HIGHLIGHTS FOR THE MONTH OF JUNE 2009

By: Fiona W. Ong and Randi Klein Hyatt

RECENT DEVELOPMENTS

Potential EFCA Implications of New Catholic Healthcare-Union Guidelines

On June 23, 2009, the United States Conference of Catholic Bishops released a set of principles entitled Respecting the Just Rights of Workers: Guidance and Options for Catholic Health Care and Unions, intended to create a fair procedure by which health care workers can freely decide if they want to have union representation. These guidelines, representing more than ten years of discussion between leaders of Catholic health care and leaders of the labor movement, reflect significant concessions on the part of both management and labor, and could have an influence on the proposed Employee Free Choice Act (EFCA).

While the guidelines make significant concessions to labor union interests, the guidelines nonetheless preserve the secret ballot election process of the NLRB, preserve free collective bargaining, and make no effort to impose arbitration if the parties are unable to reach agreement at the bargaining table.

The new guidelines envision that the hospital and labor organization will negotiate ground rules for the organizing campaign in a written, enforceable Local Agreement which can stipulate to a NLRB-run secret ballot election or to other methods mutually agreed by the parties. The guidelines further establish seven (7) principles that should be followed in assuring that health care workers will have a free and fair right to choose whether to have union representation. These seven (7) principles are:

• Respect – Unions and employers will respect each other’s mission and legitimacy and not demean the other party.

• Equal Access to Information – the employer and the union will have the same means of disseminating information and will agree in advance on an equal number of written, verbal or other communications to be made available to employees.

• Truthful and Balanced Communications- the employer and the union will agree to review and jointly approve all written communications to all employees to assure that they are confined to topics related to the advantages and disadvantages of union representation and will not disparage individuals or institutions.

• Pressure-Free Environment- neither party will make comments or engage in activities that could reasonably constitute harassment, threats, intimidation or coercion.

• Fair and Expeditious Process – encourages the parties to reach a Local Agreement for an NLRB election or other mutually agreed upon process.

• Meaningful Enforcement of the Local Agreement- should designate a neutral authority that shall have binding authority to enforce the Local Agreement and to resolve issues that arise under the Agreement. The parties should create a Rapid Response Team comprised of representatives of both parties who speak for and bind each party.

• Honoring Employee Decisions- The parties will honor the results of the election, and not seek to challenge or overturn it.

The guidelines, while applicable only to Catholic Health Care institutions, address the very issues being discussed within the Obama Administration and in Congress. Because the guidelines represent a deliberate and thoughtful approach to the issue of labor law reform, and because the guidelines have been agreed to by leading labor union officials, the guidelines could easily form the framework for compromise legislation in place of the contentious Employee Free Choice Act.

In A Rare Reverse Discrimination Case, The U.S. Supreme Court Rules In Favor Of White Firefighters Who Claim They Were Denied Promotions Because Of Their Race.

On June 29, 2009, in Ricci v. DeStefano, the U.S. Supreme Court held, in a 5-4 decision, that the City of New Haven, Connecticut’s decision to discard and refuse to certify promotion test results (that had non-minority candidates outperforming minority candidates) to avoid disparate impact claims by the minority firefighters under Title VII of the Civil Rights Act, was itself a disparate treatment violation of the non-minority firefighter’s Title VII rights.

Facts of the Case: As part of the process for qualifying for promotion, the City administered objective tests to its firefighter candidates seeking vacant lieutenant and captain positions. The test results revealed that minority candidates scored disproportionately lower. The City anticipated a lawsuit by the minority firefighters (who had actively threatened to sue if the results were certified and used as part of the promotion decision-making process), and decided to discard the questionable test results. Seventeen white firefighters (and one Hispanic firefighter) who had scored well on the test, and likely would have been promoted if the results were certified, sued the City alleging they were discriminated against on the basis of their race under Title VII (the non-minority firefighters had threatened suit for disparate treatment discrimination while the City was debating whether to certify the results). The City defended that it had a good-faith belief that it would have violated the disparate-impact prohibition in Title VII had they certified the results and that they cannot be held liable under Title VII’s disparate treatment provision for attempting to comply with Title VII’s disparate-impact bar. A federal district court ruled for the City, finding that the City’s motivation to avoid making promotions based on a test with a racially disparate impact did not, as a matter of law, constitute taking an adverse action against the white firefighters with discriminatory animus. The white firefighters then appealed to the Second Circuit, which affirmed the decision. Notably, Judge Sonia Sotomayor, President Barack Obama’s Supreme Court nominee, was one of the three Second Circuit judges who affirmed the City’s decision to discard the test results.

