Class Action Waivers in Employment Arbitration Agreements Do Not Violate Federal Labor Law

After years of litigation across the country and sharply divided rulings among the Circuits (some damning class/collective action waivers and others enforcing them), and over seven months after oral argument, the United States Supreme Court upheld the enforceability of arbitration agreements that include class and collective action waivers.  It was a close decision, 5-4, like many key workplace law rulings.  The ruling can be read here.

Having an arbitration agreement with a broad waiver against multi-claimant litigation can play a significant role in reducing  risk and the cost of defending claims.  If an employer is sued by an employee, for example, the claims would be “transferred” from state or federal court to an arbitral forum.  In that arbitration, the scope of claims  would be limited to the single claimant (rather than facing a jury trial and claims brought in behalf of a class).  An agency (e.g., DOL, EEOC) could still pursue a claim on a systemic or class basis, but agency litigation is far less frequent than private litigation.  Clearly, a class waiver agreement (and the avoidance of jury trials in federal and state courts) could materially reduce exposure and possibly legal fees.  Other than in “rocket docket” Circuits, arbitrations tend to occur more quickly than court adjudications, thus reducing potential back pay and spurring claims toward resolution while memories are fresh and witnesses are more likely to be available.

Jackson Lewis was counsel in one of the consolidated cases where the lower court held the waivers enforceable (Fifth Circuit), which was affirmed by the Supreme Court.  The other Circuits (Seventh and Ninth) were reversed.

For a more detailed analysis of the Court’s decision click here.

Internal Investigation Report Prepared by Outside Counsel Entitled to Work Product Protection

In Lassiter v. Hidalgo Medical Services, No. 17-00850 (D. N.M. Apr. 18, 2018), a former employee sought to compel production of outside counsel’s reports and findings of an internal investigation into harassment claims.  The discovery demand was denied, in this instance, because the Court found that the documents, which contained “factual summaries of the information she learned in the course of her investigations” were protected by work-product privilege.  The documents were protected because they were “prepared by a representative of the defendant in anticipation of litigation” and because the plaintiff could not show “a substantial need for the materials and an inability to obtain their equivalent through other means absent undue hardship.” Further, in this case, the defendant did not waive the privilege because it disclaimed any reliance on the investigation as a defense in the matter.

While this decision is comforting, it is not an across-the-board protection of investigations conducted by outside counsel.    In some instances, a claimant, may be able to establish a substantial need for the report and, in doing so, prove that the information cannot be otherwise obtained.  In those instances disclosure is likely to be ordered.

Reminder To Employers: Even The “New” NLRB Will Not Bail You Out If You Terminate An Employee (Union or Non-Union) Who Discusses Or Complains About Terms And Conditions Of Employment

On Friday, May 4, 2018, the National Labor Relations Board ruled that a janitorial services company violated the National Labor Relations Act  when it terminated an employee who pursued wage theft claims and discussed the company’s poor working conditions with Houston city lawmakers.  Specifically, the employee filed a formal wage theft complaint with the city of Houston and spoke about the working conditions of the company’s employees at a Houston city council meeting.  The NLRB concluded that the employee’s conduct in filing a wage theft complaint and discussing the company’s working conditions with the Houston city council both constituted concerted activity protected by the NLRA.  In finding that company terminated the employee’s employment in response to the above concerted activity, the NLRB ordered that the employee be made whole for lost earnings and benefits, but denied the employee’s request for consequential damages because current NLRB law does not provide for such damages.

This decision is significant for two reasons: (1) this is the first decision rendered by a Republican majority NLRB that includes newly appointed Republican member John Ring, thereby signaling that the NLRB will continue to aggressively prosecute cases involving non-union employees that engage in protected concerted activity; and, (2) the decision reaffirms that consequential damages (such as emotional distress damages) are not available under the NLRA.

Union and non-union employees alike have the right to collectively discuss their terms and conditions of employment.  Employers should be careful not to take adverse employment actions against employees for discussing their wages or workplace related issues.  Remember – employees do not need to be unionized in order to be afforded the protections of the NLRA.


New York Court of Appeals Says Plaintiff’s Private Facebook Materials Are Fair Game In Discovery

For employers defending discrimination claims in which the plaintiff claims emotional distress, social media accounts are potential treasure troves of evidence of claimant’s feelings, thoughts, and mental impressions. In Forman v. Henkin, New York State’s highest court held that the “threshold inquiry” for social media disclosure is whether the materials sought are “reasonably calculated to contain relevant information.”  The Court rejected the “heightened threshold” previously applied by lower courts.  That higher threshold had “conditioned discovery of material on the ‘private’ portion of a Facebook account on whether the party seeking disclosure demonstrated there was material in the ‘public’ portion that tended to contradict” plaintiff’s claims.

Although the Forman case did not involve an employment law case, we see no reason the same principles would not be applicable in the employment law litigation context.

Two States Go Against the Grain By Prohibiting Salary History Bans

By now, employers generally are aware that a growing number of states and municipalities are passing bans prohibiting pre-employment inquiries into an applicant’s salary history. This trend is part of a growing effort in the United States to reduce the pay gaps that may result from discrimination. In contrast, Michigan and Wisconsin became the first states to enact legislation barring localities from implementing legislation that would prohibit pre-hire salary history inquiries.

