Category Archives: Utah

May 3, 2017

Is Comp Time Coming To The Private Sector?

By Mark Wiletsky

Employees in the private sector may have the option of earning compensatory time off in lieu of overtime pay for hours worked in excess of forty hours per week. The U.S. House of Representatives recently passed the Working Families Flexibility Act of 2017, H.B. 1180, which would amend the Fair Labor Standards Act (FLSA) to permit employees in the private sector to receive compensatory time off at a rate of not less than one and one-half hours for each hour of overtime worked. The bill now heads to the Senate for consideration.

Eligibility For Comp Time

Under the FLSA, compensatory time in lieu of overtime pay has long been permitted for public sector government employees. But non-government, private sector employees have not had the option of accruing comp time as the FLSA requires that private sector employers compensate overtime only through pay. Under this bill, private sector employees who have worked at least 1,000 hours for their employer during a period of continuous employment with the employer in the previous 12-month period may agree to accrue comp time instead of being paid overtime pay.

Employee Agreement For Comp Time

Under the bill, an employer may provide comp time to employees either (a) in accordance with the provisions of an applicable collective bargaining agreement for union employees, or (b) in accordance with an agreement between a non-union employee and the employer. In the case of non-union employees, the agreement between the employee and the employer must be reached before the overtime work is performed and the agreement must be affirmed by a written or otherwise verifiable record maintained by the employer.

The agreement must specify that the employer has offered and the employee has chosen to receive compensatory time in lieu of monetary overtime compensation. It must also specify that it was entered into knowingly and voluntarily by such employee. Requiring comp time in lieu of overtime pay cannot be a condition of employment.

Limits On And Pay-Out Of Accrued Comp Time

The bill specifies that an employee may not accrue more than 160 hours of comp time. No later than January 31 of each calendar year, the employer must pay out any unused comp time accrued but not used during the previous calendar year (or such other 12-month period as the employer specifies to employees). In addition, at the employer’s option, it may pay out an employee’s unused comp time in excess of 80 hours at any time as long as it provides the employee at least 30-days’ advance notice. An employer may also discontinue offering comp time if it provides employees 30-days’ notice of the discontinuation.

The bill provides that an employee may terminate his or her agreement to accrue comp time instead of receiving overtime pay at any time. In addition, an employee may request in writing that all unused, accrued comp time be paid out to him or her at any time. Upon receipt of the pay-out request, an employer has 30 days to pay out the comp time balance. Upon termination of employment, the employer must pay out any unused comp time to the departing employee. The rate of pay during pay-out shall be the regular rate earned by the employee at the time the comp time was accrued, or the regular rate at the time the employee received payment, whichever is higher.

Employee Use of Comp Time

Under the bill, employers must honor employee requests to use accrued comp time within a reasonable period after the request is made. Employers need not honor a request if the use of comp time would unduly disrupt the operations of the employer. Employers are prohibited from threatening, intimidating, or coercing employees either in their choice in whether to select comp time or overtime pay, or in their use of accrued comp time.

Will It Pass?

The bill passed the House 229-197, largely along party lines with all Democrats and six Republicans voting against it. Reports suggest that although Republicans hold 52 seats in the Senate, they will need at least eight Democrats to vote in favor of the bill to avoid a filibuster. Supporters of the bill urge that it offers workers more flexibility and control over their time off. Those who oppose the bill say it could weaken work protections as it offers a promise of future time off at the expense of working overtime hours for free. This is not the first time that federal comp time legislation has been proposed, so we will have to see if the Senate can line up sufficient votes to pass it this time around. Stay tuned.

April 19, 2017

Retroactive Leniency Is Not A Reasonable Accommodation

By Brad Cave

Is an employer required to excuse misconduct that was the result of the employee’s disability? The Tenth Circuit Court of Appeals recently looked at this issue and came to an interesting conclusion.

Janna DeWitt has Type I diabetes and is insulin dependent. Beginning in 1997, DeWitt worked for Southwestern Bell Telephone Company (SW Bell) as a customer service representative in its Wichita, Kansas call center. Recognizing that DeWitt had a disability covered by the Americans with Disabilities Act (ADA), SW Bell permitted her to take breaks as needed to eat or drink in order to raise her blood sugar level. SW Bell also granted DeWitt FMLA leave which she took intermittently for health issues related to her diabetes.

Last Chance Agreement

In 2010, DeWitt made an error by failing to shut down service on a customer’s account after the customer cancelled service. Failure to remove a service plan after cancellation was known as a cramming violation under SW Bell’s Code of Business Conduct and was a terminable offense. DeWitt was suspended following her cramming incident until she could address the issue with her supervisors in what the company called a “Day in Court.” Her Second and Third Line Supervisors decided to place DeWitt on a Last Chance Agreement under which any additional failure to perform satisfactorily could lead to further discipline, up to and including termination.

Terminated For Hanging Up On Customers

Two months after the cramming incident, DeWitt suffered a severe drop in blood sugar at work which she stated caused her to experience disorientation, confusion, and lethargy, making her unable to communicate with anyone. After DeWitt found that she was locked out of her computer, she contacted her First Line Supervisor, Tom Heumann, for assistance. Heumann did not address her locked computer but instead told the Center Support Manager, Beth Kloxin, that  he had been monitoring De Witt’s calls and found that she had hung up on at least two customers. Kloxin responded by saying “I finally got that bitch” and did a little dance.

