Pflantzer had a history of sending email to the company’s guides discussing work conditions, the benefits of unionization, and potential plans for approaching the NLRB. The postings that ultimately got him fired discussed similar issues and, according to the NLRB, were “an obvious continuation of Pflantzer’s prior organization activity, activity which was known to [New York Party Shuttle].”

Pflantzer’s Facebook missives were posted to a page called NYC Tour Guides, which is accessible only to New York City tour guides who have been invited to join. The postings referred to Pflantzer’s former employer, CitySights, as a “worker’s paradise” compared to his new employer, noted that “there is no union to protect you,” and complained that paychecks from New York Party Shuttle sometimes bounced. His postings also stated that when he began to agitate for a union, he stopped getting scheduled for work.

Finding that these statements were mostly true, the NLRB rejected the company’s contention that the postings were not protected because they were libelous. The board concluded that Pflantzer was improperly fired for conduct protected by the NLRA, and ordered New York Party Shuttle to reinstate him and provide back pay.

The decision is a reminder that employees who complain about workplace treatment based on their social media activity may be protected under the NLRA, even if their posts contain disrespectful or coarse language. Employers must put time into crafting an appropriate social media policy and think carefully about how to address violations.

The Case

The plaintiff, a female Russian national, was born in 1961. She holds a Russian degree in systems engineering. After having seen a job advertisement, she applied for a job as an experienced software developer but her application was rejected. Soon afterwards, the company again published an advertisement—it was obviously still searching for a candidate eligible for the still vacant position. Plaintiff re-applied for the job but was rejected again. The company had neither invited her for an interview nor provided her with any information why her application had been rejected.

The First Decision of the BAG – Two Questions for the European Court of Justice

As the woman was of the opinion that she fully met the requirements posted in the advertisement(s), she claimed that she had been discriminated by the company on the grounds of her sex, origin and age when her application was rejected. She took legal action and claimed for financial compensation under Article 15 of the German Anti-Discrimination Act (“AGG”). As, under German law, a rejected job candidate is obligated to present facts or at least indications why he/she was discriminated, the woman requested the company at court to provide her with the details of the candidate who was hired in order to put her in the position to substantiate her claim. The company, however, rejected to disclose any information why Plaintiff was not given the job, and also refused to give any details on the successful candidate.

Plaintiff’s claim for compensation and information was rejected by the BAG. The court stated that German law does not provide for an information right of a job applicants information right. However, the BAG could not determine whether EU anti-discrimination laws may entitle a job applicant to get the information requested by the Plaintiff. Therefore, the BAG referred the following two questions to the European Court of Justice:

1. Has European law to be interpreted as meaning that, “where a worker shows that he meets the requirements for a post advertised by an employer, he has a right vis-à-vis that employer, if he does not obtain the post, to information as to whether the employer has engaged another applicant and, if so, as to the criteria on the basis of which that appointment has been made?”
2. If the answer to the first question is affirmative: “where the employer does not disclose the requested information, does that fact give rise to a presumption that the discrimination alleged by the worker exists?”

The Answers of the European Court of Justice

In response to the questions, the European Court of Justice (April 19, 2012 – C‑415/10) decided that EU law, in particular the anti-discrimination Directives, do not grant a job applicant an information right against the company.

The Court, however, pointed out that it cannot be excluded that a defendant’s refusal to grant any access to information may be one of the factors to be taken into account in the context of establishing facts from which it may be presumed that there has been direct or indirect discrimination.

The Final Decision of the BAG

After this decision of the European Court of Justice, it was heavily disputed in Germany whether a company not answering any question of a rejected job applicant (who meets the requirements for a posted job) why he/she has not given the job is a fact or incident speaking for discriminatory behavior. If so, a company refusing to give any information would have the risk to be sued for discriminatory behavior and to pay compensation.

The BAG, however, finally dismissed the claim. The woman has not presented any evidence or hints of discrimination. Given this, the silence of the company at court did not speak in favor of her. Obviously, the BAG still requests from a plaintiff the presentation of facts or incidents that may speak for discriminatory behavior. Only if the plaintiff meets these criteria, the silence of the company as defendant will help the plaintiff to win the case.

