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US Employment Litigation Round-Up for June 2017

A Review of Key Cases and New Laws Affecting Employers
14 July 2017
Mayer Brown Newsletter

Second Circuit Upholds Prohibition on Workplace Recordings

Decision: In Whole Foods Marketing Group, Inc. v. NLRB, No. 16-0002 (2d Cir. June 1, 2017), the US Court of Appeals for the Second Circuit affirmed a National Labor Relations Board (NLRB) decision that Whole Foods’ policy prohibiting its employees from recording staff meetings or other workplace conversations without prior supervisor approval or the consent of each party involved violated the National Labor Relations Act (NLRA). Whole Foods’ policy was motivated by a concern that employees’ “expression of views” might be chilled out of fear that they might be secretly recorded.

In 2015, the NLRB found that Whole Foods’ policy violated Section 8(a) of the NLRA, which prohibits employers from “interfer[ing] with, restrain[ing], or coerc[ing] employees in the exercise of” their rights under Section 7 of the NLRA (which generally relates to employees’ unionization and collective-action rights). The NLRB reached this conclusion despite the fact that Whole Foods’ policy did not explicitly restrict any activities protected by Section 7 and was not promulgated in response to any protected activities. The NLRB found that employees might reasonably construe the policy to prohibit protected activity because surreptitious recording sometimes constitutes protected activity, and there was no “overriding employer interest” justifying the infringement on employees’ Section 7 rights.

The Second Circuit, in upholding the NLRB’s ruling as reasonable, noted that the sweeping nature of Whole Foods’ policy might reasonably cause an employee to think that it prohibited even protected recording activity. The court further indicated, however, that a more narrowly tailored policy—one that was “limited to controlling those activities in which employees are not acting in concert”—might have passed muster.

Impact: A “viral” video or audio recording by an employee—often presented out of context for maximum effect—can damage an employer’s business. As a result, employers might reasonably seek to institute similar anti-recording policies. Following the Second Circuit’s ruling, however, employers must be cautious and ensure that their policies are narrowly drawn so that they do not cover situations in which employees are “acting in concert” in the exercise of their Section 7 rights.

The NLRB’s opinion suggested that a more expansive policy might be permissible where there is an “overriding employer interest.” Hospitals or financial institutions, for example, might be permitted to implement more expansive anti-recording policies in order to preserve the confidentiality of medical or financial information. Even in such cases, however, employers should ensure that their policies are tailored to those overriding interests.


New York State’s Family Leave Law: Key Differences from the FMLA

Though large employers are already likely to be familiar with the requirements of the federal Family Medical Leave Act (FMLA), New York State’s new family leave legislation, the Paid Family Leave policy (PFL), has important differences of which employers should be aware, particularly because complying with the FMLA will not in all cases ensure compliance with the PFL. New York employees can begin using their new PFL benefits on January 1, 2018, and employers began payroll deductions to fund those new benefits on July 1, 2017. It is therefore important that employers quickly become familiar with New York’s legislation to master the new requirements that it will impose. Key differences between the PFL and the FMLA include:

  • Coverage: The PFL applies to all businesses that are not sole proprietorships, whereas the FMLA only applies to employers with 50 or more employees within a certain geographic scope.
  • Eligibility: The PFL’s benefits apply to employees who have worked for their employers for 26 consecutive weeks, if full time, or 175 total days, if part time. The FMLA has a different eligibility standard: it only applies to employees who have worked for their employer for 12 months and worked at least 1,250 hours in the preceding 12 months.
  • Compensation: Under the PFL, employees are eligible for paid leave. The duration of that leave and the amount of payment will gradually increase through 2021. When the law becomes effective in 2018, eligible workers will be entitled to 8 weeks of paid leave at the lesser of 50 percent of their weekly wage or 50 percent of the state average weekly wage. By 2021, eligible employees will be entitled to paid leave for 12 weeks at the lesser of 67 percent of their weekly salary or 67 percent of the then-applicable state average weekly wage. The FMLA, by contrast, provides only for 12 weeks of unpaid leave.
  • Qualifying Leaves: The FMLA only covers childbirth or a serious medical condition experienced by a family member who is a parent, child or spouse of the employee.  The PFL, on the other hand, applies to a broader range of family members, including domestic partners, in-laws, grandparents and grandchildren, and allows leave for bonding with a new child or a newly adopted child. However, the PFL is in one way narrower in its scope than the FMLA: the PFL does not cover leave for the employee’s own medical condition. However, employees experiencing medical conditions, including childbirth, will in many cases still be eligible for FMLA (depending on the size of their employer) and would then be eligible to tack on additional PFL leave for qualifying family members after FMLA leave has been used.
  • Paying for the Program: Unlike leave under the FMLA, PFL leave will be funded through employee payroll deductions, which  began on July 1, 2017. The New York State Department of Financial Services has issued guidelines regarding maximum wage withholdings to fund this program.

