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Legal Briefs for HR – Issue#1 2013

Welcome to Legal Briefs for HR, an update on employment issues sent to over 5000 individual HR professionals, in-house counsel and business owners and many HR and legal professional organizations (who have asked and been permitted to republish via their newsletters and websites) to help them stay in the know about employment issues.  Anyone is welcome to join the email group . . . just let me know you’d like to be added to the list and you’re in!  Back issues are posted at under Media Center/Legal Briefs and you can also join the group by clicking on “Subscribe.”

I hope your new year is off to a great start . . . let’s get to work!

  1. This Recess is No Fun – Employers received an early valentine on January 25, with the sweet news from the D.C. Circuit Court of Appeals that presidential recess appointments of three NLRB board members on January 4, 2012 were unconstitutional. The decision could invalidate hundreds of decisions issued by the Board since that date, due to the lack of 3-Member quorum, including a bunch of decisions that employers felt overreached (and that’s putting it nicely).  Noel Canning v. NLRB (D.C. Cir. Jan. 2013).  The scope of invalid decisions may go back farther, to August 27, 2011, because another Board Member, Craig Becker, was also appointed when the Senate was not in recess.  Here’s the background.  The NLRB (the “Board”) is a quasi-judicial body which decides cases based on records in administrative proceedings.  There are five Members and they need at least three to have a quorum and do business.  The Board Members are appointed by the President of the United States to five-year terms, with Senate consent.  The “Recess Appointments Clause”  (Article II, Section 2) of the U.S. Constitution says “[t]he President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” Think of this as limited authority to fill gaps, in order to maintain a quorum and keep the NLRB humming.  Per the D.C. Circuit, the problem with the appointment of Members Sharon Block, Terence Flynn and Richard Griffin is that the Senate was not in Recess on January 4, 2012. Further, those Vacancies were pre-existing and did not “happen” during a Recess.  The Board argued for a broad definition of Recess, to include any sort of break while Senate is in Session.  The Court agreed with employer and said this view would give the President too much power by gutting the requirement that appointments be made “with Senate consent.”  The only time that power can be used is when the Senate is in Recess, between Sessions of Congress.  The upshot is [1] affected Board decisions will need to recalled and re-decided; [2] the Board lacks a quorum since Members Block and Griffin were not properly appointed (but the Board Chairman issued a statement on January 25 saying they would continue to work and issue decisions); [3] the Bureau of Consumer Financial Protection has a Director who was also appointed while Senate was not in Recess; and [4] this decision is most likely on its way to an en banc review by the D.C. Circuit and the Supreme Court.  Stay tuned!
  1. Data Dump – Each year, the EEOC posts charge and litigation statistics on its website at  The stats come out early in the year, covering the prior fiscal year which ended in September.  The 2012 stats are worth a glance, as they show a new record for monetary recovery ($365.4 million) as well as the types of charges and lawsuits filed.  Knowing what types of claims are the most common (retaliation, at 38.1%, followed by race at 33.7%) can inform your policy-making and training efforts and provide you with the ammo you need to get more budget to address these concerns.  The data is also broken down by state, for you multi-state employers.
  1. Bakers Dozen Plus One – Iowa is the 14th state to sign a Memorandum of Understanding with the U.S. Department of Labor (DOL), joining the DOL’s initiative to ferret out and punish employers who misclassify workers as independent contractors.  Prior signees of the MOU include CA, CO, CT, HI, IL, LA, MD, MA, MN, MO, MT, UT and WA.  The initiative has produced more than $9.5 million in back pay and overtime collections since September 2011.  There is more on the way, as evidenced by a proposal in the January 11, 2013 Federal Register for the DOL to conduct a study by interviewing 10,060 workers. The stated purpose is to “design and administer a new survey to collect information about employment experiences and workers’ knowledge of basic employment laws and rules so as to better understand employees’ experience with worker misclassification.” The determination of employee vs contractor status is complicated by the lack of single, easy to apply test, but the consequences of misclassification are becoming increasingly costly and many federal state and federal agencies (think IRS and state unemployment insurance agencies) are stepping up their game.  Take the time and trouble to review your classifications and correct errors.
