EEOC: Requiring High School Diploma Can Violate the ADA

The EEOC recently published additional “guidance” concerning an issue it raised last Fall while addressing a question about GED testing. In November, the EEOC published a letter in response to a question which indicated that an employer could violate the ADA by requiring job applicants to have a high school diploma if that requirement screened out individuals with learning disabilities who could not obtain the diploma and if the employer could not demonstrate that the requirement was job related and consistent with business necessity:

Under the ADA, a qualification standard, test, or other selection criterion, such as a high school diploma requirement, that screens out an individual or a class of individuals on the basis of a disability must be job related for the position in question and consistent with business necessity. A qualification standard is job related and consistent with business necessity if it accurately measures the ability to perform the job’s essential functions (i.e. its fundamental duties). Even where a challenged qualification standard, test, or other selection criterion is job related and consistent with business necessity, if it screens out an individual on the basis of disability, an employer must also demonstrate that the standard or criterion cannot be met, and the job cannot be performed, with a reasonable accommodation. . . .

Thus, if an employer adopts a high school diploma requirement for a job, and that requirement “screens out” an individual who is unable to graduate because of a learning disability that meets the ADA’s definition of “disability,” the employer may not apply the standard unless it can demonstrate that the diploma requirement is job related and consistent with business necessity. The employer will not be able to make this showing, for example, if the functions in question can easily be performed by someone who does not have a diploma.

Even if the diploma requirement is job related and consistent with business necessity, the employer may still have to determine whether a particular applicant whose learning disability prevents him from meeting it can perform the essential functions of the job, with or without a reasonable accommodation. It may do so, for example, by considering relevant work history and/or by allowing the applicant to demonstrate an ability to do the job’s essential functions during the application process. If the individual can perform the job’s essential functions, with or without a reasonable accommodation, despite the inability to meet the standard, the employer may not use the high school diploma requirement to exclude the applicant. However, the employer is not required to prefer the applicant with a learning disability over other applicants who are better qualified.

In 1971, the Supreme Court similarly held that it would violate Title VII to require a high school diploma for janitorial positions if such a requirement disproportionately screened out otherwise qualified African-American applicants (some of whom had been unable to obtain a diploma during school segregation when some counties closed all public schools rather than integrate them). The EEOC is taking the same position under the ADA and in 2003 found an employer to have discriminated against a nurse aide who had been performing the job successfully for four years, but then was terminated after she could not meet the employer’s new diploma/GED requirement because of her learning disability. The employer settled the dispute rather than litigate it.

In the 2012 guidance, the EEOC sought to clarify its November letter as follows. First, it is not illegal for an employer to require a high school diploma. “However, an employer may have to allow someone who says that a disability has prevented him from obtaining a high school diploma to demonstrate qualification for the job in some other way.” Second, the employer may still select the best and most qualified individual for the job; the ADA does not create a hiring preference. Finally, individuals who choose (for personal or other reasons) to not get a high school diploma are not automatically protected by the ADA; only individuals whose mental or physical impairments made it impossible to get a diploma would be protected.

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.

Sixth Circuit: Failure to Pay Any Salary to Exempt Employee Can Violate the FLSA

This morning the Sixth Circuit issued an interesting, yet concise, FLSA decision, which is no small feat. Orton v. Johnny’s Lunch Franchise, LLC, No. 10-2044 (6th Cir. 2-22-12). In this case, the plaintiff former-executive alleged in his complaint that his former employer and the company’s president (also deemed an employer under the FLSA) failed to pay him any salary or reimburse him for expenses in the last five months that he worked in 2008 because of cash-flow problems. The defendants moved to dismiss the complaint on the grounds that the president was not an employer and on the grounds that the plaintiff was exempt. Ultimately, the district court dismissed the complaint and refused the plaintiff leave to amend on the grounds that he was an exempt employee and cannot assert a claim for back wages under the FLSA. The court held that the employer’s failure to pay any salary to the plaintiff for five months was insufficient to convert him to a non-exempt employee (who was owed minimum wages and overtime). The Sixth Circuit reversed and remanded on the grounds that the district court improperly placed the burden of proving the exemption on the plaintiff and that the employer was required to prove under the 2004 FLSA regulations that its deductions from salary actually received were permissible under the salary-basis regulations. This obviously could not be done at the 12(b)(6) stage without an evidentiary record.

First, the Sixth Circuit noted that an employee’s exempt status is an affirmative defense that must be plead in the employer’s answer and proven by evidence. Although the court was critical of the district court for overlooking this significant issue, there may have been some confusion in that the plaintiff may have conceded that his position would be exempt in normal circumstances and did not challenge the court’s finding on appeal.

Second, the Court found the 2004 amendment to the FLSA regulations modified the law on whether a failure to pay any salary is actionable under the FLSA. The former regulation provided in relevant part that:

“An employee will be considered to be paid ‘on a salary basis’ within the meaning of the regulations if under his employment agreement he regularly receives each pay period . . . .” 29 C.F.R. § 541.118(a) (1973) (emphasis added).

However, the 2004 regulation changed this to:

An employee will be considered to be paid on a “salary basis” within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed . . . . 29 C.F.R. § 541.602(a) (2004) (emphasis added).

The Sixth Circuit previously addressed the impact of the 2004 changes on the salary-basis test in Baden-Winterwood v. Lifetime Fitness, Inc., 566 F.3d 618, 627-28 (6th Cir. 2009). “The new regulation now “focus[es] on pay received,” rather than the terms of the employment agreement, but the regulation still requires that a defendant show that the plaintiff was paid: “(1) a predetermined amount, which (2) was not subject to reduction (3) based on quality or quantity of work performed.” The district court improperly relied on decisions applying the pre-2004 regulation, which had made the employee’s employment agreement the starting place for any analysis.

The new (2004) regulations, which all parties correctly agree are applicable in this case, establish that employment agreements are no longer the relevant starting point for whether an employee is paid on a salary basis. Baden-Winterwood, 566 F.3d at 627. The question is therefore not what Orton was owed under his employment agreement; rather, the question is what compensation Orton actually received.

In this case, the plaintiff alleged that he was not paid any salary or wage from August until he was laid off in December 2008. The complaint also mentioned that this was because the defendants had trouble making payroll. “Whether Orton’s allegations “suggest” one reason for the deduction in salary is irrelevant; his allegations do not preclude multiple reasons for the deduction, and it was the defendants’ burden—not the plaintiff’s—to establish that the reason for the deduction was proper.” In any event, this allegation does not meet the employer’s burden for proving that the alleged deduction was permissible under the FLSA.

For example, a company experiencing cash-flow issues cannot claim the exemption if the company prevents an otherwise salaried employee from coming in three days a week and then pays him less accordingly. Such a deduction in pay would undeniably be due to an absence occasioned by the employer, see 29 C.F.R. § 541.602(a), even though the employer decided to take the action due to cash flow problems. The regulation makes no exception for deductions in pay just because they were motivated by cash flow shortages. . . ..

That is not to say a company with cash flow issues is left with no recourse. Nothing in the FLSA prevents such an employer from renegotiating in good faith a new, lower salary with one of its otherwise salaried employees. The salary-basis test does not require that the predetermined amount stay constant during the course of the employment relationship. Of course, if the predetermined salary goes below a certain amount, the employer may be unable to satisfy the salary-level test, which explicitly addresses the amount an employee must be compensated to remain exempt.

The Court also found no legal significance in a complete reduction in pay rather than a partial reduction – as existed in pre-2004 case law because of a focus on the terms of the employment agreement. “ Therefore, to the extent these cases are at all instructive regarding the new regulations, they support the general principle that the reasons for the reductions in pay are dispositive, not the amount.”

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.

