On November 21, 2017, the Financial Industry Regulatory Agency (“FINRA”) fined J.P. Morgan Securities, LLC, $1.25 million for HR due diligence failures from 2009 until May of this year. Pursuant to federal securities laws, broker-dealers must fingerprint certain non-registered associated persons to help determine if any of them have been convicted of a disqualifying criminal offense. According to FINRA, J.P. Morgan did not “conduct timely or adequate background checks on approximately 8,600, or 95 percent, of its non-registered associated persons.”

Over the last few years, there has been a “Ban the Box” legislative movement designed to provide greater employment opportunities to job applicants with criminal histories. As background, “Ban the Box” laws usually require employers to delay inquiries into an employee’s criminal history until later in the hiring process, and not have a “box” on the employment application. These criminal inquiries would then be made after a conditional offer of employment has already been extended based on the prospective employee’s qualifications, and then the prospective employee would be given a chance to explain any criminal history.

The “Ban the Box” movement has spread nationwide, with 27 states having some sort of policy which regulates the use of criminal history in state-employment applications, and with some localities extending such policies to government contractors and even private employers. Although the motives behind the “Ban the Box” movement may be noble, “Ban the Box” may not always be the safest policy. As is made clear by the significant fine that FINRA administered to J.P. Morgan, employers must ensure that they are aware of applicable laws in their industry with respect to the required HR due diligence. In the financial services industry particularly, employers must not delay too long in performing adequate checks, or worse yet, fail to do them at all.

While many convicted felons are rehabilitated and can be valuable employees, others do pose real risks. Employers owe it to themselves and all their employees and stakeholders to make decisions based upon the most accurate and complete information available.

More information on FINRA’s fine of J.P. Morgan can be found at: http://www.finra.org/newsroom/2017/finra-fines-jp-morgan-125-million-failing-screen-its-employees.

Fresh off his Senate confirmation two weeks ago, new National Labor Relations Board (NLRB) General Counsel Peter Robb has issued guidance that may portend welcomed changes for employers regarding controversial Obama-era pro-labor decisions.

The guidance comes in the form of a memorandum to the Regional Offices, dated December 1, 2017, in which Mr. Robb introduces what is essentially the General Counsel’s office’s new enforcement agenda. This memo emphasizes the General Counsel’s efforts to address several pro-labor Board decisions that were issued in the past eight past years and that concern key issues for employers. Such issues include:

  • the expanded scope of protected concerted activity,
  • unlawful handbook rules,
  • use of the employer’s e-mail system for organizing purposes,
  • joint employer status,
  • conflicts between the NLRA and other statutes (such as Title VII).

To be sure, these decisions cannot be changed by the General Counsel or the Regional Offices alone—but only by contrary Board decisions. The  General Counsel’s promise to provide the Board with the Agency’s “best analysis” of these issues, however, may help facilitate changes down the road.

On a more immediate note, the memo also rescinds several prior General Counsel Memoranda interpreting various Board precedents in a pro-labor manner. These rescissions include prior General Counsel Memoranda concerning, among other things:

  • unlawful handbook rules (again),
  • inclusion of front pay in Board settlements,
  • pre-arbitral deferral guidelines, and
  • intermittent and partial strikes.

These rescissions are effective immediately. And while no replacement guidance has been issued yet, the rescissions likely signal the issuance of more employer-friendly guidance from the General Counsel in the future.

As the summary above suggests, any practical relief for employers  will likely come about only with new cases that give the Board and the General Counsel the opportunity to address these issues. This will take time. Meanwhile, the memo is quick to point out that, with regard to current and pending cases, the General Counsel will continue to apply existing Board precedent in making determinations as to whether to issue complaints. Obviously, it will be up to the new Board to make a determination as to whether that Board precedent will remain or should be overturned yet again. Nevertheless, this memo is perhaps the clearest indication yet that changes to the Obama Board’s pro-union labor policies are headed employers’ way, after all.

Today, the Ohio Department of Commerce announced the 12 Level I medical marijuana cultivator provisional license recipients (with one recipient having a possibility of choosing from two different locations) and the 12th recipient of the Level II cultivator provisional license.

In awarding the medical marijuana cultivator licenses, the Department appears to have placed a large amount of emphasis on experience, awarding many of the licenses to companies who have licenses in other states. The emphasis on experience was one of the reasons why the Department declined to include a residency requirement during the application process, which riled many Ohio medical marijuana advocates.

