Employment Law

President Taps New Heads for Federal Employment Agencies

Why it matters

President Donald J. Trump appointed new leaders for the federal employment agencies during his busy first few days in office, tapping Victoria A. Lipnic as Acting Chair of the Equal Employment Opportunity Commission (EEOC) and Philip A. Miscimarra to lead the National Labor Relations Board (NLRB). An EEOC Commissioner since 2010, when she was nominated by President Barack Obama, Lipnic began a second term last year that will last until July 2020. "I believe equal employment opportunity is critical to all Americans and to how we define ourselves as a nation," Lipnic said in a statement about her appointment. Over at the NLRB, Miscimarra will take over as Acting Chairman. "I remain committed to the task that Congress has assigned to the Board, which is to foster stability and to apply the National Labor Relations Act in an even-handed manner that serves the interests of employees, employers and unions throughout the country," he said in a statement. Both appointees had been voices of dissent under the prior administration. Lipnic did not support the EEOC's move to collect pay data from employers while Miscimarra was outspoken in his criticism on the divisive question of whether the NLRA prohibits the waiver of class or collective actions in employee arbitration agreements.

Detailed discussion

Just a few days into his term, President Donald J. Trump turned his attention to the leadership of the federal employment agencies. At the Equal Employment Opportunity Commission (EEOC), he named Victoria A. Lipnic Acting Chair of the Commission.

"I am honored and humbled to be chosen by President Trump to serve as Acting Chair of the EEOC, the agency which safeguards the civil rights of American workers," she said in a statement. "I believe equal employment opportunity is critical to all Americans and to how we define ourselves as a nation. I look forward to working with the President, my colleagues at EEOC, Congress, and, of course, the American people in this critical task."

President Barack Obama nominated Lipnic to serve as an EEOC Commissioner in 2010. After being confirmed by the Senate, her first term ended on July 1, 2015; her second term is set to end on July 1, 2020. Prior to joining the Commission, Lipnic served as Assistant Secretary of Labor for Employment Standards from 2002 to 2009, an organization that oversees the Wage and Hour Division, the Office of Federal Contract Compliance Programs (OFCCP), the Office of Labor Management Standards and the Office of Workers Compensation Programs.

Under her purview as Assistant Secretary, these divisions of the Department of Labor (DOL) revised regulations on the Family and Medical Leave Act as well as overtime, while the OFCCP released the first regulations to evaluate compensation discrimination.

Before her time at the DOL, Lipnic was the Workforce Policy Counsel to the Majority (Republican) members of the Committee on Education and the Workforce in the U.S. House of Representatives, an attorney for labor and employment matters for the U.S. Postal Service, and a special assistant for business liaison to then-Secretary of Commerce, Malcolm Baldridge.

She received her undergraduate degree in Political Science and History from Allegheny College and her J.D. from George Mason University School of Law.

As a Republican on a majority Democrat Commission, Lipnic was critical of certain EEOC efforts such as the new requirement to collect pay data from employers.

Over at the National Labor Relations Board (NLRB), Philip A. Miscimarra was named Acting Chairman. A graduate of Duquesne University and both University of Pennsylvania's Wharton Business School and Law School, Miscimarra worked in private practice for several years as a labor and employment attorney and served as a Senior Fellow at the University of Pennsylvania's Wharton Business School in the Wharton Center for Human Resources.

President Obama nominated Miscimarra in April 2013 and the Senate confirmed him in July 2013, with his current term set to expire on December 16, 2017.

"It is an honor to be named NLRB Acting Chairman by the President," Miscimarra said in a statement. "I remain committed to the task that Congress has assigned to the Board, which is to foster stability and to apply the National Labor Relations Act in an even-handed manner that serves the interests of employees, employers and unions throughout the country."

Former Chairman Mark Gaston will continue as a Board Member until his term expires in August 2018, joined by Board Member Lauren McFerran, whose term ends in December 2019. Two seats remain vacant.

