February 2019

As Predicted, the National Labor Relations Board Keeps Moving the “Other” Direction

In what is considered a big win for employers, the National Labor Relations Board (“NLRB”) recently reversed course from its Obama-era method of determining whether a worker is an independent contractor or an employee. In SuperShuttle DFW, Inc., the Board reaffirmed its adherence to the traditional, ten-factor common law test and stressed the importance of “entrepreneurial opportunity” in the overall independent contractor/employee analysis. While “entrepreneurial opportunity” is not a factor in the test, the Board decided that this principle helps in evaluating the significance of the ten factors.

In so holding, the Board overruled FedEx Home Delivery, 361 NLRB No. 55 (2014), which focused the analysis on economic dependency. According to the Board, “the FedEx majority’s reformulation of the independent-contractor analysis impermissibly revive[d] an ‘economic dependency’ standard that Congress has explicitly rejected.”

Using its renewed standard, the NLRB found that the shuttle-car franchisees in SuperShuttle were independent contractors because of the franchisees’ ownership and control of their own vans, the nearly complete control franchisees had over their daily work schedules, and the fact that franchisees kept all their fares collected from riders. According to the Board, “these three factors provide franchisees with significant entrepreneurial opportunity and control over how much money they make each month.”

RLG Takeaway

The SuperShuttle decision shifts the focus away from how economically dependent the worker is to how much latitude the worker has in exercising entrepreneurial freedom. The more it looks like the worker is running his or her own business, by choosing how and when to work for example, the better the odds that that person will be considered an independent contractor for National Labor Relations Act (“NLRA”) purposes. Since employee and independent contractor designations bring with them varying degrees of benefits and protections, it is important to keep in mind which workers fall under which category.

SuperShuttle is likely just the beginning as the NLRB reconsiders several Obama-era standards. Some new decisions could be issued in the next few months.

Complaining vs. Concerted Activity: Another National Labor Relations Board Reversal

In Alstate Maintenance, LLC, the Board held that an airline luggage employee was not protected under the NLRA for complaining to management about a job assignment in front of his coworkers.

In this decision, the NLRB adhered to its earlier holding in Meyers II, which defined “concerted activity” as activity that “‘encompasses those circumstances where individual employees seek to initiate or to induce or to prepare for group action’ or where individual employees bring ‘truly group complaints to the attention of management.’” Since the employee’s complaints did not comprise “truly group complaints,” nor were they conversations about a term or condition of employment, the Board held that no concerted activity arose.

RLG Takeaway

As a result of Alstate Maintenance, employers should have an easier time differentiating between complaints brought by an individual on behalf of groups and individuals complaining about personal matters. While employers should always try to address employee concerns, group complaints should be taken especially seriously. However, in this case the Board said the complainer was not engaging in concerted activity.

Who Would Have Guessed: Apparently it is not helpful to copy another employee’s personnel file for your own claim

recent case in the Fourth Circuit, an employer did not violate federal law by firing an employee for copying confidential coworker personnel files to support the worker’s own discrimination claim. The Netter v. Barnes court rejected the plaintiff’s argument that stealing confidential personnel files for the purpose of proving a discrimination claim is protected conduct under Title VII of the Civil Rights Act of 1964 (“Title VII”).

Title VII’s anti-retaliation provisions prohibit employers from, among other things, opposing conduct prohibited by Title VII, including discrimination based on race, color, religion, sex, or national origin. For activity to be protected opposition to discrimination, an employee must show she (1) reasonably believed the action she opposed violated Title VII; and (2) that her conduct opposing the act was reasonable. A plaintiff claiming retaliation also must establish that the alleged retaliation “would not have occurred in the absence of the alleged wrongful action or actions of the employer.”

Here, in affirming summary judgment dismissal of the plaintiff’s retaliation claim, the court held that “unauthorized disclosures of confidential information to third parties are generally unreasonable,” and not protected under Title VII. The court further explained that although employees do not have license to “rifle through confidential files looking for evidence,” the Equal Employment Opportunity Commission (“EEOC”) can subpoena such documents since they are discoverable in a litigation.

RLG Takeaway

The Netter case highlights that Title VII generally does not prohibit a company from disciplining or discharging an employee for violating company policies, assuming the policies are non-discriminatory and consistently enforced. In dicta, the court noted the importance of personnel files to show evidence of disparate treatment—but that does not give an employee license to remove the files in violation of company policy. In any case, employers should ensure that access to personnel files and other confidential information is strictly monitored.

Why We (You and Me!) Care About Attendance Requirements

When considering a position’s requirements and responsibilities, most people would assume that attendance is a given. Before many other job duties can be fulfilled, an employee must actually come to work. This is true even in an era when many employees can perform at least some job duties remotely.

In Lipp v. Cargill Meat Solutions Corporation the Eighth Circuit gave employers a strong nod toward the oft-cited job requirement of regular attendance by addressing the critical nature of attendance in evaluating whether an individual with a disability is a qualified individual under the Americans with Disabilities Act (“ADA”).

