a 5-1 decision) held in a highly anticipated decision that the Ohio Revised Code does not require mandatory maternity leave. In particular, the Court held that an employment policy which imposes a uniform minimum-length-of-service requirement for leave eligibility with no exception for maternity leave cannot constitute direct evidence of sex discrimination under R.C. Chapter 4112. Thus, the fact that an employer relied upon a uniformly applied policy denying any leave of absence to any employee with less than one year of seniority could not constitute direct evidence of sex discrimination under Ohio law when that policy was used to deny maternity leave to an employee who gave birth eight months after being hired. McFee v. Nursing Care Mgt. of Am., Inc., Slip Opinion No. 2010-Ohio-2744. If the Court had held otherwise, the possibility existed that employers would refuse to hire pregnant or other women in order to avoid providing them with maternity leave.

According to the Court's opinion, a woman applied for employment in a nursing home in Pataskala and received an employee handbook upon being hired. The Handbook provided that employees would not be eligible for a leave of absence for any purpose until they had worked for at least one year. Eight months later, the woman's doctor provided a note saying that she was physically unable to work until after giving birth. Shortly thereafter, she gave birth and she was fired three days later for taking a leave of absence before she was eligible under the employer's policy. She filed a Charge of Discrimination with the Ohio Civil Rights Commission, where an investigator found probable cause of discrimination. An Administrative Law Judge disagreed and recommended dismissal of the complaint, but the OCRC disagreed and imposed liability. The employer appealed to the Licking County Common Pleas Court, which reversed the OCRC, which appealed. The Court of Appeals reversed again, finding that Ohio law required employers to provide all woman with a reasonable amount of maternity leave and that the employer's policy constituted direct evidence of discrimination (which relieved the woman of having to produce other evidence of sex or pregnancy discrimination). The employer again appealed and the Supreme Court reversed.

Ohio Revised Code § 4112.02(A) precludes employment discrimination on account of sex. Revised Code § 4112.01(B) provides in relevant part that:

the terms "because of sex" and "on the basis of sex" include, but are not limited to, because of or on the basis of pregnancy, any illness arising out of and occurring during the course of a pregnancy, childbirth, or related medical conditions. Women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes, including receipt of benefits under fringe benefit programs, as other persons not so affected but similar in their ability or inability to work, and nothing in division (B) of section 4111.17 of the Revised Code shall be interpreted to permit otherwise. This division shall not be construed to require an employer to pay for health insurance benefits for abortion, except where the life of the mother would be endangered if the fetus were carried to term or except where medical complications have arisen from the abortion, provided that nothing in this division precludes an employer from providing abortion benefits or otherwise affects bargaining agreements in regard to abortion.

First, the Court summarily rejected the appellate court's contention that the employer's policy could constitute "direct" evidence. Therefore, the employer was entitled to the McDonnell-Douglas burden shifting requirement of proving discriminatory intent and the opportunity to articulate a legitimate and non-discriminatory basis for its action.

Second, the Court found that it was not always illegal to discharge a pregnant employee. The statute simply required that pregnant employees not be fired without just cause or treated differently than other employees. "Thus, the statute does not provide greater protections for pregnant employees than nonpregnant employees." The Ohio statute mirrors the federal statute, which has generally been applied to not require preferential treatment for pregnant employees. In this case, the employer's policy was pregnancy-blind: it applied equally to all employees. "Thus, a pregnant employee may be terminated for unauthorized absence just as any other employee who has not yet met the minimum-length-of-service requirement but takes leave based upon a similar inability to work. Unless there is other evidence of discrimination or pretext, R.C. Chapter 4112 does not prohibit termination of an employee affected by pregnancy under these circumstances."

The Court rejected the OCRC's argument that the prohibition on discrimination "because of pregnancy" was separate from the "treated the same" requirement and required employers to provide maternity leave so that pregnant employees could not jobs to the same extent as non-pregnant employees because the United States Supreme Court had already earlier rejected that argument when interpreting the federal statute.

