Saturday, October 25, 2014
The EEOC, IIT Chicago-Kent College of Law's Institute for Law and the Workplace, and the Equal Employment Opportunity Committee of the American Bar Association's Section of Labor and Employment Law recently sponsored a wonderful event which brought together some of the key players from the well-known flight attendant sex discrimination cases that were brought in the early years of Title VII. The event was part of the on-going celebration of the 50th anniversary of the statute. The video of the event is available here. From the press release:
"Flight attendants' fight for equal treatment began in the 1960s, with lawsuits such as Mary Celeste (Lansdale) Brodigan's challenge to United's policy of discharging female, but not male, employees upon marriage, which was subsequently overturned in court. Similarly, Mary Pat Laffey-Inman brought a case under Title VII and the Equal Pay Act, resulting in findings that Northwest treated male and female flight attendants differently in areas of hiring, pay, promotions, benefits, and weight monitoring.
'To give life to Title VII, it takes the commitment and tenaciousness of individuals willing to challenge injustice and go forward, often for many years, to vindicate their rights," Commissioner Lipnic reflected. "These women, through their legal actions, made workplaces better for all Americans, women and men. They are a testament to the enduring power of the Civil Rights Act.'"
I definitely recommend this video if you have a chance to take a look. It really brings to life some of these important early cases.
- Joe Seiner
Thursday, October 23, 2014
Is there a valid economic-duress objection to the US Department of Labor’s exercise of “hot goods” authority under the Fair Labor Standards Act (FLSA)? Earlier this year, in Perez v. Pan-American Berry Growers, LLC, a federal district court in Oregon granted a Rule 60(b) motion to vacate a consent judgment--- entered after a DOL “hot goods” objection—on economic-duress grounds. In a previous post, I described that consent judgment, the political reaction to it, and that, in August 2013, some of the farm-defendants in Pan-American filed a motion to vacate the consent judgment.
Now, our story continues.
In January 2014, Magistrate Judge Coffin agreed that the consent judgment against the farm-defendants should be vacated under Federal Rule of Civil Procedure 60(b)(3). That rule authorizes relief to a party from a judgment due to “fraud, . . . misrepresentation, or misconduct by an opposing party.” Judge Coffin read the word “fraud” as also covering duress. Then, he observed that Oregon law recognizes “economic duress or business compulsion as a form of duress,” and that, under that law, to find economic duress, one must show (1) wrongful acts or threats, (2) financial distress caused by such acts or threats, and (3) no reasonable alternative to the wrongdoer’s terms (relying on Oregon Bank v. Nautilus Crane & Equipment Corp., 68 Or. App. 131, 142-43 (1984)).
Applying this test, Judge Coffin found economic duress. First, he concluded, DOL committed a “wrongful” act. Blueberries are perishable. There’s a small window of time in which they can be harvested for sale. Wait too long, and they spoil, and become worthless. Therefore, “delay in the harvest and marketing could devastate a company that produces blueberries.” DOL’s wrongful act, the judge reasoned, was to insist on a consent judgment under these circumstances as a condition of lifting its hot-goods objection: “[W]hen one party must agree to a comparatively minor penalty or lose millions simply to engage in the judicial process, such heavy handed leverage is fraught with economic duress brought about by an unfair advantage.” (In a footnote, Judge Coffin also wrote: “[T]he Constitution’s due process requirements also prohibit the alleged duress at play in these cases.” He didn’t explain further.)
Second, the judge found the requisite financial distress: The defendant-farms had agreed to the consent judgment “to avoid the egregious economic harm that would result from the hot goods objection remaining in the place.”
Third, the judge found that the farm-defendants had no reasonable alternative to agreeing to the consent judgment. Why couldn’t have Pan-American sought a temporary restraining order against DOL immediately after receiving DOL’s hot-goods objection? Judge Coffin wrote: Because of the nature of the farms’ businesses, it makes sense that they’d “conclude that resort to such options without further information would be extremely risky given the potential staggering economic losses.” Moreover, Judge Coffin couldn’t think of any good reason of why DOL wouldn’t lift its hot-goods objection unless the farm-defendants signed a consent judgment, instead of its past practice of letting an alleged FLSA violators put the allegedly owed back pay and penalties in escrow, after which it could argue against the alleged FLSA violations in court.
In April 2014, District Judge Michael McShane adopted Judge Coffin’s recommendation and vacated the consent judgments. He wrote: “The unique situation here involved a “hot goods objections” to a highly perishable product at peak harvest. As noted by Judge Coffin, additional delays, even of mere days, threatened to cripple the growers. Additionally, the Department of Labor had recently changed the implementation (and remedy) of its policy. Under these circumstances, defendants had no choice but to agree to the consent judgments.”
Weil vs. the Subcommittee
Meanwhile, the political fight against DOL continued. On July 30, 2014, the House Agriculture Committee held hearings on the issue. The key witness: David Weil, the head of DOL’s Wage and Hour Division. Before his Senate confirmation in April 2014 (about a week after the district court’s Rule 60(b) order in Pan-American), Weil had a prominent academic career researching labor and employment issues, including wage and hour enforcement (e.g., Weil, 2005).
