FAIL: Union Argues Arbitration Panel Should Ignore Public Employers' Ability to Pay

Yeah, I know, crazy right? Here is the story. Apparently the Union did not think so. When the American Federation of State, County and Municipal Employees ("Union") and the City of Philadelphia ("City") could not reach terms on a new collective bargaining agreement, they submitted the dispute to binding interest arbitration.

The Union was seeking, among other things, 8 percent annual wage increases! The City countered that it simply did not have the money to fund the Union's demands. The Union argued that the City's financial health was irrelevant. Huh? How can you pay for something if you don't have any money?

The Union's argument was essentially – cut programs, raise taxes, lay off other workers we don't care; how you pay for our 8 percent annual pay increases is your problem not ours! Insane, right?

Thankfully, the arbitration panel rejected the Union's argument and determined that it was appropriate to consider the City's ability to pay. However, the Union was undeterred. The Union petitioned the court to vacate the arbitration decision, arguing that the panel should not have considered the financial health of the City when rejecting their hefty wage increases. Thankfully, the court disagreed.

The court concluded that the Union's arguments lacked merit, and that it was appropriate for the arbitration panel to consider ability to pay when making decisions regarding wages and other compensation related items.

Thankfully, the arbitration panel and the court brought some sanity to what seemed like an insane dispute. Ability to pay is obviously highly relevant to consideration of pay and benefit demands. Public employers are facing increasing budget constraints these days and are often on the brink of distressed status. When evaluating union demands, public employers must consider their ability to pay and when appropriate explain to the union early and often that the budget simply cannot tolerate increased expenses. Where appropriate, lay the foundation for demonstrating the financial inability to meet the union's demands.

U.S. Supreme Court Finds Sworn Testimony Outside Scope of Regular Job Duties Entitled to First Amendment Protection

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

While the labor and employment law world is abuzz after the decisions in Burwell v. Hobby Lobby and Harris v. Quinn (cases this Blog will cover in the coming days), the United States Supreme Court also issued a decision further clarifying protected speech under the First Amendment. In Lane v. Franks, et al., the Court analyzed whether a public employee, testifying under subpoena, was entitled to First Amendment protection when his testimony was outside of the scope of his job duties.

The employee, Edward Lane, was hired by Central Alabama Community College as Director of Community Intensive Training for Youth ("CITY"), a statewide program in Alabama for underprivileged youth. Shortly after his employment began he conducted an audit of CITY's expenses. The audit led to the termination of an Alabama State Representative, who was on CITY's payroll. Following the termination decision, Lane provided testimony against the Representative in support of an FBI investigation of the Representative. Shortly after his testimony, twenty-nine CITY employees were laid off, including Mr. Lane. While twenty-seven of these terminations were rescinded, Mr. Lane's was not.

Lane filed suit, claiming he was terminated in retaliation for providing testimony against the Representative. The District Court found that his testimony was not protected by the First Amendment. The District Court stated that public employees speaking pursuant to official job duties were "not speaking as citizens for First Amendment purposes." The District Court opined that Lane learned of the information included in his testimony while an employee of CITY, so his "speech [could] still be considered as part of his official job duties." Lane appealed, first to the 11th Circuit Court of Appeals and then to the United States Supreme Court.

In overturning the lower courts' decisions, the Supreme Court restated the special test applied to public employees for First Amendment protection purposes. The first part of this analysis examines whether the speech in question was made pursuant to official duties or as a citizen and whether the employee was speaking on a matter of public concern. If the employee is speaking as a citizen and on a matter of public concern, the second part of the test is whether the public employer has "adequate justification for treating the employee differently from any other member of the general public."

The Court noted that "[t]ruthful testimony under oath by a public employee outside the scope of his ordinary job duties is speech as a citizen for First Amendment purposes," even when that speech "relates to his public employment or concerns information learned during that employment." The Court noted that such testimony is a "quintessential example of speech as a citizen," as it comes with the obligation to tell the truth. This obligation is separate and distinct from any obligations a public employee may have to his employer.