In 2009, plaintiff Laura Symczyk filed a complaint on behalf of herself and “all other persons similarly situated” alleging that her former employer, defendant Genesis Healthcare, violated the FLSA by automatically deducting 30 minutes of time worked for meal breaks for certain employees although the employees performed compensable work during those breaks. Defendant answered the complaint and simultaneously served upon plaintiff an offer of judgment under Rule 68. Plaintiff did not accept the offer. Defendant then filed a motion to dismiss for lack of subject-matter jurisdiction. Defendant argued that because it offered plaintiff complete relief on her individual damages claim, she no longer possessed a personal stake in the outcome of the suit, rendering the action moot. The District Court agreed, noting that no other plaintiff had yet joined the action, and dismissed the lawsuit. The Third Circuit Court of Appeals reversed, holding that plaintiff’s collective action was not moot because allowing defendants to “pick off” named plaintiffs with strategic Rule 68 offers before conditional certification could short circuit the process, and, thereby, frustrate the goals of collective actions.

The Supreme Court reversed the Third Circuit and held that “the mere presence of collective-action allegations in the complaint cannot save the suit from mootness once the individual claim is satisfied.” Id. at 1529. In so holding, the Court distinguished cases in which it held that a class action is not rendered moot when the named plaintiff’s individual claim becomes moot. The Court stated that while “a putative class acquires an independent legal status once it is certified under Rule 23” in a FLSA collective action, “‘conditional certification’ does not produce a class with an independent legal status, or join additional parties to the action” Id. at 1530.

The Court’s holding is a boon to employers facing FLSA collective actions in circuits that have held that an unaccepted Rule 68 offer that provides complete relief is sufficient to render an individual plaintiff’s claim moot because it offers a quick and easy way to dispose of potentially major and costly class-like litigation.

Clause 27 – Employee Shareholder

The new employee shareholder status is aimed at small rapidly growing companies who want to create a flexible workforce without some of the constraints that are currently imposed by UK employment law.

Employee shareholders will receive a minimum of £2,000 of shares in their employing (or parent) company. In return, the employees will waive some of their employment rights as follows:

• No right to claim unfair dismissal (except where the dismissal is automatically unfair or it is for a discriminatory reason);
• No right to request flexible (part time) working arrangements (except soon after returning from parental leave);
• No right to a statutory redundancy payment; and
• No right to request leave to undertake study or training.

There’s no restriction on the type of shares that employers can issue and employers can require employee shareholders to forfeit their shares if they leave the company.

Conditions of the Scheme

Employee shareholder status is available to both new and existing employees; although companies are not able to force the status on existing employees (a dismissal for an employee’s refusal would be unfair). Companies can offer new employment, conditional upon the individual agreeing to be an employee shareholder.

The UK government had to make various concessions to the original form of employee shareholder that was proposed before the House of Lords would approve it:

• Employee shareholders must subscribe for a minimum of £2,000 of shares (market value at time of becoming beneficially entitled) and the employee must receive independent legal advice before entering into an employee shareholder agreement. Employers are liable to cover the reasonable cost of this legal advice and without such advice the employee shareholder status will be void and the individual will be an ordinary employee (albeit with £2,000+ worth of shares). This is in effect an up-front compromise agreement (waiver of claims) which has not previously been possible. The employer is still liable to pay for the advice even if the employee ultimately decides not to take the employer up on the offer.

• There is a seven day “cooling off” period following an offer of employee shareholder status from a company, during which time any acceptance by an employee of the status will not be binding and may be withdrawn.
• Employers must provide a written statement explaining (i) details of the rights that the individual is giving up and (ii) full details about the shares and the rights they carry, including, amongst other things, whether they carry any voting and dividend rights.

How Useful is the New Employee Shareholder Status?

Whilst commentators are generally of the view that the new scheme will be of limited use (and as some have suggested, that this is really just an opportunity for the UK Government to show they are trying to promote growth by relaxing regulation), perhaps there is some merit in providing entrepreneurial rapid-growth companies with the opportunity to offer cheap equity to staff, without the fear of significant financial repercussions should the employment relationship turn sour.

The scheme effectively allows companies in their early stages to experiment by hiring different employees with an array of skills until the ideal workforce is assembled. The cost to the company is some equity (which is forfeited by the employee upon leaving the company in any event) and the cost of paying for a couple hours of legal advice—a far cry from the cost of litigating a tribunal claim three years into the employment relationship. Arguably however, the increase in the qualifying period for unfair dismissal claims from one year to two has already achieved a level of flexibility far greater than this new status will and does not involve providing employees with any shares. In any event we remain sceptical, in light of the protective provisions demanded by the House of Lords, as to how many employees will be persuaded to give up unfair dismissal protection worth a possible £75,000 in exchange for £2000 worth of shares in a potentially high risk venture.

Keep up to date with employee shareholder and other employment law developments by following us on Twitter @OrrickEmpUK.