Later that day, Heumann and Kloxin met with DeWitt for a suspension meeting because of her two customer hang-ups. A union steward also attended the meeting. DeWitt explained that she did not remember taking the dropped calls and that she had been experiencing very low blood sugar levels at the time. Although they reviewed recordings of the dropped calls, DeWitt still did not remember them and asked if they were sure that the calls were hers. Heumann then told DeWitt that she was suspended and that a “Day in Court” would be held at a later date. In response to a request from Kloxin and the union steward, DeWitt provided her blood sugar levels for that afternoon.

About a week later, SW Bell held DeWitt’s “Day in Court.” DeWitt again explained that she did not remember taking the calls due to a severe drop in her blood sugar. Five days later, SW Bell terminated DeWitt for hanging up on two customers in violation of the company’s Code of Business Conduct and her Last Chance Agreement.

ADA and FMLA Claims

DeWitt filed discrimination charges with the Equal Employment Opportunity Commission (EEOC) and after receiving her notice of right to sue, filed a lawsuit against SW Bell in federal court. She alleged that the company failed to accommodate her disability and terminated her because of her disability in violation of the ADA, and retaliated against her for taking FMLA leave. After the district court ruled in favor of SW Bell on all of her claims on summary judgment, DeWitt appealed to the Tenth Circuit Court of Appeals (whose decisions apply to Colorado, Utah, Wyoming, Oklahoma, Kansas, and New Mexico).

Employer Need Not Excuse Or Overlook Misconduct 

DeWitt asserted that SW Bell failed to accommodate her disability by not excusing her dropped calls which she says were caused by her disability. The Court disagreed, stating that the ADA does not require employers to reasonably accommodate an employee’s disability by overlooking past misconduct, even when the misconduct is caused by the disability. Instead, the Court cited the EEOC’s ADA Enforcement Guidance which states that reasonable accommodations are “always prospective.”

The Court found that DeWitt had not requested a reasonable accommodation to address concerns that her diabetes could cause her to drop calls. Using a disability as an “after-the-fact excuse” for workplace misconduct is unreasonable and employers need not ignore or overlook past misconduct. Therefore, because asking for retroactive leniency is not a reasonable ADA accommodation, DeWitt’s accommodation claim failed.

Decision-Maker’s Honest Belief In Termination Reasons

On DeWitt’s ADA termination claim, the Court assumed (without deciding) that DeWitt had established that she was a disabled person under the ADA, and was qualified to perform the essential functions of her job. The Court also accepted that SW Bell had provided a legitimate, non-discriminatory reason for terminating DeWitt, namely that she had hung up on at least two customers while on a Last Chance Agreement. To prevail, DeWitt needed to show that SW Bell’s stated reasons for her termination were pretext for discriminating against her.

DeWitt argued that dropping the calls was not intentional but instead, was a result of her disability – her severely low blood sugar at the time. The Court said that didn’t matter. Instead what mattered was whether the decision-maker, Kimberly Baskett-McEnany, who was DeWitt’s Third Line Supervisor, honestly believed that the hang-ups were intentional and acted on that belief in good faith. Finding no evidence to undercut Baskett-McEnany’s belief, the Court ruled that DeWitt’s ADA discrimination claim failed.

FMLA Retaliation Claim Also Fails

DeWitt also argued that SW Bell terminated her in retaliation for her use of FMLA leave. She offered evidence from a former manager at the call center who stated that employees who used FMLA leave were targeted as employees that should be terminated and that the company would look for other reasons to terminate such employees. DeWitt also pointed to Kloxin’s response to Heumann’s revelation that DeWitt had hung up on customers, saying “I finally got that bitch,” as evidence that SW Bell terminated her for using FMLA leave.

Again, the Court rejected DeWitt’s arguments and her FMLA retaliation claim. The Court stated that the former manager’s comments about the company targeting employees who used FMLA leave was no more than speculation, as that person had no knowledge of and was not involved in the company’s decision to terminate DeWitt. In addition, the Court determined that Kloxin’s subjective beliefs were irrelevant as she was not the person who decided to terminate DeWitt. Finding no evidence to send DeWitt’s claims to a jury, the Court upheld the grant of summary judgment in favor of SW Bell on all claims.

Key Lessons

This case highlights some significant management practices that can help defeat discrimination and retaliation claims. First, hold all employees accountable to your standards of conduct. SW Bell terminated DeWitt for violating its code of conduct, providing the necessary legitimate, non-discriminatory reason for actions. In addition, because DeWitt could not provide evidence that other employees who similarly violated the conduct rules were treated more favorably than she was treated, she was unable to show pretext. Second, if a supervisor has a potentially unlawful animus or bias against an employee, take that person out of the decision-making process. Although Kloxin appeared to express animosity against DeWitt (although it is not clear that her animosity was driven by an unlawful motive), she was not involved in the decision to terminate DeWitt and that distinction drove the Court to reject DeWitt’s claims. Finally, remember that a reasonable accommodation applies prospectively. You need not excuse poor performance or misconduct for which no accommodation was requested. That said, when dealing with an employee with a known disability, weigh all employment decisions very carefully and make sure your actions are well supported by your policies and past practices.

April 6, 2017

Seventh Circuit: Title VII Prohibits Sexual-Orientation Discrimination

By Dustin Berger

Sexual orientation discrimination is discrimination on the basis of sex for the purposes of Title VII. So ruled the majority of federal judges for the Seventh Circuit Court of Appeals on April 4, 2017. This groundbreaking ruling is the first time that a federal appellate court has held that Title VII protects workers against discrimination due to their sexual orientation. Hively v. Ivy Tech Cmty. Coll., No. 15-1720 (7th Cir. April 4, 2017).