Sixth Circuit: Many Ways to Defeat an Age Discrimination Claim

Last month, the Sixth Circuit affirmed the dismissal of an age discrimination claim that had been filed in 1999. Lefevers v. GAF Fiberglass Corp., No. 00-5567 (6th Cir. 1/11/12). The case had been around so long because it had been stayed during the employer’s bankruptcy proceedings. In it, the Sixth Circuit methodically rejected each argument that the plaintiff asserted in favor of finding direct evidence of discrimination and pretext. Moreover, it started with an interesting Tolstoy quotation: “We do not beat the Wolf for being gray, but for eating the sheep.” In other words, firing an older worker is illegal when it is based on age, not when it is based on another reason (such as a reduction in force and/or inadequate job performance).

The plaintiff first complained about a number of age-related comments made by managers (other than, of course, the decision-maker). One comment referred to “old” Bob Dole running against “dumb” Bill Clinton. Another concerned an inquiry into retirement plans. An HR manager inexplicably said that something needed to be done in the next year with the older supervisors. Yet another manager denied any plan to eliminate older supervisors because they were needed to run the plant. “Statements by nondecisionmakers, or statements by decisionmakers unrelated to the decisional process itself [can not] suffice to satisfy the plaintiff’s burden . . .’ of demonstrating animus.” The Court had no trouble finding that the statements were too unrelated in time and place to have influenced the individual who ultimately decided to terminate the plaintiff. Moreover, “questions concerning an employee’s retirement plans do not alone constitute direct evidence of age discrimination.” (emphasis added).

Next, the Court had no difficulty accepting the employer’s explanation that the plaintiff had been selected for termination during a reduction in force because of his inadequate performance. Among other things, he was not the only individual to lose his job, open jobs went unfilled and, obviously, the employer had ultimately sought bankruptcy protection (a drastic step if it was just to hide illegal discrimination against one employee). There were also numerous documents reflecting the employer’s opinion of his job performance, even if the plaintiff disagreed with those assessments. His “disagreement with GAF’s “assessment of his performance . . . does not render [GAF’s] reasons pretextual.” Moreover, poor job performance coupled with a reduction in force is a legitimate reason to terminate employment.

In addition, the Court found that the employer was actually motivated by his performance evaluations because three of the remaining peer supervisors were older or close in age to the plaintiff. Finally, it was insufficient to show that a younger supervisor absorbed some of his former job duties (on top of his existing job duties) when no one had been hired to replace him.

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’s Minimum Wage Increases for 2012

On Sunday, Ohio’s minimum wage (for non-tipped employees) increased to $7.70 per hour – which is more than the federal minimum wage of $7.25/hour. As described by the Ohio Department of Commerce:

“Non-Tipped Employees” includes any employee who does not engage in an occupation in which he/she customarily and regularly receives more than thirty dollars ($30.00) per month in tips from patrons or others.
“Employers” who gross under $283,000.00 shall pay their employees no less than the current Federal Minimum wage rate.
“Employees” under the age of 16 shall be paid no less than the current federal minimum wage rate.
“Current Federal Minimum Wage” is $7.25 per hour.

Tipped employees are entitled to $3.85/hour plus tips. According to the DOC:

“Tipped Employees” includes any employee who engages in an occupation in which he/she customarily and regularly receives more than thirty dollars ($30.00) per month in tips from patrons or others. The tips are proven if indicated by the employee’s declaration for the purposes of the federal insurance contribution act. Including when tips are added to the employee’s wage, his/her hourly pay cannot be less than the regular minimum wage of $7.70 prescribed by law.

Other employees who are exempt from Ohio’s minimum wage include the following:

1. Any individual employed by the United States;
2. Any individual employed as a baby-sitter in the employer’s home, or a live-in companion to a sick, convalescing, or elderly person whose principal duties do not include housekeeping;
3. Any individual employed as an outside salesman compensated by commissions or in a bona fide executive, administrative, or professional capacity, or computer professionals;
4. Any individual who volunteers to perform services for a public agency which is a State, a political subdivision of a State, or an interstate government agency, if
(i) the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered; and
(ii) such services are not the same type of services which the individual is employed to perform for such public agency;
5. Any individual who works or provides personal services of a charitable nature in a hospital or health institution for which compensation is not sought or contemplated;
6. Any individual in the employ of a camp or recreational area for children under eighteen years of age and owned and operated by a non-profit organization or group of organizations.
7. Employees of a solely family owned and operated business who are family members of an owner.

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

NLRB Again Delays Imposition of New Notice Requirements

Just in time for Xmas, the NLRB announced on Friday that it was delaying again the new requirement for employers to post notice of employees' rights under the National Labor Relations Act. The new requirement is being challenged in federal court and the court requested the NLRB to postpone the new requirement. The new deadline is April 30, 2012.

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.

DOL Proposes to Limit Exempt Companion Status

Yesterday, the Department of Labor announced that it intends to propose a new regulation which would limit the overtime pay exemption available for individuals employed as companions. “The proposal will revise the companionship and live-in worker regulations under the Fair Labor Standards Act to more clearly define the tasks that may be performed by an exempt companion, and to limit the companionship exemption to companions employed only by the family or household using the services. In addition, the Department proposes that third party employers, such as in-home care staffing agencies, could not claim the companionship exemption or the overtime exemption for live-in domestic workers, even if the employee is jointly employed by the third party and the family or household.” This proposal comes following a 2007 Supreme Court decision in Long Island Care at Home Ltd v. Coke, which found that the FLSA regulatory exemption for individuals employed as companions for the elderly and infirm applied to exempt the employee regardless of whether the employee was employed by a third-party provider or by the client or client family.

The proposed regulation has not yet been published in the Federal Register, which will give the public the opportunity to comment upon the proposed regulation.

Among other things, the proposed regulation would limit to 20% of the employee’s time spent in incidental activities unrelated to fellowship and protection: “The proposed regulation provides an illustrative list of permissible incidental services that may be provided by an exempt companion, such as occasional dressing, grooming, and driving to appointments, if this work is performed in conjunction with the fellowship and protection of the individual, and does not exceed 20 percent of the total hours worked by the companion in the workweek.” Similarly, the proposed regulation would preclude the employee from performing housework if the employer wants to maintain the exemption: “any performance of general household work would result in the loss of the exemption for the week.” Thus, regardless of whether the companion is employed by a third-party provider or an individual family, the companion would be entitled to overtime if s/he performs any household cleaning or any other task (such as driving, grocery shopping, dressing, or grooming), more than 20% of the time.

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 Entertains Oral Arguments on Termination of Non-Compete Agreement Upon Merger

On Tuesday, the Ohio Supreme Court entertained oral argument on a non-compete case that had been appealed by the employer from the Hamilton County Court of Appeals. Acordia of Ohio, L.L.C. v. Fishel, 2010-Ohio-6235. In that case, most of the defendant employees had signed non-compete agreements with a small insurance company which was acquired years later in a merger with an Accordia entity. The Accordia entity was eventually merged years later into a larger Accordia entity, Accordia of Ohio LLC, which ultimately merged with Wells Fargo. The employees years later resigned en masse and went to work for a competitor of Accordia. Accordia filed suit seeking a preliminary injunction based on the non-compete agreements which the employees had signed with the predecessor company more than ten years before and for theft of trade secrets. The court refused to grant an injunction and ultimately entered summary judgment in favor of the employees on the grounds that the non-compete agreements had expired years earlier.
In particular, the court found that the terms of the non-compete agreements provided that the two-year non-compete period began to run upon the employee's termination of employment with the predecessor employer. The court also found that the employee's employment with the predecessor was terminated by operation of law when the predecessor employer merged with Accordia and ceased to exist. Nonetheless, upon the merger, Accordia succeeded to the predecessor's enforcement rights under the non-compete agreement. Therefore, if the employees had gone to work for a competitor within two years of the merger, Accordia would have had the right to enforce the non-compete restriction because it had stepped into the predecessor's shoes. As it was, the employees waited approximately ten years – long after the non-compete agreement and two-year non-compete period had expired – to compete against Accordia.
On appeal, the employer argued that the appellate court erred in holding that the non-compete enforcement rights survived the merger, but not the employees' employment. The employer argued that the employees remained employed at will following the merger (even though Justice McGee Brown raised factual issue about I-9 forms and employment applications). Therefore, the employer argued, there was no break or termination in employment in fact, in law or under the non-compete agreement. Second, the non-compete agreements were assets acquired by Accordia and should have been enforced as though Accordia were the predecessor employer because it acquired all of the predecessor's rights under all contracts – whether those contracts were with customers or with employees. Some justices were sympathetic to the argument that Accordia should have had equal rights under both customer and employee contracts to step into the shoes of the employer.
There was also some discussion about the intent of the parties when the employees had entered into a non-compete agreement with a small insurance agency, which ultimately was acquired by Wells Fargo – with a national presence. Would it be fair to the employees' reasonable expectations to enforce a non-compete against them which might preclude competition anywhere in the United States when they originally signed thinking they were only giving up their rights to compete in one Ohio county. The employer pointed out that the same result could have arisen if the small insurance company had grown and acquired other companies, instead of visa versa.
The employees continued to argue that the terms of the non-compete specifically provided that the non-compete period began to run when their employment with the predecessor was terminated. It did not contain a successor clause (i.e., defining "company" under the contract to include both the predecessor and any successor). However, the employees did not make a compelling argument why their contracts should be treated differently than customer contracts. They also continued to argue that Accordia assumed the predecessor's rights to enforce the non-compete agreements if the employees had begun to compete within two years of the termination of their employment with the predecessor.
Of course, all of this could have been avoided if Accordia had simply entered into new non-compete agreements with each of the employees following the merger or required the former non-compete agreements to be amended prior to the merger to avoid this issue.
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.