Arkansas

Act 1480, signed by Governor Mike Beebe on April 22, 2013, prohibits an Arkansas employer from requiring or requesting a current or prospective employee to (1) disclose his or her username or password for a personal social media account; (2) add an employee, supervisor or administrator to the list or contacts associated with the personal social media account; or (3) change the privacy setting associated with the personal social media account. The Act further prohibits employers from retaliating against current or prospective employees for exercising their rights under the Act. Under the Act, employers are permitted to view publically available information, are not liable for inadvertently receiving an employee’s login information, and may require access to an employee’s social media account if it is reasonably believed to be relevant to a formal investigation by the employer of allegations of an employee’s violation of federal, state or local laws or regulations or the employer’s written policies.

Violation of Title 11, Chapter 2 of the Arkansas Code may result in a fine of between $10 to $100, imprisonment for up to six months, and/or a misdemeanor conviction. It is not clear when this new law takes effect.

New Mexico

New Mexico’s governor, Susana Martinez, signed S.B. 371 into law on April 5, 2013. S.B. 371 makes it unlawful for a New Mexico employer to request or require a prospective employee to provide a password in order to gain access to the prospective employee’s account or profile on a social networking site or to demand access in any manner to a prospective employee’s account or profile. Unlike Arkansas’ law (and several other state laws), New Mexico does not prohibit employers from seeking access to their current employees’ social networking accounts. Further, the law does not limit an employer’s right to (1) have policies regarding work place internet, social networking or email use; (2) monitor employees’ usage of the employer’s electronic equipment; and (3) obtain information about a prospective employee that is in the public domain.

S.B. 371 goes into effect on July 1, 2013. Currently, there are no penalties for violating this new law.

Utah

On March 26, 2013, Governor Gary Herbert signed Utah’s Internet Employment Privacy Act (“IEPA”) into law. Under the IEPA, public and private employers are prohibited from asking an employee or job applicant to disclose login information for the employee or applicant’s personal internet account. It is also unlawful under the IEPA to retaliate against an employee or applicant for failing to disclose personal login information. Employers may, however, (1) request login information to gain access to the employer’s electronic communications device, account or service; (2) discipline or discharge an employee for transferring the employer’s proprietary or confidential information or financial data to the employee’s personal internet account without authorization; (3) investigate certain misconduct that involved the use of the employee’s personal internet account; (4) restrict or prohibit employees from accessing certain websites while using the employer’s electronic communications device or computer network; (5) monitor, review, access or block electronic data and communications stored on the employer’s electronic communications device or network; (6) screen certain employees and job applicants; and (7) view information that is available in the public domain.

The IEPA creates a private right of action for aggrieved employees or job applicants to recover up to $500 in damages. It goes into effect on May 14, 2013.

Social Media Legislation Pending in New Jersey

New Jersey’s A.B. 2878 prohibits employers from requiring current and prospective employees to disclose login information for accessing personal social networking sites or inquiring as to whether they have personal social networking accounts. The Bill received final legislative approval on March 21, 2013 and is currently awaiting Governor Chris Christie’s signature.

Recommendations for Employers

Employers in Arkansas, New Mexico and Utah, as well as those in California, Illinois, Maryland and Michigan, should review their policies and practices to ensure that they are not asking prospective and, in most cases, current employees for login information for their personal social media accounts. In addition to potentially violating state social media legislation, they may also increase their exposure under state and federal anti-discrimination laws if employers view information regarding current or prospective employees’ race, national origin, religion, age, disability, or other protected status information.

The DOL also clarified that:

1. the definition of a “son or daughter” is defined by the definition of a disability under the ADAAA, which “shall be construed in favor of broad coverage;”
2. the determination of whether an adult son or daughter is incapable of self-care under the FMLA focuses on whether the individual currently needs active assistance or supervision in performing three or more activities of daily living (or ADLs) including “grooming, hygiene, bathing, dressing and eating;” or instrumental activities of daily living (or IADLs) including “cooking, cleaning, shopping, taking public transportation, paying bills, maintaining a residence, using telephones, and using a post-office, etc.;”
3. a serious health condition is an illness, injury impairment, or physical or mental condition that involves inpatient care or continuing treatment by a healthcare provider; and
4. for a parent to take FMLA leave to care for an adult son or daughter, the parent must be “needed to care” for that son or daughter due to the serious health condition.

