As part of the Consolidated Appropriations Act of 2023, Congress passed two new pregnancy-related laws requiring covered employers to provide reasonable accommodations to employees due to pregnancy, childbirth, and related medical conditions. The two new laws are the Pregnant Workers Fairness Act (PWFA), effective June 27, 2023, and the Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP Act), effective April 28, 2023. These laws will generally enhance the protections afforded to pregnant employees and create new compliance obligations for employers.

The PWFA will require employers with 15 or more employees to grant temporary and reasonable accommodations for pregnant employees or pregnant job applicants. Under the current Pregnancy Discrimination Act (PDA), covered employers are generally only prohibited from discriminating against pregnant employees. The PDA does not, however, guarantee accommodations for pregnant employees. The PWFA will not only require covered employers to provide reasonable accommodations to pregnant employees, but will also prohibit employers from discriminating against a job applicant or employee because of their need for a pregnancy-related accommodation.

If this all sounds familiar, it is because the PWFA’s protections are similar to those outlined in the Americans with Disabilities Act (ADA). Like the ADA, the PWFA will require covered employers to engage in an interactive process with pregnant employees and to provide reasonable accommodations where appropriate. But, like the ADA, pregnant employees will not necessarily be entitled to the accommodation of their choice under the PWFA – just a reasonable accommodation that does not create an undue hardship on the employer. Notably, though, the PWFA will also prohibit employers from requiring employees to take paid or unpaid leave when a different reasonable accommodation is available. Lastly, the PWFA will prohibit employers from retaliating against an employee who requests or receives a reasonable accommodation due to pregnancy, childbirth, or a related medical condition.

The other recently enacted law, the PUMP Act, will expand employers’ existing obligations to provide employees with time and space to express breastmilk. In particular, the PUMP Act will require that all breastfeeding employees, whether salaried or hourly, be given time to express breastmilk and a private place to do so, other than a bathroom. Additionally, time spent expressing breastmilk must be considered hours worked if the employee is working while expressing breastmilk. Notably, employers with fewer than 50 employees will be given an opportunity to request an exemption from the law if they demonstrate that compliance would cause an undue hardship.

Although the PWFA and PUMP Act will expand the rights of pregnant employees under federal law, numerous states and cities have already passed their own pregnancy accommodation laws, often exceeding these upcoming federal requirements. For example, cities like Philadelphia and Pittsburgh both have robust local ordinances addressing pregnancy accommodations in the workplace. Thus, for employers who operate in jurisdictions where existing laws require workplace accommodations for pregnant employees, the PWFA and PUMP Act may not have much of an impact. However, for all other employers, now is the time to start considering what changes to current practices might be necessary in order to comply with the PWFA and PUMP Act when they become effective. For any questions related to these laws, or any other labor and employment compliance issues, reach out to any member of the McNees Labor & Employment Group.

On January 5, 2023, the Federal Trade Commission (“FTC”) issued a Notice of Proposed Rule Making and additional information describing a new proposed rule that would prohibit employers across the country from entering into non-compete agreements with their workforce. The FTC’s press release and related information on the proposed rule can be found here.

The FTC’s proposed rule is in response to a prior Executive Order from President Biden, which, among other things, encouraged the FTC to use its rule-making authority to “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” At the time, few people likely anticipated the broad sweeping prohibition that would follow under the FTC’s current proposed rule.

Below is a summary of a few key aspects from the FTC’s proposed rule:

