Employer Liability Issues

Last week, the National Labor Relations Board announced that it will no longer use the Browning-Ferris joint-employer test. If you don’t have a union, why should you care? This is the test that many courts consider when determining just who employed (and is therefore responsible for) an employee who is suing for any number of reasons.

What Was the Browning-Ferris Test?

Alas, Browning-Ferris, We Barely Knew You: NLRB Rejects Its Own Recently Adopted Joint-Employer TestYou may recall that about a year ago, in Browning-Ferris Industries of California v. NLRB, et al., the NLRB implemented an unprecedented expansion of its joint-employer test. When two or more businesses share control over a worker’s terms of employment, the NLRB (and others) often need to determine who that employee’s actual employer is. The Browning-Ferris decision came up with an indirect control test in which a business with little, if any, control over an employee could qualify as the employer, resulting in many more joint-employer relationships. All that the indirect control standard required was that the entities in question be “employers” under common law precedent and share or codetermine matters regarding the employee’s terms and conditions of employment. The Browning-Ferris decision was met with much controversy, but the opposition can now rest easy, because the NLRB has restored its former joint-employer standard.

What is the Current Standard?

The original (and now current) standard focuses on the degree of direct and immediate control by employers. The test requires direct and immediate control over the essential terms and conditions of employment, such as hiring, firing, and disciplining employees. In a press release, the NLRB stated the following:

In all future and pending cases, two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine. Accordingly, under the pre–Browning Ferris standard restored today, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship.

Takeaways

This is good news for employers, as it is now harder for a worker to claim that more than one business is his or her employer. Not surprisingly, this decision is hotly contested by champions for unionization.

How can your company avoid joint-employer liability? Try some of these tips:

  1. Keep your human resources and payroll functions separate and independent.
  2. Maintain separate lines of supervision.
  3. Do not comingle equipment and resources unless all of the exchanges of such clearly are accounted for in some business fashion.
  4. Do not have one company and its C-suite governing the operation of a second company.
  5. Certainly maintain separate books and tax records.
  6. Keep brands separate.
  7. Take care of the obvious stuff, such as don’t use the same telephone number and switchboard.
  8. Use contracts, subcontracts, and consulting contracts to maintain arm’s length business obligations between the services of the companies.
  9. Maintain confidentiality of trade secrets and bidding information.
  10. Keep those union and nonunion workers as far from each other as possible.

Unless you have been living in a cave for the last month, you have heard about the sexual misconduct allegations against Hollywood mogul Harvey Weinstein. The story has all of the makings of a Hollywood blockbuster, except this time it’s not a movie. Here’s why it should also raise the curtain for employers outside of Tinseltown.

Why the Harvey Weinstein Scandal Should Scare the Pants Off EmployersRising Tide of Allegations Will Result in Increased Scrutiny

The Weinstein allegations have triggered an avalanche of claims against Hollywood stars, celebrity chefs, executives and politicians unlike anything in recent memory. The EEOC has weighed in with renewed interest in harassment claims, seizing upon an opportunity to publicize the issue. Those who use their workplace positions to make unwelcome sexual advances deserve to be called out for their misconduct. To be clear, this post is not for them. However, the sheer number of allegations regarding misconduct that occurred years ago and were never reported poses a real problem for conscientious employers. What does this mean for employers who face fallout for this kind of misconduct?

First, employers will have to deal with increased administrative interest. Undoubtedly, the EEOC will more carefully scrutinize claims of harassment and increase litigation efforts against companies alleged to harbor harassers, especially in the C-suite. Second, litigation could get tougher. Juries and courts may be more inclined to believe that alleged harassment occurred and to disbelieve denials by an accused executive and by extension his or her employer. In short, we will likely see an increase in claims, so what can employers do?

An Ounce of Prevention

You have heard it before but it bears repeating. While employers can’t stop employees from acting badly, they can take steps to try to prevent bad conduct and to properly address it when brought to their attention.

  • Review your policies. Any employer reading this almost certainly has a policy against harassment or discrimination, but far too often we see employers with cut and paste policies gleaned from another company or pulled off the internet that don’t really align with their workplace. You need clear, well-thought-out policies that your employees understand. Be sure the policy explains what harassment is and encourages people to report it.
  • Identify the right person to receive complaints. A policy merely advising employees to report harassment to their immediate supervisor, who has little or no training in how to identify or address harassment, often proves of limited help. Think about who is best to receive allegations about harassment and to properly address them and draft your policy to match. Clear policies with carefully crafted reporting procedures (perhaps supplemented with a third-party hotline option) can help.
  • Distribute the policy. A policy buried in a handbook, with no stand-alone employee acknowledgment, can be portrayed as mere words on the page with no real meaning. Worse still, employees may claim (sometimes truthfully) that they never received or read it. A policy given to employees and acknowledged in writing is critical.
  • Training, training, and more training. The again obvious, but often overlooked or sporadically implemented, additional step is education and training. For those of you in states that require annual training, make sure you do it and document it. For the rest of the country, have annual training of management in EEOC matters and trends. Add training of HR staff in how to identify, investigate and address allegations. Make sure your supervisors can identify harassment and know what to do when they see it or get a complaint. Educate employees in the company’s reporting procedures and make sure they understand that the company will not tolerate retaliation for a complaint. Finally, implement the training in a manner that avoids the holes created by employee and supervisory turnover.

