CLOSE X
RSS Feed LinkedIn Twitter Facebook
Search:
FMG Law Blog Line

Updates on the “Joint Employer” Standard

Posted on: October 10th, 2017

By: Tim Holdsworth

More than two years have passed since the National Labor Relations Board (“NLRB”) handed down its new and controversial joint employer standard in Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015). As you may recall, that decision greatly expanded the standard under which an entity could be found as a joint employer under the National Labor Relations Act (“NLRA”). In departing from its own well-established standards, the NLRB announced that they will no longer require a joint employer to possess and exercise authority to control employees’ terms and conditions of employment, but instead will find sufficient control if the entity merely reserves this authority. They also announced they will no longer require the employer’s control to be exercised directly and immediately. Instead, the NLRB declared that control exercised indirectly, such as through an intermediary, can establish the requisite control.

The U.S. Department of Labor (“DOL”) adopted a similar standard for who it considered a “joint employer” under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act shortly thereafter.

Neither of these controversial steps has fared well. The Browning-Ferris decision has been under attack in courts, while the DOL rescinded its guidance earlier this year under new Labor Secretary Alex Acosta.

Legislative efforts also have been made to give further guidance to businesses that have struggled with the uncertain and convoluted joint employer scheme. Recently, the U.S. House of Representatives Education and Workforce Committee approved a bill that would amend both the NLRA and FLSA to require that a company exert “direct, actual and immediate” control over workers to be considered an employer.

We will continue to monitor this legislation and provide any updates. For now, however, employers need to know that the Browning-Ferris standard is still in effect.

If you have any questions about federal, state, or local wage and hour laws, please contact Tim Holdsworth at [email protected] or any of the attorneys in FMG’s Labor & Employment Law Section.

Repaying Old Debts – The Supreme Court Limits FDCPA Liability for Scheduling Time-Barred Claims in Bankruptcy

Posted on: October 9th, 2017

By: Matthew M. Weiss

Earlier this year, the Supreme Court handed a victory to debt collectors when it held that the scheduling of a time-barred claim in bankruptcy was not a violation of the Fair Debt Collection Practices Act (FDCPA).

In Midland Funding, LLC v. Johnson, Aleida Johnson filed for personal bankruptcy under Chapter 13 of the Bankruptcy Code in the Southern District of Alabama. Midland Funding, LLC (Midland) filed a proof of claim asserting a credit card debt of $1,879.71. Johnson’s last charge on the account was in 2003, more than 10 years before Johnson’s bankruptcy filing, even though Alabama’s statute of limitations on the collection of debts was six years. Johnson objected to the claim and it was disallowed. Johnson then brought suit against Midland seeking actual damages, statutory damages, attorneys’ fees, and costs for a violation of the FDCPA, 15 U.S.C. § 1692k. After the district court determined that the FDCPA was inapplicable and dismissed the lawsuit, the Eleventh Circuit Court of Appeals reversed the decision, and Midland appealed to the Supreme Court.

In a 5-3 decision (with Justice Gorsuch abstaining), Justice Breyer, writing for the majority, first determined that a claim under the Bankruptcy Code was a “right of payment”, and that a creditor has the right to payment of a debt even after the limitations period expires. The Court also noted that a claim does not automatically have to be enforceable. Further, the definition of claim under the Bankruptcy Code provided that the claim could be “contingent” or “disputed”. Additionally, the Court found that the running of the statute of limitations was meant to be asserted as an affirmative defense by the debtor after the creditor asserted a claim.

Turning to whether the filing of a time-barred claim was “unfair” or “unconscionable” under the FDCPA, the court distinguished bankruptcy from civil cases in which creditors were subject to FDCPA liability for bringing suit on time-barred claims because “a consumer might unwittingly repay a time-barred debt” in a civil case. The Court reasoned that unlike civil cases, the consumer initiates bankruptcy proceedings, and are unlikely to pay a stale claim just to avoid going to court. Additionally, the Court said that the presence of knowledgeable trustees and procedural rules provided additional protection to debtors. The Court also noted that by filing a stale claim that was subsequently disallowed, that claim would be forever discharged, removing the debt from the debtor’s credit report and “potentially affecting an individual’s ability to borrow money, buy a home, and perhaps secure employment.” For all of these reasons, the Court concluded that the filing of a stale claim in bankruptcy was not “unfair” or “unconscionable” under the FDCPA.