Employers with a workforce in New York are encouraged to seek the advice of counsel, insurers, human resources specialists and other trusted advisors to ensuring that their policies and practices are in compliance with the PFL.


Ninth Circuit Rules That Outside Attorneys Can Be Liable for Retaliation under the FLSA

Decision: In Arias v. Raimondo, No. 15-16120 (9th Cir. June 22, 2017), the US Court of Appeals for the Ninth Circuit ruled that an undocumented worker can pursue retaliation claims under the Fair Labor Standards Act (FLSA) against his former employer’s attorney for arranging to have him deported after he filed a wage-and-hour lawsuit. The employer’s attorney arranged for US Immigration and Customs Enforcement officers to take plaintiff Arias into custody at a scheduled deposition for a wage-and-hour lawsuit Arias had filed against his employer and to then have Arias deported.

The Ninth Circuit held that the anti-retaliation provision in FLSA Section 215(a)(3) does not require that a defendant be the plaintiff’s employer. The FLSA prohibits any “person” from retaliating, and “person” includes “legal representative” under the statute. The court also explained that “[t]he scope of the [FLSA’s] anti-retaliation provision extends beyond workplace-related or employment-related retaliatory acts and harm.” The court clarified that its interpretation of the FLSA is limited to retaliation claims under Section 215(a)(3) and “does not make non-actual employers like [attorneys] liable in the first instance for any of the substantive wage and hour economic provisions listed in the FLSA.”

Impact: This decision provides additional protection from retaliation for undocumented workers, who are often afraid to file claims against their employers for wage-and-hour violations. It also puts employers and their attorneys on notice that retaliatory litigation tactics can have significant consequences, including additional litigation.


Department of Labor Withdraws Obama-Era Guidance Letters Regarding Employee Misclassification and Joint Employment

Development: On June 7, 2017, the US Department of Labor (DOL) announced its withdrawal of two guidance letters issued during the Obama administration. The first, a letter issued in July 2015, was aimed at curbing the misclassification of employees as independent contractors. That document stated that most workers are employees under the broad definition of “employment” contained in the Fair Labor Standards Act (FLSA) and noted the potential ramifications of improper classification, such as not being paid minimum wage and overtime. The document also noted that correct classification has “critical implications” for the legal protections that workers receive, particularly low-wage workers.

The second letter was issued in January 2016 and provided guidelines for when companies are considered joint employers for the purpose of complying with the FLSA and the Migrant and Seasonal Agricultural Worker Protection Act (MSAWPA). The letter called for greater scrutiny of arrangements through which multiple companies might jointly employ workers.

In announcing the decision to withdraw the letters, the DOL said its decision “does not change employers’ legal responsibilities” under the FLSA and the MSAWPA and that the DOL “will continue to fully and fairly enforce all laws within its jurisdiction.”

Impact: The DOL’s decision to rescind these guidance documents does not affect or change controlling judicial decisions at the state or federal level on the subjects of employee classification and joint liability. The DOL’s actions may, however, signal that the current administration’s goals include reversal of federal guidance that it views as infringing on employer flexibility with regard to the structure of its workforce.

Authors

  • Lori A. Zahalka
    T +1 312 701 7921
  • Corwin J. Carr
    T +1 312 701 8015
  • Ruth Zadikany
    Associate
    T +1 213 621 3916

Related People

  • Marcia E. Goodman
    T +1 312 701 7953
  • John Zaimes
    T +1 213 229 9545
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