  • Broad Definition of a Non-Compete Clause – A non-compete clause is defined as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.” (Proposed as 16 C.F.R. § 910.1(b)(1).)
  • Functional Test Used to Determine if a Contractual Clause is a Non-Compete Clause – In addition to the broad definition discussed above, a non-compete clause includes “a contractual term that is a de facto non-compete clause because it has the effect of prohibiting the worker from seeking or accepting employment with a person or operating a business after the conclusion of the worker’s employment with the employer.” (Proposed as 16 C.F.R. § 910.1(b)(2) (emphasis added).) The proposed rule provides examples of a few types of contract provisions that may be de facto non-compete clauses. One such example is “a non-disclosure agreement between an employer and a worker that is written so broadly that it effectively precludes the worker from working in the same field after the conclusion of the worker’s employment with the employer.” (Proposed as 16 C.F.R. § 910.1(b)(2)(ii).)
  • The Proposed Rule Applies to More than Just Employees – The proposed rule’s broad ban on non-compete clauses applies not only to employees, but also to independent contractors, externs, interns, volunteers, apprentices, and individual sole proprietors who provide a service to a client or customer. (Proposed as 16 C.F.R. § 910.1(f).)
  • Existing Non-Competes Must be Rescinded with Notice to Current and Former Workers – As all future non-compete clauses would be banned under the proposed rule, employers would also be required to rescind existing non-compete clauses that are entered into prior to the compliance date of the proposed rule (which is currently set for 180 days after publication of the FTC’s final rule). In order to rescind existing non-compete clauses, employers must provide written notice to both current and former workers (see broad definition above) bound by non-compete clauses (see broad definition above). The written notice must be provided in an individualized communication on paper or in a digital format (such as email or text message). The proposed rule also provides model language that would satisfy this written, individualized notice requirement to current and former workers. (Proposed as 16 C.F.R. § 910.2(b)(2)(C).)
  • Narrow Exception for the Sale of a Business – The proposed ban on non-compete clauses does not apply to a non-compete clause entered into between a buyer and seller of a business so long as the individual restricted by the non-compete is a substantial owner, member, or partner of the business (meaning the individual holds at least 25% interest in the business entity) at the time the individual enters into the non-compete clause. (Proposed as 16 C.F.R. § 910.3.)
  • Proposed Rule Supersedes Any State Law – The proposed rule is intended to supersede all state laws, regulations, orders, and interpretations of them that is not consistent with the proposed rule’s requirements. Nonetheless, states will still be permitted to impose requirements and restrictions against non-compete clauses if they provide greater protections than those provided by the proposed rule.

The FTC’s proposed rule is at the first stage of the rule making process, where feedback is being solicited from the public. As part of the public comment period, the FTC is seeking comment on several alternatives to the proposed rule, including whether different standards should apply to senior executives (something short of a ban), and whether low-wage and high-wage workers should be treated differently under the proposed rule. The public comment period is open until March 10, 2023. Comments on the proposed rule can be made and viewed here.

The FTC’s proposed rule is further indication of the growing scrutiny over non-compete restrictions, particularly as they relate to low-wage earners. In fact, a number of states have already introduced new bills in the early legislative sessions of 2023 that would significantly limit the use of non-compete provisions in the employment relationship. Some of those states include New Jersey, New York, and West Virginia.

The FTC’s proposed rule has already faced opposition, including a dissenting statement from FTC Commissioner Christine S. Wilson, and an announcement from the US Chamber of Commerce declaring the proposed rule “blatantly unlawful.” There will undoubtedly be legal challenges to the proposed rule should it become a final rule (much like the legal challenges raised against OSHA’s COVID-19 vaccination rule). As a result, it will likely be some time before we know whether the FTC’s propose rule is the beginning of the end for non-compete agreements in the workplace. We will continue to monitor and provide updates as the FTC’s proposed rule moves through the administrative process.

The Consolidated Appropriations Act of 2023 (“Act”) was passed by Congress in late December 2022 and signed by President Biden on December 29, 2022.  The Act, a $1.7 trillion dollar spending bill, contains provisions which modify the laws applicable to welfare benefit plans and retirement benefit plans.  Below is a high-level list of the provisions of the Act which are effective in 2023 and which may affect your plan:

Welfare Benefit Plans

  • High Deductible Health Plans can continue to waive the deductible for any telehealth services for plan years beginning before January 1, 2025.

