In a development that may be of interest both to those who follow Fair Labor Standards Act (“FLSA”) developments and to those interested in mediation, the U.S. District Court of the Southern District of New York has mandated early mediation for all FLSA cases. The pilot program responds to the surge in FLSA case filings by sending cases to mediation immediately upon the appearance of the defendant.

The mediation is to be scheduled within four (4) weeks of the Court’s issuance of its standard order. Limited disclosures are required as follows:

  1. Both parties to produce any existing documents describing plaintiff’s duties and responsibilities
  2. Both parties to produce records of pay and hours worked by plaintiff
  3. Plaintiff to produce spreadsheet of alleged underpayments and other damages
  4. Defendant to produce documents describing compensation policies
  5. If claiming inability to pay, defendant to produce proof of financial condition

If the mediation is successful, the parties are then required to provide a memorandum to the Court so that it can perform its function of approving the FLSA settlement.

Some see a conflict between the voluntary process of mediation and forcing parties to participate in it. However, getting parties to agree to mediate disputes before discovery has taken place is a tough sell, especially to lawyers. In FLSA cases, the key facts are often available and material/factual issues may be limited. FLSA cases should lend themselves well to early resolution, and mandating prompt mediation with limited, but relevant, disclosures is probably well worth the investment in the pilot project. It remains to be seen if other courts will follow along.

The Ohio Supreme Court recently held that employees need not prove they were actually injured on the job to prevail in a retaliation claim.

Employers should already be aware that, under Ohio law, they may not discharge or take punitive action against an employee for filing a workers’ compensation claim after sustaining an injury at work. The Ohio Supreme Court recently issued a decision that will deter employers from disciplining even employees who file bogus workers’ compensation claims. In Onderko v. Sierra Lobo, Inc., Slip Opinion No. 2016-Ohio-5027, the Court held that a Plaintiff in a retaliatory discharge claim is not required to prove that he or she was injured on the job, but only that he or she was discharged for filing a workers’ compensation claim.

In the Onderko case, the employee had been denied workers’ compensation benefits because the Industrial Commission found that he was actually injured outside of work, not on the job. After his claim was denied, his employer terminated him for his deceptive attempt to get workers’ compensation benefits for a non-work-related injury. The employee then sued his employer for retaliatory discharge.

It was undisputed that the employee had been fired for filing the invalid workers’ compensation claim. The employer argued that, because the employee’s claim had been denied, the employee could not prevail in a retaliation claim as a matter of law. The Supreme Court disagreed, clarifying that a retaliation claim requires only that the employee prove that he was discharged for filing a workers’ compensation claim for a work-related injury and that proof that a work-related injury actually occurred is not necessary.

The dissent warned of the implication of the Court’s decision, stating:

A court should not construe the statute in a manner to encourage fraudulent claims for workers’ compensation benefits, and here, the Bureau of Workers’ Compensation determined that there was no workplace injury. The evidence therefore supports the trial court finding that Sierra Lobo, Inc., fired Onderko for filing a fraudulent claim.

The majority clarified that its holding does not suggest that a fraudulent or false claim for workers’ compensation may be pursued without penalty and that such conduct still may provide grounds for termination. The filing of a false claim is a crime in Ohio. Whether fraud is valid defense to a retaliation claim, however, was not specifically addressed by the Court. In this case, the employer certainly felt that the claim was deceptive.

Onderko is one of a series of cases that have broadened the strike zone for retaliation plaintiffs. The case instructs employers to use caution when disciplining or discharging an employee who has filed an unsuccessful workers’ compensation claim, even where the claim appears to be bogus. To take such adverse action, the employer must have a legitimate non-retaliatory reason unrelated to the employee’s exercise of his or her rights under the workers’ compensation statutes.

On September 20, 2016, the Supreme Court of Ohio adopted an amendment to the Ohio Rules of Professional Conduct that clarifies the ethical responsibilities for attorneys under Ohio’s new medical marijuana law (H.B. 523).

Previously, on August 5, 2016, in a non-binding advisory opinion, the Supreme Court of Ohio’s Board of Professional Conduct ruled that attorneys could not counsel or advise clients regarding marijuana businesses in Ohio (Opinion 2016-6). After this opinion, the Supreme Court of Ohio moved quickly in order to clarify an attorney’s ethical responsibilities under H.B. 523. Thus, on August 30, 2016, the Supreme Court of Ohio proposed the following amendment to Prof. Cond. R. 1.2(d)(2):

A lawyer may counsel or assist a client regarding conduct expressly permitted under Sub.H.B. 523 of the 131st General Assembly authorizing the use of marijuana for medical purposes and any state statutes, rules, orders, or other provisions implementing the act. In these circumstances, the lawyer shall advise the client regarding related federal law.