The DOL has provided examples that demonstrate how these rules should be applied. One such example: An employee’s 25-year old son has diabetes and attends regular kidney dialysis appointments, but lives independently and does not need assistance with any ADLs or IADLs. Although the young man’s diabetes qualifies as a disability under the ADA because it substantially limits a major life activity (i.e., endocrine function), he will not be considered an adult “son” for purposes of the FMLA because he is capable of providing daily self-care without assistance or supervision. If the son later suffered a skiing accident that did not render him disabled within the meaning of the ADA (because it did not result in a physical or mental impairment that substantially limits one or more of his major life activities), and was admitted to a hospital overnight for observation, his parent would not be entitled to take FMLA leave to care for him because he is over the age of 18 and not incapable of self-care due to a mental or physical disability. If the son later became unable to care for his own hygiene, dress himself, and bathe due to complications of his diabetes, he would be considered an adult “son” as he is incapable of self-care due to a disability. The son’s diabetes would be both a disability under the ADA and a serious health condition under the FMLA because his condition requires continuing treatment by a doctor (e.g., regular kidney dialysis appointments). If his parent is needed to care for him, his parent may therefore take FMLA-protected leave to do so.

On April 25, 2012, the EEOC issued its “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964” (“Updated Guidance”), declaring that criminal record exclusions have a disparate impact based on race and national origin. The Updated Guidance is a warning to private sector employers that they could face litigation unless they significantly restrict the use of arrest and conviction records in hiring, promotion, and other employment decisions. The Updated Guidance came on the heels of a $3.1 million settlement with an employer after the EEOC found that the employer eliminated from consideration more than 300 African-American job applicants due to their criminal records.

Of course, ex-offenders are not a protected class under Title VII and the EEOC does not have any express statutory authority to prohibit discrimination against ex-offenders on the basis of their criminal record. However, the EEOC’s theory is that excluding individuals from hiring consideration based solely on the presence of a criminal record has a disparate impact on African-Americans and Hispanics, as they are more likely to have criminal records than other demographic populations. Thus, evidence of a blanket exclusion may then be used by the EEOC to justify an investigation into the employer’s practices.

If an investigation is commenced, the employer will be required to demonstrate to the EEOC that it performed a targeted screening of applicants, followed by an “individualized assessment” of those applicants who were flagged for their criminal records. The employer must be able to prove that it had a “business necessity” not to hire the ex-offender or that the ex-offender’s offense disqualified him or her for a specific job.  The EEOC states that a targeted screening should evaluate the following factors: (i) the nature and gravity of the offense or conduct; (ii) the time that has passed since the offense or conduct; and (iii) the nature of the job held or sought. In other words, employers should establish a policy that defines and limits the use of conviction records based on the type of job involved. The EEOC then recommends the employer provide written notice to the applicants who have been flagged based on their criminal history (in case there is an error in the record or mistaken identity). The employer should also provide each flagged applicant an opportunity to explain the circumstances of the crime and conviction, after which the employer should conduct an assessment of the facts as they apply to the particular job and the exposure to danger or risk, the age at time of conviction, the number of offenses, post-conviction conduct, employment or character references, and other factors suggested in the Updated Guidance.

Earlier this year, the EEOC admitted to the U.S. Commission on Civil Rights that the EEOC’s guideline was essentially based on a hunch, yet it has no intention to revise the guideline. At the hearing, the EEOC representative stated that the EEOC does not have any studies regarding the job performances of ex-offenders compared to non-offenders, nor does it have any statistical evidence to support or disprove the EEOC’s theory that the use of criminal background checks unlawfully disadvantages ex-offenders that would otherwise perform just as well as non-offenders. Employers were hoping the hearing would provide clarification to many of the glaring issues presented by the guidance, but no clarification was provided.

Another troubling issue is that the Guidance lacks any allowance for employers who must comply with both state law as well as the EEOC’s guidance when state laws require criminal background checks. To date, the EEOC has simply stated that an employer’s compliance with state law is not a defense to an EEOC charge under the guidance. In fact, an employer’s compliance with a state law that requires background checks in a certain industry may invite EEOC investigation of the employer to determine whether the employer is conducting the EEOC’s required “individualized assessment for each candidate,” so employers should use particular caution in this area.

Employers who perform background checks are strongly cautioned to perform an audit of their hiring policies and procedures to determine compliance with the EEOC’s guidance, as well as with state laws.

Bill number 814-A makes it unlawful for a New York City employer to refuse to hire an applicant for employment on the grounds that he or she is unemployed, unless there is a “substantially job-related reason” for doing so. In addition, the Bill prohibits New York City employers from basing an applicant’s compensation on the applicant’s unemployment status. The Bill also makes it unlawful to state in a job advertisement that current employment is a requirement or qualification for the job, or that the employer will not consider individuals that are currently unemployed.

