Back in 2011, I wondered aloud: Might the impact of new arbitration decisions from the U.S. Supreme Court bring about the end to big wage & hour class actions?

At the time, I said it would be premature.

Seven years later – what’s changed?

Well, as it turns out, wage & hour class actions are not dead. Indeed, based on some statistics, they’re as costly as ever.

Earlier this year, the Workplace Class Action Litigation report noted that just the top ten class action settlements totalled over $2.72 billion in 2017. I’d say the class action is still very much alive and well.

Yet there are still signs on the horizon that employers may be able to fight back a bit on these claims.

Late last month, the Ninth Circuit shot down a potential class action against Uber, on the grounds that the arbitration provision barred class actions.  

It’s a significant victory for the company and highlights a way for companies to push back against the threat of class actions.

But the company may still have another obstacle. According to The Verge, counsel for the Uber drivers, are encouraging the drivers to seek arbitration on an individual basis. Indeed, it is seeking thousands of them.  Consider it the “death by a thousand paper cuts” approach.  Will it work?

Stay tuned.  In the meantime, companies ought to still consider arbitration provisions with class action waivers as I noted earlier this year.

In the last few months, I’ve had some inquiries from employers asking about resources for layoffs.

Yawn.

Everyone remembers the layoffs of the recession, right?

Actually no, as it turns out.

In the ten years since the last great round of layoffs, there is a big group of new managers, directors, human resource personnel, lawyers etc that have joined the workforce.  And, as it turns out, they really DON’T remember the layoffs.  Unemployment is low. “Why would I need to worry about a Reduction in Force?

The stock market’s drop yesterday should remind all of us that good times aren’t always going to last.

What’s ironic about this is that back in 2008 — when the unemployment rate was skyrocketing — programs about reductions in force were just taking off and I noted the same concerns about whether employers were sufficiently aware of the issues.

History may repeat itself. Back then, I highlighted a few items that employers had to think about:

  • The WARN Act – If you’re doing a mass layoff, you need to notice affected workers in advance and provide notices to local and state officials.
  • Separation Agreements – If you want employees to sign a separation agreement (and you probably should), you need to give employees who are terminated in a layoff 45 days to consider an agreement and provide additional background information about the layoff itself.
  • Disparate Impact Analysis – With computers, checking your layoff data to ensure that it doesn’t have a disproportionate impact on protected groups (or, if it does, a legitimate business reason why it might) remains important.

Much of this remains valuable advice today.  And for employers who don’t remember this, now would be a good time to start your refresher courses.

Layoffs may not be right around the corner. But employers that are looking ahead in their business plans for 2019, would be wise to ensure that their staff are aware of the obligations that attach if the economy turns cold.

As I noted earlier this week, the U.S. Supreme Court has approved of the use of class action waivers in arbitration agreements with employees.

My colleague, Gabe Jiran, has a recap of Epic Systems v. Lewis on my firm’s blog, Employment Law Letter, that you can access here.

So, it’s a foregone conclusion that employers of all shapes and sizes will start using arbitration agreements and insert provisions with class action waivers, right?

Not so fast.

As Jon Hyman astutely noted in his Ohio Employer’s Law Blog yesterday, this decision may not be the panacea employers are looking for.

For example, it might end up being more costly for employers because arbitration may be more costly than litigation.

Moreover, these costs only increase if you are arbitrating dozens, or hundreds, or thousands, of individual claims instead of one class or collective action. Don’t think for a second that this decision will end wage and hour litigation. Instead, plaintiffs’ lawyers, who currently have claimants opt-in to FLSA collective actions, will instead merely file a plethora of individual arbitration claims.

It’s a valid point but I’m not sure I buy into this entirely.  Arbitration may be cheaper in many instances.

Moreover, part of the attraction that some lawyers have to wage/hour class actions are the attorneys’ fees that can get added on to the case automatically.  Filing a lot of individual arbitration cases may be good in theory, but in practice? That’s still a lot of work for a plaintiff’s-side attorney to follow.  While some enterprising attorneys will continue, we may see a thinning in the practice area as a result.

