The Evolution of Employment Law

When I started practicing, 40 years ago, the law of employment was still covered in the legal treatises under the law of Master and Servant. 

We have come a long way. But we still divide those who do the work into two broad categories: employees and independent contractors. 
But in keeping with the well discussed change to a more transactional work force, employment law scholars are beginning to think if those two broad categories are sufficient. 
An article in the Wall Street Journal talks about one possible new construct: dependent contractors. What if There Were a New Type of Worker? Dependent Contractor.  I don’t know if that one will ultimately fly, but I do think it is likely there are going to be some new thinking.
Also in the not too distant future, we may finally have a Restatement of Employment Law. I had sort of forgotten that it had been in the works, since it has been in the draft stage for such a long time, but was reminded at a conference last week that it was getting close. According to the ALI website, it is now in final draft form subject only to one more review of the entire body. 
I have suggested that employment law as a discipline really only began with the passage of the Civil Rights Act of 1964. In the bigger scheme of things, that’s not that long, so it seems likely that there is a lot of evolving to come.

A Labor Reporter: Steven Greenhouse

The Washington Post has a great interview with someone who spent the last 30 years covering the labor beat for the New York Times, Steven Greenhouse.  He is taking a buyout and will be writing a book, but his insight on labor unions and inequality are worth checking out.

Trained as both a journalist and a lawyer, the money quote on those two professions is here:

While I was at law school, I realized the actual work of what one does day to day, that journalism was more fun and intellectually stimulating, I found, than being a lawyer. I decided that if I could get a job at the New York Times or The Washington Post, I would do that rather than being a lawyer….. Many lawyers have said to me that they’re envious that I have such an interesting job, and I turn around and say I’m envious that you’re making five times as much as I am.

For anyone who has any interest in the subject matter that this blog covers, this is required reading.



Where is our Portal to Portal Act of 2014? Supreme Court Decision in Integrity Staffing v. Busk

First, the good news. The Supreme Court today unanimously held that post-shift security checks, even when required by the employer were noncompensable postliminary activities under the Portal to Portal Act, reversing a determination by the 9th Circuit. Integrity Staffing Solutions v. Busk, (S.Ct. 12/10/14).

I was wrong by at least a month on the timing, I had predicted early 2015, but at least I got the results right, and more importantly so did the Supreme Court. Back in September in an Employment Law 360 article I was quoted:

While he said it wouldn’t be a slam dunk, Fox said the justices are more likely than not to reverse the Ninth Circuit, which he said “doesn’t have a great track record” at the Supreme Court. Fox said it’s likely a decision, if it is strongly in favor of retailers, would be issued in early 2015.

A longer wait for a decision would likely jangle nerves among defense lawyers since it would suggest the justices are more divided on the issue — and perhaps more likely to side with the Ninth Circuit, he said.

“I’ll really begin to get nervous if it hangs around to June of next year,” Fox said. “If it’s hanging around until June I think there are going to be more and more people moving closer to the cliff.”

Justice Thomas wrote the decision, and as he often did, looked closely at the language of the statute in question, the Portal to Portal Act of 1947.  Specifically the term “principal activity or activities” as it had been interpreted by the Supreme Court, to mean ‘integral or indispensable’ and basically concluded that since going through a security screening had nothing to do with the job in question, pulling products and packing them for shipping to Amazon consumers, it was clearly not intended to be compensable under the FLSA as amended by the Portal to Portal Act.

He also rejected the 9th Circuit’s emphasis on the fact that it was required by and benefited the employer, noting making the only requirement would totally undo the whole Portal to Portal Act.

As a small aside, Justice Thomas may have made himself more popular with organized labor, as he discounted one of plaintiffs’ arguments, that the employer could have reduced the time spent in the screening to a de minimis amount by adding more security stations or staggering the shifts noting:

These arguments are properly presented to the employer at the bargaining table, see 29 U. S. C. §254(b)(1), not to a court in an FLSA claim.

This decision, like many for employers at the Supreme Court is a welcome relief, not because it greatly advances any particular argument for employers, but because an adverse determination could have been so bad.

Now to the rant.  Notwithstanding Justice Thomas’ well known dislike of legislative history, he does understand the importance of context and so he set out the background of what happened from the the FLSA’s passage in 1938 to the early expansive readings of the language by the Supreme Court, and the need for reaction by Congress, which happened in the Portal to Portal Act of 1947:

These decisions provoked a flood of litigation. In the six months following this Court’s decision in Anderson, unions and employees filed more than 1,500 lawsuits under the FLSA. S. Rep. No. 37, 80th Cong., 1st Sess., pp. 2–3 (1947). These suits sought nearly $6 billion in back pay and liquidated damages for various preshift and postshift activities. Ibid.

