Category Archives: legal issues

Firing Someone over Politics

With conflict between President Trump supporters and detractors still at a fiery pitch, and with his protested inauguration still in the rearview mirror, this recent post on the Littler site might prove helpful.

In it, a boss in Sacramento, Calif., is asking the San Francisco-based employment law firm whether an employee can be fired, or at least disciplined, after the boss “saw one of my employees on the local news the other night participating in a political rally over the weekend.”

“Can I at least institute a policy prohibiting this kind of behavior going forward?” the boss asks.

Well, it all depends, Littler’s Zoe Argento writes, “on the employee’s location, the legality of his conduct, the employee’s contract, the nature of your business and the characteristics of the individual.” But best advice: Probably not a good idea and tread very carefully.

There are some state laws that prohibit employers from taking adverse action against employees because of their off-duty lawful political activities. So know your state’s laws on this. According to Argento:

“In California, employers may not coerce employees, discriminate or retaliate against them, or take any adverse action because they have engaged in political activity. Similar prohibitions exist in other states, including Colorado, Louisiana, New York, South Carolina, and Utah. Connecticut actually extends First Amendment protection of free speech to the employees of private employers. Some of these laws provide exceptions for public or religious employers or for off-duty employee conduct that creates a material conflict with respect to the employer’s business interests. Under such laws, and absent some exception, the proposed termination or demotion of this employee because of his lawful, off-the-clock political activity would be illegal.”

Also, Argento points out, at least three states — California, Louisiana and Colorado — prohibit employers from adopting any policy, rule or regulation that forbids or prevents employees from engaging or participating in politics or from running for office.

On the federal level, she says, firing or disciplining workers who engage in rallies, protests, marches or any other polticial activity could run afoul of the National Labor Relations Act, which provides that “employees shall have the right … to engage in … concerted activities for the purpose of … mutual aid or protection.” She continues:

“The U.S. Supreme Court has interpreted this provision to mean that employees may organize as a group to “improve their lot” outside the employer-employee relationship. Employees’ participation in political advocacy would therefore be protected if it relates to labor or working conditions. Such advocacy can include contacting legislators, testifying before agencies or joining protests and demonstrations. If the means used are not illegal, an employer would generally be barred from retaliating against employees who participate in these political activities outside the workplace.

“Depending on the nature of the activities your employee engaged in and his role in your organization, it may violate the NLRA to penalize him. If the employee participated in a rally concerning sick leave, minimum wage, or immigration reform, for example, that conduct would likely be protected.”

Argento signs off with some sound practical advice, that a decision to terminate or discipline an employee “should be based on an objective assessment of both the individual’s job performance and your business needs.” She writes:

“If the employee is otherwise a solid performer, and if his behavior does not interfere with the operation of your business, an adverse employment decision may be difficult to explain, undermine morale in your workforce, and, on balance, have more negative than positive results.”

Rule of thumb, she signs off, “proceed with caution” before penalizing employees for lawful, off-duty poitical activities, whether they’re frustrating to you or not.

Travel Ban Would Impact Many

Though President Trump’s travel ban has been frozen indefinitely, a decision made Thursday by the United States Court of Appeals for the Ninth Circuit, it’s still worth noting how many organizations would be affected should Trump proceed successfully in appealing the decision to the United States Supreme Court. He has vowed to do just this, according to the New York Times report linked above. (More recently, on Friday, he said he is now considering rewriting the immigration executive order in question.)

Whatever we end up with,  a survey of 261 companies by the Seattle-based Institute for Corporate Productivity (i4cp) — conducted just a few days after Trump signed the order restricting entry to the U.S. by travelers from seven majority Muslim countries — reveals more than a third (36 percent) of organizations would be impacted by the travel ban. Another 21 percent were still scrambling to make that determination at the time of the poll.

Within a week of the signing of the executive order, nearly 100 companies — including many of the largest global-tech organizations such as Intel, Microsoft, Apple, Netflix and Uber — responded by joining in the filing of a brief in support of a lawsuit against the travel ban filed by the state of Washington. It was that lawsuit that was at the heart of the Ninth Circuit Court of Appeals decision Thursday.