Title VII Prohibits Discrimination Because of Sex

Title VII of the Civil Rights Act of 1964 makes it unlawful for employers to discriminate on the basis of a person’s “race, color, religion, sex, or national origin … .”  The question before the Seventh Circuit was whether discrimination on the basis of sexual orientation is a form of discrimination on the basis of “sex,” and, therefore, prohibited by Title VII.

In 2015, the Equal Employment Opportunity Commission (EEOC) began to assert the position that Title VII does indeed prohibit sexual orientation discrimination. But, the EEOC’s position is not binding law. The U.S. Supreme Court has not ruled on this question, but all eleven federal courts of appeal, including the Seventh Circuit, had previously ruled that Title VII does not protect employees against sexual orientation discrimination. The full panel of regular judges on the Seventh Circuit, however, agreed to address this issue anew, with the majority concluding that sex discrimination includes discrimination on the basis of a person’s sexual orientation.

Lesbian Professor Claimed Discrimination Based on Her Sexual Orientation

To put a face to the case before the court, we look to Kimberly Hively, a part-time adjunct professor at Ivy Tech Community College in South Bend, Indiana. Hively is openly gay. She began teaching at Ivy Tech in 2000. Between 2009 and 2014, she applied for at least six full-time positions but was not selected for any of them. In late 2013, Hively filed a charge with the EEOC, alleging that she was being discriminated against on the basis of her sexual orientation in violation of Title VII for being denied a full-time position. Then, in July 2014, Ivy Tech did not renew Hively’s part-time contract.

After receiving her right to sue letter, Hively filed her discrimination lawsuit in federal district court. Ivy Tech sought to dismiss the lawsuit on grounds that Title VII did not protect against sexual orientation discrimination. The district court agreed, and dismissed Hively’s lawsuit. On appeal to a three-judge panel of the Seventh Circuit, the dismissal was upheld, but the panel wrote that it was bound by earlier Seventh Circuit precedent to so rule. That panel, however, criticized the circuit’s precedent as inconsistent and impractical and opined that the “handwriting was on the wall” to recognize that sexual orientation discrimination was a subset of sex discrimination under Title VII.

The full panel of Seventh Circuit judges then agreed to hear Hively’s case en banc. They concluded that Title VII’s prohibition on sex discrimination also prohibited sexual orientation discrimination for two reasons. First, discrimination on the basis of sexual orientation is impermissible “sex stereotyping.” Second, discrimination on the basis of sexual orientation is a form of associational discrimination based on sex.

Ultimate Case of Sex Stereotyping

In its discussion of “sex stereotyping,” the Court relied on the Supreme Court’s 1989 ruling in Price Waterhouse v. Hopkins, 490 U.S. 228, which recognized that discrimination based on an employee’s failure to act in a manner that was stereotypical of his or her sex was prohibited as sex discrimination under Title VII. In that case, Hopkins had alleged that her employer was discriminating only against women who behaved in what her employer viewed as too “masculine” by not wearing makeup, jewelry, and traditional female clothing. The Seventh Circuit stated that Hively “represents the ultimate case of failure to conform to the female stereotype (at least as understood in a place such as modern America, which views heterosexuality as the norm and other forms of sexuality as exceptional): she is not heterosexual.”  Finding that Hively was not conforming to a stereotype based on the sex of her partner, the Court ruled that employment discrimination based on Hively’s sexual orientation is actionable under Title VII.

Associational Discrimination

Hively also argued that discrimination based on sexual orientation is sex discrimination under the associational theory. After Supreme Court cases, including the Loving case in which the Court held that laws restricting the freedom to marry based on race were unconstitutional, it is accepted law that a person who is discriminated against because of the protected characteristic of a person with whom he or she associates is being disadvantaged because of her own traits. In Hively’s case, if the sex of her partner (female rather than male) led to her being treated unfavorably in the workplace, then that distinction is “because of sex.” The Seventh Circuit stated: “No matter which category is involved, the essence of the claim is that the plaintiff would not be suffering the adverse action had his or her sex, race, color, national origin, or religion been different.”

What This Ruling Means For Employers

For employers located in Indiana, Illinois, and Wisconsin, the Seventh Circuit’s decision is binding precedent. Employers with fifteen or more employees (and hence covered by Title VII) in those states should update their policies and practices immediately to ensure that they do not permit discrimination, harassment, or retaliation on the basis of sexual orientation.

For employers located outside of those three states, existing court rulings denying application of Title VII to sexual orientation employment discrimination claims still apply. That said, the tide is turning. Indeed, as Judge Posner explained in his concurrence, as the courts have continued to grapple with the scope of Title VII’s prohibition on sex discrimination, they have failed “to maintain a plausible, defensible line between sex discrimination and sexual-orientation discrimination” and begun to realize that “homosexuality is nothing worse than failing to fulfill stereotypical gender roles.” Other courts are beginning to reach the same conclusion. The Chief Judge of the Second Circuit Court of Appeals, in a recent concurrence, noted significant merit to the arguments that sexual-orientation discrimination was a form of impermissible sex discrimination and invited his court to reconsider the issue: “I respectfully think that in the context of an appropriate case our Court should consider reexamining the holding that sexual orientation discrimination claims are not cognizable under Title VII.” Christiansen v. Omnicom Group, No. 16-748 (7th Cir. Mar. 27, 2017).

