A New Jersey appellate court has ruled that a former employee’s medical cannabis must be reimbursed by his former employer. Vincent Hager was an employee of M+K Construction when he suffered a job-site injury in 2001. The injury resulted in several surgeries and chronic pain. Hager was prescribed medical cannabis in 2016, which resulted in a monthly bill of $616.  Medical cannabis is legal in New Jersey. In a workers’ compensation proceeding, Hager sought to be reimbursed for his monthly cannabis bill because his physician testified, he would need medical cannabis to manage his pain for the rest of his life. A workers’ compensation judge ordered M+K to reimburse Hager for the costs of his medical cannabis. M+K appealed, arguing the use of cannabis still constituted a federal crime and that reimbursement of these expenses would aid and abet Hager’s commission of a crime. The appellate court rejected this argument and held there was no evidence that merely reimbursing Hager for his medical cannabis would aid and abet in a crime or require the employer to commit a crime. This appears to be the first ruling of this kind.

New Jersey’s employment laws are somewhat unique and this case is fact-specific. Yet, the case arguably expands the rights of cannabis patients at work at least in New Jersey. Thus, employers are likely to see more examples of these situations in states where medical cannabis is legal and should be aware of the laws applicable to cannabis usage in the jurisdictions where they operate as well whether internal policies address these issues.

A few weeks ago, we explained how the DOL clarified the regular overtime rate for the first time in 50 years. This month, the DOL issued its first significant update to the joint employer rule under the FLSA in more than 60 years.

On January 12, 2020 the DOL issued a Final Rule narrowing the definition of joint employer. The final rule provides updated guidance for determining joint employer status when an employee performs work for his or her employer that simultaneously benefits another individual or entity, including guidance on the identification of certain factors that are not relevant when determining joint employer status.

Significantly, the Final Rule adopts a four-factor balancing test to determine whether the potential joint employer is directly or indirectly controlling the employee. This new balancing test looks at whether the potential joint employer:

  • hires or fires the employee
  • supervises and controls the employee’s work schedule or conditions of employment to a substantial degree
  • determines the employee’s rate and method of payment
  • maintains the employee’s employment records

The final rule also clarifies when additional factors may be relevant to a determination of FLSA joint employer status and identifies certain business models, contractual agreements with the employer, and business practices that do not make joint employer status more or less likely.

As we previously reported, this new rule aims to determine, as a matter of economic reality, whether a company actually exercises sufficient control over an employee to qualify as a joint employer. The new test, which appears to be less expansive, should limit the situations under which employers can be found to have sufficient control over an employee, and therefore be considered a joint employer under the FLSA.

The Cleveland City Council has recently proposed an ordinance to decriminalize marijuana possession. If passed by the Council, the ordinance will eliminate any monetary fine or jail time for possessing up to 200 grams of marijuana. Per the proposed ordinance, a misdemeanor marijuana conviction in the city of Cleveland will no longer be considered a criminal record such that the individual will need to report the conviction to potential employers.

Cleveland’s proposed ordinance follows in the footsteps of several states and other major cities that have loosened marijuana use and possession laws in recent years. While the patchwork of adult-use and medical marijuana legislation across the country has caused headaches for employers, especially those with a multi-state presence, the addition of the proposed Cleveland ordinance should not add any additional burden to employers.

When Ohio enacted its medical marijuana program (Ohio Revised Code Chapter 3796) approximately one year ago, the Ohio General Assembly included several protections for employers, none of which should be impacted by Cleveland’s proposed ordinance.

Although Ohio law allows registered patients to use medical marijuana for certain qualifying conditions, employers may continue to enforce a drug-free workplace policy and continue to test employees and applicants for marijuana and other illegal substances.  Specifically, Ohio law does not require employers to permit or accommodate employee use, possession, or distribution of medical marijuana. Going even further, employers are able to discipline, terminate, refuse to hire, or take other adverse action against individuals based upon use, possession, or distribution of medical marijuana. Ohio has not legalized adult-use marijuana.

If Cleveland’s proposed ordinance passes, it will join other Ohio cities such as Cincinnati, Columbus, Toledo, and Dayton in decriminalizing possession of small amounts of marijuana. However, while the proposed ordinance is a positive criminal law reform, this development in local law is not likely to impact Ohio employers who wish to maintain drug-free workplaces.