That said, I could certainly see unions encouraging this type of action at some workplaces — the death by 1000 paper cuts is something to keep in mind.

Employers may also be wary of entering into arbitration agreements with class action waivers because of the public backlash against forced arbitration, particularly  in sexual harassment matters.

This is not new — indeed, there was a Law Tribune editorial in 2014 before #metoo was well-known that suggested legislative reforms in the area.

Employers that are seen as enforcing “coercive” arbitration provisions may face a social media or publicity campaign. Each employer will have to figure out its risk tolerance and how it wants to be seen by its employees and the public before implementing arbitration agreements.

Moreover, in states like California, there are statutes that allow for an employee to sue over workplace violations individually as well as on behalf of others, allowing for “representative suits”, similar to class actions.  These “Private Attorneys General Act” cases may become the norm in California.

Could Connecticut follow?

These are just a few of the considerations that employers ought to be thinking about in light of the Epic Systems decision.  The decision certainly provides employers with another tool in managing their workforce. The question on the table now is whether that tool is useful or not.

In an important 5-4 decision, the U.S. Supreme Court this morning held, for the first time, that class or collective action waivers, particularly in wage/hour cases, and contained in arbitration agreements between employers and employees are valid and enforceable.

Because wage and hour class and collective actions are quite costly for employers to defend against, this decision should cause employers in Connecticut (and nationwide) to re-evaluate their employment relationships with employees and consider enacting wide-ranging arbitration agreements that include class-action and collective action waivers.

The decision in Epic Systems Corp. v. Lewis (download here) was just released at 10 a.m. this morning, so I’ll have more in an upcoming post after I’ve had time to digest it, but here’s the summary from the Supreme Court itself:

In each of these cases, an employer and employee entered into a contract providing for individualized arbitration proceedings to resolve employment disputes between the parties. Each employee nonetheless sought to litigate Fair Labor Standards Act and related state law claims through class or collective actions in federal court. Although the Federal Arbitration Act generally requires courts to enforce arbitration agreements as written, the employees argued that its “saving clause” removes this obligation if an arbitration agreement violates some other federal law and that, by requiring individualized proceedings, the agreements here violated the National Labor Relations Act. The employers countered that the Arbitration Act protects agreements requiring arbitration from judicial interference and that neither the saving clause nor the NLRA demands a different conclusion.

Until recently, courts as well as the National Labor Relations Board’s general counsel agreed that such arbitration agreements are enforceable. In 2012, however, the Board ruled that the NLRA effectively nullifies the Arbitration Act in cases like these, and since then other courts have either agreed with or deferred to the Board’s position.

Held: Congress has instructed in the Arbitration Act that arbitration agreements providing for individualized proceedings must be enforced, and neither the Arbitration Act’s saving clause nor the NLRA suggests otherwise.

In doing so, the court relies on two main arguments. First, the Federal Arbitration Act compels this and notes that the Concepcion decision from a few years back foretold this (which I previously previewed in a prior post).  Second, the National Labor Relations Act doesn’t compel a different result.

Justice Gorsuch writes the majority opinion here and concludes: “The policy may be debatable but the law is clear: Congress
has instructed that arbitration agreements like those before us must be enforced as written. ” He criticizes the dissent for its language suggesting a retreat from modern day labor laws:

In the dissent’s view, today’s decision ushers us back to the  Lochner era when this Court regularly overrode legislative policy judgments. The dissent even suggests we have resurrected the long-dead “yellow dog” contract. … But like most apocalyptic warnings, this one proves a false alarm. … Our decision does nothing to override Congress’s policy judgments.

Justice Ginsburg writes the dissent and concludes:

If these untoward consequences stemmed from legislative choices, I would be obliged to accede to them. But the edict that employees with wage and hours claims may seek relief only one-by-one does not come from Congress. It is the result of take-it-or-leave-it labor contracts harking back to the type called “yellow dog,” and of the readiness of this Court to enforce those unbargained-for agreements. The FAA demands no such suppression of the right of workers to take concerted action for their “mutual aid or protection.”