The Court’s Ruling: In reconciling the two provisions of Title VII (the disparate impact and disparate treatment bars), the Supreme Court held that the City violated Title VII by discarding the test results. Recognizing that the City may well have been attempting to act benevolently with discarding the results, the Supreme Court determined that the City rejected the test results solely because the higher scoring candidates were white, and therefore, made an employment decision because of race. In reversing the lower courts’ decisions, and ruling for the non-minority firefighters, the Supreme Court held that the City’s race-based action was impermissible because the City could not demonstrate “a strong basis in evidence” that, had it not taken the action, it would have been liable under a Title VII disparate impact theory. An employer can only engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional, disparate impact, if it has a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action. In this case, the City very likely would have had a prima facie case of disparate-impact liability made against it based on the test results. The City, however, did not establish a strong basis in evidence that the test was deficient in either of the other two prongs of the disparate-impact theory: that the examinations were not job-related and consistent with business necessity; or that there existed an equally valid, less discriminatory alternative that served the City’s needs but that the City refused to adopt. In explaining the high burden of the “strong basis in evidence” standard, Justice Anthony Kennedy, who authored the opinion, wrote, “Fear of litigation alone cannot justify the City’s reliance on race to the detriment of individuals who passed the examinations and qualified for promotions.” The Supreme Court concluded its opinion somewhat cheekily. It noted that if the City, after it certifies the test results, faces a disparate-impact lawsuit by the minority firefighters, in light of the Supreme Court’s decision in this case, the City would have a defense as it could easily establish, with this decision, a strong basis in evidence that, had it not certified the results, it would have been subject to disparate-treatment liability.

Fourth Circuit Affirms Arbitrability of Grievances Pursuant to Expired Labor Agreement

The U.S. Court of Appeals for the Fourth Circuit, which includes Maryland, Virginia, West Virginia, and North and South Carolina, held that (1) the statute of limitations on a claim for arbitration begins to run upon the employer’s unequivocal refusal to arbitrate, and (2) whether an arbitration clause survives the expiration of the collective bargaining agreement in which it is contained is governed by the contract language.

Facts of the Case: In United Steelworkers v. Continental Tire, the union sought to compel arbitration of grievances over pension and health insurance benefits. The employer and union had entered into a collective bargaining agreement (CBA) that incorporated a broad grievance procedure, including an option for arbitration, covering all disputes arising during the life of the CBA. The parties also entered into another agreement governing pension and insurance benefits (P&I), which was cross-referenced with the CBA. The P&I agreement incorporated the CBA grievance procedure, with a direct reference to arbitration, in paragraphs specifically discussing pension benefits and health benefits and further stated that “Termination of the Labor Agreement shall not invalidate the use of its grievance procedure for purposes of this paragraph.”

Following unsuccessful negotiations and the joint expiration of both agreements, the employer unilaterally implemented the terms of its last proposal. The union filed grievances regarding pension and health benefits, which the employer refused to arbitrate. The union then filed suit, seeking to compel arbitration. The employer argued, in part, that the suit was untimely, as it was subject to a six-month statute of limitations (i.e. the time period during which a lawsuit may be filed under the National Labor Relations Act), and further argued that the agreements requiring arbitration were no longer in effect at the time that the grievances were filed. The trial court granted the union’s request to compel arbitration.

