Friday, December 19, 2014

U.S. Department of Justice Extends Title VII Protection to Transgender Status

In a Memo issued on December 15, 2014 by the United States Department of Justice, Office of the Attorney General, the government has advised that it now takes the position that Title VII's prohibition against sex discrimination encompasses discrimination based on gender identity, including transgender status.

Employers should review their handbook policies and train managers to understand that discrimination against transgendered employees is now actionable under Title VII.

Sunday, August 17, 2014

A Refresher Dip into the Tip Pool

The United States Department of Labor (DOL) is increasing its scrutiny of tip pooling practices.  An inappropriately administered tip pool can result in its invalidation, which can in turn result in liability to the employer for unpaid wages.  To ensure a safe tip pool, consider the following:

1.     Notify employees in writing of the tip credit arrangement.  For example, you can make a notation on the pay stubs, include an acknowledgment in a new hire packet, or post a notice near the time clock.  The key here is to provide adequate notice to employees and retain proof of this notice.  

2.     Keep management out of the tip pool.  Remember that only employees who "regularly receive tips" can participate in a valid tip pool.  This usually excludes management-level employees.

3.     For employees who perform tipped and non-tipped jobs (such as an employee who serves as both a waiter and a dishwasher depending on the shift), remember that the tip credit is only available for the hours spent by the employee in the tipped position.  Carefully tracking the hours spent in each position is crucial to ensure the tip pool is properly distributed.

4.     The tip credit you claim as an employer cannot exceed the amount of tips received by the tipped employee.

5.     Understand what positions can participate in the tip pool.  This is perhaps the hardest issue to determine, and the answer can vary by state, and even by DOL region.  You should know, for example, what position the local DOL representatives take on positions such as food runners and assistant hosts.

6.     Distribute a written policy regarding the tip pool distribution.  Employees should be notified of which positions participate in the tip pool, and the corresponding tip pool percentages for each position.

DOL audits can be costly and time-consuming.  A properly administered tip pool will keep employees happy and keep the sharks at bay.

Sunday, July 27, 2014

Takeaways from the EEOC's New Enforcement Guidance on Pregnancy Discrimination and Related Conditions

On July 14, 2014, the Equal Employment Opportunity Commission (EEOC) issued its latest Enforcement Guidance on pregnancy and related conditions.  You can find a copy on the EEOC's website (  As expected, the EEOC has taken an expansive view of the protections offered by the Pregnancy Discrimination Act (PDA), and based on its interpretations, many employers may unknowingly be in violation of the law.

PDA Refresher

Congress passed the PDA in 1978 to clarify that sex discrimination prohibited by Title VII of the Civil Rights Act of 1964 (Title VII) includes discrimination based on pregnancy, childbirth, or related medical conditions.  The PDA requires that pregnant employees be treated the same as non-pregnant employees who are similar in their ability or inability to work.

The EEOC's Interpretation of PDA Coverage

The EEOC takes the position that the PDA prohibits discrimination based on:

  • current pregnancy;
  • past pregnancy;
  • potential or intended pregnancy, including reproductive risk and contraception use; and
  • medical conditions related to pregnancy or childbirth, such as lactation, breastfeeding, and abortion.

Similarly, the PDA prohibits harassment based on these factors.


Highlights of the EEOC's interpretation of the PDA include the following:

  • employers are obligated to treat pregnant employees temporarily unable to perform the functions of their jobs the same as it treats other employees similarly unable to perform their jobs.  In other words, an employer may not restrict light duty work to a class of employees (such as those who have been injured on the job) but prohibit pregnant women from working light duty.  It is important to note that a number of courts disagree with this interpretation;
  • an employer may not compel an employee to take leave because she is pregnant, as long as she is able to perform her job;
  • a policy that restricts leave might disproportionately impact pregnant women. For example, a 10-day ceiling on sick leave, or a policy denying sick leave during the first year of employment, could have a disparate impact on pregnant women.  Once again, not all courts agree with this interpretation;
  • although pregnancy is not a disability under the Americans with Disabilities Act (ADA), most temporary impairments a pregnant woman could develop should be accommodated in the same manner an employer would accommodate employees with non-pregnancy related disabilities;
  • employers should modify their accommodation policies to specifically reference accommodations  based on pregnancy; and
  • employers must exercise caution when enforcing job requirements such as lifting restrictions.
 In light of the fact that a number of courts disagree with the EEOC's positions, employers should consult with counsel in the event pregnancy-related issues arise in the workplace.

Wednesday, May 21, 2014

The NLRB Continues its Assault on Reasonable Handbook Policies

In a decision issued on Monday, an Administrative Law Judge (ALJ) ruled that a number of an employer's handbook policies violated Section 7 of the National Labor Relations Act (the "Act").  See Hoot Winc, LLC, NLRB ALJ, No. 31-CA, 104872 (May 19, 2014).

