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In yet another reversal of precedent, the National Labor Relations Board has ruled that students who perform work for a university for which they are compensated can form and join labor unions under the National Labor Relations Act.  Key to the Board’s holding was that these students, including teaching assistants and research assistants, were more akin to employees, as opposed to well, students.  Yeah, we know.

Now, the students will have the opportunity to participate in an election to determine if they will be represented by a labor union.  There are some issues that remain unresolved, including who should be considered part of the unit, given the transient nature of these positions.  The Columbia University teaching and research assistants will then have the opportunity to vote in a representational election.

The decision does not come as a surprise to most observers, many of whom believed that the Democratic majority on the Board would take the opportunity to reverse the 2004 Brown University decision, which had held that graduate assistants were primarily students and not employees covered by the Act.  In Columbia University, the Board noted that the Brown decision was not grounded in the language of the Act, because no specific exemption exists under the Act for students.  The Board held that the Brown University decision “deprived an entire category of workers of the protections of the Act.”  To us, this begs the question – are they really workers?

Importantly, the decision applies only to private universities covered by the Act, and not public universities that are governed by state labor law.  Those universities who are covered will need to take proactive steps to evaluate their teaching and research assistants, both graduate and undergraduate.  While for many, the decision may have limited practical impact, it is likely that one or two negative consequences will flow from the decision: there will be fewer opportunities for teaching and research assistants; and/or the cost of tuition will increase.

This post was contributed by Erica Townes, a McNees Summer Associate. Ms. Townes is a rising third year law student at the Widener University Commonwealth Law School and is expected to earn her J.D. in May of 2017.

Recently you’ve noticed that an employee takes FMLA-covered leave the same week every year or always seems to have a medical emergency between Thanksgiving and January 1. Similarly, another employee regularly calls out of work requesting FMLA-covered, coincidentally on Fridays during football season. How can employers prevent this type of FMLA leave abuse? Several courts have addressed this issue.

Generally, employers are free to enforce company policies even with respect to employees on FMLA leave, provided that such policies are consistent with the FMLA.  Specifically, company policies cannot conflict with or diminish rights guaranteed under the FMLA.  Accordingly, the Third Circuit, the court of appeals that covers Pennsylvania, has routinely held that employers do not have to forego enforcement their call-in policies simply because an employee is FLMA eligible.

The Third Circuit has upheld an employer’s right to terminate employees for violating other policies while the employee was out on FMLA leave.  While employees may view these call-in policies as burdensome or intrusive, courts have expressly held that, despite the fact that employees have the right to take FMLA leave, employees do not have the right to be left alone when out on leave.

For example, one employer implemented a policy that required employees out on paid sick leave to stay home unless the employee was tending to a personal matter related to the reason they were on sick leave.  The employer further required employees to notify a hotline upon leaving and returning to their home, and if necessary, a sick leave investigator could call or visit the employee while he or she was out on leave.  In that case, the court held that the policy could be applied to an employee who was using FMLA-covered leave concurrently with paid sick leave, and that such application of the policy did not run afoul of the FMLA because nothing in the FMLA prevents employers from ensuring that employees are not abusing their leave.

In another case, an employee took FMLA and paid sick leave concurrently to have an operation done.  Only a few weeks after the operation, the employer learned that the employee had gone on a trip to Cancun, Mexico with friends, and as a result, the employee was terminated.  The employee brought a claim challenging her discharge under the FMLA.  Ultimately, the court held that the employee was bound by the employer’s sick leave and absenteeism policies, emphasizing that the FMLA, in no way, restricted the employer from preventing FMLA fraud.  As such, the discharge was upheld.

The Third Circuit has also held that an employer may enforce a written policy prohibiting moonlighting, or working part-time for a different employer, while the employee is out on FMLA leave.

The lesson learned from these cases is that employers have the right to safeguard against FMLA leave fraud and abuse.  To that end, employers may implement policies to reduce the fraudulent use of FMLA, so long as such policies do not abrogate rights guaranteed to the employee under the Act.

Practice Pointers

In addition to the policies mentioned above, consider the below practice pointers.

  • Consistency.  When handling FMLA leave, consistency is critical.  Providing an exception to the rule out of sympathy may hurt the employer in the long run as a disgruntled employee will use such exceptions against the employer in the future.  As the old adage goes, no good deed goes unpunished.
  • Records.  Maintain accurate records of FMLA leave so that (1) an employee’s FMLA eligibility can be accurately determined and (2) to identify suspicious patterns of absence.
  • Paid Leave.  Consider requiring employees to use paid leave concurrently with, or even before, FMLA leave. An employee will be less inclined to abuse FMLA leave if he or she has to exhaust their on time.
  • Abuse.  Immediately address employees who violate your policies.  Without doing so, employees may later argue that the employer excused the violation.
  • Seek Advice.  If you are still unsure whether you can enforce a particular policy, seek advice from legal counsel.