Franklin County Appeals Court: Incomplete Promises from Offer Letter Formed Binding Contract

Last week, the Franklin County Court of Appeals reversed a summary judgment previously entered on behalf of an employer on a breach of contract claim involving stock options promised in an offer letter. McGonagle v. Somerset Gas Transm. Co., L.L.C., 2011-Ohio-5768. The offer letter discussed the intent for the parties to enter into a later, more detailed employment agreement specifying the terms, but no such agreement was ever drafted, exchanged or signed. The trial court had found that the offer letter only constituted an agreement to later enter into a binding agreement, but the Court of Appeals disagreed.

According to the Court’s opinion, following negotiations, the plaintiff’s offer letter specified his salary, paid vacation, severance pay, eligibility for various bonuses and stock options, a portion of which would vest every six months within the next two years at a certain price and would immediately vest if he were fired without cause or if there were a change in control of the company. The offer letter provided that a more detailed employment agreement would later be provided specifying what could constitute termination “without cause,” or “with cause.” Both the employer and the plaintiff employee signed the offer letter. However, no detailed employment agreement was ever signed by the parties. The plaintiff was later provided with a management grant agreement concerning stock options in 2006, but he never signed it. He later resigned in 2007 and filed suit in 2008 for the stock options which he had been promised in 2002.

The employer argued that the offer letter was too vague to constitute an enforceable contract and left open a number of significant conditions, including the excise period and whether the plaintiff had ever vested in the options. The trial court concluded that the offer letter only constituted an offer to negotiate and later make a contract and, in the alternative, was too vague to be enforceable. The Court of Appeals reversed.

The Court found that the letter covered the essential terms of the parties’ agreement and could be enforced. "[I]f a term cannot be determined from the four corners of a contract, factual
determination of intent or reasonableness may be necessary to supply the missing term." The parties may rely on extrinsic evidence – such as the negotiations and later discussions -- to explain their intent. The introduction of such extrinsic evidence is permitted by the parol evidence rule, which only prohibits the admission of extrinsic evidence to explain the terms of an integrated (or complete) agreement after it has been reduced to writing. Where the parties have an incomplete agreement – or partially integrated agreement, extrinsic evidence is admissible to explain the missing terms.

A contract is partially integrated if the parties adopt it as a final expression of only one portion of a larger agreement, making the contract incomplete. Id. at ¶37. A party may introduce extrinsic evidence to supplement, but not vary or contradict, the written terms of a partially integrated contract. Id. at ¶38; Williams at ¶28, 30.

The fact that not all of the details (such as the affect of a resignation or duration of the options) had been explained in the offer letter does not mean that a contract was not formed.

The parties may have agreed that appellant's voluntary resignation would have no effect on his vested option to acquire stock or perhaps the parties did not reach an agreement on this issue because it was not contemplated by the parties. Similarly, the parties may have intended an option of unlimited duration or failed to contemplate a specified duration for the option. Regardless, we cannot conclude the letter lacks such enforceable clarity such that a factual determination of reasonableness or intent cannot be utilized to supply the relevant terms that are allegedly omitted from the letter.

In addition, it was not clear when the right to the options was triggered. “Thus, there is a genuine issue of material fact remaining as to whether or not the triggering event, equity financing, has occurred so as to entitle appellant to the stock option.” Therefore summary judgment was not appropriate for either party and the case was remanded “to the trial court for factual determinations of the relevant missing terms and, also, whether equity financing has occurred.”

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.

OSHA Issues Enforcement Guidance on Assessing Workplace Violence

Last month, the federal Occupational Safety and Health Administration (OSHA) issued enforcement guidance to its regional offices to establish uniform procedures for investigating and assessing incidents of workplace violence, like the one last Friday afternoon in a California hair salon. Workplace violence has ranked in the top four causes of death for more than fifteen years. “Workplace homicides remained the number one cause of workplace death for women in 2009.” “Employers may be found in violation of the general duty clause if they fail to reduce or eliminate serious recognized hazards.” In Ohio, it could also lead to public policy discharge and retaliation claims. A complaint concerning workplace violence could trigger an OSHA investigation into many of the employer’s safety and recordkeeping practices. According to OSHA, a combination of administrative, engineering and education measures can greatly reduce, if not eliminate, workplace assaults and other violence. The enforcement guidance also contains a checklist of steps employers can take to improve workplace assessments and safety. Interestingly, OSHA refuses to investigate complaints of co-worker disputes or bullying.

Workplace violence is recognized as an occupational hazard in some industries and environments which, like other safety issues, can be avoided or minimized if employers take appropriate precautions. At the same time, it continues to negatively impact the American workforce. Workplace violence has remained among the top four causes of death at work for over fifteen years, and it impacts thousands of workers and their families annually.

The Bureau of Labor Statistics’ (BLS) Census of Fatal Occupational Injuries (CFOI) shows an average of 590 homicides a year from 2000 through 2009, with homicides remaining one of the four most frequent work-related fatal injuries. Workplace homicides remained the number one cause of workplace death for women in 2009 . . . . In addition, during the same time period, survey results showed that 19% of victims of workplace violence worked in law enforcement, 13% worked in retail and 10% worked in medical occupations.

Research has identified factors that may increase the risk of violence at worksites. Such factors include working with the public or volatile, unstable people. Working alone or in isolated areas may also contribute to the potential for violence. Handling money and valuables, providing services and care, and working where alcohol is served may also impact the likelihood of violence. Additionally, time of day and location of work, such as working late at night or in areas with high crime rates, are also risk factors that should be considered when addressing issues of workplace violence.

By assessing their worksites, employers can identify methods for reducing the likelihood of incidents occurring. The Directive also includes a list of best practices, including the following:

● Conduct a workplace violence hazard analysis (this includes analyzing vehicles used to transport clients).
● Assess any plans for new construction or physical changes to the facility or workplace to eliminate or reduce security hazards.
● Provide employees with training on workplace violence.

● Implement Engineering Controls, such as:
- Install and regularly maintain alarm systems and other security devices, panic buttons, hand-held alarms or noise devices, cellular phones and private channel radios where risk is apparent or may be anticipated. Arrange for a reliable response system when an alarm is triggered.
- Provide metal detectors—installed or hand-held, where appropriate— to detect guns, knives or other weapons, according to the recommendations of security consultants.
- Use a closed-circuit recording on a 24-hour basis for high-risk areas.
- Place curved mirrors at hallway intersections or concealed areas.
- Lock all unused doors to limit access, in accordance with local fire codes.
- Install bright, effective lighting, both indoors and outdoors.
- Replace burned-out lights and broken windows and locks.
- Keep automobiles well maintained if they are used in the field.
- Lock automobiles at all times.

