Can Employers Refuse to Hire Someone Because They Are Unemployed?

In this challenging economy, unemployed individuals are looking for any way to find suitable employment. However, in a recent article posted on AOL Jobs, employers across the country explained that they tend to stray away from hiring the unemployed citing reasons such as not knowing why an unemployed worker lost his or her job.  Even though employers may have a preference to avoid hiring the unemployed, the question arises, is it legal to discriminate against someone because they are unemployed?

There is no federal law prohibiting hiring decisions based on unemployed status. That being said, several states have recently taken it upon themselves to implement laws prohibiting this type of hiring discrimination, notably, the District of Columbia. In 2012, the District of Columbia passed a law which prohibits DC employers from failing or refusing to consider for employment, or failing or refusing to hire, an individual as an employee because of his or her unemployed status. DC employers should pay careful attention to this law as it essentially adds unemployed status as a protected category of discrimination. Presently, Virginia and Maryland do not have unemployed status as a protected category.

Though the federal discrimination laws have never applied to unemployed status, there is a movement through a new federal law that has been proposed to prohibit discrimination based on unemployment status nationwide. The proposed American Jobs Act would in essence provide the equally broad coverage of Title VII of the Civil Rights Act of 1964 to the unemployed. Essentially, if enacted, the American Jobs Act would prohibit unemployment discrimination in all facets of employment, notably hiring, to employers with 15 or more employees.

Congress has not yet approved this law; however, employers nationwide should pay careful attention to the proposed Act as it could significantly alter the hiring process.  Even if not passed, employers should be aware of the growing trend from state legislatures to pass state specific laws prohibiting this type of discrimination. It is glowingly apparent that the hiring process has received much greater legislative attention, likely due to the increased unemployment and fewer hiring opportunities. Employers should regularly consult with their attorney to ensure whether or not their state prohibits this type of discrimination and update their employee handbook and hiring practices to be compliant with state and federal law.

The author, Nick Johnson, is an Associate Attorney with the DC region business law firm of Berenzweig Leonard, LLP.  Nick can be reached at NJohnson@BerenzweigLaw.com.

Government Continues to Scrutinize Workplace Social Media Policies

Concerned about its image and the protection of its employees, retail giant Costco enacted a policy restricting employees from making statements on social media sites such as Facebook or Twitter that:

“. . . damage the company, defame any individuals or damage any person’s reputation.”  

The Federal Government caught wind of Costco’s social media policy, and brought an action to stop it on the ground that the policy interfered with the right of Costco employees to band together to improve workplace conditions.  Costco defended the policy by saying it was merely trying to protect the company and its employees from online harassment and disparagement.

The National Labor Relations Board (NLRB) recently ruled that Costco’s policy violated the right of all employees (even non-union employees) to improve workplace conditions.  This is a tough decision for many companies to swallow, since on the surface it appears that Costco’s social media policy was aimed at the type of conduct that would be labeled defamation or disparagement.  But it is actually consistent with many other recent decisions from the NLRB clamping down on any company provisions that it feels could have a chilling effect on the ability of employees to protest against work conditions.

Traditionally, the NLRB has been associated with union workplaces.  But with the decline of union membership nationwide, the NLRB has become more and more active in enforcement actions related to non-union employers.  Social media policies such as the Costco policy at issue in this case have become a prime target of the NLRB’s enforcement arm.  Companies that have not had their employee handbook reviewed in a few years would be wise to undergo a qualified legal review.

Declan Leonard is managing partner of the Washington, DC regional business law firm Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com.

Are Child Care Duties Protected Under Federal Workplace Laws?

A recent case from the Alexandria, Virginia Federal Court addressed the issue of whether an employee’s child care responsibilities were protected under federal discrimination laws.  A male pharmaceutical sales rep was supposed to start work each day at 8:00 a.m.  Under an arrangement he had with his working wife, however, he needed to drop his child off at school at 8:30 a.m. four days a week, and therefore he could not start work on those days until roughly 9:00 a.m.  His supervisor told him that this later start time was not acceptable, and asked why his wife could not drop their child off at school instead.  The male rep was not the only employee who had kids, but he was the only male rep whose wife also worked outside the home.

The rep complained to Human Resources that he was being singled out because of his family responsibilities, and that the supervisor’s comments were based on a stereotype that “it’s the wife’s job” to do things such as taking the kids to school.  He eventually sued the company for gender discrimination.

A federal judge in Alexandria recently dismissed the employee’s case prior to trial, after concluding that the company’s 8:00 a.m. start time policy was applied uniformly to all employees, regardless of gender and regardless of whether an employee had children or not.  The court pointed out that federal discrimination laws do not protect against discrimination  that is based on caregiver responsibilities.  The court added that it would be a violation of federal discrimination laws if the company had treated mothers differently than fathers in terms of scheduling.