Retirement Benefit Plans

  • The age for required minimum distributions is increased to 73 starting on January 1, 2023, and age 75 starting on January 1, 2033.
  • Employers may now offer de minimis financial incentives to employees to participate in 401(k) and 403(b) plans.
  • The early distribution 10% percent tax will not apply to distributions for participants with a terminal illness.
  • Plans may allow participants the option of electing to receive matching contributions on a Roth basis.
  • Employers who (a) offer eligibility for military spouses within two months of hire, (b) qualify military spouses immediately for any matching contributions, and (c) vest employer contributions at 100% for military spouses, will receive a tax credit.
  • Repayment of qualified birth or adoption distributions must be limited to 3 years. Before the Act, the repayment term was not limited.
  • Participants in governmental 457(b) plans are no longer required to request changes in their deferral rate prior to the beginning of the month in which the deferral will be made.
  • Employers may participate in multiple employer 403(b) plans.
  • Employers joining a multiple employer plan are eligible for a startup tax credit for 3 years.

For more information on these changes and changes becoming effective after 2023, including allowing matching on student loan payments, higher catch-up limits, changes in the long-term part-time employee rules, required automatic enrollment for new plans and the creation of pension-linked savings accounts, please contact any member of our Labor and Employment Practice Group or join us on January 20, 2023 for the Secure 2.0 Webinar.  For more information on the Webinar click here:  Secure 2.0 Webinar – McNees Wallace & Nurick LLC (mcneeslaw.com)

We previously posted about employer use of Artificial Intelligence, AI, and the emerging legal issues associated with such tools.  Recently, the National Labor Relations Board General Counsel issued GC Memorandum 23-02, which outlined her view that the use of electronic monitoring and artificial intelligence can run afoul of the National Labor Relations Act.  The memo states that surveillance and other algorithmic-management tools may interfere with the exercise of Section 7 rights “by significantly impairing or negating employees’ ability to engage in protected activity and keep that activity confidential from their employer.”

The Board currently uses a balancing test to weigh an employer’s justification for surveillance against the potential interference with employees’ right to engage in concerted activity in the workplace.  The Board has held that without proper justification, certain surveillance of employees engaged in protected activities violates the Act.  Also, under current case law, the use of existing security or other technologies in response to union organizing activity can violate the Act.

After outlining the increased use of monitoring tools, including cameras, GPS, mobile devices and wearable devices, and noting the increased use of artificial intelligence in the workplace, the General Counsel outlined a number of ways that the use of such electronic monitoring and artificial intelligence could violate the Act.  She concluded that constant surveillance and management through electronic means may threaten employees’ rights under the Act by severely limiting or completely preventing employees from engaging in protected conversations about unionization or terms and conditions of employment.

The General Counsel stated that she will “urge the Board to ensure that intrusive or abusive methods of electronic surveillance and automated management do not unlawfully interfere with, restrain, or coerce employees in the exercise of their Section 7 rights by stopping union and protected concerted activity in its tracks or preventing its initiation.”

Specifically, she stated that she will urge the Board to find that an employer has violated Section 8(a)(1) of the Act if the employer’s surveillance and management practices, would interfere with or prevent a reasonable employee from engaging in activity protected by the Act.  Under the General Counsel’s framework, the employer could attempt to justify its surveillance and management practices, and if the employer’s business needs outweigh employees’ Section 7 rights, the GC will urge the Board to require the employer to disclose to employees the technologies it uses to monitor and manage them, its reasons for doing so, and how it is using the information it obtains.

Electronic monitoring and artificial intelligence are increasingly common in the workplace.  These tools can be extraordinarily beneficial employers for whole host of reasons.  However, if successful, the General Counsel’s new framework will severely restrict employers’ efforts to monitor employee conduct and improve efficiency, as well as slow the growth of “smart” workplaces in the United States.

A recent press release by the U.S. Equal Employment Opportunity Commission (EEOC) demonstrates that Equal Pay Act claims are becoming increasingly common.  The EEOC in Baltimore, MD announced that an auto dealership agreed to pay $62,500 to resolve an Equal Pay Act claim by a female employee.  The employee had alleged that she was being paid less than a male employee who was performing equal work, and that she was retaliated against for complaining about the situation.

