The National Labor Relations Board (the “Board”) announced today that it will publish a notice of proposed rulemaking tomorrow in the Federal Register regarding its joint employer standard. The Board indicated that its proposed rulemaking would foster “predictability, consistency and stability in the determination of joint employer status.” The Board indicated that an employer could be “found to be a joint employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner not limited and routine.” The proposed rule seeks to reverse a 2015 decision of the Labor Board in Browning- Ferris Industries, which had vastly expanded the scope of the joint employer definition and overturned decades of Board precedent in this area.

A comment period of 60 days will begin with the publication of the rule in the Federal Register. Chairman Ring and members Kaplan and Emanuel joined in proposing the new joint employer standard, while Board member Lauren McFerran dissented.

One of the strongest trends in human resource management is the dramatic increase in the use of mandatory employment arbitration agreements. In late 2017, a study by the Survey Research Institute at Cornell University determined that the number of private sector, non-union employees subject to mandatory arbitration agreements had dramatically increased in recent years. The study was conducted on a national level and secured responses from more than seven hundred employers. Between 1992 and the early 2000’s, the percentage of employees subject to mandatory arbitration agreements had risen from just over two percent to almost one quarter of the U.S. work force. The study concluded that as of the fall of 2017, the percentage of private sector, non-union employees subject to mandatory arbitration had more than doubled and now exceeded fifty-five percent. Thus, over sixty million American employees are now likely subject to mandatory employment arbitration agreements.

This dramatic growth preceded the landmark decision handed down in May, 2018 by the U.S. Supreme Court in Epic Systems Corp. v. Lewis. In this decision, the Supreme Court held that under the Federal Arbitration Act, an arbitration agreement that provides that an employee waives the right to bring a class action in court must be enforced. This decision is widely expected to increase even further the use of mandatory arbitration agreements by private sector employers. The decision put to rest a potential stumbling block to the enforcement of class action waivers in arbitration agreements that had been created by a decision of the National Labor Relations Board during the Obama administration and by the decisions of several federal Courts of Appeals. Thus, the Supreme Court has made the use of such agreements even more desirable by employers who now can generally be assured that their employees cannot bring class action arbitration or court cases against them. In other words, such agreements are now an even more effective means for employers to cope with the rapid increase in recent years in the numbers, costs and risks posed by employment-related lawsuits.

The advantages that the use of mandatory arbitration agreements offer private sector employers are several and are quite substantial:

  • Generally speaking, these agreements can be used to prohibit covered employees from bringing class actions against their employers
  • These agreements can require employees to waive their right to a jury trial; indeed, this has long been the principal advantage of the use of mandatory arbitration agreements
  • Instead, these agreements typically establish a procedure that permits employers and employees to select a decision maker from a panel of experienced former judges and/or licensed attorneys or other respected neutrals to hear and decide their cases, rather than juries
  • Because these procedures remove the risk of runaway jury awards and reduce the cost of litigation, employers are much more likely to be in a position of declining to agree to unreasonable settlement demands in cases that they believe involve meritless claims
  • Indeed, some studies indicate that employers are somewhat more likely to prevail in arbitration than in court proceedings
  • At the very least, and as alluded to above, the use of arbitration agreements will enable employers and employees to resolve their claims in a less costly manner than in courts; typically such agreements involve limited amounts of discovery and fewer procedural disputes
  • Claims are typically more quickly resolved in arbitration than in courts; faster resolutions benefit both employers and employees – they both avoid the years of discovery and delay that often characterize court proceedings
  • Conventional wisdom and some anecdotal evidence indicate that some plaintiffs’ attorneys are deterred from even pursuing employment-related claims once they become aware that doing so will involve arbitration rather than a potential jury trial
  • As opposed to court trials that are matters of public record and sometimes involve considerable publicity, arbitration procedures are private processes and are not as likely to result in the damage to goodwill, reputation and brand as may public trials
  • While arbitration agreements are indeed contracts, these contracts typically provide that the employees who sign them remain employees at will
The very real and apparent advantages to employers of the use of arbitration agreements is confirmed by the opposition to their use, especially since Epic Systems. Recent writings and publicity have often cast these agreements as vehicles designed to “destroy workers’ rights”. Arbitration agreements are strongly opposed by plaintiffs lawyers groups, civil rights organizations, and some politicians. Some plaintiffs law firms now espouse the filing of hundreds of individual arbitration demands on behalf of employees of an employer in order to pressure such employers to settle rather than having to absorb the costs of defending against large numbers of such claims. Opponents of arbitration agreements have recently argued that claims of sexual discrimination and sexual harassment should not be subject to arbitration. Significant political pressure not to utilize arbitration agreements has been applied against law firms, law schools and some private sector employers. The American Bar Association has adopted a resolution urging legal employers not to require mandatory arbitration of claims of sexual harassment. The State of New York has recently passed legislation that would prohibit private sector employers from requiring arbitration of sexual harassment claims. California will soon follow suit, and other states are considering similar legislation. Such state laws may well be found to be preempted by the Federal Arbitration Act and, thus, unenforceable.

