Employment Law

NLRB’s Noteworthy Developments

Recent decisions from the National Labor Relations Board (NLRB) find the board overturning two of its previously established standards. The NLRB overturned its standard for assessing the legality of employee handbooks, as established in the 2004 Lutheran Heritage Village-Livonia decision, with a 3-2 majority. The Lutheran Heritage standard held that an employee handbook policy is illegal if employees can “reasonably construe” that the policy prohibits them from exercising their rights under the National Labor Relations Act. In overturning the Lutheran Heritage decision, the board lays out three categories into which it will classify challenged rules: rules that are legal in all cases because they cannot be reasonably interpreted to interfere with workers’ rights or because any interference is outweighed by business interests, rules that are legal in some cases depending on their application, and rules that are always illegal because they interfere with workers’ rights in a way not outweighed by business interests.

The NLRB also reversed the decision it reached in the 2015 Browning-Ferris Industries of California, Inc. (BFI) case, in which it had expanded the test for determining joint employment. The board voted 3-2 to overturn the standard set in BFI, which established that a company can be classed as a joint employer even if the employer exerts “indirect control” over employees. During the vote, the board reverted to its pre-BFI standard of “direct and immediate control,” stating that the BFI test jeopardized the stability of relationships between employers and employees. The board’s dissenters countered that the board majority failed to solicit the public’s perspective, and challenged the majority’s policy basis for reversing the BFI standard as “entirely speculative.”

Please stay tuned for more detailed analysis and further coverage in our upcoming newsletters.

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A Warning to Employers: Temporary Layoff Triggers CA WARN Act

Why it matters

In a troubling new decision, a California appellate panel ruled that the state’s Worker Adjustment and Retraining Notification (WARN) Act notification requirement applies to a temporary furlough lasting four to five weeks. The case involved NASSCO, a ship building and repairing company with staffing needs that change frequently. On March 3, 2014, the company notified 14 employees that they were not to return to work for at least three weeks. Two weeks later, NASSCO informed an additional 76 workers they were also out of work for at least three weeks. Some of the employees returned to work on April 7, and the rest came back on April 14. The union sued on behalf of the employees, arguing that the failure to provide prior notice of the time off violated the state’s WARN Act, seeking back pay and statutory penalties. The trial court granted the union’s motion for summary judgment, rejecting NASSCO’s argument that the time off was simply a temporary reduction in manpower and not a layoff. The appellate panel affirmed, finding that unlike the federal statute—which does not require notice when the time out of work lasts for less than a six-month period—California’s law applies to temporary layoffs. The ramifications for employers in the state are serious, with the potential for significant penalties under the WARN Act for failure to comply with the statute’s notification requirements.

Detailed discussion

NASSCO Holdings employs thousands of workers in its ship building and repairing business, where the employees are represented by The International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, and Helpers. NASSCO’s staffing requirements change frequently, and the collective bargaining agreement contains rules applicable to terminations and unpaid work stoppages.

Realizing it needed to temporarily reduce the labor force because of a lull in shipyard production work, NASSOC notified 14 employees on March 3, 2014, they were not to return to work for at least three weeks. On March 17, an additional 76 workers were informed they were out of work for at least three weeks.

Some of the employees returned to work on April 7, and the rest were back on April 14, 2014, all returning to their same job classification.

The union president wrote to NASSCO, claiming that by laying off more than 50 workers within a 30-day period, the employer triggered the statutory notice protections of California’s Worker Adjustment and Retraining Notification (WARN) Act. NASSCO responded that the time off was more accurately characterized as a “furlough” or a “manpower reduction,” adding that under the federal WARN Act, notice is not required when the layoffs are for less than a six-month period. The union disagreed and filed suit.

Ruling on cross motions for summary judgment, a trial court judge sided with the union and entered final judgment in the plaintiffs’ favor for $211,405 plus interest, costs and attorney fees. NASSCO appealed.

Beginning with the language of the statute, the appellate panel considered the statutory duty to provide notice. There was no question NASSCO was a covered establishment with 75 or more employees or that more than 50 workers were instructed to stop working. However, the employer argued that the situation did not fall under the definition of layoff under the statute—“a separation from a position for lack of funds or lack of work”—because the work stoppage was for only a brief period.