In prepared testimony, Weil argued, among other things, that agricultural goods were not uniquely perishable. “[I]n today’s economy, most goods can be considered perishable if you consider the tremendous pressure upper-tier businesses place on lower-tier suppliers to deliver goods on a precise schedule. Be they blueberries, automobile parts, high fashion clothing items, or consumer digital products, delay in delivery date can be extremely costly to all parties in the supply chain.” In his oral testimony, Weil emphasized that during 2001-2013, DOL had invoked the FLSA hot-goods provision a total of 28 times, out of roughly 7,500 inspections, in the agricultural sector. Several committee members, however, stressed that not all agricultural goods were perishable (e.g., peanuts). The other witness at this hearing—Oregon Commissioner of Labor and Industries Brad Avakian—continued his earlier criticism of DOL.
It’s always a bit tricky to separate substance from theater at a congressional hearing. Still, one thing was clear: Weil faced some fairly aggressive questioning. Among other things, for example, Rep. Kurt Schrader (D-Oregon) asked Weil why DOL insisted that the defendant-farms in Pan-American sign a consent judgment, rather than just put the allegedly-owed back wages and penalty in escrow, before DOL would lift its hot-goods objection? This exchange followed:
Weil: The use of escrow is undertaken in cases where it is the judgment of the investigator, again in consultation with other offices, our regional offices, as well as our Solicitor’s office, that there is progress in negotiations in good faith on the part of the employer where back wages can be put in escrow and goods---
Schrader: Well, they did that. They did that. So why was the quarantine [sic] not lifted?
Weil: Well, in the—I can’t comment on the particulars of this case. I can comment that our procedures are very clear in what instances we use escrow. And it’s where we’re having progress towards resolution—
Schrader: You had progress. You had progress here. I mean, you’re violating your own standards. You’re violating---the Department violated what you just said. It’s—It’s sad. It’s almost indefensible. You keep digging a bigger hole for the Department of Labor with your testimony, sir.
Weil: Well, I don’t think so. What I’m trying to clarify is that we have very clear procedures and practices that we do institute, and certainly under my watch.
Hearing Recording (42:27 to 43:46).
No Appeal For You
About a month later, on August 25, 2014, District Judge McShane denied DOL’s request for permission to appeal the court’s Rule 60(b) order to the Ninth Circuit pursuant to 28 U.S.C. 1292(b). Section 1292(b) permits a federal appellate court to hear the appeal of an otherwise non-appealable order if the district court declares that the order “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. 1292(b).
So, DOL posed the “controlling question of law” as whether its use of its “hot goods statutory authority with respect to perishable agricultural goods constituted fraud or misconduct under [FRCP] 60(b)(3) warranting the extraordinary relief of vacating a consent judgment.” It added: “This is a novel question that has never been addressed by any other court at any level of the judiciary, let alone by the Ninth Circuit.”
In denying DOL’s request, Judge McShane reasoned the "critical issue" wasn't DOL's general use of hot-goods objections, but
the 'unique situation' present here where defendants 'had no choice but to agree to the consent judgments.' . . . It was the specific manner in which the plaintiff used the “hot goods objection” in this instance, as opposed to the general use of the “hot goods objection” as to perishable goods, that constituted fraud under rule 60(b)(3). . . . This case revolves not around a question of law on which reasonable jurists could differ, but rather on factual findings unique to this case.
Today, the case continues. Now pending—Pan-American’s motion for partial summary judgment on its counterclaim against DOL for conversion, as well as DOL’s motion to dismiss all of Pan-American’s counterclaims and to amend its complaint.
Coming Soon: A few thoughts about the district court’s Rule 60(b)(3) order and DOL's FLSA hot-goods authority.
I am so lucky to serve on the faculty at the University of Cincinnati College of Law. If you know any terrific dean candidates who would like to lead a law school with a collegial, engaged faculty, please pass along the following information.
The University of Cincinnati invites applications and nominations for the position of Dean of the College of Law. Reporting to the Provost and Senior Vice President for Academic Affairs, the Dean is the chief academic and administrative officer of the College of Law. We seek a dean whose vision will build upon the College of Law’s history and tradition of educating and inspiring leaders who pursue justice and advance the role of law in society. The fourth oldest continually operating law school in the nation, the College of Law is small, with fewer than four hundred students, and extremely rigorous. The faculty is highly productive and creative; in addition to being expert in their respective fields, they also are committed to maintaining a robust and collegial learning environment that fosters diverse and innovative ideas about law in society, builds collaborative relationships, and imparts the knowledge, values, and competencies needed to excel in a changing world. This mission is evident in our curriculum, which blends theory and practice in programs that include the Urban Morgan Institute for Human Rights; the Lois and Richard Rosenthal Institute for Justice, home to the only Innocence Project in Ohio; the Center for Race, Gender, and Social Justice; the Institute for the Global Practice of Law; the Weaver Institute for Law and Psychiatry; and the Entrepreneurship and Community Development Clinic. Our graduates have distinguished careers on state and federal courts, law firms, Fortune 500 companies, and varied levels of government, among other arenas. For more information, see: http://www.law.uc.edu.