Some courts will find arbitration agreements to be unenforceable if they are both “procedurally and substantively unconscionable”. But the bottom line is that well drafted and carefully implemented arbitration agreements will be enforced, and will provide employers with a much improved context in which to defend against claims. [1] Thus, the surge in the use of arbitration agreements documented by the 2017 Cornell study is likely to continue and indeed to expand rapidly.


[1] For example, well drafted agreements should place most if not all the costs of arbitration fees on employers; the obligation to settle disputes by arbitration should apply to employers as well as employees; the process for selecting an arbitrator must be fair; the waiver of the right to a jury trial must be clear and unambiguous; and so forth. The implementation of an arbitration agreement must be preceded by adequate notice, the ramifications of such agreements must be clearly summarized for employees in some appropriate fashion; the method utilized to secure employee consent to an agreement must be considered; and analysis must be accomplished as to what form of consideration is necessary to render such consent binding.

A federal court of appeals recently ruled that, standing alone, full-time presence at the workplace is not an essential function of a job. In the case, an HR Generalist returned to work part-time while suffering from postpartum depression and separation anxiety. Initially, the employer accommodated the employee by allowing her to work five half-days per week and perform some work from home. However, after the employee sought to extend her part-time work, the employer determined it could no longer accommodate her and discharged the HR Generalist. In response, the former employee filed a lawsuit under the Americans with Disabilities Act (“ADA”).

To prove a disability discrimination case, a plaintiff first must show that he/she is an individual with a disability and is otherwise qualified for him/her job. A plaintiff can demonstrate he/she is otherwise qualified for a job if he/she can perform the position’s essential functions with or without an accommodation. Essential job functions are core job duties which, if removed, would fundamentally alter the position. For most jobs, courts have found that “regular, in-person attendance is an essential function.” However, determining a job’s essential functions is a fact-intensive analysis which may include a review of: the time spent on a function; the employer’s judgment; written job descriptions; and the consequences of not performing a particular function.

Here, the Court concluded that “full-time presence at work” is not an essential job function on its own. According to the Court, the HR Generalist presented sufficient evidence that she could perform the core tasks of her position in a part-time role. In particular: the HR Generalist testified she completed all her work on time; a former colleague confirmed she was effective on a half-time schedule, and she received a “very positive” performance evaluation while working part-time (which made no reference to full-time work). Furthermore, the HR Generalist had not received discipline, written criticism, a performance improvement plan, or complaints about her work. For all these reasons, the Court ruled that an employer must show why an employee needs to work on a full-time schedule.

This case substantively impacts and provides a useful lesson for many employers. Issued by the Sixth Circuit Court of Appeals, the decision directly applies to employers with a presence in Kentucky, Michigan, Ohio, and Tennessee. In addition, the case offers several takeaways. First, documentation is key. An employer should include all of a job’s essential functions in the job description. Employers also should document the need for those functions and an employee’s ability (or inability) to meet them.  Here, the Court placed significant weight on the HR Generalist’s positive performance evaluation.  In another case, the employer documented specific duties that could not be performed remotely and an employee’s failure to complete work in other telework situations. Furthermore, employers should be consistent with providing accommodations. Here, the Court also considered the employer’s decision to initially accommodate the HR Generalist’s part-time work before later changing course. For all these reasons, employers should be prepared to explain why a job function is essential, remain consistent in their decision-making, and contact counsel with questions.