But the court said the statute did not dictate a specified time period. “Under its plain meaning, ‘separation’ means an action of moving apart, and does not contain a temporal component,” the court wrote. “Under a commonsense understanding, a separation can be permanent or it can be temporary. Thus, the fact that the work stoppage was temporary does not logically take the action outside the scope of the statutory duty.”

This position was bolstered by the statutory context in which the term “separation” appears, the court added. Lawmakers could have defined a layoff to mean the termination of employment, or even separation of employment, but chose not to. “The Legislature used the phrase ‘from a position’ immediately after the word ‘separation,’” the panel wrote. “The concept of being separated from a position does not suggest a requirement that the employment relationship be severed.”

Applying this reasoning to the NASSCO workers, the “‘separation from the position’ definition does not suggest a severance from the employment relationship must occur before the notice duty triggers,” the court said. “Instead it encompasses a temporary job loss, even if some form of the employment relationship continues and the employees are given a return date.”

The court found additional support in the statute’s other definitions, many of which contain explicit time restrictions—demonstrating that the legislature knew how to establish such limits when it wanted to do so.

NASSCO’s efforts to rely upon dictionary definitions and judicial decisions to support its view that a “separation” means a complete termination of the employment relationship did not sway the appellate panel. Nor did its attempt to characterize the time period as a “furlough,” a term the court noted was never used in the California WARN Act.

“The California WARN Act does not state that a separation must occur for a specified time period, and there are no statutory grounds for determining the scope of such a proposed rule,” the court wrote. “Although an employer may view a five-week break as minimal, a worker who is living paycheck-to-paycheck may not.”

Even assuming the relevant language of the statute was ambiguous, the legislative history and the underlying public policy support the conclusion that an employer has the obligation to provide notice even if the intended layoff is temporary, the panel said.

Congress enacted the federal WARN Act in 1988, but it wasn’t for another 15 years that California passed its own version of the statute, “believing the federal law was ineffective in various respects and seeking to ‘supplement’ the law to provide stronger worker protections.”

One of the ways in which the state analogue attempted to beef up worker protections: reducing the number of workers for coverage (from 100 employees under the federal WARN Act to just 50 in California) and for notice (a decrease from 500 employees or 33 percent of the workforce down to 50 workers). State legislators also changed the language of the definition of “mass layoff,” eliminating the six-month time period found in the federal statute.

“[T]he entire thrust of the legislative effort in enacting the California WARN Act was to provide greater protection to California workers than was afforded under the federal law,” the panel said, noting that the statute is remedial in nature and is intended to provide protections to workers, their families and communities. “Otherwise there would have been no need for a state law.”

To read the opinion in The International Brotherhood of Boilermakers v. NASSCO Holdings Inc., click here.

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Oklahoma Jury Awards Transgender Professor $1.1M

Why it matters

A federal jury in Oklahoma awarded more than $1 million to a transgender English professor who alleged Southeastern Oklahoma State University denied her tenure because of gender bias and retaliation. When she was initially hired in 2004, Dr. Rachel Tudor presented as a man. She began to transition in 2007 and present as a woman. In 2009, she was denied tenure over the recommendations of faculty members. She sued under Title VII and the case proceeded to trial after the district court denied the school’s motion for summary judgment. Although jurors rejected the plaintiff’s hostile work environment claim, they awarded Tudor $1,165,000 for discrimination and retaliation.

Detailed discussion

When she was hired by Southeastern Oklahoma State University as an assistant professor in 2004, Dr. Rachel Tudor presented as a man. In 2007, she began to transition and present as a woman. She applied for the tenured position of associate professor in 2009, but her application was denied over the recommendations of tenured faculty members. Tudor was then terminated during the 2010–11 school year based on her lack of tenure.

Alleging that she suffered significant discrimination and harassment after she announced her transition, Tudor filed suit asserting that she was subjected to a hostile work environment and discriminated against in violation of Title VII.

The school moved for summary judgment, arguing that the plaintiff failed to provide sufficient evidence of a hostile environment and offered just a “handful” of insults, incidents or comments.

But U.S. District Judge Robin J. Cauthron disagreed, denying the motion.

“Rather, [the plaintiff] argues that every day over the course of a four-year period she had restrictions on which restrooms she could use, restrictions on how she could dress, what makeup she could wear,” the court said. “She was also subjected to hostilities from administrators targeting her gender, such as using an improper pronoun to refer to her and other gender-based hostilities.”