Again, all of this sounds obvious but it can mean the difference between preventing harassment in your workplace and being found liable for the bad acts of people who you thought knew better.

Trick or Treat? Employee Claims Discrimination After Attending Office Halloween PartyBefore you send out that next office-wide invite to a “holiday” party, think twice. Carmelite Lofton has sued her employer, BSN Sports, LLC—a Texas uniform and equipment retailer—when things turned sour after she was forced to attend an office Halloween party. Lofton—an African American and a Christian, says the party was contrary to her religious beliefs and afterward she endured verbal and professional slights due to her race, religion, and disability.

The Legal Issues

The complaint contains claims under the Americans with Disabilities Act, Title VII, and the Lily Ledbetter Fair Pay Act of 2009.  She argues that for the entirety of her employment she was subject to a hostile work environment, discriminated against on the basis of her disability (osteoarthritis), and paid less than her colleagues because of her race and religion. She argues that her termination in March 2017 was unlawful and motivated by discriminatory factors.

          Disability Discrimination Claims. Regarding her disability claim, Lofton alleges that she told BSN about her osteoarthritis at the start of her employment, but was still made to perform strenuous physical activities in direct contravention of her doctor’s orders. Under the ADA, employers are charged with providing reasonable accommodations to workers with known disabilities. Reasonable accommodations can include things such as time off, modified duties, or even a special work area if it will aid the disabled employee in carrying out their job responsibilities.

Here though, Lofton argues that BSN refused to accommodate her and terminated her employment under false pretext. Specifically, Lofton points to being made to stand for over an hour while in “excruciating pain” at the Halloween party and having to clean and pack the BSN office building after it had been damaged in a flood.

          Religious Discrimination Claims. Beyond experiencing discrimination and a hostile work environment because of her disability, Lofton also asserts that her religion was a cause of conflict during her time at BSN. Specifically, Lofton alleges (1) her superiors told her she was “going to hell” for bringing in tootsie rolls, (2) she was told she “didn’t have a choice” of whether she participated in the office Halloween party, and (3) she was intentionally asked to accompany her manager to “Condom Sense” despite the knowledge that it was opposite to her religious ideals.

Lofton recites a series of alleged cringe-worthy incidents ranging from management’s off-handed comments against the Bible to being continually interrupted during private prayer meetings held during her lunch break to being told she should “just have Kool-Aid” when she refused to drink alcohol with her colleagues. Regardless, Lofton’s complaint is chock full of alleged derogatory exchanges in support of her religiously hostile work environment claim.

          Race Discrimination Claims. Lofton claims she was treated differently because of her race. To argue a disparate treatment claim, Lofton must show that her employer intentionally discriminated against her or treated her less favorably because of her race.

Here, Lofton argues that her non-African American colleagues were paid more for doing the same job and/or for doing a job with lesser duties and responsibilities. Further, she asserts that her non-African American colleagues did not have to use PTO when out for injuries or illnesses, whereas she was forced to use PTO for her osteoarthritis surgery. To strengthen her claim, Lofton includes that her superior has previously been accused of racial discrimination, citing a 2015 incident where an email with “a stick figure being hung on a noose” was distributed company-wide.

So What Does This Mean for Employers?

All we know is what Ms. Lofton says in her complaint and we all know that BSN’s version of events is likely to tell a different story. The question now becomes, as employers, what can we learn from this complaint?

  1. Check your policies. For starters, this is an excellent time to re-evaluate your company’s policies and to focus on maintaining a workplace that is welcoming to all, regardless of race, religion, gender, disability, etc. Recognize that an employee’s religious beliefs are protected and make sure they are not the subject of jokes or potentially disparaging comments.
  2. Rethink mandatory holiday celebration. Refrain from forcing any employee, regardless of religious belief, to attend company holiday functions. It is far too easy to blur the line between optional and compelled attendance, but once blurred, you run the risk of facing the same type of problem now facing BSN.
  3. Keep your management and staff up-to-date on non-discrimination policies, have routine sensitivity training, and take the position that discriminatory behaviors will not be tolerated in any form or fashion. Encourage your staff to speak with HR or to use other resources to report instances of what they believe is discrimination.
  4. Do a quick audit. Look around to make sure people who have disclosed potential disabilities are being appropriately accommodated. For employees with obvious disabilities, check to see if they have requested accommodations and haven’t yet gotten them. Check their files to see if they have submitted anything in writing. If you find someone who has been overlooked, find a way to do it…quickly.