When an employee leaves an organization, one issue the employer often confronts is whether to pay the employee for unused vacation time or other paid time off (PTO). The employer may seek to withhold PTO for myriad reasons: from encouraging employees to use their PTO during employment, to offsetting an employee debt, to encouraging compliance with an obligation (e.g., providing advanced notice of a resignation). But regardless of the reason, the extent of the employer’s ability to withhold PTO  (at least in Ohio) depends on the terms of its PTO policy. This lesson comes harder to some employers than others, as a recent case from the Ohio Court of Appeals for the Seventh District confirms.

In this case, 48 employees sued their employer, an area non-profit Company, after the Company declined to pay out their accrued PTO when their employment ended. The Company’s Handbook contained the following provision:

Any employee with PTO hours to a maximum of 200 hours remaining at December 31, 2011 under the former PTO policy shall have those hours “grandfathered” and banked going forward. The banked PTO hours will be available to those employees for any use that would have been allowable under the old PTO policy. Program and operation requirements will continue to override any request for leave, and the rules for using those banked hours remain the same. At the end of employment with [the Company] unused PTO balance hours will be paid out according to the schedule.

In defense of its position, the Company rightly argued (among other things) that its Handbook contained a disclaimer expressly stating that the Handbook was not a contract; thus, the Company asserted, the PTO policy was not enforceable. Nevertheless, the Court granted summary judgment in favor of the employees.  The Court noted that “although employee handbooks and policy manuals are not in and of themselves contracts of employment, they may define the terms and conditions of an at-will employment relationship if the employer and employee manifest an intention to be bound by them.”  The Court then concluded that by placing the above PTO policy in its Handbook and disseminating that policy to employees with the expectation that they would rely on it, the Company manifested an intent to be bound by it. Therefore, the Court held that the employees had a right to enforce the policy’s terms.

Key Takeaways

This case serves as a good reminder that when it comes to PTO policies, Ohio employers have a lot of flexibility in determining (1) whether to offer PTO; (2) the manner in which PTO time is earned and accrued; (3) the extent to which PTO carries over from year to year; and (4) whether PTO is paid out on termination, and if so, the terms of eligibility for or forfeiture of the payout.  However, employers must practice what they preach by ensuring that the policy accurately conveys its intent.

Multi-state employers should also know that some states are less flexible than Ohio. In California, for example, vacation and other paid time off that can be used for any purpose (as opposed to sick leave) is considered wages, and generally, this time must be paid out upon termination regardless of the employer’s policy. Therefore, it is important to comply with the PTO laws of each state in which the employer operates

With the position of its director finally filled (by Arthur F. Rosenfeld), the U.S. Department of Labor’s Office of Labor Management Standards (OLMS) is able to turn its attention to reviewing its rules and interpretations. While the main focus of attention at OLMS during the years of the Obama Administration was the “Persuader Rule” that would have imposed onerous reporting requirements upon both employers and law firms that advised employers about their legal rights during union organizing campaigns, OLMS also made other, less well-known changes. The Competitive Enterprise Institute, a free market think tank, has identified three items that it believes OLMS should address.

The first is the status of “Worker Centers” as labor organizations. In many cases, Worker Centers are set up and financed, and sometimes staffed, by recognized unions. The reason for doing so is to avoid various requirements or restrictions that are imposed upon unions. These Worker Centers are set up as not for profit organizations and engage in picketing, pro-union educational campaigns, advocacy and other forms of pressure upon employers and public officials. By avoiding characterization as labor organizations, they escape the reporting and disclosure requirements of the Labor Management Reporting and Disclosure Act of 1959, as amended (the LMDRA).  As described in an analysis by the U.S. Chamber of Commerce, the Obama Administration took a very narrow view of the definition of “labor organization” which has allowed these Worker Centers to operate without regulation or disclosure of their funding and expenditures. CEI has recommended clarifying that Worker Centers existing to deal with employers in the interest of employees are subject to the LMDRA’s requirements.