The College of Law is located on the campus of the University of Cincinnati, a premier urban research university, which traces its origins to 1819. UC is classified as a Research University (Very High Research Activity) by the Carnegie Commission and is ranked as one of America’s top 25 public research universities by the National Science Foundation. UC jumped 17 spots in the U.S. News & World Report rankings in the past two years alone. In addition to being named a “green university” by Princeton Review, UC has been named one of the world’s most beautiful campuses by Forbes Magazine. The College of Law also benefits from being located in Cincinnati, known widely for its deep cultural roots, an engaged business community, including many Fortune 500 companies, and pre-‐eminence in many other fields, such as medicine. Cincinnati is home to the U.S. Circuit Court of Appeals for the Sixth Circuit and the United States District Court for the Southern District of Ohio, as well as a very vigorous organized bar. More than 800 law firms are located in our region, which Forbes has called one of the “Best Places for Businesses and Careers.”
As the intellectual and administrative leader of the law school, the next Dean will play a key role in developing new ideas and forging consensus among stakeholders to build upon our successes and strengthen the College in a changing legal market. Among her or his responsibilities, the next dean will:
Understand the relationship of the College to the University at large, and work effectively and cooperatively to fos ter that relationship;
Articulate, advocate for, and otherwise support academic priorities in line with the University's status as a world-‐class research and teaching institution;
Champion academic excellence through collaboration with faculty, students, other deans, volunteers, and alumni/ae in fulfillment of the College’s mission and vision;
Provide active and effective leadership across the complete range of programs and professional experience at the College;
Oversee processes to recruit, retain, and develop a superb faculty, as well as those necessary to recruit and support an outstanding student body;
Manage the budget and finances of the College of Law, including a commitment to enhance development efforts within all groups of stakeholders;
Engage the legal and business communities of Southwestern Ohio and Northern Kentucky in various forms of collaboration with the College, and extend that collaboration to national and international levels;
Build active and enduring relationships with College alumni/ae.
Successful candidates will have the following attributes:
A clear vision of legal education and its future, on a global scale, based upon a comprehensive understanding of the impact of recent changes within the legal profession and in the marketplace of legal services;
Excellent interpersonal skills, especially the enthusiasm, personality and social presence to create and enhance meaningful relationships between the College and broader communities, especially the business and legal communities, as well as between the College and its immediate s takeholders ;
Superior communication skills that are founded upon consistency and credibility, with messages that strongly reflect those characteristics;
Demonstrated expertise in/and or clear willingness to engage in fundraising;
Proficiency in academic administration, including strategic planning.
Applicants must have a strong academic background, including a J.D. or equivalent and the necessary qualifications for appointment to the faculty of the College of Law. A complete application will include a letter of interest, current curriculum vitae, and contact information for five professional references. Credential review begins immediately and will continue until the position is filled. It is anticipated that the individual will start on July 1, 2015. Nominations, applications, expressions of interest, and requests for the complete leadership profile should be sent electronically.
The University of Cincinnati is committed to a diverse faculty, staff, and student body. We encourage applications from women, people of color, persons with disabilities, and others whose background, experience, and viewpoints would contribute to our diversity.
All inquiries, applications, and nominations will be kept strictly confidential absent permission to proceed otherwise. Inquiries and materials may be submitted to:
Jonathan Fortescue, Managing Partner or Jessica G. Ray, Senior Associate 101 Main Street, 14th Floor Cambridge MA 02142 (617) 401-‐2988 92114@parks quare.com
- The Office of Special Counsel just found the U.S. Army gulity of harassment against a transgendered employee. It shows how the recent executive order can help such employees, but also why such protection is needed.
- Harold Meyerson on a bill that would eliminate tax deductions for "performance-based" executive pay above $1 million.
- In These Times takes a look at TV reality show writers in an article by a former writer. In addition to shedding light on the work conditions on reality shows, it illustrates the difference that unionization can make, as well as the fact that not all of Hollywood is unionized.
- Will an NLRB complain against McDonald's come soon? Politico's Morning Shift looks at some recent comments about the case.
- New York's Pregnant Workers Fairness Act is one year old. If employers and employees don't know about, does it matter?
- The White House delays new rule extending the minimum wage and overtime laws to home health care workers until July.
- The Fourth Circuit holds that Craig Becker's recent appointment to the NLRB was valid.
- Seminary professors engage in walk off to protest Dean's management of school (there's some pretty bad allegations). The professors--80% of the faculty--are fired as a result. Too bad the ministerial exception leaves them without protection.
