President Obama’s National Labor Relations Board (NLRB) faced intense criticism for issuing significantly more precedent-changing pro-labor rulings than any previous Board. During President Trump’s first 200 days, employers have been waiting for Board nominees to be confirmed to two open slots, giving Republicans a 3-2 majority and shifting NLRB decisions towards individual employee and management rights.

One of Trump’s nominees, Marvin Kaplan, a former Occupational Safety and Health Review Commission lawyer, was confirmed (50-48) to fill one of the two open Board seats on Wednesday, August 2. Kaplan will serve a five-year term expiring August 27, 2020. Trump’s second nominee, William Emanuel, a management-side employment attorney, has been approved by the Senate Committee on Health, Education, Labor, and Pensions. A full Senate vote has not yet been scheduled, but is expected after the August recess. If he is confirmed, the Board will have a Republican majority for the first time since 2007.

The General Counsel position, currently held by Democrat Richard Griffin, Jr., will become vacant in November 2017. The Administration is considering Peter Robb, a management-side labor attorney, as a potential General Counsel nominee. The General Counsel controls which cases the NLRB prioritizes and pursues.  Consequently, whomever Trump chooses will have the opportunity to begin the process of reversing many of the pro-labor rulings issued by the Obama Board.

Finally, Phillip Miscimarra, Chairman of the NLRB and the only Republican remaining from Obama’s Board, announced on August 8 that he would no longer serve on the Board when his term expires in December 2017. Miscimarra made this decision in order to spend more time with his family. Miscimarra dissented from nearly every major precedent change from 2013 to the present. The Administration will need to make a prompt nomination of a qualified Republican to Miscimarra’s seat to avoid 2-2 deadlocked decisions of the full Board (if Emanuel is confirmed) or having cases decided by three member panels with 2-1 Democrat majorities. The Senate already has a full legislative schedule through the remainder of 2017, so confirming a Board nominee before Chairman Miscimarra leaves his seat will be more difficult the longer the President takes to make his selection.

Recently, House Republicans renewed efforts to rein in expansion of two federal labor laws’ joint employer definition by introducing the Save Local Business Act (“SLRA”) (H.R. 3441). The SLRA limits how affiliated companies are considered joint employers for collective bargaining liability purposes and within wage and hour laws.

The SLRA represents an expanded effort to reverse the National Labor Relations Board’s (“NLRB”) Browning-Ferris Industries of California Inc., 362 NLRB No. 186 (Aug. 27, 2015) decision. In Browning-Ferris, the NLRB reversed a 30-year old standard for determining joint employer status under the National Labor Relations Act (“NLRA”). According to Browning-Ferris, affiliated companies are joint employers if they 1) “are both employers within the meaning of the common law” and 2) “share or co-determine” matters governing the essential terms and conditions of employment. Under the first prong, the NLRB focuses on a company’s “right to control” employees and does not consider whether the company exercises that right. For example, a company may create a common law employer relationship if it reserves ultimate discharge authority over temporary workers but does not exercise that right. For the second prong, the NLRB defines “essential terms and conditions” to include wages, hours, hiring, firing, and supervision. Evidence of controlling these “essential terms and conditions” may include dictating the number of contingent workers supplied and controlling schedules or overtime.

The SLRA also addresses recent expansion of the joint employer definition by courts under the Fair Labor Standards Act (“FLSA”). For example, in Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017), the federal Fourth Circuit Court of Appeals, covering Maryland, North Carolina, South Carolina, West Virginia, and Virginia, applied an expanded test to conclude that general and subcontractors were joint employers. Under the Salinas-applied test, joint employment exists when 1) two companies “share, agree to allocate responsibility for, or otherwise codetermine – formally or informally, directly or indirectly – the essential terms and conditions of a worker’s employment” and 2) the companies’ combined influence “over the terms and conditions of the worker’s employment” renders the person an employee instead of an independent contractor. This determination has significant implications because, as joint employers, both companies must comply with the FLSA as it relates to an individual’s entire employment for a workweek. In other words, a company must add the hours worked for both employers to determine whether and to what extent the individual earned overtime pay.

