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FMG Law Blog Line

Archive for November, 2014

NLRB Continues to Defy Courts on Issue of Class Action Waiver

Posted on: November 21st, 2014

 

By: Nina Maja Bergmar

On October 28, 2014, the National Labor Relations Board (NLRB) stubbornly reiterated its stance that pre-employment arbitration agreements with class and collective action waivers are unlawful.

In Murphy Oil USA, Inc.,[1] the Board reaffirmed the position adopted in D.R. Horton[2] that pre-employment arbitration agreements waiving the right to collective and class actions run afoul of core substantive rights under the National Labor Relations Act (NLRA). Specifically, the Board claims such agreements unlawfully restrict employees’ right to engage in “concerted activities for the purpose of . . . mutual aid or protection.”

The Board’s decision flies in the face of numerous contrary court opinions, including Supreme Court precedent, which unambiguously hold that arbitration agreements must be rigorously enforced in all instances except where Congress has expressly mandated otherwise. The only caveat to this rule is that the complaining party must be able to effectively vindicate its statutory substantive rights in the arbitral forum.

In his dissent, NLRB Member Johnson criticizes the majority for attempting to transform a procedural limitation on the manner in which claims may be brought into a violation of a substantive right. He further states that the Act’s generalized provision about the right to engage in concerted activities does not constitute a congressional command that the Federal Arbitration Act be overridden.

The continued discord between the NLRB and the courts has significant implications for employers, who must remain wary of including class action waivers in their pre-employment arbitration agreements despite case law authorizing them to do so. While the NLRB seems to be gearing up for a petition to the Supreme Court, the Court is unlikely to grant certiorari in the absence of a circuit split. Thus far, the federal courts that have addressed the issue of class action waivers in arbitration agreements subject to the NLRA have sided with Member Johnson.

 


[1] 361 NLRB No. 72 (Oct. 28, 2014)

[2] 357 NLRB No. 184 (Jan. 3, 2012)

After-School Drumming is Not a Nuisance (at least in New Jersey)

Posted on: November 17th, 2014

 

By: Wayne S. Melnick

 

As both an attorney and a drummer, this one caught my attention.  Following a bench trial in Traetto v. Palazzo, a New Jersey judge recently ruled that a teenage drummer’s occasional afternoon practice sessions in his family’s garage was not a private nuisance.

Originally, the judge dismissed the complaint (which was filed against the drummer’s homeowner parents), but an appellate court ruled there were disputed issues of fact that required a trial.  Following remand and a bench trial, the court ruled in favor of the drummer’s parents.

The plaintiff, a computer programmer who worked from her home and was on-call for 24 hours per day, filed the law suit alleging the drumming went on at all hours of the day and night interrupting her ability to do her job and sleep.  She claimed the nature of her job required her to work at night so she would sometimes try to sleep during the day. In their responsive pleadings, the drummer’s parents said their son played only between the hours of 4pm and 7pm and that the town’s health administrator had determined there was no noise ordinance violation.

In ruling in favor of the drummer’s parents, the trial court followed the law discussed by the appellate court, finding the plaintiff had failed to show “injury to the health or comfort of ordinary people to an unreasonable extent.”  Most importantly, the court determined that “”[O]ne cannot expect absolute silence when living in a densely populated area.” Citing a prior case, the trial court noted, “[t]he interruption of normal conversation, the drowning out of TV sound, an occasional disturbance during sleeping hours and like complaints may all fall within the area of mere annoyance.… The court concludes that the unusual work pattern of the plaintiff, working at night versus the playing of an instrument by a 17-year-old young man during the day, does not lead to the granting of relief.”

Once again, common sense prevails.  It just goes to show that the old adage is true, and much like law, the way to get better playing drums is to practice (but still be considerate of your neighbors)!

Court Hears Oral Argument in Closely-Watched Yelp Defamation Case

Posted on: November 14th, 2014

 

By Matt N. Foree

Business owners and free speech advocates are anxiously awaiting a Virginia Supreme Court ruling in the Yelp, Inc., v. Hadeed Carpet Cleaning defamation case.  In this matter, the owner of a carpet cleaning company sued seven anonymous parties who submitted negative reviews about his company on Yelp. Hadeed then sought to subpoena from Yelp information identifying these individuals.  The lower court and the appeals court ordered Yelp to turn over the information.  Yelp appealed the decision to the Virginia Supreme Court, which heard oral argument at the end of October.

The court’s decision must weigh the competing interests of the business in protecting its reputation versus the right to anonymous free speech.  The case has garnered the interest of third party advocates, including social media entities.  Google and others, including Facebook, Pinterest, and Twitter, have filed an amicus, or “friend of the court” brief, regarding their interests in protecting anonymous speech.  These parties argued that the lower courts erred by failing to protect the First Amendment rights of anonymous online speakers.

Significantly, the Federal Trade Commission has received over 2,000 consumer complaints about Yelp since 2008.  Most of the complaints are from business owners alleging that they received unfair or false reviews on Yelp. The interest in the Yelp decision signifies its importance in the quickly developing area of the law regarding on-line review websites.  The court’s ruling is expected in early 2015.

Playing Offense in Defense of Disability Discrimination

Posted on: November 10th, 2014

 

By: Lisa Gorman

One of the biggest challenges facing California employers today is the underperforming employee with a disability. Under the Fair Employment and Housing Act (“FEHA”), a “disability” is any physical or mental impairment that limits a major life activity. Working is a major life activity, and most impairments limit our ability to work in some way.