The Court opined that the essential question is whether the relevant speech is "ordinarily within the scope of an employee's duties" and "not whether it merely concerns those duties." In its analysis, the Court found that such public employee speech holds special value because of how public employees gain knowledge, and is "necessary to prosecute corruption by public officials." The Court ultimately found Lane's sworn testimony, pursuant to a subpoena, to be speech as a citizen and on a matter of public concern. In applying the second step of the analysis, the Court found that the employer had no legitimate interest in treating Lane differently from any other member of the public, finding that his testimony did not involve any false statements or disclose any privileged or confidential information.

The Court's decision provides useful guidance to public employers in the area of First Amendment protection for public employees. However, future decisions will likely shed light onto when speech is "ordinarily within the scope of an employee's duties" sufficient to warrant First Amendment protection. Many employees, especially public employees, provide testimony on a regular basis pursuant to official job duties. Accordingly, while Lane is helpful, First Amendment issues must still be evaluated on a case-by-case basis.

Pennsylvania Supreme Court To Consider When a Public Sector-Related Entity May Subcontract Bargaining Unit Work to Private Sector Contractors Without Bargaining

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

In a case which will interest public and private sector employers alike, American Federation of State, County and Municipal Employees, District Council 87 v. Pa. Labor Relations Bd.the Pennsylvania Supreme Court is poised to address important issues regarding the subcontracting of public sector bargaining unit work to private sector contractors.

The work in question is the work of the Luzerne/Schuylkill Workforce Investment Board ("WIB"), which was created under federal and state law to "increase local employment through the provision of educational training and services, which are paid for by federal funds." Previously, these duties were performed by the Luzerne County Workforce Investment Development Agency ("County Agency"), but the WIB decided to issue a Request for Proposals to explore whether a subcontractor should be hired to perform the services. The County Agency employees were represented by AFSCME (the "Union"), and the Union demanded to negotiate with the County regarding the potential subcontracting. The County did not respond to these demands and the WIB proceeded to issue the RFP.

The RFP indicated that the decision was subject to approval by both Luzerne and Schuylkill Counties' Commissioners; however, the Commissioners did not act on recommendations forwarded by the WIB. The County Agency bid on these services, but was not recommended for or awarded either contract. The WIB proceeded to award contracts to bidders and enter into contracts with third-party contractors. Thereafter, the Union filed an unfair labor practice charge against Luzerne County for unilaterally subcontracting without bargaining.

A hearing examiner issued a Proposed Decision and Order, finding that the WIB was controlled by the County, and thus the County had committed an unfair labor practice. The hearing examiner determined that the chief elected officials directed the WIB to seek bids, the RFPs indicated the Commissioners had to approve the contracts, and that the WIB was required to act with the agreement of these officials on certain matters. However, the Pennsylvania Labor Relations Board reversed that decision, finding that the County did not control the WIB, as it was the WIB's decision to subcontract, issue the RFPs, review bids, choose successful bidder(s) and enter into the contracts. As such, the Board found the County did not commit an unfair labor practice when a third party (WIB) made the decision to subcontract.

The Union appealed to the Commonwealth Court. In upholding the Board's decision, the Court found no error in the Board's factual conclusions that WIB independently decided to subcontract. The Court also noted that the County Agency attempted to retain its contracts by submitting a bid, as it had done at least once previously, and that the disbursement of funds was at the direction of the WIB. The Court held that although the chief elected official partners with the WIB to create a local plan and approves the budget, this does not mean that the local official controls the WIB. The Court concluded that WIB was "an independent third party not subject to the collective bargaining agreement" and its actions were "not attributable to the County."

However, the Court's ruling was not unanimous. In his dissent, Judge Pellegrini, joined by Judge McGinley, opined that the Board erred in finding the County had not committed an unfair labor practice, as the County failed to negotiate to a bona fide impasse before subcontracting.  Judge Pellegrini disagreed with the majority's ruling, reasoning that the WIB was part of County government, as its purpose was to "advise and assist" County officials and had no authority to enter into a contract authorizing the disbursement of funds; the County had control over the WIB based upon the facts of record, including that the RFPs indicated that decisions were subject to the Commissioners' approval; and the WIB did not have a "separate legal status."

The Pennsylvania Supreme Court has agreed to hear this issue on appeal. The decision will likely have significant implications for public sector employers, and their various related and affiliated entities, as well as private sector organizations seeking to do business with these entities. Stay tuned for future updates on this important topic.