 

McNees recently issued an Employer Alert regarding the U.S. Department of Labor’s new Fair Labor Standards Act regulations, which significantly change the FLSA’s white collar overtime exemptions.  You can review the Employer Alert by clicking here.

Please feel free to reach out to any member of the McNees Labor and Employment Team to discuss the new regulations and strategies for effectively implementing the changes in your organization.

An appeals court recently reinstated the four game suspension issued to Tom Brady by the National Football League. The Patriots quarterback previously had his four game suspension reversed by the United States District Court for the Southern District of New York, but in a 2 to 1 decision, the Second Circuit Court of Appeals overturned that decision. We previously offered you some lessons that could be taken from the “Deflategate” saga. We also noted that we did not believe that the District Court used the appropriate standard of review in evaluating Brady’s appeal of his suspension (yes, this is us patting ourselves on the back).

The decision is a double edged sword for employers with a unionized workforce, because it contains both good and bad news. The good news is, the court recognized that the NFL had bargained for the right to issue disciplinary action to players for rules violations and to have Commissioner Rodger Goodell serve as the arbitrator to decide internal appeals of those disciplinary actions. The court recognized that the collective bargaining agreement between the NFL and the Players’ Association was clear on these points. The court noted that, while this scheme was unorthodox, it was what the parties bargained for in the agreement.

The bad news: the court also recognized that the decisions of arbitrators are afforded broad deference and are very hard to overturn. And all too often it is the employer on the losing side of an arbitration decision that faces an uphill battle on appeal. In affirming Goodell’s decision on Brady’s internal appeal, the court reaffirmed the high level of deference owed to arbitrator’s awards. The battle may have been won by the NFL here, but it often seems that employers generally are losing the war.

Only time will tell if Brady and the Players’ Association pursue a further appeal. In the meantime, we can continue to take lessons from this much publicized labor dispute with a football twist.

This post was contributed by Alan Boynton, Chairman of McNees’ Injunction Practice Group.

On April 27, 2016, the United States House of Representatives voted 410-2 to approve the proposed Defend Trade Secrets Act (DTSA). The vote follows the Senate’s unanimous approval of the bill. President Obama has stated that he will sign the bill. This rare display of legislative and executive cooperation and goodwill is, on its own, quite impressive. Along the way, a couple of key compromises were required to gain consensus. Putting those compromises aside for the moment, what ultimately emerged is a law which could have significant effects on how employers deal with rogue ex-employees.

The departure of employees for competitors is not an unusual occurrence in modern business. Also fairly common is the assertion that those employees took with them customer lists, spreadsheets and (even more so today) gigabytes of electronic business data. Faced with such misconduct, because trade secret misappropriation has been considered a tort under state law, employers have traditionally been compelled to seek relief in state court, often in employee friendly jurisdictions and courts. In recent years, most states have adopted variations of the Uniform Trade Secrets Law, which has leveled the playing field considerably. Yet, some significant variations still exist from state to state. Through the DTSA, Congress has decided to largely eliminate those distinctions. Moreover, and critically, it has shifted the venue for handling most post-employment matters to federal district courts.

The DTSA technically applies only to trade secrets related to products or services used in interstate or foreign commerce. In today’s world, finding products that don’t qualify under this standard may be difficult. Once that threshold is met, and federal jurisdiction is established on the trade secret claim, all related state-law claims can follow the trade secret claim into federal court, now allowing the injured ex-employer to pursue claims for breaches of non-competition, non-solicitation and confidentiality agreements alongside the trade secret ones in a venue which might be less employee-friendly than a local state court where the defendant may reside. While there remains a bit of uncertainty as to how the DTSA will be applied, one thing seems fairly certain: federal courts may soon be seeing a significant uptick in cases that were previously routinely handled by the local county courts.

One final observation: It appears that the DTSA is being inserted in the federal crimes code. Perhaps it is appropriate, then, that a new weapon granted to employers in the DTSA but not found in the Uniform Trade Secrets Acts in most states is the possibility of ex parte seizure of the alleged misappropriated trade secrets. The use of this powerful weapon by federal courts is supposed to be limited to “extraordinary circumstances” (the addition of this limitation was one of the compromises that led to overwhelming approval of the bill) but it could provide quite a strong tool for the ex-employer. Stay tuned to see how courts will interpret and apply this provision in the DTSA

To mark the 80th birthday of the National Labor Relations Act, the National Labor Relations Board apparently decided to make history in 2015. The Board did just that,  issuing several ground breaking decisions, and in the process addressed facts and circumstances that could not possibly have been contemplated in 1935. The ramifications of the Board’s agenda will certainly have both short and long term impact on employers and labor unions.

