NLRB Modifies Standard Remedial Notice to Include QR Code and Link to Board's Web Site

This post was contributed by Adam L. Santucci, an Attorney in McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Harrisburg, Pennsylvania.

The National Labor Relations Board recently took the opportunity, in a case dating back to 2011, to update and modernize some of the standard language contained in the remedial notice that the Board requires to be posted as a remedy for unfair labor practices. By way of background, in nearly every case in which the Board finds a violation of the Act, it requires the offending party (union or employer) to post or otherwise furnish a notice to employees setting forth their rights under the Act. The notice will also include information regarding the remedial actions that will be taken by the violating party. In the recent past, the Board has begun to require parties to issue the notice in electronic format, but for the most part the standard language in the notice has not changed.

In Durham School Services, L.P., the Board upheld an ALJ decision reinstating an employee who was allegedly discharged in retaliation for supporting the union during a hotly contested union election. The Board also affirmed the ALJ's finding that the employer engaged in objectionable conduct during the period prior to the election, which warranted the setting aside of the election results which had been in favor of the employer. As a result, the ALJ ordered that a third election be held (the first election was also overturned).

Those of you who have been following the Board's decisions of late were probably not surprised to see that the employer lost on all fronts. That result is not what makes this case of note. What makes it noteworthy is that the Board took the opportunity, at the request of the union, to prospectively modify the standard language it includes in all remedial notices.

In Durham, the Board granted the union's request that it modify its current standard notice to inform employees that a copy of the Board's full decision and order are available on the Board's web site. The notices will now include a link to the decision/order and a QR code that will take employees directly to the Board's web site. The Board found that making the decisions and orders more readily available will facilitate a better understanding of the violations that occurred and why the Board granted the remedies it directed. It will be interesting to see what the future holds for the Board's standard notice as the Board continues its unprecedented outreach efforts and continues to attempt to facilitate employees' understanding of the Act.

Workers' Compensation: Advantages of Self-Insurance

This post was contributed by Paul D. Clouser. While Paul has over 25 years of experience representing clients in workers' compensation matters and employment litigation, Paul is new to McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Lancaster, Pennsylvania.

Employers in Pennsylvania can often benefit from self-insuring their workers' compensation plan, rather than simply opting for carrier based coverage year after year. The advantages of self-insurance include the following:

  • Reduced Cost: Self-insured employers bear the costs, but also keep any profits that are normally "built into" traditional insurance premiums. Per claim costs are usually reduced in self-insurance arrangements, as the employer has a direct and vested interest in reducing costs through a "hands-on" approach to managing claims. 
  • Cash flow: Self-insured employers also appreciate cash flow advantages, as medical bills and wage loss benefits are paid when these items are required to be paid, rather than when the insurance carrier decides that premiums or special assessments are due.
  • Ability to select counsel and claims management vendors: Self-insured employers have the freedom to select their own legal representatives, nurse case manager, IME physicians, and investigators, and to reduce the risk of "spin off" ADA, PHRC, FMLA, wrongful discharge or other costly lawsuits that are often not on the radar of carrier-appointed defense counsel.
  • Cost control: Self-insured employers are able to control risk and financial exposure through the purchase of specific and aggregate reinsurance. In addition, self-insureds enjoy the benefit of investment income on funds that are set aside to pay claims.

The path to becoming self-insured typically involves a multi-step process including preliminary review, a more detailed feasibility study, a plan implementation phase, and fine tuning or monitoring the program, once it is in place.

Since self-insurance is not a suitable option for all companies, the first step, or preliminary review, should address some very basic questions. What does the company currently spend, on an annual basis, for its workers' compensation coverage? As a general rule of thumb, self-insurance can become cost effective once annual workers' compensation expenditures exceed $500,000. In which states does the company do business? Most states permit self-insurance in the workers' compensation realm, but the requirements and timeline for achieving self-insured status will vary from state to state. What has the loss experience been for the specific business and for the industry in general? Does your business consistently pay out more premiums than it had paid in claims?

Once these initial questions have been addressed, the company can move on to a more detailed feasibility analysis, with respect to possible self-insurance. A capable risk management consultant will typically gather the necessary data, perform the financial and actuarial analysis, and review the specific state requirements to guide the company in its final decision making process. Key to this study will be the decision as to whether day-to-day claims should be handled internally or assigned to a third party administrator. A third party administrator (TPA) arrangement is generally preferable, at least in Pennsylvania, as the workers' compensation statute and regulations are quite complex, with many traps for the unwary. Some newly self-insured employers opt for initial TPA coverage, with the goal of attaining "self-administration" status after several years.