● Implement Administrative Controls—to change work practices and management policies in order to reduce exposure to hazards. Such controls include:
- Establish liaisons with local police and state prosecutors. Report all incidents of violence. Give police physical layouts of facilities to expedite investigations.
- Require employees to report all assaults or threats to a supervisor or manager (in addition, address concerns where the perpetrator is the manager). Keep log books and reports of such incidents to help determine any necessary actions to prevent recurrences.
- Advise employees of company procedures for requesting police assistance or filing charges when assaulted and help them do so, if necessary.
- Provide management support during emergencies. Respond promptly to all complaints.
- Set up a trained response team to respond to emergencies.
- Use properly trained security officers to deal with aggressive behavior. Follow written security procedures. [Do they know how to respond to armed aggression? Have you asked about the training your security contractor provides to security guards assigned to your facility?]
- Develop a written, comprehensive workplace violence prevention program, which should include:
- policy statement regarding potential violence in the workplace and asignment of oversight and prevention responsibilities.
- workplace violence hazard assessment and security analysis, including a list of the risk factors identified in the assessment and how the employer will address the specific hazards identified.
- Development of workplace violence controls, including implementation of engineering and administrative controls and methods used to prevent potential workplace violence incidents.
- A recordkeeping system designed to report any violent incidents. Additionally, the employer shall address each specific hazard identified in the workplace evaluation. The reports must be in writing and maintained for review after each incident and at least annually to analyze incident trends.
- Development of a workplace violence training program that includes a written outline or lesson plan.
- Annual review of the workplace violence prevention program, which should be updated as necessary. Such review and updates shall set forth any mitigating steps taken in response to any workplace violence incidents.
- Development of procedures and responsibilities to be taken in the event of a violent incident in the workplace.
- Development of a response team responsible for immediate care of victims, reestablishment of work areas and processes and providing debriefing sessions with victims and coworkers. Employee assistance programs, human resource professionals and local mental health and emergency service personnel should be contacted for input in developing these strategies.

● Limit window signs to low or high locations and keep shelving low so that workers can see incoming customers and so that police can observe what is occurring from the outside of the store.
● Ensure that the customer service and cash register areas are visible from outside of the establishment.
● Use door detectors so that workers are alerted when someone enters the store.
● Have height markers on exit doors to help witnesses provide more accurate descriptions of assailants.
● Establish a policy of when doors should be locked. Require workers to keep doors locked before and after official business hours.
● Train all staff to recognize and defuse verbal abuse that can escalate to physically combative behavior.
● Train all staff and practice drills for physically restraining combative patients or clients, including the use of physical restraints and medication, when appropriate.
● Provide employee “safe rooms” for use during emergencies.
● Provide staff members with security escorts to parking areas in evening or late hours. Ensure that parking areas are highly visible, well lit and safely accessible to the building.

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.

Franklin County Court of Appeals Affirms Stay in Favor of Arbitration Despite $23K Arbitration Cost for Plaintiff

Last week, the Franklin County Court of Appeals affirmed a trial court’s order staying litigation pending arbitration without first holding an evidentiary hearing despite evidence that the plaintiff would be required to deposit over $23,000 with the American Arbitration Association in order to pursue her claims of disability discrimination. Shearer v. VCA Antech, Inc., 2011-Ohio-5171 (10-6-11). The plaintiff had filed suit challenging the arbitration proceedings and, in doing so, apparently only challenged the arbitration clause on the basis of procedural and substantive unconscionability under state law. She did not rely on any federal court precedent that such expensive arbitration expenses could deprive a victim of discrimination of the benefit of the Americans With Disabilities Act and, thus, be unenforceable. Thus, the Court had no difficulty finding that the arbitration agreement was enforceable when presented with documentary evidence that the plaintiff had consulted with counsel and negotiated over some of its terms and had never been concretely mislead. While the defendant employer had persuaded her to agree to the terms by claiming that it had never sought legal enforcement in the past and was unlikely to do so in the future, it wanted to reserve its right to sue in the event that she prematurely resigned her employment.

According to the Court’s opinion, the plaintiff sold her veterinary practice to the defendant employer. In doing so, she signed an agreement of sale and an employment agreement. Both contained arbitration clauses. They also both required her to remain employed for four years and precluded any voluntary resignation before that time. Before signing, she consulted with counsel and negotiated a requirement to use the AAA in the arbitration clause. The employer refused to include her proposed revision giving her the right to resign on 30 days notice. When she expressed concern, they assured her that they could not force her to continue working, but did not want her to quit right after selling the practice because of her clients would probably go elsewhere. While they had never enforced the termination clause in the past, they wanted the ability to do so in the future – just in case.

A year later, the plaintiff resigned – despite the termination clause requiring her to work four years – and the employer filed a claim with the AAA. She counterclaimed that it had failed to accommodate her disability and retaliated against her, among other things. The AAA ultimately required each party to deposit over $23,000 before proceeding to hearing. At that point, the plaintiff filed suit objecting to the cost of arbitration. There is no discussion in the decision of the Morrison v. Circuit City opinion where the Sixth Circuit found such cost sharing/shifting provisions to be inconsistent with federal employment statutes, and thus, unenforceable. Rather, the only discussion is whether the arbitration clauses – and cost shifting provisions – are procedurally or substantively unconscionable. The Court found they were not.

The plaintiff also objected to the lack of an evidentiary hearing. The Court noted that a hearing was discretionary when the party only sought to stay arbitration and were not mandatory unless the party sought to compel arbitration.

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.

Federal Court in Dayton Finds Employer Liable for Not Paying Overtime to Employees Misclassified as Independent Contractors

The federal government has taken a renewed interest in the misclassification of employees as independent contractors. In my view, this is one of the most common management faux pas I see. Employers do not need to pay overtime or taxes, provide insurance benefits, withhold taxes or worry about unemployment compensation liability in connection with independent contractors and this provides a powerful financial incentive for employers to take risks concerning legal requirements when everyone else is doing it. However, if it quacks like a duck . . . . . . About a decade ago, this was a very hot issue because Microsoft found itself on the wrong side of the IRS on this issue (and then had to provide stock to the misclassified employees under its benefit plants because of how it defined eligible “employees.”). Then the issue disappeared. On September 19, 2011, the DOL entered into a highly publicized arrangement with the IRS and 11 state tax agencies to turn over employers who misclassify employees as independent contractors. A recent federal case in the Dayton demonstrates that employers cannot rely on the “but everyone else is doing it” defense – (aka industry practice) to avoid or minimize its liability.

Near the end of September, the United States District Court concluded that an employer and its president misclassified employees as independent contractors and would be, therefore, liable for unpaid overtime and failing to maintain records of hours worked. Solis v. Cascom, Inc., Case No. 3:09-cv-257 (S.D. Oh, 9/21/11). The Fair Labor Standards Act essentially classifies everyone as an employee who is permitted to work and expects compensation (i.e., not true volunteers). However, it impliedly does not include paying overtime to independent businesses (such as those firms advertising in the yellow pages or on their own commercial websites). Courts typically apply the economic realities test, and the outcome depends on a number of factors and the facts of each individual case.

In this case, the Court found a number of factors weighed strongly in favor of finding the individuals to be employees and not independent contractors:

1) Employer’s right to control the manner in which the work is performed.