The underlying dispute involved the termination of employees who were allegedly involved in, among other things, a dispute about a bikini contest.  In a lengthy ruling in favor of the employee, the ALJ found that a number of the employer's policies violated the Act, including those prohibiting:

  • employees from discussing tips with other employees or guests.
  • insubordination to a manager or lack of respect or cooperation with fellow employees or guests.
  • disrespect to a guest, including profanity or negative comments or actions.
  • the unauthorized dispersal of sensitive company operating materials.
  • actions or activities the complaints believes represent a threat to the smooth operation, goodwill, or profitability of the business.
  • off-duty conduct which negatively affects the employee's ability to perform his or her job.
  • discussion involving the company's business or legal affairs with anyone outside the company.
Incredibly, the ALJ also found that the employer's social media policy, which required employees to be respectful to the company, other employees, customers, partners, and competitors, also violated the Act.  According to the ALJ, these policies, which a large number of employers have, were overly broad and could "chill" union activity.

The takeaway here is that the NLRB continues its efforts to erode an employer's right to effectively manage its workforce by striking down reasonable policies.  Employers must be vigilant about keeping pace with these decisions.  

Sunday, May 11, 2014

Spring Cleaning for Hospitality Employers Part 2

Arbitration agreements aren't right for every employer, but if you utilize one, now is a good time to determine if it is as comprehensive as it could be.  When reviewing your existing arbitration agreement, ask yourself these questions:

  1. Does it require the arbitration of all employment-related claims, and exclude claims for, by way of example only, workers' compensation and unemployment benefits, administrative charges, and claims for declaratory and/or injunctive relief?  
  2. Is it mutual, meaning it equally binds both employer and employee?
  3. Have you reviewed your handbook language to ensure that there are no conflicts between the handbook language and the arbitration agreement?
  4. Does it indicate which party or parties is responsible for arbitration filing and other costs?
  5. Do you ensure each employee signs a copy of the arbitration agreement upon hire, and retain that copy in the personnel file?
  6. Does it specify that the arbitrator can award all relief that could be awarded by a court, including the granting of a motion for summary judgment?
  7. Does it specify whether the parties will be required to utilize an arbitration administration service, such as the American Arbitration Association, or JAMS, or does it allow the parties to forego the expense and choose a mutually-agreeable arbitrator?
  8. Does it specify the parties do not require more than one arbitrator?
  9. Does it include a class action waiver?  If so, does it require any dispute regarding the waiver to be decided by a court, and not the arbitrator?
  10. Does it specify the minimum requirements for the arbitrator's experience and expertise?
  11. Does it provide deadlines for requesting arbitration?
  12. Does it define "employer" broadly enough to include affiliates, subsidiaries, parents, etc.?
  13. Does it specify that whether an issue is arbitrable is a matter for the arbitrator to decide, or a matter for the court? 
  14. Does it clearly state the parties waive all rights to a trial in court before a judge and jury on all claims?
  15. Does it require the arbitration proceeding and result to remain confidential?
  16. Does it provide that each side is responsible for its own attorneys' fees and costs, absent an award to the contrary?
  17. Does it include rules regarding available discovery?
This list is not exhaustive, but should provide an initial checklist for your review project.

Wednesday, May 7, 2014

A Missouri Court Rules Obesity Could Be a Disability under the ADA

The 2009 amendments to the Americans with Disabilities Act (ADA) left no doubt that Congress intended to expand the ADA's scope, but is this pendulum swinging too far? 

In a recent decision, a Missouri court refused to grant an employer's motion to dismiss a plaintiff's disability discrimination claim where the alleged disability is obesity.  See Whittaker v. America's Car-Mart, Inc., Case No. 1:13CV108SNLJ, in the United States District Court, Eastern District of Missouri, Southeastern District.

In that case, the plaintiff contends he was discharged based on his severe obesity.  The employer moved to dismiss the lawsuit on the grounds that obesity is not a disability unless it is related to an underlying physical or psychological disorder or condition.  Denying the motion to strike, the court noted that with the 2009 amendments, Congress mandated that the definition of "disability" be construed in favor of "broad coverage." 

Although the court tempered its ruling by noting that the plaintiff still had to prove that his weight rises to the level of a disability, the decision clearly signals that currently, there is no girdle holding the ADA's expanding girth in place.

Monday, April 21, 2014

Spring Cleaning for Hospitality Employers Part 1

This is the time of year when most people review their assets and insurance elections, clean our their closets and attics and discard unnecessary belongings.  In the spirit of spring cleaning, it is also a good time for hospitality employers to review their policies and procedures to ensure they do not run afoul of ever-changing employment laws. This blog article will be the first of several parts to provide tips and suggestions for this important project.

