Supremes Strike Down ACA Contraception Regs 2014-06-30T15:01:00-07:00

Posted on June 30, 2014

In a highly controversial, but very specific ruling, the Supreme Court today struck down Obama administration regulations requiring for-profit corporations to provide insurance coverage for certain forms of contraception. The case arises out of the tension between the Affordable Care Act’s contraception mandate, on the one hand, and the Religious Freedom Restoration Act’s broad protection of free religious exercise on the other hand. Three closely-held corporations sued challenging the administration’s ACA regulations requiring for-profit corporations to provide employee insurance coverage for contraception. The companies argued that the regulations forced them to violate their religious beliefs by forcing them to make it easier for their employees to obtain contraceptives. The Court agreed, finding that forcing the companies to choose between their religious beliefs against abortion versus facing the substantial ACA penalties for failing to provide contraception coverage unduly burdened the companies’ free exercise of religion.

This decision is extremely limited on its facts. The Court held that the Health and Human Services Regulations exemption from ACA’s contraception mandate for closely-held non-profit corporations could not be squared with HHS’s opposite treatment of closely-held for-profit corporations. The decision is noteworthy in several respects: (1) the decision arises under the extremely broad provisions of the Religious Freedom Restoration Act rather than the Constitution, meaning Congress can respond however it sees fit; (2) the decision involves only closely-held for-profit companies, and not publicly-traded companies; and, (3) the decision involves only four of the twenty forms of HHS-approved contraceptives, those that terminate pregnancy post-conception. Justice Bader-Ginsburg’s blistering dissent portends much broader implications for creative employers who seek to take advantage of the decision, but Justice Alito’s 5-4 majority decision maintains that the parade of horribles is unlikely and implausible. Burwell v. Hobby Lobby Stores, Inc., No. 13-354 (U.S. June 30, 2014).

Supremes Benchslap President 2014-06-26T09:13:24-07:00

Posted on June 26, 2014

By John Alan Doran

This morning the U.S. Supreme Court handed down a decision that has widespread impact on the Obama Administration’s labor agenda, as well as the NLRB’s recent attempts to grossly expand its authority. NLRB v. Noel Canning, No. 12-1281 (U.S. June 26, 2014) The Court held that the President’s “recess appointments” to the NLRB in January 2012 were not recess appointments at all, and therefore exceeded the scope of Presidential power. The Court, in short, held that a recess of a mere three days, while the Senate was actually still in session, did not entitle the President to unilaterally appoint new members to the NLRB. Because the appointments were unconstitutional, the NLRB lacked a necessary quorum to render decisions, and therefore their decisions were void. The result is to invalidate hundreds of NLRB decisions, many of which are among the most controversial in Board history. The NLRB will now have to go back to the drawing board and reconsider these cases, hopefully with a more balanced and employer-friendly view in light of the recent business-side appointments to the Board. We will issue a far more detailed analysis of the decision in the form of a Client Alert within the next day.

News Flash: ESOP Fiduciaries May Obey the Law 2014-06-26T02:00:37-07:00

Posted on June 26, 2014

By Bill Wright

The U.S. Supreme Court ruled in Fifth Third Bancorp et al. v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014), that no special presumption of prudence applies to the decision by ESOP fiduciaries to buy and hold stock of the sponsoring employer. But what the Supreme Court shot down with one hand, they reinstated through common sense. Although ESOP fiduciaries don’t get the benefit of any special presumption of prudence, they don’t have a duty to diversify holdings (after all, the ESOP exists to hold employer stock) and plaintiffs have a steep climb to allege the fiduciaries breached their duty of prudence. Alleging that the fiduciaries should violate SEC rules on insider trading is never enough; and, almost always, alleging that the fiduciaries traded in the employer’s stock at the market price is not enough, even if publicly available information could lead an investor to believe the stock was overpriced. Apparently fiduciaries don’t have to be clairvoyant and predict stock market bubbles before they burst.

DOL Hits Restaurant for $800k for Illegal Tip Withholdings 2014-06-25T13:59:11-07:00

Posted on June 25, 2014

By Bryan Stillwagon

The Department of Labor continued its roundup of restaurants supposedly skirting wage and hour laws, recently reaching a settlement with a Texas-based restaurant for $650k in back wages and $150k in penalties to be split among 279 current and former wait staff. A DOL investigation found that not only was the restaurant retaining a portion of the employees’ tips to pay for business supplies (e.g, menus, glasses, trays), but it was also withholding percentages of tips as discipline for certain infractions. The DOL shows no sign of slowing its vigorous wage-and-hour investigations, especially in the restaurant industry, which, according to a DOL Administrator, “employs some of our country’s lowest-paid workers, who are vulnerable to exploitation.” If you have tipped employees, remember that tips are the property of the employee, and tips may only be pooled (shared) among employees who customarily and regularly receive tips (e.g., waiters, bussers, and bartenders, not cooks, dishwashers, or janitors).

