Friday, April 29, 2016

Hiring in Austin? What Employers Need to Know About Austin's New "Ban the Box" Ordinance

Passed in March 2016 and effective April 4, 2016, Austin's new "Fair Chance Hiring" Ordinance implements new rules related to employer inquiries about an applicant's criminal history.
Here's what employers should know about the new law:
Does the law apply to every employer?  No, it applies to an employer (including a labor organization) that employs at least fifteen (15) individuals  whose primary work location is in the City of Austin for each working day in each of twenty (20) or more calendar weeks in the current or preceding year.  The term "employer" excludes the United States; a corporation wholly owned by the United States; a bona fide private membership club exempt from taxation under Section 501(c) of the Internal Revenue Code; the state or a state agency; and a political subdivision of the state. 
What does the law prohibit?  Employers cannot:
  • publish or cause to be published information about a job covered by the new law that states or implies that an individual's criminal history automatically disqualifies the individual for consideration;
  • solicit or otherwise inquire about an individual's criminal history in an application for a job covered by the new law;
  • solicit criminal history information about an individual, or consider the individual's criminal history unless the employer has first made a conditional offer of employment to that person;
  • refuse to consider an individual in a job covered by the law because the individual did not provide criminal background information before he or she received the conditional offer of employment;
  • take adverse action (refuse to hire, refuse to promote, or revoke an offer of employment or promotion) against an individual unless the employer has determined the individual is unsuitable for the job based on an individualized assessment conducted by the employer; and
  • take an adverse action against an individual because he or she has reported a violation of the law or participated in an administrative proceeding.
 What does the law require?  Employers must conduct an individualized assessment of a criminal background record after a conditional offer of employment is made.  Nothing in the law limits an employer's authority to withdraw a conditional offer of employment for any lawful reason, including the determination that an individual is unsuitable for the job based on the results of the individualized assessment.
What is an individualized assessment?  An individualized assessment is an evaluation of the criminal history of an individual that includes, at a minimum, the following factors:
  • the nature and gravity of any offenses in the individual's criminal history;
  • the length of time since the offense and the completion of the sentence; and
  • the nature and duties of the job for which the individual has applied.
Are there any exceptions related to staffing agencies?  Yes, the law provides that a staffing agency may solicit criminal history information about an individual and make an individualized assessment when the staffing agency has identified a job to which the individual will be employed or placed in a staffing pool.
Can an employee sue for a violation?  No, there is no private cause of action.
How is the new law enforced?  The Equal Employment/Fair Housing Office has the authority to receive and investigate complaints, as well as issue subpoenas.

Can an employer be subjected to penalties for violations?  Yes.  Employers will be given ten (10) days to correct any violation after receiving a written notice of a violation.  If the violation continues, the City can impose a penalty of up to $500.  The City may, for a first-time violator, issue a warning if the employer attends an appropriate training session about compliance.

Employers that use a standardized application form throughout the State of Texas, and have employees in the City of Austin, should review the form to ensure it complies with the law.  They should also review their job postings and train hiring managers on permissible and impermissible inquiries and actions, with a particular emphasis on best practices for performing individualized assessments.

Monday, April 25, 2016

Disagreement over DOL’s Tip Credit Position Continues

Section 203(m) of the Fair Labor Standards Act (FLSA) addresses an employer’s use of the tip credit for tipped employees, and provides that an employer cannot take a tip credit unless the employee has been provided notice of the use of the tip credit, and all tips are retained by the employee, although valid tip pooling arrangements are not prohibited.

In its Fact Sheet #15, revised in July 2013, the United States Department of Labor (DOL) reiterates the position in its 2011 regulations that a tip is the sole property of the tipped employee regardless of whether the employer takes the tip credit.  At the time it issued the Fact Sheet, a district court in Oregon had declared invalid the DOL’s 2011 regulation that limited an employer’s use of its employees’ tips when the employer has not taken a tip credit against its minimum wage obligations.  Oregon Restaurant & Lodging v. Solis, 948 F. Supp. 2d 1217 (D. Or. 2013).  As a result of that decision, the DOL decided it would not enforce the tip retention requirements against any employer that had not taken the tip credit in jurisdictions within the Ninth Circuit while the government considered its options for appeal of the decision. 