It would be contrary to this interpretation of the federal statute to hold that the first and second sentences of the state statute, which mirrors the federal statute, serve different purposes. Although the scope of the second sentence is narrower than that of the first sentence, both serve the same goal—to ensure that employees who are pregnant are not discriminated against on the basis of pregnancy. To hold otherwise would be to require that employers treat pregnant employees more favorably than other employees. The statutes do not support such a result.

The Court also refused to characterize the woman's termination as "because of pregnancy" when it was really "because of an unauthorized leave of absence." Only if she satisfied the McDonnell-Douglas burden of proof (or introduced other direct evidence of discrimination) would she be able to show that her termination was "because of pregnancy."

Finally, the Court chose to interpret the OCRC's Administrative Rule 4112-5-05(G) as consistent with the Court's interpretation of the Ohio Revised Code.

Ohio Adm. Code 4112-5-05(G)(2), the administrative regulation at issue, provides: "Where termination of employment of an employee who is temporarily disabled due to pregnancy or a related medical condition is caused by an employment policy under which insufficient or no maternity leave is available, such termination shall constitute unlawful sex discrimination."

Still later, however, OAC 4112-5-05(G)(5) provides:

Women shall not be penalized in their conditions of employment because they require time away from work on account of childbearing. When, under the employer's leave policy the female employee would qualify for leave, then childbearing must be considered by the employer to be a justification for leave of absence for female employees for a reasonable period of time. For example, if the female meets the equally applied minimum length of service requirements for leave time, she must be granted a reasonable leave on account of childbearing. Conditions applicable to her leave (other than its length) and to her return to employment shall be in accordance with the employer's leave policy." (emphasis added)

In light of these two apparently conflicting rules by the OCRC, the Court found the first rule to be ambiguous. If the Rule requires mandatory maternity leave even when similar leaves were not offered to other employees, then the Rule would require preferential treatment for pregnant employees in violation of the Ohio statute and, thus, would be unconstitutional. However, the Court found the Rule to be vague and ambiguous on this point and, thus, chose to harmonize it with the second part of the Rule and interpret it as being constituent with the Ohio statute. Without such an interpretation, the second part of the Rule would be rendered meaningless. According to the Court, the OCRC rule provides in effect that:

Ohio Adm. Code 4112-5-05(G)(2) must mean that when an employee is otherwise eligible for leave, the employer cannot lawfully terminate that employee for violating a policy that provides no leave or insufficient leave for temporary disability due to pregnancy or a related condition.

Because the woman offered no other proof of discrimination on account of sex or pregnancy, the Court affirmed the dismissal of her case by the trial court.

Justice Pfeifer dissented.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Divided Supreme Court Upholds Arbitrator’s Contractual Authority to Determine Arbitrability of Arbitration Agreement

This morning, a divided Supreme Court again reversed the Ninth Circuit Court of Appeals in California on the enforceability of an arbitration agreement in an employment discrimination dispute. Rent-A-Center, West, Inc. v. Jackson, No. 09-497 (6/21/10). This arbitration dispute centered on whether the court or the arbitrator should determine the arbitrability of the dispute when the arbitration agreement itself provided that an arbitrator should resolve any such controversy over arbitrability. In particular, as Justice Scalia put it, whether under the Federal Arbitration Act, "a district court may decide a claim that an arbitration agreement is unconscionable, where the agreement explicitly assigns that decision to the arbitrator." The Court held that the question of arbitrability is for the arbitrator to decide when the challenge goes to the validity of the entire agreement as a whole or when the agreement clearly and unmistakably empowers the arbitrator to decide arbitrability, but is for the trial court to decide when the challenge goes only to the enforceability of the arbitration clause and there is no clear and unmistakable waiver of the trial court jurisdiction.