After the commenting period ended on September 18, 2016, the Supreme Court of Ohio adopted the proposed amendment verbatim on September 20, 2016. Now, attorneys may counsel and advise clients regarding conduct expressly permitted under H.B. 523, and if they do, attorneys must also advise clients of related federal law.

However, Prof. Cond. R. 1.2(d)(2) does not address an attorney’s use of medical marijuana or ownership of a medical marijuana business. Therefore, pursuant to the advisory opinion, an attorney’s use of medical marijuana or ownership of a medical marijuana business may reflect adversely on the attorney’s honesty or trustworthiness and fitness to practice law.

A copy of the amendment can be found here.

With the clock counting down toward the December 1, 2016, effective date of the U.S. Department of Labor’s new overtime rules, officials from 21 states have stepped forward to try to stop the DOL in its tracks. In particular, on September 20, 2016, Texas Attorney General Ken Paxton, backed by 21 state officials from across the country, filed a lawsuit in federal court in Sherman, Texas, challenging the DOL’s rules. The lawsuit challenges the rules on several substantive and procedural grounds and seeks an injunction preventing the rules from taking effect. Secretary of Labor Thomas Perez expressed confidence that the rules will survive all legislative, judicial or other challenges. The same day, private sector groups, led by the U.S. Chamber of Commerce, filed a suit seeking the same relief in the same court.

It is clear that both sides of this battle will approach it with vigor, although it is not at all clear in whose favor the court will rule. As a result, employers who are making plans to comply with the rules as of December 1 should not abandon those plans just yet. We will follow the lawsuit closely, and we will be prepared to advise our clients as to any developments that may arise.

outsickSince Connecticut’s 2011 passage of the first law requiring employers to issue paid sick leave benefits, over 30 states, counties, and cities — mostly on the East and West coasts — have enacted similar statues. These include Massachusetts, California, Oregon, Vermont, San Francisco, Seattle, New York City, and Philadelphia.  Chicago and Minneapolis have also passed paid leave ordinances.

On September 7, 2016 Saint Paul, Minnesota joined its Twin City in following this bi-coastal trend when its City Council unanimously passed a paid sick time ordinance. Under the new St. Paul Ordinance, employees may earn up to 48 hours of sick time per year with the option of carrying over hours into the following year. No more than 80 hours may be accrued at any time. The St. Paul Ordinance contains no express limit on the amount of paid sick time that an employee can use in a year.

As is the case in other states in which multiple paid sick leave laws have been passed by local governments, St. Paul and Minneapolis’ ordinances differ in material respects. First, while the Minneapolis Ordinance exempts businesses with five or fewer employees, the St. Paul Ordinance applies to businesses of all sizes. The St. Paul Ordinance also provides for a private right of action against employers for retaliation, while the Minneapolis Ordinance currently does not. Duluth has now also begun exploring its own individualized sick leave ordinance, which could potentially lead to more inconsistency within the State.

Both before and after its passage, members of the business community as well as the St. Paul Chamber of Commerce asked the St. Paul City Council to consider amending the Ordinance to align with Minneapolis’ small company exemption, and to include additional exemptions for highly-compensated part-time workers and student workers at private colleges. Those requests were rejected.

The St. Paul ordinance will take effect July 1, 2017 for employers with 24 or more employees and January 1, 2018 for employers with fewer than 24 employees.

Employers operating in various locations around the country need to be alert to these local ordinances, which are not always consistent. Shying away from the coasts is no longer a reliable method of avoiding the imposition of these costs upon employers. Accordingly, covered employers should review their policies and handbooks carefully to ensure compliance with the various paid sick leave laws across the country.

Workplace-RetaliationEarlier this year, we reviewed the Equal Employment Opportunity Commission’s (“EEOC”) proposed enforcement guidelines regarding retaliation claims. After a 30-day comment period and input from approximately 60 individuals and organizations, on August 25, 2016, the EEOC released the final version of the Enforcement Guidance on Retaliation and Related Issues (“Guidance”). The Guidance comes nearly 20 years after the release of the EEOC’s last guidance on retaliation, during which time the Courts and the EEOC have released significant decisions on the topic of protected workplace activity.

The EEOC protects individuals from retaliation by their employer when they “participate” in an EEO process or “oppose” discrimination. While “participation” is narrowly defined as filing a charge; or testifying, assisting, or participating in an investigation, proceeding, or hearing, it is broadly protected and does not require the individual to have acted in good faith.

The new regulations also attempt to delineate what constitutes “opposition” activity. Opposition activity is broadly defined as any activity by an individual in opposition to discrimination. Unlike the participate clause, however, the opposition clause is narrowly applied to those having a good faith belief that there has been a violation of the law and those who act reasonably in opposition.