The FLSA Applies to Public Sector Employers, Too

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

Most HR professionals in the private sector are aware of the risks presented by non-compliance with the overtime and minimum wage requirements of the federal Fair Labor Standards Act ("FLSA") and its state law companion, the Pennsylvania Minimum Wage Act ("PMWA"). Since 1974, the FLSA's requirements have applied to virtually all state and local government employees and most federal employees, too.

A recent decision in the case of Morrow v. County of Montgomery illustrates this point. In Morrow, a class of correctional officers at the Montgomery County Correctional Facility filed a class action lawsuit against the County in the United States District Court for the Eastern District of Pennsylvania, alleging that they were not compensated for time spent working before and after their scheduled shifts. The plaintiffs in Morrow sought damages under both the FLSA and PMWA. On January 31, 2014, the Court issued a decision that (1) dismissed the plaintiffs' PMWA claims, but (2) granted the plaintiffs' motion to conditionally certify a collective action based on their claims under the FLSA. After noting that no court has directly ruled on the applicability of the PMWA to government entities, the Court concluded that government entities were not covered by the PMWA and dismissed the plaintiffs' state law claims. However, the Court also held that plaintiffs met their initial burden of showing that the proposed class members were similarly situated and conditionally certified the class for purposes of an FLSA collective action. Thus, the class-based FLSA claims for unpaid overtime will move forward.

The Court's holding in Morrow that the PMWA does not apply to government entities is certainly useful for public sector employers. That said, the remainder of the decision confirmed that, with a few limited exceptions, the FLSA applies to government entities in the same manner that it applies to private sector employers. Public sector employers face the same risks and threats of class-based litigation under the FLSA that have vexed the private sector for years. As such, it is important for all employers, public and private alike, to work to ensure compliance with the FLSA.

Three in a Row? That's a Trend

It seems like we have been spending a lot of time discussing successful appeals of arbitration decisions lately, which is been a good thing for Pennsylvania employers. Recently, we reported on two cases in which an employer successfully appealed a negative arbitration decision. Historically, such successful appeals have been difficult. However, the current trend continued when a decision from the Commonwealth Court of Pennsylvania, sitting en banc (as full court rather than simply a three judge panel), rounded out the trifecta.

In Pa. Dept. of Corr. v Pa. State Corr. Officers' Assoc. (pdf), the court was asked to analyze whether a grievance arbitrator's decision reinstating corrections officers accused of inmate abuse was rationally derived from the collective bargaining agreement, and of so, whether the award violated a well-defined public policy. You may recall from our prior posts that these questions call for the application of the "essence test" and the limited public policy exception to that test.

Let's take a step back.  The grievants had been suspended pending investigation of corroborated allegations of inmate abuse, and the union filed grievances challenging the suspensions. The first issue before the arbitrator was whether the grievances were timely filed. The parties' agreement required that grievances be filed within 15 days of the alleged "occurrence" giving rise to the dispute. The arbitrator found that the grievances were in fact timely filed, even though they were filed well beyond 15 days after the implementation of the suspensions. The arbitrator reached this conclusion by finding that the suspensions constituted continuing violations of the agreement. The arbitrator held that, as a result, the grievances were timely filed even if back pay would be limited to the date the grievances were filed. Basically, the arbitrator held that each day of suspension gives rise to a new occurrence, triggering a new 15 day period.

What did the court have to say?  The court disagreed and succinctly concluded that the arbitrator's decision, which did not cite to any provision of the agreement, lacked foundation in and failed to logically flow from the agreement. Put simply, the arbitration decision failed the essence test. The court did not reach the issue of whether the decision would violate a public policy.

So what?  For those of us with responsibilities for responding to grievances, this decision is significant. The court seems to have thrown out the continuing violation theory, a theory that unions often rely on when grievances are untimely filed, but there is some ongoing impact on the grievant.  Because most agreements prohibit an arbitrator from adding language to the agreement, as the agreement did here, without a specific provision providing for its use, employers should strongly consider taking the position that the continuing violation theory is dead.

Appealling An Arbitration Decision - A Success Story Part II

The Supreme Court of Pennsylvania recently confirmed that sexual harassment is against public policy. Seems like a no brainer, right? The court seemed to agree, stating that the decision in Phila. Housing Authority v. AFSCME, District Council 33, Local 934 [WARNING EXPLICIT] (pdf) was not "a difficult case." So, why did it take over a decade to reach this conclusion?

