Another Facially Neutral Employment Policy Bites the Dust

Another Facially Neutral Employment Policy Bites the DustAbout a year ago, the National Labor Relations Board (NLRB or Board) struck down another neutral employer workplace rule – this one against making unauthorized recordings in the workplace. The NLRB’s decision just was affirmed by the federal appeals court in New York this month. It seems that yet another common sense rule bites the dust.

The Policy

The employer Whole Foods Market had a policy which prohibited workplace recordings, no matter what the subject matter of the recording was. Actually, the company had two related rules in its employee handbook: One against the recording of company meetings without prior approval from management, and the second against any recording in the workplace without similar prior approval.

The Company’s Position

Whole Foods included the policy in its handbook for reasons unrelated to employee labor relations rights. The motivation was to encourage employee participation and involvement at work, and the company believed that employees taking videos or recordings of each other would discourage involvement. The company asserted in the legal proceedings that it believed that allowing recording in the workplace actually would have a negative impact on employee or union organizing activity, not the other way around. Whole Foods’ position thus was that its no-recording policy did not violate its employees’ rights to act collectively under the National Labor Relations Act (NLRA).

 The Board’s Position

The NLRB’s stated position is that a work rule is unlawful “if it would reasonably tend to chill” employees in their exercise of protected concerted activities under Section 7 of the NLRA – basically those activities that employees do together to address issues in the workplace. If the rule explicitly prohibits such activities, it of course is unlawful. If it does not prohibit lawful union activity explicitly, it still is unlawful if (1) employees reasonably would construe the rule to restrict their rights, (2) the rule was adopted in response to group activity, or (3) the rule was applied to restrict group activity. In this case, the Board’s position was that lawful recording could include documenting unsafe work practices, discussions about terms and conditions of employment, inconsistent application of work rules, picketing, or evidence for a later legal proceeding.

The Board also had a problem with the breadth of Whole Foods’ policy. The Board implied that the policy might be acceptable if it was more narrowly drawn so that employees would understand that lawful recording under the NLRA was not prohibited. Moreover, the Board noted that Whole Foods’ policy did not differentiate between recordings made in nonworking areas and during nonworking time, which often is the analysis applied to employee nonsolicitation rules.

The Final Ruling

The federal appeals court in New York just agreed with the NLRB this month. The court stated that the core question is whether the “employees would reasonably construe the language to prohibit protected activity.” Applying a deferential standard of review to the NLRB’s position on this issue, the appellate court then affirmed the earlier Board decision. The appellate court emphasized further, however, that a more narrowly tailored policy could be lawful. For example, a policy restricting recordings that violated patient rights, constituted employee harassment, or disclosed trade secrets of the company perhaps could be lawful.

Why This Matters to You

Facially neutral employment policies will continue to be under attack by the NLRB, at least for a while. So, check your policies. The NLRB continues to be active in this area and is making it clear it will go after any neutral policies that may chill Section 7 rights, especially those policies that restrict communication or group activity in any way. These policies can include unauthorized recording bans, as well as nonsolicitation rules, email use prohibitions, social media restrictions, and even simple attendance policies if they interfere with lawful group activity.

And one other bit of advice. Don’t say anything to your employees that you do not want recorded!

The Devil is in the……..Biometric Scanner? Fourth Circuit Finds Employer Failed to Accommodate Employee’s Religious Belief

The Devil is in the……..Biometric Scanner? Fourth Circuit Finds Employer Failed to Accommodate Employee’s Religious BeliefJust how far do you have to go to accommodate an employee’s off-the-beaten-path religious belief? The 4th Circuit Court of Appeals recently ruled that you at least have to give the same accommodations you give to disabled employees. In U.S. EEOC v Consol Energy, Inc., Mr. Beverly Butcher’s evangelical Christian beliefs put him in conflict with Consol Energy’s decision to use a hand scanner as part of the time clock system.

The Facts

Mr. Butcher, who had worked for the coal mine for 40 years, was also an associate pastor in a church that believed that the hand scanner time clock would “mark” him in a way that could lead to his identification with the Antichrist, as shown in the book of Revelation. He talked to his union representative about his concerns and the union contacted HR. Initially, the coal mine told Mr. Butcher that they needed a letter from his pastor explaining why he needed a religious accommodation. Mr. Butcher provided the letter and also met with management about the situation. He offered to verbally report his time to his supervisor or to punch in on a time clock instead of using the biometric hand scanner. Consol Energy responded by providing a letter from the scanner manufacturer assuring that (no kidding) since the biometric scanner only used an employee’s left hand, it would not violate any concerns from Revelation which states that the “Mark of the Beast” is only associated with the right hand or forehead.