In July 2015, the Ninth Circuit reversed the Oregon district court’s decision and remanded the case, finding in part that in exercising its discretion to regulate, the DOL promulgated a rule that is consistent with the FLSA’s language, legislative history, and purpose.  Oregon Restaurant & Lodging v. Perez, No. 13-35765, 2016 U.S. App. Lexis 3119 (9th Cir. Feb. 23, 2016).

The issue, however, is far from settled.  Late last month, a district court in Utah flatly rejected the holding in Perez, noting that the Perez majority analysis affords deference to a DOL regulation that contradicts the plain language of the statute.  Brueningsen v. Resort Express Inc., No. 2:12-CV-843-DN, 2016 U.S. App. Lexis 39747 (D. Utah Mar. 25, 2016).  Put another way, the district court in Utah agreed that where an employer did not take a tip credit to meet the minimum wage requirement for certain employees, it could retain some or all of the employees’ non cash tips.

Despite the conflicting court authorities, employers should expect the DOL to take the Perez position and find FLSA violations where an employer that does not take a tip credit retains all or some of the employees’ tips. 

Friday, April 22, 2016

New Lawsuit Asks Court to Find Joint Employment Relationship Between Pizza Franchisee and Franchisor

In a new collective and class action lawsuit filed in New York this month, the lead plaintiff, a former assistant store manager and customer service representative for one of the largest Domino’s Pizza franchisees in the city, contends that the franchisee for which he worked and the Domino’s franchisor should be held liable as joint employers for the franchisee’s alleged violations of the Fair Labor Standards Act (FLSA).  Kucher v. Domino’s Pizza, et al., Civil Case No. 1:16-cv-02492 (S.D.N.Y.).

In support of the joint employer argument, plaintiff makes two primary arguments.  First, he contends that the franchisor controls the work performed by franchisee employees in franchisee stores by: (1) performing routine inspections of the franchisee’s locations; (2) setting policies and procedures to be followed by franchisees; (3) controlling advertising; and (4) regulating employee behavior, such as by dictating employee uniforms. 

Second, he contends the franchisor exerts influence and “a high level of control and oversight” over its franchisees by: (1) identifying and selling store locations to franchisees; (2) assisting in the franchise purchase process by providing financing to prospective franchisees; (3) handling new store location and existing store renovation construction projects; (4) creating, designing, building and updating all training and development programs for its franchisees; (5) employing an operational support team that instructs franchisees how to run their stores; (6) providing instruction regarding food preparation and the implementation of bookkeeping, accounting, inventory and general operating procedures; (7) implementing a uniform and proprietary point-of-sale system used at most of the franchised locations; and (8) allowing franchisor administrators access to the point-of-sale system. 

Further, plaintiff alleges the franchisor: (1) has the right to access all computer data maintained by its franchisees; (2) requires franchisees to send profit and loss statements at the end of each fiscal year; and (3) maintains the right to audit the sales reports, financial records, and computer data of its franchisees, as well as terminate franchise agreements.  According to the plaintiff, based on the control allegedly asserted by the franchisor, it “is ultimately able to control how its franchises operate,” and should therefore be held jointly liable for the franchisee’s actions.

This lawsuit provides another example of how plaintiffs are following the lead set by the United States Department of Labor and the National Labor Relations Board with respect to attempting to destroy the legal barriers that separate franchisors from franchisees.  Franchisees across industries should keep a watchful eye on these types of cases to determine whether courts are receptive to the idea, and if so, what control factors they consider most persuasive in finding a joint employer relationship.


Saturday, April 16, 2016

Employer's Refusal to Hire Obese Candidate Based on Risk of Future Medical Conditions Did Not Violate ADA

This month the Eighth Circuit Court of Appeals affirmed a lower court's ruling that an employer did not violate the Americans with Disabilities Act, as amended (ADA), when it refused to hire a job candidate for a safety sensitive machinist position because the candidate was obese and had a body mass index (BMI) of greater than 40.  Morriss v. BNSF Railway Company.  

The facts

BNSF maintains a policy that prohibits the hiring of a new applicant for a safety sensitive position if his BMI exceeds 40 due to the significant health and safety risks associated with that level of obesity.  Morris applied for a machinist position with BNSF.  Because BNSF considered the position to be safety sensitive, it made the offer of employment contingent on a satisfactory medical review.  In response to BNSF's medical questionnaire, Morriss reported that his health was "good" and that he experienced no difficulties or limitations in his daily activities.  BNSF's doctors conducted two physical exams of Morriss and in both exams, found he had a BMI of more than 40.  In reliance on its BMI policy, BNSF withdrew the conditional offer of employment.