In its release about the survey, i4cp describes the responses as very mixed:

“While some respondents lauded the executive order for protecting the safety of employees, others drew attention to its potentially negative impact on the recruiting and motivation of a diverse, inclusive global workforce, a clear illustration of the polarization of views and reactions.”

Some respondents reported they are simply unsure of the impact of the travel restrictions because of a “lack of transparency in their global contract workforces, which are managed by vendors,” the release states.

Human resources, however, was the predominant responsible party (at 41 percent) for managing internally anyone affected by the ban, followed by legal, 7 percent; CEO, 6 percent; other senior executive, 5 percent; and security, 1 percent. (Other responses included don’t know, 10 percent, and other, 30 percent.) As i4cp states:

“Often, [HR’s lead] is in conjunction with legal teams responding to the needs of individual employees.”

In a few cases, companies reported having multifunctional “SWAT” teams in place responding to the situation. And nearly a third said they are providing legal assistance to affected employees and their families.

Of course, these were the actions in place when the ban was in place. No doubt things have returned to normal since the freeze and its being upheld in appeals court. But should Trump succeed at the Supreme Court level, these challenges would be back on employers’ plates immediately. Would be wise to stay poised to help these employees — and clearly, there are a lot of them — once again if need be.

LGBTQ Protections Spared — For Now

Given the combative tone of the first week of the Trump administration (at least as it related to Mexicans, Muslims and the media) it may have come as a surprise to some to learn President Trump will maintain workplace protections for gays and lesbians instituted during the Obama administration, according to multiple news reports.

“The executive order signed in 2014, which protects employees from anti-LGBTQ workplace discrimination while working for federal contractors, will remain intact at the direction of President Donald J. Trump,” the administration said in a statement.

USA Today reported that gay rights groups had expressed concern that Trump would reverse that order, but White House aides said such a step has not been contemplated. Drafts of proposed orders to roll back the Obama order had circulated through Washington in recent days, which caused concern among LGBTQ activists and others.

The Washington Post’s coverage includes a statement from Chad Griffin, president of the Human Rights Campaign, in which he says he and other activists remained concerned that the new administration could still undermine other legal protections based on sexual orientation or gender identify:

“Claiming ally status for not overturning the progress of your predecessor is a rather low bar. LGBTQ refugees, immigrants, Muslims and women are scared today, and with good reason. Donald Trump has done nothing but undermine equality since he set foot in the White House,” Griffin said. “Donald Trump has left the key question unanswered — will he commit to opposing any executive actions that allow government employees, taxpayer-funded organizations or even companies to discriminate?”

The New York Times first reported the decision by the White House to stick with the Obama-era protections.

 

Discriminatory Dress Codes in the U.K.

Over on the other side of the Atlantic, a storm is brewing over the unequal treatment of women in the workplace. The United Kingdom has a law in place — the Equality Act of 2010 –intended to prevent such treatment. However, that apparently hasn’t stopped U.K. employers from ordering their female employees to wear high heels, dye their hair blonde and dress themselves in revealing outfits. That’s according to a recent report by the British Parliament, undertaken in the wake of a petition signed by more than 150,000 people calling for a law that would ban organizations from requiring women to wear heels at work. The parliamentary investigators received complaints from hundreds of U.K. women who said they were subject to sexist dress codes by their employers.

As reported in yesterday’s New York Times, Nicola Thorp started the petition after she was sent home without pay from her job as a temporary receptionist for refusing to comply with an order that she get herself a pair of shoes with heels that were at least two inches high. Turns out that Portico, the receptionist-services firm that formerly employed Thorp, had quite an extensive employee dress code that covered just about every aspect of a woman’s appearance, including hair (“regularly maintained hair colour — if individual colours hair — with no visible roots”), makeup (“makeup worn at all times and regularly reapplied … “) and footwear (“Heel height normally a minimum of 2 inches and maximum of 4 inches, unless otherwise agreed by the company”). The code even suggested the palette of nail polishes that was acceptable. Portico said it changed its policy after Thorp raised the issue, the Times reports.