Unknown to Mr. Butcher, at this same time the coal mine was accommodating two other employees who had hand injuries. Those employees were allowed to enter their personnel numbers on a keypad instead of using the scanner. The employer refused to make the same accommodation for Mr. Butcher, noting in an email “Let’s make our religious objector use his left hand.” Mr. Butcher was told he had to use the hand scanner system, so he tendered his retirement papers and, apparently, an EEOC charge. The EEOC brought an enforcement action against the coal mine for failing to accommodate Mr. Butcher’s religious beliefs in violation of Title VII and constructively discharging him.

At trial, Mr. Butcher and the EEOC won and awarded him $150,000 in damages. The court later awarded an additional $436,860 in front and back pay and lost benefits. The coal mine appealed.

The 4th Circuit’s Take

The 4th Circuit’s opinion began by noting that under Title VII, an employer must make reasonable accommodation for the religious beliefs of employees, short of incurring an undue hardship. To show a violation of this accommodation duty, an employee must show that he or she has a bona fide religious belief that conflicts with an employment requirement; that he or she informed the employer of this belief; and that he or she was disciplined for failing to comply with the conflicting employment requirement.

The coal mine argued that Mr. Butcher was not entitled to win because there was, in fact, no conflict between his religious beliefs and the requirement that he use the hand scanner system. They relied on the fact that Mr. Butcher admitted that the scanner would not imprint a physical mark on his hand. However, the 4th Circuit found it significant that Mr. Butcher clearly laid out his religious objection to using the system, despite knowing that it would not produce a physical mark. The court held that there was “ample evidence” to show that Mr. Butcher sincerely believed that even without a physical mark, his use of the hand scanner “was a showing of allegiance to the Antichrist” and was inconsistent with his religious convictions. The fact that the employer believed that Mr. Butcher’s beliefs about the hand scanner were “mistaken” was not enough to get beyond that conflict. The court stated that it is not the employer’s place to “question the correctness or even the plausibility of [the Plaintiff’s] religious understandings.” Instead, as long as there is sufficient evidence that the employee’s beliefs are sincerely held, as the jury found here, then they must accommodate.

The coal mine also attempted to argue that Mr. Butcher did not suffer an adverse employment action since he chose to retire. The court found that there was substantial evidence that Mr. Butcher was put in an “intolerable position” when his employer failed to accommodate his religious objection. The court held that Mr. Butcher’s belief that his use of the hand scanner would render him a follower of the Antichrist and make him “tormented with fire and brimstone” went beyond run-of-the-mill employee complaints such as unfair criticism or dissatisfaction with work assignments. As such, his retirement could constitute a constructive discharge. The 4th Circuit ended up affirming the lower court verdict and findings.

Accommodating Sincerely Held Religious Beliefs

This case provides a good, but probably rare, example of where an employee’s unique, but sincere, religious belief may come in conflict with what seems to be a mundane employer requirement. As noted by the court, an employer cannot escape the requirement to accommodate simply because they think the belief is stupid or mistaken. If there is enough evidence to show that the employee really believes it, you need to start looking at whether you can find some sort of accommodation.

This is also a good reminder that undue hardship is a defense in a religious accommodation case.  Although the undue hardship defense is less onerous in this context that under the Americans with Disabilities Act, you still have to show hardship. That the coal mine was providing an accommodation for two other employees’ physical restrictions (even if only temporarily) certainly did not help the argument’s cause. The coal mine here chose not to provide Mr. Butcher a similar accommodation, and it ended up costing them.

Parting of the Joint Employers: Trump DOL Withdraws Past Guidance on Independent Contractor Standards and Joint Employment

Parting of the Joint Employers: Trump DOL Withdraws Past Guidance on Independent Contractor Standards and Joint Employment Yesterday the U.S. Secretary of Labor Alexander Acosta announced the Department of Labor’s withdrawal of guidance on independent contractors and joint employer liability issued in 2015 and 2016 by the Obama administration DOL. Generally, the guidance made more people employees rather than independent contractors. In particular, this guidance sought to (1) define more rigidly the situations in which a worker was found to be an employee under an “economic realities test” (even when an independent contractor relationship was intended), and (2) expand the joint employer doctrine taking into account “whether, as a matter of economic reality, the employee [was] economically dependent on the potential joint employer.”