Tudor’s discrimination claim also survived, as she provided sufficient evidence suggesting that substantial procedural irregularities existed in the decision to deny her tenure, the court said, as did her retaliation claim, based on her engagement in multiple protected activities (from filing an internal grievance to sending a letter to the U.S. Department of Education complaining of discrimination).

The ruling moved the case forward to trial.

After two days of deliberations, the eight-person jury returned a verdict in favor of the plaintiff on three counts: that she was denied tenure in 2009-10 because of her gender, that the defendants’ decision to deny her the opportunity to apply for tenure in 2010–11 was because of her gender, and that she was denied the opportunity to reapply for tenure in retaliation for her complaints about workplace discrimination. Jurors rejected Tudor’s hostile work environment claim, however.

The jury awarded Tudor a total of $1,165,000.

To read the verdict form in Tudor v. Southeastern Oklahoma State University, click here.

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No Insurance Coverage for Employee’s Suit Because of Prior Letter

Why it matters

When does insurance coverage attach to a claim made by an employee? One employer learned a hard lesson when a federal court denied coverage for an employee’s Equal Employment Opportunity Commission (EEOC) charge and related lawsuit because the plaintiff had previously sent a letter to the company about his impending termination. Facing a layoff, an employee sent a letter to the board of Convercent, Inc., stating that his termination would violate the Age Discrimination in Employment Act (ADEA) and asking that the parties “get together and determine” if continued employment was a possibility “to avoid litigation.” Seven months later (and after he was let go), the employee filed a charge of discrimination with the EEOC as well as a subsequent lawsuit based on the same allegations made in the letter. Convercent tendered defense of the charge and the suit to Scottsdale Indemnity Co., but the insurer refused to provide coverage. The letter constituted a claim that occurred outside of the current policy period, and because the charge and lawsuit related to the letter, they were not timely reported, the insurer said. The court agreed, finding the letter was a “demand for damages or other relief” even though it wasn’t authored by an attorney.

Detailed discussion

In October 2015, an employee was told that his position at Convercent, Inc., would be terminated in early 2016. Believing that the grounds for his termination were improper, the employee sent a letter via email to the company’s board of directors, CEO and president.

The letter asserted his belief that his forthcoming termination violated the Age Discrimination in Employment Act (ADEA), among other allegations. He requested that Convercent “reconsider the decision to terminate my employment because of my age or any unjustified or unlawful reason,” suggesting that the parties “quickly get together and determine if my continued employment may be mutually addressed in a manner reflective of all issues to avoid litigation.” He added that if the recipients did not “pursue the steps outlined above,” he would “pursue all appropriate remedies against everyone involved.”

Receiving no response, the employee followed up with a second missive in December. This letter reiterated his position and requests. Again, he received no response from Convercent and was terminated on Jan. 4, 2016.

The employee filed a charge of discrimination on the basis of age with the Equal Employment Opportunity Commission (EEOC) in August 2016, followed by a lawsuit in Colorado federal court.

Convercent tendered both the charge and the lawsuit to Scottsdale Insurance Co., seeking a defense. The insurer had provided two policies to the employer: one covering the period from May 30, 2015, to May 30, 2016, and a virtually identical policy that began May 30, 2016, and ended May 30, 2017. Both were claims-made policies that covered claims of wrongful acts that occurred during the policy period and were reported to the insurer within a specified time period.

The policies defined a “claim” to include various types of criminal and civil proceedings as well as “a written demand against an Insured for damages or other relief.” Claims were deemed to have been made whenever the earliest claim involving the same wrongful act or interrelated wrongful acts was first made.

Scottsdale denied Convercent’s request for coverage. The EEOC charge and lawsuit were related to the letters the employee sent to Convercent during the prior policy period, the insurer explained, and therefore, the employer was too late to obtain coverage under the 2015 policy and could not seek coverage under the 2016 policy.

The insurer then filed a declaration judgment action, asking the court to determine its obligations to provide a defense to Convercent with regard to the EEOC charge and the lawsuit. The employer argued that only the charge and lawsuit constituted claims pursuant to the two policies and that the letters were not a demand for damages, meaning coverage was required.

