Monthly Archives: April 2013

NLRB Mass Chaos, Part III

As if the D.C. Circuit’s decision rendering the National Labor Relations Board ineffective and the pending cases in several other circuits haven’t caused enough confusion, more has been added to the mix.

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President Obama has nominated three nominees to the NLRB, but the Senate must confirm them. One is a current NLRB member and the two others are Republicans, as is required by law. If the Senate doesn’t move forward on their nominations, the NLRB may remain stalled.

On the other side of Congress, the House today approved a bill that would freeze the NLRB’s work until either the U.S. Supreme Court reverses the D.C. Circuit or the Senate approves enough nominees to create a quorum. The bill would also nullify all NLRB decisions during the time the Board acted without a quorum (as the D.C. Circuit ruled).

Stay tuned!

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Federal Court Lets “Gender Stereotype” Case Move Forward

A federal court in Richmond ruled last week that an apparently effeminate, but heterosexual, male who was harassed based on “gender stereotypes” could take his case to trial.

In refusing to grant the employer summary judgment, the trial court judge held that the complaint alleged harassment based on “failing to comply with accepted gender norms,” and not sexual orientation. The opinion noted that discrimination based on sexual orientation isn’t protected by federal law. In contrast, the protected class in this case is sex, not sexual orientation.

The issue comes on the heels of a growing trend of expanding federal workplace protection–the EEOC last year officially took the position that Title VII covered transgender employees and applicants.

The ruling highlighted the tension created by expansively reading Title VII, citing several other federal cases that grappled with this issue and noting that “it is often difficult to draw the distinction between discrimination on the basis of gender stereotyping and discrimination on the basis of sexual orientation.”

Employers Make Changes to Avoid Health Insurance Coverage

Reporting on a widely popular trend, the Wall Street Journal ran a piece last week on small businesses’ strategies to address the health-insurance mandate kicking in next year. The new law requires employers with 50 or more full-time employees to begin offering group health insurance to all full-time employees (those averaging over 30 hours a week).

So what are these small businesses doing? It depends.

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The owner of one foodservice company said he plans to pay the $2,000 per employee penalty, which is cheaper than the company picking up the $500,000 tab for group health insurance. Says the owner:

I’ve never made a profit in any year of the company that has surpassed that amount. I don’t make enough money.

Others, including a Pennsylvania-based home healthcare company, are paring hours down to force employees into part-time roles that wouldn’t make them eligible for mandatory insurance coverage. 

Another option is simply forcing employees to pay the bill themselves, leaving them with escalating costs expected to reach over $15,000 annually for family coverage.

Whatever the solution may be for any given employer, there will be many more shifts over the next several months.

4th Circuit Upholds Arbitration Agreement for FLSA Claim

In a promising opinion for employers, the Fourth Circuit this week upheld an arbitration agreement restricting an independent contractor’s FLSA lawsuit arguing he was an employee.

Shuttle Service, an airport taxi company, entered a “franchise agreement” with a driver. The driver was deemed an independent contractor under the agreement. In addition, the agreement contained a strict arbitration provision, requiring any dispute arising out of the agreement to be arbitrated, with the parties splitting the cost. It also imposed a one year statute of limitations and required the independent contractor to waive his right to participate in any class-action suit.

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The driver sued Shuttle Service, alleging he was an employee entitled to overtime under the FLSA. Instead of litigating the merits, Shuttle Service asked the federal trial court to send the matter to arbitration. The court denied its request and struck the arbitration provision as “unconscionable.”

The Fourth Circuit, however, reversed the trial court, ruling that the agreement was enforceable. It determined that requiring the independent contractor to share in the cost of arbitration was no so costly as to be prohibitive. The court also blessed the class-action waiver and shortened statute of limitations.

The decision follows a clear trend upholding employer-employee arbitration agreements, even those that require the employee to chip in for the arbitration, leaving employers with a good option to foreclose litigation before it begins.

Questions Remain in NLRB Recess Appointment Case

Since the D.C. Circuit Court of Appeals January 25 ruling invalidating President Obama’s recess appointments to the National Labor Relations Board, over 70 cases pending in federal appeals courts have cited it in attempts to undo adverse Board decisions.

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The D.C. Circuit Court opinion, which will affect not only the NLRB but every federal agency, is pending appeal in the U.S. Supreme Court, which will probably review the case. In the meantime, though, employers facing the losing end of an NLRB decision are not wasting any time trying to persuade other appeals courts to follow the D.C. Circuit’s reasoning.

The Fourth Circuit, which sits in Richmond, held oral argument on one of these cases in late March. That means an opinion will be released in the coming months. The consequences of upholding the D.C. Circuit’s reasoning are drastic: any decision the NLRB made would be completely invalidated. The resulting uncertainty affects not only labor cases, but the more controversial social-media cases that have brought the NLRB to the forefront of employment law recently.

Ultimately–especially if federal appeals courts reach differing results–the U.S. Supreme Court should clarify the issue.

“European” Is Protected Class for National-Origin Discrimination

A federal case in Alexandria last month raised an interesting issue that’s caused conflict within federal trial courts: What does a reverse-discrimination plaintiff need to prove?

The federal trial court, which ended up granting summary judgment to the employer, ruled that “Europeans” occupy a protected class under Title VII’s prohibition on national-origin discrimination. The employer passed over the European applicant for a candidate of Indian descent, who the employer argued was better qualified.

Interestingly, though, the court noted a severe split among federal appeals courts, and even disputes among trial courts within the Fourth Circuit, which encompasses Virginia. Some courts require so-called reverse-discrimination plaintiffs to show the employer had some underlying, “invidious” intent to discriminate against majority groups. Other circuits apply the same law as any other discrimination case, simply requiring the plaintiff to show an individual from another national origin (in this case) was hired. The judge noted that the Fourth Circuit has refused to rule on this issue, leading to disagreement in the federal trial courts over the correct standard.

In the end, the judge applied the typical discrimination standards, but ruled that the European candidate was less qualified than the Indian candidate the employer eventually hired and granted the employer summary judgment.