2013 left employees as the overall victors on the employment law battlefield, by arming them with a host of new statutory rights and options, primarily at the state and local level. These new, pro-employee laws place added restrictions on employer hiring, firing, and other employment actions, and they are sure to tax every employer’s patience and pocket.
The one significant exception to employees’ overall “win” for 2013 came from the United States Supreme Court. The Supremes, most often in 5-4 decisions, ruled consistently for employers on important employment law questions.
A. SUPREME COURT, PRO-EMPLOYER RULINGS
The Court issued two major decisions in 2013 that should improve employer chances of prevailing on summary judgment and avoiding expensive, risk-filled jury trials. Neither decision has much practical, day-to-day application for employers, but both will make it harder for employees to “stretch out” and prevail in litigation.
1. “Supervisor” Definition Narrowed
The first of the Court’s two key decisions, Vance v. Ball State University, describes who is a “supervisor” for Title VII “hostile work environment” purposes. Ruling for the employer, the Court “skinnied down” the potential universe of “supervisors” to include only those able to take “tangible employment actions” against an alleged harassment victim.
- The Court defined “tangible employment actions” as: “hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”
Only those who fall within the new, narrow group of Court-defined “supervisors” can engage in unlawful acts attributable to an employer and that can lead to employer liability. Harassment by others will not be attributed to employers, even if those others are managers who direct an alleged victim’s day-to-day job duties and activities.
Key takeaway: So long as a manager cannot take “tangible” employment actions “against” an employee, irrespective of whether s/he directs the employee’s daily work and commits unlawful harassment, the employer will not be liable unless the employee establishes employer “negligence,” meaning it “knew or should have known” of the manager’s harassment but “failed to take appropriate corrective action.”
2. Stiffer Burden of Proof in Retaliation Cases
In the second notable Court case, Univ. of Texas Southwestern Medical Ctr. v. Nassar—decided by the same 5-4 majority, on the same day as Vance—the Court ruled that a plaintiff’s burden of proof in a Title VII retaliation case is higher than that in other types of discrimination cases. The plaintiff in Nassar allegedly received a less-than-favorable job offer because of his past complaints of discrimination. The employer defended using the theory that even if retaliation had occurred, because there also were legitimate reasons for its alleged “bad” job offer, there should be no liability. The Court agreed. It ruled that to prevail in a retaliation case, an employee must prove more than that retaliation was “a” motivating factor for an adverse employment action.
Key takeaway: An employer will be liable if a discrimination claimant proves “race, color, religion, sex, or national origin” was a motivating factor in an employment action, even where other, lawful factors also played a role. But an employer will not be liable if a retaliation claimant proves retaliation was a motivating factor in an employment action. Instead, such a claimant must prove retaliation was the only motivating factor.
- Given the prevalence of retaliation cases and the prevailing supposition that they are “easier to prove” for employees, at least to defeat summary judgment and “get to trial,” the Nassar decision is welcome news for all employers.
B. PRO-WORKER STATE AND LOCAL LEGISLATION
In contrast to the United States Supreme Court, state and local legislatures were busy “working for workers” in 2013. Employers must beware of and compliant with new laws and other developments in the following areas: (1) Criminal History Questioning; (2) Credit Report Checks; (3) Employment Protection for Domestic Violence Victims; (4) Provision of Unpaid Internship Programs; (5) Classifying Workers as Independent Contractors; and (6) Managing Employees Who Are Legally Permitted To Smoke Pot.
Detailed below are highlights and key developments in each of these areas during 2013:
1. Inquiry Into Applicant Criminal Histories Becoming Taboo
Employers vetting job applicants over criminal convictions now face a maze of freshly minted laws throughout the country. Despite high-profile data leaks and related security breaches plaguing businesses, roughly a dozen state and local laws now restrict employers from asking job applicants, “Have you ever been convicted of a crime?”/>/>
• At least seven jurisdictions—the states of Massachusetts, Rhode Island, and Hawaii, and the cities of Philadelphia, Buffalo, Newark, and Seattle—make it automatically illegal for employers to seek information on past convictions on a job application.