Sheena Lipp worked in Cargill’s meat and processing facility for almost twenty years. During that time, Lipp was diagnosed with an incurable lung disease, which made it difficult for her to walk, run, or otherwise exert herself physically. Cargill accommodated all her needs, including allowing time off for out-of-town appointments and during “flare ups” multiple times per year, limiting overtime, and providing Lipp with lifting assistance when she was required to move pallets.

In January 2014, Lipp began a nine-month, unplanned leave of absence to take care of her mother, who had her own significant health issues. This leave of absence violated Cargill’s attendance policy, which explicitly provided for progressive disciplinary action for unplanned absences. Unless on an approved extended leave, employees were required to report their absences daily using Cargill’s automated call-in system. An employee would be charged one “occurrence” point for each unplanned absence and could accrue up to six occurrence points in a calendar year without disciplinary action. An employee’s seventh and eighth points would result in written warnings, and the ninth point would result in termination. Additionally, employees could be required to verify any absences from work. All verification had to be presented upon the first day the employee returned to work.

Rather than immediately terminating Lipp when she returned to work in October 2014, Cargill informed her that she had accumulated 194 occurrence points and placed her on a “Last Chance” plan for attendance. Two weeks after returning to work, Lipp called in to report she would be absent. When she returned to work without providing medical verification for her absence, Cargill terminated Lipp under the attendance policy.

On appeal, the Eighth Circuit held that Lipp could not establish a prima facie case of disability discrimination because she was not a qualified individual with a disability. Specifically, “Lipp ha[d] not demonstrated that at the time of her termination she could regularly and reliably attend work, an essential function of her employment.”

In holding that attendance was an essential function of Lipp’s job, the Eighth Circuit emphasized the language of Cargill’s written attendance policy, which stated that “punctuality and regular attendance [was] crucial for efficient plant operations, safety, and morale.” The Eighth Circuit also noted that all of Lipp’s listed activities in Cargill’s written job description required being present on Cargill’s premises. Even more importantly, the Court added that “persistent absences from work can be excessive even when the absences are with the employer’s permission.”

Regarding Lipp’s failure to accommodate claim, the Eighth Circuit held that the ADA did not require Cargill to provide an unlimited absence policy or eliminate the essential functions of Lipp’s job to accommodate her. The Eighth Circuit highlighted how generous Cargill had been despite Lipp’s excessive absenteeism and explained that a denial of summary judgment would punish Cargill for giving Lipp another chance instead of promptly terminating her before she returned to work in October.

RLG Takeaway

This case provides employers with some key points regarding absenteeism:

  • Make sure employees understand both your attendance policy and discipline policy. Discuss it with them and give them a written copy (maybe two!).

  • Review the employee’s essential job functions and be able to explain why attendance is essential for his or her position. It is helpful if written job descriptions make clear that attendance is necessary.

  • Carefully assess when absences are authorized or unauthorized. Require medical verification as soon as possible after the employee returns to work from an absence.

  • Be flexible. Consider the employee’s disability and specific circumstances when determining what reasonable accommodations are feasible. There is no one-size-fits-all accommodation.

Growing 2019 Trend – Employee Reimbursement

The new year brings new employee reimbursement obligations for Illinois employers. Effective January 1, 2019, the Illinois Wage Payment and Collection Act requires employers to reimburse employees for all necessary expenditures or losses incurred within the employee’s scope of employment and directly related to services performed for the employer. The Act defines “necessary expenditures” as all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer. We anticipate seeing this sort of legislative action move various other states.

The Illinois Act requires employees to submit all necessary reimbursement requests with appropriate supporting documentation within 30 days after incurring the expense, unless an employer’s written reimbursement policy provides for additional time to submit a reimbursement request. If supporting documentation is nonexistent, missing, or lost, the employee shall submit a signed statement regarding any such receipts. Employers will not be required to reimburse employees for losses due to an employee’s own negligence, normal wear, or losses due to theft unless the employer’s negligence caused the theft.

Illinois now joins several other states—such as California, Iowa, and New Hampshire—that require employers to reimburse their employees for certain employment-related expenses. The Illinois law, however, contains one wrinkle that is not present in any of the other state statutes: it permits employers to maintain written expense reimbursement policies that reimburse employees for less than the full cost of the expenditure. Put simply, employers may maintain policies that reimburse employees for less than 100 percent of the expenditure amount so long as the employer provides some reimbursement and the reimbursement is more than “de minimis.”

This Illinois law also requires employers to reimburse employees who use their personal cell phones for work-related calls and messages. However, many employees possess unlimited phone data and plans, making it difficult to separate the costs for personal and work use. Illinois courts may turn to states such as California for guidance; courts there have required employers to reimburse employees for a “reasonable percentage” of the employee’s phone bills. Unfortunately, in today’s climate of widespread mobile and technological communications, calculating a “reasonable percentage” of the employee’s phone bill is a task that is more easily said than done for employers.