It’s an “Epic” day at the Supreme Court.   Will this have the same effect for state law claims? How should employers implement these changes? When? For all employees?

Lots of questions but today, at least, the Supreme Court answered one of the biggest employment law questions out there.

There is news in the employment law world beyond sexual harassment.  Arbitration clauses to be exact.

Yesterday, the Second Circuit issued a small, but important decision for employers that will continue to limit FLSA wage & hour claims.

The court ruled that an employee’s FLSA claims in court were barred by the arbitration clause contained in his employment agreement.  While it isn’t the first time, it’s clear logic will be tough to ignore.

(The case, Rodriguez-Depena v. Parts Authority, Inc. et al can be downloaded here.)

For the court, it was not even a close call. The court ruled that the Supreme Court’s pronouncement years ago that age discrimination claims were barred by an arbitration clause controlled.

The court also looked at whether its decision in the Cheeks v. Freeport Pancake House, Inc. – which required oversight of settlements of FLSA claims — precluded arbitration. The court said it did not.

The rationale of Cheeks, however, is assurance of the fairness of a settlement of a claim filed in court, not a guarantee of a judicial forum.

For employers in Connecticut it remains to be seen if the Connecticut Supreme Court will be all in on such a logic for state wage & hour law claims, but the federal endorsement of arbitration provisions provide a strong basis for doing so.

The case is yet another sign that employers have a few options when it comes to FLSA claims.  It has previously held that class action waivers for FLSA claims are also valid.  

Nevertheless, employers should once again consider whether mandatory arbitration provisions are right for their workforce, particularly when combined with class action waivers.  Having such provisions in place could make a big difference in the future.

lettersPicture this scenario:

You come into your office one morning to learn that an employee has filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) claiming that you failed to accommodate his disability reasonably and then terminated his employment because of his disability.

As if that isn’t challenging enough, many months afterwards, you receive a request from the EEOC to provide the names and contact information of his fellow employees who worked for you at the same time as the original complainant, as part of the EEOC’s investigation into the complaint.

This type of scenario isn’t uncommon; the state agency investigating discrimination complaints (CHRO) often requests information on co-workers as part of the investigation and sometimes requests that these co-workers be available for interview.

But here’s where the scenario gets interesting — and this story is based on a ruling on a motion to dismiss in federal court just this week in the EEOC v. Day & Zimmerman case.  The employer’s in-house counsel — seemingly with reference to outside counsel as well — decided to notify the co-workers of the request.

Indeed, the employer sent a letter to approximately 146 individuals, all of whom were members of same union as the Complainant and all of whom had worked, or continued to work, for the employer.  Whether you view the letter as an innocuous helpful note, or a nefarious threat will depend on your perspective.

In the letter (which you can download here at part of the employer’s filings — page 49), the employer identified the complainant by name, and indicated that he had filed a charge of discrimination on the basis of disability. The letter went on to identify the Complainant’s union local, the medical restrictions on his ability to work, and the accommodation he had requested. It further informed the recipients of their right to refuse to speak to EEOC investigator and offered them the option to have the employer’s counsel present if they chose to speak to EEOC.

Is there anything wrong with the letter?

According to the EEOC, yes (download here). The EEOC alleged that this letter constitutes retaliation against the original Complainant for opposing conduct made unlawful by the ADA. The EEOC further alleged that the letter interfered with the Complainant and the recipients of the letter in their the exercise or enjoyment of rights protected by the ADA, including the right to communicate with EEOC, the right to participate in an EEOC investigation, and the right to file a charge of discrimination with EEOC.

The employer, as you might imagine, vehemently disagreed and filed a motion to dismiss the complaint (download here).  It argued that the lawsuit “exemplifies the U.S. Equal Employment Opportunity Commission (“EEOC”)’s enforcement position of ‘do as I say, not as I do.'”  It noted that the EEOC, through the lawsuit itself, publicized the same information it now criticizes the employer for doing, even though the employer was obligated — it argues — to do so by the Rules of Professional Conduct (simply, the ethical code for attorneys).