The Guidance gives “protected activity” an expansive meaning and, not surprisingly, defers to the EEOC to interpret what conduct is protected. The Guidance lists a number of activities that are considered to be protected under the opposition clause:

  • Complaining to management about discrimination against oneself or coworkers;
  • Accompanying a coworker to the human resources office to file an internal EEO complaint;
  • Taking a stand against an employer’s discriminatory practices by refusing to take action (e.g., refusing to follow a supervisor’s order to fire a junior worker for discriminatory reasons);
  • Answering an employer’s questions about a discrimination complaint initiated by another employee; or
  • Explicitly or implicitly communicating a belief that some workplace condition is or could become harassment or discrimination.

Employers should be aware that the opposition does not need to be in any particular form or specifically use words such as “harassment” or “discrimination.” An employee who files a broad complaint of “unfair” treatment in the workplace may be protected if the circumstances indicate that unfair treatment may include some discrimination based on a protected status. In addition, while the employee must have a good faith belief that discrimination has occurred, the new regulations make clear that the employee does not have to prove the underlying claim of wrongdoing to be successful in his or her retaliation claim.

Taking a cue from recent Supreme Court cases, the Guidance also broadens the definition of “adverse action” to include anything that could be reasonably likely to deter protected activity — even if it has no tangible effect on the individual’s employment. Adverse action can be non‑work-related, occur outside of work, and can be associational (e.g., taken against a third‑party who is closely linked to a complaining employee). This is different from the adverse action needed to sustain a claim of discrimination, which must be substantial and work‑related (e.g., suspension, termination).

Retaliation claims continue to be the most frequently filed claims with the EEOC – almost 45% of charges filed yearly allege workplace retaliation. In light of this new Guidance as well as the EEOC’s recent efforts to expand the number of protected categories, employers can expect these numbers to rise. Employers should continue to update employee handbooks and provide training to ensure that employees, especially those in supervisory roles, are aware of what may constitute workplace retaliation.

On August 10, 2016, the Securities and Exchange Commission issued a cease and desist order against BlueLinx Holdings, Inc. that further demonstrates the scrutiny of various federal agencies with respect to severance agreements.

In BlueLinx, the SEC found a provision in a severance agreement that restricted employees from providing information to the SEC without company approval. This finding had a chilling effect on employees reporting suspected fraudulent activity. Such “whistleblowing” is specifically permitted and encouraged under the Dodd-Frank Act, which even offers financial incentives to employees to do so. While the severance agreement in issue did allow severed employees to file a charge with the SEC, it did not allow them to provide information to the SEC without company approval.

The SEC fined BlueLinx $265,000, and also ordered the company to modify its severance agreements to add language that advised employees they were not limited in their ability to file a charge or complaint with the SEC. The SEC did not stop there, however, as it also stated that BlueLinx must advise employees they were not limited in their ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, or any other federal, state or local agency or commission. Additionally, the SEC stated that the severance agreements must inform employees that they were not limited in their ability to communicate with any governmental agency, nor from participating in an investigation or action by such agencies, or from receiving any monies for providing information (i.e., the Dodd-Frank whistleblowing reward).

This last provision is particularly troubling, as the nature of the release is that the employee gives up a claim for potential future monetary recovery in exchange for a current payment. Almost every current, well-drafted release informs an employee that, although he or she may provide information for and assist in government investigations, there is no longer any right to share in monetary recoveries.

This decision parallels some recent decisions and guidance from the U.S. Equal Employment Opportunity Commission and the National Labor Relations Board wherein the agencies have scrutinized severance agreements and found certain language to have a chilling effect on the exercise of statutory rights, and it highlights the need for employers to review carefully the language that is included in severance and separation agreements.

In general, the Family and Medical Leave Act (“FMLA”) provides that eligible employees may take twelve weeks of unpaid leave in a twelve-month period for the serious health condition of the employee, the employee’s spouse, the employee’s parents or the employee’s children. Thus, if an employee normally works five, eight-hour days a week, and the employee misses one eight-hour day because of an FMLA event, the employee uses one-fifth of a week of FMLA leave. FMLA permits an employer to convert these fractions to their hourly equivalent so long as the conversion equitably reflects the employee’s total normally scheduled hours. Although calculating the twelve-week period is simple enough when the employee works a regular schedule and takes leave in full day increments, complications arise when the employee’s work hours vary, and the employee takes intermittent leave. An example of this problem occurs when an employee is required from time to time to work mandatory overtime and misses the overtime because of an FMLA event.

