In a unanimous decision, the U.S. Supreme Court recently clarified the circumstances under which an employer may deny a request for a religious accommodation under Title VII.  Specifically, in Groff v. DeJoy, the Court held that in order to justify denying a request, an employer must now demonstrate that granting a religious accommodation would result in “substantial increased costs in relation to the conduct of its particular business.”  Prior to the Groff decision, employers could deny a religious accommodation request when it would simply result in “more than a de minimis cost” to an employer, a standard set forth in 1977 by the Supreme Court in Trans World Airlines v. Hardison.

In Groff, the petitioner, Mr. Groff, was a Postal Service employee whose religious beliefs prevented him from working on Sundays.  The Postal Service initially accommodated Groff by re-distributing his Sunday shifts to other employees, but eventually began to progressively discipline Groff for failing to work on Sundays.  Groff ultimately resigned and sued the Postal Service under Title VII, alleging that they could have accommodated his religious beliefs without an undue hardship.  Both the district court and the Third Circuit Court of Appeals applied the previously-applicable “de minimis cost” standard, and found in favor of the Postal Service.

In reversing, the Supreme Court did not go so far as to overturn the Hardison decision, which has been in effect for almost 50 years.  Instead, the Court found that the lower courts misinterpreted the Hardison decision by focusing on the “de minimis cost” language when, in actuality, the Hardison court repeatedly referred to “substantial burdens,” “substantial additional costs,” and “substantial expenditures” when describing what “undue hardship” means for an employer.  Based on a more detailed analysis of the Hardison case and the “ordinary meaning” of the term “undue hardship,” the Court clarified that under Title VII, when denying an accommodation request, an employer must demonstrate that the burden of granting an accommodation would result in “substantial increased costs in relation to the conduct of its particular business.”  After clarifying the standard, the Court remanded the case back to the lower courts for further review.

In light of the Groff decision, and while awaiting further guidance from the courts on the revised standard, employers should update their current process as it relates to evaluating religious accommodation requests and ensure that when denying an accommodation request, the revised “substantial cost” standard can be met.

If you have any questions about the Groff decision and how it impacts a company’s review of religious accommodation requests, or if you need assistance with updating your policies and procedures, please contact a member of the McNees Labor & Employment Group.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.

Did you know that if you maintain a cafeteria plan, you have to complete annual non-discrimination testing?

For more information regarding compliance for your benefit plans, contact any member of the McNees Labor and Employment Group.

In a 6-3 ruling, the U.S. Supreme Court in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College all but banned the use of race as a factor in college admissions.  The majority opinion turned on the idea that race-based admissions violated the Equal Protection Clause of the U.S. Constitution. Twenty years ago, the court upheld the use of race as a factor in college admissions in Grutter v. Bollinger, 539 U.S. 203 (2003). Today’s decision makes it clear that race may not play a role in admissions, whether directly or indirectly. In making this clear statement, the court signaled its intent to thwart expected efforts by universities to skirt the decision by using race proxies in admissions. Specifically, applicants will no longer be able to check a “race” box in the admissions process. They will, however, be able to discuss race in admissions essays.

Many critics and news agencies are touting this decision as signifying the beginning of the end for Affirmative Action, and many companies may be wondering what the decision means for their Affirmative Action policies. The fact of the matter is that this decision is not a decision on Affirmative Action and it will have no effect on government contractors’ AA obligations. The schools at issue, Harvard and UNC, used race as a direct factor in selecting for admissions and as the court duly noted, “Both programs lack sufficiently focused and measured objectives….”  Affirmative Action planning, as required of federal contractors, focuses on providing a pool of applicants for the hiring manager that mirrors the population in specific job groups in the recruiting area.  It forbids the use of quotas or requirements to hire due to race.

The Office of Federal Contract Compliance Programs defines an affirmative action plan as an “obligation on the part of the contractor to take action to ensure applicants are employed, and employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identity, national origin, disability or status as a protected veteran.”  While colleges and universities are no doubt struggling with how to modify their admissions policies, rest assured that private sector Affirmative Action obligations are untouched by today’s decision.

On June 1, 2023, the United States Supreme Court held that a company could sue a union over intentional damage caused during a labor dispute. In Glacier Northwest v. International Brotherhood of Teamsters Loc. Union No. 174, a concrete company, Glacier Northwest, alleged that the Union intentionally destroyed company property during a strike. Specifically, Glacier claimed that the Union called for a work stoppage while concrete was being mixed, resulting in the hardening of the concrete, which not only ruined the concrete batch but also damaged company trucks. Seeking to hold the Union responsible, Glacier sued the Union in state court. The Union argued that because this was a labor dispute matter, the National Labor Relations Act (NLRA) preempted any state court claims.