Beyond the judicial realm, many state and local anti-discrimination laws explicitly cover sexual orientation discrimination and the EEOC continutes to take the position that Title VII prohibits sexual-orientation discrimination. Should the U.S. Supreme Court take up the issue or Congress pass legislation amending Title VII, we may get a uniform nationwide interpretation of “sex discrimination” under Title VII. Until that occurs, employers are on notice that they cannot safely rely on existing case law to conclude that sexual-orientation discrimination is permissible under Title VII.

April 3, 2017

Supreme Court Confirms That EEOC Subpoena Enforcement Decisions Must Be Reviewed Under Abuse of Discretion Standard

By Mark Wiletsky

When reviewing a district court’s decision on whether to enforce or quash a subpoena issued by the Equal Employment Opportunity Commission (EEOC), appellate courts should determine if the district court abused its discretion, rather than conducting a new review of the subpoena enforcement, according to the U.S. Supreme Court. All eight justices agreed that the proper standard of review of an EEOC subpoena enforcement decision is abuse of discretion, not de novo review. McLane Co., Inc. v. EEOC, 581 U.S. ___ (2017).

EEOC Subpoena Sought “Pedigree Information”

In the case before the Court, the EEOC was investigating a gender discrimination charge filed by a female distribution center employee named Damiana Ochoa. Ochoa had worked for eight years as a cigarette selector which required her to lift, pack, and move large bins of products. After Ochoa took three months of maternity leave, her employer required that she undergo a physical evaluation that tested her range of motion, resistance, and speed. The company required such tests of new employees as well as all those returning from medical leave. Despite attempting to pass the physical evaluation three times, Ochoa failed. The company fired her.

Ochoa filed a discrimination charge alleging, among other things, that she had been terminated on the basis of her gender. As part of its investigation, the EEOC asked the company to provide the agency with information about the physical evaluation test and individuals who had been asked to take the test. The company provided a list of anonymous employees who had been evaluated, providing each individual’s gender, role at the company, reason for the test, and evaluation score. The company refused, however, to provide what it called “pedigree information,” including the individual’s name, social security number, last known address, and telephone number.

When the EEOC learned that the company used its physical evaluation nationwide, the EEOC expanded the scope of its investigation, asking for information not only on gender but on potential age discrimination, and not only for the Arizona division where Ochoa worked but also for all of the company’s grocery divisions nationwide. The EEOC issued subpoenas requesting pedigree information related to its expanded investigation. The company refused to comply, so the EEOC sought to enforce its subpoenas in the Arizona district court.

District Court Quashed EEOC’s Subpoenas, But Ninth Circuit Reversed

The district court determined that the pedigree information was not relevant to the charges, as “an individual’s name, or even an interview he or she could provide if contacted, simply could not shed light on whether the [evaluation] represents a tool of . . . discrimination.” The district court refused to enforce the EEOC’s subpoenas.

The EEOC appealed to the Ninth Circuit Court of Appeals, where the applicable precedent indicated that the appellate court must review the district court’s decision to quash the subpoenas de novo (i.e., a completely new review). Concluding that the district court was wrong to quash the subpoenas, the Ninth Circuit reversed, finding that the pedigree information was relevant to the EEOC’s investigation.

The U.S. Supreme Court agreed to resolve a dispute among the Circuit Courts of Appeal on whether the proper standard of review is de novo, as was applied by the Ninth Circuit, or an abuse of discretion review, which other Circuits applied.

Supreme Court Decides Deferential Appellate Review Applies

The Supreme Court decided that a district court’s decision whether to enforce an EEOC subpoena should be subject to a deferential review, namely whether the district court had abused its discretion, rather than a de novo review. Recognizing that the Title VII provision that grants the EEOC subpoena power is the same as the authority granted to the National Labor Relations Board (NLRB) to issue subpoenas, the Court looked to the standard of review used when considering NLRB subpoena enforcement decisions. The Court found that every circuit that had considered that question had ruled that a district court’s decision whether to enforce an NLRB subpoena should be reviewed for abuse of discretion. In addition, almost every circuit other than the Ninth had applied the same deferential review to a district court’s decision whether to enforce an EEOC subpoena. Consequently, this “long history of appellate practice” carried weight with the justices for adopting an abuse of discretion standard in this case.

In addition, the Court focused on the case-specific nature of each EEOC subpoena enforcement decision. A district court must consider whether the evidence sought by the EEOC is relevant to the specific charge at issue and whether the subpoena is unduly burdensome in light of the circumstances. Believing that the district court is better suited than the courts of appeals to address these kinds of “fact-intensive, close calls,” the Court stated that the abuse of discretion standard of review was appropriate. Read more >>

March 21, 2017

Supreme Court Rules That NLRB Acting GC Became Ineligible To Serve After Nomination To Permanent Role

By Steve Gutierrez

Once a President nominates a candidate for a Senate-confirmed office, that person may not serve in an acting capacity for that office while awaiting Senate confirmation, pursuant to a ruling today by the U.S. Supreme Court. In a 6-to-2 decision, the Court ruled that Lafe Solomon, who had been appointed by President Obama to serve as acting general counsel for the National Labor Relations Board (NLRB) during a vacancy, could no longer serve in that acting role after the President later nominated him to fill the position outright.

