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Non-Compete Clauses: A Critical Update for Employers

 

The Connecticut Appellate confirmed today that continued employment alone will not bind an existing employee to an adverse change in contract terms. 

In Thoma v. Oxford Performance Materials, Inc., Conn. App. Ct., No. AC 35313, official release 9/23/14, the Court found that a terminated executive was entitled to benefits of her original employment agreement, despite having the executive having signed a second employment agreement negating said benefits. 

CT appSpecifically, the Oxford executive signed a first employment agreement with provisions including severance pay in the case of termination without cause and received at increase in salary.  Some time after, Oxford decided that the benefits in the first agreement were too generous and revised the agreement.  Both parties signed the second agreement, which excluded any severance benefits and did not provide any further increase in salary.  As provided in the first agreement, the executive’s salary increased.  When Oxford terminated the executive over a year later and failed to pay her severance, she sued Oxford. 

Ultimately, the Court’s decision should not come as a huge surprise to Connecticut employers.  For some time, Connecticut courts have leaned toward requiring some form of additional consideration to bind existing employees to any adverse change in their terms or conditions of employment.  Employers should know that if they want to incorporate a non-compete agreement or a mandatory arbitration clause, these significant restrictions on employees must be done in connection with hiring or some incentive other than continued employment to be binding and enforceable. 

Harris v. Quinn: What's Next for Employers?

 

This morning, the U.S. Supreme Court held that personal care assistants who are paid by the state of Illinois—but mostly supervised by the homecare recipients they serve—are not “full-fledged” public employees. As a result, these employees cannot be forced to pay union dues or fees.

In a 5-4 decision, the majority ruled that requiring personal care assistants to pay union dues would violate the First Amendment rights of nonmembers who disagree with the positions that unions take.

The Court noted that these assistants are “different from full-fledged public employees,” because they work primarily for their disabled client, and do not receive the same benefits as regular state employees.describe the image

This decision deals a considerable blow to organized labor. Unions are losing members—and, in turn, the dues and fees provided by said members—at an astonishing rate. Had the court ruled in their favor, public-sector unions would have had access to 26,000 new members—and their wallets. And given that nine other states, including Connecticut, allow personal care assistants to join unions, the impact will be felt far beyond Illinois.

In making its decision, the court refused to overturn Abood v. Detroit Board of Education, a 1977 Supreme Court cases that requires “full-fledged” public employees to pay dues, even if they are not members of the union. Justice Alito, writing for the majority, noted that:

Abood itself has clear boundaries; it applies to public employees. Extending those boundaries to encompass partial-public employees, quasi-public employees, or simply private employees would invite problems...If we allowed Abood to be extended to those who are not full-fledged public employees, it would be hard to see just where to draw the line, and we therefore confine Abood's reach to full-fledged state employees.

However, labor unions will likely emphasize that the ruling stressed the unique nature of the personal care assistant:

PAs are much different from public employees. Unlike full-fledged public employees, PAs are almost entirely answerable to the customers and not to the State, do not enjoy most of the rights and benefits that inure to state employees, and are not indemnified by the State for claims against them arising from actions taken during the course of their employment. Even the scope of collective bargaining on their behalf is sharply limited.

Bottom Line for Employers:

Look for this decision to trigger a battle over the definition of “full-fledged public employees,” as well as a renewed organizing push from public sector unions.


Amendments to Connecticut's Paid Sick Leave Law

 

The Connecticut legislature voted this month to enact Public Act 14-128 (the “Act”).  The Act makes several changes to Connecticut’s existing law governing paid sick leave, Conn. Gen. Stat. § 31-57r–w, and will take effect on January 1, 2015.  Changes of note for all Connecticut employers include the following:

Under existing Connecticut law governing paid sick leave, an employer must provide paid sick leave to qualifying employees if it employs 50 or more employees in Connecticut during any of the previous year’s quarters.  Under the Act, the employer now must determine if it meets the 50-employee minimum threshold for coverage based upon the number of employees on its payroll for the week containing October 1, annually. 

Next, the Act changes the timeframe for accruing the paid sick leave benefit.  Under the Act, employees accrue one hour of paid sick leave for every 40 hours worked based upon whatever 365-day year the employer uses to calculate employee benefits.  This provides an employer with the flexibility to start the benefit year on any date, rather than only on January 1.   

Finally, the Act prohibits an employer from taking certain actions to avoid providing paid sick leave to employees.  This includes terminating or transferring employees between job sites for the purpose of staying below 50 employees, the threshold for coverage under Connecticut's paid sick leave law. 

Employer Alert: Connecticut Minimum Wage Increase

 

Earlier this month, the Connecticut legislature wrapped up its 2014 regular session—a whirlwind few months that left employers scrambling to adjust to several new laws and regulations.

CapPrimarily, Connecticut employers should be concerned about the legislature’s decision to increase the minimum wage. Under SB 32 (“An Act Concerning Working Families' Wages”). Connecticut’s minimum wage will (as of January 1 of each of the next three years) increase to:

·         $9.15 per hour in 2015;

·         $9.60 per hour in 2016; and

·         $10.10 per hour in 2017.