 

To the surprise of few, Judge Kimberly Mueller has enjoined California from beginning enforcement of its law (Assembly Bill 51) prohibiting employers from requiring employees to waive their right to jury trials in favor of arbitration. In her three page order. Judge Mueller noted that the plaintiffs (which included the U.S. Chamber of Commerce, the National Retail Federation, the National Association of Security Companies, and the Home Care Association of America) had satisfied their burden of showing that the law raised serious questions as to preemption under U.S. Supreme Court precedent, that even a brief effective period for the Act would cause disruption, and that other factors, including the fact that the law provides criminal penalties for its violation, mitigate in favor of preventing it from taking effect.

Also finding that no harm would come to the defendants (California’s Attorney General, Labor Commissioner, and Director of the Department of Fair employment and Housing), the Court declined to require any security bond. While this decision is preliminary, it bodes well for employers’ ability to continue to use arbitration as a means to obtain prompt, objective resolutions to workplace disputes. A preliminary injunction hearing is scheduled for January 10, 2020.

Frantz Ward will stay on top of this litigation. If California succeeds in making criminals of employers who maintain arbitration programs, several other states are likely to follow suit, creating a confusing patchwork of regulations.

The National Labor Relations Board has issued a new rule that significantly changes its union election procedures, reversing controversial Obama-era rules that had expedited the election process.

The last revision was implemented in 2015, when the Obama Board revised the union election process to implement what were referred to by many as “ambush” or “quickie” elections. Under these rules, an election could take place in as few as 13 days following the initial petition. This left the employer with little time to prepare for the election and ensure that employees were fully informed about their rights and the important facts and issues that could affect their decision.

The new rule takes several steps to slow things back down, and restores a more balanced election procedure. Below are some of the more notable changes:

  • Election-Notice Posting: The prior or “quickie” rule required employers to post a Notice of Election within two business days of receiving a Notice of Hearing from the NLRB, while the new rule increases that time period to five business days. This gives employers more time to prepare before formally notifying employees of the pending election.
  • Pre-Election Hearing Timing: Under the prior rule, pre-election hearings (in which disputes related to the election details are resolved) were scheduled within eight calendar days of the Notice of the Hearing. That period is now extended to at least 14 business days from the Notice of Hearing, giving employers more time to identify potential issues and begin preparing for the election.
  • Statements of Position: The prior rule required employers to submit Statements of Position within seven calendar days of the Notice of Hearing, i.e., one day before the pre-election hearing was to occur, and the union was not required to formally respond to the employer’s position until the actual hearing. Under the new rule, employers now have eight business days to identify issues (e.g., regarding unit scope, voting eligibility, and election logistics), and the union must respond to the employer’s statement in writing at least three business days before the hearing.
  • Resolution of Voter Eligibility and Unit Scope Issues at the Hearing:Under the prior rule, pre-election hearings were confined to issues relating to whether a valid question concerning representation existed. Such issues included the petitioning union’s status as a labor organization and whether the petitioned-for unit was appropriate for the purposes of bargaining. Important challenges to issues like voter eligibility and unit scope were postponed until after the election. The new rule gives the employer the option to have those issues resolved before the election occurs. The rule also gives employers the right to appeal a Regional Director’s adverse determination to the full Board and to have the appeal resolved prior to the election or, if not resolved, to have disputed ballots impounded pending the outcome of the appeal.
  • Election Timing: One of the most significant revisions of the prior rule was the scheduling of the election at the “earliest date practicable,” which resulted in elections being held on average just 23 calendar days after the filing of the petition (and potentially as few as 13 days). The new rule uses the same general mandate—“the earliest date practicable”—but also clarifies that, absent waiver by the parties, the election normally will not be scheduled before the 20th business day after the date of the Direction of Election, i.e., 20 full business days after the regional office issues its decision on the issues presented in the pre-election hearing. As a result, the total time from petition-filing to election in such situations can more than double the average time under the prior Rule.
  • Certification of Election Results: The quickie rule required Regional Directors to certify the results of an election that the union had won, even if the employer was appealing the results seeking to have the election overturned. The new rule dictates that appeals be resolved before certification, which makes clear that no bargaining obligation will attach unless and until the appeal is denied and the election is upheld.