Congress responded swiftly. It found that the FLSA had “been interpreted judicially in disregard of long established customs, practices, and contracts between employers and employees, thereby creating wholly unexpected liabilities, immense in amount and retroactive in operation, upon employers.” 29 U. S. C. §251(a). Declaring the situation to be an “emergency,” Congress found that, if such interpretations “were permitted to stand, . . . the payment of such liabilities would bring about financial ruin of many employers” and “employees would receive windfall payments . . . for activities performed by them without any expectation of reward beyond that included in their agreed rates of pay.” §§251(a)–(b).

Congress met this emergency with the Portal-to-PortalAct.

Although the current epidemic of FLSA collective actions which has been well documented perhaps took a little longer to ramp up, you could use almost identical language to Judge Thomas first paragraph above, only the number of lawsuit and the amounts being claimed would be much larger.

Certainly the same harms have been visited on business for the last 15 years. And of course the political chance of a modern Portal to Portal Act which would deal with those issues is not even slim and none, it is just none.

But the courts, including the Supreme Court could act, if they just would by changing the standards for collective action certification. Currently we have a kabuki process where with only minimal evidence, or sometimes not even evidence, just allegations, large classes are ‘conditionally certified’ and employers are extorted to settle to avoid the expense and uncertainty of  large scale, expensive litigation.

Windfalls are created not only for numerous employees who knew full well what the economics of the job they were being asked to do was, but also for lawyers, on both sides of the docket who prosper greatly.

It’s a crazy system, that in a better functioning world would have been solved directly. Instead, the best the courts have come up with so far is to allow employers to escape the problem by opting out of the judicial system into the world of private arbitration.

I am really not one who believes that the world was better in 1947 than today. Heck, even I am not that old. But there is no question that some things were handled better.

5th Circuit Takes Expansive View of SOX

While I was starting a week long trial in the Southern District of Texas, the 5th Circuit was taking a wide, pro-employee view of Sarbanes Oxley.  In Halliburton v. Administrative Review Board (5th Cir. 11.12.14) the Court was faced with an unusual factual case.

A whistleblower had raised complaints with both the SEC and later directly to Halliburton’s Board of Directors about he perceived as improper accounting practices. Halliburton in response sent an email to the whistleblower’s colleagues alerting them to the fact that the SEC was initiating an inquiry, instructing them to maintain all relevant documents, but also identifying the whistleblower.

What happened afterwards was that his colleagues, who had now been accused of wrongdoing, treated him differently.  A reaction the 5th Circuit characterized as “unsurprising.”  Menendez, the whistleblower felt it was ostracism and ultimately negotiated a paid leave. When the SEC concluded that no enforcement action against Halliburton was recommended, he resigned a month later.

After OSHA initially throwing out his claim, Menendez requested a hearing before an ALJ. Unsuccessful there, he appealed to the Administrative Review Board, which ultimately ruled in his favor adopting a $30,000 conditional award made by the ALJ.

In the appeal from that ruling to the 5th Circuit, the Court in a per curiam opinion made at least three significant findings:

  1. It held that identifying a whistleblower, at least in an environment where collaboration is valued, is an adverse employment action. It relied on the Supreme Court’s decision in White v. Burlington Northern,  which the 5th Circuit had previously adopted for SOX purposes. Allen v. Administrative Review Board (5th Cir. 2008),
  2. That motivating factor does not require any malicious or wrong motive, and
  3. That compensatory damages, specifically mental anguish, are available under SOX.
Not a fact pattern likely to re-occur, but another signal that in the years ahead SOX, and my guess is other whistleblower statutes, are going to be read broadly.

Implicit Bias: A Brave New World

Implicit bias as a concept has been bubbling around the world of employment discrimination for a few years now. Although the fact that Google is seriously studying the issue as it applies to its own workforce may not mean that the concept is now main stream, I do think it means it is an issue that we will be hearing more about.

The NYT article earlier this week, Exposing Hidden Bias at Google, gives a pretty good overview of how Google is approaching the issue. And also notes that they first started looking at it way ahead of the curve in 2012.

Although I have done no in depth research, it seems that the case for implicit bias as a “fact” has been made.  But what it means for employment discrimination law remains an open question. For example, see Implicit Bias Evidence and Employment Law: A Voyage Into the Unknown.

One obvious problem is that most employment discrimination cases are brought under a disparate treatment theory, which by definition involves intentional discrimination. As explained in a training class at Google:

The lecture begins with a dismal fact: Everyone is a little bit racist or sexist. If you think you’re immune, take the Implicit Association Test, which empirically measures people’s biases. Dr. Welle goes on to explain that some of the most damaging bias is unconscious; people do the worst stuff without meaning to, or even recognizing that they’re being influenced by their preferences.