For a good place to start, dust off the employee handbook, personnel manual, or whatever you have that advises employees of the company's policies and procedures, read it from cover to cover, and ask yourself these questions:
  1. Does it contain an at-will employment disclaimer?  If so, does it comply with the recent ruling by the National Labor Relations Board (NLRB) regarding appropriate language?
  2. Does it contain any type of confidentiality or other provision that prohibits employees from discussing salaries?  
  3. If your company is subject to the Family and Medical Leave Act (FMLA), is your policy updated to reflect the newest regulations?
  4. If your company is subject to the FMLA, is it using the FMLA forms expressly blessed by the United States Department of Labor?
  5. Does it address lactation breaks and a private place for new mothers to express breast milk?
  6. Does it contain a social media policy?  If so, is it NLRB compliant?
  7. Does it address all types of prohibited harassment, discrimination, and retaliation, or does it only address sex harassment? 
  8. Does it advise employees of the company's tip credit policy?
  9. Does it prohibit unauthorized overtime?
  10. Does it prohibit all weapons on company property?  If so, does it violate Texas' "Guns in the Parking Lot" law?  
  11. Does it include a reasonable accommodation policy that complies with the Americans with Disabilities Act, as amended? 
  12. Does it address severance pay, pay for unused vacation, and payment upon termination or resignation?
  13. Does it contain a code of conduct?  If so, is it narrowly tailored to comply with the NLRB's recent rulings?
  14. Does it include, or reference, a payroll deduction authorization form?
  15. Does it require employees to pay for uniforms?  
  16. If the company has a drug testing policy, does it include a prohibition against synthetic drugs?
  17. If the company has a no-smoking policy, does it address vapor cigarettes?
  18. Does it prohibit the hiring or promotion of employees based on felony convictions or arrest records?  
  19. Does it address exempt versus non-exempt employees?
  20. Does it contain a handbook acknowledgment form, a signed copy of which is maintained by the employer?
Based on your answers to this initial set of questions, you may find that the company's policies and procedures are non-existent, outdated or even unlawful.  If you are unsure why all of the answers to these questions matter, consult counsel.  

Wednesday, March 26, 2014

Fifth Circuit Agrees Employer's Confidentiality Policy Violates NLRA

In a decision issued this week, the Fifth Circuit upheld and enforced a National Labor Relations Board (NLRB) order finding that a portion of a  non-unionized employer's confidentiality policy violated the National Labor Relations Act because it was overly broad and contained language employees could reasonably interpret as restricting the exercise of their Section 7 rights.  See Flex Frac Logistics, L.L.C. v. National Labor Relations Board, No. 12-60752 (Mar. 24, 2014). 

The employer's confidentiality policy included the following language:

"Confidential information includes...personnel information and documents..."

The NLRB found that even though the clause did not reference wages or the specific terms or conditions of employment, the clause nevertheless violated the NLRA.  In reviewing the NLRB's order, the Court reiterated that a workplace rule that forbids the discussion of confidential wage information between employees violates the NLRA.  Confronted with the employer's argument that the clause in question did not reference wages, the Court nevertheless determined that employees would "reasonably construe" the clause to prohibit wage discussions, and went so far as to note that the clause did not except out wages from its scope.

This decision underscores the importance of regular handbook reviews to ensure compliance with the NLRB's growing list of prohibited policies.

Eleventh Circuit Finds Depressed Employee's Leave Request Did Not Qualify as Protected FMLA Leave

It is common knowledge there are no magic words required for an eligible employee to make a valid request for FMLA leave.  But what happens when an employee makes a vague request?  The Eleventh Circuit answered this question in Hurley v. Kent of Naples, Inc. et al., No. 13-10298 (11th Cir. Mar. 20, 2014).  

Hurley, an executive, sent the CEO an e-mail that included a list of eleven weeks of vacation over a two year period.  The executive denied the request and asked to schedule a meeting to discuss the e-mail.  In response, Hurley sent another e-mail to the executive that said the vacation request "was not a request it was a schedule…I have been advised by my medical health/health professionals that my need to avail myself of vacation time that I have earned is no longer optional."  

The next day, the two met, and the executive terminated Hurley for insubordination and poor performance.   A week after Hurley's discharge, he visited his health care provider to secure FMLA paperwork, which reflected he did suffer from depression, but the duration and frequency of any incapacity was unknown.

Hurley filed suit alleging FMLA interference and retaliation, and the claims proceeded to trial, where he was awarded substantial damages.  The company appealed.

The Court's opinion addressed two important issues.  First, the company argued Hurley's requested leave did not qualify as protected FMLA leave; therefore, he could not maintain a valid interference claim.  The Court agreed, finding that Hurley's notice of the need for leave was sufficient, but that notice is only relevant to FMLA leave if the leave is protected.  Hurley admitted his leave (vacation) was not for a period of incapacity, or for treatment for such incapacity, and he could not predict any period of incapacity from his condition.  For these reasons, his leave request was not protected, and his interference claim failed.

Second, the Court rejected Hurley's argument that he only needed to provide notice of potentially qualifying FMLA leave, noting that "[o]therwise, the FMLA would apply to every leave request."

 This decision demonstrates that employees continue to test the boundaries of the FMLA.  