Hat Tip: Michael Duff, Jonathan Harkavy, & Patrick Kavanagh
Friend-of-blog Jim Hawkins (Houston) just posted on SSRN his fascinating article, The Law's Remarkable Failure to Protect Mistakenly Overpaid Employees, which is forthcoming later this year in the Minnesota Law Review. This piece takes a unique look at an unexplored but very important issue -- what the rules currently are for employers attempting to recover from erroneously overpaid workers. He further suggests legislative and judicial intervention to help protect this group of employees. From the abstract:
"Employers frequently make mistakes and overpay their employees. For instance, the federal government alone, which makes up only around 2% of the U.S. workforce, will likely overpay its employees by $2 billion this year. After discovering the error, employers often recoup the mistaken overpayments without the supervision of the courts by simply exercising a self-help remedy — setting-off the debt against the employees’ paychecks. The law of restitution enables this recovery because overpaying on a contract is a prototypical example of unjust enrichment. For some employees, the entire transaction is trivial, but for many others, losing significant portions of their wages and suffering from aggressive collection techniques drive the employees and their families into financial distress.
Remarkably, current law does virtually nothing to protect employees who are indebted to their employers, and scholarship on restitution, creditor-debtor law, and employment law has not recognized this near absolute absence of protection. This Article uncovers law’s failure to protect mistakenly overpaid employees and suggests judicial and legislative action to protect this vulnerable group."
This paper takes an extremely interesting look at this novel issue, and I definitely recommend it to those of you interested in this topic.
In an interesting article over at Forbes.com, the magazine discusses several different strategies on how to best effectuate the termination of an employee. The article focuses on several methods that can be used in this regard, with an eye toward avoiding subsequent litigation. From the piece:
“In a well-executed firing the employee understands the reasons why they and the company are better off separated. They accept the offer of severance in exchange for a legal release, and move on with their lives and careers, without any legal involvement.”
When covering employment discrimination and employment law topics, this is often an issue that arises in class. Students may find it interesting to see some of the approaches offered by a major publication on this issue. Reasonable minds can certainly differ on the best ways for employers to separate from employees, but this article provides at least one worthwhile quick read on some of the basic approaches.
-- Joe Seiner
Tuesday, October 21, 2014
Is there a valid economic-duress objection to the US Department of Labor’s exercise of “hot goods” authority under the Fair Labor Standards Act (FLSA)? Under FLSA, 29 U.S.C. §§ 212(a), 215(a)(1), the US Department of Labor (DOL) can go to federal court to get an injunction to stop any person from shipping or selling goods produced in violation of FLSA’s wage, hour, and child labor provisions (“hot goods”). FLSA has no express economic-duress defense to a “hot goods” injunction. But earlier this year, in Perez v. Pan-American Berry Growers, LLC, a federal district court in Oregon granted a Rule 60(b) motion to vacate a consent judgment--- entered after DOL asserted a “hot goods” objection—on economic-duress grounds.
Here’s that story. In this post, I’ll set the stage by describing the consent judgment and the political reaction to it. In subsequent posts, I’ll discuss the court’s Rule 60(b) ruling, its reasoning, and more. (For prior accounts in the press, see, e.g., here, here, and here, and see also this law student note.)
The Consent Judgment
Perez v. Pan-American Berry Growers, LLC, involves DOL actions against three Oregon farms that grow berries. I’ll focus here on Pan-American Berry Growers, which operated a Salem, Oregon farm that grows blueberries. On August 2, 2012, DOL contacted Pan-American. Based on a DOL investigation initiated a few days earlier, DOL said that it had concluded that Pan-American had committed FLSA wage and hour violations with respect to blueberry pickers working on its farm. On that basis, DOL faxed over a “hot goods” objection—a notice to Pan-American that its blueberries were “hot goods” and a request that it not ship those blueberries for sale. This was DOL’s signal to Pan-American that it believed that it had enough proof of FLSA violations that it could, if necessary, go to court and persuade a judge to order a hot-goods injunction against Pan-American. The next day, DOL contacted one of Pan-American’s downstream buyers, who agreed not to take shipment of the “hot” blueberries. Throughout, DOL told Pan-American that it would not lift its “hot goods” objection unless Pan-American entered into a consent judgment.
On August 9, Pan-American (represented by an attorney) and DOL signed a consent judgment , under which Pan-American paid DOL about $41,778 in back wages and a $7040 penalty, as well as agreed to training plus regular audits by a third-party monitor. After Pan-American signed, DOL told the downstream buyer that it no longer had a “hot-goods” objection to the shipment or sale of Pan-American’s berries. On August 15, DOL filed its complaint in Perez v. Pan-American Berry Growers, LLC. The consent judgment—now signed by both parties—was then signed by Oregon federal district court judge Michael R. Hogan on August 18 and entered on August 21, 2012.
The Farms Fight Back
Even before the consent judgment had been entered, Pan-American, the other farm-defendants, and their allies took the fight to DOL. In a letter, dated August 17, 2012, to then-DOL head Hilda Solis, both Oregon’s US Senators and four of its five US House Representatives expressed concern that “Oregon farmers” had told them a “narrative and supporting documentation” indicating that DOL “may have abandoned the normal due process mechanisms and remedies in favor of a significant sanction.” They asked for “additional clarification” of DOL’s policies for issuing hot-good orders on agricultural enterprises.