Let's look at what happened.  The union representing an employee of the Philadelphia Housing Authority filed a grievance challenging the employee's termination for sexual harassment. An arbitrator reinstated the employee, with back pay, despite finding that the employee was not credible and had refused to take responsibility for his "lewd, lascivious and extraordinary perverse" physical and verbal harassment of a coworker. After the decision was appealed and wound its way to the court (for the second time), the court held that it was against public policy for an arbitrator to reinstate an employee who was terminated by a public employer for engaging in physical and verbal harassment. Although the arbitrator's award was entitled to deference under the essence test, the award essentially amounted to a reward for the employee's borderline criminal behavior and was contrary to the clear public policy prohibiting sexual harassment in the workplace.

You may recall from our prior posts that the essence test is an extremely deferential standard of review by which courts review the decisions of arbitrators. Under that test, if an arbitrator's decision is grounded in the collective bargaining agreement, and is rationally derived from that agreement, then the court will not disturb the arbitrator's findings. In the majority of cases, the courts simply defer to the decision of the arbitrator.  So what happened here? 

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Pennsylvania Whistleblower Law Restricts Ability of Public Employers and Non-Profits to Terminate Employees

In Pennsylvania, as in the majority of states, most employees are presumed to be employed “at will.” Under the at-will employment doctrine, an employer does not need “cause” to terminate an employment relationship. Rather, the employer may terminate an employee at any time, for any reason or no reason at all. (At the same time, the employee reserves the right to terminate his or her employment for any reason.) The only caveat is that the employer’s reason for termination cannot be an illegal one.

Federal and state statutes, as well as the courts, have created a number of exceptions to the doctrine of at-will employment. To be sure, an employee cannot be fired (or demoted, transferred, denied a promotion, or subject to any otherwise “adverse employment action”) on the basis of race, religion, gender, national origin, age, or disability, among other things. In addition, under Pennsylvania law, certain employers may not terminate an employee who has reported that his or her employer is engaging in misconduct.

Such retaliation is prohibited by Pennsylvania’s Whistleblower Law, 43 P.S. § 1421 et seq. Specifically, the Whistleblower Law makes it unlawful for an employer to “discharge, threaten or otherwise discriminate or retaliate against” an employee for making a good faith report to a superior or to an “appropriate authority” about an instance of “wrongdoing or waste.” The Whistleblower Law also prohibits retaliation against an employee who has participated in an investigation, hearing, or inquiry into the employer’s alleged misconduct.

While the Whistleblower Law does create a significant carve-out to the at-will employment doctrine, the whistleblower protections afforded do not protect every gripe, objection, or criticism of a dissatisfied employee. Specifically, the Law extends whistleblower protections to only those employees who report “waste” or “wrongdoing.” These terms are narrowly defined to require more than a report of inefficient business practices or violation of internal policies. Rather, the Whistleblower Law requires a report of conduct that is (1) specifically prohibited by a particular federal, state, or local law or regulation; (2) a substantial abuse of public funds or resources; or (3) a breach of professional ethics. Moreover, the employee must report the misconduct internally to a supervisor or externally to a government body or agency with appropriate enforcement or regulatory authority over the subject of the report; a report to a co-worker, the general public, or a member of the media is not protected.

The most significant limitation on an individual’s ability to challenge his termination under the Whistleblower Law is that the statute extends whistleblower protections to only those who are considered “employees” within the meaning of the statute. Unlike many states who extend whistleblower protection to both public and private employees, the Pennsylvania Whistleblower Law narrowly defines “employee” to be an individual performing work for wages for a “public body.” In simple terms, a “public body” is a state or local government agency or department, or any entity “funded in any amount by or through Commonwealth or political subdivision authority.”

What then qualifies as a “public body”? Clearly, state agencies, departments, and commissions; county, city, and township bodies; municipal corporations; and school districts are public bodies. But beyond that, the answer depends on whom you ask. 

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Public Sector Supervisors Can Be Personally Liable for Violations of the FMLA

A recent Third Circuit Court of Appeals decision has made clear that supervisors in public agencies may be subject to individual liability under the Family and Medical Leave Act (FMLA). The court previously has held that public employers, private employers, and supervisors in the private sector may be liable for FMLA violations. Now, for the first time, in Haybarger v. Lawrence County Adult Probation and Parole, the court has extended FMLA liability to supervisors in the public sector.