• Other states—California, Georgia, Michigan, Minnesota, Nebraska, New York, Nevada, Ohio, Pennsylvania and Washington—restrict the timing and scope of such inquiry.
These “legal handcuffs” are so diverse that they make it difficult, if not impossible, for employers to use a “one size fits all” nationwide employment application. To illustrate, California and Ohio bar employers from asking about certain “petty” crimes, but laws in Massachusetts, Washington, and Hawaii apply only to questions on “stale” convictions, with “stale” meaning convictions of 10 or more years in Washington and Hawaii, but of five or more years in Massachusetts, and only if they are misdemeanors. Another variant is the city of Newark, which prohibits questioning on criminal convictions using a sliding scale, depending on the nature of the crime.
To add confusion, some of the hodge-podge of restrictions forbid seeking criminal conviction information at the initial job application stage, while others go much further. At one end of the spectrum, Minnesota, Rhode Island, and the city of Buffalo forbid conviction inquiries before the first job interview. In the middle, Philadelphia makes employers wait until after the first interview. Near the other end, Hawaii and the city of Newark prohibit conviction inquiries until after a provisional job offer. So far, no jurisdiction forbids criminal conviction inquiries entirely. But stay tuned….
- Nationwide and multi-state employers need to purge the criminal history question from job applications. This recommendation is especially sound for employers using Internet-based job postings that can “reach” applicants anywhere. Additionally, every employer should work closely with employment counsel to keep alert to and compliant with the new and developing laws in all the jurisdictions where the employer recruits.
Employers also face new restraints on their consideration of applicant and worker credit reports.
• At least 10 states—California, Colorado, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont, and Washington—limit an employer’s ability to use individual credit histories when making work-related decisions. Similar bills are pending in New York and other jurisdictions.
• At the federal level, a Senate bill introduced December 17, 2013, would ban virtually all use of consumer credit reports “for employment purposes,” even if the consumer consents or otherwise authorizes such use.
The impetus behind these laws appears to be a consensus that “credit-worthiness” has little, if any, bearing on “job-worthiness.” That is particularly so today, when individual financial slip-ups affecting credit reports have become commonplace, and where so many have financial woes because of the recession and resulting high unemployment./>
3. More States Protecting Domestic Violence Victims At Work
Another growing trend in the states is providing legal protection to employees victimized by domestic violence or sexual assault (“DV victim”). More than a dozen states—including California, Colorado, Connecticut, Florida, Hawaii, Illinois, Kansas, Maine, New Jersey, New York, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, and Washington—and the District of Columbia have placed such laws on the books in recent years, with New Jersey the most recent on October 1, 2013.
- Under the New Jersey law, called the NJ Security and Financial Empowerment Act (acronym and abbreviation, appropriately, the “SAFE” Act), employers with 25 or more employees must provide, among other things, DV victims with unpaid leaves of up to 20 days. Beyond that, the New Jersey Department of Labor just published a Notice that all New Jersey employers must post, to alert their employees of these new rights. Click here for the Notice: http://lwd.state.nj.us/labor/wnjpin/employer/content/employerpacketforms.html.
The majority of other state DV victim protection laws require similar leaves, but their lengths vary considerably. Colorado employers, for example, must provide only three days, but Illinois employers must provide 12 work weeks. Laws in Maine and Washington potentially go farther, by requiring an undefined “reasonable and necessary” leave. In a related approach to DV victim protection, New York and Rhode Island prohibit employers from taking adverse employment action against a DV victim.
Plan for extension of protection for DV victims into other states and locales. Like NJ’s SAFE Act, Senate bills introduced during 2013 in Massachusetts and New York, for instance, provide DV victims with leaves. The Massachusetts bill would require employers with 50 or more employees to provide up to 15 days of leave per year, and New York would require 90 days of job-protected but unpaid leave during any one-year period.
4. Heightened Scrutiny of Employers’ Unpaid Intern Programs
Also notable in 2013 were new attacks on employers that offer student intern programs. Be ready for these attacks to continue and expand, especially from unpaid interns who fail to secure regular employment and decide “there is nothing to lose” by contesting past unpaid internships.