Similarly, in a letter dated August 15, 2012, the Commissioner of Oregon’s Bureau of Labor and Industries, Brad Avakian, asked DOL to stop using its hot-goods authority “to seize perishable goods on Oregon farms.” For Avakian, the problem was this: “Seizing goods that will spoil quickly creates leverage by potentially destroying the value of the goods. If the goods spoil, however, the incentive for the employer to correct its action is largely lost as is the ability to gain income from the goods to pay proper wages.” He added that “the seizure of the perishable items on Oregon farms under the ‘hot goods’ provision likely violates the [Fourth and Fourteenth Amendment] rights of farmers who have yet to be found guilty of anything.”
On February 16, 2013, Oregon State Senator Fred Girod introduced SJM 7 into the Oregon legislature. If adopted, the Oregon legislature would thereby officially ask Congress to require DOL to “adopt standard rules and procedures” for applying the FLSA hot-goods provision “that specifically speak to full disclosure of employers’ and workers’ rights and when the application of the provision is appropriate or not.” Among its various “whereas” clauses was one that declared that, in July and August 2012, DOL had invoked its FLSA hot-goods authority in the agricultural industry “in a way that was, on its face, coercive and extortive.” (This bill was still in committee when the Oregon legislature adjourned in July 2013.)
In March 2013, U.S. House Representative Kurt Schrader (D-Oregon) introduced H.R. 1387, a bill to amend FLSA to exclude “perishable agricultural commodities” from the ambit of the FLSA hot-goods provision. That exclusion would cover “fresh fruits and fresh vegetables of every kind and character,” even if frozen or packed in ice. Schrader, whose congressional district includes Salem, later described the bill as the result of working “closely” with the Oregon Farm Bureau—an organization that lobbies on behalf of Oregon farmers and ranchers— to “combat” DOL’s actions.
In May 2013, the Oregon Farm Bureau—which had already spoken out against DOL’s actions in the press—sued DOL under the Freedom of Information Act. According to the lawsuit, the Oregon Farm Bureau had filed a FOIA request on February 27, 2013, asking for specific investigative files as well as general documents containing DOL policies and procedures. In response, it alleged, DOL asserted a FOIA exemption for active cases and otherwise did not provide any of the requested documents. (In February 2014, the parties settled this lawsuit.)
The Rule 60(b) Motion
On August 15, 2013, Pan-American and another of the farm-defendants, B&G Ditchen LLC, moved to vacate the consent judgment pursuant to Federal Rule of Civil Procedure 60(b), on the ground that they had agreed to that consent judgment under duress. Judge Hogan, the original district court judge assigned to the case, had retired in November 2012. So, about a week later after the Rule 60(b) motion was filed, the case was reassigned to federal magistrate judge Thomas M. Coffin.
Coming up Next: Judge Coffin agrees that the consent judgment should be vacated because of economic duress. Plus, the political fight continues, as DOL goes before the House Agriculture Committee.
image from www.eeoc.gov
The EEOC has scheduled a live chat which will take place via Twitter on October 28th from 2:00 to 3:00 pm (EDT). As this is National Disability Employment Awareness Month, the Commission will be addressing questions on the federal government's role as a model employer for individuals with disabilities. The EEOC Chair (Jenny Yang) and friend-of-blog Commissioner Chai Feldblum will be fielding questions during this chat. From the EEOC's website:
“Members of the public are encouraged to participate by submitting questions using the hashtag #EEOC4NDEAM. The EEOC invites queries regarding the hiring, promotion and retention of people with disabilities in the federal government and suggestions on how agencies can increase the number of people with disabilities in the federal workforce.
‘We hope this Twitter Chat provides useful information about what the EEOC is doing to increase the employment of people with disabilities at all levels of federal service," said EEOC Chair Yang. "The EEOC is committed to ensuring our nation's workplaces are inclusive of all people without regard to disability, race, color, sex, national origin, religion, age, or genetic information and family medical history, beginning with the federal workplace.’”
It is definitely worth taking part in this chat if you can work it into your schedule.
-- Joe Seiner
Monday, October 20, 2014
Monique Lillard (Univ. of Idaho) and Natasha Martin (Seattle Univ.) pass along the following request for information for the annual AALS newsletter.
Call for information for Joint Newsletter published by the AALS Sections on Labor and Employment and Employment Discrimination:
The semester is quickly passing by, but we don’t want to miss an opportunity to share and to celebrate the many accomplishments and developments in of the section members. As secretaries of the Labor and Employment Law and Employment Discrimination Law Sections of the AALS, we invite your participation and collaboration. We are interested in your news, so please do share it with us! (See below for ideas on content)
If you would like any information included in the newsletter, please send it to Monique C. Lillard, Professor of Law, University of Idaho – email@example.com. Be sure to include your full name, title and law school affiliation. I will acknowledge each email I receive. If you do not receive an acknowledgement, please telephone me at 208 885 7022. (The filters on my email have become erratic and your email may be lost.)
Deadline is November 7 – that is approximately three weeks from now.
Please send the following information:
Comings and Goings: information about new hires in Workplace subjects, tenure, promotions, movement into administration, visits, honors, awards, deaths, etc.