The Washington state court agreed with the Union, and that decision was upheld by the Washington Supreme Court, which reasoned that “the NLRA preempts [the company’s] tort claims related to the loss of its concrete product because that loss was incidental to a strike arguably protected by federal law [the NLRA].” Following the Washington Supreme Court’s decision, the United States Supreme Court decided to hear the case. In an 8-1 decision, the Supreme Court sided with Glacier, holding that because the Union “took affirmative steps to endanger Glacier’s property … the NLRA does not arguably protect its conduct.” The Supreme Court recognized that the NLRA protects the right to strike; however, it also noted that the National Labor Relations Board “has long taken the position – which the parties accept – that the NLRA does not shield those who fail to take ‘reasonable precautions’ to protect their employer’s property from foreseeable, aggravated, and imminent danger due to the sudden cessation of work.”

In light of this limitation on the right to strike, the Supreme Court held that the Union did not meet its burden in asserting that the NLRA preempted the matter. Writing for the majority, Justice Amy Coney Barrett noted that, based on the allegations, “the Union executed the strike in a manner designed to compromise the safety of Glacier’s trucks and destroy its concrete. Such conduct is not ‘arguably protected’ by the NLRA; on the contrary, it goes well beyond the NLRA’s protections.” Accordingly, the Supreme Court reversed the judgment of the Washington Supreme Court and remanded the case for further proceedings.

Justice Jackson authored the lone dissenting opinion in the case. In her dissent, Justice Jackson cautioned that the majority’s decision would confuse lower courts as to how preemption applies and that this decision “risks erosion of the right to strike.” Justice Jackson also noted that the Supreme Court should have suspended its adjudication on this case because a complaint against the company is pending before the NLRB.

The upshot of the Supreme Court’s decision is that unions may be exposed to lawsuits based on work stoppages that damage company property. Although unions were previously capable of being sued in state court for violent or threatening conduct, the Supreme Court’s decision here goes a step further in finding that a union can be sued in state court if it is alleged that the Union enacted a work stoppage in an attempt to damage company property intentionally. Moving forward, employers should be aware of their right to sue a union when a work stoppage intentionally damages company property.

If you have any questions about the Glacier decision or how it impacts a company’s right to sue, please contact a member of the McNees Labor & Employment Group.

It’s no secret that non-compete agreements have recently come under greater scrutiny by the federal government.  In July 2021, President Joe Biden signed an Executive Order on “Promoting Competition in the American Economy” that, among other things, directed the Federal Trade Commission (“FTC”) to consider curtailing the use of non-compete agreements.  Then, in January of this year, the FTC responded to the Executive Order by proposing a broad and sweeping rule that would prohibit employers across the country from entering into non-compete agreements with their workforce.  Now, Jennifer Abruzzo, the General Counsel of the National Labor Relations Board, has joined this growing chorus, stating that non-compete agreements violate the National Labor Relations Act (“NLRA” or “Act”), except in limited circumstances.

On May 30, 2023, the General Counsel issued GC Memorandum 23-08 in which she argued that non-compete agreements are overbroad, and may violate the NLRA, “when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work.”  She reasoned that this denial of access to employment opportunities purportedly chills protected activity under Section 7 because: (1) employees know they will have greater difficulty finding another job if they are discharged for exercising their rights to organize and act together to improve working conditions; (2) their bargaining power during strikes, lockouts, and other labor disputes is undermined; and (3) as former employees of an employer, they are unlikely to “reunite” at a local competitor and encourage each other to exercise statutory rights to improve working conditions at their new employer.

Moreover, the General Counsel argued that non-compete agreements chill employees from engaging in five specific types of protected activity:

  • They chill employees from concertedly threatening to resign to demand better working conditions.
  • They chill employees from carrying out concerted threats to resign or otherwise concertedly resigning to secure improved working conditions.
  • They chill employees from concertedly seeking or accepting employment with a local competitor to obtain better working conditions.
  • They chill employees from soliciting their co-workers to go work for a local competitor as part of a broader course of protected concerted activity.
  • They chill employees from seeking employment, at least in part, to specifically engage in protected activity (e.g., union organizing) with other workers at an employer’s workplace.