The DOL’s roll back of Obama-era guidance signals an important shift in favor of employers, but no binding laws have changed. Employers should remember that the same statutes, regulations, and case law are still in force and the analysis applied to these issues remains the same, at least for the time being. In fact, the proper legal “test” for joint employer liability is currently on appeal in the D.C. Circuit in the Browning-Ferris case, with a decision expected later this year. For a more detailed look at the law on independent contractors and joint employers, see our previous blog posts on independent contractors and joint employment.  Be sure to keep an eye on how the DOL’s action affects these issues going forward.

Wave Goodbye to Waivers? 6th Circuit Joins March to Prohibit Class Action Waivers in Arbitration Agreements

Wave Goodbye to Waivers? 6th Circuit Joins March to Prohibit Class Action Waivers in Arbitration AgreementsJoining two other circuit courts, the 6th Circuit concluded that employers cannot take advantage of class action and collective action waivers as part of employment arbitration agreements. In NLRB v. Alternative Entertainment, Inc., the divided court agreed with the National Labor Relations Board (NLRB) that prohibiting employees from pursuing class action litigation or collective action arbitration violated the National Labor Relations Act (NLRA). The 6th Circuit agreed with the 7th and 9th Circuits, which are at odds with the 5th and 8th Circuits on the class action waiver question. Based on the circuit split, the U.S. Supreme Court has agreed to take up the question and will ultimately decide whether class action and collective action waivers in employment arbitration agreements violate the NLRA.

The Facts of the Case

AEI was changing its field technicians’ compensation structure. James DeCommer felt the change would cause him to lose between $7,000 and $10,000 per year in compensation.  DeCommer complained about the compensation restructuring to his manager and company president, and also spoke with 10 or more other technicians who shared his frustration. Finally, DeCommer spoke with AEI’s CFO to express that he had talked with other employees and all had concluded they would lose “quite a bit of money” with the salary restructuring.

Two days after the conversation with the CFO, AEI fired DeCommer because the “relationship [was] not working out,” and DeCommer had said he would not perform certain home sales calls based on the new salary structure. DeCommer filed charges against AEI with the NLRB.

The case centered around two employment documents: (1) an arbitration agreement that stated that “[b]y signing this policy, you and AEI also agree that a claim may not be arbitrated as a class action, also called ‘representative’ or ‘collective’ actions, and that a claim may not otherwise be consolidated or joined with claims of others,” and (2) the employee handbook that prohibited unauthorized disclosure of confidential business information “including any compensation or employee salary information.”

An administrative law judge (ALJ) concluded that AEI’s mandatory arbitration policy (with its class action and collection waivers) prevented employees from taking concerted legal action as protected under the NLRA. The NLRB agreed with the ALJ.

The 6th Circuit’s Decision

The 6th Circuit agreed that the arbitration provision violated the NLRA in preventing concerted action. Two federal statutes came into play to evaluate whether the arbitration provision was enforceable: the Federal Arbitration Action and the NLRA.

The FAA sets forth that arbitration agreements are generally enforceable, and interpretive case law has consistently reflected the “liberal federal policy favoring arbitration agreements.” The FAA provides that arbitration agreements are as enforceable as any other contract, but, notably, the FAA does not make arbitration agreements more enforceable than other contracts which is commonly known as the “savings clause” in the FAA. For its part, the NLRA gives employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection” along with making it an unfair labor practice to “interfere with, restrain, or coerce employees in the exercise” of those rights. The court surmised that the two statutes were compatible because the FAA’s savings clause addressed the scenario presented: The NLRA makes AEI’s mandatory arbitration provision – that interferes with the right to engage in concerted activity – illegal on grounds that would be applicable to any other contract. In other words, “because any contract that attempts to undermine employees’ right to engage in concerted legal activity is unenforceable, an arbitration provision that attempts to eliminate employees’ right to engage in concerted legal activity is unenforceable.” According to the 6th Circuit, the NLRA makes clear that the right to concerted activity is a substantive right that is not subject to waiver.