Saturday, March 15, 2014

High Court Extends SOX Whistleblower Protection to Employees of Private Contractors and Subcontractors

Congress enacted the Sarbanes-Oxley Act of 2002 (SOX) to safeguard investors in public companies and restore trust in the financial markets following the collapse of Enron.

In a recent decision, the United States Supreme Court ruled that the whistleblower protection included in SOX protects not only the employees of public companies, but also the employees of privately-held contractors and subcontractors who render services to public companies.  See Lawson v. FMR LLC, No. 12-3 (March 4, 2014).  

Drawing on, among other things, the legislative record, the plain language of the statute and Congressional intent, the Court noted that to exclude employees of private contractors and subcontractors would leave them vulnerable to retaliation by their employers for blowing the whistle on schemes to defraud public company investors, even if the schemes were engineered entirely by the contractor or subcontractor.

Private contractors and subcontractors that do business with, or otherwise provide services to, public companies should ensure they implement policies prohibiting retaliation and train their managers to understand and enforce the policies.  

Thursday, March 13, 2014

President Expected to Direct DOL to Revamp Overtime Rules

Today President Obama is expected to direct the United States Department of Labor to revise overtime pay regulations under the Fair Labor Standards Act to expand the scope of employees entitled to overtime pay.  Although the President's directive could take considerable time to accomplish, it could have a significant impact on the hospitality industry by increasing the number of employees, such as certain types of managers, who would no longer be classified as exempt.

Sunday, March 9, 2014

EEOC Issues New Publication Regarding Religious Garb and Grooming in the Workplace

Last October, the Tenth Circuit Court of Appeals dealt the Equal Employment Opportunity Commission (EEOC) a blow when it reversed a religious failure to accommodate summary judgment ruling in the EEOC's favor and remanded the case with instructions to grant summary judgment in favor of the defendant, retailer Abercrombie & Fitch Stores.  See EEOC v. Abercrombie & Fitch Stores, Inc., No. 11-5110 (10th Cir. 2013).  

In the Abercrombie case, the Tenth Circuit found that Abercrombie was entitled to summary judgment as a matter of law because there was no genuine dispute of material fact that Ms. Elauf (the individual on whose behalf the EEOC sued) never informed Abercrombie prior to its hiring decision that she wore her headscarf, or “hijab,” for religious reasons, and that she needed an accommodation for that practice due to a conflict between the practice and Abercrombie’s clothing policy.  In the decision the Court repeatedly referenced the EEOC's Compliance Manual and other publications related to its position on accommodations in the workplace.
On March 6, 2014, the EEOC issued a new publication, along with a Fact Sheet, regarding religious garb and grooming in the workplace, which provides guidance on the topic, including the following:
  • Title VII protects all aspects of religious observances, practices and beliefs and defines religion broadly to include not only traditional religions, but also religious beliefs that seem illogical or unreasonable, are new or uncommon, and/or are not part of a formal church or sect, as long as the beliefs are "sincerely held."
  • Employers cannot exclude employees from positions due to customer preferences or desired images.
  • Employers cannot assign employees to non-customer contact positions due to customer preferences.
  • An employer may accommodate religious dress or grooming (such as tattoos) by offering to have the employee cover the item or attire, provided that the accommodation does not conflict with the religious belief.
  • Applicants who request religious accommodations are protected from retaliation.
  • Employers have an obligation to stop religious-based harassment.
  • While safety, security, or health may justify denying a religious accommodation, the employer may only do so if the accommodation would actually pose an undue hardship.
Interestingly, this newest publication appears to recognize the Abercrombie decision (specifically in its Example No. 5 regarding an employer's insufficient knowledge that an employee might need an accommodation) yet criticize the retailer (specifically in its Example No. 10 addressing an employer's "image" requirements) for its image policy.  

Employers should be particularly mindful of the EEOC's positions that the religious accommodation at issue may not relate to any recognized or established religion, and that only accommodations which pose an undue hardship may be denied.  

Thursday, February 27, 2014

NLRB's General Counsel Issues Memo Regarding Mandatory Submissions to Advice

On February 25, 2014, Richard F. Griffin, Jr., General Counsel for the National Labor Relations Board (NLRB), issued a memo to all Regional Directors, Officers-in-Charge, and Resident Officers instructing them on the types of cases that require submission to the Division of Advice (the NLRB's legal department) prior to the issuance of a decision.

Despite Mr. Griffin's position that "the vast majority of cases can be processed without guidance from headquarters," he then proceeds to identify 3 "areas" requiring legal review: (1) cases that involve the General Counsel's initiatives or policy concerns; (2) cases that involve difficult legal issues or the absence of clear precedent; and (3) "other case-handling matters."  