According to the EEOC, in addition to paying $62,500 in monetary relief, the auto dealer is enjoined from sex-based pay discrimination and retaliation moving forward, and is required to adopt a policy creating channels for employees to report unequal pay and procedures for handling those complaints.  In addition, the dealer was required to conduct training on preventing gender-based wage discrimination.

What was the issue? 

The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work.  The jobs need not be identical, but they must be substantially equal. All forms of pay are covered by this law, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.  Title VII also makes it illegal to discriminate based on sex in pay and benefits. Therefore, someone who has an Equal Pay Act claim may also have a claim under Title VII.  Title VII, the ADEA, and the ADA prohibit compensation discrimination on the basis of race, color, religion, sex, national origin, age, or disability. Unlike the EPA, there is no requirement under Title VII, the ADEA, or the ADA that the jobs must be substantially equal.

How can you avoid these types of claims?

Employers should take every opportunity to proactively review any vulnerabilities in their pay practices.  A pay equity audit can help determine if any pay equities or pay gaps exist in the workforce, what employee population is affected by the inequity and if the pay inequity can be explained by legitimate job-related reasons, such as tenure, education and experience.  A thorough evaluation includes reviewing pay structures, starting pay policies, merit increase policies, promotional pay policies and recordkeeping practices.  In addition, confidentiality of the evaluation can be established with the use of attorney-client privilege.

The time to conduct a pay equity audit is now, before any litigation arises.  This is especially true for employers who were experiencing difficulties in recruiting, and who may have offered very generous compensation packages to new hires as a result.

Benefits of an audit include avoiding or defending against litigation, gaining safe harbor protection in some states, improving employee recruitment, retention and morale, and responding to shareholder activism pertaining to pay equity.  The benefits of an audit far outweigh the risks.  Risks include finding unfavorable results and employee suspicion of results.

If you are interested in exploring a pay equity audit further, please reach out to any member of the McNees Labor and Employment Group.

The holiday season is in full swing, and what better way to celebrate the joyous season than with a festive soiree, right?  In many cases, this is the first time in a couple of years that employees are getting together for an in-person gathering.  Some employees may be ready to reconnect and cut loose.  So, this is an opportune time for a quick “refresher” on things employers should keep in mind to help keep all holiday parties ‘holly and jolly,’ and free from Grinchy legal issues.

Too much ‘Holiday Spirit?’

It’s important to remember that employment laws don’t take a break for the holidays.  A holiday party can be a great way to celebrate another year gone by and build comradery, but employers should remember, and remind their employees, that company policies still apply.  This includes, of course, policies against discrimination and discriminatory harassment.  And, with many employers choosing to serve alcohol at holiday functions, as you may guess, this could increase the odds that things could go sideways.  If the party gets too rowdy, or if a flirtation progresses into an inappropriate sexual advance, you may soon have a whole host of issues on your hands, ranging from the obvious sexual harassment claim to other issues, like workers’ comp claims, or liability to a third-party for damages caused by one of your merrymaking employees.

It’s also worth remembering that not all employees celebrate the religious aspects of the season.  Diversity makes the workplace a better, more productive place, and a holiday party should reflect the diversity of the workplace.  Beyond the fact that laws like Title VII protect against discrimination on the basis of religion, your holiday party should be a place of inclusion that makes all employees of any or no religious affiliation feel welcomed.

Last, remember that if you require employees to attend a company holiday party, be sure that employees are compensated accordingly.  Particularly, if parties are held on-premises during working hours, with mandatory attendance, chances are quite good this will count as compensable working time.

And, remember that there is risk that the organization could be on the hook for injuries occurring during these events, or for damage which may be caused by employees who may have been overserved at your holiday party.