RLG Takeaway

All employers should create or review your existing reimbursement policies. The policies must include the methods of reimbursement and define a procedure whereby employees can submit reimbursement requests. Reimbursement policies should state the deadline for employees to submit reimbursement requests and should require necessary documentation, such as receipts, to support each expenditure. When creating or revising reimbursement policies, be mindful of the “de minimis” threshold and ensure that reimbursements reasonably compensate the employee for the expenditure.

We also suggest employers revisit job descriptions, offer letters, and employment contracts to determine whether the described job duties may encourage employees to incur personal expenditures that may be considered necessary for the employee to discharge their employment duties. If so, you may consider revising such job descriptions to specifically state the expenditures necessary for the job, and that you will furnish all necessary items or equipment.

The Power of Arbitration Agreements: U.S. Supreme Court Rules in Their Favor AGAIN

The U.S. Supreme Court has built a reputation for favoring arbitration agreements as a preferred mechanism for resolving disputes. In January, the Court was asked to determine the extent to which parties can arbitrate their cases under the Federal Arbitration Act (“FAA”). This time, the Court rejected the “wholly groundless” exception, which afforded courts the ability to rule on whether claims brought for arbitration can continue to proceed to arbitration, i.e., whether a case is “arbitrable.”

In Henry Schein Inc. v. Archer and White Sales, Inc., two businesses agreed to resolve any dispute arising under their contract through binding arbitration. However, the contract excluded from arbitration actions seeking injunctive relief. After the parties’ business relationship soured, Archer and White sued Schein. They alleged violations of antitrust laws and sought money damages and injunctive relief.

The District Court, in denying Schein’s motion to compel arbitration, held that Schein’s argument that the contract provided for an arbitrator to decide whether the arbitration agreement applied to the dispute was “wholly groundless.” The Fifth Circuit agreed. However, since other Federal Circuits disagreed about whether the “wholly groundless” exception was consistent with the FAA, the Supreme Court decided to finally resolve the issue.

Relying on the text of the FAA, the Court noted that the FAA requires courts to interpret arbitration agreements as written. The Court held that “[j]ust as a court may not decide a merits question that the parties have delegated to an arbitrator, a court may not decide an arbitrability question that the parties have delegated to an arbitrator.” When parties agree to delegate the arbitrability question to an arbitrator, a court cannot override this decision. So long as a valid agreement exists, “a court may not decide the arbitrability issue” when the parties agree to have an arbitrator decide on arbitrability.

Since the FAA makes no mention of the “wholly groundless” exception, the Court refused to impose a court-created exception onto the statute. In doing so, the Court rejected the “wholly groundless” exception as inconsistent with the FAA and with Supreme Court precedent.

RLG Takeaway

Although the U.S. Supreme Court refused to consider whether the claim at issue in Schein was truly arbitrable, it did limit the extent to which courts in the future can rule on issues of arbitrability. So long as the arbitration agreement is valid, parties can delegate questions of arbitrability to the arbitrator, thereby avoiding court intervention. Binding arbitration agreements are powerful documents that should not be taken lightly. Make sure to talk to counsel before using arbitration clauses in your contracts.

Don't Forget: Roe Law Group Offers One Hour of Free Training!

Please take us up on our offer of one hour of free training this year for your managers. To set up a time contact Roe Law Group at newsletter@roelawgroup.com and choose from one of the following topics for 2019:

  • Documentation and Performance Management: Documentation can either save or bury you. It’s not enough to just write something down. What’s written down must be timely, accurate, factual, clear, and concise. Just as important as the documentation are the processes leading up to the documentation, especially when it involves disciplinary or performance problems. This session is designed to build your confidence and manage risk when it comes to effective discipline and documentation through simple and easy to use tools and real-life case studies. Key Learning Points: (1) Steps in positive and effective discipline; (2) What, when, why and how to document effectively; and (3) Dos and don’ts of discipline and documentation.

  • Respect in the Workplace: Disrespectful behavior is more common in the workplace than harassment and can be just as destructive. This session shifts away from the law and focuses on three behaviors all organizations should expect from every employee at every level: Respect, Regard and Courtesy. Key Learning Points: (1) Identifying behaviors that demonstrate respect and those that destroy it; (2) Minimizing workplace bullying; and (3) Understanding and appreciating differences.

  • Employment Law: Minimize Risk and Gain Confidence: Establishing and maintaining a sound knowledge base of the most important areas of employment law results in preventing problems before they arise, minimizing financial loss and gaining the confidence you need to know you are doing the right things for the right reasons. Through the use of real case studies, current case law and practical day-to-day guidance, learn about the most important and current employment law issues you’re most likely to face and the steps to take to ensure your organization does not become one of the negative statistics. Key Learning Points: (1) Understanding of current state and federal employment laws, rules, and regulations and recent cases; (2) How to apply employment laws, rules, and regulations to any situation; and (3) Avoiding common mistakes.

This newsletter is provided for informational purposes only, not as legal advice.  The reader of these materials should seek legal advice before using this or any other materials from this author.

Copyright © 2019 Roe Law Group, PLLC, All rights reserved.

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