Had the company been in the District of Columbia however, the result may have been different as D.C. is one of two states (Alaska being the other) that explicitly outlaws discrimination in the workplace based on family responsibilities.  

Declan Leonard is managing partner of the Washington, DC regional business law firm Berenzweig Leonard, LLP. He can be reached at DLeonard@BerenzweigLaw.com.

Trend Toward Enforcing FLSA Settlements

The general rule regarding out-of-court settlements for claims brought under the Fair Labor Standards Act (“FLSA”) is that in order to be enforceable, the settlement agreement must be approved by the Department of Labor or by a court. This rule has long posed a burden on employers because unlike many other employment-related claims that could be resolved through a private settlement agreement, settlement agreements in FLSA claims need to be filed in the public record for necessary court approval.

A recent ruling out of the Fifth Circuit Court of Appeals has provided a breath of fresh air for employers. In the case of  Martin v. Spring Break ’83 Productions, LLC, a group of film-industry technicians brought a claim under the FLSA for additional compensation for hours they allegedly worked. After an investigation, a union representative determined that it would be impossible to determine whether the technicians actually worked on the days they claimed.  Subsequently, the union and employer entered into a private settlement agreement regarding the disputed hours. Though the settlement agreement was entered, the technicians filed suit seeking unpaid wages under the FLSA. The employer moved to dismiss due to the previous settlement agreement. The Fifth Circuit ultimately ruled that there existed a bona fide dispute as to the number of hours allegedly worked. Because of this, the court held that the settlement payment was “an enforceable resolution of those FLSA claims predicated on a bona fide dispute about time worked and not as a compromise of guaranteed FLSA substantive rights.”

Importantly, the court allowed this private settlement because it “resolve[d] a bona fide dispute as to the number of hours worked – not the rate at which [the technicians] would be paid for those hours.” Employers must take note that nothing in this opinion allows for employees to privately waive or release substantive rights provided under the FLSA. For example, nothing in this opinion would allow an employer to enter into a settlement agreement whereby the employer would settle to pay half of an employee’s claimed overtime compensation or where the employer negotiated to pay a higher rate of pay than allowed for hours worked in excess of 40 per workweek.

Although the Fifth Circuit came to this conclusion, other jurisdictions may not necessarily reach a similar conclusion.  The Fifth Circuit is the appellate jurisdiction covering Louisiana, Mississippi, and Texas. The Fourth Circuit covering Virginia and Maryland has not yet permitted a private settlement waiver of FLSA overtime claims.  This decision calls into question the long standing principle that FLSA settlements must always be approved by a court or the Department of Labor to be valid. Employers should take note of this opinion and discuss with counsel its potential impact on any FLSA settlement.

Posted by Nick Johnson, Associate Attorney at Berenzweig Leonard, LLP, a business law firm in the DC region.  Nick can be reached at NJohnson@BerenzweigLaw.com.

Not All Employee Insults Are Defamatory

A surgeon at Inova Fairfax Hospital claimed that the hospital and several of its staff members defamed him by making a number of statements challenging his abilities as a doctor.  Among the allegedly defamatory statements the doctor claimed the staff made were the following:

• That he was “incompetent and unqualified.”
• That he was “a bad surgeon who had poor technique.”
• That he was “a foreigner with a bad accent and that American patients do not like foreign doctors.”
• That he had “no compassion” for a particular patient.
• Telling potential patients that his “hands shake.”

The hospital defended the lawsuit by claiming that the above statements were statements of opinion, which do not give rise to a claim for defamation.

The Court had to determine which of the above statements were factual in nature (that could support a defamation claim), and which were statements of opinion which could not support a defamation claim.
A Fairfax County Circuit Court recently found that only the last one, regarding the doctor’s alleged shaking hands, was factual in nature.  The Court found that the other statements above were opinions that could not be proven in fact as either true or false.  Therefore, the first four statements above could not be used by the doctor in bringing his defamation case against the hospital.

Posted by Declan Leonard, Managing Partner of Berenzweig Leonard, LLP DLeonard@BerenzweigLaw.com

Social Media Policies Under Scrutiny by the Government

Social media is everywhere.  Most people are interacting through social media outlets such as Facebook, Twitter and LinkedIn.  The ability to interact with friends, family and colleagues in real-time is unprecedented in modern day society.  However, given the transparent nature of social media outlets, privacy issues can be problematic, especially in the employment context.

Recently, the National Labor Relations Board (“NLRB”) has taken an aggressive stance on analyzing employee social media policies and has issued multiple reports over the last year guiding employers in drafting them.  The NLRB’s main focus is whether the policies hinder or violate an employee’s right to engage in protected concerted activity, such as discussing the terms and conditions of employment. Given the uptick in social media, most policies receive scrutiny when an employee is terminated based on discussions or comments posted on a social media site.