  1. Franchisor FLSA Feud – Round one in an FLSA collective wage action goes to franchisee employees who are suing the franchisor as their “employer” in a case alleging loss of wages due to an improper tip-pooling arrangement.  A proposed class of servers and bartenders  employed by Hot Shots Sports Bar & Grill say a policy of improper tip-pooling, that included back of the house employees (e.g., cooks, dishwashers), applied to three independent franchise as well as company-owned locations.  Plaintiffs cite to corporate managers who helped open franchise locations as evidence of “control” and the court, at this early stage, agreed that it was sufficient to grant conditional class certification.  White v. 14051 Manchester Inc. dba Hotshots Sports Bar and Grill (E.D. Missouri Nov. 2012).
  1. Are You Religious About Eating Vegetables? – Most employers are savvy about Title VII’s requirement of religious accommodation but many will scratch their heads when they read this case.  Hospital requires its employees to have a flu shot each year.  Employee/Plaintiff was allowed to skip the shot for several years but was fired after her refusal in late 2010.  Plaintiff sues, saying the discharge violates Title VII because (follow me here) [1] the flu vaccine is developed using a hen egg; [2] Plaintiff is a vegan who eschews any animal products or by-products; and [3] her veganism is a “sincerely held belief” that must be accommodated.  Round One goes to the Plaintiff, since the court denied the employer’s motion to dismiss.  Chenzira v. Cincinnati Children’s Hospital Medical Center (S.D. Ohio Dec. 2012).  While Plaintiff alleged sufficient facts to skirt the 12(b)(6) motion, the court noted that it is premature to opine on the hospital’s justification for the flu shot requirement in light of Plaintiff’s level of interaction with patients and concern for the safety of those patients.  The fact that the hospital allowed her to skip the shot in the past is not helpful to their cause unless the job has changed in a way that increases the risk to others.
  1. Ain’t She Sweet . . . Now She’s Out on the Street – Can a woman be fired for being an “irresistible attraction?”  In Iowa, the answer is yes.  Dental assistant (female) and dentist (male) worked together for more than ten years.  Both are married to other people.  Dentist tells assistant on several occasions, using very colorful analogies, that she is very attractive to him.  The two begin exchanging texts that include discussion of her sex life.  Dentist’s wife becomes aware of the exchange, so she tells hubby/dentist to fire the assistant.  And he does, with his pastor present.  Assistant sues for sex discrimination, but makes no allegation of sexual harassment.  Dentist points out, at trial, that all of his employees are female including the new assistant.  Court agrees that the firing is not based on assistant’s gender “but because she was a threat to the marriage of Dr. Knight.”  Assistant appeals the decision to the Iowa Supreme Court, asking “whether an employee who has not engaged in flirtatious conduct may be lawfully terminated simply because her boss views the employee as an irresistible attraction.”  The Supreme Court said “yes.”  Nelson v. James H. Knight, DDS (Iowa Dec. 2012).
  1. Never Mind – In Legal Briefs for HR #5-2012, a noncompete case in Ohio was discussed.  In May, the Supreme Court had held that the noncompetes of employees acquired via a merger were no longer enforceable due to the lack of specific language assigning those rights to the successor employer.  Upon reflection, the Supreme Court now says it misapplied precedent and is modifying their decision to make those noncompetes enforceable. Under the new reasoning, the opine that the old entity was absorbed into the new one rather than completely ceasing to exist, so the missing assignment language was not necessary. Acordia of Ohio LLC v. Fishel (Ohio Oct. 2012).
  1. Do Not Erase, Really – Parties to litigation are normally admonished to preserve evidence, including electronic files, relating to the dispute.  In this case, the court had OK’d plaintiff’s request for an independent e-discovery expert to take a cruise through the defendant’s computers.  After the appointment but before the expert had a chance to get a peek, several executives erased files from their computers and used “wiping” software.  They defended their actions saying the removals involved only personal and/or embarrassing content but the court was not impressed.  The defendant was sanctioned $600,000.00 for spoliation of evidence during discovery. Multifeeder Technology Inc. v. British Confectionary Co. (D. Minn. Sept. 2012).