This factor weighed heavily in favor of employee status. The individuals completed employment applications, were hired for indefinite periods under terms that could be changed at any time by the defendant employer and, for liability reasons, were not allowed to hire their own assistants without the employer’s permission. Moreover, the employer controlled both the manner and means of performing the work: scheduling their appointments on a take-it-or-leave it basis, requiring them to remain on each job until dismissed by their supervisors, providing detailed training and instructions and requiring the completion of the employer’s forms. The employer also required mandatory attendance at meetings, required them to wear shirts and drive cars with the company logo and required them to seek permission in advance to take a day off work. In addition, the employer also made deductions from pay for errors and other customer issues that were sometime beyond the employee’s control. Most importantly, the individuals were performing the primary work of the company. Indeed, they were the only individuals performing the work that constituted the company’s core business: cable installation.

2) Alleged Employee’s Opportunity for Profit or Loss Depending upon Own Managerial Skill

This factor also weighed in favor of employment status because there were no opportunities for the individuals to increase their profit based on managerial skill (such as scheduling, material acquisition, hiring assistants, etc.). The only way to earn more money was to work longer hours.

3) Alleged Employee’s Investment in Equipment or Materials Required for His Task, or His Employment of Helpers

The Court found this factor to be neutral. The individuals did not invest in advertising or hold themselves out as independent entrepreneurs. They were, however, required to purchase their own tools (and could do so from the employer through payroll deduction) and to supply their own vehicle (or lease one from the employer). The employer provided the materials to be installed.

4) Requirement of a Special Skill to Render the Service

This favor also weighed in favor of employment because the job required minimal skill which could be apparently taught to anyone with six weeks of on-the-job training.

5) Degree of Permanence of the Working Relationship

This favor also weighed in favor of employment because the individuals were treated like at-will employees and remained employed for as much as several years.

6) How Integral the Services Are to the Employer’s Business

This favor weighed very heavily in favor of employment. “More than integral, more than core, cable installation was the entirety of Cascom’s business.”

Finally, the Court rejected the employer’s good faith defense that it was simply following an industry practice: “As for industry standards, “the law...is that ‘simple conformity with industry-wide practice’ fails to demonstrate good faith under the FLSA.”

Employers who are found to have misclassified employees as independent contractors can find themselves liable for unpaid overtime (for the past 2-3 years), unpaid state and federal employment taxes, tax penalties and possible liability under health insurance and pension plans. When the DOL announced its new enforcement agreement with the IRS, the IRS also announced an amnesty program encouraging employers to fix misclassified employees by paying only 1% fines, but does not cover any potential liabilities to state tax agencies or to the individual employees for back pay and pension obligations.

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.

NLRB Delays New Posting Requirement Until 2012

[Editor's Note: Just in time for Xmas, the NLRB announced that the new requirement would be delayed yet again (at the request of a federal court hearing an employer challenge to the new rule) until April 30.]

Yesterday, the NLRB announced that it was delaying from November 14 until January 31, 2012 the new requirement for employers to post a notice explaining employees' rights under the National Labor Relations Act. The reason given is to give the NLRB time to reach out and educate small and medium sized employers as to who is and is not subject to the NLRA.

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.

Compensation Records Concerning Non-Profit Employees Can Be Public Records in Ohio

Last week, the Ohio Supreme Court issued a unanimous public records decision involving a private non-profit organization/joint insurance pool for 66 counties. State ex rel. Bell v. Brooks, Slip Opinion No. 2011-Ohio-4897. The plaintiff had submitted a public records request to the entity seeking a wide variety of records. The entity responded that it was not subject to Ohio’s Public Records Act because it was not a public office. It was a private, non-profit that was exempt from federal taxation as a governmental instrumentality. 88% of its funding came from contributions from the member counties. However, its governing board consisted only of nine individual county commissioners. Examining a number of factors, the Court had no trouble concluding that it was not the functional equivalent of a public office, was not the alter ego of a governmental entity and did not perform traditional government functions.

However, one provision of Ohio’s Public Records Act applies to private, non-profit entities which receive more than 50% of their funding from government entities. With certain exceptions for confidential client/patient records, Ohio Revised Code §149.43 provides in relevant part that:

Any governmental entity or agency and any nonprofit corporation or association, except a corporation organized pursuant to Chapter 1719 of the Revised Code prior to January 1, 1980 or organized pursuant to Chapter 3941 of the Revised Code, that enters into a contract or other agreement with the federal government, a unit of state government, or a political subdivision or taxing unit of this state for the provision of services shall keep accurate and complete financial records of any moneys expended in relation to the performance of the services pursuant to such contract or agreement according to generally accepted accounting principles. Such contract or agreement and such financial records shall be deemed to be public records as defined in division (A)(1) of section 149.43 of the Revised Code and are subject to the requirements of division (B) of that section, . . . .

Any nonprofit corporation or association that receives more than fifty per cent of its gross receipts excluding moneys received pursuant to Title XVIII of the “Social Security Act,” 49 Stat. 620 (1935), 42 U.S.C. 301, as amended, in a calendar year in
fulfillment of a contract or other agreement for services with a governmental entity shall maintain information setting forth the compensation of any individual serving the nonprofit corporation or association in an executive or administrative capacity. Such information shall be deemed to be public records as defined in division (A)(1) of section 149.43 of the Revised Code and is subject to the requirements of division (B) of that section.

(italics emphasis added by Court).

Because the respondent entity arguably fit within this statutory section, the Court remanded the matter back to the trial court to determine whether the plaintiff was entitled to financial
and employee compensation records under the Ohio Public Records Act.

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.

Franklin County Court of Appeals Affirms Dismissal of ADA Claim Brought by Former Drug Addict Who was Fired After Volunteering for Strip Search After Theft Accusation.

Last week, the Franklin County Court of Appeals upheld a summary judgment in favor of a fast food employer concerning a claim for disability discrimination brought by a former employee who had been fired for theft. Turner v. Shahed Enterprises., 2011-Ohio-4654.
The plaintiff was a recovered drug addict and convicted drug offender who was hired by the restaurant after she successfully passed a pre-employment drug screen (which was apparently not administered to any applicants who had not identified prior drug convictions). After an employee identified the plaintiff as being seen placing $50 in her pocket shortly after money went missing from the manager's desk, the plaintiff was confronted with the accusation. She volunteered to undress to disprove the accusation and the assistant manager permitted her to do so in the restroom. The money was later found near the plaintiff's work station in an area where all of the other employees also had access. The plaintiff was interviewed and release by police officers, but was still fired the next day. The plaintiff claimed that she was discriminated against on account of her former addiction when she was required to submit to a drug test when other employees were not, when she was required to undress to disprove the theft accusation, and when she was fired for attempted theft.

First, the Court found that requiring the plaintiff to submit to a pre-employment drug test was not a material adverse job action that could support a claim for discrimination. Further, the Court found it permissible for employers to adopt reasonable drug testing procedures to ensure that recovered addicts did not (or had not) relapsed. The ADA specifically provides that it shall not be a violation of the ADA for an employer to adopt or administer reasonable policies or procedures, including but not limited to drug testing, designed to ensure that recovered or recovering individuals are no longer engaging in the illegal use of drugs. 42 U.S.C. §12114(b).

Second, the Court found that the employer lawfully terminated the plaintiff because it believed that she had attempted to steal $50 based on the accusation of a co-worker and the fact the money was eventually found near her work area. While another employee could have placed the money there and it was not found on the plaintiff, that the employer may have been mistaken does not mean that it was not motivated by its belief that she was a thief. The plaintiff could identify no evidence that her status as a recovered addict was the actual reason that she was terminated in light of the theft investigation.

Finally, the Court dismissed her invasion of privacy claim because she had volunteered to undress in front of the assistant manager to prove her innocence even after she was told that it would not be necessary:

Based upon the undisputed evidence, appellant voluntarily undressed in front of an assistant manager, while in a private bathroom, in order to show that she did not have the missing money on her person. Nobody asked her to undress. Rather, appellant was instructed that she did not have to undress, and she insisted in an attempt to exonerate herself. The expectation of privacy appellant now seeks to protect was lost when she undressed on her own volition.

The outcome would probably have been different if she had been threatened with termination if she did not agree to a strip search.

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.