Miscimarra has been a frequent voice of dissent at the Board over the last few years, most notably in his opposition to the position advanced by the NLRB in D.R. Horton, that class or collective action waivers in arbitration agreements in the employment context violate employees' Section 7 right under the National Labor Relations Act to engage in protected, concerted activity by requiring individual arbitration. That issue is currently pending before the Supreme Court.

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DOL's Fiduciary Rule Upheld in Texas Federal Court

The Department of Labor's fiduciary rule was upheld again earlier this week, this time in a decision issued in a Texas federal court. The rule, introduced by the Obama administration, states that financial professionals who advise on retirement accounts must act in their client's best interest when recommending investment products—a higher standard of accountability than previously required. The rule is set to take effect in April. Judge Barbara M. G. Lynn issued the decision, making her the third federal district judge to rule in the Labor Department's favor on this issue.

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

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Disclosure of FMLA Condition May Violate Statute

Why it matters

Disclosure of an employee's Family and Medical Leave Act (FMLA) condition may be an automatic violation of the statute, a Florida federal court held in a case involving the sharing of information about an employee's genito-urinary system problem. After almost ten years of employment with the Collier County Board of County Commissioners, Scott Holtrey developed the disorder and applied for FMLA leave. He also submitted a medical certification that he characterized as containing "sensitive and detailed" information. His leave was granted. But without his knowledge, a manager discussed his condition at a meeting with eight other employees. Coworkers later approached him, asking about his ailment, making jokes and using obscene gestures about his condition. He filed suit under the FMLA, asserting claims for interference and retaliation because Collier breached his right to confidentiality under the statute. The employer moved to dismiss but the court denied the motion. "Although district courts conflict on whether a disclosure of an employee's medical information constitutes an interference claim under FMLA, the Court finds that the enforcing labor regulation makes clear that confidentiality of medical information is a right provided and protected under the FMLA," the court wrote.

Detailed discussion

Scott Holtrey began working for the Collier County Board of County Commissioners in 2006. In 2015, he developed a chronic and serious health condition with his genito-urinary system. As a result, he applied for leave under the FMLA and provided "sensitive and detailed medical information" to his employer.

Collier approved his leave request. But without Holtrey's knowledge, a manager allegedly disclosed his condition to approximately eight coworkers and subordinates at a staff meeting that he did not attend. These employees approached Holtrey to ask about his condition and make fun of him, he said, making jokes and obscene gestures. Holtrey said he complained to his employer but Collier failed to take action.

Holtrey then filed suit, claiming that Collier interfered and retaliated against him because the employer breached his right to confidentiality under the FMLA. Collier moved to dismiss the suit, arguing that, because the plaintiff's leave was approved, he failed to allege denial of FMLA benefits or an adverse employment action resulting in damages. As for his interference claim, Collier said Holtrey failed to adequately allege a hostile work environment.

But U.S. District Court Judge Sheri Polster Chappell disagreed.

First tackling the interference claim, she noted that the statutory regulations mandate that employee records and documents relating to certifications "shall be maintained as confidential medical records in separate files/records from the usual personnel files." While recognizing that the law is "unsettled" on whether this requirement gives rise to a private right of action for disclosure, Collier only challenged the sufficiency of Holtrey's claim and not whether a private right of action exists under the regulations, the judge said.

Reviewing the sufficiency of the complaint, the court said Holtrey met his burden to survive the motion to dismiss. "Plaintiff has sufficiently alleged a right of confidentiality and that Defendant breached that right when it disclosed his protected medical information during a staff meeting and without his permission," Judge Chappell wrote. "And because of this disclosure, Plaintiff's subordinates made jokes and obscene gestures about his condition."

Just because Collier granted Holtrey's FMLA leave did not foreclose the possibility of an interference claim, the court added. "The issue in this case is whether confidentiality is a right under the FMLA and whether Defendant interfered with that right," the judge wrote. "Although district courts conflict on whether a disclosure of an employee's medical information constitutes an interference claim under FMLA, the Court finds that the enforcing labor regulation makes clear that confidentiality of medical information is a right provided and protected under the FMLA."