The memo includes no less than 24 types of cases that require submission to the Division of Advice, such as:
  • Cases involving the issue of whether employees have a Section 7 right to use an employer's e-mail system; 
  • Cases involving the duty to furnish financial information in bargaining where the employer has asserted an "inability to pay";
  • Cases involving "at-will" provisions in employer handbooks;
  • Cases presenting unresolved issues concerning undocumented workers; 
  • Cases involving mandatory arbitration agreements with a class action prohibition that are not resolved by the D.R. Horton decision in the Fifth Circuit; and
  • Subpoena authorization issues.
Clear from the Memo is the NLRB's intention to step up its efforts simplify the organizing process and to push deeper into the private sector.

Wednesday, February 19, 2014

NLRB Finds Portion of Employer's Confidential Information Policy Unlawful

On February 6, 2014, the National Labor Relations Board (NLRB) affirmed an Administrative Law Judge's ruling that a portion of an employer's confidential information policy violated Section 8(a)(1) of the National Labor Relations Act (Act).  See MCPc, Inc., Case 06-CA-063690, 360 N.L.R.B. No. 39.  

As most employers do, MCPc maintained a confidential information policy in its handbook that prohibited employees from: (1) storing, outside of the company, information pertaining to any matter related to the company's business; (2) providing anyone with information about the company's purchase prices or processes without permission of senior management; and (3) engaging in "idle gossip or dissemination of confidential information within [the company], such as personal or financial information…."  A violation of the policy could lead to disciplinary action, up to and including discharge.

MCPc discharged an employee after he commented, during an internal meeting, on the dollar figure of a new company executive's salary, contending the employee improperly accessed computer files in violation of the confidential information policy to discover the executive's salary.

Finding no issue with the first two subparts of the policy, the Board agreed with the ALJ that the third subpart was overly broad because employees would (allegedly) construe the rule to prohibit the discussion of wages or other terms and conditions of their employment with their co-workers, activity that is protected by Section 7 of the Act. 

This ruling is yet another example of the NLRB's assault on private employers' facially-reasonable employment policies.

Sunday, February 16, 2014

Employer's Hard Stop Leave Policy May Violate the ADA

On February 11, 2014, a judge in Illinois denied United Parcel Service's 12(b)(6) motion to dismiss, finding that its policy of administratively separating employees after twelve months of leave is a "medical requirement" that may violate the Americans with Disabilities Act, as amended ("ADA").  See EEOC v. United Parcel Service, No. 09-C-5291, in the United States District Court, Northern District of Illinois, Eastern Division.

UPS' policy applies to qualified individuals with disabilities who can perform the essential functions of their jobs, with or without reasonable accommodations.  The court rejected UPS' argument that the ability to attend work is an essential job function, finding instead that the twelve-month policy can be considered a qualification standard, or medical requirement, that an individual must meet to retain his or her position.  The court's order cited to cases holding that a 100% healed policy is per se impermissible because it prevents an individualized assessment and necessarily excludes disabled people who are qualified to work.

The takeaway is that employers with hard stop leave policies should include an exception for leave as a reasonable accommodation under the ADA.

Thursday, February 6, 2014

An Employer's Prompt Remedial Action Results in a Fifth Circuit Reversal of a Race Harassment Jury Verdict

On January 31, 2014, the Fifth Circuit Court of Appeals reversed a hostile work environment jury verdict based on race, finding that the employer's prompt remedial action was sufficient to defeat the claim.  See Williams-Boldware v. Denton County, Texas, No. 13-40044.

In that case, the African-American plaintiff complained about racially inappropriate language directed at her by her Caucasian male co-worker.  Within twenty-four hours of her complaint, the co-worker had issued a written apology, and the complaining employee's immediate supervisor reported the incident to human resources.  The employer then reprimanded the co-worker, required him to participate in diversity training, and transferred the plaintiff to a different division to ensure she had no contact with the co-worker.  

The race harassment claim proceeded to trial, and the trial court denied the employer's motion for judgment as a matter of law.  The jury awarded the plaintiff over $400,000 in mental anguish damages and the employer appealed.

Reversing the trial court's denial of judgment as a matter of law, the Fifth Circuit focused on the employer's post-complaint conduct, which included:

  • the supervisor's prompt report of the complaint to human resources.
  • the employer's meeting with the plaintiff to discuss her complaint.
  • the employer's acquiescence to the plaintiff's request to personally confront the co-worker.
  • the employer's request for the plaintiff's input on an appropriate response.
  • the employer's verbal reprimand of the co-worker.
  • the employer's requirement that the co-worker attend diversity training.
In short, the employer's remedial efforts were prompt and "effectively halted"the racially harassing conduct entitling it to judgment as a matter of law.

Saturday, February 1, 2014

The Empire EEOC Strikes Back Against the Rebel State of Texas

On November 5, 2013, the State of Texas filed suit against the Equal Employment Opportunity Commission (EEOC) challenging the EEOC's April 2012 Enforcement Guidance titled, "Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964." See State of Texas v. EEOC, Case No. 5:13-CV-00255-C, In the United States District Court for the Northern District of Texas, Lubbock Division. 