NLRB Makes Union Organizing Easier in Long-Term Care Facilities

In late August, the NLRB issued a 3-1 decision overruling the 1991 Park Manor Care Center decision, which has governed the scope of new bargaining units outside the acute care (i.e., hospital) setting and held that parties who object to the scope of a new bargaining unit in long-term care facilities must demonstrate “an overwhelming community of interest” between the employees included in the petitioned unit and the excluded employees. In other words, a petitioned unit will be deemed appropriate if it contains employees who are readily identifiable as a group and who share a community of interest. Specialty Healthcare and Rehabilitation Center of Mobile and United Steelworkers, 357 N.L.R.B. No. 83 (Aug. 26, 2011). In Specialty Heathcare, the union sought a nursing home unit that consisted only of 53 certified nursing assistants, but the employer contended that the unit should consist of all non-professional and service employees, including maintenance workers, cooks, dietary aides, recreational aides, medical records clerks and clerical employees. This would add 33 additional employees to the unit. The decision is significant because it will make organizing employees in nursing homes much easier for unions if they can convince a majority of a smaller group of employees to vote in favor of the union and then slowly and steadily expand the unit over time to include additional groups. It will also mean that nursing home employers may face multiple unions among its workforce (and multiple bargaining agreements with differing deadlines and benefits, and multiple strikes, etc.). The Board indicated that this is the general rule for organizing all employees outside of the acute care industry.


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 Finally Puts Nail in Dohme Coffin

This morning, the Ohio Supreme Court finally reversed the Dohme case on the merits, finding that that the plaintiff had failed to allege the violation of any state or federal statute, regulation, rule or decision when he was fired for insubordination after complaining to an insurance adjuster (despite explicit instructions to the contrary) about certain fire alarm inspection reports being missing as part of a supposed scheme to set him up to be fired. Dohme v. Eurand America, Inc., 2011-Ohio-4609. As reported here in June and earlier in February 2008, “the Ohio Supreme Court heard oral argument about whether public policy wrongful discharge claims should be recognized when the employee did not “blow the whistle” to either a government agency or management about safety concerns, but rather, complained to a private sector insurance auditor about his paranoia of being set up to be fired due to an allegedly missing document about fire alarm inspections. The Court resolved the dispute on the very narrow grounds of the “clarity” element of a wrongful discharge claim. Because the plaintiff had failed to identify any law which permitted, encouraged or required him to express his concerns to the adjuster, the employer was perfectly justified to forbid unauthorized conversations with the adjuster and to fire the plaintiff for insubordination when he disregarded those explicit instructions. Vague concerns about workplace safety are insufficient to support a claim for wrongful discharge. Rather, citation to some legal authority is required:

[T]o satisfy the clarity element of a claim of wrongful discharge in violation of public policy, a terminated employee must articulate a clear public policy by citation to specific provisions in the federal or state constitution, federal or state statutes, administrative rules and regulations, or common law. A general reference to workplace safety is insufficient to meet the clarity requirement.

Interestingly, the Court also noted that it was inappropriate for a court to sua sponte fill in a supposed public policy if the plaintiff fails to identify such a policy or law.

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.

Sixth Circuit: Volunteer Firefighters Can Be Title VII Employees

Earlier this month, the Sixth Circuit reversed a summary judgment which had been entered in favor of a volunteer fire department in Ohio. Bryson v. Middlefield Volunteer Fire Department, No. 10-3055 (6th Cir. 9/2/11). In that case, the plaintiff served as a volunteer firefighter and then was also hired as the department’s administrative assistant. She alleged that the former fire chief sexually harassed her and then constructively discharged her in retaliation for her complaints. She filed a Charge of Discrimination with the EEOC and OCRC, which found probable cause of harassment, but not retaliation. She then filed suit and the department moved for summary judgment on the basis that it did not employ 15 employees as required by Title VII. In particular, it denied that the volunteer firefighters were employees under Title VII. Although the firefighters were provided with insurance coverage and gift certificates, were covered by workers compensation and were provided with other benefits (such as access to department facilities and training, etc.), the trial court agreed that the renumeration received by the firefighters was not substantial enough to convert them from non-covered volunteers to covered employees. The Sixth Circuit reversed.

The Sixth Circuit concluded that whether an individual was covered by Title VII was governed by the common law of agency. The amount and type of compensation received by the individual was merely one factor to be considered and should not be given greater weight by making it an independent condition precedent to conducting the common law agency analysis. Because the trial court failed to consider all of the agency factors and then weigh them, the Court reversed so that the court could apply the proper analysis on remand.

Whether an individual is an “employee” for Title VII purposes arises in a number of contexts, including non-profits, shareholders, trustees, etc.

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.

Sixth Circuit Finds Arbitration Policy is Unenforceable Without Proof Employee Was Given Notice and Knew of It

This morning, the Sixth Circuit reversed an order to compel arbitration based on a lack of evidence that the employee knew about the arbitration policy. Hergenreder v. Bickford Senior Living Group, LLC., No. 10-1474 (6th Cir. 8/31/11). In that case, the plaintiff was hired as a nurse in October 2006 and soon thereafter required a medical leave of absence following a cancer diagnosis. When she attempted to return to work in December 2006, she was told there was no job for her and was notified that she had been fired (with the ability of being rehired) in January 2007 because she had not qualified for a medical leave of absence so soon after being hired. When she filed suit under the ADA, the employer moved to compel arbitration even though she had never signed an arbitration agreement. The employer could not rely on any arbitration provisions in the employee handbook because it contained numerous disclaimers that it was not a binding contract. The employer’s arbitration policy was purportedly distributed to all employees, but there was no evidence that it had been specifically distributed to plaintiff during the application process or after being hired. The plaintiff had never signed it and denied that she had ever seen it before the litigation. The Court, therefore concluded that she could not have agreed to arbitrate her claims and remanded the matter back to the District Court.

The Federal Arbitration Act only requires arbitration agreements to be in writing, but does not require them to be signed. However, both parties must still be aware of the terms of the agreement and agree to them. The employer argued that a reference to the dispute resolution policy in the employee handbook put the employee on notice of the arbitration policy and agreement. However, the Court disagreed because the handbook was not a contract and there were too few details (let alone no mention of the word arbitration) in the employee handbook to have put any employee on notice that s/he was agreeing to arbitrate his or her claims.

This statement says nothing about arbitration, and it says nothing that would indicate to Hergenreder that accepting or continuing her job with Bickford would constitute acceptance. Indeed, it is incorrect to conflate the fact that Hergenreder knew generally of the DRP with the notion that she knew of the arbitration language—and Bickford’s desire to create an arbitration agreement—contained within the DRP. Were Hergenreder required to read, or even notified of the importance of reading, the DRP, the analysis here might be different. But this court’s inquiry is focused on whether there is an objective manifestation of intent by Bickford to enter into an agreement with (and invite acceptance by) Hergenreder, and we are not convinced that there is any such manifestation made by Bickford in the record in this case.

In addition, even if the policy constituted an offer of an arbitration agreement, there was no evidence that the plaintiff’s continued employment constituted acceptance of that offer because she had never been informed that continuing employment constituted acceptance of the arbitration 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.

NLRB to Require Employers to Post Notice of Employee-Union Rights

[New Editor's Note: On December 23, 2011, the NLRB announced again that it was postponing the implementation of the new posting requirement from November 14 until April 30, 2012. In April 2012, the NLRB announced that it was postponing the requirement pending resolution of an appeal to the D.C. Circuit Court of Appeals.]

[Editor's Note: As expected, the final rule was published in the Federal Register on August 30, 2011. The poster has been available on the NLRB website since September 14, 2011.]

On Tuesday, Federal Register is expected to contain a rule adopted on Thursday by the NLRB requiring all employers subject to the National Labor Relations Act (i.e., which does not include states, federal government, unions, political subdivisions, employers subject to the Railway Labor Act, etc.) to post a notice in a conspicuous place of employee rights under the NLRA. A copy of the form notice eventually will be available on the NLRB website. Government contractors may continue to post the notice required by the DOL instead of the NLRB notice. When the entire workforce is not proficient in reading English, a separate notice must be posted in any language spoken by 20% of the workforce. The rule will take effect 75 days after it has been published in the Federal Register (i.e., November 14) and will be codified at 29 C.F.R. Part 104.