The Court’s Ruling: On appeal, the Fourth Circuit reiterated its previous holding that “a cause of action to compel arbitration accrues, and the limitations period begins, with the refusal to arbitrate” and further noted that the refusal to arbitrate must be “unequivocal.” In this case, the employer’s representative informed the union that the company believed the grievances were not arbitrable and that he would give the grievances to the Company’s Vice President of Human Resources for a written response. The Fourth Circuit found that the representative’s response was not an “unequivocal” refusal, as it suggested that his statement was subject to higher review and that the verbal response was “too informal to end the matter.”

The Fourth Circuit also determined that the arbitration provisions survived the expiration of the CBA and P&I agreement. The Court recognized that a grievance filed after a contract expires is arbitrable only if it arose under the contract. The Court then turned to the actual language of the contracts in this case – the CBA and the P&I agreement – and found that language of the provisions themselves provided that the arbitration procedure would continue to apply to disputes over pension and health insurance benefits even after the agreements expired.

Lessons Learned: This case offers several cautionary lessons to employers. First, employers should be definitive in refusing to arbitrate. Verbal refusals should be immediately followed with clear writings that do not contemplate further review by higher authority or the possibility of reconsideration. Second, employers should be mindful of the specific arbitration language that is included in CBAs and other union agreements. If the employer does not wish the arbitration provisions to survive the expiration of an agreement, the language must be clear in that regard.

Non-Payroll Records Do Not Necessarily Result In Employer Knowledge Of Overtime Worked

The U.S. Court of Appeals for the Eighth Circuit held that an employer’s access to certain non-payroll records reflecting overtime worked did not constitute constructive knowledge that the employees actually worked overtime.

Facts of the Case: In Hertz v. Woodbury County, the county tracked the duty-status of its sheriff’s department officers using a Computer Aided Dispatch (CAD) program, which records the moment at which the officer goes on duty and the moment that he/she goes off duty. By using CAD, the county could track what officers were available to respond to emergencies. For purposes of payroll, county officers were required to track their hours on a “sign-in sheet” system, in which each officer initialed a sheet to verify that he/she worked his/her scheduled hours for the day. If working overtime, the officer was required to submit an overtime slip indicating the number of excess hours worked, which was then approved by a supervisor.

The Fair Labor Standards Act requires that an employer pay overtime if it knew or should have known that its employees were working more than their scheduled 40 hours in a workweek. A number of officers sued the county for unpaid overtime, based on the hours worked as reflected on the CAD records. They argued that the CAD records established constructive knowledge by the county that they worked overtime.

The Court’s Ruling: The Eighth Circuit held that “[a]ccess to records indicating that employees were working overtime . . . is not necessarily sufficient to establish constructive knowledge.” In this case, although the payroll office technically had access to the CAD records, they were not used for payroll purposes. Rather, they were only used so dispatchers would know what officers to deploy in an emergency. The Eighth Circuit determined that it would not have been reasonable to expect the county to “weed through” CAD records, which it deemed a “severe” administrative burden, to determine if officers were working overtime, particularly because the county had an established procedure for recording overtime hours.

The Court noted, however, that non-payroll records could, in other instances, constitute constructive knowledge by the employer of overtime hours worked. The Court gave examples of where employees are discouraged from submitting overtime slips or where submitted slips are not paid, or where the employer is on notice that hours are regularly under-reported.

Lessons Learned: Employers should be aware that non-payroll records that track hours worked could be used to establish overtime hours, and should review whether such records are being utilized in some fashion. Whether such records should be considered for purposes of overtime will depend on a number of factors, including whether the employer has an established procedure for recording overtime that does not rely on such non-payroll records, whether the procedure accurately captures and compensates overtime worked, and how accessible the information in those records is to those with payroll authority.

TAKE NOTE

E-Verify. The effective date of the rule requiring federal contractors to use E-verify (the internet-based system used to verify employee eligibility to work in the U.S.) has been further delayed from May 21, 2009 to September 8, 2009. As was explained in our January E-Update, the effective date of the rule, which was first published on November 14, 2008, had been extended several times, most recently to May 21, 2009. Previously, the Obama Administration cited a need to consider the rule further as the reason for initial delays. These repeated delays resulting from continued opposition to mandatory use of E-verify by both employer and employee advocacy groups suggest that the rule may ultimately be revised significantly or even rescinded.