The implementation phase includes obtaining approval from the state to self-insure and meeting any state statutory regulatory requirements. Section 305 of the Pennsylvania Workers' Compensation Act, for instance, provides that an employer desiring to be self-insured must submit an application to the Department of Labor and Industry demonstrating its ability to pay compensation. The application process is now done on the Bureau's new computer platform, WCAIS (Workers' Compensation Automation and Integration System). A business applying for self-insurance must meet 3 basic requirements under the Pennsylvania statute:

1. The company must have been in business for at least three consecutive years;
2. It must provide proof of incorporation or organization under the laws of a state within the United States; and
3. It must have an adequate accident and illness prevention plan.

A $500 application fee is required and the primary focus of the department's review will be on the company's ability to pay claims and its ability to provide security for the ability to pay in the future. The employer seeking self-insurance status must also demonstrate that it has ample facilities and competent personnel to adjust and pay its claims. As noted, the employer may contract with a registered claims service or third party administrator, to provide these services.

An employer wishing to self-insure or a group of employees wishing to pool their liabilities, must "post a bond or other security, including letters of credit drawn on commercial banks with a Thompson Bank Watch rating of B/C or better or a Thompson Bank Watch score of 2.5 or better for the bank or its holding company or with a CD rating of BBB or better under "Standard and Poor's." Pennsylvania Workers' Compensation Act, Section 305(a)(3).

Finally, once implemented, the employer will need to "fine-tune" or monitor its self-insurance program, to make sure that the expected cost savings are realized and that the program is running smoothly. Regular quarterly meetings between the employer, TPA, legal counsel, broker, and nurse case manager are an important step toward transparency and keeping the program "on track." The company and its TPA must have an accurate system for tracking claims and monitoring losses, in addition to allocating costs to the appropriate company subsidiaries or departments. Regular auditing and actuarial reserve analysis will be necessary to ensure that there are no unknown financial liabilities lurking beneath the surface and to give the excess carrier the requisite assurance that the program is running smoothly.

Despite the effort needed to establish and monitor a self-insurance workers' compensation program, our clients routinely report that the process is well worth it. Controlling ones' own destiny is frequently mentioned as the key reason why others may wish to chart a similar course.

If you have any questions regarding this article or workers compensation liabilities in general, please contact Paul Clouser or Denise Elliott in our Lancaster Office.

EEOC's Attack On Severance Agreements Dealt Blow

This post was contributed by Adam R. Long, an Attorney in McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Harrisburg, Pennsylvania.

As we noted earlier this year, the EEOC has begun filing legal challenges to relatively common provisions found in form severance agreements, based on the EEOC's belief that such language unlawfully interferes with employees' rights to file charges with and provide information to it. Specifically, the EEOC has attacked non-disparagement and confidentiality provisions and general release language that it has deemed to be overly broad. The EEOC's position on this issue represents a significant shift from its prior position on what language is acceptable for use in severance agreements.

In February 2014, the EEOC filed a lawsuit against CVS Pharmacy, Inc., claiming that various provisions in CVS's form severance agreement violated Title VII. This lawsuit garnered significant attention and represented the EEOC's most aggressive and significant action to date on this issue. CVS moved to dismiss the lawsuit in April 2014, arguing that the EEOC failed to state a claim upon which relief could be granted.

Last week, U.S. District Judge John Darrah announced at a status hearing that he would grant CVS's motion and dismiss the lawsuit. The court has indicated that it will issue a written opinion confirming and explaining the dismissal by October 2.

After Judge Darrah issues his decision, we will provide an update on the decision and what it means for employers. In the meantime, it appears that CVS has obtained a significant initial victory for employers in what likely will be a long legal fight over the EEOC's current position on common severance agreement provisions.

Court Weighs In On Employee Tip Pools

This post was contributed by Adam L. Santucci, an Attorney in McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Harrisburg, Pennsylvania.

We recently prepared a post for our friends at www.jurisbrewdence.com, who write about interesting issues in the craft beer industry (yeah we know, rough life right?). Our post was about a recent decision from the United States District Court for the Middle District of Pennsylvania, which brought some clarity to the issue of which employees may participate in employee tip pools. As you may recall, we previously discussed employee tip pools, which can be risky and problematic, particularly when deciding which employees will share in the pooled tips.