With all of this in mind, here a few takeaways as you plan your holiday celebration:

  • If you do choose to serve alcohol at your holiday party, consider offering drinks with lower alcohol content, such as beer, wine, and hard seltzers, and serving food, too, to help slow the absorption of alcohol.
  • Consider having alcohol served by a professional bartender who can better recognize a visibly intoxicated person and/or limit the number of beverages available for each guest.
  • Make transportation available to and from the event.
  • Make sure it is clear to employees that their attendance is encouraged, but optional.
  • Provide a helpful reminder to employees (and supervisors) that the company’s policies against harassment and discrimination apply during company-sponsored events, just as they ordinarily apply during the workday.

The holidays are a time of celebration for everyone, and your holiday party should be, too. Remaining cognizant of the liability issues that may be associated with a holiday party can help keep things ‘merry and bright.’ As always, feel free to contact a member of the McNees’ Labor & Employment Group if you have any questions or concerns about your holiday party.  We wish you all a happy and healthy holiday season!

As the negative economic outlook continues to fill our news and social media feeds, many organizations are pondering what an economic shift may mean for their business.  Others have moved on to the next stage of grief, acceptance, and have started to plan ahead.  For some organizations, this means considering, and possibly implementing, a reorganization or reduction in force (RIF).

Regardless of company size, industry or location, employers considering a reorganization or a reduction in force must consider many variables—and avoid many pitfalls.  While there are too many issues to list here, here are five key questions for those organizations that are about to take the next step to implement a reduction in force.

  1. Do we have Federal or State WARN Act obligations?

The federal Worker Adjustment and Retraining Notification Act, or WARN Act, requires employers to give 60 days’ advance, written notice to employees impacted by certain mass layoffs and facility closures.  The WARN Act provides extensive detail on the who, what, when, where, why and how of such notifications.  Failure to comply with the notification requirements can result in significant penalties.

Here, as with many areas of employment law compliance, employers also must ensure that they are considering any state and local laws that may be implicated by their actions.  Some states and municipalities have their own “mini-WARN Act” on the books.  These state laws often apply to smaller organizations and smaller layoffs, which might not trigger the federal WARN Act.  For this reason, employers also must be aware of any “mini-WARN Act” obligations in the locations where they operate.

  1. How do we ensure there is no discrimination in our selection process?

Like just about every other employment decision, RIFs can expose your organization to various legal claims.  For example, employers who terminate a group of employees should be mindful of the potential for exposure to claims of discrimination—both intentional and unintentional.

In order to help reduce the risk of such claims and to prepare an appropriate defense for the worst-case scenario that a former employee challenges their termination as discriminatory, employers should strive to use objective selection criteria when identifying which employees will be selected for discharge.  This is critical as you determine which employees from the same or similar job classifications will be selected for termination.  These types of individual selection decisions may lead to disparate treatment claims—i.e., you selected someone for termination based on a protected class, such as age, gender, race, disability, etc., or based on a protected activity, such as making a complaint of harassment or requesting family or medical leave.

However, using objective selection criteria is not only important when evaluating individual selection decisions.  It is equally vital when evaluating the selected group as a whole.  This is because employers also must consider whether their selection criteria have an adverse impact on members of a protected group, such as members of a particular gender or race.  For example, perhaps your chosen selection criteria inadvertently resulted in the disproportionate selection of female over male workers, even though this skewed gender impact was completely unintentional.  Remember: even if the result was unintentional, an employer may still be liable for a discriminatory outcome.  Therefore, evaluating the group as a whole before finalizing RIF selection decisions is critical.

The results of an organization’s selection criteria may need to be reassessed following the evaluation discussed above.  If it appears that one or more of your selection criteria are problematic from a disparate treatment or disparate impact perspective, you might need to revise those criteria—and then conduct this evaluation again until you are comfortable with the results, and with defending them in the event of a legal challenge.

  1. Will we offer severance?

Many employers choose to offer severance to employees whose positions are being eliminated in a reduction in force.  There are significant benefits to such an approach for both the employee and the employer.  For example, severance provides the employees with income continuation and/or assistance with continuation of health care coverage to assist them with the transition.  On the employer side of this equation, employers who offer severance will almost always condition receipt of those benefits on the employee’s acceptance of a waiver and release agreement.  This allows the employer to receive the benefit of finality if the severance agreement contains a full release and waiver of claims.