Further, Holtrey did not have to allege a hostile work environment to move his interference claim forward, the court said. The complaint "includes sufficient allegations that the subordinates' obscene behavior and joking altered his work conditions," the court wrote.

Turning to the FMLA retaliation claim, Judge Chappell rejected Collier's position that Holtrey failed to allege he suffered an adverse employment decision. "Plaintiff alleges that Defendant's disclosure of his confidential FMLA information constitutes a materially adverse action because it resulted in his co-workers making repeated and frequent jokes and obscene gestures about his condition," the court said. "These allegations suffice to state an adverse employment action. At this early stage of the litigation, the Court is hard-pressed to find that disclosing confidential medical information about an individual's genito-urinary system to that employee's coworkers and subordinates does not materially affect his working conditions. Accordingly, the Court denies Defendant's motion to dismiss the FMLA retaliation claim."

To read the order in Holtrey v. Collier County Board of County Commissioners, click here.

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Ninth Circuit: Liability Waiver a Willful FCRA Violation

Why it matters

The U.S. Court of Appeals for the Ninth Circuit took a tough position on multiple issues in a class action filed against an employer under the Fair Credit Reporting Act (FCRA), holding that the inclusion of a liability release in an employment background check disclosure not only satisfies the concrete harm requirement of Spokeo, Inc. v. Robins but also constitutes a willful violation of the statute. When Sarmad Syed applied to work for M-I LLC, he received a background check disclosure form that indicated his signature released the company from any liability associated with the form. Syed later filed suit, asserting that the inclusion of the liability waiver violated the FCRA as the statute mandates that the disclosure form consist "solely" of the disclosure. A federal district court dismissed the suit and Syed appealed. The federal appellate panel reversed. Not only were the plaintiff's "extraneous language" allegations sufficient to satisfy Spokeo's standing requirements, but the liability release was a willful violation of the FCRA, entitling Syed to both statutory and punitive damages, the court said. With the Ninth Circuit taking a bright line approach that any extraneous language violates the FCRA, employers should review their disclosure and authorization forms to make sure they are compliant.

Detailed discussion

In 2011, Sarmad Syed applied for a job with M-I LLC. The employer provided Syed with a document labeled "Pre-employment Disclosure Release." The document informed Syed that his credit history and other information could be collected and used as a basis for the employment decision, authorized M-I to procure Syed's consumer report and stipulated that, by signing the document, Syed was waiving his rights to sue M-I and its agents for violations of the FCRA.

The liability waiver stated: "I understand the information obtained will be used as one basis for employment or denial of employment. I hereby discharge, release and indemnify prospective employer, PreCheck, Inc., their agents, servants and employees, and all parties that rely on this release and/or the information obtained with this release from any and all liability and claims arising by reason of the use of this release and dissemination of information that is false and untrue if obtained by a third party without verification."

By signing the document, Syed simultaneously authorized M-I to obtain his consumer report and granted a release of liability. He subsequently filed a putative class action lawsuit under the FCRA, arguing that the form's inclusion of the liability waiver violated Section 1681b(b)(2)(A)'s requirement that the disclosure document consist "solely" of the disclosure. His complaint requested statutory and punitive damages but not actual damages, which would have required proof of actual harm.

A U.S. District Court granted M-I's motion to dismiss the suit and Syed appealed.

The U.S. Court of Appeals for the Ninth Circuit began with the issue of whether the plaintiff established Article III standing under the Supreme Court's recent opinion in Spokeo, Inc. v. Robins, which requires that a plaintiff establish more than a "bare procedural violation" to bring suit.

The federal appellate panel wasted little time on the question, noting that the disclosure requirement at issue creates a right to information while the authorization requirement creates a right to privacy by enabling applicants to withhold permission to obtain the report.