Morriss sued BNSF for disability discrimination claiming his obesity was an actual disability under the ADA and that BNSF regarded his obesity as an actual disability.  BNSF argued that Morriss's obesity did not meet the definition of a disability because it was not a "physical impairment," and that BNSF did not regard his obesity as a disability because it acted only on its assessment of Morriss's predisposition to develop an illness or disease in the future.  The district court granted BNSF's motion for summary judgment, and Morriss appealed.

The Court finds that obesity, in and of itself, is not a disability

Reviewing the EEOC's Interpretive Guidance on Title I of the ADA, the Eighth Circuit concluded that an individual's weight is generally a physical characteristic that qualifies as a physical impairment only if it falls outside the normal range and it occurs as the result of a physiological disorder.  In other words, even weight outside the normal range must be the result of an underlying physiological disorder to qualify as an impairment under the ADA.  The Court also rejected Morriss's argument that the threshold question of whether an impairment is a disability under the ADA should not demand extensive analysis, finding that an individual must first establish he has a qualifying impairment before the less extensive analysis is applied to determine whether the impairment substantially limits a major life activity.

The Court rejects the "regarded as" claim

The Court reiterated that the ADA prohibits an employer from discriminating against an individual on the basis of a presently existing physical impairment, but does not prohibit an employer from acting on some other basis, such as its determination that there is an unacceptable risk of a future physical impairment.  Drawing a clear line, the Court found that "the ADA does not prohibit discrimination based on a perception that a physical characteristic---as opposed to a physical impairment---may eventually lead to a physical impairment as defined by the Act."  


With this decision, the Eighth Circuit joins the Sixth and Second Circuits in holding that for obesity to qualify as a disability under the ADA, it must result from an underlying physiological disorder or condition. Employers should be mindful that there are conflicting opinions from other courts, and should also understand the difference between a physical characteristic and a physical impairment before deciding whether to take adverse action against a job candidate or employee based on weight.

Wednesday, April 13, 2016

Are You in Compliance with OSHA's Revised Hazard Communication Standard?

In 2012, the Occupational Safety and Health Administration issued its Revised Hazard Communication Standard (HCS) to align with the United Nations' Globally Harmonized System of Classification and Labeling of Chemicals.  The intent of the HCS is to provide a common and understandable approach to classifying chemicals used in the workplace, and communicate the hazardous information on labels and Safety Data Sheets, formerly known as Material Safety Data Sheets (MSDS).  Employer responsibilities have been phased in, with the last deadline approaching on June 1, 2016.
Does my establishment need to comply?
1.     The HCS should apply to most hospitality employers because they typically use various types of hazardous chemicals, including degreasers, soaps, oven cleaners, floor cleaners, sanitizers, and drain openers, in the workplace.
What's new?
1.     Chemical manufacturers and importers are required to provide a label that includes a harmonized signal word, pictogram, and hazard statement for each hazard class and category.  They must also provide precautionary statements.
2.     Safety Data Sheets will replace the MSDS, and have a specified, 16-section format.
3.     OSHA has prepared Label, Pictogram, and Safety Data Sheet Quick Fact cards, in both English and Spanish, for use in training employees.
What are my obligations as an employer?
1.     Employers were required to train workers by December 1, 2013 on the new label elements and Safety Data Sheets format.
2.     By June 1, 2016, employers are required to update alternative workplace labeling and hazard communication programs as necessary, and provide additional employee training for newly identified physical or health hazards. 
What else do I need to know?
1.     Employers should ensure they post, in a prominent location in the workplace, the OSHA "It's the Law" poster, which can be downloaded for free in English and Spanish at
2.     OSHA also imposes record-keeping requirements on employers.
3.     OSHA can impose penalties for noncompliance.

Friday, April 1, 2016

Franchisee's Fuss over Food and Facebook Leads to Unfair Labor Practice Findings

In a decision entered last week, the Eighth Circuit Court of Appeals agreed that a Jimmy John's franchisee owner and operator violated the National Labor Relations Act (the "Act") when it, among other things: (1) fired some and disciplined other employees for posting misleading and potentially disparaging posters about the company's sandwiches and sick leave policy; and (2) created a public, anti-union Facebook page used by store employees and managers to post comments about a union and its organizers.  See Miklin Enterprises Inc. v. NLRB, Nos. 14-3099, 14-3211 (8th Cir. March 25, 2016).