As you are planning a RIF, determine early in the process whether you intend to offer some form of severance to affected employees.  If so, your organization will need to think through what the benefits will look like and what terms will be included in the agreement provided to employees, and it will need ensure that there is some consistency to the approach.

  1. How do we ensure compliance with the Older Workers Benefit Protection Act?

Speaking of severance, employers who offer severance and condition the receipt of that severance on the employee’s execution of a separation agreement must ensure that their separation agreement is legally compliant—and that it maximizes the benefit that the employer is receiving from the transaction.  This is particularly important when offering a separation agreement to employees who are age 40 or older.

The Older Workers Benefit Protection Act (OWBPA) requires employers to jump through several hoops in order to obtain a valid waiver of age discrimination claims from individuals aged 40 or older.  There are differing requirements for individual terminations versus group terminations like a RIF (i.e., when more than one employee is being terminated and offered severance in exchange for signing a release).  By way of most critical example, in a group termination scenario, OWBPA requires employers to provide those employees with certain disclosure information, which can be burdensome.  Employers must understand these requirements and their obligations when preparing OWBPA-compliant separation agreements.

OWBPA requirements are many, and frankly, there are simply too many obligations to list here.  We will say, however, that the aforementioned disclosure requirements will drive decision making in a number of key respects.

  1. Do we have any obligations to labor unions?

Unionized employers should expect that they may have a number of additional requirements to consider when conducting a reduction in force.  Collective bargaining agreements (CBAs) often contain layoff and bumping provisions that will dictate the order in which employees must be laid off.  Notice may be due to the union, additional benefits may be due to the bargaining unit employees being laid off, and recall rights likely will need to be established.  In certain instances, the employer’s RIF may trigger an obligation to engage in effects bargaining.

Each CBA, and the layoff obligations under each CBA, are different.  For unionized workplaces, the collective bargaining agreement often will be the first place to start the reorganization planning process.

These five considerations are basic, threshold questions—and they are key to developing the beginnings of an effective strategy to plan and implement your reduction in force.  These are not, however, the only considerations.  As noted above, there are many, many more things for an organization to consider prior to finalizing and implementing their reduction in force.  Planning ahead in a careful and thoughtful manner, with an eye towards legal compliance, can place your organization in the best position possible under difficult circumstances.

Last, but not least, engage your labor and employment counsel early and often in the process—both to obtain appropriate guidance and in order to preserve the attorney-client privilege over the planning and selection processes to the maximum extent possible.  Doing so can help minimize your organization’s exposure to potentially costly legal claims that could erode some of the savings you may have experienced from the RIF.

A recent decision from the Third Circuit suggests that the leak of information onto the Dark Web provides standing to class action plaintiffs in data breach litigation. In Clemens v. ExecuPharm, Inc., 48 F.4th 146 (3d Cir. 2022), the Defendant employer suffered a data breach that permitted a ransomware gang to steal sensitive information pertaining to the Defendant’s current and former employees. Eventually, the hackers posted the data on underground websites located on the Dark Web.

The plaintiff, a former employee whose data was stolen by the hackers, filed a class action lawsuit on behalf of herself and other employees whose information was accessed. However, the plaintiff did not allege that she (or any other employees) suffered any financial losses as a result of the breach. Since showing financial harm is traditionally a required element to establish standing, the District Court dismissed the case.

However, the Third Circuit reversed. Interpreting the U.S. Supreme Court’s holding in Transunion[1], the Third Circuit held that the leak of information onto the Dark Web by itself constitutes an “injury-in-fact” sufficient to provide standing to sue in federal court. Explaining their decision, the Third Circuit wrote, “Because we can reasonably assume that many of those who visit the Dark Web, and especially those who seek out and access [the ransomware group’s] posts, do so with nefarious intent, it follows that Clemens faces a substantial risk of identify theft or fraud by virtue of her personal information being made available on underground websites…”

In light of this decision, and the increasingly digitized world, employers are strongly encouraged to implement appropriate security measures and ensure that those measures continue to comply with ever-changing industry standards. Failure to take these preventative measures could leave employer networks vulnerable to data breach, subjecting employers to potential liability for the breach of employee or customer data itself, let alone the financial consequences that could result if such information is misused.