The Supreme Court’s decision in Midland Funding legitimizes a major tool of debt collectors, who now can freely assert time-barred claims in bankruptcy proceedings with the hope that both the debtor and the bankruptcy trustee fail to assert a statute of limitations defense. As Justice Sotomayor wrote in her dissent, because debt buyers assume that a certain percentage of old debt will be written off as uncollectible, the Supreme Court’s decision will likely make consumer debt a more valuable commodity based on the assumption that a greater percentage of that debt will be collected in bankruptcy proceedings. Sotomayor had specifically predicted that “debtor collectors may file claims in bankruptcy proceedings for stale debts and hope that no one notices that they are too old to be enforced.”

In light of the Supreme Court’s decision, bankruptcy debtors should be extra vigilant about reviewing claims filed in their bankruptcy cases to determine whether a statute of limitations affirmative defense can be asserted. Conversely, creditors should not become too comfortable because, even though the Supreme Court’s decision precludes FDCPA liability for filing time-barred bankruptcy claims, the Supreme Court expressly declined to extend its holding to creditors who assert time-barred claims outside of bankruptcy.

If you have any questions or would like more information, please contact Matthew Weiss at [email protected].

 

Debate Over the ELD Mandate Intensifies

Posted on: October 6th, 2017

By: Parker M. Green

The debate over mandatory ELDs continues to intensify as the December 18th compliance deadline approaches. With less than 75 days until the deadline (FMG’s compliance countdown), some truck drivers are now resorting to desperate measures to voice their displeasure over the federal mandate. The best example occurred in Sacramento, CA earlier today. According to news reports, a line of commercial trucks formed a blockade across all lanes of traffic on Highway 99, which prevented other vehicles from getting around. Some of the truck drivers even completely stopped in the middle of Highway 99. The involved truck drivers call their protest “Operation Black and Blue,” which they describe as a nationwide effort by commercial drivers. It remains to be seen whether their form of protest spreads to other metropolitan areas and highways.

For additional information on the ELD mandate, please refer to the law journal article that Parker Green co-authored with fellow FMG attorneys Wayne Melnick and Matt Grattan here.  If you have any questions or would like more information, please contact Parker M. Green at [email protected].

Third Circuit Reminds Employers To Draft Compromise Agreements Carefully

Posted on: October 6th, 2017

By: Mark C. Stephenson

On August 12, 2104, Craig Zuber suffered a work-related injury, and then filed a workers’ compensation claim and took medical leave. He returned to work on August 14 and requested a further week of medical leave on August 17, 2014, which was granted. Zuber returned to work on August 26. On September 10, department chain Boscov’s fired Zuber. Six months later, on April 8, 2015 Zuber signed a Compromise and Release Agreement before the PA Department of Labor and Industry Workers’ Compensation office. In response, Zuber sued under the FMLA and Pennsylvania common law, which the federal district court dismissed based on the agreement’s express terms.

Boscov’s countered by contending that Zuber’s suit was barred as the result of the compromise reached in the state administrative proceeding. The agreement stated that “Employer and Employee intend for the [Agreement] to be a full and final resolution of all aspects of the … alleged work injury claim and its sequela whether known or unknown at this time.” The agreement further stated that “Employee is forever relinquishing any and all rights to seek any and all past, present and/or future benefits in connection with the alleged work injury,” and required the Employee to acknowledge that if the agreement were to be approved by a workers’ compensation judge, his claim would be closed forever and that his appellate rights waived.

Looking to solely to contract law, the Third Circuit rejected Boscov’s expansive reading of the agreement’s waiver provision as well beyond the contemplation of the parties in reaching their compromise of claims. Boscov’s argued that the term “sequela,” commonly understood as a medical term referencing the aftermath of sickness or injury, encompassed any and all rights that Zuber may have had to maintain a legal claim against the Employer arising from his work injury, no matter how distantly. The Third Circuit found support in its narrow reading of the agreement in the document’s structure, which was expressly stated to address Zuber’s work-related injuries only, and a common sense reading of the workers compensation case release and its limited purpose.