While employers in Michigan and Wisconsin may welcome legislative relief, New York City, and states including California, Delaware, Massachusetts, and Oregon have taken an opposite approach and passed legislation banning salary history inquiries. Employers should check their policies to confirm that they are in compliance with applicable laws and assess whether those responsible for hiring are familiar with all applicable laws.

Employee Complaints Of Pay Inequity Can Trigger Protected Activity Even With No Mention Of “Sex Discrimination”

In Mumm v. Charter Township of Superior, the United States Court of Appeals for the Sixth Circuit held that Plaintiff is entitled to a trial where her employer began the termination process on the same day she threatened suit over a difference in pay between her and a male counterpart even though she did not allege the pay disparity was the result of sex discrimination.

In the lawsuit, Plaintiff alleged violations of Title VII of the Civil Rights Act and Michigan’s Elliot Larsen Civil Rights Act, claiming that she was paid less than her male counterpart for substantially similar work because of her sex and that she was retaliated against after she complained about the alleged sex discrimination.  The District Court granted summary judgment for Defendant, holding that Plaintiff did not clearly allege that the difference in pay was the result of sex discrimination and that Plaintiff could not show that Defendant’s non-retaliatory reasons for her termination were pretexts.  The Court of Appeals reversed, holding that Plaintiff’s threat to sue over the difference in pay was clear enough to qualify as protected activity given that the officials should have known that Plaintiff was charging sex discrimination.

In light of this decision, employers should consider that employee complaints about different treatment among employees could be protected activity even if the employee does not invoke any “magic words” describing the basis for the different treatment. Managers who handle these types of complaints should be trained accordingly.

Unplug: Will Employees Soon Have The “Right to Disconnect?”

If a proposed law is enacted by the New York City Council, employers would be prohibited from requiring employees to check and respond to email or other electronic communications during non-work hours. The bill allows for exceptions in “cases of emergency” and would require employers to publish a written policy governing work-related communications during non-work hours.  The bill includes an anti-retaliation provision, and reserves the right to impose different levels of civil penalties, up to two thousand five hundred dollars, for violations.

Excluded would be:

  1. employees whose terms of employment require them to be on call twenty-four hours a day on days when they are working, in which case it shall only apply on days off, including paid time off; and,
  2. independent contractors who do not meet the definition of employee under section 190(2) of the labor law.

Interestingly, the bill does not carve out an exception for exempt employees who are paid a salary for all hours worked.

If the bill passes, New York City will be the first city in the United States to enact such a law. It could drastically effect the way companies that conduct business in New York City engage with their employees.

Supreme Court Declines to Review Seventh Circuit Case Finding Extended Leave of Absence Is Not a Reasonable Accommodation

The United States Supreme Court declined to review a decision from the Seventh Circuit Court of Appeals that held a two-to-three month leave of absence following the exhaustion of leave under the Family and Medical Leave was not a reasonable accommodation under the Americans With Disabilities Act.  Severson v. Heartland Woodcraft, Inc.  For more information on the ruling and the Seventh Circuit’s decision, please see our Disability, Leave & Health Management Blog by clicking here.

Jury May Find Pregnancy Discrimination Where Employer Refused To Assign Work To Avoid Injury To Pregnant Worker

Pregnancy discrimination can arise from an employer’s effort to “protect” a pregnant worker from harm, just as it can from other adverse actions.  In Cameron v. NYC Dept. of Educ., 15-cv-9900 (S.D.N.Y), it was alleged that plaintiff no longer received teaching assignments after her pregnancy became visible and known.  According to plaintiff, the principal told her she was not contacted for substitute work because the school wanted to avoid liability in the event she became injured.  Plaintiff alleged, among other things, that the school  engaged in pregnancy discrimination in violation of Title VII and the New York City Human Rights Law.  The defendants denied the allegations.  In denying the employer’s motion for summary judgment the Court found that a jury reasonably could conclude that plaintiff had been discriminated against because of the direct evidence of discrimination that she presented.

That’s What Friends Are For: Federal Court Extends Retaliation Protection to Employee’s Friend

Picture this scenario: Employee A brings a sexual harassment claim against Company. Employee B, who is friendly with Employee A believes the Company has taken adverse actions against her because of her friendship with Employee A, such as transferring her to a different location where she was denied her own office for six months and was directed to perform tasks she was not required to do.  For these and other reasons, Employee B asserts that her job performance suffered due to these alleged retaliatory actions.  She sued under Title VII of the Civil Rights Act of 1964 and the employer moved to dismiss.  The dismissal motion was denied.

When employers think about retaliation claims, they usually anticipate them from the worker who reported (or filed a claim alleging) harassment or discrimination. However, according to the U.S. Supreme Court, retaliation claims also can be brought by those associated with a claimant – like Employee B.  To establish a prima facie retaliation claim, a claimant must show (1) that she engaged in a protected activity; (2) that the employer took a materially adverse employment action against her; and, (3) that a causal connection exists between her protected activity and the adverse action.  In this instance, the trial court found that the co-worker’s claim established, at the pleading stage, that she engaged in protected activity by being “associated with a co-worker who indeed did complain of sexual harassment.”  The Court also found that the employer’s action taken after her transfer were sufficient at this early stage to allege an adverse employment action.

Employers should be careful not only to avoid taking adverse action against those who bring claims, but also co-workers who may be affected by association. Further, employers should also be aware that even a transfer can rise to the level of adverse action in some cases.