Further, the authorization requirement establishes a concrete injury when applicants are deprived of their ability to meaningfully authorize the credit check, the court said. By providing a private cause of action for such violations of the FCRA, "Congress has recognized the harm such violations cause, thereby articulating a 'chain[] of causation that will give rise to a case or controversy,'" the panel wrote. "Therefore, Syed has Article III standing to bring this lawsuit."

The court then looked to the language of the statute to determine whether M-I violated the FCRA by including a liability waiver on the same document as its disclosure. Section 1681b(b)(2)(A) unambiguously requires a document that "consists solely of the disclosure," the Ninth Circuit said. The ordinary meaning of "solely" is "[a]lone; singly" or "[e]ntirely; exclusively," leaving no question about Congress's intent, the court added.

M-I's contention that the statutory allowance for the consumer to "authorize in writing" the procurement of a consumer report on the same document as the disclosure did not render the statute ambiguous, the panel said. "[I]t is clear that Congress intended the two subsections to work together," the court wrote, and allowing an authorization on the same document as the disclosure "is consistent with the purpose of the statute" as "each would be largely ineffective on its own."

"Had the statute required disclosure without conditioning the procurement of a consumer report on the job applicant's authorization, it would have failed to give the applicant control over the procurement of the personal information contained in the consumer report," the Ninth Circuit explained. "On the other hand, had the statute conditioned the procurement of a report on the job applicant's authorization without mandating clear disclosure by the prospective employer, Congress's purpose would have been frustrated because applicants would not understand what they were authorizing."

The statute does not implicitly authorize the inclusion of a liability waiver in a disclosure document, the court said, as it would frustrate Congress's goal of guarding a job applicant's right to control the dissemination of sensitive personal information by "pull[ing] the applicant's attention away from his privacy rights protected by the FCRA by calling his attention to the rights he must forego if he signs the document."

Nor could the statute's explicit language be interpreted as permitting the inclusion of a liability waiver, the panel said, adding that whether the disclosure was "clear and conspicuous" was irrelevant to the analysis.

M-I's statutory violation was not objectively reasonable and willful as a matter of law, the court concluded, unmoved by the employer's argument that a dearth of guidance exists from the federal appellate courts and administrative agencies. Although no courts of appeals have spoken to the issue and the Federal Trade Commission has released just three relevant informal staff opinion letters, "M-I's inclusion of a liability waiver in the statutorily mandated disclosure document comports with no reasonable interpretation of Section 1681b(b)(2)(A)," the court wrote.

The employer ran an "unjustifiably high risk of violating the statute," with M-I acting in "reckless disregard of statutory duty," the panel said, reversing dismissal of the suit and remanding. "The FCRA's employment disclosure provision 'says what it means and means what it says.'"

To read the opinion in Syed v. M-I, LLC, click here.

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Social Media Communications Insufficient to Order Halt, Court Rules

Why it matters

An employer lost a motion requesting a California federal court limit the communications of the plaintiff's counsel in a wage and hour dispute. Jerrod Finder filed a putative class action against Leprino Foods Company, alleging that his employer violated California wage law. While the case was on appeal to the U.S. Court of Appeals for the Ninth Circuit, the employer filed a motion to limit Finder's counsel's communication with putative class members via a social media group dedicated to the case, arguing the interactions were "inappropriate and intentionally misleading." Finder's counsel retorted that a former employee started the page and issued him an invitation, and that his comments and questions—even those about other employees that filed affidavits in support of Leprino—were appropriate. Ultimately, the court was not persuaded that the communications at issue were misleading or improper enough to warrant judicial intervention. Finder's counsel's appeared to be engaging in pre-certification communications with potential class members, the court said, and Leprino failed to provide evidence of any prejudicial effect on employees supportive of the company.

Detailed discussion

The dispute over proper communications between counsel and potential class members over social media began in 2013, when Jerrod Finder filed a wage and hour class action against Leprino Food Company. He alleged multiple violations of the California Labor Code as well as Private Attorneys General Act claims.

