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.