Furthermore, hotel, bar, and restaurant employees’ minimum wages (with the corresponding tip credit), will also change

The legislature’s decision to raise the minimum wage will negatively impact not only employers, but working-class families as well. Indeed, minimum-wage increases reduce the number of entry-level minimum-wage jobs available—actually hurting many of the workers the legislation endevors to help. 

Connecticut employers should review all policies and procedures to ensure compliance with these changes to the minimum wage law.

Siegel O'Connor Named 2014 Litigation Department of the Year

 

Siegel O’Connor received top honors in this year’s Connecticut Law Tribune Litigation Department of the Year Awards, being named Litigation Department of the Year in the Labor and Employment Law category.  

describe the imageThe Law Tribune noted in its April 28, 2014 article profiling Siegel O’Connor’s litigation team that the firm was named the winner because of its “high-impact success stories” and dedication to this area of the law.  “Nearly 90 percent of Siegel O’Connor’s cases involve employment law, ranging from wage and salary law disputes to employee disciplinary actions to employment discrimination allegations.”

According to the publication, “Siegel, O’Connor, O’Donnell & Beck likes to do more than win cases.  The firm, with Hartford and New London offices, wants to have an impact on the law.”  And it does.  Read the full article here.

Publisher: Connecticut Law Tribune
4/28/2014

Northwestern Football Players Free to Organize Says NLRB

 

NCAA unions

Hopefully, you had an opportunity to enjoy some college football last year. If not, you might be out of luck, because if a new ruling from the National Labor Relations Board stands, the game will never be the same.

 Yesterday, in a stunning decision, the Board held that, “all-grant-in-aid scholarship players for the [Northwestern University] football team who have not exhausted their playing eligibility are ‘employees’ under . . . the Act.”

 So, how can student-athletes also be employees? The NLRB concluded the players “are not primarily students.” That conclusion came from the following findings:

  • The players spent 50-60 hours a week on their “football duties” during the month-long training camp before the school year even started;
  • The players spend an additional 40–50 hours a week during the 4–5 month football season;
  • These hour commitments are “more hours than many undisputed full-time employees work at their jobs”; and
  • The time spent on football constituted “many more hours than the players spend on their studies.”

As a result of this ruling, the Northwestern University players, as well as athletes at other private universities who meet the above-noted criteria, can organize with a labor union. In fact, the Northwestern athletes have already joined the College Athletes Players Association.

In response to this decision, Northwestern University's president emeritus said that if the football players were successful forming a union, he could envision a number of private universities punting their programs.

"If we got into collective bargaining situations, I would not take for granted that the Northwesterns of the world would continue to play Division I sports," Henry Bienen said at the annual conference for the Knight Commission on Intercollegiate Athletics.

Shortsighted and overly technical, the Board’s ruling will likely hurt the players its ostensibly trying to helpall the while adding new, dues-paying members to national labor organizations. Although Northwestern is going to appeal the Board’s ruling—a process that might take years—should this decision stand, the consequences could be dire.

If, for example, schools drop football programs, there will be fewer opportunities for student-athletes to attend a major university; more likely than not, these players will opt to skip the NCAA experience, and play football in Europe, Canada, or new “developmental” football leagues that will form should college programs be eliminated.

Rather than helping student-athletes earn their degrees while playing the game they loveand perhaps even earning a shot at a lucrative professional football career—the Board’s decision only ensures that fewer student-athletes will have an opportunity to earn a degree, which would prepare them for life after football.

But why allow a few inconvenient truths get in the way of this Hail Mary bomb to organized labor?

Photo credit: CBNC.com

NLRB Moves to Implement “Ambush” Election Rule

 

Breaking News:  Last week, the National Labor Relations Board (NLRB) announced that it’s moving to shorten the length of time in which a labor union certification election is held.

ambush election

The Basics:  According to the Board, this new rule would:

  • Allow for electronic filing and transmission of election petitions and other documents;
  • Ensure that employees, employers and unions receive and exchange timely information they need to understand and participate in the representation case process;
  • Streamline pre- and post-election procedures to facilitate agreement and eliminate unnecessary litigation;
  • Include telephone numbers and email addresses in voter lists to enable parties to the election to be able to communicate with voters using modern technology; and
  • Consolidate all election-related appeals to the Board into a single post-election appeals process.

Impact on Employers: Currently, the average time between when a union files a representation petitionthe first step in organizing a workplace into a unionis 38 days, but this new rule would reduce that to as few as 10 days.  Consequently, unions could launch guerrilla-organizing campaigns that, because of the compressed timeline, deny management its legal right to discuss with their employees whether a union has anything worthwhile or constructive to offer them or the company. 

As noted in a letter from the U.S. House of Representatives labor committee to NLRB chairman Mark Gaston Pearce, a former union attorney, “[t]his rule will seriously limit employer free speech and undermine employee free choice.”  The NLRB announcement also drew criticism from business groups such as the National Retail Federation.