Multiple motions followed by both parties and the U.S. District Court certified for interlocutory appeal the question of whether meal period premiums are wages or penalties under California law. The U.S. Court of Appeals for the Ninth Circuit accepted the appeal in October 2016.

While the case was pending before the federal appellate panel, Leprino filed a motion to limit plaintiff's counsel's communications with putative class members. According to the employer, several Leprino employees reported to their manager that their names had been published in posts in a semi-private social media group about the lawsuit.

Specifically, Phillip Downey, counsel for Finder, named 27 individuals whose declarations were submitted by Leprino in support of its opposition to class certification, asking group members to notify him "if you know anything about the following individuals who are testifying for Leprino." Downey also quoted from the deposition of one employee that he said was contrary to hundreds of other employee statements and asked the social media group members to contact him with reasons why she would provide conflicting information.

Members of the group responded with posts such as, "someone got promise [sic] a promotion lol" and "You know that's true." Leprino argued that such commentary falsely insinuated that the declaring employee lied in return for an employment benefit, and that Downey's conduct would have a chilling effect on employees willing to speak on behalf of Leprino, hampering the employer's ability to defend itself. The comments were "amplified" by appearing in an online public forum, Leprino added.

But the social media page was created by a former Leprino employee to let other current and former employees know about the case—not by plaintiff's counsel, they argued. Downey said he was invited to join the group and that it was a perfectly appropriate way to communicate with the putative class. The comments challenged by Leprino were aimed at vetting Leprino's declarations, a duty of counsel, Downey told the court.

Were Downey's communications "misleading or improper"? No, U.S. Magistrate Judge Barbara A. McAuliffe determined.

"By all indications, the [social media] group at issue, here, is one lawfully created by an interested potential class member," she wrote, and not by Downey or other class counsel. "This factor is important because the origins of the relationships between class counsel and the putative class is a distinction that matters under current case law evaluating pre-certification communications by counsel."

While the court recognized that the potential for abusive or coercive statements is particularly high in an employer/employee context, it was not persuaded that Downey's comments required judicial intervention.

"Absent from the communications here is any potential for coercion or undue influence by Plaintiff's counsel," the court wrote. "Because neither Mr. Downey nor his law firm created the [social media] group, the Court has little concern that members are being harassed or improperly influenced in their voluntary communications with Mr. Downey. Mr. Downey is an advocate for his position in this lawsuit; a position that members can freely take or leave. Mr. Downey's participation in this [social media] group is therefore no more than Plaintiff's counsel's engagement in pre-certification communications with potential class members."

Although several of Downey's communications were directed at uncovering information—potentially unflattering about Leprino—such inquiries were not improper, Judge McAuliffe said. "The United States Supreme Court has recognized the importance of permitting class counsel to communicate with potential class members for the purpose of gathering information, even prior to class certification," she said. "[T]he bulk of the comments made by Mr. Downey are aimed at 'determin[ing] whether . . . potential class member[s] possess any evidence relating to the Complaint allegations."

The court even recognized that some of Downey's comments "may consist of insinuations" that cast the employer in a negative light, but found that "those comments do not mislead employees about their rights as potential class members," or create confusion or seek to influence whether members opt in or opt out of the class. "Defendant's arguments boil down to concerns about whether Mr. Downey's comments potentially expose Leprino employees to negative commentary or office gossip," the judge said. "Ultimately, however, case law does not require that communications to potential class members be objective and neutral."

Importantly, Leprino did not present evidence that any members of the social media group had harassed employees in the workplace. The names of the declarants were already publicly available on the Court's docket and Downey asked members of the group to refrain from "intimidating" Leprino witnesses by contacting them. The "mere possibility" of abuses did not justify the adoption of a communications ban, Judge McAuliffe wrote.

To read the order in Finder v. Leprino Foods Company, click here.