“Me Too” Evidence Doesn’t Cut It 2014-06-24T12:43:07-07:00

Posted on June 24, 2014

By Lori Phillips

In a case of first impression, Adams v. Austal, USA, LLC, No. 12-11507 (11th Cir. June 17, 2014), the Eleventh Circuit addressed whether an employee may rely on evidence of racial harassment of which he is not personally aware to prove that his work environment was objectively hostile. There, 24 African Americans sued their employer for racial discrimination claims, including hostile work environment. The district court granted summary judgment against 13 of them, concluding that though they met the subjective element of the severe-or-pervasive prong of a hostile work environment, they did not meet the objective prong. The employees appealed, arguing the district court erred by failing to consider evidence of racial harassment of which the individual employees were unaware—but of which other employees were aware. In affirming the district court, the 11th Circuit reasoned that the objective totality of a plaintiff’s workplace circumstances does not include other employees’ experiences of which the plaintiff is unaware until after his employment ended or what discovery later revealed.

The 11th Circuit’s decision is in line with those of the 6th, 7th, 8th, 9th, and 10th Circuits. This case prevents employees from alleging a hostile work environment on “me too” evidence alone.

NLRB Concocts New F’ing Profanity Excuse 2014-06-20T09:00:25-07:00

Posted on June 20, 2014

By John Alan Doran

In 2005, a Starbucks barista walked into his store with several co-workers while off duty. He was there to protest Starbucks’ policy concerning baristas wearing pro-union pins. A row ensued between the barista and an off-duty manager of a different Starbucks store who just happened to be enjoying a triple venti mocha loco latte triple espresso with two packs of sweet and low and a dash of cream at the time. The two exchanged heated words, including F-bombs, and the barista threatened the visiting manager before the matter was diffused. Two weeks later, Starbucks fired the barista for using obscenities in front of customers. Most unfortunately, the termination papers noted that the barista was not eligible for rehire because of his conduct, but added that the barista strongly supported the union.

The NRLB originally ruled that the barista was engaged in protected activity regardless of his multiple F-bombs and threats, and therefore the firing was unlawful. A federal appeals court reversed the NLRB’s ruling because the NLRB’s standard failed to give any import to the barista’s boorish conduct. When the case returned to the NLRB for reconsideration, the Board minted a brand new theory to find that the firing was unlawful. Applying its long-time Wright Line rule, the Board found that the barista’s union support must have played some role in his firing, and the employer was supposedly unable to prove that it would have fired him even if he wasn’t a union supporter. Starbucks Corp., 360 NLRB No. 134 (June 16, 2014)

Tips for the day: The next time you are inclined to note a fired employee’s pro-union leanings in a termination document, pause, treat yourself to a grande frappamochachino caffe misto with a shot of green tea and a dash of pumpkin spice, and forget about writing that termination document. Also, if I’m ever behind you in line at a Starbucks, please just order a large black coffee and move along. Thank you.

Supremes Rule That Trial Speech is Protected Speech – Part II 2014-06-19T15:30:08-07:00

Posted on June 19, 2014

Click here to read Part I.

By John Alan Doran

The Supreme Court previously ruled in Garcetti that a prosecutor’s internal memorandum written in the course of his job responsibilities did not constitute protected speech because he was speaking as a government employee pursuant to his job responsibilities, and not as a public citizen. The new Lane case tests the boundaries of the government employee/public citizen dichotomy. Does a government employee act as a public citizen when he testifies pursuant to a subpoena with respect to matters directly involving his work?

The Supreme Court resolved a circuit court split by holding that, when a government employee testifies under compulsion of a subpoena, and such testimony is not part of the employee’s regular job responsibilities, the speech is generally entitled to protection, with certain exceptions. The Court also recognized that this clarification of its holding in Garcetti was not clearly established, which allowed the President to invoke a qualified immunity defense against the personal capacity claim.

The Court held that testimony under oath by a public employee constitutes speech as a private citizen when the testimony is outside the scope of the employee’s ordinary job duties. The Court noted that sworn testimony in court is a “quintessential example of speech as a citizen” because everyone who testifies in court owes a duty to the court and society as a whole to tell the truth. While the Eleventh Circuit held that Lane’s speech was not public because he learned of matters to which he testified in the course of performing his job, the Supreme Court held that this reads Garcetti far too broadly. Speech that relates to public employment or that concerns matters learned in the course of public employment does not make the speech any less public. The only question to ask is whether the actual speech itself falls within the employee’s duties, not whether its subject matter arises out of those duties.