Important take-aways regarding recent NLRB opinions:

• Employers are allowed to prohibit employees from sharing confidential and/or proprietary information online.  It is Best Practice to give examples of what is considered confidential and/or proprietary information.
• Employers are allowed to prohibit employees from posting vulgar or obscene language, as well as intimidating or harassing material. 
• A simple disclaimer such as “nothing herein prohibits protected conduct under Section 7 of the NLRB” will not, by itself, save an overly broad social media policy. However, it is Best Practice to include it, thus ensuring that the remaining social media policy is not overly broad. 
• Policies cautioning employees about posting inaccurate, misleading or internal company information have been determined to be overly broad.
• Policies stating that employees are prohibited from disparaging or defaming the company through social media have consistently been struck down, thus employers should avoid such language. 

There is a clear trend from the NLRB to strike down social media policies that are overly broad or determined to be restrictive.  As an ever-evolving area of the law, social media policies that may have been acceptable a few years ago may no longer be considered lawful. Employers should be mindful of this and understand that drafting employee handbooks and policies is not a one-time event, but rather a continuing and evolving process.

Nick Johnson, is an Associate Attorney for Washington, DC business law firm, Berenzweig Leonard, LLP. Email Nick Johnson

Disciplinary actions and racial discrimination

A new case out of Charlottesville looks at whether employers can be held liable for discrimination if they discipline an employee of one race for an infraction but not an employee of another race.

A Caucasian employee for the Department of the Army noticed a dirty coffee cup and spoon left in the sink in the workplace kitchen for several days, and she finally threw them in the garbage.  The items belonged to an African American co-worker, who claimed the coffee cup had sentimental value and was very upset to learn it was thrown away.  A series of accusatory emails were exchanged between the two employees, with the African American employee ending one email with the biblical verse that she takes “comfort in knowing that in the Bible God says vengeance is mine.”  The agency investigated the matter, but only the Caucasian employee was issued a written counseling notice.  She sued the agency, claiming that disciplining her and not her African American co-worker for the perceived threat amounted to discrimination on the basis of race.

A federal judge in Charlottesville denied the Army’s motion to dismiss and allowed the case to move forward.  The court said illegal discriminatory discipline occurs when disciplinary measures taken against one employee are harsher than those taken against another employee of a different protected class such as race.  The court did not rule that the Caucasian employee had proven her case of disciplinary discrimination, but did find that she made sufficient allegations to be able to proceed further in litigation with her case.

This case is a wake-up call to employers that they have to be constantly cognizant of how they treat one employee compared to another, especially where there is a difference of protected traits between co-workers. 

Posted by: Declan Leonard, dleonard@berenzweiglaw.com

Supreme Court Narrowly Upholds Affordable Care Act - What’s Next for Employers?

In its recent landmark decision, the Supreme Court upheld nearly all of the Patient Protection and Affordable Care Act. While having a significant business law impact, legal scholars continue to debate the Act’s merits, and presumptive Republican presidential candidate Romney has vowed to repeal it if elected, the law remains intact for now. Employers must prepare to take the necessary steps to comply with the Act’s sweeping changes.

The provisions of the Act attracting the most attention are the so called “play or pay” provisions. Beginning in 2014, employers with fifty or more full-time employees must provide them with affordable health care coverage or pay a penalty of $2,000 per worker above 30 employees. For employers already offering coverage to their employees, these provisions are not likely to result in significant changes.  However, the Act now requires continued coverage of dependent children until age 26 as well as coverage of employees with pre-existing conditions.  In addition, plans must eliminate lifetime limits and restrict annual limits on the dollar value of essential health benefits.

Moreover, employer health plans cannot discriminate in favor of highly compensated individuals, meaning that differences in plan features such as employer contribution levels, copays, deductibles, and waiting periods for different classes of employees are not allowed.

The new Act includes reporting requirements that affect employers issuing more than 250 W-2’s.  Effective for 2012 and beyond, the cost of employer sponsored coverage must be included on an employee’s W-2. This reporting is for informational purposes only, and will help the IRS assess individual employee penalties. Employers should begin tracking employees’ health benefit coverage elections so that the proper information will be disclosed on W-2s distributed in January 2013.

To assist small businesses in offsetting the costs of providing insurance to their employees, a temporary tax credit of up to 35% of their premiums is included in the Act.  However, in order to be eligible, a business must have no more than 25 employees and contribute at least half of the cost of its employees’ health care premiums. The amount of the credit depends on the number of employees and average employee compensation. As the number of full-time employees and average compensation increases, the credits decrease.

Only time will tell the fate of the Patient Protection and Affordable Care Act. In the meantime, employers should act quickly to identify the requirements and related corporate compliance deadlines applicable to them in order to avoid substantial penalties.

Author Sara Dajani is an Associate Attorney with Washington, DC business law firm Berenzweig Leonard, LLP.