At center stage are two intern lawsuits pending in federal courts in New York (one in New York’s Southern District (SDNY), the other in its Eastern District (EDNY)). Both involved basically the same legal claims, but the courts’ decisions diverged dramatically./>
• In the SDNY case, against Fox Searchlight Pictures (“Searchlight”), plaintiffs were former college and graduate school students. One set of plaintiffs were “production interns” for an independent production company (“IPC”) that performed set design and related tasks to produce the “Black Swan” film (for which Searchlight provided financing). Another set of plaintiffs were “corporate” interns at various Searchlight offices in New York. After ending their combined internships/educational stints, both sets of plaintiffs joined and sued Searchlight for back pay of unpaid minimum wages and overtime under federal and state wage-and-hours laws.
- The SDNY judge sided with the interns. As to the “Black Swan” production-intern plaintiffs, the court granted summary judgment in their favor, ruling that they should have been considered and paid as regular employees. Searchlight therefore had violated both federal and state laws by not paying them for time spent at their internships.
- The SDNY decision stemmed from U.S. Department of Labor (DOL) guidelines that direct that interns should be categorized and paid as “employees” unless their position meets six factors: whether the internships (i) offered training like that provided by educational institutions; (ii) were intended for interns’ benefit; (iii) involved no displacement of regular employees; (iv) provided the employer-sponsors with no immediate, tangible benefit, similar to that provided by regular employees; (v) promised the interns no future employment; and (vi) started with the mutual understanding that the interns would be unpaid.
• As to the New York-based, corporate-intern plaintiffs, the SDNY judge denied Searchlight’s motion for summary judgment and granted the plaintiffs’ motion for class certification on their claims under New York state law.
• In the EDNY case, brought against Hearst Corporation, the intern plaintiffs had performed daily tasks in a different type of industry than those in the Searchlight suit, but, as noted, the legal claims in both cases were fundamentally the same. The judge sided with Hearst on all points. It both denied the interns’ motion for summary judgment (through which they, like the “Black Swan” interns, had sought a ruling that they had been misclassified as non-employees), and also denied their bid for class certification on their state law claims.
Both cases are on appeal to the United States Court of Appeals for the Second Circuit. That court’s decision is expected to provide much-needed clarity and guidance for all employers that maintain unpaid internship programs, though the decision will be binding law only in the Second Circuit. Check here for future news about the decision, expected in early to mid-2014./>/>
- In the meantime, be safe rather than sorry: track your internship program and implementation “against” the six-factor DOL test and resolve any disparity by curing it, or treating and paying “interns” as employees for their “work.”
On a final intern-related note, laws are under consideration to protect interns as “employees” from the “get-go.” A New Jersey state senate bill introduced December 5, 2013, for example, would protect unpaid interns from employment discrimination and retaliation by including them under its Law Against Discrimination, Conscientious Employee Protection Act, and Worker Freedom from Employer Intimidation Act. In a parallel vein, the New York state legislature is considering a bill to make it illegal for employers to subject unpaid interns to unlawful discrimination or harassment. So is California, and comparable intern protection laws are pending in other states. Oregon, so far, however, is the only state “with” a law.
5. Increased Attacks on Independent Contractor Classification
Lawsuits by exotic dancers against strip clubs made the hottest 2013 headlines on misclassification of independent contractors (indies), though all types of employers have remained prime targets for agency audits. Federal, state, and local agencies, supplemented by ever-present plaintiffs’ bars, stepped up efforts to ferret out misclassified indies and to reap resulting rewards, including back pay, benefits, and workers/unemployment compensation contributions.
Just one illustration of the agency effort is New York’s recent joining with 14 other states in the U.S. DOL taskforce against indie misclassification. The “other 14” are California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington. To monitor for future states that may join the forces, check http://www.dol.gov/whd/workers/misclassification/.
