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FMG Law Blog Line

Archive for December, 2017

Gone In A Flash: NLRB Overrules Employee Handbook Standard

Posted on: December 20th, 2017

By: William E. Collins, Jr.

On December 14, 2017, in a case involving the Boeing Company, the National Labor Relations Board (“NLRB”) overruled the Lutheran Heritage workplace policy standard that stood for over 13 years, and ushered in a new standard for workplace policies. This decision is a significant shift in labor policy, leaving many hopeful that the new standard will provide consistency and give employers a clear picture of compliance.

Under the now overruled Lutheran Heritage standard, policies, rules, and handbook provisions that appeared neutral still violated the National Labor Relations Act (“NLRA”) if an employee could “reasonably construe” the policy to prohibit protected activity. As you can imagine, discerning what an employee would “reasonably construe” often led to puzzling results.

Departing from the “reasonably construed” standard, the Boeing decision sets out that an employer’s rule violates the NLRA only if the reasonable interpretation of the policy would potentially interfere with an employee’s ability to engage in protected activity.  The NLRB will look at two factors:

(1) the nature and extent of any potential impact on the protected activity; and

(2) the legitimate justifications associated with the rule.

Under this standard, the NLRB will categorize employer rules in one of three categories:

 

 

Category

Explanation

Category 1 The rule is lawful to maintain.

The rule is lawful because:

(a) when reasonably interpreted the rule has no tendency to interfere with the ability to engage in protected activity; or

(b) while the rule may have some tendency to interfere with an employees rights, the risk of interference is outweighed by the corresponding justifications.

Category 2 It is unclear whether the rule, as a general matter, would prohibit or interfere with an employee’s right to engage in protected activity. These rules warrant “individualized scrutiny” to determine if there is interference and whether the interference is outweighed by the specific justifications in the case.
Category 3 The rule is unlawful. The rule prohibits or limits an employee’s right to engage in protected activity and that limitation is not outweighed by the justifications.

 

Applying this new standard, the NLRB held that the Boeing “no-camera” policy was a Category 1 policy. While the policy requiring a camera permit to take pictures inside Boeing’s facilities could interfere with protected activity, the NLRB found that the justification for the rule outweighed this risk because it serves to protect information that is proprietary and involves national security.

While this more objective standard should remove some of the guesswork, employers are wise to revisit their employee handbooks to determine whether their policies fall into Category 1, or are at least defensible under Category 2. As you prepare your 2018 employee handbooks, members of the FMG National Employment Law Practice Group are available to assist your organization review and finalize these documents.

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

 

A Look Ahead to 2018 Legislative Session

Posted on: December 20th, 2017

By: Allan J. Hayes

The Georgia General Assembly will convene on January 8, 2018 and adjourn after 40 legislative days (usually the end of March). With 2018 being an election year, there is likely to be as much politicking, positioning and posturing as there is legislating during the second half of the 2017-2018 cycle. All statewide elected officials and all seats in the state House and State Senate are up for election in 2018. This generally means that no sweeping new policies will be passed this year.

Governor Deal (R) is term-limited, so the race for the office is open. Lt. Governor Cagle (R) is running for governor, so that office will be open as well. Many current and former legislators are campaigning to replace the Governor and the Lt. Governor, so both chambers are expected to adjourn early so everyone can campaign for their respective office.

But, as Speaker Ralston recently told a group of us, “regardless of elections, the people’s work must get done. And we will stay until it is finished.” This governor and legislature have worked well together in the past, and will likely work together on legislation that include the following (not in order of importance).

Every session, the most scrutinized piece of legislation is the state budget. According to the Georgia Constitution, it is the only issue the General Assembly must address each year. An increase in state revenue means lawmakers will have additional money to use in the 2018 fiscal year. At least some of that new money will go into education, which represents about half of the state budget. The health program for state employees and Medicaid are also likely to receive additional funds. And Lieutenant Governor Cagle wants the state to invest $100 million into venture capital for tech companies, a program he calls “Invest Georgia.” The state will also do what is necessary to continue funding of the Savannah Harbor Deepening Project.

The legislature will also consider spending for new rural development ideas like relocation tax incentives, rural broadband and healthcare funds to fight the opioid epidemic. Other healthcare related priorities include addressing rising health insurance premiums, including exploring association health plans and promoting the selling of insurance across state lines. Out-of-Network “Surprise Billing” or Balance Billing prohibitions is another major issue that will be tackled this session. The department of insurance may pursue ACA 1332 State Innovation Waivers to cover more Georgians and health insurance issues like air ambulance payments, cost-sharing Limits for prescription drugs, health insurance network adequacy standards, and medical marijuana will also be discussed.

The very contentious Religious Freedom Restoration Act has come up in each of the last two sessions of the legislature. Even with legislative leaders declaring it a “non-starter,” it will likely receive attention in the halls, if not on the floor. Last year a bill to modernize Georgia’s adoption laws which included the religious liberty provision was stalled. Legislative leaders have vowed to pass a “clean” adoption bill this year and the Governor has said he will sign it.  Additionally, there will be a bill introduced that would restrict local governments ability to ban short term residential rentals like Airbnb.

Another holdover from the 2017 session is Marsy’s Law, a proposed Constitutional Amendment securing permanent, enforceable rights for victims of crime. It passed the Senate and will be addressed in the House in 2018. Georgia’s certificate of need law for healthcare provider facilities is also a likely topic for debate. The Cancer Treatment Center of America is limited to 50 beds and a cap on in-state patients of 35 percent at their Georgia hospital and they support legislation to raise the 35 percent cap.

Finally, lawmakers are expected to debate two separate proposals that would boost pay for police and legislators. The Georgia Sheriffs’ Association is backing a one-cent sales tax to help fund a new mandatory minimum salary for deputy sheriffs and jailers, and legislators would see a 72 percent increase to their salaries under a proposal by a committee created earlier this year to review compensation for elected officials.