You can check out the full article on on Jurisbrewdence by clicking here

Would You Like Fries . . . and an Unfair Labor Practice Charge with That?

This post was contributed by Bruce D. Bagley and Lee E. Tankle of McNees Wallace & Nurick LLC's Labor & Employment Practice Group.

Mainstream media, attorneys, and business owners are discussing the meaning and impact of a two paragraph press release issued on July 29 by the Office of the General Counsel of the National Labor Relations Board (NLRB). That Office is the "prosecuting arm" of the NLRB, and in the press release, the General Counsel indicated he has authorized the issuance of unfair labor practice (ULP) complaints against franchisor McDonald's USA, LLC for the actions of its franchisees. In a typical franchisor-franchisee relationship, a franchisor, like McDonald's, may contract with a franchisee to provide the latter with use of the franchise name, logo, processes, recipes, etc., in exchange for an upfront franchise fee and sales-based royalties. So is this press release declaring McDonald's a "joint employer" with potentially over 13,000 United States franchisees the super-sized issue pundits have made it out to be?

Over the past two years, 181 ULP charges have been filed with the NLRB involving numerous McDonald's restaurants. The charges arose largely from the termination of a number of fast food workers who had participated in various protests and union organizing efforts at McDonald's franchised stores across the country. Per the General Counsel's press release, 68 of those cases were found to be meritless, 64 are pending investigation, and 43 were found to have merit. In those 43 cases found to have merit, the General Counsel contends that the various franchisees and McDonald's USA, LLC (the franchisor headquartered in Illinois) are "joint employers" and will therefore be named as parties to the complaints.

We have previously discussed the United States Court of Appeals for the Third Circuit's views on joint employer status under the Fair Labor Standards Act (FLSA), a different federal statute.

Why all the hubbub now under the National Labor Relations Act (NLRA)?

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Mailing FMLA Notices to Employees? Not So Fast

This post was contributed by Gina E. McAndrew, an Attorney in McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Scranton, Pennsylvania.

Recently, the United States Court of Appeals for the Third Circuit issued an opinion analyzing the so-called "mailbox rule" in a case which centered on the receipt of an FMLA notice. In Lupyan v. Corinthian Colleges, Inc., Lupyan, the employee, submitted a request for leave from her position as an instructor with Corinthian Colleges, Inc. ("CCI"). Based on a suggestion by her supervisor to apply for short-term disability, she obtained a Certification of Health Provider form from her doctor. Pursuant to this form, CCI determined that she was eligible for FMLA leave. Lupyan met with CCI's Supervisor of Administration, who instructed her to indicate FMLA on her Request for Leave form, and changed her projected return-to-work date to a date in excess of twelve weeks based on the Certification form. Lupyan claimed she was never told of her rights under FMLA during the meeting; however, CCI claimed that it sent correspondence to Lupyan that same afternoon indicating that her leave was designated as FMLA leave and explaining her rights. Lupyan denied receiving the letter, and further denied any knowledge of actually being placed on FMLA.

More than twelve weeks after her leave began, Lupyan received a full release to return to work from her doctor. Lupyan was terminated shortly thereafter, in part because she did not return from her FMLA leave within the twelve weeks allotted for such leave. Lupyan claimed this was the first time she became aware she was placed on FMLA. She filed suit, alleging CCI interfered with her FMLA rights by failing to provide notice that she was on FMLA leave (and thus was unaware of the requirement to return to work within twelve weeks), and further alleging she was terminated in retaliation for taking such leave. The District Court for the Western District of Pennsylvania granted CCI's motion for summary judgment and Lupyan appealed.

Under the FMLA, employers are required to provide both general and individual notice to its employees. In terms of individual notice, the employer must give an individual employee written notice that the employee's absence falls under the FMLA and is governed by it. Once the employer is on notice of FMLA-qualifying leave it must take specific action, including notifying the employee of FMLA eligibility within five business days and notifying the employee in writing whether leave is designated as FMLA leave, the obligations and consequences for not meeting those obligations under the FMLA, and the amount of leave which will count against FMLA entitlement. Failure to provide this notice may constitute an interference claim; prejudice occurs when this failure renders the employee unable to exercise the right to leave in a meaningful way. 