Supremes Rule That Trial Speech is Protected Speech – Part 1 2014-06-19T15:29:03-07:00

Posted on June 19, 2014

By John Alan Doran

This morning the U.S. Supreme Court issued an important decision affecting public employers and employee First Amendment rights to free speech. Lane v. Franks et al., No. 13-483 (U.S. June 19, 2014) Central Alabama Community College (CACC) hired Edward Lane to run a city youth program. Lane audited the youth program, learned that a State congresswoman was on the payroll of the program but never worked for it, reported his findings to his superiors, and fired the congresswoman after being warned by his superiors that the firing could have negative consequences for Lane and CACC. Lane subsequently received a subpoena to testify at the congresswoman’s criminal trial, and testified truthfully. She was convicted and sentenced to 30 months in prison. CACC then fired Lane, pointing to the financial distress of the youth program.

Lane sued CACC and its President, claiming that he was fired for his testimony at the criminal trial. Importantly, Lane sued the President in both his individual and official capacities, and sought damages and equitable relief. Both the trial court and the Eleventh Circuit Court of appeals threw out the case against the President. Both courts concluded that Lane’s trial testimony was part of his employment duties and was, therefore, not protected under the First Amendment. Both courts also held the President was entitled to qualified immunity, a defense to the claims against him in his personal capacity.

The Supreme Court reversed, finding that Lane’s testimony was protected by the First Amendment because it was public speech that was not part of Lane’s ordinary job duties. The Supreme Court affirmed the dismissal of Lane’s claim against the President in his personal capacity only, because the President was entitled to a qualified immunity in light of the unsettled nature of this area of First Amendment law. In doing so, the Supreme Court significantly expanded the scope of First Amendment-protected speech for public sector employees, reining back what many believed was a broad pro-employer standard previously established by the Court in Garcetti v. Ceballos, 547 U.S. 410 (2006).

The Court’s reasoning and the limitations of the ruling can be read in Part II.

NLRB Meets Gossip Girl 2014-06-19T11:30:38-07:00

Posted on June 19, 2014

By John Alan Doran

The NLRB recently struck down an employer’s “anti-gossip” policy, ruling that the policy unlawfully interfered with employees’ rights to engage in concerted protected activity under the NLRA. Laurus Technical Inst., 360 NLRB No. 133 (June 13, 2014). The employer had a seemingly reasonable policy that listed the destructive impacts of gossip, defined gossip to include talking about co-workers’ professional lives and making disparaging comments about others, and establishing punishment for violations. The NLRB found that the policy was overly broad, vague, and effectively prevented any gossip about anyone. And that’s a bad thing because?????

This is simply a continuation of the NLRB’s unreasonable invocation of what we lovingly call “the biggest idiot rule.” The NLRB continues to flyspeck otherwise reasonable policies by viewing those policies through the eyes of a hypothetical buffoon to conclude that the policies somehow chill protected concerted activity when read by a buffoon. The “biggest idiot rule” continues to undermine workplaces and otherwise defensible workplace policies and practices, and, unfortunately, the “rule” appears to be with us for the indefinite future.

Is Any Use of Medical Info Disparate Treatment? 2014-06-18T14:28:12-07:00

Posted on June 18, 2014

By Bryan Stillwagon

If an employer administers a post-offer medical exam in accordance with the ADA and keeps the acquired medical information confidential in accordance with the ADA, may the employer then use the information without violating the ADA? In Wetherbee v. The Southern Co., No. 13-10305 (11^th Cir. June 11, 2014), the plaintiff argued that using the results of a medical test as the basis for rescinding a job offer violates the ADA, regardless of whether the candidate has a disability. The court disagreed.

The employer rescinded the plaintiff’s job offer after his required medical exam revealed that he should not operate safety-sensitive equipment until his medication regimen had been shown to be effective. Because his job offer was for a position that required work on safety-sensitive equipment, the company determined he could not perform the essential job functions. The plaintiff alleged the employer violated 42 USC Sec. 12112(d)(3)(C) by using the disclosed medical information to discriminate “on the basis of disability,” but the plaintiff admitted he could not show he was disabled. The court held that, regardless of whether the results were used “properly,” the use can be “discrimination on the basis of disability” only if the plaintiff is disabled. Beware however that there might be other ways to use information improperly under the ADA.

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