In addition to posting the required notice physically, "an employer must also post the required notice on an intranet or internet site if the employer customarily communicates with its employees about personnel rules or policies by such means. An employer that customarily posts notices to employees about personnel rules or policies on an intranet or internet site will satisfy the electronic posting requirement by displaying prominently – i.e., no less prominently than other notices to employees -- on such a site either an exact copy of the poster, downloaded from the Board's Web site, or a link to the Board's Web site that contains the poster. The link to the Board's Web site must read, "Employee Rights under the National Labor Relations Act."

The rationale for the posting requirement is that most employees are not aware of their rights under the NLRA. This has been attributed to the declining union membership, a failure of high school civics teachers, and greater number of immigrant employees. The NLRB refused to include on its poster all employee rights, such as the right to vote to decertify a union, etc.

Employers who fail to post the notice can face three adverse consequences. The NLRB will treat the posting failure as an unfair labor practice (subject to a cease and desist order) and may treat it as evidence of anti-union animus (on other allegations). In addition, the NLRB may toll the six-month limitations period for an employee to file an ULP Charge for the period during which the employer failed to post the employees' notice of rights.

Not all small and/or non-profit employers are subject to the NLRA and should consult with their attorney to confirm whether they are required to post the NLRB notice.

The new rule is already being challenged as beyond the statutory authority of the NLRB. The text of the notice has been subject to some criticism because the listed rules are not equally applicable to all employees as stated because of differences in how the law is applied in different regions and industries. The text provides as follows:

EMPLOYEE RIGHTS UNDER THE NATIONAL LABOR RELATIONS ACT

The National Labor Relations Act (NLRA) guarantees the right of employees to organize and bargain collectively with their employers, and to engage in other protected concerted activity or to refrain from engaging in any of the above activity. employees covered by the NLRA* are protected from certain types of employer and union misconduct. This Notice gives you general information about your rights, andabout the obligations of employers and unions under the NLRA. Contact the National Labor Relations Board (NLRB), the Federal agency that investigates and resolves complaints under the NLRA, using the contact information supplied below, if you have any questions about specific rights that may apply in your particular workplace.

Under the NLRA, you have the right to:

• Organize a union to negotiate with your employer concerning your wages, hours, and other terms and conditions of employment.



• Form, join or assist a union.
  


• Bargain collectively through representatives of employees' own choosing for a contract with your employer setting your wages, benefits, hours, and other working conditions.



• Discuss your wages and benefits and other terms and conditions of employment or union organizing with your co-workers or a union.
  


• Take action with one or more co-workers to improve your working conditions by, among other means, raising work-related complaints directly with your employer or with a government agency, and seeking help from a union.



• Strike and picket, depending on the purpose or means of the strike or the picketing.
  


• Choose not to do any of these activities, including joining or remaining a member of a union.
  

Under the NLRA, it is illegal for your employer to:

• Prohibit you from talking about or soliciting for a union during non-work time, such as before or after work or during break times; or from distributing union literature during non-work time, in nonwork areas, such as parking lots or break rooms.


• Question you about your union support or activities in a manner that discourages you from engaging in that activity.


• Fire, demote, or transfer you, or reduce your hours or change your shift, or otherwise take adverse action against you, or threaten to take any of these actions, because you join or support a union, or because you engage in concerted activity for mutual aid and protection, or because you choose not to engage in any such activity.


• Threaten to close your workplace if workers choose a union to represent them.


• Promise or grant promotions, pay raises, or other benefits to discourage or encourage union support.


• Prohibit you from wearing union hats, buttons, t-shirts, and pins in the workplace except under special circumstances.


• Spy on or videotape peaceful union activities and gatherings or pretend to do so.
  

Under the NLRA, it is illegal for a union or for the union that represents you in bargaining with your employer to:

• Threaten or coerce you in order to gain your support for the union.


• Refuse to process a grievance because you have criticized union officials or because you are not a member of the union.


• Use or maintain discriminatory standards or procedures in making job referrals from a hiring hall.
  


• Cause or attempt to cause an employer to discriminate against you because of your union-related activity.
  


• Take adverse action against you because you have not joined or do not support the union.
  


• If you and your co-workers select a union to act as your collective bargaining representative, your employer and the union are required to bargain in good faith in a genuine effort to reach a written, binding agreement setting your terms and conditions of employment. The union is required to fairly represent you in bargaining and enforcing the agreement.
  

Illegal conduct will not be permitted. If you believe your rights or the rights of others have been violated, you should contact the NLRB promptly to protect your rights, generally within six months of the unlawful activity. You may inquire about possible violations without your employer or anyone else being informed of the inquiry. Charges may be filed by any person and need not be filed by the employee directly affected by the violation. The NLRB may order an employer to rehire a worker fired in violation of the law and to pay lost wages and benefits, and may order an employer or union to cease violating the law. Employees should seek assistance from the nearest regional NLRB office, which can be found on the Agency's Web site: http://www.nlrb.gov. You can also contact the NLRB by calling toll-free: 1-866-667-NLRB (6572) or (TTY) 1-866-315-NLRB (1-866-315-6572) for hearing impaired. If you do not speak or understand English well, you may obtain a translation of this notice from the NLRB's Web site or by calling the toll-free numbers listed above.

The National Labor Relations Act covers most private-sector employers. Excluded from coverage under the NLRA are public-sector employees, agricultural and domestic workers, independent contractors, workers employed by a parent or spouse, employees of air and rail carriers covered by the Railway Labor Act, and supervisors (although supervisors that have been discriminated against for refusing to violate the NLRA may be covered).

This is an official Government Notice and must not be defaced by anyone.

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 Court of Appeals: No Rehire Recommendation is Protected Opinion, Not Defamation

Last week, the Cuyahoga County Court of Appeals affirmed summary judgment in favor of University Hospitals arising from, among other things, a no-hire recommendation placed in the plaintiff’s personnel file following her voluntary resignation. Byrne v. Univ. Hosps., 2011-Ohio-4110. The Court found the statement to be too vague to constitute a false statement of fact about the plaintiff’s job performance because it was based purely on her supervisor’s subjective overall opinion. Therefore, the plaintiff could not show that it was defamatory, and it was also protected opinion. The Court also found that it was not sufficiently publicized to place the plaintiff in a false light and that there could not be any tortious interference with contract when other departments and locations of the hospital relied on the no-hire recommendation when considering subsequent applications for employment.

According to the Court’s decision, the plaintiff had been promoted into a position for which she had not applied and which she was ultimately uncomfortable in performing. After two months, she requested and received a demotion back to a staff position. Shortly thereafter, she voluntarily resigned and obtained another job. In filling out the exit interview paperwork, her supervisor marked her personnel file as “not recommended for rehire” because the plaintiff had raised invalid complaints about her compensation, had not tried sufficiently to adopt new skills for her supervisory position before requesting a demotion two months after her promotion, and had taken off a significant amount of paid personal time after her promotion. None of these reasons were indicated anywhere in the personnel file.

After the plaintiff was subsequently rejected for three other positions at the hospital, she discovered the no-rehire recommendation and brought suit for defamation, false light and tortious interference with contract. The trial court granted the employer summary judgment on all three claims. The Court of Appeals affirmed.

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.

