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FMG Law Blog Line

Archive for March, 2018

McDonald’s to Settle its NLRB Case

Posted on: March 30th, 2018

By: Allen E. Sattler

On March 19, 2018, McDonald’s USA LLC (“McDonald’s”) and the U.S. National Labor Relations Board (the “Board”) entered into a preliminary settlement to resolve many long-standing claims made against McDonald’s concerning its alleged labor law violations.  The proposed settlement reportedly includes the resolution of all outstanding labor law charges against McDonald’s, with payments to individual employees ranging from $20 to $50,000.  The primary issue that McDonald’s and the Board were litigating is whether McDonald’s should be considered a joint employer with its franchisee restaurant owners.  If McDonald’s is found to be a joint employer with its franchisees, McDonald’s may be liable for violations of federal labor laws committed by those franchisees.

An entity is considered a joint employer where that entity has sufficient control over the essential terms and conditions of employment of another employer’s employee.  The standard applied by the Board to determine whether sufficient control exists has changed over recent years.   In August 2015, the Board expanded the scope of the standard by holding that an entity’s control over the employee need not be “direct or immediate” and that the entity need not actually exercise its control over the employee to be considered a joint employer.  Rather, the mere reservation of a right to control the employee might be sufficient to establish a joint employment relationship.  Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015).

In December 2017 and acting under a new administration, the Board overruled its decision in Browning-Ferris and issued a strongly worded critique of that standard, stating that the “Browning-Ferris standard is a distortion of common law as interpreted by the Board and the courts, it is contrary to the Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.”   Hy-Brand Industrial Contractors, Ltd., et. al., 365 NLRB No. 156 (December 14, 2017).  The Board accordingly returned to the less-expansive standard that existed prior to Browning-Ferris.  Pursuant to Hy-Brand, a finding of joint employer status requires proof that the entity actually exercised control over the employee, rather than merely reserving the right to exercise control, and the control must be “direct and immediate.”  Also, a joint employer status will not result where the control is “limited and routine.”

In February 2018, the Board vacated its decision in Hy-Brand on ethical grounds, i.e., a disqualified member of the Board failed to recuse himself.  Hy-Brand Industrial Contractors, Ltd., et. al., 366 NLRB No. 26 (February 26, 2018).  The standard as articulated in Browning-Ferris once again became the controlling standard.

The McDonald’s litigation is significant because a trial on the joint employer issue might provide clarification of the appropriate standard to be applied by the Board, particularly in the franchise context, and a decision on the issue can have an enormous impact on other, similarly situated companies.  If the preliminary settlement is approved, the joint employment status of McDonald’s remains an open question.  The litigation will therefore not result in a clarification of the joint employer standard or have any precedential effect on future joint employer cases.  Unless and until the Board re-visits this issue, the standard as articulated in Browning-Ferris appears to be the controlling standard.

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

Pay-When-Paid Clauses: A Cautionary Tale

Posted on: March 28th, 2018

By: Jake Carroll

With the recent surge of construction projects in Georgia, the memories of owner and developer bankruptcies following the 2008 financial crisis may have grown dim. Nevertheless, material suppliers and subcontractors must remember that when the pace slows down, their contracts could leave them without remedy or recourse to seek payment.

One of the most common issues in construction disputes is whether a general contractor is obligated to pay its subcontractor before the general contractor has received payment from the owner for the work. Most construction subcontracts address this problem and attempt to make the owner’s payment to the general contractor a condition precedent to the general contractor’s obligation to pay the subcontractor. Typically, these clauses are known as “pay when paid” clauses because they condition the general contractor’s obligation to pay the subcontractor upon receipt of payment by the owner.

Georgia appears to adhere to the rule that if the contract makes payments from the owner a condition precedent to the general contractor’s obligation to pay, then the general contractor’s obligation never arises if the owner becomes insolvent and never makes a payment. See Vratsinas Constr. Co. v. Triad Drywall, LLC, 739 S.E.2d 493 (Ga. Ct. App. 2013). Thus, if an owner fails to pay a general contractor due to the owner’s bankruptcy, the subcontractor also remains unpaid. What’s more, the provisions of the automatic stay in Bankruptcy cases may prevent the subcontractor from claiming or enforcing its rights under Georgia’s mechanic lien statutes—depending on the specific circumstances of the Project. See 11 U.S.C. 362. When combined, these circumstances leave the unpaid subcontractor with limited legal remedies and could lead the subcontractor to consider its own option for relief under the Bankruptcy code.

In order to avoid these potential payment issues, all parties in the construction process should carefully review their contracts for “pay when paid” clauses during the contract negotiation and drafting phase of the Project. And despite subcontractors’ limited bargaining power in modifying the terms of its subcontract, full awareness of the contract terms should allow the subcontractor to mitigate risk on its Projects. For advice on specific language or for questions regarding general construction contract terms and conditions, contact Jake Carroll at [email protected] or any member of the FMG Construction Practice Group.