Announcements: conferences, workshops, writing competitions, etc.
Articles of Note: include a two line description of the article, the title, any co-authors, and the citation
Noteworthy Cases: we will of course note any US Supreme Court cases, but if you consider any of your local (federal or state) cases to be noteworthy, please include a three-four line summary and the full citation. If you have written or presented recently on any of the recent U.S. Supreme Court decisions, we would appreciate you including your short synopsis in the newsletter.
Thanks in advance for your cooperation.
Monique C. Lillard, University of Idaho, Secretary, Labor and Employment Law Section, and
Natasha Martin, Seattle University, Secretary, Employment Discrimination Section
Saturday, October 18, 2014
image from www.DOL.gov
In an interesting post from the official Department of Labor blog, the agency discusses the importance of paid family leave in the workplace. As the only industrialized nation without such paid leave, this country lags far behind many of our counterparts on this important issue. The DOL's comments are worth taking a look at, as the agency discusses new funding that has been approved to study the feasibility of paid leave:
"Today, we were delighted to announce that the Department of Labor has awarded $500,000 to assist Massachusetts, Montana, Rhode Island and the District of Columbia in funding feasibility studies on paid leave. The studies will inform the development or implementation of paid family and medical leave programs at the state level – seeking solutions that work for their unique communities.
As Secretary Perez has said, it’s time for America to lead on paid leave. It’s time to make strides in our workplace policies to meet the long-standing realities of today’s working women and families. It is critical to the nation’s economic success, and these grants are an important step in the right direction."
This is certainly a controversial issue, and one that will be worth following in the coming months and years (and political campaigns)...
Wednesday, October 15, 2014
Many of you have been following the EEOC's high-profile litigation against CVS, where the agency challenged the validity of the severance agreements offered to terminated employees. While workers waived their rights to litigation as part of the agreement, they were still entitled to bring charges against the company with the Commission. The case seemed primed to provide substantial guidance on the uncertainty which currently exists in this area of the law. This was not to be, however, as the District Court threw out the case on other grounds. From the Chicago Tribune's report on the case:
"U.S. District Court Judge John Darrah barely addressed the merits of the EEOC claim. He threw out the suit because he said the EEOC did not follow the law by failing to have formal settlement discussions with CVS before filing the complaint."
It will be interesting to see if the agency appeals this decision, and if so what the Seventh Circuit ultimately does with this case. More to follow soon…
Tuesday, October 14, 2014
What’s the confidential information about a fast-food restaurant franchise that justifies having all its employees sign a non-competition agreement? Jimmy John’s Sandwich Shops is the restaurant chain—stores nationwide—and the lawsuit is Brunner v. Jimmy John’s Enterprises, Inc., No. 1:14-cv-05509 (N.D. Ill., filed July 18, 2014). Although the lawsuit leads with a collective action under the Fair Labor Standards Act, a recent Huffington Post report (followed by the New York Times) points to the plaintiffs’ additional effort to declare void and enjoin enforcement of a Jimmy John’s Employee Confidentiality and Non-Competition Agreement. See First Am. Compl. ¶ 293.
According to that Agreement (¶ 1), under the standard franchise agreement between a franchisee and Jimmy John’s Franchise Inc. (JJF), “all employees” of the franchisee “having access to Confidential Information are required to execute” the Employee Confidentiality and Non-Competition Agreement. The term “Confidential Information” is quite broadly defined (Agreement ¶ 2(a)). The Agreement then provides in relevant part:
Employee covenants and agrees that, during his or her employment with the Employer and for a period of two (2) years after . . . he or she will not have any direct or indirect interest in or perform services for (whether as an owner, partner, investor, director, officer, representative, manager, employee, principal, agent, advisor, or consultant) any business which derives more than ten percent (10%) of its revenue from selling submarine, hero-type, deli-style, pita and/or wrapped or rolled sandwiches and which is located within three (3) miles of either (1) ___________________ [insert address of employment], or (2) any such other JIMMY JOHN’S Sandwich Shop operated by JJF, one of its authorized franchisees, or any of JJF’s affiliates.
Agreement ¶ 3 (emphasis added). The Agreement (¶ 6) also gives the employer-franchisee and JJF the right to seek reimbursement for costs and attorney fees incurred to enforce the Agreement against the employee.
In Brunner, the plaintiffs assert that the above-quoted non-compete clause effectively restricts an employee “from working in an area that is over 6,000 miles large, at innumerable types of business . . . in any capacity, for a period of two years in 44 different states and the District of Columbia. (First Am. Compl. ¶ 185). They also argue that the clause is overly broad, because it bans “any and all employment, association, ownership or consultation with any business that derives more than 10% of its revenue from selling a range of sandwiches, pita, wraps or rolls.” (First Am. Compl. ¶ 187).
The Agreement says it is governed by Illinois law (Agreement ¶ 7). In Illinois, an employee non-complete clause, to be enforceable, has to be “ no greater than is required for the protection of a legitimate business interest of the employer-promisee; (2) does not impose undue hardship on the employee-promisor, and (3) is not injurious to the public.” Reliable Fire Equipment Co. v. Arredondo, 965 N.E.2d 393, 396 (Ill. 2011). A “legitimate business interest” can be at stake when, for example, the employee acquires “confidential information through his employment.” Id. at 403.
