On A “Need to Know” Basis 2019-08-15T13:40:24-06:00

Posted on August 15, 2019

Can you get sued for defamation because you conduct an internal investigation? It depends on who you tell and what you say. In Warren v. Federal National Mortgage Assoc., a Texas court ruled in favor of the employer on a former employee’s defamation claim, based, in part, on the employer’s qualified immunity privilege. The investigation was conducted without malice and the results were shared only with persons who had a valid interest in the investigation.

The former employee alleged the company made two types of defamatory statements about her: the investigative report itself (looking into her violations of company policy) and comments allegedly made by other employees. Under Texas law, qualified privilege protects employers from defamation liability for communications made while investigating alleged wrongdoings, so long as the communications are made only to persons with a “valid interest.” To overcome the employer’s qualified privilege, this employee had the burden of establishing by clear and convincing evidence that statements made during the investigation were made with malice or were distributed to persons who lacked a valid interest. The employee attempted to establish malice by pointing to things the investigator left out of the report, rather than evidence in the report, but the court said lack of investigation is insufficient to show actual malice. The employee then speculated that the company shared its investigation with other employees and their spouses – but there was no actual evidence that any of these third parties received the information. The evidence showed that only persons with a “valid interest” in the information received the report or were made aware of its findings. Thus, the employer was safeguarded by the qualified privilege defense.

The takeaway? Including only evidentiary findings and truthful statements in an investigative report and sharing it among only those on a need to know basis provides a backup defense to a defamation claim in many states.

NLRB Serves Up An Epic Ruling For Employers 2019-08-15T10:20:02-06:00

Posted on August 15, 2019

By Patrick Scully

In its first significant decision applying the Supreme Court’s holding in Epic Systems v. NLRB, 584 U.S. ____, 138 S.Ct. 1612 (2018), the National Labor Relations Board (“NLRB” or “Board”) ruled that a restaurant owner lawfully compelled its employees to sign a revised mandatory arbitration agreement.

The employer, an operator of Latin-themed restaurants in the Houston area, required its employees to sign a revised arbitration agreement prohibiting them from opting into a class or collective wage and hour action. The employer issued the revised agreement because several employees had opted into such a wage action and the employer’s prior arbitration agreement only prohibited employees from filing class or collective actions.

The Board noted, in light of Epic Systems, that it was simply not unlawful under the National Labor Relations Act (“Act”) for an employer to require its employees to waive their right to file or opt into class or collective wage and hour actions. Accordingly, it was not unlawful for the restaurant owner to insist on its revised agreement as a condition of employment. Although it was clear that the employer imposed the new agreement in response to employees participating in the wage and hour action, the NLRB reasoned that the employer did not retaliate, because the new agreement did not actually restrict any activity protected by Section 7 of the Act.

Dissenting Board Member McFerran took issue primarily with this last point, noting that the NLRB has historically found that a facially valid work rule must be struck down if it is promulgated in response to “protected” (Section 7) activity. Member McFerran disagreed with the majority that this precedent only applied to rules that imposed restrictions on union or other protected activity. By suggesting that the Board’s decision “departs from Board precedent without explanation”, the dissent provided a recipe for the restaurant owner’s employees to appeal the decision.

Cordua Restaurants, Inc. 368 NLRB No. 43 (August 14, 2019)

Freeze! Put your hands up and go review your attendance policy ASAP… 2019-08-13T15:34:10-06:00

Posted on August 13, 2019

By Beth Ann Lennon

The Sixth Circuit reminds all employers to carefully review even “no fault” attendance policies for FMLA compliance. Dyer v. Ventra Sandusky, LLC. The employer used a collectively bargained, no-fault, attendance policy that required termination when an employee received eleven or more “points” due to absences. Employees received points whenever they missed all or part of a scheduled shift. Employees who had “perfect” attendance for thirty days, on the other hand, had a point subtracted from their total. Although FMLA-protected absences were expressly excluded from the point-accumulation system, taking such leave reset the “perfect attendance” clock. According to the Sixth Circuit, and the Department of Labor (DOL), this policy may give rise to an FMLA “interference” claim.

Do you have a policy problem? The dispositive question when reviewing your own policy is whether the “practical result” of your company’s policy is that “taking FMLA-protected leave . . . [becomes] a negative factor in employment actions.” For many employers, this will not be news. As the Sixth Circuit was quick to point out, the DOL has repeatedly explained that “point reduction [under an attendance policy] can be viewed as an employment benefit.” Thus, if an employer chooses to provide their employees this benefit, FMLA-protected absences cannot “reset” the “perfect attendance” clock. According to the DOL (and, now, the Sixth Circuit), employers must draft their attendance policies so that FMLA leave “freeze[s] the accrual of attendance.”

EEOC Benchslapped for Umpteenth Time on Criminal Background Checks 2019-08-07T13:58:37-06:00

Posted on August 7, 2019

By John Alan Doran

In a case with a truly byzantine court history, Texas v. EEOC, Texas has once again prevailed in striking down the EEOC’s “guidance” on employer use of arrest and conviction records.

Way back in 2012, the EEOC issued “guidance” making it extremely hard for employers to categorically exclude candidates based on criminal arrest or conviction records. Among other things, the “guidance” required employers to exclude candidates only when the specific criminal conduct involved for a specific candidate creates risks inherent in that candidate’s particular position.

The EEOC did not follow the strictures of the Administrative Procedure Act in formulating this “guidance”, but simply imposed it by administrative fiat. This piqued the great State of Texas, since its laws provide for the blanket exclusion of felons in certain agencies and school systems. To make a long procedural story short, the case effectively went up on appeal to the Fifth Circuit three times. In this latest appeal, the Fifth Circuit devoted the vast majority of its opinion to constitutional standing and jurisdiction. But, with a mere three pages of the 27-page opinion remaining, the Court concluded that the EEOC overstepped its authority when it adopted the “guidance” and circumvented the Administrative Procedures Act.

This decision should help employers challenge the “guidance” in other settings. While the decision involved only the State of Texas, the Fifth Circuit’s rationale under the Administrative Procedure Act should resonate with respect to other public and private employers. Having blogged on this case ad nauseum, and having repeatedly railed against agencies such as the EEOC for circumventing the Administrative Procedure Act through unofficial “guidance”, we really, really hope this case will serve as a deterrent to agencies that attempt similar “guidance” end-runs around that Act in the future.

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