According to the Court's opinion, the employer moved to compel arbitration after the plaintiff former employee filed a § 1981 employment discrimination suit in federal court based on the arbitration which the plaintiff had signed. The Agreement provided for arbitration of all "past, present or future" disputes arising out of [the plaintiff's] employment . . . , including claims" for employment discrimination. The arbitration clause also provided that "[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable." The plaintiff attempted to avoid the arbitration agreement by arguing that it was unconscionable (in that the parties were required to split the arbitration fees and limits were placed on discovery), but the employer asserted that such a challenge was for the arbitrator to decide. The trial court agreed with the employer, but noted that he did not think the agreement was substantively unconscionable merely because the parties were required to split the arbitration fees. A divided Ninth Circuit Court concluded that the trial court was required to determine unconscionability, but agreed that the clause was not unconscionable merely because of the fee splitting provision. A divided Supreme Court reversed.

The FAA provides that arbitration clauses must be enforced just like any other contracts. Nonetheless, unless the parties clearly and unmistakenly provided otherwise, the question of whether the parties agreed to arbitrate is for the court and not the arbitrator. "The validity of a written agreement to arbitrate (whether it is legally binding, as opposed to whether it was in fact agreed to—including, of course, whether it was void for unconscionability) is governed by §2'sprovision that it shall be valid "save upon such grounds as exist at law or equity for the revocation of any contract." Justice Scalia found it irrelevant that prior cases examining the arbitrability question involved agreements where the substantive provisions concerned subjects other than arbitration (such as check-cashing, consulting, talent management, etc), unlike this case where the "contract as a whole" involved only arbitration of any future disputes.

There are two types of validity challenges under §2: "One type challenges specifically the validity of the agreement to arbitrate," and "[t]he other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract's provisions renders the whole contract invalid." Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440, 444 (2006). In a line of cases neither party has asked us to overrule, we held that only the first type of challenge is relevant to a court's determination whether the arbitration agreement at issue is enforceable. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395, 403–404 (1967) . . . That is because §2 states that a "written provision" "to settle by arbitration a controversy" is "valid, irrevocable, and enforceable" without mention of the validity of the contract in which it is contained. Thus, a party's challenge to another provision of the contract, or to the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate. "[A]s a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract." . . . . But that agreements to arbitrate are severable does not mean that they are unassailable. If a party challenges the validity under §2 of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with that agreement under §4 [employer parties to seek enforcement of arbitration clauses in federal court].

Nonetheless, Justice Scalia found it irrelevant that prior cases examining the arbitrability question involved agreements where the substantive provisions concerned subjects other than arbitration (such as check-cashing, consulting, talent management, etc) and merely also contained an arbitration clause, unlike this case where the "contract as a whole" involved only the arbitration of any future disputes. Instead, he found that the plaintiff could only prevail in obtaining the trial court's examination of the arbitrability of the dispute if he had challenged only the delegation clause – which empowered the arbitrator to decide arbitrability – instead of attacking the unconscionability of the arbitration contract as a whole:

It may be that had [the plaintiff] challenged the delegation provision by arguing that these common procedures as applied to the delegation provision rendered that provision unconscionable, the challenge should have been considered by the court. To make such a claim based on the discovery procedures, [the plaintiff] would have had to argue that the limitation upon the number of depositions causes the arbitration of his claim that the Agreement is unenforceable to be unconscionable. That would be, of course, a much more difficult argument to sustain than the argument that the same limitation renders arbitration of his fact bound employment-discrimination claim unconscionable. Likewise, the unfairness of the fee-splitting arrangement may be more difficult to establish for the arbitration of enforceability than for arbitration of more complex and fact-related aspects of the alleged employment discrimination. [Plaintiff], however, did not make any arguments specific to the delegation provision; he argued that the fee-sharing and discovery procedures rendered the entire Agreement invalid.

The Court refused to address an additional argument made by the Plaintiff because he failed to raise it below: that the quid pro quo for the delegation provision failed because of the Supreme Court's decision in Hall Street Associates LLC v. Mattel, Inc. entered after he signed the agreement. He claimed that he had agreed to the clause delegating arbitrability to the arbitrator in exchange for the employer's agreement that the arbitration decision would be subject to substantive judicial review (when the FAA and state laws generally provide that courts will only overturn an arbitration decision for fraud, corruption, etc.). However, his consideration for agreeing to the delegation failed when the Hall Court held that parties cannot agree by contract to alter the exclusive judicial review of arbitration decisions provided by the FAA. The Court found that he could have filed a supplemental brief with the Ninth Circuit on this issue following the Hall Court decision, but that it might have been pointless because that was already the rule in the Ninth Circuit even before the Hall decision.