  1. Shop Before You Drop (a small fortune on a degree) – In response to spiraling costs of higher education and lackluster prospects for work after graduation, some states are posting return on investment data tied to specific degrees.  Virginia, Tennessee and Arkansas already post on and Colorado, Nevada and Texas plan to join in early 2013.  The goal is to help prospective students (and their parents, no doubt) make an informed choice when selecting what to study.  It may be useful for employers, too, as additional input into their compensation surveys.
  1. Stated Differently – Here are some hot topics for you multi-state employers:
    1. Maryland – A bill is pending which, if passed, would nullify a noncompete agreement which applies to a former worker who applied and qualified for unemployment compensation benefits.  It would take effect October 1, 2013 and would not apply to any noncompete promise entered into before that date.
    2. New Jersey – Expanding on the discussion in LB4HR #9-2012 about posting a notice of the right to be free from gender-based pay discrimination, the NJ Dep’t of Labor and Workforce Development has published proposed rules.  The rules echo the statute but also explain that [1] the 50 employees needed to trigger coverage do not all have to be employed in NJ; and [2] the posting requirement can be satisfied electronically on the Internet or an intranet accessible to employees.
    3. New York – Labor Law sec. 198 already provides for liquidated damages in amount equal to wages owed (aka double damages), when an employer fails to pay wages owed to an employee.  Assembly Bill No. 249 proposes to increase the liquidated damage to twice the amount owed to the employee, creating triple damages, when either [1] the wages remain unpaid for more than 30 days; or [2] the employer failed to pay wages owed to ten employees or more.
    4. Ohio – The 6th Circuit upheld summary judgment for the employer by agreeing that a fired employee’s surreptitious recordings of her co-workers, customers (doctors) and managers, in violation of a policy that prohibited such acts, was not protected under Title VII.  The plaintiff argued that she was being treated less favorably than white male peers and her recordings were a form of “opposition” that could support a claim of retaliation.  The Court disagreed, saying opposition is protected only where it is reasonable and there were other means for her to preserve evidence of the alleged discrimination.  While Ohio has a “one-party” consent wiretapping law (which allows recording where at least one party consents), that means her conduct was not illegal under the wiretapping law.  Period.  It does not mean the activity is protected from consequences under other laws.  Jones v. St. Jude Medical S.C., Inc. (6th Cir. Nov. 2012).
    5. Oregon – An independent contractor must be free from direction and control over the means and manner of providing services, must fulfill licensing/certification for some services and must be engaged in an “independently established business” under state law.  An architecture firm that hired a person to provide occasional drafting services whiffed on that last requirement, so the worker was an employee and not a contractor.  In order to satisfy that third prong, the person must satisfy three of the following five criteria:  [1] maintain a separate business location separate from the location of the service recipient, or in a portion of his residence used primarily for business; [2] bear the risk of loss on his services, shown by factors such as being required to correct defective work, warranting the services provided, negotiating indemnification agreements or purchasing liability insurance; [3] provides contracted services for two or more persons within a year, or routinely engages in efforts reasonably calculated to obtain contracts for similar services; [4] makes a significant investment in the business, such as buying tools or equipment, paying for premises or facilities, or paying for licenses, certificates or specialized training required to provide the services; and [5] has the authority to hire and fire other persons to provide assistance in performing the services.  Compressed Pattern LLC v. Employment Dep’t Tax Section (Ore. Ft. App. 2012).
    6. Texas – The new legislature in session and among the bills they are considering is one that would make it unlawful for employers to require or ask applicants or employees to provide passwords to their social media accounts.  If you want to follow the bill, it’s H.B. 318.
  2. For the Birds – If you like being tweeted and want breaking news on employment law changes (and the occasional random cheer for K-State . . . Go Cats!), follow me on Twitter.  I’m at @amross.

Until next time,

Audrey E. Mross

Labor & Employment Attorney

Munck Wilson Mandala LLP

600 Banner Place

12770 Coit Road

Dallas, TX  75251

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