Wrinkle in Employment at Will Foils Employer’s Summary Judgment

Last week, a unanimous Franklin County Court of Appeals reversed summary judgment previously entered in favor of an employer on a breach of written bonus agreement brought by a terminated executive. Pate v. Quick Solutions, Inc. No. 2011-Ohio-3925. In that case, the employer had entered into a written agreement with the executive specifying, among other things, his salary, stock and cash bonus and employment at will. The terms of the stock bonus were to be subject to the terms of the employer’s attorney, but were never attached as specified within 90 or more days. The employer later modified the executive’s salary (by increasing it) and discussed making the bonus discretionary, but there was a factual dispute as to whether the terms of the discretionary bonus were ever reached or mutually agreed to. The employer initially contended that the bonus had been modified to be discretionary, but conceded upon cross examination that the prior bonus formula had largely been followed. The employer’s attorney argued that the stock bonus had to be returned upon termination, but the court eventually rejected that argument for lack of a written agreement and when it was disputed by the executive. Finally, the employer argued that the executive had not lost any money because the amount of his raise was larger than the amount of the allegedly unpaid bonus. Therefore, the employer argued that the executive should be stopped from contending that the employer breached the bonus agreement. This argument was also rejected.

The executive had been terminated for unprofessional conduct involving female employees. He then sued and lost for age discrimination and also contended that his bonus agreement had been breached when the employer only paid part of the bonus due each year and failed to transfer any stock. The executive contended that he had not pushed the bonus issue earlier because he saw how the CEO retaliated against employees who complained about their compensation. The employer pointed out that the executive was employed at will and the terms of his compensation had been unilaterally modified after his first year of employment, resulting in a raise in salary and conversion of the bonus formula to a discretionary bonus. Because the executive acquiesced and continued to work under the terms of the new compensation arrangement, he could not later challenge it. The trial court agreed with the employment at will theory and granted summary judgment for the employer.

On appeal, the court found that there was a factual dispute as to whether the terms of the executive’s cash bonus had been modified. While the parties agreed that the executive had been given a raise in salary, salary is different from a bonus. The discussion about the bonus continued over several years and was never reduced to writing. While the CEO contended that an agreement had been reached when the executive was given a raise to convert the bonus formula to a discretionary bonus, he conceded on cross examination that he still followed the old formula (for the most part) because “that was the plan that was in place.” Therefore, when the executive denied that a meeting of the minds had been reached to change the bonus formula and the employer had not acted consistently with a discretionary bonus agreement, there was a factual dispute. While employment at will provides that the employer may unilaterally change the terms of employment, the employee still has the option to quit or to continue working under the new terms. Without evidence that the new terms have been communicated to and accepted by the employee, there can be no binding modification from the mere fact that the executive continued to work. In other words, there was no clear evidence of acquiescence by the executive because there was no clear evidence of modified terms. “Importantly, continuation of employment after a modification only constitutes assent if the employer notifies the employee of the modification or the employee otherwise knows of it.”

The employer also attempted to argue that the executive’s acceptance of the reduced cash bonuses constituted knowledge of and acceptance of the new bonus plan. However, the court found the evidence was not strong enough to show knowledge or consent under the circumstances. Nonetheless, if a jury found that the executive had knowledge that the terms has changed and he continued to accept the reduced cash bonus with that knowledge, then the executive would lose.

The court rejected the employer’s estoppels argument, which was based on the fact that the amount of salary exceeded the amount in dispute with the bonus. The employer pointed out that the amount of the executive’s raise in salary more than offset the amount of allegedly unpaid bonus. However, again, the court found these to be two separate issues. An employer’s compliance with one component of compensation (i.e., salary) does not excuse the breach of a different component (i.e., bonus). Further, the executive’s receipt of the cash bonus and raise in salary did not estop him from arguing a breach of his written agreement because there was insufficient evidence that his acceptance was inconsistent with his claims.

The executive also pointed out that he had never received any of the stock bonus he had been promised in his agreement. The stock bonus was subject to terms to be developed by the employer’s attorney within 60 days, but were never developed or attached to the agreement. The attorney contended that it was to be the same as the stock purchase plan already in place (requiring a return of the stock upon termination), but the executive disagreed and pointed out that a grant of stock is different from a stock purchase. The trial court sided with the employer, but the Court of Appeals reversed on the grounds that no meeting of the minds had been reached.

In short, the employer suffered from attempting to make an oral modification of a written agreement. The lesson to be learned is to always confirm modifications of the terms of employment in writing, particularly if the modifications are to a written agreement so as to prevent any confusion or later dispute between the parties after memories have faded and biases are formed.

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.

Sixth Circuit Denies Qualified Immunity for Allegedly Discriminating Against Married Employees

This morning, the Sixth Circuit affirmed the denial of qualified immunity to employees of the Ohio Department of Youth Services in connection with alleged discrimination against two married employees in violation of their First Amendment right to associate with each other. Gasper v. Ohio Dep’t of Youth Services, No. 09-3829 (6th Cir. 8/5/2011). A new chain of command was created when the wife was promoted so that she would not be responsible for supervising her husband. However, the union and other employees continued to object to the appearance of impropriety. The husband had been threatened with termination for an unrelated incident (involving inadvertently bringing a gun onto state property) unless he agreed to transfer to a different facility. It was only through a union arbitration decision that he ultimately kept his job. The wife was then demoted and transferred despite her stellar work record and the poor work records of her replacements.

The married plaintiffs brought an action under 42 U.S.C. §1983 alleging violation of their First Amendment right which protects their freedom of association. The district court granted summary judgment on the claim for damages against the state agencies and against the individual defendants in their official capacities because of their Eleventh Amendment immunity. The district court also granted summary judgment on all claims against two individual defendants in their individual capacities, but denied qualified immunity to the four remaining individual defendants based on the treatment of the husband and wife’s demotion and transfer. This appeal followed.

“Government officials who perform discretionary functions are generally protected from liability for civil damages as long as their conduct does not violate ‘clearly established statutory or constitutional rights of which a reasonable person would have known.’” The Sixth Circuit follows a three-step analysis to analyze qualified immunity:

First, we evaluate whether the facts demonstrate that a constitutional violation has occurred. . . . Second, we determine whether the violation involved a clearly-established constitutional right of which a reasonable person would have known. Id. Third, we consider “whether the plaintiff has offered sufficient evidence ‘to indicate that what the official allegedly did was objectively unreasonable in light of the clearly established constitutional rights.’”
. . . .
A plaintiff alleging First Amendment retaliation under 42 U.S.C. § 1983 must prove that (1) she “engaged in protected conduct; (2) the defendants took an adverse action that would deter a person of ordinary firmness from continuing to engage in that conduct; and (3) the adverse action was taken at least in part because of the exercise of the protected conduct.

The Court’s analysis is dependent on context. With respect to First Amendment marriage discrimination claims, “cases based on a challenge to a rule or decision based on marriage per se, such as an anti-nepotism policy, are different from cases challenging purported acts of retaliation that affect the right of marriage” because policies are subject only to a rational basis test, whereas the lack of a legitimate government policy to justify government interference in a marital relationship subjects the government interference to a higher level of scrutiny.

In this case, the husband was able to establish a material factual dispute regarding causation because – despite his culpability in a dischargeable offense – the defendants had been willing to save his job if he would transfer to another location – away from his wife. The court was also influenced that not every employee who engaged in similar misconduct was terminated; that one defendant accurately predicted that his wife would be transferred if he were reinstated by arbitration, that the defendants rejected the unpaid suspension recommended by the mediator and that every individual defendant had expressed dissatisfaction with the plaintiffs working together in the same facility even though the husband did not report to his wife and “the couple was not violating any [agency] anti-nepotism policy.”

The wife was able to establish a material factual dispute regarding causation because she received her first below-target performance evaluation two months after her husband was reinstated. The only “fault” attributed to her was an incident a couple of days earlier by subordinates which could not be ascribed to her. This evaluation was subsequently revised upward immediately before her transfer to a distant location that prevented her from living with her husband during the week. And, she was replaced by individuals with serious performance deficiencies.

As for the qualified immunity, the Court found the right of employees to marry was clearly established and that it had been similarly clearly established that an employee could not be terminated simply because the decisionmaker did not like the person’s spouse. Therefore, the individual defendants were not entitled to qualified immunity and the claims should proceed to trial on the merits.

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.