The facts in Haybarger may seem eerily familiar to many of you. A public-sector employee took FMLA-covered absences for a number of different health issues. The supervisor, who served as the Director of the Probation and Parole Office, believed that the employee was under performing and that her attendance problems contributed to her poor performance. The supervisor wrote in the employee's performance evaluations that she needed to improve her overall health and cut down on the days that she missed due to illness (red flag!). The supervisor also formally disciplined the employee, placing her on probation for six months, which required weekly formal progress assessments and monthly meetings. While it is unclear who specifically made the ultimate decision to terminate the employee, she was terminated when her performance did not improve.

Not surprisingly, following her termination the employee brought suit raising a number of claims against the County, the Probation and Parole Office, and the supervisor. After many of the claims were dismissed, and a few were settled, all that remained for the court to decide was the FMLA claim against the supervisor. The supervisor argued that he was not liable under the FMLA.

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The State of State Unions: A Year in Review

This post was contributed by Tony D. Dick Esq., an Associate in McNees Wallace & Nurick LLC's Labor and Employment Practice Group in Columbus, Ohio.

Many watched intently in early February as the political theater unfolded in Madison, Wisconsin when Republican Governor Scott Walker proposed legislation to limit the collective bargaining rights of most state government employees. In a matter of days, the Capitol would be swarming with protesters and demonstrators on both sides of the issue. What followed was weeks of sit-ins in the Capitol, a mass walkout by all 14 Democratic State Senators to block a vote on the proposed law, the unprecedented recall elections of 6 Republican and 3 Democratic state lawmakers and a bitterly fought campaign to unseat an incumbent State Supreme Court Justice widely viewed as a pro-Walker.

Those in favor of public sector reform argue that collective bargaining limits are necessary to deal with steep budget shortfalls. Projections from Governor Walker’s office estimate that the state will save approximately $30 million this year as a direct result of the new law. On the other side, pro-union allies contend that moves like the one in Wisconsin are nothing more than a political power grab designed to bust up unions and cripple their longstanding support of Democratic candidates. Observers on both sides generally agree though that the movement to reform public sector collective bargaining rights has invigorated the debate on the role of unions in today’s uncertain economic climate.

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United States Supreme Court Clarifies Public Employee Petition Clause Protections

This post was contributed by James Welch, a Summer Associate with McNees Wallace and Nurick LLC. Mr. Welch will begin his third year of law school at William & Mary School of Law in the fall, and he expects to earn his J.D. in May 2012.

In Borough of Duryea v. Guarnieri, 113 S.Ct. 2488 (2011) (PDF), the United States Supreme Court clarified that, although the Petition Clause of the First Amendment of the United States Constitution provides public employees separate and distinct protections, those protections are essentially the same as those afforded by the Free Speech Clause of the First Amendment.  This is good news for public sector employers, who already face a slew of additional concerns in the area of employee discipline. 

The Petition Clause has been trendy for public employees lately, but its contours have been somewhat unclear.  Generally, the Petition Clause protects the rights of individuals to petition the government to seek redress of grievances.  The courts have held that this provision protects public employees who file grievances against their employers.  In other words, public employers are prohibited from retaliating against an employee who has filed a grievance or other complaint. 

However, like other protections afforded to employees, there are limits to the protections afforded by the Petition Clause.  The issue in Guarnieri was, what types of grievances/complaints are protected? 

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Court Issues Ruling Restricting Ability to Suspend Police Officers Pending Investigation

In a recent precedent-setting opinion, the Third Circuit Court of Appeals significantly restricted the ability of police departments to suspend police officers pending investigation in Pennsylvania. The decision in Schmidt v. Creedon, __ F.3d __ (3rd Cir. 2011) (pdf) makes clear that absent extraordinary circumstances, prior to suspending a police officer for any reason, a police department must provide the officer with notice and a hearing.

In Schmidt, the plaintiff, a police officer, was suspended and ultimately terminated after he entered criminal charges against his superior officers into a criminal record data base. According to the employer, following a dispute, the officer left his duty area, entered information that there was probable cause to arrest some of his superiors officers, and failed to report these allegations through his chain of command. After the department conducted a brief investigation into the incident, the plaintiff was suspended pending further investigation. The officer was suspended three days after the incident occurred, and was not questioned or interviewed before he was suspended. The officer was eventually terminated, but reinstated by an arbitrator with no back pay.