Thorp told the Times that part of the reason she started her protest was concern for the health effects of wearing high heels throughout the workday: “The company expected me to do a nine-hour shift on my feet escorting clients to meeting rooms. I told them that I just wouldn’t be able to do that in heels.”

Thorp is hardly alone in her concern about the physical effects from being forced to wear high heels all day: “We heard from hundreds of women who told us about the pain and long-term damage caused by the wearing of high heels for long periods in the workplace, as well as from women who had been required to dye their hair blonde, to wear revealing outfits and to constantly reapply makeup,” the report said. It cited longstanding medical evidence showing that women who wear high heels for long periods of time can suffer physical damage, including stress fractures.

U.K. lawmakers expressed concern that the Equality Act has not been effective in preventing employers from applying sexist dress codes. The report calls for “urgent action” by the government, including increased financial penalties for employers that break the law. However, Thorp said she wasn’t satisfied, telling The Guardian she was “absolutely chuffed to bits” that the report’s recommendations didn’t go further.

“The petition took off and I was very pleased to see the debate over heels grow to one about clothes, and continue moving on to other aspects of how women are treated in a work environment,” she told the paper. “We now need to see the government take these recommendations on board. The law should not just be changed but enforced.”

Under current U.K. law, instructing women to wear high heels at work “isn’t necessarily sex discrimination, ” Julia Wilson, an employment lawyer at Baker McKenzie, told British newspaper The Independent. “If [members of Parliament] want clear rules and fines for companies in relation to dress code practices, that is likely to require a change in the law.”

Gaming the Gainsharing System

This is just a guess, but I’m going to say the mood throughout Whole Foods break rooms is less than festive this holiday season.

And if the claims made in a new lawsuit prove to be true, you couldn’t really blame the grocery store chain’s employees for not getting into the spirit this year.

Last week, one current and one former employee from a Whole Foods store in Washington, D.C. filed a federal class-action lawsuit claiming the Austin, Texas-based company “engaged in a nationwide scheme to strip hard-working employees of earned bonuses in order to maximize [its] own profit.”

More specifically, plaintiffs Michael Molock and Randal Kuczor assert that a group of managers gamed Whole Foods’ gainsharing program to avoid paying automatic bonuses to departments that came in under budget for the year, as reported by the Washington Post.

According to the lawsuit, the gainsharing program is intended to enable employees in such departments to share in surpluses. The plaintiffs claim, however, that Whole Foods avoided paying by shifting labor costs to other departments without properly accounting for it, as well as by creating “fast teams” comprised of employees who float from one department to another.

The complaint also alleges that company executives knew of the “illicit practice of shifting costs,” which the suit says has impacted as many as 20,000 past and present Whole Foods employees.

In a statement, Whole Foods acknowledges that some sort of bonus program manipulation took place, while maintaining that it was confined to a relatively small number of its stores. Nevertheless, Whole Foods says it is investigating the matter. And, as the Post reports, the organization has already terminated the nine managers known to have been involved.

The plaintiffs are asking for more than to see a few managers fired. The suit seeks $200 million in punitive damages and triple unpaid wages, among other relief, according to the Post.

“Defendants intentionally manipulated the program and illicitly engaged in a nationwide corporate practice of ‘shifting labor costs’ in order to pad its profits,” the suit claims, alleging that this “unlawful” maneuvering effectively wiped out surpluses in certain departments, “thereby robbing hard-working employees of earned bonuses.”

High Anxiety for Plan Sponsors

It’s still unclear whether the incoming Trump administration will take aim at the Department of Labor’s new fiduciary rules, which are slated to go into effect on April 10.  As Joseph Urwitz, a partner in McDermott Will & Emery’s Boston office, told us late last month: “While it’s not possible to predict the future, the new Congress and president may overhaul, eliminate or at the very least delay implementation of the fiduciary rule. Time will tell whether or not any of these moves will come to pass.”

thinkstockphotos-468426388But what we do know is that litigation continues to be very much on the minds of plan sponsors.