For an overview of major labor law developments in the past year, check out our McNees White Paper entitled The National Labor Relations Board 2015 Year in Review.

We have talked with you in the past about the risks of allowing employees to pool or share tips. This is a pretty common practice in the food service industry, but there can be concerns because of the complexity of compliance with the Fair Labor Standards Act and state wage and hour laws. We also previously wrote about a decision that offered some guidance on how to implement tip pools safely. It turns out that the case, Ford v. Lehigh Valley Restaurant Group, is also a cautionary tale.

According to various news outlets, the case recently settled for about $1.3 million.

If you are still allowing employees to pool or share tips, please work with your wage and hour counsel to make sure the tip pools are structured appropriately.

This week would have marked the return of Tom Brady, had his four game suspension not been reversed by the United States District Court for the Southern District of New York.  Much ink has been spilled over Brady’s suspension for his [alleged] involvement in using deflated footballs and the subsequent cover up, and Brady’s appeal of that suspension.  But is there really anything of real value to learn from this case?

Yes, if you are a unionized employer, there are some valuable lessons to be learned.  Here are four (one for each game Brady would/should have served) key takeaways for unionized employers.

  1. Employees must be on notice that conduct is inappropriate. Although it is laughable that Brady did not know he was doing anything wrong by encouraging the use of deflated footballs, the court held that Brady was never advised that he could be subject to disciplinary action for being aware of the use of deflated footballs and not reporting it.  As many of you know, work rules take on a whole new meaning in a unionized setting.  Often, these work rules are litigated and take on their own unique meaning.  In the Brady case, the rules regarding inflation of footballs was apparently given to the NFL clubs, not the players.  The court found that Brady was not put on notice that his knowledge of the deflated footballs could result in discipline; and therefore, he should not have been disciplined for that conduct. The takeaway: draft a clear and concise code of conduct and make sure every employee signs an acknowledgement of receipt of the code.
  2. Employees must be on notice of possible disciplinary penalties.  The court also concluded that even if Brady knew he could be subjected to discipline for failing to report the deflated footballs, he was not on notice that he would be suspended four games for such conduct.  The level of discipline was based on the NFL’s performance enhancing drug policy, but Brady argued that his conduct was more in line with an equipment or uniform violation, which would only result in a fine. The takeaway:  make sure you have a well crafted discipline policy that grants you significant discretion with respect to disciplinary action for violations of your code of conduct.
  3. Employees must be required to cooperate fully in an internal investigation.  Brady apparently destroyed his cell phone, which held relevant evidence, almost immediately after his initial meeting with the NFL’s outside investigators.  That is absolutely shocking and outrageous.  It is also shocking that the court did not take issue with this conduct.  But the court found that no NFL player had ever been disciplined for failing to cooperate with an internal investigation in the past. The takeaway: although we question that such a rule is really necessary (like a specific written rule against theft or fighting), make sure your code of conduct requires cooperation during internal investigations.
  4. Prior to issuing disciplinary action, employees should be afforded some level of due process.  Although a formal hearing will not be necessary in every case, some level of due process should be provided before discipline is rendered.  In many instances, employers benefit from these informal meeting by obtaining key information.  Employees should be advised, generally, of the nature of the charges against them and should be afforded the opportunity to respond to those charges.  In addition, any subsequent appeal process should not only be impartial, but should avoid even the appearance of impropriety.  A review of the court’s decision leaves one with the impression that the court had an issue accepting the NFL’s role as both prosecutor and judge, even though the NFL Players Association had specifically agreed to that approach.  

Please keep in mind that some of the changes recommended above will require prior negotiation with the appropriate union.  But now would be a good time to review your code of conduct and your disciplinary policies and procedures to determine what if any changes you would like to make.

Also, it does appear that the court’s decision may have confused the role of the arbitrator, NFL Commissioner Roger Goodell, and the NFL’s discipline issuing office. In several instances the court appears to indicate that it was Goodell himself that issued the discipline, rather than Troy Vincent, the Executive Vice President in charge of discipline.  As a result, there may have been confusion regarding the appropriate standard of review for evaluating Goodell’s role as the arbitrator reviewing Vincent’s imposition of discipline.  One could argue that the decision lacks the appropriate deference to be afforded an arbitrator under federal labor law. The NFL has appealed the court’s decision, and the NFL may take up this issue on appeal.