The legal presumption under the "mailbox rule" is that if a letter is proved to have been put into the mail (by way of the post office or by delivery to the mailman), it is presumed that "it reached its destination at the regular time" and was received by the addressee. The Court noted that certified mail provides a stronger presumption of receipt, since it "creates actual evidence of delivery." Regular mail is a weaker presumption, since no receipt or proof of delivery exists. The Court acknowledged that such receipt can be proven by introducing evidence of the practices relating to the mail, such as a sworn statement from someone with "personal knowledge of the procedures in place at the time of mailing." The presumption is not conclusive- once a party has proven mailing, the other party has the burden of producing evidence, which can be minimal, to rebut the presumption.

Here, the letter was sent by regular mail, with no return receipt or tracking requested by the employer. Further, while CCI provided sworn statements by two individuals with actual knowledge of mailing procedures, the affidavits were submitted almost four years after the purported date of mailing. The Court found this to be a weak presumption of receipt under the mailbox rule and not enough to establish actual receipt. Additionally, the Court found that Lupyan's statement alone denying she received the letter was enough to create a genuine issue of material fact, reversing the lower court's order granting summary judgment and remanding the proceedings.

The Court summed up the key takeaway here, noting that "[i]n this age of computerized communications and handheld devices, it is certainly not expecting too much to require businesses that wish to avoid a material dispute about the receipt of a letter to use some form of mailing that includes verifiable receipt when mailing something as important as a legally mandated notice." In other words, when sending an FMLA notice to an employee, use certified mail!

Screaming Profanities and Threatening the Boss Not Enough to Get You Fired According to NLRB

This post was contributed by Adam L. Santuccian Attorney in McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Harrisburg, Pennsylvania.

Yep, that's right. The employee's outburst is too obscene to reproduce on the Blog, but you can review the Board's decision here. Suffice to say that the employee, who was employed for only about two months: (1) called the owner of the company a crook and a number of other colorful names; (2) the attack was personal and contained a veiled threat; and (3) was described as "physically aggressive" by a Board Administrative Law Judge. Should be enough to get you fired, right? Not with this Board.

The employee was a car salesman, and asked some general questions about restroom breaks and employee compensation during his first few days on that job. Pretty typical for a new employee. When the employee sold his first car, he questioned the commission payment he received and questioned the dealership's draw on commissions policy. At various times, the employee was told – if you don't like how we do things here, find yourself another job. (As much as we all would like to say that at times, you and your managers really need to avoid that statement.)

Eventually, the dealership's owner met with the employee to talk with him about his constant complaining. During the meeting, the employee apparently lost it, as described above, and was fired for the outburst.

The employee filed a complaint with the Board, and the ALJ initially concluded that the employee was engaged in concerted activity protected by the National Labor Relations Act, but that his belligerent, physically aggressive and menacing behavior lost the protection of the Act; and therefore, the termination was upheld.

The Board disagreed and reversed the ALJ's determination. The Board found that the Atlantic Steel factors, which are used to determine whether employee conduct lost the protection of the Act, all weighed in favor of the employee. The Board ordered the employee reinstated. The employer appealed to the 9th Circuit Court of Appeals, which determined that the Board's decision was internally inconsistent, i.e. did not make sense, and remanded the case to the Board.

On remand, the Board affirmed its earlier decision (surprise!). The Board noted that although one of the Atlantic Steel factors did weigh against the employee, overall the factors weighed in favor of protecting the employee's conduct. The Board concluded, again contrary to the ALJ, that the employee's conduct was not physically aggressive or menacing. The Board concluded, contrary to the ALJ, that the veiled threat was not really a threat. Ultimately the Board held that the employee's conduct did not lose protection of the Act.

What can we take from this case (besides a whole lot of frustration)? This Board is clearly willing to split hairs when evaluating employee misconduct and the Board's efforts to expand the protections of the Act continue – but we knew that. To us, it appears that this Board is only going to require an express (rather than implied) threat or actual physical violence in order to find that an employee's outburst loses protections of the Act. And that is a shame.

UPDATE: Still No Love for No Gossip Policy

We previously reported that a National Labor Relations Board Administrative Law Judge found that an employer violated the National Labor Relations Act by implementing a "no gossip" policy and firing an employee who violated the policy.

Not surprisingly, the Board has affirmed that decision (pdf).  We say it's not surprising because the Board's assault on employer policies has been ongoing and highly publicized over the past few years.

Suffice to say, employers must be sure to carefully craft policies to ensure compliance with the Act. In addition, employee disciplinary decisions should be closely scrutinized to ensure claims under the Act are not triggered.
 

Long-Term Employee Ineligible for UC Benefits for Violating Workplace Conduct Policies

This post was contributed by Joseph S. Sileo, an Attorney in McNees Wallace & Nurick's Labor & Employment Practice Group in Scranton, Pennsylvania.