[1] In this case, the U.S. Supreme Court held that an allegation of a risk of future harm is sufficient to establish an injury-in-fact for standing purposes, if such risk of future harm is “sufficiently imminent and substantial.” TransUnion LLC v. Ramirez, __ U.S. __, 141 S.Ct. 2190, 2210-11 (2021).

Our blog post on Nanny Cams in the workplace turned out to be one of our most popular posts (makes us wonder what people are putting in the search bar?).  So, we thought we would follow up with some more information for employers about surveillance in the workplace.

Employers with unionized workforces will need to be sure that any surveillance program or policy complies with the National Labor Relations Act.  It has long been the policy of the National Labor Relations Board that employers with a unionized workforce must bargain with the union before installing hidden cameras.   In Colgate-Palmolive Company, 323 NLRB 515 (1997), the Board held that the installation and use of covert cameras was a mandatory subject of bargaining.  That decision left open, however, the question of whether an employer could install non-hidden, or conspicuous, methods of surveillance without going through the union.

It appears that question was answered earlier this year, however, in Endurance Environmental Services, LLC, 2022 NLRB LEXIS 45, 2022 WL 393229 (2022).  In a footnote in that decision, the Board said, “[t]he Respondent’s decision to install cameras that observe employees at work was a mandatory subject of bargaining.” The Board further indicated that it would likely not matter if cameras were for surveillance purposes or not, as the installation of cameras in the workplace is likely always a mandatory subject of bargaining.  So, it appears the current Board views the installation of cameras as a mandatory subject of bargaining, regardless of whether the cameras are covert or conspicuous.

The NLRA also impacts non-union employers who may engage in surveillance.  For example, in AdvancePierre Foods, Inc., 366 N.L.R.B. No. 133 (July 19, 2018), the Board held (and the D.C. Circuit affirmed) that an employer’s video surveillance of employees distributing union materials violated the Act.

The scale and scope of an employer’s ability to conduct workplace surveillance are topics we could spend a lot of time on, but we will save those for another day.

In addition to the NLRA, employers should also be aware of the wiretapping and surveillance laws of the states in which they operate.  Many state wiretapping laws require both parties to consent to the audio recording of a conversation or a communication.  That is true in Pennsylvania, for example.  See here for more on how the Pennsylvania law may be implicated in the workplace.  Other state laws only require one person to consent to such recording or allow recordings in situations where two individuals did not have a reasonable expectation of privacy.

In order to get around state wiretap laws, some employers use cameras that do not capture audio recording, but instead capture only video.  But, even still, employers must be aware of state laws that govern such recordings.  Some states, such as Delaware, prohibit video surveillance in certain workplace locations.  Other states require notification to employees prior to the installation of workplace cameras.

Suffice to say that video monitoring of employees in the workplace is a compliance minefield for employers.  Despite these challenges, many employers do it, and do it successfully.  If you have not already started that process, and maybe even if you have, we recommend that you work with your friendly neighborhood labor and employment attorney to ensure compliance.

In Valley Hospital Medical Center, 371 NLRB No. 160 (Sept. 30, 2022) (Valley Hospital II), a divided National Labor Relations Board held that employers must continue to deduct union dues from employees’ pay and remit such dues to their union – a process known as “dues checkoff” – even after the expiration of the collective bargaining agreement containing a checkoff provision.  The decision demonstrates the current Board’s rather unfriendly approach to employers.  It also illustrates how employers have been whipsawed in recent years by swings in Board precedent depending on the Board’s political makeup.