So, what’s that confidential information that Jimmy John’s Franchise, Inc. and its employer-franchisees are trying to protect? Is it really worth applying the non-compete clause’s time, subject matter, and geography restrictions to all former employees of a Jimmy John’s Sandwich Shop? Was it reasonable to believe, both when drafted and today, that this non-compete clause would have been enforceable against any former Jimmy John’s Sandwich Shop employee? It is still early days in the Brunner litigation, so stay tuned.
An interesting battle is brewing over whether local governments can become local “right to work” zones within states that have not enacted so-called “right to work” laws. Illinois Republican gubernatorial candidate Bruce Rauner has suggested that, while he does not intend to push for “right to work” state legislation in historically labor-friendly Illinois, he does favor letting municipalities or counties within Illinois decide whether to enact such laws at the local level. Rauner says that we could call them “economic opportunity zones.” Many would no doubt prefer to name them “free-rider zones.” But, for the moment, I want to set aside the debate over whether “right to work” is a misnomer.
This political strategy picks up on a recent Heritage Foundation paper arguing that local governments should enact local “right to work” laws. Many believe, based on the text of the NLRA, that only states – and not localities – are authorized to enact such legislation in the face of federal preemption. But Andrew Kloster, one of the Heritage authors responded: “I personally don’t think that is the case. It is certainly not clear. And that is the important thing: When it is not clear, the tie goes to the jurisdiction trying to pass their own law.”
You can decide for yourself whether the statutory text results in a tie. Section 14(b) reads:
“Nothing in this subchapter shall be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law.”
Elsewhere, in the NLRA's definition of “employer” found in Section 2(2), Congress used the phrase “any State or political subdivision thereof,” suggesting that Congress knew how to intentionally include local governments where it wanted to within the statutory scheme. But Kloster's argument is that Section 14(b) was merely meant to dispel concerns about possible federal preemption of such laws, and that failing to include specific reference to local governments in 14(b) should not be read to mean that local "right to work" laws are preempted.
ALEC is reportedly creating a template for local “right to work” legislation. This stands in stark contrast to ALEC’s push for state laws that preempt any local living wage laws or local paid sick leave laws, which I previously discussed here. Advocates of those state preemption laws claim to be concerned about complying with a patchwork of varying local employment laws where employers have employees in multiple cities. Perhaps some patchworks of local workplace regulation are more concerning to ALEC members than others? Why not think of a local living wage law or paid sick leave law in Milwaukee, Wisconsin (now preempted by state law) as simply the indirect creation of a local “economic opportunity zone” in nearby Waukesha?
Monday, October 13, 2014
image from eeoc.gov
The EEOC just announced a class case that it filed against FedEx Ground Package System, Inc. The lawsuit was brought under the Americans with Disabilities Act, and seeks relief for hearing impaired employees of the company. From the press release:
“The EEOC says that FedEx Ground failed to provide needed accommodations such as American Sign Language (ASL) interpretation and closed-captioned training videos during the mandatory initial tour of the facilities and new-hire orientation for deaf and hard-of-hearing applicants. The shipping company also failed to provide such accommodations during staff, performance, and safety meetings. Package handlers physically load and unload packages from delivery vehicles, place and reposition packages in FedEx Ground's conveyor systems, and scan, sort and route packages.
The EEOC charges that, in addition to failing to provide communications-based accommodations for mandatory meetings, FedEx Ground refused to provide needed equipment substitutions and modifications for deaf and hard-of-hearing package handlers, such as providing scanners that vibrate instead of beep and installing flashing safety lights on moving equipment."
It is very interesting to see this type of litigation brought in the disability context, were such claims are often more individualized. It is also interesting to see this type of high profile class claim brought by the agency after the Supreme Court's Wal-Mart decision, which made it more difficult for private plaintiffs to pursue class-action litigation. This will definitely be a case worth following.
Thursday, October 9, 2014
image from eeoc.gov
Many of you are probably following the federal litigation involving the EEOC's employment discrimination suit against BMW Manufacturing Co. That litigation alleges that the company's policy of not hiring individuals with certain criminal backgrounds created a disparate impact against workers on the basis of race for which there was no sufficient business justification. The suit is specifically targeted at BMWs Spartanburg facility in South Carolina.
In an interesting twist to this lawsuit, BMW has now asked a court to order the Commission to disclose its own treatment of applicants with criminal backgrounds. This move certainly shows the contentious nature of the litigation. The EEOC has opposed the motion on grounds that the information sought is not relevant to the case.
This case is a fascinating one to follow on an important issue of disparate impact law. This recent development highlights yet another interesting aspect of this case.