The new law, however, does not otherwise restrict an employer from inquiring into the circumstances surrounding the applicant’s separation from prior employment. Employers may also advertise and consider “substantially job-related qualifications,” including but not limited to: a current and valid professional or occupational license; a certificate, registration, permit, or other credential; a minimum level of education or training; or a minimum level of professional, occupational, or field experience. The Bill also does not prohibit an employer from hiring only its incumbent employees or otherwise give hiring priority to employees currently employed by the employer.

The new law also provides for a disparate impact claim under the theory of liability that the employer’s policies or practices resulted in a disparate impact on the unemployed. An employer could escape liability, however, if it establishes an affirmative defense that the employer’s policy or practice is based on a substantially job-related qualification (defined above) or otherwise did not contribute to the disparate impact. Where an aggrieved applicant is able to establish a disparate impact, the applicant will not be required to specifically identify which of the employer’s policies or practices caused the disparate impact. Unlike similar laws in New Jersey, Oregon, and the District of Columbia that only permit administrative agency claims, New York City’s law permits aggrieved job applicants to file a private civil action in court seeking damages, injunctive relief, punitive damages, and reasonable attorneys’ fees and costs.

New York City’s Mayor Michael Bloomberg had previously vetoed the Bill and called it “misguided” in its use of the subjective “substantially job related” standard. The Mayor was concerned that the Bill provides insufficient guidance to employers on how to engage in the hiring process without running afoul of the new law, and he warned of an impending flood of potentially baseless and costly litigation likely to result if the Bill were passed. Nevertheless, the City Council passed the Bill over the Mayor’s veto.

Over the next three months, New York City employers would be well advised to review their applications and job advertisements and to train their managers and hiring decision makers to avoid making decisions or imposing conditions that might violate this new law.

In Comcast, subscribers accused the cable giant of violating antitrust laws by using “clustering” methods to increase its share of the local cable market. During class certification proceedings, Plaintiffs’ expert presented four damages theories and a damage calculation model to show that classwide damages could be ascertained through “common methodology.” The District Court accepted only one of Plaintiffs’ four damages theories, but still certified the class even though the expert acknowledged that his model did not limit damages to the single theory that the court accepted. On appeal, the Third Circuit held that Comcast’s arguments about Plaintiffs’ damages approach amounted to a merits issue that should not be considered at the class certification stage.

The Supreme Court overturned, striking down the Third Circuit’s refusal to hear arguments about damages when ruling upon class certification. In a key footnote, Justice Scalia wrote that the issue was whether “certification was improper because respondents had failed to establish that damages could be measured on a classwide basis.” Heavily citing Wal-Mart, the Court explained that all Rule 23 requirements must be satisfied and that damages—like liability—must be “capable of measurement on a classwide basis.” Comcast, slip op. at 7. Because Plaintiffs’ damages model was dependent on several theories that were rejected by the trial court, the Supreme Court held that “[q]uestions of individual damage calculations [would] inevitably overwhelm questions common to the class,” defeating predominance and rendering class certification improper. Id. at 7-8.

The strongly worded dissent challenged whether damages issues are sufficient to bar class certification in cases certified under Rule 23(b)(3), stating that “a class may obtain certification under Rule 23(b)(3) when liability questions common to the class predominate over damages questions unique to class members.” Id. at 5. Nevertheless, Comcast stands for the clear proposition that courts should scrutinize not only whether liability can be adjudicated on a classwide basis, but whether plaintiffs have satisfied this requirement for damages issues when they seek certification under Rule 23(b)(3).

Under CAFA, federal courts have original jurisdiction over class actions if the proposed class has more than 100 members, the parties are minimally diverse, and the amount in controversy exceeds $5 million. In Standard Fire, the plaintiff’s state court class action complaint included an affidavit stipulating that the class would seek less than $5 million in damages. Citing CAFA, the defendant removed the case to federal district court and presented evidence that damages would exceed $5 million. Although the district court agreed that the amount in controversy exceeded CAFA’s $5 million threshold, it remanded the case based on plaintiff’s stipulation. The Eighth Circuit refused to hear the defendant’s appeal, but the Supreme Court accepted defendant’s petition citing a split among the circuit courts.

In a unanimous opinion, the Supreme Court rejected the plaintiff’s attempt to avoid CAFA’s jurisdictional requirements, explaining that a class action plaintiff cannot bind proposed class members until the case is certified. Because plaintiff’s pre-certification stipulation was not binding on the proposed class, plaintiff did not alter the amount in controversy and the district court “should have ignored the stipulation.” The Court thus vacated the district court’s judgment and remanded the case.