DOL Wage And Hour Enforcement. In response to a Government Accountability Office (GAO) report finding that the Wage and Hour Department (WHD) has not properly investigated claims of wage and hour violations on a regular basis, Secretary of Labor Hilda Solis issued a statement, announcing the DOL’s renewed focus on enforcement. The GAO determined that the WHD’s processes for complaint intake, investigation and conciliation were ineffective. To address these issues, Secretary Solis stated that the WHD will be adding 150 investigators to its field offices to support enforcement responsibilities. The agency will also hire an additional 100 investigators pursuant to the American Recovery and Reinvestment Act to ensure that government contractors on stimulus projects comply with wage and hour laws. Employers can expect to see increased WHD investigative activity as a result of this renewed focus and expanded staffing.

“Association” Retaliation. In Thompson v. North American Stainless, the U.S. Court of Appeals for the Sixth Circuit rejected a claim by an employee that he was terminated in retaliation for his fiancé’s filing of an EEOC charge against their mutual employer. Title VII prohibits retaliation against individuals who engage in protected activity by opposing an unlawful discriminatory practice, filing a charge of discrimination, or assisting or participating in a discrimination investigation. The Sixth Circuit determined that, under the plain language of Title VII, those who did not personally engage in such protected activity cannot bring a claim for retaliation, even if the person is associated with another person who has engaged in protected activity. In so holding, the Sixth Circuit joined the Third, Fifth and Eighth Circuits, while recognizing that several federal District Courts have held to the contrary.

TOP TIP

Are Your Employees Tweeting?

The latest social networking phenomenon is Twitter. Twitter is powerful, easy to use and readily accessible. Given our increasingly wired-in workforce, it is likely that some of your employees are using Twitter.

Many employers may wonder, what exactly is Twitter? Through the website Twitter.com, individuals or other entities can post “tweets,” which are short messages of 140 characters or less, to their profile page. Tweets from a particular author are automatically delivered via mobile texting, instant messaging, or the web, to those who sign up to receive them, known as “Followers.” An author can restrict followers to a limited group, or can permit general access.

The use of Twitter has exploded, with millions of users worldwide. It can be used for social purposes (to update friends), entertainment purposes (to follow a celebrity’s tweets), informational purposes (from organizations like the American Red Cross), and political purposes (from political candidates like Barack Obama during the 2008 campaign). Media sources report that Twitter was a significant tool in the post-election protests in Iran.

Twitter can have an impact in the workplace. Of concern to employers, employees may be using company equipment to send or receive tweets, and may be doing so during work time. In addition, employees could post negative tweets about their employer. As with other social networking sites, like Facebook or MySpace, employers may wish to implement policies to address employee use of Twitter. Employers must be careful in drafting policies that attempt to regulate an employee’s communication activities, however, as an overly broad policy may run afoul of the National Labor Relations Act, which gives employees the right to engage in “concerted activities for the purpose of . . . mutual aid and protection.” This right has been extended to electronic communications, like e-mails and web postings.

A properly drafted policy may include the following:

- Employees may not use company equipment or systems to “twitter.”
- Twittering on personal cell phones, PDAs, etc. may not interfere with working time.
- Employees should not tweet on behalf of the employer, unless approved by appropriate management.
- Employees may not use company logos or trademarks in tweets or twitpics (a service that enables users to post pictures to Twitter) without company authorization.
- Employees may not post tweets that disparage company products, contain false statements or breach company confidentiality policies.
- Employees may not post tweets of a defamatory, obscene, harassing, proprietary or libelous nature.
- Employees who tweet about the company should provide a disclaimer on their profile page that the opinions are their own, and not those of the company.

As with any other company policy, each employer should assess what specific issues need to be addressed with a Twitter policy.

For greater clarification of any of these issues, you may contact any Shawe Rosenthal attorney.

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