Hardly a definition of intentional discrimination.

Of course, there is also a theory of discrimination, disparate impact, which can be used to challenge unintentional discrimination. It is tied to discriminatory results of a facially neutral business practice. Whether it can be wielded to really address implicit bias remains to be seen.

How implicit bias plays out in the world of employment litigation is an interesting legal issue.

Unfortunately for employers, interesting legal issues are often much more “interesting” for the lawyers than for their clients.

5th Circuit Weighs In On Religious Discrmination

Yesterday’s post about the difficulty that courts have in dealing with religious discrimination, see Not Off to a Good Start and Onionhead: the newest religion? could not have been a better segue way to today’s decision from the 5th Circuit, Davis v. Fort Bend County, (5th Cir. 8.26.14).

In a 2-1 decision, written by Judge Prado, the Court overturned summary judgment where the district court had found that Davis’ absence on a Sunday to attend a ground breaking ceremony for her church was not a religious practice. As the district court found, and Fort Bend County argued before the 5th Circuit:

“being an avid and active member of church does not elevate every activity associated with that church into a legally protectable religious practice.”

Instead, the majority opinion focused on what it called a historical reluctance of court’s to delve too deeply into an individual’s professed religious belief:

This court has cautioned that judicial inquiry into the sincerity of a person’s religious belief “must be handled with a light touch, or judicial shyness.” Tagore, 735 F.3d at 328  …. “[E]xamin[ing] religious convictions any more deeply would stray into the realm of religious inquiry, an area into which we are forbidden to tread.” Id. …. Indeed, “the sincerity of a plaintiff’s engagement in a particular religious practice is rarely challenged,” and “claims of sincere religious belief in a particular practice have been accepted on little more than the plaintiff’s credible assertions.” Id. 

Judge Jerry Smith, politely, but vigorously disagreed with the Court’s limited view:

In its well-written opinion, the majority errs in holding that our inquiry is limited to the sincerity of an employee’s alleged religious belief; we must also consider whether that belief is “religious” in nature or merely a personal preference or a secular social or economic philosophy. 

I can see en banc, or perhaps even Supreme Court review written all over this one.  So perhaps, at least in this Circuit, the question I raised yesterday will soon be, if it is not already, answered by Davis.

At a minimum, if you currently have a religious discrimination case pending in the 5th Circuit, you need to be aware of this decision.

Not Off to a Good Start and Onionhead: the newest religion?

Six weeks ago, on the 12th anniversary of this blog, I indicated that I would see if last year’s lack of posting would continue and whether or not it was time to give this blog a formal ending.  Based on the last six weeks, it is definitely on its death bed.

However, I have been recently involved in preparation and a trial of a lawsuit, so I am going to cut myself a little slack. And if you have to try a case in August, Taos, New Mexico is about as nice a venue as you can get.

One of the things that I am just now catching up on was actually announced by the EEOC on my birthday. They have sued Syossett based health network United Health Programs and its parent company, Cost Containment Group, Inc. for religious discrimination. The charge: employees are being forced to participant in what the EEOC calls “religious practices” which are part of a belief system that a family member created called Onionhead. According to the EEOC press release:

Employees were told wear Onionhead buttons, pull Onionhead cards to place near their work stations and keep only dim lighting in the workplace. None of these practices was work-related. When employees opposed taking part in these religious activities or did not participate fully, they were terminated. 

This is an unusual case in a couple of ways. First, the discrimination is in the nature of proselytizing as opposed to the more frequently seen failure to accommodate. But more importantly, it raises an issue that courts have been really reluctant to deal with: what is religion?

Not exactly a new issue as almost ten years ago, I had this post: A Piercing Problem – 1st Cir. Ducks the Real Question, discussing the Cloutier v. Costco  decision, involving the claim by an employee that as a member of the Church of Body Modification she had been discriminated against by not being allowed to wear a facial piercing.

The Court’s language then showed the reluctance of courts to venture into this nebulous debate:

Determining whether a belief is religious is “more often than not a difficult and delicate task,” one to which the courts are ill-suited. Thomas v. Review Bd. of Indiana Employment Sec. Div., 450 U.S. 707, 714 (1981). Fortunately, as the district court noted, there is no need for us to delve into this thorny question in the present case.  

Hard to imagine how that question gets dodged in this litigation. See, EEOC Sues United Health Programs of America and Parent Company for Religious Discrimination.