Second, OLMS changed the LM-30 form, which unions must file, to eliminate a number of financial disclosures, including union work paid by employers, credit union transactions, and payments to union officials from union benefit trusts. CEI recommends reinstating the 2007 version of the LM-30 form.

Third, in 2010, OLMS issued a rule rescinding the requirement that unions file form T-1, the Trust Annual Report, which disclosed what union trusts spent their money on. These trusts are set up to funds things like apprenticeship training programs. Sometimes, they are used to fund improper activities, such as payments for personal expenses of union officials. Form T-1 is a tool that could protect union members from having their benefit trust funds used for improper purposes, so CEI recommends its reinstatement.

Whether OLMS will act on these recommendations remains to be seen. The Worker Center issue can be handled as a matter of guidance, which would not require formal rulemaking. Additionally, Worker Centers are extremely irritating to many business organizations, such as those in the restaurant industry and the cleaning/janitorial industry, so correction of the Obama interpretation may be an early focus.

In one of the most significant labor decisions in decades, the Supreme Court today held in Janus v. AFSCME that public sector workers cannot be forced, over their first amendment objections, to pay dues or fees to a union as a condition of employment. The implications for organized labor, in both the public sector and private sector, are significant. For example, the HR Policy Association reported that a recent survey by AFSCME of its 1.6 million members found that only 35% of those members would definitely pay dues if not required to do so. There is little question that union treasuries will be negatively impacted by this decision. This, in turn, may impact the ability of unions to continue to organize and represent employees in both the public and private sector.

Public sector union dues and agency fees are currently a major source of political contributions to candidates who favor union positions. If Janus forces unions to spend their funds on representation activities instead of political donations, the power of unions in Washington, state capitals and city halls will be diminished.

Several international unions, including the Service Employees International Union and AFSCME, have been active in both their public and private sector negotiations in trying to plan for a future that would involve the decision rendered by the Supreme Court today. The SEIU, for example, has proposed in numerous negotiations that work previously done on-site by paid union representatives would now be coordinated and centralized out of the International Union’s offices to eliminate the need for SEIU representation to attend meetings on site at each of their organized facilities. Both unions also have preemptively sought “recommitments” from their membership related to their financial support for their union.

The Janus decision could allow for an estimated 5 million government workers in twenty-two states to stop paying agency fees, the portion of union revenue that funds collective bargaining. Twenty-eight states previously passed “right to work” laws, which allow workers to avoid paying even the agency fees. It is certainly possible that the Janus decision will further embolden efforts in the non-right to work states to propose legislation to further limit the ability of unions to require union security provisions that would provide for the payment of dues or agency fees.

While implications of the decision will play out over the next several years, it is certainly a body blow to organized labor that will impact not only the public sector but private sector as well.  Employers should expect immediate complications in all negotiations, as unions seek to deal with a significant loss of revenues.

In a memorandum issued last week, NLRB General Counsel Peter Robb offered important guidance on how his office plans to prosecute claims of unlawful workplace rules in the wake of the Board’s restorative Boeing decision (365 NLRB No. 154 (Dec. 14, 2017)). As we discussed here last December, the Boeing decision created a sensible standard for determining the lawfulness of work rules. This was a welcome change for employers, given the flurry of handbook-related activity under the Obama-era Board. Unfortunately, though, Boeing gave little guidance on how to actually implement the new standard. Mr. Robb’s memo adds some clarity. Recall that Boeing established three different categories for evaluating employer work rules:  (1) rules that are generally lawful (known as “Category 1” rules); 2) rules that merit a case-by-case determination (“Category 2” rules); and (3) rules that are plainly unlawful (“Category 3” rules). Click here to read the full client alert.