The decision serves as a useful cautionary warning to employers to be clear when stating what rights employees waive when compromising their claims. Here, post hoc, Boscov’s tried and failed to recast a limited agreement into a global resolution of claims between the parties. The Third Circuit makes clear that it will not allow employers to beat a narrow shield secured in settling a lesser claim into a broad sword to defeat an employee’s ensuing claims that are well outside the intended scope of the parties’ compromise.

If you have any questions or would like more information, please contact Mark C. Stephenson at [email protected].

 

Qualified Immunity and The First Amendment – Why Plaintiffs Continue To Struggle Proving “Clearly Established Case Law”

Posted on: October 3rd, 2017

By: Bradley T. Adler and Will Collins

The recent Eleventh Circuit decision Gaines v. Wardynski, 2017 U.S. App. LEXIS 18276, No. 16-15583 (11th Cir. Sept. 21, 2017), is a good reminder of the importance and value of qualified immunity as a defense to litigation in the Eleventh Circuit Court of Appeals (federal appeals court covering Georgia, Florida and Alabama).  In Gaines, a school teacher, Lynda Gaines, filed a Section 1983 claim against the school superintendent, Dr. Casey Wardynski, alleging violations of her First Amendment right of freedom of speech and freedom of association.  After Gaines filed suit and before discovery commenced, Dr. Wardysnki filed a motion to dismiss based on qualified immunity.  The district court denied the motion and Dr. Wardysnki appealed.

In short, Gaines’ claim arose out of a dispute in May of 2013 when Gaines’ father, a county commissioner, “blasted” the Hunstville City Board of Education and Dr. Wardynski for recent actions they were taking.  Gaines, who was a teacher in the Huntsville school system at the time, alleged that, after the article was published, she was denied a promotion to one of three open teaching positions in retaliation for her father’s comments. While the district court denied Dr. Wardynski’s motion for summary judgment based on qualified immunity, the Eleventh Circuit reversed.  Through its decision, the Eleventh Circuit reminded practitioners that, in order for a constitutional right to be clearly established by law under the doctrine of qualified immunity, the clearly established law must be specifically particularized to the facts of the case. The Eleventh Circuit concluded in Gaines that the case law that the district court and Gaines cited “was not particularized to the facts of the case, but rather merely set out First Amendment principals at a high level of generality.”  As a result, the Eleventh Circuit concluded that the defendants had not violated a clearly established constitutional right.

As a part of its decision, the court emphasized that whether a right is clearly established turns on whether the governmental official had fair warning.  According to the court, there are three methods for a plaintiff to show fair warning: (1) citing a materially similar case already decided; (2) pointing to a broader clearly established principle that should control the novel facts of the situation; and (3) where the conduct of a situation so obviously violates the constitution, prior case law is unnecessary.

Here, the court quickly moved past the second and third methods, which are rare and generally involve cases of egregious conduct. Instead, this decision turned on whether there was a materially similar case already decided. The Eleventh Circuit stressed that the “materially similar case” analysis is not a general inquiry, but rather must (1) be particularized to the facts; (2) be particularized to the context; and (3) give notice to the governmental official.  As a part of its analysis, the Eleventh Circuit stopped short of saying that the facts must be directly on point, but emphasized the facts must be close enough to put the “question beyond debate” and must come from a previously-issued decision of the United States Supreme Court, the governing federal court of appeals, or the applicable state supreme court.

In the end, the Gaines decision emphasized just how difficult it is for a plaintiff to overcome qualified immunity because of the level of particularity required for a case to be materially similar in facts and context.  As a result, when government officials are facing suits for constitutional violations, it is critical for them to remember to assess the potential use of a qualified immunity defense at the outset of the case.

If you have any questions or would like more information, please contact Bradley Adler at [email protected] or Will Collins at [email protected].