After nearly 21 years of employment, a full-time clerk with Turkey Hill lost her job for engaging in several instances of bad behavior within a short period of time. The employee initially received a verbal counseling from her supervisor after telling two Spanish-speaking co-workers to stop speaking Spanish at work because it was a "pet peeve" of hers that employees should speak English when working in the United States. Then, only a few months later, the employer received a complaint that that employee was involved in an argument with a driver over the telephone during which she displayed her "middle finger" to the phone as the call ended, an unseemly gesture that was witnessed by an outside store vendor. Following this incident, the employee was advised that her behavior must improve and she was issued a written warning; when her supervisor attempted to give her copies of the Company polices that she had violated, the employee attempted to throw the policies in the garbage. Having had enough, the employer terminated the employee.

The employee filed a claim for unemployment compensation (UC) benefits and Turkey Hill challenged the employee's UC application. Turkey Hill pointed to its disciplinary policy prohibiting loud, argumentative, disruptive or otherwise unprofessional conduct toward or in the presence of others, including associates, vendors, visitors and the public, as well as its "Enduring Principles" policy which, among other things, required employees to treat others with fairness and respect and practice honesty and integrity in all relationships. Turkey Hill argued that the employee's conduct violated both policies and that her termination for such willful misconduct rendered her ineligible for UC benefits.

Not surprisingly, the employee's testimony differed significantly as compared to the employer's witnesses. As a result, the outcome of the case turned primarily on witness credibility. The employee testified that she "politely" asked her two co-workers not to speak Spanish when she was standing between them as it was rude for them to do so, she did not make a crude "middle finger" gesture during the phone call, and she never refused to read or attempted to throw away any policies presented to her by her supervisor.

Both the Referee following the hearing, and then the UC Board of Review on appeal, credited the testimony of the employer's witnesses over the employee's testimony, and determined that the employee's separation from employment was due to willful misconduct thus rendering her ineligible for UC benefits. The employee appealed.

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President Obama Signs Executive Order Prohibiting Federal Contractors from Discriminating Based on Sexual Orientation and Gender Identity

Frustrated with Congress's failure to pass the Employment Non-Discrimination Act (ENDA) and consistent with his recent Executive Order to raise the minimum wage to $10.10 per hour for employees of federal contractors, President Obama once again signed an Executive Order on Monday amending Executive Order 11246 to include "sexual orientation" and "gender identity" in the list of protected classes federal contractors may not discriminate against.

In light of the President's action, Executive Order 11246, originally issued by President Lyndon Johnson, will now prohibit federal contractors from discriminating "against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin.” The Executive Order is not as broad as the proposed Employment Non-Discrimination Act, a law that would prohibit discrimination in employment based on sexual orientation or gender identity for all employers with 15 or more employees. There is no indication that Congress will act anytime soon to enact nationwide legislation prohibiting private employers from discriminating in hiring and employment on the basis of sexual orientation or gender identity.

Notably, the Executive Order does not contain any type of "religious exemption" meaning that religiously affiliated federal contractors and subcontractors must abide by the Executive Order. Under an Amendment to the Order issued by President George W. Bush, religiously affiliated contractors may favor individuals of a particular religion when making employment decisions. However, President Obama's Order does not allow religious organizations with federal contracts or subcontracts to consider sexual orientation or gender identity when making employment decisions. Federal law already prohibits discrimination against federal employees based on sexual orientation and President Obama's Order extends that protection to discrimination on the basis of gender identity.

What does this mean for many Pennsylvania employers? Frankly, not much. The Executive Order only applies to federal contractors and subcontractors. Unlike 18 other states and the District of Columbia, Pennsylvania does not have a law prohibiting employment discrimination based on sexual orientation or gender identity—however many of the Commonwealth's largest cities including Pittsburgh, Harrisburg, and Philadelphia do. While Pennsylvania employers are free to include sexual orientation and gender identity in the list of protected classes guarded by their discriminatory harassment policies, they are under no legal obligation to do so unless they are a federal contractor or subcontractor or covered by a local ordinance. Furthermore, according to the White House, 91% of Fortune 500 companies already prohibit discrimination based on sexual orientation; and 61% already prohibit discrimination based on gender identity.

The President's Executive Order requires the Department of Labor to prepare regulations to implement the requirements of his Order within 90 days. We will update you again when proposed regulations are released in mid-October.