The plaintiff filed suit against the department and some of his superior officers, alleging that they violated the 14th Amendment of the United States Constitution by suspending him without providing him with notice of the charges against him or a hearing. Under the 14th Amendment, a government actor cannot deprive an individual of life, liberty or property without due process. In the employment context, the courts have held that if another statute, such as a civil service statute, provides employees with protection from suspension or termination, then such employees have a property interest that cannot be taken away without due process. Interestingly, the court relied on a provision in the Borough Code to find that the plaintiff had a property interest in his job because the Borough Code provides that police officers may not be suspended or terminated without just cause.

The court concluded that the plaintiff was deprived of his rights under the 14th Amendment because he was not afforded due process before he was suspended pending investigation. The court held that, except for extraordinary circumstances, under Pennsylvania law, notice of the charges and a brief and informal pre-suspension hearing is necessary, even if the officer has access to a collectively bargained grievance procedure or other appeal process.

Only a brief and informal hearing is necessary in this context, and it appears that departments can satisfy these requirements by stating, verbally or in writing, the nature of the investigation, the nature of evidence currently available, and by allowing the officer to provide a statement. In addition to interviewing the officer before suspending him or her pending investigation, which has always been a good practice, departments should be sure to issue a written suspension notification.

The court made clear that there is an exception to the pre-suspension hearing requirement for "extraordinary circumstances," and further defined that term to include those situations in which some valid government interest is at stake that justifies postponing the hearing until after the suspension. However, the court did not determine whether such circumstances existed in this case, and provided no further explanation or guidance as to what may constitute extraordinary circumstances. Importantly, waiting a few days to suspend an officer while additional information is gathered may undermine a claim that an important interest existed that required immediate suspension without a hearing. The court also noted that the United States Supreme Court has held, in Gilbert v. Homar, 520 U.S. 924 (1997), that if a third party has determined probable cause existed to believe that a serious crime occurred, such as when an officer has been arrested and charged with a crime, a department may suspend an officer without a hearing.

The court appeared to go to great lengths to limit its decision in this case, and to provide departments with as much guidance as possible. For example, the court noted that if an officer is suspended with pay, the analysis would have very likely been different. However, while the court's decision appears to be limited to police officers, the due process requirements would apply to any public employee who is protected by statute from being suspended or terminated without good cause, unless the statute provides an exception or one of the exceptions noted above applies. Therefore, in addition to police departments, all public sector employers in Pennsylvania should be sure to review their suspension procedures to ensure compliance with this decision.

This decision will require some police departments to change their practices regarding suspensions pending investigation, and may hamper a department's ability to take immediate action in certain cases.

Public Employers Still Cannot Unilaterally Impose Restrictions on Union Employees' Tobacco Use

This post was contributed by Kelley E. Kaufman, Esq., an Associate in McNees Wallace & Nurick LLC's Labor and Employment Law Practice Group.

In a recent decision, the Supreme Court of Pennsylvania evaluated whether a public employer's ban on employee tobacco use in the workplace affected a "working condition" that was subject to the employer's statutory duty to bargain with the union representing its employees. In Borough of Ellwood City v. Pa. Labor Relations Bd. (pdf), the Court held that, under the Pennsylvania Labor Relations Act, the municipal employer's ban on the use of tobacco products in the workplace was a mandatory subject of bargaining.

The Borough of Ellwood passed an ordinance in 2006, which banned tobacco use on or in Borough-owned buildings, vehicles and equipment – a ban that applied to the Borough's unionized police officers. The Borough unilaterally implemented the ban without bargaining with the union. The union subsequently filed an unfair labor practice charge against the Borough with the Pennsylvania Labor Relations Board, alleging that the Borough failed to bargain over a mandatory subject of bargaining. On appeal, the Court found for the Union, holding that tobacco use restrictions constitute a mandatory subject of bargaining – not an "inherent managerial prerogative." Thus, the Borough was obligated to bargain with the union over the tobacco restrictions.