The background

The union lost a representation hearing in 2010, and had filed objections to the conduct of the election and an unfair labor practice charge, both of which were settled in 2011.  Around the time of the settlements, several employees placed posters featuring two identical, side-by-side photos of a sandwich on a community bulletin board in the public area of several of the franchisee's locations.  Above one sandwich on the poster was the comment, "Your Sandwich Made by a Healthy Jimmy John's Workers," and above the other sandwich was the comment, "Your Sandwich Made by a Sick Jimmy John's Worker." 

Below the photographs, in larger white letters, was the comment, "Can't Tell the Difference?"  In smaller red letters was the comment, "That's Too Bad Because Jimmy John's Workers Don't Get Paid Sick Days.  Shoot, We Can't Even Call in Sick."  Below that comment, in even smaller white letters, was the comment, "We Hope Your Immune System is Ready Because You're About to Take the Sandwich Test."  Finally, below that text was the comment, "Help Jimmy John's Workers Win Sick Days.  Support Us Online At......"  Managers removed the posters.

The employees met with the franchisee's co-owner and presented him with a letter from the union demanding a change to the sick leave policy, and when he did not respond to the letter, the union issued a press release stating, in part, that the sandwich makers were sick and tired of putting the health of their customers at risk.

Additionally, several employees posted the posters in various public places within two blocks of the franchisee's stores, and included the co-owner's phone number.  The co-owner and others took down as many posters as they could find, and the franchisee fired several employees over the posters, and disciplined others.
In late 2010, a franchisee employee established a Jimmy John's Anti Union Facebook group,  used by employees, managers, and one of the co-owners, and accessible to anyone with a Facebook account, to post comments about the organizing activities and the employees who supported the union.  The co-owner posted a message encouraging anyone who saw the sandwich posters to take them down, and an Assistant Manager posted a union organizer's personal cell phone number with a suggestion to call him to express feelings about a union, along with the comment, "F*&# you David.  Forever."  A former employee posted an altered picture of a union supporter wearing union apparel and a ball cap labeled "Shithead" with feces on the bill, and encouraged others to repost it.
The union filed unfair labor practice charges claiming the franchisee violated the Act by terminating or disciplining employees for engaging in protected activity, and encouraging employees on Facebook to harass union supporters.  The Board  agreed that the franchisee committed most, but not all, of the violations, and the franchisee filed a petition for review.

The Court weighs in

In defense of its termination and disciplinary decisions, the franchisee argued that the sandwich poster statement about not being able to call in sick was false, and that the communication as a whole was disloyal and disparaging.  The Court noted that employees have the right to self-organization, but concerted activity may lose its protected status if it is so detrimentally disloyal that it provides cause for an employer to discharge the employee. In this case, the sandwich posters were made in the context of a pending labor dispute, and although the poster comment about the inability to call in sick was factually incorrect, the Court agreed the comment was more like exaggerated rhetoric common in labor disputes, which is protected.  As to the disloyalty and disparagement arguments, the Court agreed that the poster did not use language intended to degrade or humiliate, and only suggested the realistic potential for illness resulting from the handling of food by sick workers.
With respect to the allegations of Facebook harassment, the franchisee argued that none of the Facebook postings was unlawful because there was no evidence linking them to any particular protected activity, and there was no election pending at the time. The Court recognized that the Act contemplates a significant degree of vituperative speech in the heat of labor relations, but further noted that an employer's disparaging characterization of union supporters has been found unlawful when it has the coercive effect of holding employees' protected concerted activities up to ridicule and frustrating such activities. 
Here, the Court found there was substantial evidence supporting the Board's finding that the postings were sufficiently linked to the union supporter's protected activity.  Additionally, the combination of negative postings and the Assistant Manager's solicitation of negative comments from others could create fear of similar treatment for engaging in union activities.  The Board flatly rejected the "no election pending" argument.
In short, this case underscores the fact that when it comes to judging the behavior of unions against employers, whether during or outside of an election, the scale often tips in favor of the union.