But U.S. District Judge R. Brooke Jackson sided with Scottsdale. The term “claim” was not ambiguous because it was defined by the policy, said the court, having little problem finding that the employee’s letters met the definition.

“[The employee’s] letter was a thinly veiled ultimatum,” the court wrote. “[He] listed the specific legal violations that he believed had occurred in relation to his termination and suggested that the parties ‘get together and determine if my continued employment may be mutually addressed in a manner reflective of all issues to avoid litigation.’ In so doing, [the employee] was impliedly requesting a settlement of the issues he raised. Additionally, he warned that he would ‘pursue all appropriate remedies’ if his recommended steps were not taken. Such a statement should reasonably have been read as an ultimatum and a threat to engage in litigation if his requests were not met.”

It was irrelevant that the employee did not hire an attorney to write his letter, the court added, and it would be unreasonable to require that a written demand for damages or other relief come from an attorney rather than from the individual seeking relief, “especially when, as in this case, that individual expressly cites alleged violations of law and conveys a desire to avoid litigation.”

The letter “contained enough information to put defendants on notice of his willingness to litigate the matters he raised if a settlement was not possible,” Judge Jackson wrote. “Defendants were thus given fair warning of [the employee’s] complaints and of the fact that he would likely sue if his requests were not addressed. The absence of an attorney was not a legitimate reason for defendants’ ignoring [his] requests or failing to see his letter for what it was: a demand for relief.”

Convercent’s attempts to characterize the language of the letters as “part of the negotiation of his continued employment” did not impress the court, which found the letters to contain requests for both equitable relief (reconsideration of the decision to terminate his employment) and monetary compensation (continuation of his salary and benefits).

The employee’s letters “requested that defendants reconsider their decision to terminate his employment, ensure that his salary and benefits not be terminated, and ‘get together’ to resolve the issues without litigation,” the court said. “If these requests were not met, [the employee] asserted that he would seek all remedies against all involved parties. Thus … the letter contained a demand for specific relief.”

Judge Jackson granted Scottsdale’s motion for summary judgment, declaring that the employer was not entitled to coverage for the EEOC charge or the lawsuit.

To read the order in Scottsdale Indemnity Company v. Convercent, Inc., click here.

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Court Allows Some Access to Employee’s Social Media Accounts

Why it matters

Considering the scope of an employer’s access to a worker’s social media accounts for discovery purposes, a Connecticut federal court refused to grant full access, as it would constitute a “wholesale invasion of [the plaintiff’s] privacy,” instead opting for a middle ground. Lauren Marsteller claimed that two male coworkers repeatedly sexually harassed her, watched her on a company security camera while she changed her clothes, and shared the video with other employees. The employer petitioned the court for direct access to Marsteller’s social media accounts or, in the alternative, copies of her social media communications, arguing that the materials were relevant to her claims of emotional distress. Attempting to strike a balance, the court allowed the employer’s request for copies of certain social media communications but refused direct access to the plaintiff’s accounts, calling the request a clear “example of a fishing expedition.” An employee’s “routine status updates and/or communications on social networking websites are not, as a general matter, relevant to her claim for emotional distress damages, nor are such communications likely to lead to the discovery of admissible evidence regarding the same,” the court wrote.

Detailed discussion

In her Connecticut federal court complaint, Lauren Marsteller claimed that two coworkers repeatedly sexually harassed her, watched her on a company security camera while she changed her clothes in a private office, and showed the video to other employees. Alleging “severe emotional distress,” she asserted claims under Title VII, state law and intentional infliction of emotional distress, among others.

The employer filed a motion seeking to compel Marsteller to provide access to her social media accounts or, in the alternative, copies of certain social media communications. The materials were relevant to her allegations of emotional distress, the defendants told the court.

Marsteller objected, asserting that she never posted anything relevant to her employment or the allegations in her complaint.

Drawing a line, U.S. Magistrate Judge Sarah A.L. Merriam refused to have the plaintiff hand over her password but did allow the defendants to obtain copies of relevant communications.

As a general matter, routine status updates and communications on social networking websites are not relevant to a claim of emotional distress, the court said. “Requiring plaintiff to provide her social media passwords to defendants would constitute a wholesale invasion of her privacy, and would be far outside the bounds of proportionality,” Judge Merriam explained. “One can hardly imagine a better example of a fishing expedition.”