In the General Counsel’s view, the “proffer, maintenance, and enforcement” of non-compete agreements that would reasonably tend to chill employees from engaging in these activities would violate the Act unless they are “narrowly tailored to special circumstances justifying the infringement on employee rights.”  The General Counsel did not explain what she believes might constitute “special circumstances,” although she provided examples of what likely would not: avoiding competition from former employees, retaining employees, and protecting special investments in employee training.  Those activities, according to the General Counsel, would not justify the use of a non-compete agreement.

The General Counsel also acknowledged that employers have a legitimate business interest in protecting proprietary or trade secret information, but noted that such interests can be protected by narrowly tailored “workplace agreements.”  She also allowed that some non-compete agreements might not violate the Act if they don’t restrict employment relationships, such as if they restrict ownership interests in a competing business or independent contractor relationships, or under “special circumstances” (again, undefined) that justify a narrowly-tailored non-compete.

Importantly, the General Counsel’s memorandum is not binding, and thus does not change existing law or render all non-compete agreements unlawful.  Furthermore, while the NLRA protects “employees” (union and non-union), it does not protect “supervisors” who are excluded from Section 7’s protections.  As such, non-compete agreements with supervisors or managers should not be affected by her memorandum.  That said, the General Counsel is looking for a case to bring to the Board, and in that regard, directed the Regional Offices to submit to the Division of Advice cases involving non-compete agreements that are “arguably unlawful” under her analysis.

Whether the General Counsel’s position ultimately carries the day remains to be seen.  Although the current employee-friendly Board may be sympathetic to her position, the federal courts of appeals – which review Board decisions – may not.  We anticipate that there will be legal challenges by employers to an adverse Board decision.  Moreover, her memo sets up a clash with states, which have traditionally regulated non-compete agreements.  For example, under Pennsylvania law, employers have legitimate business interests in their investments in specialized employee training and trade secrets or confidential information that may be protected by non-compete agreements.  See, e.g., WellSpan Health v. Bayliss, 869 A.2d 990, 996 (Pa. Super. Ct. 2005).

We will be monitoring the NLRB and will provide updates on any action by the Board with respect to non-compete agreements.  If you have any questions about the General Counsel’s memorandum or other issues involving non-compete agreements, please contact any member of our Labor and Employment Practice Group.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.

Did you know that qualified retirement plans may now allow a participant with a terminal illness to receive distributions from their retirement accounts without incurring the usual 10% penalty? The employer will need to amend the retirement plan to allow for such distributions.

For more information regarding compliance for your benefit plans, contact any member of the McNees Labor and Employment Group.

Now more than ever, it seems that employees are willing to express themselves.  While open communication with and among employees is usually a good thing, sometimes an employer’s rules are broken in the process.  A worker might call her supervisor a nasty name while complaining about her production team’s overtime assignments.  An employee could use profanity to describe working conditions in a social media post in which he also asks his co-workers to join a labor union. A striking employee may threaten a company executive while picketing.

In such cases, an employer is likely to consider disciplining employees for breaking its rules while otherwise engaged in activity protected by the National Labor Relations Act. Nearly three years ago, the NLRB announced that it would apply the same test when determining whether disciplinary action is lawful, regardless of the context in which the employee’s misconduct occurred.  In General Motors, LLC, the Board held that in order to prove that disciplinary action violates the Act, an employee was required to show that:

  1. the employee engaged in Section 7 protected activity;
  2. the employer knew of that activity; AND
  3. there is a causal connection between the discipline and the Section 7 activity.

If an employee met this initial burden, an employer could still avoid liability by proving that it would have taken the same action in the absence of protected activity.  Our discussion of General Motors, LLC can be found here.  Many employers welcomed this universal test, as it standardized the law regardless of the context in which the employee’s misconduct happened.  But, alas, the General Motors standard is no more.

On May 1, the Board issued its ruling in Lion Elastomers LLC II. There it overruled General Motors in favor of applying setting-specific tests to evaluate the propriety of employee discipline.  Now, the setting of an employee’s misconduct once again determines the standard by which disciplinary action will be judged.  The setting-specific tests are as follows:

First, when discipline arises out of an employee’s conduct toward management in the workplace, the Board will apply the test originally established in Atlantic Steel.  That test considers the following four factors:

  1. the place of the interaction between employee and management;
  2. the subject matter of the discussion;
  3. the nature of the employee’s outburst; AND
  4. whether the outburst was, in any way, provoked by an employer’s unfair labor practice.