The Ellwood Court also addressed potential conflicts between a municipality's ability to enact legislation protecting the health, welfare, safety, and general welfare of its citizens with the rights of the police officers to collectively bargain. In reconciling this conflict, the Court noted that, while local legislation promoting clean air and warning of the risks of tobacco use was laudatory, such legislation cannot serve as a barrier to negotiations over the topic when it constitutes a working condition subject to mandatory bargaining.

Although the Borough is a public employer, the Court's decision has implications for public and private employers alike. Many employers are subject to the Pennsylvania Clean Indoor Air Act and similar local ordinances which may impose restrictions on tobacco use in workplaces and public areas. However, unionized employers who unilaterally change existing policies and practices to comply with such restrictions may face challenges from the unions with which they deal. For this reason, it may be advisable for unionized employers to discuss applicable tobacco restrictions and the impact of these restrictions with the union before implementing changes.

Supreme Court Issues Highly Anticipated City of Ontario v. Quon Decision

On June 17, 2010 the United States Supreme Court issued the highly anticipated decision City of Ontario v. Quon (pdf). The case was closely watched by many in the human resources and employment law spheres because it was thought that the case would shed valuable light on employees' privacy rights in the area of employer-provided electronic devices. The Court admitted that the case raised issues of "far-reaching significance," but nonetheless unanimously decided the case on previously established legal principals, and left many questions unanswered.

Quon was appealing for many reasons, not the least of which were the facts of the case. In 2001, the City of Ontario, California, Police Department issued members of the SWAT team two-way pagers in an effort to help the team mobilize and respond to emergencies quickly. The City had a contract with Arch Wireless Operating Company (Arch), also a party to the litigation, to provide wireless services for the pagers. The City's "Computer Usage, Internet, and E-Mail Policy" applied to text messages sent via the pagers, and the policy specifically put employees on notice that they should have no expectation of privacy or confidentiality.

Quon and other officers exceeded the monthly text message limit many times, but a Lieutenant informed Quon, and others, that if they paid for the excess text messages, he would not audit the text message records to determine whether the excess messages were work-related or personal. Quon and other officers took advantage of this opportunity and paid for the excess text messages. After several months, the Chief of Police determined that an audit should be conducted to determine whether the text message limit was too low, or whether the officers were using the pagers for personal reasons too often. The audit revealed that Quon was "sexting" his wife and his mistress while on duty. Presumably, Quon was disciplined for his actions.

Quon and others filed suit against the City, the Department and the Chief, alleging that the audit violated their Fourth Amendment right to be free from unreasonable searches. Quon also filed suit against Arch, alleging a violation of the Stored Communications Act, because Arch turned over the transcripts of the text messages to the Chief. The Ninth Circuit Court of Appeals reversed the District Court (pdf) and held that the City, the Department and the Chief did in fact violate Quon's Fourth Amendment rights, and held that Arch violated the Stored Communications Act by turning over the text transcripts.

The Supreme Court agreed to review the case only on the Fourth Amendment issue, and therefore, the Stored Communications Act judgment against Arch Wireless remains intact. The Court made many assumptions in its decision, and therefore failed to answer many questions presented by the case. Instead, the Court focused on one narrow issue, i.e. whether the search was "reasonable," to determine the outcome. The Court determined that the review of Quon's text messages was reasonable, and therefore, not a violation of the Fourth Amendment.

In order to be reasonable, a public sector employer's work-related search must be justified before the search, and the search must be reasonably related to the justification and cannot be excessively intrusive. The Court held that the search of Quon's records was justified because many officers exceeded the text message limit, and the Chief needed to determine whether that was because the limit was too low, or because the officers' personal usage was too high. The Court also concluded that the scope of the search was appropriately limited. Importantly, the Court noted that it would not have been reasonable for Quon to have concluded that his messages were in all circumstances immune from review. Thus, the search was justified and not excessive, and therefore, there was no Fourth Amendment violation.

While the Quon decision was highly anticipated for many reasons, including the interesting facts and the potentially far-reaching implications of any decision outlining employees' privacy rights in the workplace, it left many observers wanting more. The decision did leave the door open for both employees and employers to further define the landscape of employees' privacy rights in the workplace, and dropped clues as to what the Court will consider when the issue of employee privacy appears again.