In light of this decision, one can expect that employers across the country will – and even should – amend their arbitration agreements to reserve the question of arbitrability for the arbitrator in the hopes of avoiding long and expensive battles over the enforcement of an arbitration clause or agreement.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court Invalidates Decisions of Two-Member NLRB

This morning, in one of the most highly-anticipated decisions of the year, the United States Supreme Court ruled 5-4 that the NLRB does not have the legislatively required quorum to act when it only has two members. New Process Steel v. NLRB, No. 08-1457. Under the 1947 Taft-Hartley Act, the NLRB is supposed to have five members. However, for a variety of reasons – mostly related to the partisan Congress – it only had two members between January 1, 2008 and March 27, 2010 (when President Obama made two recess appointments after it became clear that his appointees would not receive Senate confirmation). During that 27 months, the NLRB had issued approximately 600 decisions when the two remaining members could agree. Two of those decisions involved the employer who appealed enforcement to federal court. The Seventh Circuit ruled that the NLRB could act with only two members, but the Supreme Court reversed in an opinion written by outgoing Justice Stevens. Although the THA permitted the five-member Board to delegate decisions to a three-member panel, that panel could not act with only two members present.

The Board's quorum requirements and delegation procedure are set forth in §3(b) of the NLRA, 49 Stat. 451, as amended by 61 Stat. 139, which provides: "The Board is authorized to delegate to any group of three or more members any or all of the powers which it may itself exercise. . . . A vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board, and three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group designated pursuant to the first sentence hereof." 29 U. S. C. §153(b).

It is undisputed that the first sentence of this provision authorized the Board to delegate its powers to the three member group effective on December 28, 2007, and the last sentence authorized two members of that group to act as a quorum of the group during the next three days if, for example, the third member had to recuse himself from a particular matter. The question we face is whether those two members could continue to act for the Board as a quorum of the delegee group after December 31, 2007,when the Board's membership fell to two and the designated three-member group of "Members Liebman, Schaumber, and Kirsanow" ceased to exist due to the expiration of Member Kirsanow's term. Construing §3(b)as a whole and in light of the Board's longstanding practice, we are persuaded that they could not.

The Court construed the first clause "as requiring that the delegee group maintain a membership of three in order for the delegation to remain valid" for three reasons.

First, and most fundamentally, reading the delegation clause to require that the Board's delegated power be vested continuously in a group of three members is the only way to harmonize and give meaningful effect to all of the provisions in §3(b). . . . . Interpreting the statute to require the Board's powers to be vested at all times in a group of at least three members is consonant with the Board quorum requirement, which requires three participating members "at all times" for the Board to act. The interpretation likewise gives material effect to the three-member requirement in the delegation clause. The vacancy clause still operates to provide that vacancies do not impair the ability of the Board to take action, so long as the quorum is satisfied. And the interpretation does not render inoperative the group quorum provision, which still operates to authorize a three member delegee group to issue a decision with only two members participating, so long as the delegee group was properly constituted. Reading §3(b) in this manner, the statute's various pieces hang together—a critical clue that this reading is a sound one.

. . . .

Second, and relatedly, if Congress had intended to authorize two members alone to act for the Board on an ongoing basis, it could have said so in straight forward language. Congress instead imposed the requirement that the Board delegate authority to no fewer than three members, and that it have three participating members to constitute a quorum. Those provisions are at best an unlikely way of conveying congressional approval of a two member Board. Indeed, had Congress wanted to provide for two members alone to act as the Board, it could have maintained the NLRA's original two-member Board quorum provision.

. . . .