The employer also argued that the letter explicitly re-affirmed the employer’s policy against retaliation, its commitment to equal employment opportunity, and the “employer’s position that a decision to speak with the EEOC investigator ‘will not have an adverse impact on your current or future employment.'”

The federal court rejected the employer’s motion to dismiss (ruling available here for download); in doing so, it emphasized that under the standards governing review of such motions, it must construe the federal complaint in a light most favorable to the EEOC. After doing so, the court concluded that the allegations were sufficient to state a claim for ADA violations  even though the Complainant had already been terminated from employment at least 17 months prior to the letter being distributed.

As a starting point, the court noted that “Routinely, courts have held that, when an employer disseminates an employee’s administrative charge of discrimination to the employee’s colleagues, a reasonable factfinder could determine that such conduct constitutes an adverse employment action.”  And the court concluded that, again construing the facts most favorably to the EEOC, the letter was sent just three months after the employer learned that the EEOC intended to pursue the complaint seriously:

Here it is plausible that the first opportunity to retaliate against [the Complainant], whom they had already terminated, was when the EEOC provided a list of fellow union members to whom Defendant could disseminate the potentially damaging EEOC charge.

The court also addressed the seldom-litigated issue of an interference claim under the ADA. It noted that neither the Supreme Court nor the Second Circuit has outlined a test for such a claim. (Though query whether the court overlooked the Second Circuit case of Gradziano — or at least had written its opinion before that one came out.)

Here, the court concluded that while there was no allegation of any direct evidence of the employer’s intent behind the letter, the issue of the employer’s intent “is a question of fact that cannot be resolved on a motion to dismiss.”

Moreover, the fact that the employer disclosed “sensitive personal information” about the Complainant could dissuade the Complainant and the co-workers from communicating further with the EEOC.

Obviously, this lawsuit if far from over.  Both the EEOC and the employer have staked out positions that make a compromise seem unlikely.  And so the case will likely proceed to discovery and then another round of motion practice.

For the rest of us though, this case — and the issues it touches upon — is again worth following.

In the meantime, employers should be very wary of mass notifications of discrimination charges to co-workers (former or current) in response to an EEOC inquiry.   Left unclear from the decision is whether there are any circumstances in which the employer can notify co-workers of the inquiry and at what level of detail.  Would an e-mail indicating that the EEOC may be contacting them but without the details of the Complainant’s complaint pass muster?  How strongly should an employer emphasize its policies prohibiting retaliation?

Employers are going to want to tread very carefully for now and consult their counsel about any communications going out.

soccer1This morning came word that members of the U.S. National Women’s Soccer Team are filing a discrimination complaint against the U.S. Soccer Federation on the grounds that they are paid less than their male counterparts.

According to press reports, “the filing, citing figures from the USSF’s 2015 financial report, says that despite the women’s team generating nearly $20 million more revenue last year than the US men’s team, the women are paid almost four times less.”

U.S. Soccer issued its own release arguing: “While we have not seen this complaint and can’t comment on the specifics of it, we are disappointed about this action. We have been a world leader in women’s soccer and are proud of the commitment we have made to building the women’s game in the United States over the past 30 years.”

This is not the first time this argument has been raised. But it continues the forceful arguments of female athletes arguing that the pay disparity is at a minimum, unfair, or in other cases, illegal.

For example, Connecticut attorney Kelly Burns Gallagher has been talking about the disparities in the triathlon world for a while.  The 50 Women to Kona movement notes that “At the World Championships for the Ironman Triathlon in Kona, Hawaii, the professional men have 50 qualifying spots and the professional women have only 35.  We are asking you to help stop this unequal allocation by sending a message to the World Triathlon Corporation and its CEO, Andrew Messick.”

And recently in tennis, a tennis tournament directly resigned after suggesting that women tennis players owe their success to their male counterparts.

There is no doubt that the argument of equal pay for female athletes has strong appeal. I’ve watched the women’s World Cup, for example, with the same enthusiasm as I do the men’s World Cup (and written about my love of U.S. Soccer too).  Tennis has, for the most part, adopted the laudable position that tournament payouts should be the same for men and women.