The SLRA rolls back these expanded definitions by redefining joint employer in both the NLRA and FLSA.  Specifically, under the Act:

A person may be considered a joint employer in relation to an employee only if such person directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment (including hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, and administering employee discipline).

Ultimately, the bill seeks to reinstate the traditional joint employer standard and restore some semblance of predictability that the NLRB eviscerated in the Browning-Ferris decision. Although the House is on recess, the bill will almost assuredly proceed within Education and Workforce Committee upon Congress’s September return. In addition, the bill could quickly move to the House floor for consideration and, with sufficient support, advance to the Senate. Frantz Ward will keep close track of the bill and provide updates on the SLRA’s progress.

Two recent events serve as continuing examples of how attitudes towards marijuana are changing in the U.S. The National Football League (“NFL”), which strictly enforces its drug policies, may be changing its mind on medical marijuana. The NFL Players Association (“NFLPA”) has already been working on its own study for the potential use of medical marijuana for pain management. On August 1, 2017, the NFL wrote a letter to the NFLPA indicating its willingness to work together to study the potential use of marijuana for pain management and for acute and chronic conditions for players.

Further, former players have come out in favor of the use of marijuana for medical reasons. For example, on July 24, 2017, former New York Jets Defensive End Marvin Washington was one of five plaintiffs in a lawsuit filed in the Southern District of New York against Attorney General Jeff Sessions, the Department of Justice, and the Drug Enforcement Agency. See Washington, et al. v. Sessions, et al., No. 1:17-cv-05625 (S.D.N.Y.). The lawsuit seeks to remove marijuana from the list of Schedule I drugs, as it is currently classified under the Controlled Substances Act. Marijuana is classified in the same category as heroin, LSD, and Quaaludes, to name a few. However, drugs such as methamphetamine and cocaine are classified as Schedule II drugs and are subject to less strict enforcement.

Are the changes to the overtime rules going to take effect or not? Ever since a federal court issued an injunction in late 2016 stopping major changes to the federal overtime rules, employers have anxiously been waiting for an answer to that question. Last week, the U.S. Department of Labor (DOL) turned the tables, and asked employers and others whether the overtime rules should change and, if so, how they should change. More specifically, the DOL published a formal Request for Information (RFI) in the Federal Register on July 26 acknowledging concerns about the previously proposed changes and asking the public for its help in formulating a new proposal.

The DOL’s RFI poses eleven specific questions and asks interested individuals and organizations to provide written answers to those questions within 60 days. The questions suggest that the DOL may be open to considering increasing the minimum salary level for exempt employees, but perhaps not increasing it as much as the DOL had proposed in 2016. The questions also suggest the DOL may revisit the idea of automatic increases to the minimum salary level and may explore other overtime rule changes.

Many commenters view the DOL’s action as a positive sign for employers, especially given certain business-friendly comments made by Secretary of Labor Alexander Acosta during his March 2017 confirmation hearing. At the very least, this is the first step in a process that will hopefully result in more balanced and reasonable changes to the overtime rules. We will certainly continue to monitor the issue.

In Cristina Barbuto v. Advantage Sales & Marketing LLC and Joanne Meredith Villaruz, Massachusetts Supreme Judicial Court Case No. SJC-12226, the Massachusetts Supreme Court held on July 17, 2017, that an employee in Massachusetts can bring a claim of disability discrimination after being fired for using medical marijuana.

Medical marijuana was approved by Massachusetts voters in 2012, and the law provides that individuals who qualify for the use of medical marijuana cannot be punished for using it.  Barbuto suffers from Crohn’s disease and was using medical marijuana two to three times per week, although never during the work day, when she began working for Advantage Sales in 2014. After failing a mandatory drug test, Barbuto was terminated by Advantage Sales on the basis that Advantage follows federal law and not state law, and of course the use of marijuana is illegal under federal law.