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EEOC Releases Enforcement, Litigation Stats for FY 2016

Why it matters

The Equal Employment Opportunity Commission (EEOC) released data on enforcement and litigation for fiscal year 2016 recently, adding statistics on LGBT charges for the first time. A total of 91,503 charges of workplace discrimination were filed in FY 2016—an increase over the prior fiscal year. Over the 12-month period, the agency resolved 97,443 charges and secured more than $482 million for employees, responding to over 585,000 calls and more in excess of 160,000 inquiries in field offices, "reflecting the significant public demand for EEOC's services," while reducing the workload of pending charges by 3.8 percent to 73,509. Retaliation charges appeared in almost half of all charges filed (42,018), followed by charges alleging discrimination based on race, disability, sex, age, national origin, religion, color, the Equal Pay Act, and the Genetic Information Non-Discrimination Act (just 238 charges). As for LGBT-related charges, the EEOC said it resolved 1,650 charges and recovered $4.4 million for LGBT individuals who filed sex discrimination charges in FY 2016, reaching a total of almost 4,000 charges filed and recovery of $10.8 million since the agency began collecting LGBT charge data in FY 2013.

Detailed discussion

Fiscal year 2016 saw an increase in the number of charges of workplace discrimination filed with the EEOC, the agency reported in a detailed breakdown of the 91,503 total charges received. For the second year in a row, the overall number of charges filed was up.

Of those charges, almost half—45.9 percent or 42,018—alleged retaliation. Race was the next most common charge of discrimination (35.3 percent or 32,309 charges), followed by disability (28,073 charges or 30.7 percent), sex (26,934 or 29.4 percent), and rounding out the top five, age (22.8 percent or 20,857 charges).

The remaining charges were made up of discrimination allegations based on national origin (10.8 percent or 9,840 charges), religion (4.2 percent or 3,825 charges), color (with 3,102 charges or 3.4 percent), the Equal Pay Act (1,075 charges or 1.2 percent) and the Genetic Information Non-Discrimination Act (238 charges or 0.3 percent). The percentages add up to more than 100 because some charges have multiple allegations.

In total, the EEOC resolved 97,443 charges and secured more than $482 million for employees in private, federal, state and local government workplaces, reducing the agency's overall workload of pending charges by 3.8 percent to 73,508, the lowest it has been in three years. More than 585,000 calls and over 160,000 field office inquiries kept the agency on its toes in FY 2016.

On the litigation front, the EEOC filed 86 lawsuits alleging discrimination, including 55 individual suits and 31 cases with multiple victims or asserting discriminatory policies by an employer with a success rate of 90.6 percent. After resolving 139 lawsuits in FY 2016, the agency had 168 cases on its active docket. Of those cases, 19 percent (32 actions) are multiple victim cases and 48 (28.6 percent) feature challenges to systemic discrimination.

For the first time, the agency included data about LGBT charges in its summary. During FY 2016, the EEOC resolved 1,650 charges of LGBT discrimination and recovered $4.4 million for workers who filed sex discrimination charges. The statistics demonstrate a "steady increase" in LGBT-related charges over the four years the EEOC has been collecting such charge data, the agency said, rising from 808 charges filed in FY 2013 to 1,100 in FY 2014, 1,412 in FY 2015, and 1,768 charges filed in FY 2016. Almost 4,000 total charges have been filed from FY 2013 to FY 2016 with a total recovery of $10.8 million for LGBT victims of discrimination.

"EEOC advances opportunity for all of America's workers and plays a critical role in helping employers build stronger workplaces," former EEOC Chair Jenny Yang said in a statement about the statistics. "Despite the progress that has been made, we continue to see discrimination in both overt and subtle forms. The ongoing challenge of combating employment discrimination is what makes EEOC's work as important as ever."

To read the EEOC's detailed breakdown of FY 2016 charges, click here.

For a breakdown of LGBT-based sex discrimination charges, click here.

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