Furthermore, if Congress had intended to allow for a two-member Board, it is hard to imagine why it would have limited the Board's power to delegate its authority by requiring a delegee group of at least three members. Nor do we have any reason to surmise that Congress' overriding objective in amending §3(b) was to keep the Board operating at all costs; the inclusion of the three-member quorum and delegation provisions indicate otherwise. Cf. Robert's Rules of Order §3, p. 20 (10th ed. 2001) ("The requirement of a quorum is a protection against totally unrepresentative action in the name of the body by an unduly small number of persons").

In sum, a straightforward understanding of the text, which requires that no fewer than three members be vested with the Board's full authority, coupled with the Board's longstanding practice, points us toward an interpretation of the delegation clause that requires a delegee group to maintain a membership of three.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Supreme Court: Employer’s Review of Employee’s Text Messages Was Reasonable and Did Not Violate Fourth Amendment

This morning, a fairly unanimous United States Supreme Court again reversed the Ninth Circuit Court of Appeals and ruled that a police department's review of the content of text messages sent and received by a police officer on his work pager was reasonable under the circumstances and did not violate the Fourth Amendment. City of Ontario v. Quon, No. 08-1332 (U.S. 6/17/10). The Court found it irrelevant and did not address whether the plaintiff had a reasonable expectation of privacy and did not address (or overrule) the Circuit Court's ruling against the telecommunications provider for giving the message transcripts to the employer under the Stored Communications Act. The employer had asked to review the content of the text messages sent by its employees because they were routinely being assessed extra fees for exceeding their text message ceiling and management wanted to know if the ceiling was reasonable in light of the number of work-related messages being sent/received. Upon reviewing the transcript of the messages, it discovered that few of the messages were work related and some of the messages were sexually explicit. Accordingly, the officer was disciplined and he filed suit alleging that the city's audit of his text messages had violated his right under the Fourth Amendment.

According to the Court's opinion, this decision involved "the assertion by a government employer of the right, in circumstances to be described, to read text messages sent and received on a pager the employer owned and issued to an employee." The city had a policy informing employees that it might monitor their emails and computer usage and disclaiming any right of privacy. The policy did not explicitly apply to pagers or text messages, but the city informed the employees by memorandum that it considered the pagers to be subject to the Policy even though emails were sent via the city's own computer network while the text messages and pagers were operated by a telecommunications company and the messages were stored on the company's servers instead of the city's servers. The City's purchased pagers through a wireless provider which charged the city extra whenever it exceeded its text limit ceiling. The plaintiff exceeded the ceiling every month after he was issued the pager, but when he was given the option of having his use of his pager audited or paying the overage fee, he always chose to pay the overage fee. Nonetheless, the city became tired of having to bill him every month for excessive pager use and decided to audit his use of the pager in order to determine whether it was fair to charge him for work-related message because the text limit ceiling was too low or whether it should renegotiate its contract with the wireless provider.

At the city's request, the provider provided transcripts of the plaintiff's text messages (because the city was the account subscriber, not the plaintiff). A review of the transcripts (which were audited by the union to delete messages sent during non-work time) revealed that many of the plaintiff's messages were not work related and some were sexually explicit. He was referred to Internal Affairs for disciplinary action for pursuing personal matters during work time. The Internal Affairs investigation revealed that the plaintiff

sent or received 456 messages during work hours in the month of August 2002, of which no more than 57 were work related; he sent as many as 80 messages during a single day at work; and on an average workday, [the plaintiff] sent or received 28 messages, of which only 3 were related to police business.

The plaintiff filed suit (along with other individuals who had exchanged text messages with him uncovered by the audit and IA investigation) under state and federal law against the city and the wireless provider. The lawsuit alleged that their fourth amendment rights had been violated by the audit and investigation and that the provider had violated the Stored Communications Act by providing transcripts of the text messages to the city. The trial court granted summary judgment to the provider. It also concluded that the plaintiffs had a reasonable expectation of privacy (in that he had been given the choice of an audit or paying the overage fee), but that it was a jury question whether the city's search was reasonable under the circumstances. The jury found in favor of the city. However, the Ninth Circuit reversed summary judgment in favor of the provider and the jury verdict.