In upholding Barbuto’s right to bring a disability discrimination claim under State law, the Massachusetts’ high court stated that although an employee’s possession of medical marijuana may violate federal law, that fact does not make it a per se unreasonable accommodation. The court further stated that even if allowing the use of medical marijuana was unreasonable, Advantage should have still engaged in the interactive process with Barbuto to determine if there was another potential, reasonable accommodation, such as using another drug that did not violate the company’s drug policy. Advantage will have the opportunity to demonstrate the unreasonableness of medical marijuana as an accommodation on remand.

While the court allowed Barbuto’s disability claim to stand, it did state that employers do not have to tolerate the use of medical marijuana during work time, nor allow medical marijuana for individuals in safety-sensitive jobs or those covered by the federal drug-free workplace laws. The court additionally stated that there is no implied statutory cause of action for individuals alleging a violation of the state’s medical marijuana law.

As reported in prior postings, Ohio’s medical marijuana law is much more protective of employers than the law passed in Massachusetts, but it is of course difficult to prevent determined courts from finding ways around what would otherwise be clear provisions of the law.

The U.S. Citizenship and Immigration Services released a new I-9 Form on July 17, 2017, to replace the I-9 Form that was last revised and issued in November 2016.

The I-9 is an Employment Eligibility Verification form that all U.S. employers must use to verify the identity and authorization of individuals hired to work in the United States. Employers are required to complete an I-9 for each individual they hire to work in the U.S., regardless of whether the person is a citizen of the United States.

The new form may be used immediately. The prior I-9 also may be used until September 17, 2017, but as of September 18, 2017, employers must use the new form.

While not in the employment field, the latest attack on arbitration as a sensible, fair and comparatively inexpensive and fast dispute resolution mechanism comes from the federal government. Until now, the federal level has been a primary supporter of arbitration, through the Federal Arbitration Act, which protects arbitration clauses in contracts affecting commerce from interference by states and local governments, and policies of agencies. Now, the Consumer Finance Protection Bureau has taken a provocative step hostile to the institution of arbitration. On Monday, July 10, it issued a Final Rule prohibiting banks and other financial institutions under the jurisdiction of the CFPB from using contracts that require individuals with disputes to arbitrate those disputes individually.

In addition, the Rule would require financial institutions to provide broad information about the number of arbitration cases filed, and the outcomes.

Characterizing arbitration provisions as “Contract Gotcha’s”, the CFPB relied upon a controversial study completed in 2015. The study reviewed available records of class actions, small claims actions and arbitration cases in 2010—2012, plus a survey. Many cases covered in the survey’s time period were not completed by the cut-off date, so their results were not included. There are substantial disagreements over the validity of the study and the “lessons” from the data it assembled. The CFPB, however, believes the study supports its conclusion that individual arbitration is unfair and abusive to consumers.

The CFPB’s effort to prevent financial institutions from prohibiting court-based class actions by consumers instead of arbitration is likely to draw a response from Congress. Employer and business groups have already urged Congress to begin the process of using the Congressional Review Act to overturn the Rule. The CRA process, if successful, would not only void this rule, but would also prevent the agency from issuing a similar rule in the future without authorization. In addition, the CFPB is currently subject to scrutiny from Congress and the Trump Administration due to its possibly unconstitutional independence from Congressional or Presidential oversight. See the Trump Administration’s Brief asserting unconstitutionality here. This new rulemaking effort may well result in a response from the Administration consisting of an attempt to remove the head of the CFPB, Richard Cordray (who is rumored to be considering a run for the office of Governor of Ohio in 2018 as a Democrat).

