“Ambush Election Rules” or Big Win for Labor Unions? Either Way, Changes May Be in Store for the Union Organizing Process

With a Notice of Proposed Rulemaking (“NPRM”) issued earlier this month, the National Labor Relations Board’s controversial proposed regulations on union elections are once again making headlines. A near reincarnation of a 2011 proposal that was ultimately struck down, the proposed regulations look to “streamline” the union election process. The changes, however, make some substantive revisions that may negatively impact employers. Read More

The High Cost of Hiring Unpaid Interns

Given the difficulty of finding a job in today’s economy, unpaid internships are becoming increasingly popular, particularly for students looking to gain resume-boosting experience. Yet just because someone is willing to work for free and will derive some benefit from an unpaid internship, it does not make it legal under state and federal law. Class litigation regarding unpaid interns is on the rise, and likely will increase even more given the recent ruling in Glatt v. Fox Searchlight PicturesRead More

Labor Courts in Germany extend Employer’s Rights to Monitor and Control Employee IT Devices

In a series of recent verdicts since 2011, Higher Labor Courts in Germany have increased the employer’s scope to monitor and control employees’ use of provided company IT and to sanction breaches of contract and statutory law discovered hereby. While the protection of the employee’s privacy and right to self-determination regarding his personal data had been the focus of the jurisdiction in the past, labor law jurisdiction has now strengthened the employer’s rights of ownership (as to their company IT) and of profession. This enables employers to track unlawful action committed by their employees on electronic devices in a more efficient way and will support employers particularly in the maintenance of their business operations, in litigation procedures against employees as well as in internal company (compliance) investigations.

1. Verdict by the Higher Labor Court Berlin-Brandenburg from February 16, 2011 (4 Sa 2132/10)

Until 2011, the employer’s possibility to access and control the computer of an employee, which was furnished by the employer in order for the employee to fulfill his contractual obligations, with regard to possible breaches of law depended on whether the employer had allowed the use of such computer for business purposes only or also for private use. According to lower German labor courts and German scholars, the grant of private use of company IT qualified employers as “providers of telecommunication services” in the sense of the German Telemedia Act (Telemediengesetz; “TMG”) and German Telecommunications Act (Telekommunikationsgesetz; “TKG”) to the effect that the employers were deemed to be subject to the requirements of the “secrecy of telecommunications” (Fernmeldegeheimnis). Such secrecy of telecommunication bans the respective service provider from reviewing “the contents and the detailed circumstances” of any communication that takes place via its communication channels. Lower German labor courts and German scholars argued that, due to the grant of private use of email and internet, employers could not be treated in a different way than professional providers of telecommunication services, such as AOL or T-Mobile, as the respective communication would no longer only relate to internal affairs of the company. Instead, there would be a risk that the employer takes note of private communication as well even if he intends to check business communication only. Read More

California Court of Appeal Smacks Down Unfair Competition Claim Based on Cursory Pleading

In Aleksick v. 7-Eleven, Inc., California’s Fourth District Court of Appeal provided a stark reminder that claims brought under California’s Unfair Competition Law (“UCL”) must specifically invoke an underlying law or public policy in order to be properly pled.  The plaintiff in Aleksick alleged that 7-Eleven, which provides payroll services to its franchisees, used a payroll system that improperly converted partial hours worked from minutes to hundredths of an hour.  According to the plaintiff, this practice of “truncating” hours shorted employees a few seconds of time for every converted partial hour and thereby violated the UCL, which prohibits “any unlawful, unfair or fraudulent business act or practice.”  The plaintiff’s complaint, however, did not specify any underlying Labor Code section as a basis for plaintiff’s UCL claim.

The court affirmed the trial court’s grant of summary judgment for 7-Eleven on two grounds.  First, the court held that the plaintiff’s complaint failed to specifically allege a statutory predicate for the UCL claim of “unlawfulness,” and that plaintiff’s failure in this regard constituted a forfeiture of her UCL claim.  Second, the court held that, even absent forfeiture of the UCL claim, the claim necessarily failed against 7-Eleven because 7-Eleven was not the plaintiff’s employer.  Rather, under both the applicable Wage Order and the common law, the individual franchisee was the plaintiff’s employer.  As the court observed, only the employer has the duty to pay wages.  Thus, the plaintiff could not assert a UCL claim against 7-Eleven, whether based on an assertion of “unfair” or “unlawful” business practices.

Aleksick is a helpful decision for employers because it reinforces a pleading rule that is not always followed by plaintiffs’ attorneys: complaints alleging UCL claims must specifically invoke the statutory or public policy bases underlying the UCL claims.  It also could cause plaintiffs’ attorneys to think twice before naming franchisors in lawsuits involving allegations of unpaid wages.