But the lawyer in me recognizes that the legal issues aren’t neat and tidy. We’ve seen it come up in golf where LPGA golfer Stacy Lewis recently argued that LPGA players should be paid the same as their male counterparts on the PGA.

In that case, however, there are arguments that each tour has different endorsement deals, different sponsors and different viewer audiences.

The Equal Pay Act (which may or may not get the soccer players to victory, depending on the legal arguments raised) mandates that that men and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially equal.  Title VII can also be raised; it does not require that the job of the person claiming discrimination be substantially equal to that of a higher paid person of the other sex, but unlike the EPA, Title VII requires proof of intent to discriminate on the basis of sex.

So how does one make a claim under the EPA? Simply stated, by showing that the jobs require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment defined as follows (and as noted by the Workplace Fairness site):

  • Skill: measured by factors such as the experience, ability, education, and training required to perform the job.
  • Effort: the amount of physical or mental exertion needed to perform the job.
  • Responsibility: the degree of accountability required in performing the job.
  • Working conditions: encompasses two factors: (1) physical surroundings like temperature, fumes, and ventilation, and (2) hazards.

It is this argument that the soccer players will likely try to advance. But as noted by The New York Times, there are likely to be several arguments that U.S. Soccer will respond with including that the law allows for different payments on factors other than gender:

U.S. Soccer could counter that the players’ pay is collectively bargained, and that the players agreed to all issues, including compensation and working conditions like whether the team must play on artificial turf on not. (The federation and the women’s players’ union are continuing discussions on compensation in a new collective bargaining agreement amid the current action.)

U.S. Soccer also receives substantially higher payouts from FIFA, world soccer’s governing body, for participation in the men’s World Cup. But the women’s complaint seems to take aim at a bigger share of domestic revenue, like sponsorships and television contracts.

Who will win? My guess is that we won’t know because ultimately U.S. Soccer and the soccer players will reach an agreement, perhaps as part of a new bargaining agreement.  But the arguments about pay disparity between male and female athletes and coaches will live on.

yankees3With Opening Day of baseball season nearly upon us, it’s time again to bring back a “Quick Hits” segment to recap a few noteworthy (but not completely post-worthy) employment law items you might have missed recently.

  • The U.S. Department of Labor released the final version of new “persuader” rules which will become effective April 25, 2016.  The new rules revise the “advice” exemption and will require a larger universe of consultants, lawfirms, and employers to report their labor relations advice and services.  You can find many recaps of the new rule (here and here, for example).  For Connecticut employers, if you haven’t had to worry about “persuader” reporting before (and don’t know what it is), it’s not likely to change things much, though for law firms and consultants, it may have a more significant impact.
  • Not every U.S. Supreme Court case is a big one.  The latest example of that is the Tyson Foods, Inc. v. Bouaphakeo et al. case that was issued last week. In that case, the court ruled that employees could use representative evidence to establish liability and damages for class certification purposes in a donning and doffing case. As another blog post stated sufficiently, this decision allowed employees to rely on a “time study conducted on a sample of class members to calculate an average donning/doffing time, which is then extrapolated to each member of the class — even if the actual time spent on the activity in question varies dramatically among employees and even if some of the class members failed to prove damages at all based on that time study.”  For most employers, however, the decision will have limited utility. Donning and doffing cases are, for example, fairly rare.
  • An interesting case up for oral argument at the U.S. Supreme Court today looks at the limited circumstances in which an employer can recover attorneys’ fees as a “prevailing party” in a Title VII suit.  The SCOTUSBlog has more on this case here.
  • Tax season has renewed fears regarding the privacy of W-2 forms.  A spear-phising e-mail scheme has been making the rounds of late, as this post reminds us.

 

One of the cases I’ve covered on this blog since the beginning, was a lawsuit challenging CIGNA’s change from a traditional defined benefit plan to a cash balance plan.