The new rule is a welcome change for the business community. It provides employers with more time to educate employees and prepare for the election, restoring a more balanced and fair election process. All of this in turn gives employees a better opportunity to make an informed decision about whether union representation is right for them.

Absent legal challenge, the new rule will likely become effective in April of 2020 (120 days after posting of the rule in the Federal Register, which is expected to occur on December 18, 2019).

For the first time in 50 years the Department of Labor has issued a Final Rule attempting to clarify the overtime regular rate. The Final Rule focuses primarily on clarifying whether certain kinds of benefits or “perks,” and other miscellaneous items must be included in the regular rate. Since the DOL’s last overtime regular rate revision, the workplace has changed significantly, with compensation practices being one of those areas leading the way. For years employers have been left to their own interpretation in determining whether newer “perks”, like wellness benefits, fitness classes, cell phone reimbursements or snacks must be included in the overtime rate. The DOL’s final rule issued on December 12, 2019 seeks to clarify those issues.

Significantly, the Final Rule makes clear that employers may exclude certain “perks” from the regular rate. Perks such as wellness benefits, parking benefits, certain sign on bonuses, cell phone reimbursements and coffee or snacks provided to employees do not need to be included in the overtime base rate. The Final Rule will publish on December 16, 2019, in the Federal Register, with an effective date of January 15, 2020.

Employers should review their employee benefit packages to see whether any “perks” they provide employees may be excluded from the overtime regular rate.

For Ohio employers who pay into the state fund for their workers’ compensation coverage, enrollment in the Bureau of Workers’ Compensation’s (BWC) Drug-Free Safety Program (DFSP) can provide significant savings by way of premium rebates, provided that all the requirements of the program are met. These requirements include developing a written DFSP policy, providing employee education, offering supervisor training and employee assistance, and conducting drug and alcohol testing. Regarding drug testing, the BWC requires participating employers to utilize, at a minimum, a 5-panel drug test protocol, which includes cocaine, meth/amphetamines, PCP, opiates, and marijuana.

Naturally, with the legalization of medical marijuana in Ohio, employers may be questioning whether they are still required to test for marijuana to maintain their rebates under the DFSP. Well, with respect to the DFSP, nothing has changed… so far, at least. In order to enjoy the rebates afforded by DFSP enrollment, employers must still include marijuana in their drug testing protocol, regardless of a prescription. Not only that, but the BWC still does not cover medical marijuana as a prescription medication regardless of whether  the employee’s recommendation is related to allowed conditions in a workers’ compensation claim; the BWC only covers prescriptions that are filled by registered pharmacists, not recommendations supplied by dispensaries, and further only covers medications that have been approved by the U.S. Food and Drug Administration, which is not currently the case for medical marijuana. Finally, the statutory rebuttable presumption that intoxication was the cause of a work injury upon a positive drug test following said injury also still applies with respect to marijuana, again even despite an authorized medical marijuana recommendation.

As such, while some may feel pressure to change with the times, Ohio employers should practice caution in any efforts to accommodate the use of medical marijuana, as they risk losing their DSFP premium rebates if they stop testing for marijuana and may even be missing out on a viable defense to workers’ compensation claims when marijuana is involved, even if the injured worker has a valid recommendation. This, of course, may change along with any changes in the legal status of marijuana in both federal and state law, but until the BWC officially states otherwise, it remains business as usual in Ohio when it comes to marijuana and workers’ compensation claims.

Section 7 of the National Labor Relations Act (“NLRA”) protects employees who engage in concerted activity. Since the Atlantic Steel case in 1979, the National Labor Relations Board (“NLRB” or the “Board”) has applied a four-part test to determine whether that protection extends to offensive language, often times finding offensive speech to be protected on the basis that Section 7 permits a wide range of oral and written communication in order to promote the open debate between labor and management in the collective bargaining process. Atlantic Steel Co., 245 NLRB 814. For example, during the Obama administration, the Board protected speech by employees who had engaged in profanity-laced outbursts during a meeting with a supervisor (Plaza Auto Center, 360 NLRB No. 117 (2014)), posted on Facebook a profane attack against a supervisor (Pier Sixty, LLC, 362 NLRB No. 505, enforced 855 F.3d 115 (2d Cir. 2017), and directed racist insults at replacement workers during a strike. Cooper Tire, 363 NLRB No. 194 (2016), enforced 866 F.3d 885 (8th Cir. 2017).