The Court declined to decide whether the plaintiffs had a reasonable expectation of privacy (in that it would affect the decision of whether a city would be reasonable in reviewing the transcripts for other reasons like performance evaluations, litigation or open records laws) and decided to assume for purposes of the appeal that he had such an expectation, that the audit constituted a search and that an employee's privacy interests in electronic communications was as strong as his interest in privacy from physical searches of his person, office, work desk and work locker.

"Although as a general matter, warrantless searches "are per se unreasonable under the Fourth Amendment," there are "a few specifically established and well-delineated exceptions" to that general rule," including an exception for workplaces. Under the approach of the plurality in O'Connor v. Ortega, 480 U. S. 709 (1987), "when conducted for a 'noninvestigatory, work-related purpos[e]'or for the 'investigatio[n] of work-related misconduct,' a government employer's warrantless search is reasonable" if (1) " it is 'justified at its inception'" and (2) "if 'the measures adopted are reasonably related to the objectives of the search and not excessively intrusive in light of' the circumstances giving rise to the search.'" The Court found that the O'Connor test was met by the city employer in this case.

The search was justified at its inception because a jury found that there were "reasonable grounds for suspecting that the search [was] necessary for a noninvestigatory work-related purpose" in order to determine whether the character limit on the City's contract with its wireless provider was sufficient to meet the City's needs. "The City had a legitimate interest in ensuring that employees were not being forced to pay out of their own pockets for work-related expenses, or on the other hand that the City was not paying for extensive personal communications."

" As for the scope of the search, reviewing the transcripts was reasonable because it was an efficient and expedient way to determine whether [the plaintiff's] overages were the result of work-related messaging or personal use." The review was also not "'excessively intrusive'" in that the City had limited its review to two of the several months at issue (in order to have a sufficient sample size) and had excluded messages sent during non-working hours. Moreover, even if the plaintiff

"could assume some level of privacy would inhere in his messages, it would not have been reasonable for [him] to conclude that his messages were in all circumstances immune from scrutiny. [He] was told that his messages were subject to auditing. As a law enforcement officer, he would or should have known that his actions were likely to come under legal scrutiny, and that this might entail an analysis of his on-the-job communications. Under the circumstances, a reasonable employee would be aware that sound management principles might require the audit of messages to determine whether the pager was being appropriately used."

Further, from the perspective of the police department, plaintiff's limited expectation of privacy, "with boundaries that we need not here explore, lessened the risk that the review would intrude on highly private details of [his] life." Its review of messages on his

"employer-provided pager was not nearly as intrusive as a search of his personal e-mail account or pager, or a wiretap on his home phone line, would have been. That the search did reveal intimate details of [his] life does not make it unreasonable, for under the circumstances a reasonable employer would not expect that such a review would intrude on such matters. The search was permissible in its scope."

The Court specifically rejected the approach of the Ninth Circuit that the availability of less intrusive measures made the search unreasonable. The Ninth Circuit had suggested that (i) the plaintiff be told in advance that his usage would be audited going forward; (ii) that the plaintiff be asked to count the words himself and report back to his employer; (iii) that the plaintiff be asked to redact the transcript of personal messages himself before it was reviewed by the employer. "That rationale 'could raise insuperable barriers to the exercise of virtually all
search-and-seizure powers,' because 'judges engaged in post hoc evaluations of
government conduct can almost always imagine some alternative means by which
the objectives of the government might have been accomplished.'" Therefore,
even if the police department "could have performed the search that would
have been less intrusive, it does not follow that the search as conducted was unreasonable." Similarly, even if the wireless provider had violated the SCA by providing the transcript to the employer, it did not follow that the employer's review of the transcript constituted an unreasonable search. "The otherwise
reasonable search by [the police department] is not rendered unreasonable by the assumption that [the wireless provider] violated the SCA by turning over the transcripts."

The plaintiffs did not attempt to argue that the city's review of the text messages violated the senders' privacy rights even if it did not violate the recipient's privacy rights. Therefore, the Court found that they had no Fourth Amendment claim either.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.