NLRB General Counsel Appointment

The position of general counsel of the NLRB must be filled through an appointment by the President with the advice and consent of the Senate – a so-called “PAS” office. When a vacancy in a PAS office arises, the President is permitted to direct certain officials to serve in the vacant position temporarily in an acting capacity. Under the Federal Vacancies Reform Act of 1998 (FVRA), only three classes of government officials may become acting officers. The FVRA,  however, prohibits certain persons from serving in an acting capacity once the President puts that person forward as the nominee to fill the position permanently.

In Lafe Solomon’s case, he was directed by President Obama in June 2010 to serve temporarily as the NLRB’s acting general counsel when the former general counsel resigned. Solomon had worked for ten years as the Director of the NLRB’s Office of Representation Appeals and was within the classes of officials who could be directed to serve in an acting capacity under the FVRA. In January 2011, President Obama nominated Solomon to serve as the NLRB’s general counsel on a permanent basis. Solomon continued to serve as acting general counsel for an additional two-plus years as the Senate failed to act on his nomination. In mid-2013, the President withdrew Solomon’s nomination, putting forward another candidate whom the Senate confirmed in late October 2013.

Company Facing ULP Argued Solomon Couldn’t Be Acting GC After Nomination

In January 2013, while Solomon was acting general counsel, SW General, Inc., a company that provides ambulance services, received a complaint alleging it committed an unfair labor practice (ULP) for failing to pay certain bonuses to employees. After an administrative law judge and the NLRB concluded that SW General had committed the ULP, the company argued in court that the complaint was invalid because Solomon could not legally perform the acting general counsel duties after the President had nominated him for the permanent position. The company pointed to wording in the FVRA restricting the ability of acting officers to serve after being nominated to hold the position permanently. Whether the FVRA prohibits all classes of acting officials or only first assistants who automatically assume acting duties from continuing to serve after nomination was the issue before the Supreme Court.

Once Nominated, Official Is No Longer Eligible To Serve In Acting Capacity

The Court ruled that once a person has been nominated for a vacant PAS office, he or she may not perform the duties of that office in an acting capacity. The Court rejected the NLRB’s position that the FVRA restricted only first assistants who were in an acting capacity, rather than restricting all classes of officials directed to serve in an acting capacity who are later nominated for the permanent position. In applying its ruling to Lafe Solomon, the Court ruled that Solomon’s continued service as the NLRB acting general counsel after he had been nominated to fill that position permanently violated the FVRA. NLRB v. SW General, Inc., ___ 580 U.S. ___ (2017).

Solomon’s Actions “Voidable”

So what does this mean for all of Solomon’s actions taken during the over two-year period in which Solomon improperly served as the acting general counsel after his nomination for the permanent position? For example, what happens to the ULP complaints filed by, or at Solomon’s direction, during that period?

The Court noted in a footnote that the FVRA exempts the general counsel of the NLRB from the general rule that actions taken in violation of the FVRA are void ab initio (i.e. from the beginning). The Court of Appeals had ruled that Solomon’s actions during that period were “voidable.” Because the NLRB did not appeal that part of the lower appellate court’s ruling, it was not before the Supreme Court to decide. Consequently, the Court of Appeals’ decision that Solomon’s actions are voidable stands. Accordingly, each action taken by Solomon during the time that he improperly served as acting general counsel would need to be challenged on an individual basis.

March 7, 2017

Utah Payment of Wages Act Amendments Passed

By Bryan Benard

On March 7, 2017, the Utah Legislature passed a bill amending certain provisions of the Utah Payment of Wages Act (“UPWA”). H.B. 238 was sponsored by Representative Tim Hawkes and if signed into law by the Governor, will make three primary changes to the law.

Individual Liability For Payment of Wages 

First, the bill changes the definition of “employer” from a unique Utah definition to the definition of employer as used in the federal Fair Labor Standards Act (“FLSA”). The change will allow case interpretation of the FLSA definition of employer to apply to Utah employers under the UPWA. The reason behind this change is to clarify that in certain situations, individual directors and officers of companies may be held individually liable for the non-payment of wages. In a 2015 case, the Utah Supreme Court had ruled that there was no individual liability under the UPWA (Heaps v. Nuriche, 2015 UT 26), causing the Utah legislature to take action this session to effectively overrule that decision, replacing it with the individual liability standards applicable under the FLSA.

Private Cause of Action 

Second, this new law expressly creates a private cause of action for wages under the UPWA. This change also was prompted by a court ruling, namely Self v. TPUSA, Inc., 2009 U.S. Dist. LEXIS 10822, D.Utah Jan. 16, 2009, in which the federal court in Utah suggested that there was no private right of action under the UPWA. After the effective date of the new amendments, a private citizen clearly has the right to file a lawsuit to recover payment of wages under the UPWA in Utah state court. The amendments also provide that Utah state courts may award actual damages (i.e., the unpaid wages), a potential penalty for the violation, and an amount equal to 2.5% of the unpaid wages owed for up to 20 days.

Administrative Process Mandatory For Smaller Wage Claims 

Finally, the new law requires that certain wage claims alleging a violation of the UPWA be filed first with the Utah Labor Commission. Currently, employees “may” file a wage claim at the Commission. After enactment, all wage claims that are less than $10,000 must first be filed with the Labor Commission and the party must exhaust the administrative remedies there on such claims. Claims that are greater than $10,000, employees with multiple claims (that aggregate above $10,000), or multiple employees in the same civil action whose claims together are greater than $10,000, may file such claims directly in court without exhausting the administrative remedies.

Next Steps 

Utah employers should certainly take note of these changes, and specifically the potential for individual liability of directors and officers for the payment of wages. It is also worth watching to see if the new express private right of action increases the amounts of wage claims brought in Utah.