In addition, the decision was important for public sector employers that provide electronic communication devices to employees. Public sector employers are permitted to "search" electronic records when the search is justified and appropriately limited in scope to the justification. In other words, although not every search is permissible, a well-justified and well-tailored search will not be found to be a violation of the Fourth Amendment.

Finally, all employers, public and private, should make certain that supervisors and managers are properly trained regarding policies related to electronic resources and devices to ensure that they are not waiving any of the employer's rights to enforce the policy. Therefore, all employers should review the Court's decision and determine what, if any, policy and procedure changes are necessary. 

Civil Rights Division Announces Plan to Target Public Employers

During his recent State of the Union Address, President Barack Obama confirmed the news that some employers feared. During his address, President Obama stated that the Civil Rights Division (CRD) of the Department of Justice (DOJ) will begin aggressively pursuing employment discrimination claims. The President's statement reiterated the CRD's December 2009 message to Congress that they will be increasing prosecution and litigation efforts in this area.

In December 2009, Thomas E. Perez, assistant attorney general for civil rights, announced the CRD's intention to file more class action "pattern or practice" discrimination suits against state and local governments. Class action suits involve large groups of plaintiffs, and the term "pattern or practice" refers to alleged widespread discrimination, typically when dealing with decisions involving new hires or promotions. In a typical case, the CRD will allege that an employment practice, such as a test or physical ability requirement, unlawfully discriminates against a certain protected class of individuals because fewer members of that class are selected. This makes public employers who hire large numbers of employees each year, for example prison guards or police officers, susceptible to discrimination claims based on latent defects in their selection methods or tests.

In addition to seeking a variety of remedial damages in these cases, such as priority hiring and reforming an organization's hiring and promotion procedures, the CRD also will pursue monetary damages. Mr. Perez also announced his intention to pursue other types of claims against employers, such as those arising Uniformed Services Employment and Reemployment Rights Act (USERRA), which protects reemployment rights of employees serving in the military. Mr. Perez also mentioned Project Civic Access, which seeks to enforce compliance with the public accommodation provisions of the Americans with Disabilities Act by sending investigators to evaluate state and local government facilities. The heightened focus on enforcement efforts already has begun to increase investigation, prosecution and litigation in each of these areas.

The CRD's renewed focus on vigorous enforcement and prosecution of cases, without any testimony regarding an actual increase in the number of violations, is consistent with the renewed focus on enforcement within the Department of Labor, the Equal Employment Opportunity Commission, and other federal agencies under the Obama Administration. State and local governments that come under investigation by the Department of Justice, the CRD, or any other federal government agency should seek legal counsel early in the process to ensure the investigation proceeds in a lawful manner and the potential damages available, if any, are limited.

Public Employers Beware: The Other Religious Discrimination Claim

As a public employer, your actions are considered the actions of the government or the “state.” This dual persona brings with it additional obligations and challenges that private employers do not face. Some of these obligations include the requirement to provide due process rights to employees, and the challenges include a seemingly endless variety of lawsuits that your employees may bring against you. Lawsuits unique to public sector employers include unreasonable search and seizure challenges, including e-mail and text message based challenges, free speech challenges, and alleged violations of the Establishment Clause of the First Amendment.

The Establishment Clause prohibits the government from endorsing any particular religion and, in fact, endorsing religion at all. In a recent case involving the Establishment Clause, Milwaukee Deputy Sheriffs' Association v. Clarke, the 7th Circuit Court of Appeals found that a county sheriff violated the Establishment Clause by having a Christian organization deliver a faith-based presentation to employees at mandatory meetings. The court concluded that the Sheriff, by introducing the Christian group and allowing them to speak at mandatory employee meetings, either endorsed the group or at the very least, gave the appearance of endorsing the group. This endorsement constituted a violation of the Establishment Clause, and the Sheriff’s Department was ordered to cease and desist from further violations and was also required to pay over $38,000 in fees and costs.

While it may seem like an easy decision for most savvy Human Resource practitioners to avoid supporting one religion over another in the workplace, this is something that still occurs outside of the watchful eye of HR. It is true that Milwaukee Deputy Sheriffs' Association is an extreme case, but it is still a good reminder that as a public employer, you must avoid showing preference toward one religion over another. Because this message does not always trickle down to all supervisors and managers, the facts of this case serve as a good reminder to briefly discuss at your next executive staff meeting or supervisor and manager training session.