Next, when discipline arises out of an employee’s misconduct on social media or while interacting with a co-worker in the workplace, the Board will apply its “totality of the circumstances” test without regard to any particular factor.  This test was originally enunciated in Pier Sixty, LLC.

Finally, when discipline arises out of an employee’s misconduct on the picket line, the Board will again consider the Clear Pine Mouldings standard.  Under that test, the Board examines the totality of the circumstances to assess whether non-striking employees reasonably would have been coerced or intimidated by the misconduct.  If so, discipline is proper.

As the current NLRB continues to unwind many of the employer-friendly rules established by the previous Board, employers must now remember that context matters when disciplining employees for conduct that occurs during otherwise protected activity.  One size no longer fits all.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.

Did you know that group health plans are required to submit a gag clause prohibition compliance attestation to the Departments of Labor, Health and Human Services, and Treasury prior to December 31, 2023?  The annual attestation provides that the group health plan has not, since December 27, 2020, entered into and will not enter into a contract with a health care provider, third-party administrator, or other service provider offering access to a network of providers that would directly or indirectly restrict the group health plan from disclosing the quality and cost of services and certain other information.

For more information regarding compliance for your benefit plans, contact any member of the McNees Labor and Employment Group.

We have posted about employer use of Artificial Intelligence, AI, and the emerging legal issues associated with such tools, and no doubt, AI is going to continue to be a hot topic.  The growth of AI tools and their usage across industries has been explosive.

Recently, we attended a Webinar on Chat GPT and learned more about the awesome power of this technology.  We walked away very impressed, and even a little scared of its capabilities.  One key takeaway: while Chat GPT may be a good way to start a project, at this point, employers should be sure to use REAL intelligence to review and finalize any work product.  Legal issues are just starting to surface and the field is dynamic.

Still, we wanted to give it a shot.  So we asked Chat GPT to help us with a first draft of a blog post.  We asked it, please help me with a blog post for Human Resources professionals about Chat GPT.  Here is what it came up with (with some careful editing from us):

With the rise of artificial intelligence, HR professionals are now presented with new tools to streamline their work processes and make more informed decisions. One such tool is Chat GPT, a large language model developed by OpenAI based on the GPT-3.5 architecture. In this blog post, we will explore how Chat GPT can be used by HR professionals to improve their work processes.

What is Chat GPT?

Chat GPT is a large language model that uses deep learning techniques to generate human-like responses to text prompts. The model is based on the GPT-3.5 architecture, which allows it to generate responses that are both accurate and contextually relevant. Chat GPT can be used in a variety of applications, including chatbots, customer service, and even HR.

How can HR professionals use Chat GPT?

HR professionals can use Chat GPT in a variety of ways to streamline their work processes and improve their decision-making. Here are just a few examples:

       1.  Recruitment

Chat GPT can be used to automate the recruitment process by answering candidates’ questions about the job requirements, company culture, and application process. This can free up HR professionals to focus on other tasks while ensuring that candidates receive timely and accurate information.

       2.  Onboarding

Chat GPT can also be used to automate the onboarding process by answering new hires’ questions about company policies, benefits, and procedures. This can help new hires feel more comfortable and confident in their new role, while also reducing the workload for HR professionals.

       3.  Performance management

Chat GPT can be used to gather feedback from employees about their performance and provide personalized recommendations for improvement. This can help HR professionals identify areas where employees need additional support and create more effective performance improvement plans.

       4.  Employee engagement

Chat GPT can also be used to engage with employees and provide them with personalized support. For example, Chat GPT can be used to answer questions about company benefits, provide training resources, and even schedule appointments with HR professionals.

       5.  Compliance

Chat GPT can also be used to ensure compliance with company policies and legal regulations. For example, Chat GPT can be used to answer employees’ questions about policies, provide information about mandatory training requirements, and even alert HR professionals to potential compliance violations.

Our Conclusion

There is no doubt that OpenAI, and Chat GPT specifically, is a powerful tool.  OpenAI is going to change the world and the world of work.  There is also no doubt that the lightning-fast changes happening in this space will continue for the foreseeable future.

Certainly, employers need to be aware of the power of these tools, how they may be useful to the organization, and where there are risks.  In a future article, we will discuss what employers should be doing to educate and guide employees as these tools become more widely used.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.

Did you know that an employer must issue an updated summary plan description (“SPD”) at least every five (5) years that contains all recent amendments? If there were no amendments to the SPD, then the SPD must be reissued every 10 years.

For more information regarding compliance for your benefit plans, contact any member of the McNees Labor and Employment Group.