March 7, 2017

New Immigration Executive Order Scales Back Earlier Travel Restrictions

By Roger Tsai

On Monday, March 6th, President Trump signed a new, narrower Executive Order (EO) that temporarily restricts travel to the United States by citizens of six Muslim-majority countries. The new EO revokes the administration’s earlier order that was issued on January 27, 2017. Here are the highlights of the new EO and how it may affect employers in the U.S.

Ninety-day Travel Restrictions

The new EO restricts entry into the U.S. of nationals from six countries for 90 days from the effective date of the order, which is March 16, 2017. The six restricted countries are Iran, Syria, Yemen, Libya, Sudan, and Somalia. During the 90-day suspension period, the Secretary of Homeland Security is directed to conduct a worldwide review to identify additional information that is needed from each foreign country to determine whether individuals who apply for a visa, admission, or other immigration adjudication, are a security or public-safety threat. 

Iraq No Longer Subject To Travel Restrictions

As we reported earlier, the administration’s January executive order sought to temporarily restrict travel to the U.S. from seven Muslim-majority countries, and only Iraq has been removed from the list due to the “close cooperative relationship between the United States and the democratically elected Iraqi government, the strong United States diplomatic presence in Iraq, the significant presence of United States forces in Iraq, and Iraq’s commitment to combat ISIS.” The EO further notes that since the January EO was issued, the Iraqi government has taken steps to increase information sharing, travel documentation, and the return of Iraqi nationals who are subject to final orders of removal. Consequently, the temporary travel restrictions will not apply to Iraqi citizens.

Exceptions for Valid Visa Holders and Lawful Permanent Residents

Unlike the confusion caused by the January executive order, the new EO specifies that it does not apply to lawful permanent residents of the U.S. (green card holders) or to foreign nationals of the designated countries who hold a valid visa. The new EO does apply to individuals from the six designated countries who are outside the U.S. and do not have a valid visa on March 16, 2017. In addition, exceptions to the restriction exist for:

  • any foreign national admitted to or paroled into the U.S. on or after the effective date of the order,
  • any foreign national who has a document other than a visa, valid on the effective date of the order or issued any date thereafter, that permits travel to the U.S.,
  • any dual national of one of the designated countries when traveling on a passport issued by a non-designated country, and,
  • any foreign national who has been granted asylum, any refugee who has already been admitted to the U.S., or any individual who has been granted withholding of removal, advance parole, or protection under the Convention Against Torture.

Additional waivers of the suspension of entry from the designated countries may be decided on a case-by-case basis, including when the individual has previously been admitted to the U.S. for a continuous period of work, study, or other long-term activity and seeks to reenter the U.S. to resume that activity. Exceptional waivers may also be granted for spouses, children, or parents of a U.S. citizen, permanent resident, or lawful nonimmigrant where a denial of entry causes undue hardship.

Visa Interview Waiver Program Immediately Suspended

The new EO suspends immediately the Visa Interview Waiver Program, which allows travelers to renew travel authorizations without an in-person interview. Now, all individuals seeking a nonimmigrant visa will have to partake in an in-person interview, unless traveling for certain diplomatic or other excepted purposes. 

Refugee Program On Hold For 120 Days

The new EO suspends decision on applications for refugee status for 120 days after the effective date of the order. Unlike the January order, this EO does not single out refugees from Syria as indefinitely suspended. The EO caps the entry of refugees in fiscal year 2017 at 50,000.

March 16, 2017 Effective Date

The new EO becomes effective at 12:01 a.m. on Thursday, March 16, 2017. This advance effective date allows all agencies, airports, airlines, employers, individuals, and others affected by the order to plan for its restrictions.

What Employers Need To Consider

The suspension of the Visa Interview Waiver Program could result in delays for some foreign nationals traveling to the U.S. who now must undergo an in-person interview. Employers who employ individuals in the U.S. with unexpired visas from the designated countries should not be impacted because the suspension only affects workers currently outside the U.S. without a valid visa on the March 16, 2017 effective date. Employers seeking to employ or otherwise work with foreign nationals without existing visas from the six designated countries may need to seek a waiver under the case-by-case review process. We will continue to monitor this order, including any legal challenges that may be filed.

March 2, 2017

Remove That Liability Waiver From Your FCRA Disclosure Form

By Mark Wiletsky

If you use an outside company to run background checks on your applicants or employees, you need to review your disclosure forms asap to make sure the forms don’t violate the Fair Credit Reporting Act (FCRA).

In a case of first impression by a federal court of appeals, the Ninth Circuit recently ruled that a prospective employer willfully violated the FCRA by including a liability waiver in its FCRA-mandated disclosure form it provided to job applicants. Syed v. M-I, LLC, 846 F.3d 1034 (9th Cir. 2017). In fact, any extraneous writing on the disclosure form can lead to significant liability for a willful FCRA violation. And if you think you are safe by using forms provided by your background check company, think again.

FCRA Refresher

Background checks that inquire into a person’s criminal history, driving record, employment history, professional licensing, credit history, or other similar records, can either be done in-house or by an outside third party. In other words, your HR department may make calls, check online resources, or contact law enforcement or the DMV to obtain this information directly, or your company may outsource this function to a background check company that can do the leg work for you. If you use a background check company or another third party to compile this information on your behalf, the information provided to you is considered a consumer report and is subject to the FCRA.