This fact received further support earlier this week, when Cerulli Associates, a global research and consulting firm, released the findings of a study—titled “The Cerulli Report: U.S. Retirement Markets 2016”—that found more than half (57 percent) of more than 800 401(k) plan sponsors questioned are concerned about potential litigation.

While much of the litigation has targeted large plans with deeper pockets, the research found that smaller plan sponsors are also paying attention to today’s litigious environment.  Nearly one-quarter of small plan sponsors—those less than $100 million in 401(k) assets—describe themselves as “very concerned” about potential litigation.

As most of you know (and the Cerulli report points out), fee-related lawsuits, in particular, have been something of a theme in 2016, putting added pressure on plan sponsors to find ways to reduce fees. “Plan-sponsor-survey results show that the top two reasons for which 401(k) plan sponsors choose to offer passive (indexed) options on the plan menu are because of ‘an advisor or consultant recommendation’ or because they ‘believe cost is the most important factor,’ ” according to the Cerulli press release. But there is also no denying that lowering the risk of litigation factors into the decision making as well.

The Cerulli report suggests that the rash of litigation that has occurred in recent times is stifling innovation. Jessica Sclafani, associate director at Cerulli, notes that “plan sponsors feel they have little to gain by appearing ‘different’ from their peers due to the risk of being sued. This mindset can make plan sponsors reluctant to adopt new products … .”

The Zenefits Saga Continues

It appears Zenefits woes are continuing—and if the predictions of one consultant are correct, they aren’t likely to end anytime soon.

Yesterday, Washington State Insurance Commissioner Mike Kreidler ordered Zenefits to “cease free distribution of its employee benefits software, noting the tactic violates Washington state insurance law against inducements,” his office’s statement reads.zenefitslogo

Washington is said to be the first state to take action against the company for violating inducement laws. Under an agreement with Kreidler, Zenefits can challenge the order within 90 days.

The state took issue with the fact that Zenefits required clients to designate it as its broker of record and then collected insurance commissions from the products it sold in order for them to access its free software.

“The inducement law in Washington is clear,” Kreidler said. “Everyone has to play by the same rules.”

Following the announcement, Zenefits’ General Counsel Josh Stein posted the following on the company’s website

“Today, Zenefits has reached a compromise agreement with the Washington Office of the Insurance Commissioner (OIC) on how Zenefits will price its services in Washington State.  Beginning January 1, at the order of OIC, Zenefits may no longer provide free software services in Washington. As a result, Zenefits will charge all Washington state customers $5 per employee per month for our core HR product.”

Stein went on to say …

“The Washington viewpoint is a decidedly minority view. Since its founding, Zenefits has had conversations with regulators about our business model, which includes some free HR apps. Many states have looked into the issue and concluded that free software from Zenefits is not a problem; in fact, it’s in the interest of consumers. Only one state other than Washington has disagreed.  Utah’s department of insurance tried to force Zenefits to raise prices for consumers, and Utah’s state legislature and governor quickly took action, passing a bill to clarify that its rebating statute should not be interpreted to prohibit innovative new business models that deliver value to consumers.”

Earlier today, I spoke with Rhonda Marcucci, partner and consultant in Gruppo Marcucci, a Chicago-based HR and benefits technology consulting firm.

Zenefits has created its own regulatory scrutiny reputation for the rest of its life, Marcucci told me. In this case, she said, “I don’t think it is driven so much by the brokers but by the insurance departments who are extremely angry about the licensing piece—so that now invites more scrutiny in other places. Brokers may have brought it to [the attention of insurance regulators], but the way I look at this, Zenefits is a regulatory penalty box—and they will be, I think, forever.”

Marcucci noted that every state, except for California, has some kind of no rebating or inducement laws for transactions. But that doesn’t necessarily mean that every employer is following the law.

At the end of day, she said, states typically base their decision on enforcing these laws by “who screams the loudest.”

As far as Zenefits is concerned, Marcucci said, it’s realistic to expect that other states might follow Washington’s lead, especially those states with difficult regulatory insurance environments such as New York.