In plain English, it was basically (and I’m oversimplifying) a conversion from a pension plan to a 401(k) plan.

That case has gone all the way up to the U.S. Supreme Court.

(And, in the interests of full disclosure, one of the named plaintiffs is a family friend who attended my wedding many years ago.)

Today comes word that the matter is reaching a conclusion, in a report by Mara Lee of The Hartford Courant.

Fifteen years after Cigna Corp. employees and former employees first sued over 1998 changes to the company pension plan, a federal court ordered the company in January to provide a list of all 27,000 people in the class-action lawsuit and how much each one is owed. There are 3,620 Connecticut residents in the lawsuit.

The conversion from a pension to a cash balance plan was legal, and did not discriminate against older workers, a U.S. District judge in New Haven found. But because the way the company described the changes was misleading, the court found Cigna liable for paying for what they are owed from the original pension, frozen at the end of 1997, plus additions to the lump sums the pensions were converted to.

Lawsuits like this one are rare. But after 15 years of pursuing the claims, the current and former employees look to finally get some closure on the matter later this year with payouts.  The exact amount is still to be determined but the company has reserved over $180M for the potential payouts.

robertsFirst things first. My favorite David Bowie song is “Heroes” (though I remember really being struck by its use in the 2001 movie, Moulin Rouge).

But the Bowie song that comes to mind today for various reasons is “Changes” and how it ties into another big story of the day — an oral argument before the U.S. Supreme Court in a case involving public employers.

At issue is whether public employees who do not want to be part of a union can still be required to pay an “agency fee”, which is typically the equivalent of the dues that union members pay as well.

The case is revisiting a 1977 case (the Abood case if you’re interested) which that requiring non-union members to pay fees for collective bargaining was constitutional.

The SCOTUSBlog sets up the argument on behalf of the non-union members like this:

Here is their logic: because unions cannot charge non-members for political activity and since non-members argue that everything a public-sector union does — even bargaining — is political in nature, it follows that any fees violate their First Amendment right not to pay for activity to which they object. Their target, in union parlance, is the “agency fee.”

The State of Connecticut has come out firmly on the side of upholding the current law.  In November 2015, it joined an amicus brief from New York urging the court to not change the current law and leave it to the state to determine the full scope.

It noted that 23 states permit these “agency fees” (also known as “fair share” fees) to “provide a mechanism for ensuring that represented employees contribute to  union costs germane to collective bargaining. The majority of these statutes make agency-fee requirements a permissible subject of bargaining and  authorize (but do not require) agency-fee provisions as part of public-sector collective-bargaining agreements.”
In the amicus brief, New York (and Connecticut) argue that the court should uphold the current scheme “recognizing that the government must have flexibility to manage its own internal operations, especially with respect to
matters affecting the delivery of government services.”

Why is this important, according to the states? A few things:

A lack of adequate funding can reduce a union’s ability to maintain the staff expertise necessary to perform collective-bargaining functions. Eliminating agency fees as a secure funding mechanism may require unions to focus disproportionate effort on recruiting members and collecting fees, thereby diverting attention from bargaining and contract-administration responsibilities. Moreover, the absence of secure funding may create skewed incentives for unions to make excessive bargaining demands or disparage management as antagonistic to labor, in order to encourage employees to give financial support.

Notably, a separate amicus brief filed by 18 other states argue the opposite.

It is time to abandon the meaningless distinction between collective bargaining and other political activity.  In the public sector, core collective bargaining topics such as wages, pensions, and benefits inherently implicate public policy, and in ways that matter.

Like lobbyists, public sector unions obtain binding agreements from the government that have enormous public impact — all without the natural counterweight of a financial market that exists in the private sector. In the public sector, it is taxpayers, not business owners and consumers, who foot the bill — and the bill is often steep.

Some pundits predict that the court will strike down agency fees.  Consistent with my post lack week, I won’t make any such predictions, but this case has significant implications obviously for public employers and it’ll be interesting to watch whether there will be any impact on private employers as well.

In any event, stay tuned and be sure to listen to some David Bowie in the meantime.