Because of the private nature of this information, the FCRA limits the reasons for which consumer reports may be obtained. Using consumer reports for employment purposes is a permissible purpose under the FCRA, but such use comes with numerous obligations. In 1996, concerned that prospective employers were obtaining and using consumer reports in a way that violated applicant’s privacy rights, Congress amended the FCRA to impose a disclosure and authorization provision. Pursuant to that provision, a prospective employer is required to disclose that it may obtain the applicant’s consumer report for employment purposes and it must obtain the individual’s consent prior to obtaining the report.

FCRA Disclosure Must Consist “Solely” of Disclosure

Specifically, the FCRA provision states that a person may not procure a consumer report for employment purposes with respect to any consumer unless “(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.”

It is clear that the required disclosure should be its own standalone document and should not be included within a job application or other onboarding documents. It is also clear that the authorization (consent form) may be included on the disclosure document. But what about other information? May the disclosure form include a statement that the applicant releases the employer (and/or the background check company) from any liability and waives all claims that may arise out of use of the disclosure and obtaining the background check report?

Court Nixes Liability Waiver As Willful FCRA Violation

What may or may not appear in an FCRA disclosure form has been a hot topic in recent years. Numerous class actions have been filed by job applicants (and their aggressive attorneys) alleging that any extraneous language in a disclosure form violates the requirement that the document consist “solely” of the disclosure. Although numerous lower federal courts have grappled with the meaning of that provision, the Ninth Circuit became the first federal appellate court to examine it. (The Ninth Circuit’s rulings apply to Montana, California, Idaho, Washington, Oregon, Nevada, Arizona, Alaska, and Hawaii.)

In Syed’s case, the prospective employer provided applicants with a document labeled “Pre-employment Disclosure Release” that appears to have been obtained from its background check company, PreCheck, Inc. The third paragraph on the single-page document included the following statement:

“I hereby discharge, release and indemnify prospective employer, PreCheck, Inc., their agents, servants and employees, and all parties that rely on this release and/or the information obtained with this release from any and all liability and claims arising by reason of the use of this release and dissemination of information that is false and untrue if obtained from a third party without verification.”

On behalf of a class of over 65,000 job applicants, Syed alleged that by including this liability waiver, his prospective employer and the background check company violated the statutory requirement that the document consist “solely” of the disclosure. The Ninth Circuit agreed.

The Court found that the text of the FCRA provision was unambiguous and that even though the law permits the authorization to be included on the disclosure document, that was an express exception authorized by Congress. The Court further explained the difference between an authorization and a waiver by stating that the authorization requirement granted authority or power to the individual consumer whereas the waiver requires the individual to give up or relinquish a right. Therefore, the Court rejected the employer’s argument that the FCRA permits the inclusion of a liability waiver in the disclosure.

Moreover, the Court deemed this FCRA violation to be willful. Stating that “this is not a ‘borderline case,’” the Court ruled that the employer acted in reckless disregard of its statutory duty under the unambiguous disclosure requirement. As a willful FCRA violation, the employer faces statutory damages of between $100 and $1,000 per violation (remember, there were over 65,000 class members), plus punitive damages and attorneys’ fees and costs. Read more >>

February 27, 2017

Union Organizing At Boeing, Yale University, and Elsewhere Show Need For Swift Response

By Steve Gutierrez

Union organizing campaigns have been in the news a great deal lately. Graduate students at Yale University voted this week in favor of unionizing. But Boeing workers at its South Carolina factory recently rejected representation by the International Association of Machinists, after a long and bitter organizing campaign. What makes the difference between a “yes” or “no” vote? The key lies in understanding current organizing tactics and preparing a timely, effective response.

Boeing Defeats Union Vote In South Carolina

According to news reports, 74 percent of over 2,800 workers at Boeing’s South Carolina factory voted against the union. The election was significant because it is believed that Boeing opened its Dreamliner assembly line in South Carolina at least in part to escape the strong union that represents Boeing’s workforce in its home state of Washington. South Carolina is one of the least unionized states in the country and Boeing mounted a strong opposition to the union campaign there.

Boeing’s South Carolina production and maintenance workers sought more consistent work instructions, fairer evaluations, and higher wages and benefits, according to news reports. In opposition, Boeing is described as emphasizing that the union had earlier opposed expansion of the South Carolina factory and that the union would only come between workers and management.  Reports also describe a series of edgy opposition ads ran by a group closely tied to the South Carolina Manufacturers Alliance, to which Boeing belongs, including one that showed a machinist as a casino boss who pushed workers to gamble away their future. The strong opposition campaign appears to played a significant role in the rejection of the union in the recent vote.

Yale University Grad Assistants Favor Union 

In 2016, the National Labor Relations Board ruled that graduate student employees, such as teaching and research assistants, on private campuses are entitled to form a union and collectively bargain.  (See our post on that ruling here.) That ruling overturned long-standing Board precedent against treating graduate assistants as employees who are entitled to the rights and protections of the National Labor Relations Act. In the short time since last summer’s ruling, at least three campuses have seen graduate students form unions, with Yale University as the latest.

News reports cite numerous motivations behind the teaching assistant’s push for a union, including funding security, mental health care, affordable child care, and equitable pay. Yale, which had expressed its opposition to the 2016 NLRB ruling, warned graduate students that a union could alter their relationship with faculty members and limit their individual power as the union made decisions for everyone. The union’s margin of victory in this week’s election was reported to be slim.