The problem with protecting offensive speech under Section 7 of the NLRA is that sometimes that same speech may violate the protections afforded to other employees under the civil rights laws, which protect employees from being subjected to a hostile work environment and severe and pervasive racist, sexist and other rude comments regarding protected classifications. Thus, there may be a conflict and an employer may be caught in a Catch-22 when it terminates an employee for creating a hostile work environment and the employee files an unfair labor practice charge under the NLRA and is reinstated by the NLRB.

In General Motors LLC, Case Nos. 14-CA-197985 and 208242, that is exactly what happened when an administrative law judge held that GM unlawfully disciplined an employee who had directed a profane outburst at a supervisor during a discussion regarding overtime and then later played profane and racially charged music when the supervisor entered the room. Hence, on September 5, 2019, the Board invited briefing on the issue of whether “profane outbursts and offensive statements of a racial or sexual nature, made in the course of otherwise protected activity,” should lose their Section 7 protection; see also, extension of briefing schedule.

Briefs have been filed by the U.S. Equal Employment Opportunity Commission (“EEOC”) and several management and labor groups. EEOC and management groups are citing the conflict between the NLRA and civil rights laws and how they affect diversity and inclusion efforts, as well as arguing that employees do not need to use offensive statements in order to exercise their Section 7 rights and that employers need to be able to take corrective action to stop harassing conduct in the workplace. Labor groups argue that the alleged offensive comments are only offensive to members of management and not the offending employees’ co-workers, and that the comments are sporadic and not pervasive.

A decision is not expected until later next year. In the meantime, employers should be careful when considering disciplinary action against an employee for the use of profane or offensive language where the employee has arguably engaged in concerted activity while doing so.

While many are beginning to turn their thoughts to the holidays—looking forward to attending office parties, enjoying time with family, or eating too much— data privacy and information management professionals do not have that luxury. Instead of sugar plums, our heads are full of opt-out options, thirty party disclosures, and privacy notices. Yes, the California Consumer Privacy Act (“CCPA”) is arriving on January 1, 2020, and immediate action is required to get your business ready for it.

Despite amendments having only been signed by the Governor on October 11, 2019 and proposed regulations having only been issued by the Attorney General on October 10, 2019, the CCPA will take effect on January 1, 2020 and with it companies that do business with California residents must be prepared to implement a whole new set of personal data protections and rights. If you do business in California or even just with California residents, as all natural persons who are residents of California are considered consumers under the CCPA, there are several important questions that your company should answer before the new year to help ensure compliance

  1. What Type of CCPA Entity Are You?

The CCPA divides businesses into three categories: (1) covered businesses, (2) service providers, and (3) third parties.

Covered business are for-profit entities that do business with and collect the information of California residents (including employees and applicants). To be a covered business, your company must (1) have annual gross revenues in excess of $25 million, (2) receive personal information of more than 50,000 California consumers, households or devices, or (3) derive more than 50% of its revenue from selling consumer information.

Service providers are for-profit entities that process information on behalf of a covered business for an allowable business purpose and who receive consumers’ personal information from the covered business, which must be in accordance with a written contract that prohibits the use, disclosure or retention of personal information for any purpose other than the allowable business purpose.

Third parties are vendors or other organizations that do not fit into either the covered business or service provider definition. Third parties that receive California consumer personal information may be subject to the CCPA through contractual arrangements with their business partners.

Depending on the circumstances and contracts at issue, your company may fall into one, two or all three of the foregoing categories based on how you are receiving, disclosing, and using personal information in a given situation.

  1. Are you Selling Personal Data?

If you determine your company is a covered business, you must also decide whether your company is “selling personal data,” and thus subject to additional notice and compliance obligations. Selling information is not limited to circumstances in which money is directly paid by a third party for access or use of the personal information, but includes exchanges of personal information that are tied to any valuable consideration. For example, simply allowing another business with whom  you already have a contract for a separate service to use personal information for its own analytics purposes may constitute a “sale” because the information is exchanged in connection with consideration.