Where Does It Go From Here?

Several other federal circuit courts have weighed in on this issue. The 9th and 7th Circuits agreed with the 6th Circuit that mandating individual arbitration violated the NLRA based on the savings clause. The 5th and 8th Circuits, on the other hand, have found that class and collective action waivers as part of arbitration agreements were enforceable and did not violate the NLRA. The AEI opinion took particular issue with the 5th Circuit’s view that the policy behind the FAA trumped the policy considerations behind the NLRA.

The AEI opinion included a partial dissent contending that the employer and employee contracted to do just what the FAA allowed in having disputes resolved in the efficient and cost-effective forum of arbitration and that arbitration provisions have been uniformly upheld. The dissent highlighted that neither the majority opinion nor NLRB confronted what would make class or collective litigation “concerted” in such a way that makes it a substantive right that could not be voluntarily waived by the employee.

So there is obvious dissension among the circuits on this question of class action waiver, and the U.S. Supreme Court agreed in January to resolve the circuit split with review of a related NLRB decision. For now, however, employers with these agreements under the 6th Circuit’s jurisdiction (Kentucky, Michigan, Ohio, and Tennessee) should evaluate their arbitration provisions and expect challenges. Employers with these types of agreements in the jurisdiction of the 5th Circuit (Louisiana, Mississippi, and Texas) and 8th Circuit (Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota) are okay for now. Stay tuned for the Supreme Court’s final decision on the matter.

Spouse Swapping Not Cool for Police Officers, Says the Fifth Circuit

Spouse Swapping Not Cool for Police Officers, Says the Fifth CircuitJust how much can you regulate a public employee’s off-duty conduct? In an interesting and rather frank opinion, the Fifth Circuit found a sheriff’s department could regulate deputies’ private conduct pretty broadly. In Brandon Coker and Michael Golden v. Julian Whittington and Charles Owens, two Louisiana sheriff’s deputies (Coker and Golden) were terminated for moving in with each other’s wives before getting divorced from their current spouses. The sheriff’s department’s code of conduct broadly prohibited employees from engaging in any “illegal, immoral or indecent conduct” or engaging in even any “legitimate act which, when performed in the view of the public, would reflect unfavorably” on the department. After Chief Deputy Sheriff Charles Owens learned that two of his officers had each moved into the other’s house and exchanged spouses, he put both on administrative leave for violating the code of conduct. He gave them an opportunity to remedy the situation by providing a deadline to move back in with their legal spouses. When that deadline passed without a spouse “re-swap,” the department determined that they had voluntarily terminated their employment. The deputies immediately sued for wrongful termination and violation of their Constitutional rights.

The lower court dismissed the case, holding that the code of conduct was properly applied based on the rational grounds of preserving a cohesive police force and upholding the reputation of the department. The court cited Fifth Circuit precedent that approved terminations of law enforcement officers for sexually inappropriate conduct. Finally, the court found that the code was not unconstitutionally vague.

The Fifth Circuit affirmed the dismissal of the officers’ suit. The Court specifically noted that “sexual decisions between consenting adults take on a different color when the adults are law enforcement officers.” The opinion stated that the wife swapping “notoriously” violated the legally sanctioned relationships of marriage and therefore besmirched the reputation of the department. Even if the extramarital relationships were consensual and loving at first, according to the Court, they have “great potential to create internal dissension within the force.” Finally, the Court was concerned how this unique living arrangement might be adversely used in litigation concerning the deputies’ official conduct. The Fifth Circuit took a final shot by stating that the Supreme Court’s Obergefell decision on same-sex marriage did not create rights for sexual relations beyond a formal marital relationship. Specifically, Obergefell did not “create ‘rights’ based on relationships that mock marriage.”

Although this situation is likely very, very extreme, it does show that codes of conduct are more than just window dressing in an employment manual. Employers should be cautious in applying them and be careful to apply them consistently across the board. Do not use a code of conduct violation against one employee and not against another who committed the same violation. And if you live in Louisiana, Mississippi or Texas, it appears that you certainly can terminate two employees who decide to openly swap spouses—especially if they are cops.