New Decision Rejects D.R. Horton Reasoning

A new ruling from the Northern District of California, Morvant v. P.F. Chang’s Bistro, Inc. (May 7, 2012), confirms the enforceability of class action waivers despite contrary California law and the National Labor Relations Board’s opinion in D.R. Horton. Read More

The New York Court of Appeals Latest Word on Bonus Compensation Disputes

The case of Ryan v. Kellogg Partners Institutional Services, presents a scenario familiar to many employers – a former employee claims that he is entitled to bonus compensation based upon oral assurances he was given by senior management, while his employer responds that the employee has no right to any bonus because bonuses are discretionary. Despite upholding the employee’s claim for a bonus, the New York Court of Appeals in Ryan actually reaffirmed the well-established New York principle that employees have no legal right to unvested, discretionary bonuses. Significantly, the Court of Appeals confirmed that properly drafted discretionary bonus policies could vitiate a bonus claim, but that the at-will statements in the employment application and handbook that Kellogg was relying upon simply did not meet the standard. The Ryan Court also restated its previous holding in Truelove v. Northeast Capital & Advisory, explaining that discretionary bonuses linked to an employer’s financial success do not constitute “wages” under the New York Labor Law, and that a bonus does not vest and become earned until the conditions of the employer’s bonus plan are met, which may include the requirement that the employee be employed by the employer at the time the bonus is paid.

Department of Labor Rejects Title VII Framework in SOX Whistleblower Cases

A new opinion from the Department of Labor (“DOL”) makes clear that the department will treat the burden of proof in whistleblower retaliation claims under the Sarbanes-Oxley Act (“SOX”) differently from typical retaliation claims under Title VII.  In an opinion issued in late MarchZinn v. American Commercial Lines Inc. – the DOL’s Administrative Review Board (“ARB”) reversed an administrative law judge’s decision that applied Title VII’s “burden shifting” framework to dismiss Zinn’s whistleblower retaliation claim.  Specifically, the ARB removed the third prong of the traditional “burden shifting” analysis as discussed further below.

Under Title VII, once an employee makes a prima facie case of retaliation, the burden shifts to the employer to provide a legitimate non-retaliatory reason for taking the adverse employment action at issue in the case.  If an employer provides such a reason, the burden then shifts back to the employee to show that the employer’s reasons were actually a pretext for retaliation.  In Zinn, the ARB found it was incorrect to apply this framework and “conflat[e] the SOX burden of proof standard with the Title VII burden of proof.”  Under SOX, the employee needs to show that she engaged in protected activity that contributed to an adverse employment action.  The burden then shifts to the employer to demonstrate, by clear and convincing evidence, that it would have taken the same adverse action absent the protected activity.  However, the ARB clarified that it was unnecessary for the employee to then show that the employer’s actions were pretextual.  Instead, once an employer produces evidence to support that its actions were non-retaliatory, an administrative law judge should “weigh the circumstantial evidence as a whole” to “gauge the context of the adverse action in question” and determine whether the case should proceed.  With this distinct standard and its rejection of the familiar Title VII framework, the DOL has made it evident that SOX whistleblower cases will continue to be a unique and developing area of employment law.

California Supreme Court Concludes No Attorney’s Fees For Meal and Rest Break Suits

California’s highest court held that a party who prevails on a claim for an alleged failure to provide meal or rest breaks is not entitled to attorney’s fees under either Section 1194 or Section 218.5 of the California Labor Code. Kirby v. Immoos Fire Protection, Inc., Cal. Sup. Ct. S185827 (April 30, 2012). Section 1194 is a “one-way fee-shifting statute” that authorizes an award for attorney’s fees only to employees who prevail on minimum wage or overtime claims. By contrast, Section 218.5 is a “two-way fee-shifting statute” that authorizes either an employee or an employer to recover attorney’s fees as a prevailing party in an action brought for the nonpayment of wages.

The court concluded that neither of those sections is applicable to claims for unpaid meal or rest breaks as such claims do not fit under the terms “minimum wage” or “overtime” specified in Section 1194, or the terms “nonpayment of wages” used in Section 218.5. Thus, employers cannot recover attorney’s fees for failed meal and rest break actions. On the other hand, neither can employees. Reading this decision in the context of the California Supreme Court’s April 12, 2012 Brinker decision, plaintiffs’ lawyers may be more cautious as to which meal and rest break claims they pursue as they will not be entitled to recover attorney’s fees as a result of those in which they prevail.

EEOC Issues New Enforcement Guidance Regarding Criminal Background Check Policies

On Wednesday, April 25, 2012, the Equal Employment Opportunity Commission (“EEOC”) issued new enforcement guidance regarding the use of criminal conviction and arrest records in employment decisions. The EEOC has had a long-standing policy that, unless job-related and justified by business necessity, a policy or practice of denying employment because an applicant has a criminal record violates Title VII. The new enforcement guidance, however, emphasizes EEOC’s presumption that consideration of a criminal history is unlawful, and undoubtedly illustrates the increased scrutiny under which EEOC will review criminal background check policies. Click here to view the new guidance on the EEOC’s website. Read More

EEOC: Gender Identity Discrimination Covered by Title VII

In a decision issued April 23, 2012, the EEOC held that gender-identity discrimination-or discrimination against transgender individuals because they are transgender-constitutes sex discrimination under Title VII. This decision builds on the Supreme Court’s decision in Price Waterhouse v. Hopkins in 1989, which held that the prohibition against sex discrimination includes protection for people who do not conform to gender stereotypes. The EEOC also held that, even if stereotyping was not involved, an employment decision made on the basis of the fact that an employee had a change of sex would be considered sex discrimination under the law. Since transgender employees report facing workplace discrimination at high levels, this decision, coupled with an increasing number of states that now include sexual identity as a protected category under their anti-discrimination statutes, may spark an increase in claims brought on this basis.