On June 8th, New Hampshire Governor Christopher Sununu signed into law H.B. 1319, which prohibits discrimination based on gender identity in employment, housing, and public accommodations. H.B. 1319 defines gender identity as “a person’s gender-related identity, appearance, or behavior, whether or not that gender-related identity, appearance, or behavior is different from that traditionally associated with the person’s physiology or assigned sex at birth.” The bill amends the state’s anti-discrimination law to add gender identity to the already existing protections against discrimination based on age, sex, race, religion, color, marital status, familial status, physical or mental disability, or national origin. The law will take effect July 8.

Although the statutory language in Ohio law and Title VII does not expressly prohibit gender identity employment discrimination, employers should be aware of the changing legal landscape regarding gender identity as a protected class. New Hampshire has joined California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont, and Washington, and Washington, D.C., in protecting gender identity.  Additionally, the Sixth Circuit has interpreted Title VII to protect transgender individuals from employment discrimination. Based on the increasing protections for transgender employees nationwide, employers should consider reviewing and updating their anti-discrimination and anti-harassment policies.

In a 7-2 decision yesterday, the U.S. Supreme Court issued a ruling in favor of a Colorado baker who refused to bake a custom wedding cake for a same-sex couple based on his devout Christian beliefs. Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, No. 16-111 (June 4, 2018). Although the case received heightened media coverage because of potential equal protection and public accommodation repercussions, the Court’s decision largely avoided the constitutional question of whether the First Amendment’s free exercise and free expression clauses protected the baker’s right to deny services to same-sex couples. The majority (comprised of Justices Roberts, Kennedy, Breyer, Alito, Kagan and Gorsuch) focused, instead, on the Colorado Civil Rights Commission’s failure to provide the baker with religious neutrality and due process during its adjudication process.

The dispute began when Charlie Craig and David Mullins, a same-sex couple, came into Jack Phillips’ cake shop with Craig’s mother Deb to order a wedding cake. Phillips refused to create a custom cake for the couple, citing his religious beliefs. The couple filed a Complaint with the Colorado Civil Rights Commission, which concluded that Phillips violated the Colorado Anti-Discrimination Act and that the First Amended did not permit Phillips to refuse his services to the couple. Phillips argued that the Commissions’ decision, as well as the subsequent state court Order affirming the ruling, violated Phillips’ First Amendment protections.

Justine Kennedy, once again a critical voice and vote in what could have been a politically fractured outcome, wrote for the majority, focusing largely on the religious bias demonstrated by the Commission against Phillips: “The Commission’s hostility was inconsistent with the First Amendment’s guarantee that our laws be applied in a manner that is neutral toward religions. Phillips was entitled to a neutral decision-maker who would give full and fair consideration to his religious objection as he sought to assert it in all of the circumstances in which this case was presented, considered, and decided.” Justice Kennedy also reiterated, however, that “Our society has come to the recognition that gay persons and gay couples cannot be treated as social outcasts or as inferior in dignity and worth. For that reason the laws and the Constitution can, and in some instances must, protect them in the exercise of their civil rights. The exercise of their freedom on terms equal to others must be given great weight and respect by the courts.” The Court underscored the delicate and balanced approach that must be taken by future courts in deciding these core constitutional questions: “The outcome of cases like this in other circumstances must await further elaboration in the courts, all in the context of recognizing that these disputes must be resolved with tolerance, without undue disrespect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market.”

The takeaway for employers, whether places of public accommodation or not, is that non-discrimination obligations remain intact after this decision.

The Board of the Ohio Bureau of Workers Compensation at its meeting today approved an 85% premium rebate of the workers compensation premiums paid for the year ending June 30, 2017 for private sector employers and calendar year 2016 for public employers. Checks should go out to the eligible employers over several weeks in July, 2018. There may be some steps employers should take to ensure that they are eligible for the checks. Employers must pay any overdue premium amounts and send in outstanding payroll reports before June 8, 2018. Current contact information should be verified, so the checks go to the proper location. The justification for the rebate is good investment returns, falling claims, and prudent fiscal management. Once again, this demonstrates the concrete benefits to employers’ pocketbooks of controlling injuries and defending claims.