To be sure, it is difficult for even the most careful employer to ensure correct classification and treatment of every worker, but that is the only option. The burdens associated with the necessary and continuous “due diligence” may seem daunting, but the risks of not taking on those burdens are simply too great. Just Google, Bing, or otherwise search the Internet and you will find horror stories about employers who had non-compliant programs and/or, perhaps worse, had legally compliant programs but failed to keep verifying that supervisors were adhering to these programs “on the floor.” Say it in your policy and make sure your policy is followed—to the letter. Remember the chants and gongs from C.B. DeMille’s The Ten Commandments after Pharaoh Ramses II made a decision: “SO IT HAS BEEN SAID; SO SHALL IT BE DONE‼!”
- Consider periodic internal audits, or other self-policing measures, with outside legal counsel to maximize preservation of attorney-client privilege if misclassifications are found, before correcting them privately.
Such efforts can avoid, or at least reduce, potential wage and other liability, as well as establish your “good faith” attempt at compliance, if investigations and/or lawsuits occur.
6. Going to Pot: Workers’ Legal Use of Marijuana
In our final category, and on a less traditional front, employers in 2013 saw a slew of new state laws granting residents (and therefore workers) the right to smoke pot. As detailed in an earlier 2013 posting here, “What Were They Smoking?” States’ Legalizing of Marijuana Means Headaches for Employers, employers need to remain alert to all existing and pending marijuana laws in each state where they employ workers./>/>
• To date, in 20 states and the District of Columbia, individuals may use marijuana for medicinal purposes. Included are Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana , New Hampshire, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont and Washington.
• Colorado and Washington approve recreational use of marijuana by adults.
• In addition, bills pending in Minnesota, New York, Ohio and Pennsylvania would permit marijuana use by individuals for medical purposes.
• Three other states, Maryland, Minnesota, and Oklahoma, also have passed legislation that is favorable toward medical marijuana, but do not legalize its use. For example, Maryland and Minnesota law now establish medicinal use as an affirmative defense to a prosecution for possession of marijuana.
• Maryland and Oklahoma also had bills pending in 2013 to legalize medicinal marijuana use, but they failed to become law. Similar bills in Alabama, Iowa, Kansas, North Carolina, and West Virginia also cratered.
Some existing and pending state “legal pot use” laws prohibit employers from refusing to hire applicants and from disciplining or otherwise adversely treating registered medical marijuana “card holders” and/or applicants or employees who test positive for marijuana components or metabolites. Other states have yet to issue regulations or other guidance on how employers should apply marijuana legalization laws in the workplace.
Million-dollar questions for employers in “marijuana” states are:
• Can I test an applicant or incumbent employee for drugs, and, if so, when?
• Can I discipline or discharge an employee who tests positive for controlled substances, including marijuana, and, if so, when?/>
The answers are anything but clear or simple:
- Start with the law or laws in each locale in which you have employees.
- In general, in jurisdictions where pot use is legal, you should steer clear of absolutes and prohibitions. Examples of what to avoid include: requiring pre-hire testing for marijuana and/or refusing to hire anyone who is an admitted marijuana user.
- If you generally test applicants and/or employees for other substance use/abuse, such as alcohol and illegal drugs, make sure your testing clinic omits checks for marijuana levels.
With these considerations in mind, if “an employer” observes—and some states require two witnesses—a worker acting unsafely, or in a manner that appears unsafe, it should have greater rights and options in connection with marijuana testing and related discipline. The federal Occupational Safety and Health Act (OSHA), as well as certain state laws, require employers to provide their workers with a safe workplace. That is why, where a worker is acting unsafely, an employer should have the right—and, arguably, the legal duty—to require him or her to undergo a medical exam, including a full, pot-inclusive drug screen, and to take adverse employment action based on any positive test results or based upon an insubordinate refusal to take a test.
C. “WRAP UP” OF THE YEAR-END WRAP UP
Because it is unknown how many pro-employee, legislative and court-imposed changes “lay in wait” for employers in 2014, and is unclear “how far they go,” it is critical to remain alert and reactive to all legal developments in these areas. Make certain that your Human Resource professionals and, through HR, other managers comply with the language and intent “behind” these developments, including updating and implementing your policies consistently and legally—consistent with the age-old Boy Scout motto of “Be Prepared.” It will be every employer’s best way to avoid and prevail on employee claims, in 2014 and beyond.