-- Joe Seiner
Wednesday, October 8, 2014
Last week, the NLRB issued its decision in FedEx Home Delivery, the most recent case addressing FedEx's attempts to classify its drivers as independent contractors. What's notable about this case is that the NLRB expressly refused to follow an earlier FedEx decision by the D.C. Circuit. In that decision, the court rejected the traditional right-to-control focus of the common law test for employee status. Instead, the court held that the principal focus was entreprenurial opportunity. In its recent decision, the NLRB noted that its precedent, as well as the Supreme Court's, used the traditional common-law test. Moreover, although entrepreneurial opportunity was one of the factors, the proper focus is on actual entrepreneurial opportunity, not the more theoretical opportunity that the court's decision turned on.
As I've written before, I'm no fan of the court's FedEx decision, so I'm glad to see this development. There's a question whether this is a prelude to Supreme Court action in this area, which has gained increased attention. I tend to think the Court won't step in any time soon, as it's precedent has been pretty clear on this issue, the D.C. Circuit notwithstanding. But we'll see. In in the meantime, it's baeen a bad month for FedEx on this issue, as they've some other cases involving their drivers' classifications.
Politico Pro just launched its new "Morning Shift," which is described as a "daily speed read on labor and employment policy" by Brian Mahoney, with help from Timothy Noah and Mike Elk. Their stated intent is to resuscitate the workforce journalism beat. So far, so great. It looks like it will immediately become an integral and indispensable part of my workday.
Check it out.
As Jason previewed yesterday, the Supreme Court heard oral arguments this morning in Integrity Staffing Solutions v. Busk, a case about whether end-of-shift security screenings are compensable or non-compensable as postliminary activities under the Portal to Portal Act. The oral argument transcript is now up on the Supreme Court's website for your reading pleasure.
I've skimmed it and have just a few observations. The questions for the employer's counsel and the Solicitor General pushed them to distinguish this security process from things like closing out a cash register or showering after working with chemicals (compensable). The questions for the employees' counsel pushed for a distinction between this and the process to clock out (not compensable). The one main takeaway for me is that the concepts in this area are especially slippery. What does it mean for something to be a principal activity of one's work, for example. Is it the central thing a person is hired to do, or might it be more task focused? Does the location of the conduct matter? Does it help to think about whether the person is waiting to be engaged or engaged to wait? Everyone at the argument tried to come up with a definition, but words failed them, and examples seemed the only way to talk about the rules. Those examples were hard to generalize from, though, leading the argument in circles several times.
Ultimately, I think the decision will ultimately rest on whether a majority of the justices see this as more like clocking out or like showering off chemicals at shift's end.
I previously wrote about the EEOC's new theory that Section 707 of Title VII contains substantive protections, rather than simply the procedural framework for claims that an employer has engaged in a "pattern or practice" of unlawful discrimination. There are two important developments to report in this area.
First, an update on the severance agreement challenge: In EEOC v. CVS Pharmacy, Inc., the EEOC alleged that CVS's severance agreement violated Section 707(a) and constituted a "pattern or practice of resistance" to the full enjoyment of Title VII rights by implying that the former employee could not file a charge of discrimination with the EEOC. CVS disputed this characterization of the severance agreement, and also argued that Section 707 did not create separate substantive rights. CVS also argued that the the EEOC had failed to conciliate, as required by Section 707(e) [which, in turn, references the procedures of Section 706]. District Judge Darrah in the Northern District of Illinois has now dismissed the EEOC's complaint. The opinion, just released today, can be found here. Judge Darrah agreed with CVS that the EEOC was required to conciliate this claim and failed to do so. Judge Darrah rejected the EEOC's contention that Section 707(a) created a claim for a "pattern or practice of resistance" that is separate and independent of otherwise prohibited discrimination or retaliation, and that is free from the conciliation requirement for charges of a "pattern or practice of discrimination" found in Section 707(e).
Second, the EEOC has recently introduced a new use of the substantive Section 707 theory. In my earlier post, I wondered whether we might see similar Section 707 challenges to mandatory predispute arbitration provisions. We now have the answer. The EEOC has sued Doherty Enterprises, which owns and operates many Applebee's and Panera Bread restaurants in several states, alleging that its mandatory arbitration agreement violates Section 707(a) and constitutes a pattern or practice of resistance to the full enjoyment of Title VII rights. The EEOC alleges that the arbitration agreement at issue, which insists upon the exclusive arbitration of claims that might otherwise "require or allow resort to any court or other governmental dispute resolution forum," denies employees "the full exercise of the Title VII right to file a charge." The EEOC press release is here, and the complaint is here.
image from www.DOL.gov
The US Department of Labor just issued its annual report on the status of child labor violations around the world. The report looks at over 140 countries and analyzes the status of improvements on various child labor issues. The report paints a picture of a situation that is improving to some degree, but still has a very long way to go. From the news release on the report:
"This report shines a light on the estimated 168 million children around the world who toil in the shadows — crawling underground in mine shafts, sewing in textile factories or serving in households as domestic workers," said Secretary Perez. "We are seeing more countries take action to address the issue, but the world can and must do more to accelerate these efforts. When children are learning rather than working, families flourish, economies grow and nations prosper."
This annual report performs an enormously important public service by bringing to the forefront this critically important issue.