Shoving or discrimination?

A male supervisor who was offended at a comment made by a female employee during a meeting, shoved the female employee on her arm.  The female employee sought treatment for the alleged pain from the altercation, and she also claimed to have suffered headaches, nightmares, and high blood pressure as a result of the incident.  The female employee eventually sued the company, claiming that her experience there constituted both harassment and a hostile work environment.  The company disputed her claim as legally flawed, and asked the court to dismiss her lawsuit without a trial.

Who won?
The company won.  A federal judge in Alexandria dismissed the case a few weeks ago after finding that there was no evidence that the shoving incident was motivated by the male supervisor’s hostility toward women.   This case is a good example of how federal discrimination laws are often wrongly invoked to remedy workplace situations that, while being inappropriate, do not rise to the level of actionable discrimination.  The terms “harassment” and “hostile work environment” have specific legal meaning in the context of federal discrimination laws, and only harassment or hostility that is motivated by a bias against one of the protected classifications (gender, race, age, disability, religion, etc.) can support a discrimination claim.  Here, the evidence showed that the supervisor was mad at a comment made by the female employee in a meeting, but that her gender had nothing to do with the supervisor’s angry act toward her.

The female employee in this case was not without recourse for the shoving incident.  She could have filed an assault and battery lawsuit against the supervisor, and probably also brought the company into the case under the theory of respondeat superior.  But by raising her grievance in the context of a federal discrimination lawsuit, the employee learned the hard way that these laws are not intended to address all problems in the workplace.

Non-compete agreements: overly broad and unenforceable?

An employee for Virginia-based Paramount Pest Control Company left to go work for a competing pest control company, and once there, he actively solicited Paramount’s customers.  The employee had signed a non-compete agreement with Paramount, which prohibited him for a period of two years from working in any capacity with a competing pest control company in any city or county where Paramount operated.  Paramount’s exact non-compete language had previously been found by the Virginia Supreme Court to be enforceable.   Paramount sued the former employee for violating his non-compete.

Who won--Paramount or the ex-employee?
The ex-employee did, after the Virginia Supreme Court this past Friday found Paramount’s non-compete overly broad and therefore unenforceable, because it restricted the employee from taking any job at a competitor, not just a job that would compete with Paramount’s business.  This defect in the non-compete is commonly referred to as the “janitor defense,” since a broad provision like the one in this case would prohibit an employee from working even as a janitor at a competing company.
Incredibly, in 1989 the Virginia Supreme Court had found the exact same Paramount non-compete provision to be fine and fully enforceable.  But the Court recognized that times had changed in the twenty years since that decision, and that Virginia (like many other states) now requires a non-compete to be expressly limited to the same or similar job positions previously held by the employee that would actually compete with the work of the former company.

This case is perhaps the best illustration that non-compete agreements need to be reviewed and updated at least every two years, if not more frequently, to take into account changes in the law.

Facebook and employee grievances

A salesperson for a BMW dealership posted mocking comments and pictures on his Facebook page about the food the dealership served at a promotional “Ultimate Driving Event” held to introduce clients to the new BMW Series 5.  The salesperson was disappointed that his dealership chose to serve hot dogs, bags of Doritos, cookies, and mini water bottles purchased from the local Sam’s Club at an event where the dealership should have been trying to impress its clients.  The Facebook postings complained that the choice in food was not befitting an event centered on a luxury car product, a viewpoint that the salesperson discussed with his colleagues before he posted them.  The negative Facebook postings were accompanied by photos of the salesperson and his colleagues posing in mocking fashion with various food items at the event.

The BMW dealership eventually discovered the Facebook postings, and fired the salesperson for demeaning the company.  The salesperson challenged the legality of his termination, claiming that his Facebook postings were protected activity since he was venting about workplaces issues.

Who won this issue?
The salesperson did.  A judge in New York found that the Facebook postings were protected under Section 7 of the National Labor Relations Act (NLRA), since the cheap food selection could have resulted in less car sales and therefore reduced commissions for the salesperson and his colleagues.  The judge noted that of the salesperson’s 95 “friends” on Facebook, 16 of them were co-workers at the dealership.  Therefore, the postings could be seen as facilitating a discussion among employees of the dealership about workplace issues.

Legal issues such as this involving social media in the workplace are becoming more prevalent every day.  Section 7 of the NLRA applies to all employees and workplaces, not just unionized ones, and prohibits any conduct by an employer that restricts an employee’s ability to commiserate with other employees about workplace issues such as compensation.  Not too long ago, the main concern here would have been employees griping around the water cooler.  But with the advent of social media such as Facebook and Twitter, employees are using online postings to air their employment grievances, creating a major legal dilemma for employers who attempt a heavy-handed approach in response.  Companies need to take great care and work with experienced employment counsel in crafting an effective social media policy.