‘Persuader’ Ruling Helps Employers

Barack Obama hasn’t yet turned the Oval Office over to Donald Trump, but already one of his administration’s signature pro-labor rules has been scrapped. Not by the new president, but by a federal court.

Gavel banging
Gavel banging

U.S. District Judge Sam Cummings  in Lubbock, Texas, on Nov. 16 made permanent an earlier temporary injunction halting the Department of  Labor’s controversial “persuader rule.” That rule, announced in April, expanded an existing requirement for employers  to disclose in government filings when they hire legal counsel to combat unionization drives. Under the new rule, disclosure was necessary even if those lawyers only provided advice on how companies should persuade workers to oppose representation. It was one of several pro-labor rules or standards set recently by Obama-administration agencies, including the DOL, EEOC and NLRB.

“It’s a good result,” says Jeff Londa, a Houston-based labor and employment attorney with Ogletree Deakins who led the legal effort to set aside the rule.  As a result, “We’re back where we were.”

Business groups that joined several states in seeking the order included the National Federation of Independent Business, whose members are generally small employers.

But larger companies also will benefit from Wednesday’s ruling, Londa says. Though more likely than small firms to  have their own attorneys on staff,  larger employers still “typically go to outside counsel” for training and advice on company policies  “when there’s a lot on the line” in a major union organizing campaign, Londa says.

The “persuader”rule had  stirred widespread objections not only from employers, but also from lawyers, who said it breached the attorney- client privilege.

The Labor Department had filed an appeal with the Fifth Circuit after Cummings issued a preliminary injunction on June 27. That appeal is now mooted b this week’s permanent injunction, Londa says. That means “it would clearly be on the shoulders of a new administration” to appeal again  — unlikely, given Trump’s position on the Obama administration’s labor regulations. And given the GOP’s strong showing in Senate and House races on Election Day, Congress is not likely to intervene to revive the “persuader” rule, he notes.

“The inclination of the new Congress would probably be against the new rule,” Londa says. “I’m not sure they would get involved.”

 

 

 

NLRB: Grad Students Are Employees

In a 3-1 decision, the National Labor Relations Board has ruled that graduate students working as research and teaching assistants at Columbia University are statutory employees covered by the National Labor Relations Act.

As the Washington Post reports, the ruling overturns a 2004 Brown University decision, in which the NLRB said graduate students engaging in collective bargaining “would undermine the nature and purpose of graduate education.”

The decision, which clears the way for these grad students to join or form unions, opens the door “to the full panoply of rights provided under collective bargains, and the effect will change the relationship between private sector universities and their students,” Joseph Ambush, a Boston-based attorney who filed the brief on behalf of the schools involved in this case (and who represented Brown in 2004), told the Post.

Philip Miscimarra, who offered the lone dissenting opinion in the Columbia case, voiced concerns that allowing students to collectively bargain could “wreak havoc” on their education, given the potential for strikes and lockouts, according to the paper.

That’s not all the decision could do.

Earning recognition as employees means that grad students working in teaching or research capacities “can bargain for larger stipends and better health coverage, especially if they have children,” according to the Post. “It also means they can get basic protections, such as unpaid leave.”

The ruling “could be huge,” says Laura Hung, a doctoral candidate in anthropology at American University. Hung, now working as an adjunct professor, told the Post that she’s making roughly the same salary (around $19,000) that she earned as a teaching and research assistant in her most recent academic year.

“The vast majority of my colleagues are swimming in student debt,” notes Hung, adding that her wages are “barely enough” to cover her $1,000 rent each month, and “certainly not enough” to pay for the health insurance offered by the university.

“The way things are right now obligates students to take out large amounts of debt to eat and live,” continues Hung. “There are students who are not going to find jobs that pay enough to pay that back.”

This struggle is real among young workers outside of academia as well. Pay attention, employers.

As HRE notes in an upcoming feature in our Sept. 2 print issue, the number of recent grads buckling under the weight of massive student loan debt is only growing. Recent data from the Plan Sponsor Council of America, for instance, finds 69 percent of students graduating college in 2011 and 2012 borrowed money to finance their educations, compared to 49 percent of 1992 and 1993 college graduates.