Level I cultivators may have up to 25,000 square feet of cultivation area in a growing facility, with the ability to increase that area up to 75,000 square feet with approval from the Department of Commerce.  Level II cultivators may have an initial cultivation area of up to 3,000 square feet, with an option to increase to up to 9,000 square feet with prior approval. The winners will have nine months from the date they were notified of selection for a provisional license to obtain a certificate of operation by passing all applicable inspections.

The winning applications may be seen here:  https://www.medicalmarijuana.ohio.gov/cultivation.

To learn more about Ohio’s medical marijuana industry, you can reach out to one of the firm’s Marijuana Law & Policy attorneys.

In recent weeks, reports of sexual harassment allegations against high-profile individuals have emerged on an almost daily basis. From Hollywood A-listers, to politicians, to celebrity chefs, the list of powerful individuals accused of sexual harassment and assault continues to grow. As a result, the national conversation surrounding the topic of sexual harassment in the workplace shows no signs of abating.

This focus upon workplace harassment is not unprecedented. In 1991, Senate hearings related to Clarence Thomas’ appointment to the Supreme Court highlighted these issues after the testimony of Anita Hill. The impact on U.S. workplaces was unmistakable. In the years immediately following the Thomas hearings, the number of sexual harassment charges filed annually with the Equal Employment Opportunity Commission (EEOC) more than doubled.

There should be no question that the recent media attention focused upon issues of workplace harassment will yield similar results. An increase in harassment charges and litigation, particularly those involving claims of sexual harassment, is inevitable.

Employers seeking to protect their employees from unlawful harassment and to avoid resultant liability should heed the clear warnings from recent, high-profile cases. Employers should immediately review and update their workplace policies relating to all forms of unlawful harassment. This includes ensuring that employees are provided a clear, effective, and accessible reporting mechanism for complaints of harassment. Employers should then re-promulgate their policies and take steps to meet with and educate their workforce about its provisions. Employers also should regularly train supervisors on how to prevent and appropriately respond to instances of workplace harassment.

Of course, upon receiving any complaints of harassment, employers must immediately conduct a thorough investigation and take appropriate remedial action based upon the results of the investigation. When dealing with a complaint of harassment, employers also must take steps to prevent any retaliation against the accuser or any of the participants in an investigation, regardless of whether the complaint is determined to be valid.

Finally, given the particular focus upon the relative power that an alleged harasser may hold over a victim of harassment, employers that have not already done so may want to re-think their policies and practices related to workplace relationships. Even consensual relationships where one employee is arguably subordinate to the other may present too much risk for all involved.

On Wednesday, the Senate confirmed Trump’s nominee, David Zatezalo, for a key employment-related position: Assistant Secretary of Labor for Mine Safety and Health Administration (MSHA). Mr. Zatezalo is the former Chief Executive Officer of the coal mining company, Rhino Resources.

Democratic Senators, including Joe Manchin from mining-heavy West Virginia, have publicly opposed Mr. Zatezalo’s confirmation, citing Rhino Resources’ MSHA violations under his leadership. Despite opposition, Mr. Zatezalo was confirmed to the position by a 52-46 vote along party lines, with all 52 Republican Senators voting to confirm Mr. Zatezalo. Mr. Zatezalo was approved by the Senate Committee on Health, Education, Labor and Pensions in October, also on party lines (12-11).

As the Assistant Secretary of Labor for Mine Safety and Health, Mr. Zatezalo will manage the MSHA, which regulates safety and health in all types of mines in the US. For more information on Mr. Zatezalo’s background and other key nominees refer to our previous post on his nomination.

What was scheduled as a hearing by the House Judiciary Committee regarding Attorney General Jeff Sessions’ testimony about possible Russian Government contacts with the Trump Campaign, also included another hot-button issue: Jeff Sessions’ views regarding marijuana.

Representative Steve Cohen, a Democrat from Tennessee, stated some of the purported benefits of marijuana, and his hope that the Department of Justice would consider states as the “laboratories of democracy.” (Justice Louis Brandeis). Attorney General Sessions stated that they would look at purported benefits and would conduct a “rigorous analysis of marijuana usage,” but he added that he was not as “optimistic” as Representative Cohen. Further, when Attorney General Sessions was asked to clarify his comment that people who use marijuana are “not good people,” he tried to explain that the context in which he made this comment was his experience as a U.S. Attorney where “it was seen” that “good people did not use marijuana.”