In Valley Hospital, the employer and union were parties to a collective bargaining agreement that had a dues-checkoff clause.  Over a year after the agreement had expired, the employer ceased deducting union dues from its employees’ pay.  The practical effect was that the union would have to collect dues directly from the employees.  The union objected and claimed that the employer’s action violated the National Labor Relations Act (NLRA).

Under well-established U.S. Supreme Court precedent, where a collective bargaining agreement has expired, an employer must generally refrain from unilaterally changing terms and conditions of employment until the parties either negotiate a new contract or bargain to lawful impasse.  However, in its 1962 decision, Bethlehem Steel, 136 NLRB 1500 (1962), the Board held that an employer’s obligation to check off union dues ends when the collective bargaining agreement containing a checkoff provision expires.  As such, an employer could unilaterally – and lawfully – cease dues checkoff upon expiration.  For over 50 years, the Bethlehem Steel rule was consistently applied by the Board and enforced in the United States Courts of Appeals.

But things changed in 2015.  The Obama Board overruled Bethlehem Steel and held that an employer’s obligation to check off union dues continues after expiration of the collective bargaining agreement establishing such an arrangement.  Lincoln Lutheran of Racine, 362 NLRB 1655 (2015)Lincoln Lutheran was short-lived, however, because in 2019, in an earlier decision in the Valley Hospital case, the Trump Board overruled Lincoln Lutheran and reinstated the Bethlehem Steel rule.  Valley Hospital Medical Center, 368 NLRB No. 139 (2019) (Valley Hospital I).  The union appealed to the United States Court of Appeals for the Ninth Circuit, which remanded the case to the Board.

On remand in Valley Hospital II, the Board – now controlled by Biden-appointees – reversed its decision in Valley Hospital I, once again rejected Bethlehem Steel, and reinstated the rule of Lincoln Lutheran.  The Board majority observed that the NLRA’s policies would be furthered by holding that dues checkoff provisions survive expiration of the collective bargaining agreement.  The majority also distinguished dues checkoff provisions from other contract terms that do not survive contract expiration – mandatory arbitration, no-strike, and management-rights clauses – reasoning that the latter category involves the waiver of rights the parties would otherwise enjoy and thus are presumed not to survive contract expiration.  The majority concluded that it would apply its decision retroactively in all pending cases – even in cases in which the employer acted in reliance on Valley Hospital I.  Finally, the majority ordered the employer to make the union whole for dues that it should have deducted and remitted had it not ceased dues checkoff, but prohibited the employer from recouping from the employees any dues amounts that it was required to reimburse.  This is a particularly harsh remedy because union dues are a financial obligation that employees owe to their union.  The employer simply performs an administrative service of facilitating union dues collection.

Members Kaplan and Ring dissented.  They quoted language from the Taft-Hartley Act providing that employers may not deduct union dues from their employees’ pay unless “the employer has received from each employee, on whose account such deductions are made, a written assignment which shall not be irrevocable for a period of more than one year, or beyond the termination date of the applicable collective agreement, whichever occurs sooner.”  The “logical implication” from the reference to “applicable collective agreement,” they argued, was that employers may terminate dues-checkoff provisions upon expiration of the agreement containing such provisions.  They also argued that the majority decision impermissibly interferes with the bargaining process by “eliminating one of employers’ legitimate economic weapons” to persuade unions to agree to a successor collective bargaining agreement.  Finally, they argued that it would be manifestly unjust to apply this decision retroactively to employers who acted pursuant to current Board law (Valley Hospital I) and to “a practice that had been settled law for decades”; and that the make-whole order barring the employer from recouping funds that it had already paid the employees in dues money was “clearly punitive” and exceeded the Board’s remedial authority.

Valley Hospital II is the latest swing in the dues checkoff “pendulum.”  Going forward, employers who are parties to collective bargaining agreements containing dues-checkoff provisions must continue to deduct and remit dues after the agreement expires.  Failing to do so could not only violate the NLRA, but also make the employers financially responsible for the union dues of their employees.

If you have any questions about the Valley Hospital II decision or dues-checkoff provisions, please contact a member of the McNees’ Labor & Employment Group.