There is, however, an important exception to the “sale” of personal information for personal information communicated to a service provider according to a compliant service provider contract, discussed further below.

If your company is engaged in the sale of personal information, you will need to take several additional steps on January 1, including incorporating a “Do Not Sell My Personal Information” button or link on your company’s website. This button must link to a page that informs the consumer of how to opt out of the sale of his or her personal information and enables the consumer to do so. Your company must also ensure that the consumer’s election remains in force for at least 12 months before you make a new request to sell the consumer’s personal information.

  1. Have You Updated Your Privacy Notices?

The CCPA requires that privacy notices be made available at or before the time of collection, and such notices must describe the categories of personal information collected and purposes for which the information will be used. These notices will likely be more detailed and provide more information on your company’s use of personal information than your current notices. Covered businesses must disclose:

  • Descriptions of the consumer’s right to access and delete personal information, obtain information about disclosures, opt out of any sales, and not be discriminated against for exercising his or her CCPA rights;
  • The methods for submitting requests to exercise those rights and obtaining information, including a toll-free telephone number and web address;
  • The categories of personal information your company has collected in the past 12 months, the business or commercial purposes for collecting such information, and the categories of third parties with who such information is shared; and
  • Categories of personal information sold or disclosed for a business purpose in the last 12 months.

Additionally, it will be critical to review your privacy notice and policies to capture the broad definition of personal information under the CCPA. The CCPA defines personal information to include cookies, IP addresses, device identifiers, customer observations and inferences, and information that can reasonably be linked to a consumer or household. Your current policies may not capture all of these items  as “personal information.” It is necessary to both revise your privacy notices now, in light of the fast-approaching effective date, and be prepared to update them when regulations are finalized in April or May 2020.

Employee personal information is also within the scope of the CCPA. Each employer must extend the rights and protections of the CCPA to personal information it collects on job applicants, employees, owners, directors, officers, medical staff, or contractors, including informing its employees of the categories of personal information the employer will collect. Simply put, employees are consumers for purposes of the CCPA with some exceptions on enforcement discussed further below.

  1. Are Your Vendor Contracts CCPA Compliant?

All vendors with whom you share personal information must be classified as either service providers or third parties. This is critical for providing  the appropriate notices regarding the disclosure and sale of personal information as required by the law.

Service provider contracts should be updated to specify the business purpose for which personal information is processed, expressly prohibit the sale of personal information, and prohibit the use, disclosure or retention of personal information for any other purpose other than the contracted for business purpose.

Third party contracts should also be reviewed to ensure that third parties are prohibited from reselling personal information unless there has been explicit notice to the consumer and the right to opt out of such resales. Third party contracts will also likely constitute the sale of personal information unless your company can establish that it was directed by the consumer to intentionally disclose the personal information and intentionally interact with the third party. Properly documenting and updating these contracts will be key to ensuring that your company is not inadvertently selling personal information under the CCPA.

  1. Will You be Able to Respond to Consumer Access, Deletion, and Opt-Out Requests?

In addition to the opt-out rights for the sale of personal information discussed above, any covered business—even those not selling personal information—must ensure the right of access to and deletion of consumer personal information. Starting January 1, your company must both inform consumers of these rights and be ready to implement their requests.

This will include developing a process to verify the requestor’s identity prior to complying with the request, determining how such requests will be processed by your company, ensuring that data will be provided in a portable and usable format, and making sure that your service providers and third parties can implement such requests when directed.

Importantly, there is a year-long mortarium for offering these rights to employees for any personal information held in connection with their employment, but the data breach private right of action discussed below and the requirement to inform employees and applicants about categories of personal information and purposes for which it will be used still apply to this information during the moratorium. Now is a good time to develop employee and worker privacy notices.

Although the California Attorney General will delay enforcement until July 2020, the law has a 12-month lookback period built in. Thus, while the ink is still fresh on amendments and regulations, businesses have the remainder of the year to implement compliance mechanisms. The penalties for failing to do so are steep: the California Attorney General can bring a civil action for an injunction and a penalty of up to $7,500 for each intentional violation, and consumers have a private right of action for breaches of unencrypted sensitive-category information resulting from a business’s violation of its duty to “implement and maintain reasonable security procedures and practices.”