In the end, Jeff Sessions did not explain his prior comments on marijuana. Nonetheless, his statement that he is not optimistic that any investigation or research would show any purported benefit of marijuana may be a harbinger of things to come.

In 2015, the National Labor Relations Board (NLRB) expanded the joint employer doctrine through its controversial decision in Browning-Ferris Industries of California. The House of Representatives will vote today on the “Save Local Business Act” (SLBA), a recent effort advanced in Congress to re-define the concept of “joint employers” for collective bargaining purposes as well as wage-and-hour, safety, and other employment liability.  If passed, the bill would effectively undo Browning-Ferris.

The Browning-Ferris decision broadened the standard used in evaluating joint employment beyond the “direct and immediate” control over the essential terms and conditions of employment.  Instead, it created a two-part “indirect control” test for determining “employer” status that examined whether a common law relationship exists with the employee(s) in question and whether the potential employer “possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful bargaining.” That broadened standard drew significant criticism and caused concern across a variety of industries, as companies that merely had “potential” or “reserved control” to hire, terminate, discipline, supervise, and direct an affiliated company’s employees – but who did not actually exercise that right – could now be liable for various employment claims and collective bargaining requirements.

If passed by Congress and signed into law, the SLBA would limit the extent to which affiliated businesses are considered to be “joint employers” under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA).  Under the SLBA’s proposed terms, a person could be considered a joint employer under the NLRA only where it “directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment” over an employee.  The definition of “employer” under the FLSA would also be amended to include a reference to the NLRA’s definition, which is consistent with the Department of Labor’s decision in June 2017 to withdraw prior guidance that applied the broadened joint employer definition to the FLSA.

After the Browning-Ferris decision, franchisees, which typically get standardized training and employment manuals from franchisors, and staffing agencies, which recruit temporary workers for their client companies, feared increased liability under the new joint employer standard.  Unsurprisingly, then, the U.S. Chamber of Commerce, National Retail Federation, and the International Franchise Association all support the bill. Opponents argue, however, that the bill would enable wage theft by immunizing unscrupulous employers and would reduce collective bargaining rights of employees.

Until the SLBA becomes law, companies, including those using franchise models and staffing agencies, should be aware of potential liability not only for their own actions, but also for those of any other entity with which they can be determined to be a joint employer.  For more information on how to manage these liabilities, please contact one of Frantz Ward LLP’s Staffing Industry attorneys.

On Thursday, November 2, 2017, Mimi Walters (R-California), Cathy McMorris Rodgers (R-Washington), and Elise Stefanik (R-New York) introduced in the House of Representatives the Workplace in the 21st Century Act (H.R. 4219). The bill would amend the Employee Retirement Income Security Act (ERISA) to include a voluntary option for employers to provide employees with guaranteed paid leave and qualified flexible workplace arrangements.

The bill would exempt employers from having to comply with the patchwork of state and local paid leave laws if they voluntarily offer employees a minimum level of paid time off and at least one of the following flexible working arrangements: compressed work schedule, biweekly work program, telecommuting program, job-sharing program, or a flexible or predictable schedule. Employees would not be required to adopt a flexible work schedule in order to receive paid leave.

The minimum amount of paid leave that an employer would be required to provide under the plan depends on the size of the employer and the employee’s length of service. The minimum amount of compensable leave provided to an employee each year cannot be fewer than the minimum days as follows:

Number of employees employed by an employer Minimum number of compensable days of leave per plan year
Employees with 5 or more years of service with the employer Employees with fewer than 5 years of service with the employer
1000 or more 20 days 16 days
250 to 999 18 days 14 days
50 to 249 15 days 13 days
Less than 50 14 days 12 days

Under the bill, employers would be mandated to offer paid leave to both part time and full time employees, with prorated minimum leave requirements for part-time employees based on the number of hours they work. Only employees who have been employed for at least 12 months by the employer and have worked at least 1,000 hours during the previous 12 months would be eligible for a workflex arrangement.  Employers would be responsible for the cost of the paid leave.

Several states and local jurisdictions have adopted their own paid leave laws. The Workplace in the 21st Century Act would preempt state and local paid leave laws for employers located within those jurisdictions.  The bill would not affect state or local laws on unpaid leave or the Family and Medical Leave Act.

