Labor Law

Department of Labor Rejects Title VII Framework in SOX Whistleblower Cases

Whistle

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.

The Affordable Care Act and Lactation Breaks

3 Minutes to 12:00

As the nation awaits the Supreme Court’s opinion on the constitutionality of its individual health insurance mandate, some lesser-known provisions of the “Patient Protection & Affordable Care Act” (a.k.a. “Obamacare”) have received short shrift.  For instance, the Affordable Care Act also amended the Fair Labor Standards Act (“FLSA”) and requires employers to provide nursing employees with “a reasonable amount of break time to express milk as frequently as needed” for up to one year after a child’s birth.  The law also requires all employers subject to FLSA to provide employees with a private place to express milk that is not a bathroom.

While at first blush, this law sounds rather broad, it contains several limitations: READ MORE

Ninth Circuit Limits Federal Criminal Liability Reach of Computer Fraud and Abuse Act to Hackers Only, Not Employees in Violation of Company Policy

Email

Employees cannot be criminally prosecuted by the federal government for breach of an employer’s computer policies, according to the Ninth Circuit’s April 10, 2012 en banc opinion in U.S. v. Nosal.  The 9-2 en banc panel (with a strongly worded dissent) opted to narrowly construe the Computer Fraud and Abuse Act (“CFAA”) to avoid creating a world in which employees could be held criminally liable for “workplace dalliances” like accessing social media sites which may be in violation of a company policy that work computers may be used for business purposes only.  The opinion reversed the Ninth Circuit’s earlier April 28, 2011 panel decision and further deepened a split among circuits on this issue. READ MORE

D.C. Circuit Enjoins NLRB Posting Requirement

Gavel and Hundred-Dollar Bill

In a key update regarding an issue that will affect all employers, on April 17, 2012 the U.S. Court of Appeals for the District of Columbia Circuit issued an injunction requiring the National Labor Relations Board (“NLRB”) to preserve the “status quo” in its ongoing push to require employers to post its controversial “Employee Rights Notice” informing employees of their rights to organize unions.  As a result of this order, the NLRB is prohibited from enforcing its new requirement that employers post the notice by April 30, 2012.  The NLRB has appropriately acknowledged the Court’s injunction, stating on its website that “The DC Circuit Court of Appeals has temporarily enjoined the NLRB’s rule requiring the posting of employee rights under the National Labor Relations Act” and that “[t]he rule, which had been scheduled to take effect on April 30, 2012, will not take effect until the legal issues are resolved.  There is no new deadline for the posting requirement at this time.”

The D.C. Circuit’s order is an important and welcome “time out” given the uncertainty of the “legal issues” surrounding the NLRB’s posting requirement.  Just last week, the U.S. District Court for the District of South Carolina granted summary judgment to the U.S. Chamber of Commerce in its bid to invalidate the posting requirement, holding that the posting requirement was in violation of the Administrative Procedures Act and that the NLRB’s role is to be “reactive” rather than “proactive.”  But earlier this year, the U.S. District Court for the District of Columbia upheld the NLRB posting requirement against a challenge by the National Association of Manufacturers.  That case is presently on appeal, the outcome of which will determine the next development in this saga.

For now, at least, employers should breathe a sigh of relief and know that they do not need to post the NLRB’s “Employee Rights Notice” until its legality is determined by the courts.

Stay tuned for further developments.

Brinker‘s Effect on California Meal and Rest Periods

Coins and Hourglass

In a highly anticipated decision largely hailed as a victory for employers, the California Supreme Court, in Brinker v. Superior Court, No. S166350 (Cal. April 12, 2012), clarified employers’ obligations to provide meal and rest periods under California law and provided guidance regarding class certification issues in wage-and-hour litigation. On the most contentious of the issues raised in Brinker—the nature of an employer’s duty to provide meal periods under California law—the court held that an employer’s obligation is simply to relieve the employee of all duty for the designated period, with the employee free to use the time for whatever purpose he or she desires, but the employer need not ensure that no work is done. Thus, if an employer relieves an employee of all duty, but the employee continues to work, the court held that the employer will not be liable for premium pay. The court cautioned, however, that an employer may not undermine a formal policy of providing meal periods by coercing employees to skip breaks, creating incentives for employees to forego breaks, or otherwise encouraging employees not to take legally protected breaks. READ MORE

Credit Checks & Employment Discrimination—State Legislatures and the EEOC Take Action

Faced with the current uncertain economic climate and concerns regarding the plight of the unemployed, several state legislatures have recently passed or introduced bills restricting employers and prospective employers from using credit checks in hiring and personnel decisions. For example, on October 12, 2011, California Governor Jerry Brown signed AB 22 into law, creating California Labor Code section 1024.5, which prohibits California employers from using a consumer credit report for employment purposes except in limited circumstances. In passing this law, California joined six other states (Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington) in recently enacting laws restricting the use of credit checks in employment decisions. And the trend is expected to continue. As of February 13, 2012, 36 bills in 19 states and the District of Columbia have been introduced or are pending concerning the use of credit information in employment decisions.  Click here for a list of the bills. READ MORE