If you have any questions or would like more information, please contact Allan J. Hayes at [email protected].

Another Super Bowl in New Jersey? Unlikely!

Posted on: December 19th, 2017

By: Joshua G. Ferguson

A Third Circuit panel issued an opinion last week in an NFL fan’s class action alleging the National Football League violated New Jersey’s consumer fraud law by failing to make enough 2014 Super Bowl tickets available for sale, finding that the economic factors presented created a plausible theory that the league’s conduct inflated prices.

The three-judge panel reversed the district court’s decision to dismiss the claim brought by Josh Finkelman alleging that the NFL’s lottery ticket policy for the Super Bowl distributed a fraction of the tickets to the public. Plaintiff relied on a statute which requires the sale of 95 percent of all tickets of any event held in New Jersey.  In their amended complaint Plaintiff cited the opinion of sports economist Dr. Daniel Rascher’s that Finkelman paid more on the secondary market for his tickets to Super Bowl XLVIII than he would have had the NFL not withheld more than 5 percent of tickets from sale to the public, and in doing so violated the New Jersey Consumer Fraud Act.

In rendering the decision, The Third Circuit deferred the action to the Supreme Court of New Jersey to certify the meaning of the New Jersey ticket law statute and determine if the NFL’s violation falls within that statute.

For further information or for further inquiries involving hospitality law, you may contact Joshua Ferguson of Freeman Mathis & Gary, LLP, at [email protected].

DOL To Rescind 2011 Tip-Pooling Regulations

Posted on: December 19th, 2017

By: Timothy J. Holdsworth

In 2011, the U.S. Department of Labor (“DOL”) revised its regulations to support its position that the Fair Labor Standards Act (“FLSA”) requires that tipped employees retain all their tips regardless of whether the employer takes the tip credit for those employees. These regulations have repeatedly been challenged in courts, and circuits have split over their legality. In addition, several states (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington) have enacted legislation requiring employers to pay tipped employees the state minimum wage, effectively abolishing the federal tip credit.

As we predicted, in the wake of this litigation and legislation the DOL has issued a Notice of Proposed Rulemaking (“NPRM”) announcing its intent to reverse these 2011 regulations in part. The DOL now proposes to rescind the portion of the regulations that apply to employers that do not take a tip credit, but instead pay wages of at least the federal minimum wage.

One major effect of this change is that employers would now be able to create tip-pooling arrangements that include employees who do not regularly and customarily receive tips. For example, a restaurant could share tips among both servers and dishwashers. In its NPR, the DOL acknowledges that its proposed changes will allow employers and employees greater flexibility in determining their pay policies and allow employers to reduce wage disparities among all employees that contribute to customers’ experience.

The DOL will be accepting public comments on its proposed changes until February 5, 2018. We will update you once the DOL announces the finalized changes, but we do not expect the DOL to modify the changes significantly (if they decide to do so at all). Until the portions of the regulation are rescinded, employers need to be sure their tip policies comply with the current interpretation of the 2011 regulation in their circuit. Additionally, employers need to comply with any applicable state and local compensation laws and regulations regarding tips and tip-pooling, as they could face liability under those laws regardless of the proposed changes discussed in this blog.

If you have any questions about these changes or would like more information on navigating wage and hour laws, please contact Timothy J. Holdsworth at [email protected].

NLRB Delivers One-Two Punch to Pair of Standards that Have Dogged Employers

Posted on: December 18th, 2017

By: Paul H. Derrick

In a stunning development, the National Labor Relations Board has overruled a pair of controversial standards that have caused headaches in the business community for years.

In the first case, the NLRB reversed an Obama-era decision that put employers potentially on the hook for labor law violations committed by their subcontractors and franchisees.  By a 3-2 vote, the Board erased its decision in a case known as Browning-Ferris Industries, which found a company to be a joint-employer with a subcontractor or franchisee if it had “indirect” control over the terms and conditions of the terms and conditions of the workers’ employment or had the “reserved authority to do so.”

Since that broad standard was adopted, the Board has used it to bring literally hundreds of cases against McDonald’s and other businesses for the alleged acts of their contractors and franchisees.  Going forward, however, the NLRB says that two or more entities will be deemed joint employers under the National Labor Relations Act only if there is proof that one entity actually exercised direct and immediate control over essential employment terms of another entity’s employees.  Proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will no longer be sufficient to establish a joint-employer relationship.

In a second unexpected development, also by a narrow 3-2 margin, the NLRB overturned its 2004 decision in Lutheran Heritage Village-Livonia, under which many seemingly harmless workplace rules were deemed unlawful.  The Board had determined in that case that employer rules violate the NLRA if they “could be reasonably construed” by employees to prohibit the exercise of rights under the NLRA.

Going forward, the NLRB says that it will consider the nature and extent of a challenged rule’s potential impact on employee rights under the NLRA and the legitimate justifications associated with the rule.  The Board also announced three categories into which it will now classify rules to provide greater clarity and certainty to employees, employers, and unions.

The first category covers rules that are legal in all cases because they cannot be reasonably interpreted to interfere with workers’ rights or because any interference is outweighed by business interests; the second covers rules that are legal in some cases, depending on their application; and the third covers rules that are always unlawful because they interfere with workers’ rights and cannot be outweighed by business interests.  Notably, the Board also announced that it will no longer find a rule to be unlawful simply because it requires employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.

Because of ongoing changes in the NLRB’s composition and the recent nomination of a new General Counsel, these latest decisions will certainly be the subject of challenge and much debate.  If you have any questions or would like more information, please contact Paul Derrick at [email protected].