However, the request for copies of responsive social media materials was both “reasonable and likely to lead to admissible evidence,” the court said. The motion sought “statements … of any and all witnesses to the Incident(s) described in the Complaint” and “communications, including, but not limited to, emails, text messages, regarding or relating to the Incident as alleged in the Complaint.”

Granting the motion to compel production of social media materials responsive to these two requests, the court cautioned the defendants not to expand or amend the requests to seek information about the plaintiff’s mental or emotional state generally.

The defendants also scored a victory with an order to compel disclosure of Marsteller’s medical records. Although the plaintiff argued that her medical files were privileged and disclosure would be inappropriate, she also asserted a claim for intentional infliction of emotional distress, the court pointed out. By claiming “severe” emotional distress in her complaint, she waived the psychotherapist-patient privilege and the “defendants are entitled to discovery of her treatment records to provide a reasonable opportunity to defend against these claims,” Judge Merriam wrote.

To read the order in Marsteller v. Butterfield 8 Stamford LLC, click here.

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Fourth Circuit: Race Not the Reason for Termination

Why it matters

A manager’s refusal to adopt an improvement plan—not his race—was the reason for his termination, a panel of the U.S. Court of Appeals, Fourth Circuit affirmed in an unpublished opinion. Following complaints from his subordinates that his management style created a stressful work environment, John Hightower was presented with a “Performance Improvement Plan” that stated that he had “displayed a pattern of unacceptable behaviors.” Hightower refused to sign the plan. Even after the employer retitled the document a “Development Plan” and revised the language, he still refused to sign and was subsequently reassigned. He then sued for racial discrimination and retaliation in violation of Title VII. The federal appellate panel affirmed summary judgment in favor of the employer. If Hightower had signed the document, he would have retained his position, the court said, and he failed to provide any evidence to rebut this nondiscriminatory reason for his transfer. Even assuming the subordinates complained due to some racial or retaliatory animus, there was no basis for imputing the bias to the employer, the panel added.

Detailed discussion

During a November 2012 meeting, two subordinates of John Hightower became upset and behaved inappropriately, yelling and cursing at him. Soon after, while Hightower was out of the office on previously scheduled medical leave, his supervisors spoke with the subordinates about the incident. Several workers who reported to Hightower complained that his management style created a stressful workplace environment.

As a result, Hightower’s supervisors asked him to apologize to his team. Initially, he agreed. But while still on leave, he changed his mind and declined to apologize, telling his supervisors that he felt he had done nothing wrong.

Upon his return to work, Hightower’s supervisors presented him with a “Performance Improvement Plan,” which stated that he had “displayed a pattern of unacceptable behaviors” and needed to improve his interpersonal skills as well as his relationship with his subordinates.

Hightower expressed concern about signing the document. His superiors retitled the document “Development Plan” and changed the “pattern of unacceptable behaviors” language to state that his management style “needed improvement.” Despite these tweaks, Hightower refused to agree to the terms of the plan or sign it, even when he was informed that he would not be able to return to his position if he did not do so. When Hightower continued to refuse to sign, the employer reassigned him to a similar position with the same salary and benefits but without supervisory authority.

Hightower then filed suit under Title VII with claims of race discrimination and retaliation. A district court judge granted the employer’s motion for summary judgment, and Hightower appealed.

As an initial matter, the U.S. Court of Appeals, Fourth Circuit questioned whether the plaintiff suffered an adverse employment action because he was reassigned to a position with the same salary and benefits as his former position. But the court still affirmed summary judgment, assuming—without deciding—that the plaintiff had made out a prima facie case of discrimination and retaliation.

Hightower had the burden to demonstrate that the employer’s proffered nondiscriminatory reason for his reassignment—his refusal to sign the Development Plan—was a pretext and that the true reason was discriminatory or retaliatory, the court said, but he failed to meet this burden.

“He acknowledges that he was reassigned not because he was performing inadequately, or even because his subordinates did not like his management style, but because he refused to sign the Development Plan,” the panel wrote. “[The plaintiff] would have retained his position had he signed this document to the satisfaction of [the employer’s] management. Further, even assuming that [the employer’s] subordinates complained about his management style due to some racial or retaliatory animus, there is no basis for imputing any such bias to [the employer].”

To read the opinion in Hightower v. Savannah River Remediation LLC, click here.

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