While many employers are under the impression their employees must provide formal or written notice of a disability, that’s not the case. Taken to the extreme – familiar territory for California employment attorneys – every employee who complains they suffer from stress may effectively be a member of a “protected category” (an individual with a known disability). All too often, the employee “protected” by a disability is someone the employer has been considering terminating. And, employers often discover unacceptable performance deficiencies while accommodating a disabled employee with a leave of absence. By way of example, we are aware of a case where an employee took a disability leave of absence for surgery to remove a bunion on her foot. During the employee’s leave of absence, her supervisor discovered she had not been adequately performing prior to her leave. The supervisor, a cancer survivor whom the Company had accommodated numerous times during her treatment, had no intention of discriminating against the employee because she was disabled by a bunion. She did, however, terminate the employee because of the poor performance discovered during the leave period. Unfortunately, the employee’s personnel file did not support a performance-based termination, and as a result the ensuing disability discrimination case had high exposure.

In California, employment is presumably at-will, which means employers can terminate their employees at any time, for any reason (except an illegal one), or for no reason. Employment at-will arrangements are advantageous for employers, as they allow them to release employees without having to establish good cause. However, given the at-will employment arrangement, managers are not usually tasked with engaging in strict performance evaluations that might establish the good cause necessary to terminate an employee with an employment contract. In addition, most managers understand positive feedback tends to improve morale and productivity. As well, when preparing performance evaluations for employees we work with on a daily basis – and even become friendly with – it is easier and more comfortable to focus on achievements than deficiencies. Thus, personnel files often include evaluations that do not portray an accurate picture of an employee’s performance. When employers call seeking guidance on terminating underperforming employees with a disability, we often find the personnel file riddled with positive reviews and lacking any documentation of performance deficiencies or warnings.

From a legal perspective, there is no advantage to documenting an employee’s positive performance. While we do not underestimate the value of positive feedback, verbal accolades may improve morale and performance as effectively as written accolades. Negative performance reviews and warnings, on the other hand, have significantly more value – legally, that is – when written. With respect to the underperforming employee with a disability, we advise employers to comply with their legal obligations to engage in a good faith interactive process and accommodate the disability. We also advise employers to simultaneously document performance deficiencies. The more credible an employer’s showing a termination is due to legitimate reasons unrelated to a disability, the less exposure it faces on a discrimination claim. Documentation of performance problems that predate notice of the disability render the argument that a termination is performance-based significantly more credible. In other words, properly documenting poor performance and providing candid performance evaluations – playing offense – is the best defense when it comes to disability discrimination claims.

 

Recent Litigation Reminds Employers to Review Background Check Forms

Posted on: November 7th, 2014

By: Amy Combs Bender

As most employers are aware by now, many federal government agencies are scrutinizing background check practices on job applicants and employees. As FMG reported in its July 2014 issue of LawLine, the EEOC and the Federal Trade Commission have issued publications on the proper use of background checks in employment (https://www.fmglaw.com/article.php?id=340).

Employers who do utilize background checks have another hurdle to face: ensuring the forms they provide to applicants and employees in connection with the checks comply with the Fair Credit Reporting Act (“FCRA”). Although the FCRA’s requirements regarding forms are not new, some federal courts recently have interpreted these requirements in a narrow way that may expose many employers to liability.

Under the FCRA, before an employer may conduct a lawful background check on an applicant or employee by obtaining a “consumer report” (which includes motor vehicle records, criminal background checks, and credit history reports, among others), it must: 1) make a clear and conspicuous disclosure in writing to the individual in a document that consists solely of the disclosure that a consumer report may be obtained for employment purposes; and 2) obtain written authorization from the individual for the employer to obtain the report (this authorization may be included on the same form as the disclosure). The statute provides for penalties of $100 to $1,000 for each willful violation as well as punitive damages, litigation costs, and attorney’s fees. Monetary penalties also are available for mere negligent violations.

There has been a recent emphasis on the phrase “in a document that consists solely of the disclosure” in an effort to determine what, if any, other information (aside from the authorization) may be included on the disclosure form. The purposes of this requirement are to place applicants and employees on clear notice that they may be subjected to a background check and to avoid employers burying the disclosure in another document, such as a job application. In particular, plaintiffs have argued, and been successful, in several high-profile lawsuits that employers should not be permitted to include on the disclosure form a provision releasing the employer from liability for any decisions made based on information obtained through the consumer report.

In December 2013, a federal district court in Pennsylvania, in a class action brought by job applicants, ruled that Closetmaid violated the FCRA by including in its disclosure and consent form a waiver of rights provision. This summer, well-known supermarket chain Publix entered into a $6.8 million settlement in another class action by job applicants alleging violation of the FCRA by including on its employment application a liability release regarding consumer reports.

Although not all federal courts have adopted this narrow interpretation, employers would be wise to avoid risk (and the possible imposition of monetary fines, which could increase exponentially in a class action) and review their FCRA background check disclosure forms to ensure they do not contain any waiver or release of liability provisions. As always, the Labor and Employment Law attorneys at FMG are available to assist in this review and in ensuring that employers’ background check practices are consistent with applicable laws.