Ultimately, the bill, if passed, will have no immediate effect on employers located in jurisdictions with no paid leave mandate (such as Ohio). However, for employers in jurisdictions with more restrictive paid leave mandates, the Workplace in the 21st Century Act would provide another option to meet paid leave requirements if they adopt the voluntary plan. The bill was immediately referred to the House Education and the Workforce committee and its future is unknown. Frantz Ward will keep close track of the bill and provide updates on the Workplace in the 21st Century Act’s progress.  The full text of the Workplace in the 21st Century Bill is available here.

The U.S. Third Circuit Court of Appeals issued an opinion on October 13, 2017, that serves to remind employers of the need to pay employees when they take short work breaks during their workday.

In DOL v. Am. Future Sys., Inc. 2017 BL 367399, 3d Cir., No. 16-2685, the employer had a “flex time” policy under which it allowed employees to take breaks “at any time, for any reason, and for any duration.” The company tracked employee breaks by monitoring when they logged off their computers, which they were required to do when on a break, and they were only paid while logged-on to their computers. While on their breaks, employees were allowed to leave their work stations and to use the time for their own personal benefit.

The Department of Labor (“DOL”) argued that the employees should have been paid for their short breaks taken during the course of the day, and the trial court granted it summary judgment. Although the employer argued that employees were free to do what they wanted while on breaks, the DOL relied on the language in the regulations for the Fair Labor Standards Act (“FLSA”), which provide that rest periods up to 20 minutes should be compensable. The 3rd Circuit Court of Appeals gave “substantial deference” to the DOL since it is responsible for administering the FLSA, and it affirmed the granting of summary judgment for the DOL. The Court noted, however, that should employees abuse the “flex time” policy, such as by taking multiple breaks of 19 minutes in length, the employer could discipline the employees, but it nevertheless had to pay them for the break time.

This decision serves as a reminder to employers to pay employees for any breaks that are 20 minutes or less, regardless of whether the employees are free to use the time as they choose or to leave the employer’s facility. This is also a good time for employers to remember that any unpaid breaks, such as meal times, must not be interrupted by the employer or the entire meal period could become compensable.

At this year’s National Safety Council (NSC) Congress & Expo in Indianapolis, OSHA’s Deputy Director of Enforcement Programs announced its preliminary list of the top ten citations issued for fiscal year 2017. OSHA’s top 10 violations for 2017 are as follows:

  1. Fall Protection in Construction (29 CFR 1926.501) 6,072 violations
    Frequently violated requirements include unprotected edges and open sides in residential construction and failure to provide fall protection on low-slope roofs.
  2. Hazard Communication (29 CFR 1910.1200) 4,176 violations
    Failure to have a written hazard communication program was the most frequently violated requirement, followed by failing to provide employee access to safety data sheets.
  3. Scaffolding (29 CFR 1926.451) 3,288 violations
    Frequent violations include improper access to surfaces and lack of guardrails.
  4. Respiratory Protection (29 CFR 1910.134) 3,097 violations
    Failure to establish a written respiratory protection program topped these violations, followed by failure to provide medical evaluations.
  5. Lockout/Tagout (29 CFR 1910.147) 2,877 violations
    Frequent violations were inadequate worker training and failure to conduct periodic inspections.
  6. Ladders in Construction (29 CFR 1926.1053) 2,241 violations
    Frequent violations include improper use of ladders, damaged ladders, and using the top step.
  7. Powered Industrial Trucks (29 CFR 1910.178) 2,162 violations
    Violations included inadequate worker training and refresher training.
  8. Machine Guarding (29 CFR 1910.212) 1,933 violations
    Exposure to/failure to guard points of operation topped these violations.
  9. Fall Protection—Training Requirements (29 CFR 1926.503) 1,523 violations
    The most frequent violations include failure to train workers in identifying fall hazards and proper use of fall protection equipment.
  10. Electrical—Wiring Methods (29 CFR 1910.305) 1,405 violations
    Violations of this standard included temporary writing in lieu of permanent wiring and were found in most general industry sectors, including food and beverage, retail, and manufacturing.

While OSHA’s top ten rankings vary little from year to year (2017’s top five violations remained the same), there is one new addition this year: Fall Protection – Training Requirements in the number 9 slot. The final report on the Top 10 violations for 2017 will be published in the December. Roughly 13,000 of these violations were in the construction industry, which is disproportionate to the employment in that industry compared with all others. This is likely reflective of the high turnover of employees and the number of employers who engage in construction work on an intermittent basis. The number of training and communication citations show the importance of paying attention to the administrative and paperwork regulations, and not just to the health and safety rules.