Union organizers took a unique approach at Yale, seeking to have individual departments hold separate elections for their respective grad assistants. This tactic of using micro-units has proven successful in other organizing campaigns as the union need only convince a smaller number of employees in a particular department to vote “yes” rather than getting a majority of all employees holding the same position companywide to vote in favor of the union. In Yale’s case, the union Unite Here was successful in getting the graduate assistants in eight of nine departments to vote in favor of joining the union.

Understanding Union Organizing Tactics

The fast pace of union elections under the “quickie election” rules can significantly favor union organizers. As we’ve written in a prior post, the NLRB’s new election process, in effect since April 2015, accelerates the election process by shortening the time between a union’s filing of a representation petition and the holding of the vote. That time may be as short as two weeks, leaving management little time to ramp up an opposition campaign. Unions can seek to catch employers off guard or unprepared, using the quick election process to win elections without an organized response from management. Read more >>

February 25, 2017

Utah’s Non-compete Research Study Results Released: No New Non-compete Legislation in 2017

By Bryan Benard

The results from an unprecedented research study seeking input from 2,000 Utah employees and 937 Utah employers about the use of non-compete agreements has just been released and can be viewed on the Salt Lake Chamber of Commerce website here:

http://slchamber.com/noncompetestudy/

Initial Reactions

Some interesting results jump out immediately. Based on the responses, 18% of Utah employees currently have a signed non-compete with their employer. 35% of the employee respondents indicated that at some point in their careers, they had been asked to sign a non-compete. 96% of employee respondents stated that they were aware that they were signing a non-compete when they signed the agreement. 40% of employees with current non-competes in Utah believed their non-compete agreement was fair or moderately fair, while another 34% believed that their non-compete was somewhat fair. 26% of employees did not believe that their current non-compete was fair. 51% of responding employees indicated that they were ok signing a non-compete if the terms were fair.

The study seemed to confirm that last year’s non-compete bill, limiting non-competes to one year in duration, was an appropriate duration. 90% of employer respondents, and surprisingly, 74% of employee respondents, responded that Utah law should allow non-compete agreements if they are supported by consideration/value and are reasonable in scope and duration. Most employee and employer respondents indicated that they believed it was rare that a non-compete agreement dispute resulted in a court case.

Through focus group research, in addition to the survey question results, some areas of overlapping agreement appears likely between positions held by employers and employees.  Some themes indicate that there could be some consensus relating to not allowing usage of non-competes with lower wage earners and perhaps requiring more notice to employees about non-competes at the beginning of employment.  The survey results are extensive and impressive, and will require significantly more review and consideration.

Legislative Response

Good information should drive good policy decisions. Speaker Greg Hughes, Representative Mike Schultz, and Representative Tim Hawkes have been very committed to the research-first process. They have supported this unprecedented effort at collecting Utah-specific information that will then drive their policy decisions.

With only 9 business days left in this legislative session, thoughtful legislation based on these results would be very difficult, if not impossible, to propose, debate, and consider. Hours after the results were released, Representative Schultz indicated that rather than pursuing legislation on non-compete agreements this year, he and Representative Hawkes remain committed to working with the working group and other stakeholders to utilize this research and take sufficient time to consider further legislation. Here is his statement. As a result, it looks like there will be no further legislative action on non-compete agreements this session but continued work will take place before the 2018 legislative session.

Research Study Process

During the 2016 Legislative session, a working group was formed to try to reach a compromise on the 2016 non-compete bill. The working group consisted of the legislators proposing the non-compete legislation, business leaders (Randy Shumway, Vance Checketts, Jeffrey Nelson, and Dan Sorenson), the Salt Lake Chamber (Lane Beattie, Abby Osborne and Michael Parker), the Governor’s Office of Economic Development (Val Hale, Aimee Edwards), and Bryan Benard of Holland & Hart LLP. After the session, the working group discussed the concept of a Utah-specific research study of Utah-based employees and employers, related to the use of non-competes in Utah. The Cicero Group was tasked with conducting the research study and the study was funded 50/50 by the Legislature and the business community.

The survey questions were developed by Cicero group in conjunction with two employment law lawyers who donated their time, Jaqualin Friend Peterson (employee-side) and Bryan K. Benard of Holland & Hart LLP (employer-side). Input was then sought from each legislator, the business community, and the public, with all comments and suggestions reviewed, discussed, and addressed through several revisions to the study questions. Hundreds of hours were spent in this process to prepare a comprehensive, unbiased survey—one tailored to employees and one for employers that covered the same issues.

The survey was conducted over several months with 2,000 employees and 937 employers responding. Employees from a broad variety of private companies (both large, medium and small in size) were eligible. Employers of diverse industries and sizes were also eligible. Focus groups were also conducted by the Cicero group as were interviews of potential investment firms. The full methodology is set forth in the survey results.

Next Steps

Digesting and understanding the research results will be a large task given the comprehensive and unique nature of the survey itself. While there is academic research and writing on this topic, this type of specific employee/employer responses seems unique and provides a fascinating perspective. And it is certainly full of important information for Utah legislators to absorb and consider. The Salt Lake Chamber will also host two open houses with the Cicero research team on February 28 and March 1, 2017, from 2-4 p.m. at the Chamber.

The study results also provide helpful information for employers to consider and assess with respect to their own practices. Given this large undertaking, it is likely that the information will be discussed, and potential legislation may arise on this topic, for years to come.

Finally, the exceptional work by the Cicero Group should be commended and recognized. Also, the leadership of the Salt Lake Chamber was the driving force to this process and was invaluable.