The issue of calculating mandatory overtime as part of an employee’s FMLA leave entitlement was recently addressed by the United States Court of Appeals for the Eighth Circuit in Hernandez v. Bridgestone Ams. Tire Operations, LLC, 822 F.3d 1001 (8th Cir. 2016). In that case, an employee who was required to work mandatory overtime missed several overtime shifts to care for the serious health condition of his child. The employer included the mandatory overtime as FMLA time but did not include the hours when calculating the employee’s leave entitlement. After the employee had exhausted all his FMLA leave, and took subsequent, unexcused absences to care for his child, he was discharged because of his attendance. The employee sued the employer alleging that it had interfered with his FMLA entitlement. The Court of Appeals concluded that the employer was correct in counting the missed overtime hours against his FMLA entitlement. Notwithstanding this finding, the Court held that employer still had improperly interfered with the employee’s FMLA rights because, in calculating the number of hours to which the employee was entitled under FMLA, the employer did not include mandatory overtime. In other words, the employer counted the missed mandatory overtime in calculating FMLA usage but did not count mandatory overtime in calculating the amount of FMLA leave to which the employee was entitled.

In a situation like Bridgestone, if an employee’s schedule varies from week to week because of mandatory overtime to such an extent that an employer is unable to determine with certainty how many hours the employee would otherwise have worked but for the taking of FMLA leave, a weekly average of hours scheduled over the twelve months prior to the beginning of the leave (including any hours for which the employee took leave of any type) are to be used in calculating the employee’s leave entitlement.  For example, if an employee regularly scheduled to work 50 hours per week takes an entire week of FMLA leave, the whole 50 hours can be counted as FMLA time used, but that may or may not convert to one week of leave depending on how many hours are considered to be in the employer’s “work week.”  If the employer’s average work week is 50 hours, the FMLA allotment would also be one week; if the average week is 55 hours, the allotment would be .91 weeks; if the average week is 40 hours, the allotment would be 1.25 weeks.

Ultimately, the Bridgestone decision is an important reminder that employers who count missed overtime for usage purposes must also count overtime to calculate FMLA entitlement.

Since 2014, Congress has maintained an appropriations rider prohibiting the Department of Justice (“DOJ”) from using funds in relation to 33 named states and territories “to prevent such States from implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. No. 113-235, § 538, 128 Stat. 2130, 2217 (2014). DOJ has regarded this as preventing only efforts directed at those states, and not a bar to its prosecution of violations of federal law by individuals engaging in medical marijuana activities that would be permissible under state medical marijuana laws.

In accordance with that interpretation, DOJ brought criminal actions against a number of marijuana cultivators, processors and distributors in California and Washington. The defendants sought to have their cases dismissed and asked for an injunction against DOJ. Ten of those cases were consolidated for consideration by the United States Court of Appeals for the Ninth Circuit. The opinion, U.S. v. McIntosh, No. 15-10117 (9th Cir. Aug. 16, 2016), contained the following points:

  1. The Appeals Court had jurisdiction because the lower courts had denied injunctions sought by the defendants
  2. The defendants had standing to challenge DOJ’s allegedly improper use of funds
  3. DOJ’s interpretation of the rider was incorrect. Prosecuting individuals under the federal Controlled Substances Act, 21 U.S.C. §§ 801 et seq., for marijuana felonies would inevitably “interfere” with states’ efforts to implement their medical marijuana programs
  4. The DOJ is, however, entitled to prosecute individuals who are not acting in strict compliance with the programs of the listed states
  5. The cases should be remanded for evidentiary hearings on whether the defendants were actually acting in conformity with their states’ medical marijuana laws

For those interested in medical marijuana in Ohio, it is important to note that Ohio is not one of the listed states, so the current version of the appropriations rider does not protect Ohio or Ohio defendants. With the Ninth Circuit’s broad interpretation of the rider, it may be that passage of the rider for the 2017 fiscal year will not be as automatic as in prior years and will not be extended to additional jurisdictions.


The U.S. Drug Enforcement Agency (“DEA”) may issue a decision as soon as this summer regarding the potential downgrading of cannabis to allow for its medical use.

In response to a letter from seven U.S. Senators in December, 2015, the U.S. Drug Enforcement Agency issued a 26-page response in April, 2016, that many believe indicates a willingness to change the current illegal status of marijuana from a Schedule I substance to a Schedule II prescription drug.

While changing the status of a Schedule I drug is rare, it is not unprecedented, as the DEA has done so at least five times in the past.

If cannabis became a Schedule II prescription drug, it would legalize medical marijuana in all 50 states and the U.S. territories. It is uncertain whether such a change would force those states that have legalized marijuana for recreational use to revert to prescription-only marijuana use, or whether the DEA would allow states to decide whether and how to make legalized marijuana available for recreational use. This is an editorial that discusses the various options available to the DEA.