Don’t Report Yet! OSHA Holds Off on Electronic Posting Requirements

Don’t Report Yet! OSHA Holds Off on Electronic Posting RequirementsLast July, we wrote about the Occupational Safety and Health Administration’s new electronic reporting requirements, which will require certain employers (those with 250 or more employees, or those with 20-249 employees in specific industries) to electronically submit injury and illness data. When OSHA announced the new reporting requirements, it gave a deadline of July 1, 2017, for employers to electronically submit their information in a Form 300A. Last week, OSHA announced that it has indefinitely postponed that deadline and conveyed that it is not accepting electronic submissions at this time.

At this point, OSHA and the new presidential administration have not hinted that they plan to make any substantive changes to employer obligations to complete and retain injury and illness records. We have seen, however, a significant change in the course of employer regulations across the board since the Trump Administration took office, so the delay in the implementation of the electronic reporting requirements could suggest that substantive changes are in the works.

As we discussed in a March blog post, President Trump has already repealed the Fair Play and Safe Workplaces regulations finalized last August, which required reporting of a host of violations under labor laws including OSHA. Additionally, OSHA has not published any information about enforcement fines issued since Inauguration Day, whereas under the Obama administration, OSHA issued more than 400 news releases annually about fines and other enforcement actions. This change marks a dramatic shift from the prior administration’s attitude that employers should be admonished to clean up any issues lest they face a hefty fine or other penalty. The postponement of the electronic reporting requirement appears to be yet another development in that shift.

Stay tuned for further developments.

6 of One, Half a Dozen of the Other: 10th Circuit Rules Quid Pro Quo and Hostile Work Environment Harassment Theories Aren’t So Different After All

6 of One, Half a Dozen of the Other: 10th Circuit Rules Quid Pro Quo and Hostile Work Environment Harassment Theories Aren’t So Different After AllQuid pro quo and hostile environment sex harassment claims—two totally different claims—right? Or are they? While employers draw strict distinctions between these types of sex harassment, courts may not go along, as demonstrated in a recent 10th Circuit case, Jones v. Needham Trucking LLC et al.

Types of Sex Harassment Claims.

Traditionally, two Title VII sexual harassment claims exist: quid pro quo and hostile work environment. The two sex harassment theories have different meanings, have different elements of proof, and are generally referred to distinctly. In short, quid pro quo (“this for that”) means that an employee submitted to or refused to submit to a supervisor’s sexual demands and suffered a tangible employment action as a result. Hostile work environment, on the other hand, means conduct that is so severe or pervasive that it creates an abusive working environment.

So What Happened in the 10th Circuit Case?

The differences in the two theories are typically not lost on employers. In the Needham Trucking case, Jones, a mechanic, claimed in his lawsuit that he was fired because he would not have sex with his supervisor—a classic quid pro quo allegation.  However, Jones’ EEOC charge did not expressly allege quid pro quo sexual harassment. Rather, the charge alleged that Jones was subjected to “sexual remarks” by his supervisor, that he complained about those remarks but nothing was done, and that the same supervisor subsequently terminated his employment without giving him a reason why—classic hostile environment allegations. The defendants moved to dismiss the plaintiff’s quid pro quo sexual harassment claim for failure to exhaust administrative remedies. A Title VII plaintiff must, of course, exhaust his or her administrative remedies by filing a charge of discrimination with the EEOC identifying the factual-basis for the claim(s) of discrimination and/or retaliation. The defendants argued that Jones failed to exhaust the quid pro quo sexual harassment claim he later asserted in his lawsuit, conceding that he had properly exhausted a hostile work environment claim.

The United States District Court for the Western District of Oklahoma agreed, dismissing the plaintiff’s quid pro quo claim for failure to exhaust his administrative remedies. Jones appealed to the Tenth Circuit Court of Appeals, who reversed the district court.

In a 2-1 decision, the 10th Circuit held that Jones had properly raised a quid pro quo sexual harassment claim with the EEOC even though the charge did not specifically mention quid pro quo sexual harassment or specifically allege facts to meet the definition. The Tenth Circuit ruled that Jones’ allegations were sufficient to exhaust administrative remedies because they alerted the defendants to the alleged harassment and should have sparked an investigation. The Court noted that

“Both [quid pro quo and hostile work environment] scenarios lead to the same place: sexual harassment that violates Title VII’s proscription against sex discrimination in the workplace. . . . Though the descriptors matter a great deal insofar as they reveal what elements are needed to prove the specific claim of sexual harassment . . . they are not so unrelated that the facts of the two scenarios could not overlap, or that an investigation resulting from facts specific to one category could not also fall within the scope of an investigation of the other.”