The Plaintiff State of Texas took issue with the EEOC's position regarding the hiring of convicted felons, and asked the Court for the following relief: (1) a declaratory judgment and injunction that the State's "No-Felons Policies" do not constitute "unlawful employment practices"; (2) a declaratory judgment that the EEOC's Guidance is unlawful (and not just the portion related to state laws) because the EEOC exceeded its statutory authority; and (3) a declaratory judgment that the EEOC's interpretation of Title VII cannot abrogate State sovereign immunity

On January 27, 2014, the EEOC struck back by filing a Motion to Dismiss the lawsuit. Therein, the EEOC makes three arguments. First, it contends the Court lacks subject matter jurisdiction because the EEOC's Guidance lacks legal effect. This argument is interesting for private employers because the EEOC readily concedes the Guidance reflects only the EEOC's view of the law, and is not the law itself. Second, it contends Texas has not suffered a concrete injury from the Guidance, or that such injury is imminent or impending. Third, the EEOC contends none of the claims is ripe for a decision by the Court.

The State of Texas will have the opportunity to file a response, to which the EEOC can file a reply. Thereafter, the matter will be decided by the Court. Stay tuned to see whether the rebel State of Texas or the Empire EEOC wins this battle.

Wednesday, January 29, 2014

What Happens in Vegas…May Be Protected FMLA Leave

Yesterday, the Seventh Circuit Court of Appeals agreed with a district court and found that a woman's trip to Las Vegas with her terminally-ill mother qualified as FMLA leave.  See Ballard v. Chicago Park District, No. 10-C-1740, January 28, 2014.  

Plaintiff Beverly Ballard worked for the Chicago Park District and cared for her mother, Sarah, who was receiving hospice care for end-stage congestive heart failure.  During a meeting attended by Beverly, Sarah, and the social worker to discuss Sarah's end-of-life goals, Sarah told her daughter she had always wanted to take a family trip to Las Vegas. With help from a nonprofit agency, the social worker secured funding for the trip, and Beverly and Sarah headed to Vegas for six days of fun-filled, Sin City tourist attractions.

During the trip, Beverly continued to provide care to her mother, even finding replacement insulin when a fire at their hotel prevented them from accessing Sarah's medicine.  The Chicago Park District terminated Beverly's employment for unauthorized absences during the trip, and Beverly filed suit.

The FMLA provides eligible employees with twelve weeks of leave to "care for" a spouse, son, daughter, or parent of the employee if the spouse, son, daughter, or parent has a "serious health condition."  The Chicago Park District argued, in part, that Beverly did not "care for" her mother in Las Vegas because she was already providing her mother with care at home, and the trip was not related to any continuing medical treatment.

There was no dispute that Sarah had a serious health condition.  The primary issue in the case was what qualifies as "caring for" a family member under the FMLA.

Focusing on the text of the FMLA, the Court noted that the section granting the leave entitlement speaks of "care," not treatment, and the statutory text does not restrict care to a particular place or geographic location.  It further supported its conclusion with language from the FMLA regulations, which provide that care for a family member encompasses "both physical and psychological care."  

The Court's opinion is noteworthy for several reasons.  First, the Court recognized that its decision creates a split with the First and Ninth Circuits on the issue of the definition of "caring for" a family member.  A split in the Circuits could make the issue ripe for a review by the Supreme Court.  Second, the Court acknowledged, but dismissed, the Chicago Park District's concern that the Court's expansive reading of the term "caring for" will open the door to increased FMLA requests and create a greater potential for FMLA abuse.  

For employers already wary of the complications inherent in administrating FMLA leave, remember that if you have any reason to question the legitimacy of an employee's FMLA leave, you have the right   to request medical certification.  

Sunday, January 26, 2014

ROC United Issues its Latest Propaganda Piece---the "2014 Diners' Guide to Ethical Eating"

Restaurant Opportunities Centers United ("ROC"), with offices in Pennsylvania, Texas, and Washington, D.C., identifies itself as a national intermediary that helps initiate Restaurant Opportunities Centers around the country.  According to its website, ROC uses tactics including organizing workers, litigation, and public pressure to achieve its version of "Workplace Justice."  

ROC contends its mission includes: (1) raising the minimum wage from $7.25 per hour to $10.10 per hour over the next three years, and the tipped minimum wage from $2.13 to 70% of the regular minimum wage; (2) guaranteeing workers a minimum number of paid sick days; and (3) ending what it refers to as "occupational segregation."  

For the past few years, ROC has published its Diners' Guide to Ethical Eating, which purports to rank restaurants from the top 100 highest revenue-grossing restaurants in the United States, in five categories:  ROC partner, tipped wages, non-tipped wages, paid sick days and internal promotion.  ROC's rankings are based on information allegedly gathered by university students from phone calls to corporate and local restaurant offices about their pay, sick leave and promotion practices.