The new Rule from the CFPB may represent the first of many efforts to roll back the ability of businesses to manage their dispute resolution processes through arbitration, among other tools. It could, on the other hand, represent a last gasp of those who prefer the current system of class action litigation, where businesses and lawyers resolve cases with consumers receiving little or no real relief. https://cei.org/issues/class-action-fairness

Dangerous precedent with respect to the State’s use of Ohio employers’ money has just been set with the passing of House Bill 49, the state’s Biannual Appropriation Bill. Specifically, House Bill 49 contains a provision authorizing the Office of Budget and Management (OBM) to “raid” BWC and Industrial Commission budgets, transferring up to two percent of those budgets to the General Revenue Fund. This is despite the fact that the BWC and Industrial Commission budgets are funded entirely by employers’ premiums and assessments, not state taxes. On June 30, 2017, despite virtually unanimous opposition to the proposed change amongst employers and business groups in Ohio, House Bill 49 passed with this budget change intact.

In the short term, this measure essentially forces Ohio employers to subsidize, at least in part, any and all state operations through their BWC premiums rather than state taxes. In the long term, this change creates a dangerous precedent in authorizing the raiding of funds collected for one specific purpose to be used to cover budget shortfalls elsewhere, completely unrelated to that intended purpose. It makes future premium rebates less likely and creates an additional burden on Ohio’s “State Fund” employers. In addition, this change presents an issue of constitutionality – Ohio’s Constitution reserves these BWC and Industrial Commission funds for the treatment of injured workers and the promotion of safer workplaces.

Employers and business groups will continue to oppose this measure, possibly through litigation. Frantz Ward will follow this issue closely.

BN-KB504_edp082_GR_20150828194637Last week, the U.S. Department of Justice (DOJ) made a significant reversal in its position regarding the critical class action waiver cases pending before the Supreme Court. In January, the Supreme Court granted certiorari in three consolidated cases: NLRB v. Murphy Oil USA, Inc.; Epic Systems Corp. v. Lewis; and Ernst & Young LLP v. Morris. The cases address whether employer arbitration agreements prohibiting employees from bringing or participating in class action litigation violate the National Labor Relations Act (NLRA). The Supreme Court’s decision will resolve the current circuit split on the issue.

The National Labor Relations Board (NLRB) in D.R. Horton, Inc., 357 NLRB No. 184 (2012), held that class action waivers violate the NLRA and has consistently adhered to this position, despite setbacks in some Circuits. The Sixth, Seventh, and Ninth Circuits agree with the NLRB’s position, while the Second, Fifth, and Eighth Circuits have upheld the waivers.

Under the Obama Administration, the DOJ filed a petition for a writ of certiorari on behalf of the NLRB defending the Board’s position that class action waivers are unenforceable. After the change in administration, the DOJ stated it has “reconsidered the issue and has reached the opposite conclusion.”

The DOJ’s changed stance combined with the appointment of Justice Gorsuch makes it more likely that the Supreme Court will uphold class action waivers. However, no one will know for sure until a decision is announced in late 2017 or early 2018.

The full amicus brief is available here.

The uncertainty as to how the Trump administration will proceed in the current environment of marijuana being illegal under federal law while legal, to some extent, in 29 states, has not yet caused significant angst within the $6 billion marijuana industry. Attorney General Sessions’ most recent statements on the issue may change that.

On Monday, June 12, 2017, Massroots.com published a letter it was able to obtain, that Sessions sent to Senators McConnell and Schumer, and Speaker Ryan and Representative Pelosi on May 1, 2017. In this letter, AG Sessions renewed the DOJ’s opposition to the Rohrabacher-Farr amendment. (The law which prohibits the DOJ from spending funds to interfere with the implementation of state marijuana laws.)  He asked that Congress not include such restrictions in DOJ appropriations. Sessions cites “an historic drug epidemic,” “potentially long-term uptick in violent crime,” and that smoking marijuana “has significant health effects,” to support his position in this letter. Sessions also states that drug traffickers and criminal organizations cultivate and distribute marijuana and do so “under the guise of medical marijuana laws.”

It is not yet clear what effect, if any, this letter will have. Nonetheless, it seems to signal a change in the Trump Administration’s stance on marijuana that could turn a $6 Billion industry on its head.

A copy of the letter can be obtained at:  https://www.scribd.com/document/351079834/Sessions-Asks-Congress-To-Undo-Medical-Marijuana-Protections.