The dissent did not disagree with the majority’s analysis, but rather argued that Jones had waived the argument regarding administrative exhaustion of the claim on appeal.

What Does this Mean?

Does this change how employers approach harassment claims? Probably not. This Tenth Circuit case shows that, while employers may try to bifurcate quid pro quo sexual harassment and hostile work environment claims into two distinct camps, courts may not be willing to make such a distinction, at least when it comes to the question of whether a charging party has exhausted administrative remedies.  As a practical matter, this decision may change some of the defenses raised during litigation, but it should not change how an employer handles a sexual harassment complaint or administrative charge. As with any complaint, employers should investigate broadly—looking for anything that might violate their policies. So—even if an employee complaint only mentions a hostile work environment, you still need to be sure there aren’t quid pro quo harassment allegations lurking in the wings.

EEOC Pulls the Hood Off of Employer’s Attempt to Retaliate against Its Employee

EEOC Pulls the Hood Off of Employer’s Attempt to Retaliate against Its EmployeeCan an employer force an employee to agree that his complaints have been adequately addressed? On April 26, the EEOC announced that Downhole Technology LLC will pay a former employee $120,000 and provide other relief after it terminated an employee who refused to do just that.

In Equal Opportunity Equal Employment Opportunity Commission v. Downhole Technology LLC, Kenneth Echols, an African-American employee, reported that white coworkers wore white hoods similar to those used by the Ku Klux Klan to intimidate him. After the report, Echols later reported that those same employees physically and verbally threatened him.

The EEOC alleged that, instead of addressing the reported incidents, Downhole asked Echols to sign an agreement stating that he had not been harassed because of his race and that Downhole had adequately addressed his concerns. When Echols refused, Downhole terminated him despite a prior unblemished employment record.

The EEOC filed suit against Downhole alleging violations of Title VII. Shortly after the lawsuit was filed and after extensive negotiations, the EEOC and the company resolved the claim which led to a two-year consent decree. Under that decree, Downhole Technology must:

  • Pay Echols $120,000 in monetary relief;
  • Give Echols a job recommendation by a senior level manager;
  • Not discuss, mention, or allude to Echols’ charge of discrimination;
  • Exclude any information regarding the charge of discrimination from Echols’ personnel file;
  • Designate and train a liaison to conduct annual training on employees’ rights under Title VII and avoiding unlawful discrimination in the workplace;
  • Adopt an anti-discrimination policy that meets minimum requirements as set out in the decree; and
  • Maintain a toll-free telephone number for employees to report any alleged discrimination.

Obviously, we don’t know what exactly happened in this case—only what the plaintiff and the EEOC alleged. However, as reported in the complaint, this case is a cautionary tale about how NOT to conclude a harassment investigation. Although, an employer has the right to ask for a waiver of past employment claims in exchange for severance payments when the relationship is ending, the significant fact here is that the employee would have continued to be employed with his complaints of harassment allegedly unaddressed to his satisfaction. Even under these alleged facts, Downhole could have just agreed to disagree with Mr. Echols—who could have then filed his harassment complaint while he continued as an employee. Downhole could then have defended the harassment complaint based on its investigation and the fact that it had stopped the conduct as soon as it was brought to its attention. Significantly, it may have been able to avoid the retaliation claim.

One Judge Finds Alabama’s Workers’ Compensation Act Unconstitutional—Now What?

Close Up Of Businessman With InjuryWorkers’ compensation laws are supposed to take the guess work out of employee injuries. If an employee is hurt at work, the statute governs, you pay the benefits and move on—right? Well, if you have employees in Alabama, some of the predictability of the workers’ compensation scheme is in question. In Clower v. CVS Caremark Corporation, Jefferson County Circuit Judge Pat Ballard ruled that two provisions of the law violate the U.S. and the Alabama Constitutions. To make matters even more interesting, because the Alabama Workers’ Compensation Act has a nonseverability clause, that means Judge Ballard finds the entire law unconstitutional.