ROC recently issued its 2014 ROC National Diners' Guide to Ethical Eating.  Notably absent from the Guide is any specific information regarding the data collection process, such as which restaurant locations were contacted and when, whether the interviewees were authorized to speak on behalf of the restaurant, and whether any corporate representative for a particular restaurant confirmed any findings or conclusions.  Also absent from the Guide is any information regarding whether employees were interviewed about their satisfaction with their working conditions, and whether and how any biases were eliminated. While ROC's website includes a number of its publications, it does not include the research data to support the Guide's rankings.

Saturday, January 11, 2014

Ferreting out the Frauds: a Virginia Court Orders Yelp to Identify Anonymous Users

Social media is widely-used in the hospitality industry for everything from promoting sales to recruiting new talent.  Facebook, Twitter, Pinterest, Foursquare, and a number of other sites provide hoteliers and restaurateurs with nearly limitless access to local, national, and international audiences.

In recent years, sites like Yelp have emerged to provide customers with an anonymous, online platform to post reviews of businesses, and its impact is far-reaching.  In the first quarter of 2013, Yelp allegedly averaged nearly 102 million unique visitors per month.  

Many businesses understand the importance of widespread feedback, monitor Yelp and other sites for both positive and negative reviews, and interact with reviewers about their experiences.  Cyber-saboteurs are an unfortunate risk to companies with an Internet presence, and a number of employers have undoubtedly been the subject of anonymous, negative and disparaging attacks by competitors or disgruntled employees. 

The lawsuit

A carpet cleaning company in Virginia filed suit against seven, anonymous individuals who posted allegedly defamatory statements about the company on Yelp.  To identify the posters, the company served Yelp with a subpoena duces tecum asking it to produce documents revealing the identities of the seven individuals.  Yelp refused, based in large part on its argument that the First Amendment to the United States Constitution protects the individuals' rights to anonymous, free speech.  The Circuit Court disagreed with Yelp, and held it civil contempt.  Yelp appealed to the Court of Appeals of Virginia.  See Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., Court of Appeals of Virginia, Record No. 0116-13-4, January 7, 2014.

The appellate decision

The appellate court agreed that Yelp was in contempt for failing to comply with the subpoena.  In affirming the lower court's ruling, the Court of Appeals made the following observations:

  • The State of Virginia has enacted a statute that includes specific procedures designed to "unmask" people communicating anonymously over the Internet.  
  • Free speech is protected by the First Amendment.
  • Anonymous free speech is protected by the First Amendment.
  • "An Internet user does not shed his free speech rights at the log-in screen."
  • The freedom of speech, and the right to speak anonymously, is not absolute.
  • Defamatory speech is not entitled to constitutional protection.
  • "Commercial speech" is afforded less protection than literary, religious, or political speech.
  • Matters of opinion are protected as free speech.
  • "Factual statements made to support or justify an opinion…can form the basis of an action for defamation."
  • "Generally, a Yelp review is entitled to First Amendment Protection because it is a person's personal opinion about a business they patronized…" but if the customer never visited the establishment, then the review is not an opinion, and instead, is based on a false statement of fact.
In this case, the Court found the company had met the requirements of the unmasking statute by showing, among other things, that the communications by the anonymous Yelp users (which included statements that the company overcharged for services) are or could be tortious or illegal.  Persuasive to the Court was the company's evidence that it had conducted an independent investigation in an attempt to match the negative reviews with customers in its database.  Despite its efforts, it was unable to do so.  

The implications

The line between free speech, including opinion speech, and defamation, remains a fine one.

Although Texas currently does not have an unmasking statute, the Hadeed opinion's rationale for revealing the identities of potentially defamatory Internet users may prove persuasive to Texas courts.  Hospitality employers should keep a watchful eye on comments and feedback from social-networking sites and discuss with counsel any potential defamation issues.

Wednesday, January 8, 2014

NLRB Drops Union Poster Fight

On Monday, January 6, 2014, the National Labor Relations Board (NLRB) announced it would not seek review by the United States Supreme Court of two appeals courts decisions invalidating the NLRB's Notice Posting Rule, which would have required most private employers to post a notice in the workplace advising employees of their rights to unionize.

In 2013, two appellate courts, the D.C. Circuit and the Fourth Circuit, enjoined the NLRB from requiring the posting, and subsequently denied the NLRB's request for en banc review.  This left the NLRB with the option of appeal to the United States Supreme Court.

The NLRB's decision lays to rest, at least for now, its attempt to force employers to affirmatively assist with unionizing efforts.

Sunday, January 5, 2014

The Potential Onslaught of Pot: How Texas Employers Can Prepare For the Impact of Colorado's New Recreational Marijuana Law

In December 2013, the State of Colorado legalized the recreational use of marijuana.  Portland, Maine and Washington State have done the same, and several cities in Michigan have voted to legalize the possession of up to one ounce of marijuana for use on private property.  Other states face similar ballot initiatives.  

January 1, 2014 was the first day marijuana could be sold to anyone over the age of 21 from specially-licensed stores in Colorado.