Some employers are recognizing this trend, and are responding. As we report in the aforementioned Sept. 2 piece, for example, Nvidia Corp. is helping its youngest workers start off their careers on the right financial foot.

Designed to help employees repay student loans up to $30,000, the Santa Clara, Calif.-based technology company’s Student Loan Repayment program is open to all full- or part-time employees who have graduated within the past three years and are working 20 or more hours per week and provides monthly reimbursement up to $500 or the worker’s monthly payment amount, whichever is less.

Applicable to various types of loans—Federal Perkins loans, private student loans and subsidized Stafford loans, for instance—the repayment program also helps employees who go back to school for an advanced degree.

Beau Davidson, vice president of human resources at Nvidia, describes the effort as a “bridge program” geared toward helping recent grads transition into the working world.

“This kind of assistance might help them get started in an apartment, put a down payment on a car, and get themselves situated and ready to work,” says Davidson. “It’s one less stressor to worry about.”

Supporters of E-Cigs Fight Back

There’s some real pushback under way to what I was thinking had become a generally agreed-upon vice worth eradicating from our streets, public arenas and workplaces: e-cigarette vaping.

470456691--vapingMy eyebrows were raised on Friday when I came across this release from the National Center for Public Policy Research announcing an amicus brief that had just been filed by the NCPPR and TechFreedom in support of an earlier challenge to the Food and Drug Administration’s war on vaping.

Specifically, the initial challenge that got a major boost on Friday was filed by Nicopure Labs, a manufacturer of e-cigarette liquid, against the FDA’s Deeming Rule, which was finalized in May. That rule would force e-cigarette manufacturers to undergo an expensive and time-consuming premarket tobacco-application process unless their products were on the market prior to the predicate date of Feb. 15, 2007. As the NCPPR release puts it:

“The high cost of the application process means most e-cig businesses will be forced to shut down, eliminating choices of dramatically safer alternatives to combustible cigarettes, which will leave smokers with fewer options to compete against the most harmful form of nicotine consumption, [again,] combustible tobacco.”

It also states that:

“The FDA’s Deeming Rule fails to consider the scientific evidence readily available to the agency regarding the safety and the public health benefits of e-cigarettes.”

Is it just me or is this the first time you’ve read anything about the “public health benefits of e-cigarettes”?

I love how this guy, Tom Remington, on his blog post, compares  choosing between e-cigs and tobacco to choosing between Donald Trump and Hillary Clinton. Mind you, I’m not 100-percent sure what position he’s taking here (something tells me he’s anti e-cigs … and don’t ask me to even hazard a guess as to who he plans to vote for), but his quote is pretty fun:

“Having a discussion about whether or not e-cigarettes are more healthy than real tobacco-product cigarettes is akin to deciding which crook, Hillary or Donald, should get your vote. Would you rather die from e-cigarettes or from tobacco? Would you rather get screwed and further forced into slavery by Hillary or Donald?”

For a much more complete and sobering look at why clamping down on the e-cigarette business isn’t necessarily a good thing for health but IS a big victory for Big Tobacco, read this opinion piece on the Washington Post site by Jonathan Adler. Here’s just one compelling thought to come away with, as Adler writes it:

“With the new FDA rule, Big Tobacco is getting just what it wanted. … [A]s a consequence of the FDA rule, the e-cig market will shrink, and Big Tobacco will be in a better position to dominate what’s left. A vibrant competitive market will be replaced with a cartel, much like the one we see in the cigarette market.”

So what does all this have to do with HR? Probably not as much as other topics we’ve raised here, but I do know many of you are grappling with your smoking policies, and many of you have opted to lump vaping in with the rest of your organization’s prohibited activities.

I guess this might just give you something more to think about as you go about drafting or enforcing such a policy … like who’s hands you might be playing into(?) Or where the real truth lies(?) If, indeed, these things are so much healthier than cigarettes, for all concerned, and can help move the quitting process along, are you sure you want to deny your employees any and all access(?)

Maybe just put all this in your pipe and smoke it(?) (Sorry.)