The Offending Provisions

The provisions at issue are Ala. Code 25-5-68, which sets a weekly $220 cap on permanent partial disability benefits (PPD), and Ala. Code 25-5-90(a), which caps attorney’s fees at 15% of the compensation awarded or paid in workers’ compensation proceedings. If you want the specifics of why Judge Ballard found that these provisions violated the federal and state constitutions, read the opinion—which includes a history of the workers’ compensation law. Suffice it to say, he concluded there was a constitutional violation and that potentially throws the entire Alabama workers’ compensation world into a spin.

If this becomes the law in Alabama, this decision will change everything about employee injuries. Judge Ballard noted that he was “not blind to the magnitude nor the consequence” of the holding. The impacts that he mentioned included:

  • Medical providers will no longer be able to bill claims to workers’ compensation insurers, employers and self-insurance funds.
  • Insurers will not be able to sell workers’ compensation insurance policies or collect premiums.
  • Self-insurance funds will continue only on claims that pre-date this decision.
  • Employees injured at work will have to file tort claims for on-the-job injuries—and get no benefits while they await a verdict.

What Should We Do Now?

Judge Ballard has stayed the ruling for 120 days, so it will not go into effect at least until early September—assuming the legislature or an appeals court takes no action. The Alabama Legislature is at the end of the legislative session, so it is unlikely to be addressed in this session. We can expect an expedited appeal and a number of organizations (including insurance carriers) weighing in on the subject with amicus curiae (“friend of the court”) briefs. Once appealed, the case is likely to be stayed pending the outcome of that appeal (so there will be more than the 120-day respite).

For the law nerds out there: This decision is not binding on any court until affirmed by an appellate court, so for now it only impacts the parties in the Clower case. No other court has to follow it. Undoubtedly, some judges will jump on this bandwagon and others will reject it. Employers in Jefferson County, Alabama may see some interesting results in the next few months.

In the meantime, what can you do to get ready for a potential workers’ comp apocalypse? Frankly, not much. However, here are some ideas:

  • Talk with your workers’ compensation carrier. This could have a huge impact on their business, and they should be all over it. Make sure they know you want them to keep you updated.
  • Look at short-term disability coverage and whether you need some or more of it. If this ruling becomes the law of the state, you could end up with injured employees who no longer get comp benefits, and they will be looking for other sources of replacement income (which you probably want them to have). It might be good to think about that impact and how you would handle it.

Otherwise, we will all just have to wait and see.

Let’s See You Flex – The Working Families Flexibility Act Passes the House and Proposes a New Option for Overtime

overtime timesheetThe House of Representatives passed at least two notable measures last week.  You probably heard about the new healthcare legislation, but you may not have heard about the Working Families Flexibility Act (WFFA). Though Republican representatives were not invited to a celebration in the Rose Garden following its passage, employers need to keep an eye on the WFFA. If enacted, the WFFA would allow employers to offer employees who work overtime the choice of paid time off or time-and-a-half pay as compensation. The act would require employers to continue offering traditional overtime pay; a PTO option would simply become a legal alternative that the employee could choose.

Quick FLSA Refresher

Last year at this time, we were preparing for significant changes to the salary threshold requirement for the Fair Labor Standards Act’s (FLSA) white collar exemptions. While a Texas district court ultimately struck down those changes at the end of 2016, one benefit to that process was that many employers brushed up on the FLSA’s overtime requirements. In case you did not, though, here is a quick refresher on the basics:

  • The FLSA generally requires covered employers to pay nonexempt employees minimum wage (currently $7.25 per hour) and time-and-a-half compensation for hours worked over 40 in a workweek.
  • Covered employers (almost everybody) are employers engaged in interstate commerce or whose annual gross volume of sales or business is $500,000 or more.
  • There are a number of exemptions, and you should look closely at an employee’s duties and compensation to ensure that he or she meets all of the requirements to fall into that exemption. An employee is not exempt simply because he or she is salaried.

WFFA Chances of Passing

The WFFA serves as a reminder that offering additional PTO, sometimes called “comp time,” is not currently a lawful form of overtime compensation for private employers. The requirement for time and a half for hours over 40 in a workweek will stand unless the Senate also passes the WFFA, and that may be a longshot. All 52 Republican Senators as well as eight Democrats must vote for the act to avoid a filibuster. The act did not have unanimous Republican support in the House, and it is unlikely to garner unanimous support in the Senate. Republican Congressmen have introduced similar measures on several occasions over the years, most recently in 2013, but none has passed both chambers to change the overtime pay requirements. We will keep you posted.