The recreational use of marijuana remains illegal in Texas.

The citizens of Colorado amended their constitution to permit recreational marijuana use.  Below is a summary of key provisions and enforcement information:
  • according to the constitutional amendment, marijuana is to be regulated in a manner similar to alcohol;
  • a Colorado resident, 21 years of age or older, may possess, use, display, purchase, or transport (although not across state lines) marijuana accessories, and up to one ounce of marijuana, for any purpose (although nothing prevents a person from purchasing the legal limit at multiple stores in one day);
  • identification "to determine a person's age" will be required;
  • the sale, distribution, or transfer of marijuana to minors remains illegal;
  • non-residents may purchase up to 1/4 ounce of marijuana;
  • smoking marijuana in public places, including in shops where the product is purchased, is prohibited;
  • smoking marijuana is permitted on an owner's private property with the owner's permission;
  • counties can choose not to allow recreational marijuana in stores in their local jurisdictions;
  • nothing in the law requires an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale or growing of marijuana in the workplace, or affects the ability of employers to have policies restricting the use of marijuana by employees;
  • driving under the influence of marijuana remains illegal;
  • to protect individual privacy, the Colorado Department of Revenue cannot require the collection of personal information regarding drug purchasers;
  • the City of Denver has decriminalized the use of marijuana by individuals between the ages of 18 and 21.  Those individuals may be subject to a fine, but not jail time, for the use or possession of one ounce or less of marijuana;
  • the new law does not impact Colorado's existing medical marijuana law;
  • according to a recent CNN report, the Denver International Airport has advised it is against airport rules to carry marijuana through the airport, although TSA officers will not undertake specific searches for marijuana in carry-on bags or in travelers' pockets; and
  • in August 2013, the United States Department of Justice, in a Memorandum from the Office of Deputy Attorney General, advised it would focus its investigative and prosecutorial resources on drug issues unrelated to the personal, recreational use of small amounts of marijuana.
With the new law, vacationers, and more specifically, your employees, may now find the snow of Denver or the slopes of Telluride more enticing than the sands of Miami's South Beach.  

Considering the absence of physical barriers to prevent the transport of marijuana from Colorado and other states that permit its recreational use, as well as the federal government's position on its enforcement priorities, Texas employers should expect an increase in issues related to substance abuse in the workplace.

What can Texas employers do to prepare?

1.  Implement a Drug-Free Workplace Policy.  If you already have one in your handbook, review it to ensure it has kept pace with the changing times.  For example, does it address the use of synthetic drugs, such as K-2, Spice, and Bath Salts?   Does it address the consequences for the possession or sale of unlawful substances on employer property?

2.  Implement a Drug Testing Policy.  A comprehensive policy should, for example, permit random, post-accident, and reasonable suspicion drug testing, clearly define prohibited substances, explain the testing process and consequences for failures, such as the failure to comply with testing procedures, and specifically require written, employee acknowledgment.  Employers should also make arrangements with convenient, established testing facilities.

3.  Implement a Background Check Policy.  Determine the information you wish to consider, when you wish to consider it (pre-hire?  At the time of promotion?), and understand how to use the information without running afoul of current EEOC Guidelines, the Fair Credit Reporting Act, and any other, applicable laws or regulations.

4.  Implement employee and manager training regarding your policies.   Ensure your employees are familiar with your drug policies and the consequences for violating them, and maintain documentation of training dates, topics addressed, and attendees.

5.    Enforce drug policies in a consistent manner.  Follow your policies and don't play favorites.  Thoroughly document drug-related issues and investigation results, and retain testing records in separate medical files.

Through policies and training, employers should make it clear that the legalization of recreational marijuana use in other states will not excuse drug policy violations in Texas.  

Friday, January 3, 2014

Revised IRS Ruling Classifies Automatic Gratuities as Service Charges Subject to Payroll Tax Withholding

For years, it has been common practice in the hospitality industry to include an automatic gratuity on the bills of larger parties, usually defined as eight or more guests.  The purpose of this practice was to, among other things, ensure that servers were not short-changed on large tabs.  Prior to January 2014, automatic gratuities were treated as tips for employees to report as income.

Starting now, the IRS will classify automatic gratuities as "service charges," which means they will be treated as regular wages subject to payroll tax withholding (FICA).  

Hospitality employers should be mindful that their characterization of a "tip," whether communicated orally or in writing to employees, is not controlling for purposes of this rule.  According to the IRS, the absence of any of the following factors creates a doubt as to the status of a payment as a tip, and indicates the payment may be a service charge:

1.  the payment must be made free from compulsion; 
2.  the customer must have the unrestricted right to determine the amount; 
3.  the payment should not be the subject of negotiation or dictated by employer policy; and
4.  generally, the customer has the right to determine who receives the payment.

As a result of the revised IRS Revenue Rule 2012-18, located at, employers will not receive an income tax credit for the service charges, and employees will have to wait until payday to receive service charge money due to the federal tax withholding requirement.