By answering these questions today, your company will be more ready for CCPA and you won’t have to spend your new year playing catch up.

And even if you are not covered by the CCPA, you should consider whether to voluntarily comply with some or all of the CCPA requirements.  As data breaches continue to occur, the pressure will mount on other state legislatures and Congress to take action to follow the lead of the European Union, with its GDPR regulations, or California, with the CCPA, to further protect personal identifiable information. CCPA like legislation is currently pending in multiple states, including Massachusetts, Maryland, and New York. Taking steps now to conduct data mapping of the personal information maintained by your company, update your privacy policies and analyze your data security processes will help you prepare for these new laws and regulations. In fact, Microsoft announced on November 11, 2019 that it will implement the requirements of CCPA nationwide. By recognizing that additional state laws are inevitable, Microsoft is looking to promote itself as industry leader on consumer privacy by extending the CCPA protections to all its customers across the United States. Similar steps can help your company be proactive instead of reactive to your clients and customers data privacy concerns and needs.

If you have any questions, or would like assistance with a review of your current data privacy policies, please contact Brad Reed, Mia Garcia, or the other data privacy attorneys at Frantz Ward for more information.

McDonald’s recent termination of its highly-regarded CEO Steve Easterbrook provides employers with another high-profile reminder of shifting attitudes regarding workplace romances, even voluntary ones.  As most are now aware, McDonald’s board of directors determined that their CEO had violated company policy and shown “poor judgment” by having a romantic relationship with a subordinate employee.

While interoffice dating is not a new phenomenon and office romances remain prevalent, McDonald’s quick move to terminate Easterbrook illustrates how shifting attitudes related to power dynamics have caused many to reexamine workplace relationships.  High profile allegations against several powerful individuals, the advent of the #MeToo movement, and an increase in related litigation underscore the challenge of determining what is truly “voluntary” in the context of a workplace relationship.  This is particularly true when one of the participants holds a position of power or authority in the workplace.

Employers should take a proactive approach regarding workplace romances and the ultimate need to prevent sexual harassment.  Unfortunately, there is no “one size fits all” solution to the potential morale and legal issues that can result from workplace romances.  An employer’s unique history and culture may inform its position regarding these relationships.  At a minimum, however, employers should consider taking the following steps to avoid the practical and legal problems that may result from workplace romances:

  • Proactively address the issue of workplace romances. Because relationships are inevitable, employers should determine their position in advance.  Alternatives include – 1) prohibiting some (e.g., direct reports) or all romantic relationships by adopting a non-fraternization policy, or 2) acknowledging and addressing romantic relationships through the use of a “love contract,” essentially a written agreement between the employees that establishes the voluntary nature of their relationship and provides mechanisms to protect the employees (and the employer) in the event that the relationship ends badly.
  • Review and “modernize” workplace policies relating to all forms of unlawful harassment. Anti-harassment policies should be closely reviewed and made more approachable, stripping away decades-old legalese and other formulaic language.  Updates should include ensuring that employees are provided an effective and accessible reporting mechanism for complaints of harassment, as well as clearly illustrating behaviors that will not be tolerated, even if these behaviors do not rise to the level of unlawful harassment.
  • Regularly train employees, and particularly managers. All employees should receive training that covers both sexual harassment and other forms of workplace harassment on a regular basis.  Managers and supervisors should receive additional training, particularly on how to recognize harassment, how to handle a harassment complaint, and how to have a conversation about harassment.
  • Follow the policy and investigate promptly. All complaints should be taken seriously, regardless of the employer’s initial or personal belief as to the validity of a complaint.  Employers should be careful not to ignore rumors of sexual relationships, as this is often an indication of a situation which, at a minimum, warrants further investigation.  In all instances, complaints should be investigated immediately so that the employer can take appropriate remedial action based upon the results of the investigation.
  • Foster a culture that discourages sexual harassment. A workplace culture that does not tolerate sexual harassment must start at the top.  Management, including senior executives, must buy into the policy and voice their support for the policy.