 

Supreme Court on Prolonged Detention and Bond for Immigrants

Posted on: March 27th, 2018

By: Layli Eskandari Deal

Immigration has been a hot topic in the news lately due to the various issues being litigated in the Courts.  Recently the Supreme Court made a ruling on the issue of prolonged detention by Immigration and Customs Enforcement (ICE) of immigrants who are in removal (deportation) proceedings.

In Jennings v. Rodriguez, 138 S.Ct. 830 (2018), the Supreme Court held that the Immigration and Nationality Act (INA) authorizes the prolonged detention of certain noncitizens without a custody hearing during their removal cases.  This was a reversal of the 9th Circuit Court of Appeals decision that authorized detention only for six months, at which point, the detained individual must then receive a custody (bond) hearing before an Immigration Judge.  Post decision, the Supreme Court has remanded this case back to the Ninth Circuit for consideration of whether the 5th Amendment Due Process Clause entitles immigrants to a hearing over their prolonged detention.

This week the Supreme Court has agreed to review whether U.S. immigration laws allow ICE to indefinitely detain foreign nationals in the removal process if the person has previously committed crimes.  The case is Nielsen v. Preap.  Current laws allow ICE to take an individual into custody after they have served their criminal jail term prior to their release from prison.  A person detained immediately can then be held indefinitely.  The 9th Circuit Court of Appeals ruled that foreign nationals who are not promptly taken into custody must be given an opportunity to be released on bond.  The federal government argues the same rules should apply to individuals promptly taken into custody as those who are released from prison and then taken into custody at a later date.  We now await the Supreme Court’s decision on this type of detention.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Layli Eskandari Deal of the law firm of Freeman Mathis & Gary, LLP at (770-551-2700) or [email protected].

Planning To File Your 2018 H-1B Cap Case Under Premium Processing? Not So Fast…

Posted on: March 27th, 2018

By: Kenneth S. Levine

On March 20th USCIS announced an indefinite suspension of the premium processing program for H-1B visa petitions that are subject to the 2018 statutory cap.  The annual statutory cap limits the total of H-1B visas that can be approved in any one year to 85,000, 20,000 of which are set aside for foreign nationals who obtained a Master’s degree from a regionally accredited college or university in the U.S.

H-1B cap exempt petitions, which applies to higher education institutions, non-profits affiliated with a higher education institution and non-profit or governmental research organizations, remain eligible for premium processing.

The USCIS announcement made clear that any H-1B petitions that include a request for premium processing would simply be rejected and returned to the employer. The suspension of the premium processing service does not apply to petitions for renewals, amendments or transfers of H-1B visas.

It should be noted that USCIS also suspended premium processing in March 2017 for H-1B cap and cap exempt cases.  The program was reinstated around 6 months later.  Therefore, FMG Immigration Attorneys are cautiously optimistic that premium processing for soon to be filed H-1B cap cases will resume in October 2018.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Kenneth S. Levine of the law firm of Freeman, Mathis & Gary, LLP at (770-551-2700) or [email protected].

Congress Steps Into Tip-Pooling Fight

Posted on: March 23rd, 2018

By: Timothy J. Holdsworth

We wrote previously about the background on the tip-pooling regulations and the DOL’s Notice of Proposed Rulemaking (“NPR”) that would allow tip-pooling arrangements that include employees who do not regularly and customarily receive tips under the Fair Labor Standards Act (“FLSA”). The DOL received a considerable number of comments on the NPR, some of which worried that the NPR would allow employers to keep their workers’ tips.

Buried in the spending bill Congress passed (pages 2025-2027 if you are dying to read it) is a rider that will affect the current U.S. Department of Labor (“DOL”) laws on tips. The bill proposes language that prohibits an employer, including managers and supervisors, from keeping tips received by employees. This prohibition would apply regardless of whether the employer takes the tip credit. The rider also would make employers liable to employees for any tips unlawfully kept by the employer.

If the bill is signed by President Trump, these may substantially affect any tip-pooling arrangements employers planned to enact under the NPR. It is also unclear if the DOL may try to revise the NPR in any way.

The provision would also subject employers to new liability under the FLSA. Just last year, the Eleventh Circuit (Alabama, Florida, and Georgia) in Malivuk v. Ameripark, LLC held that the FLSA does not authorize an employee to sue her employer solely for an employer allegedly withholding her tips when the employee does not allege that she received less than the minimum wage or less than what she was entitled to for overtime work. The rider creates a new cause of action solely for withheld tips.

If you have any questions about what these potential changes may mean for your business or would like more information on navigating wage and hour laws, please contact Tim Holdsworth at [email protected].