In fact the issues seems to be getting teed up from the git-go, as we would say in East Texas, as defendants have moved to dismiss on the basis that Onionhead is not a religion. In a response, the EEOC says, “What defendants glibly call ‘self-improvement workshops’ and ‘corporate wellness programs’ were actually compelled religious activities led by their spiritual adviser, “Denali,” and other management in violation of Title VII.”  Employment Law 360 has a story on the latest,  EEOC Defends Suit Over Workers Forced to Say ‘I Love You.’ ($)

I have had relatively few issues involving religious discrimination over the years, but since writing about Cloutier  I have long been curious as to how this question — what is a religion — was going to be handled. It looks like we might begin to get an answer in the near future.

12 Years Ago

I posted the initial post on this blog. A dozen years is a long time to keep anything going, although you could seriously question whether or not this last year it was really going as the posts were few and far between.

As I have spoken in the past, when I began I was the first labor and employment law blog, although there were some others that joined soon after. Now there are literally hundreds, so the immediate almost news type reporting is amply covered.

So I have contemplated giving this a decent burial.

However, as I near the end of my active practice, I thought maybe this would be a good space to reflect back on some of the things that have happened.

If that proves workable and meaningful, then maybe Jottings will stay alive for some time. If not, well we can cross that bridge when we get there.

How Disruptive Can an Aggressive NLRB Be in a Non-Union Setting? More Than You Might Think

If you are a non-union employer (and overwhelmingly most employers are) you might not have given much thought to your how your confidentiality policy stacked up against the National Labor Relations Act. In fact your policy might read something like the following:

Confidential Information

Employees deal with and have access to information that must stay within the Organization. Confidential Information includes, but is not limited to, information that is related to: our customers, suppliers, distributors; [Company] organization management and marketing processes, plans and ideas, processes and plans, our financial information, including costs, prices; current and future business plans, our computer and software systems and processes; personnel information and documents, and our logos, and art work. No employee is permitted to share this Confidential Information outside the organization, or to remove or make copies of any [Company] records, reports or documents in any form, without prior management approval.Disclosure of Confidential Information could lead to termination, as well as other possible legal action.

But if it does, then according to the NLRB, now buttressed by the 5th Circuit Court of Appeals, you are in violation of the NLRA because that policy infringes on employees Section 7 rights.  Flex Frac Logistics v. NLRB (5th Cir. 3/24/14).

The 5th Circuit review of the Board’s decision finding a violation is straightforward:

  1. It is a violation of the NLRA to have a workplace rule that forbids discussion of confidential wage information between employees.
  2. The rule above does not explicitly do that, but it is also a violation if “employees would reasonably construe the language to prohibit Section 7 activity.
  3. Because the clause covers financial information, including costs, that “necessarily includes wages and thereby reinforces that the rule proscribes wage discussion with outsiders.”
  4. And the rule makes no attempt exclude some personnel information such as wages, which might make it pass muster.
And less you think this is the opinion of some of the newer members of the 5th Circuit who might have a more liberal bent, the opinion is authored by Chief Judge Stewart and joined by Judges Higginbotham and Jones. 
Confidentiality clauses are just one area of personnel policies that the new NLRB is putting under strict scrutiny. All employers, but particularly non-union employers, need to realize that there is a new entity around, and that not all its actions will be upended by the courts. 

5th Circuit Short Circuits Plaintiff’s Use of State Court

In certain parts of Texas, plaintiffs seek to avoid being in federal court at all costs. Today, the 5th Circuit clarified a procedural hurdle to that tactic in a small category of  cases.

In Taylor v. Bailey Tool & Manufacturing (5th Cir. 3/10/14), plaintiff originally filed suit in state court alleging only violations of the Texas anti-discrimination statute. Unfortunately, for the plaintiff, the claim was not timely filed. Later plaintiff amended to add Title VII and a Section 1981 claim.

Defendant removed and moved to dismiss arguing all claims were untimely.  Both parties agreed that the state claims were untimely.  Both parties also agreed that whether the federal claims were timely depended on whether Federal Rule of Civil Procedure 15(c) or the Texas relation back rule, TEX. CIV. PRAC. & REM. CODE ANN. § 16.068 applied.

If Rule 15(c) applied, the federal claims, even though filed after the federal statute of limitations would be timely because they would relate back to the filing of the original claim. On the other hand, if the Texas rule applied, they would not be timely because § 16.068 prohibits relation back if the cause of action would have been subject to a plea of limitation when filed.

The 5th Circuit joined the two other circuits (the 6th and 9th)  that had ruled on this matter, holding that the state rule applied, thus barring the claim.

The net result is that plaintiffs will have to make sure that their state claim is timely if they want to avoid federal court.

A simple and straight forward, but important, holding.