Furthermore, employers need to be concerned about the impact on their employees’ privacy.  As unions are exempt from some state laws against stalking or trespassing when their members are engaged in organizing activities, as a report from the U.S. Chamber of Commerce revealed in 2012, questions as to how and to what extent unions will use employees’ personal information remain unanswered.

What’s Next:  The Board will be accepting public comments on the new proposed rulemaking through April 7, 2014.  The Board will also hold a public hearing during the week of April 7.

Bottom line for Employers:  With a clear Democratic majority, the Board will likely move quickly to implement this new rule. However, on March 5, 2014, the U.S. House of Representatives Education and Workforce Committee will be holding a hearing on the ambush election proposal.  We will continue to keep you updated as the NLRB continues to push its pro-union agenda.

The OSHA Trojan Horse: Organized Labor's New Scheme to Gain Access to Your Workforce

 

As union membership continues to tumble, organized labor is getting desperate.  First, the unions sought help from Washington; the Employee Free Choice Act, the RAISE Act and the President's unconstitutional "recess" appointment to the National Labor Relations Board all were attempts by labor-friendly politicians to help unions gain access to the non-union American workforce.  Now, federal agencies are riding to Big Labor's rescue, using the power of the executive branch to help organizers recruit more dues-paying union members. OSHA Trojan Horse

Earlier this year, the Occupational Safety and Health Administration (OSHA)-the Department of Labor's workplace safety watchdog-issued a guidance letter that offered a new interpretation of a long-standing rule.This new interpretation will allow labor union officials to participate in safety inspections at the request of an employee even if the employer is non-union.

During an OSHA safety inspection, employees are entitled to have an observer accompany the government investigators on the investigators' tour of the workplace.  For nearly half a century, this observer was understood to be an actual employee of the workplace in question; indeed, OSHA's own interpretative manual uses the word "employee" when describing the observer.  But in this new guidance letter, written by OSHA Deputy Assistant Secretary Richard E. Fairfax, labor union officials could participate in safety inspections at the request of an employee-even if the employer is non-union.

By re-interpreting this "observer" law in such an expansive fashion, OSHA is giving unions an unprecedented opportunity to not only gain access to non-union facilities—an organized labor "Trojan Horse"—but also to advance the idea that without union representation employees' personal safety is at risk

While ostensibly serving as "observers," union representatives will be able to spread a pro-union message among employees, a sales pitch reinforced by the sudden discovery of a number of potential safety hazards and OSHA violations.  Alleged violations need not be legitimate for the union's gambit to succeed; they need only generate concern among the company's workforce that management is fostering potentially unsafe working conditions.  And with an organizer on-site, masquerading as an observer, the solution to this sudden spike in safety violations will be offered: union representation.

Employers can still fight back.  First, companies must be prepared for the scenario described above.  When an OSHA inspector and an organized-labor observer arrive at your worksite, it is critical to demonstrate an interest in identifying and remedying any potential safety issues.  Such concern, however, does not mean acquiescence to bullying by an "observer" attempting to undermine employees' faith in management.  Have an OSHA expert, whether it is an attorney or a member of your management team, accompany the "observer" on his/her tour of your workplace.  Be prepared to counter any exaggerated or erroneous violations made by the observer—a critical step in undermining the union's credibility—while demonstrating to employees that management takes safety seriously.  Furthermore, make sure the "observer" is only allowed to participate in the actual inspection; do not let him/her wander the facility unsupervised.

Already struggling with a massive increase in federal regulations, health-care "reforms" and a sea of red tape, employers now must contend with a federal government determined to reverse the decline in organized labor's membership roles.  But employers can, and, indeed, must, take proactive steps to protect their rights and the rights of their employees.

Micro-Unit Union Battle Brewing

 

Last month, unions across America received a significant boost when the Sixth Circuit Court of Appeals upheld a 2011 ruling by the National Labor Relations Board that allowed unions to organize smaller “micro units” of workers.

The 2011 case, Specialty Healthcare, 357 NLRB No. 83 (Aug. 25, 2011), aff’d sub nom, 727 F.3d 552 (2013), involved a union that wanted to try and organize a group of nonprofessional nursing assistants—despite the employer’s argument that other nonprofessional employees should have been included in the unit. In its ruling, the Board upheld the union’s position, while noting that if an employer believes employees should be included in a particular unit, it is the employer’s burden to demonstrate those workers “share an overwhelming community of interest.”Unions

In its review of the Specialty Healthcare decision, the Sixth Circuit determined that the Board has “wide discretion,” in determining the constitution of a bargaining unit”—unless “the employer establishes that [the Board’s decision] is arbitrary, unreasonable, or an abuse of discretion.” 

The Board’s decision in Specialty Healthcare turned 75 years of labor law on its head.  And now, the Sixth Circuit has doubled-down on this seismic legal shift by affirming the Board’s decision. Yet, these rulings might still backfire on organized labor.  Often, unions use micro units to gain a foothold in an employer’s workforce—the proverbial camel’s nose under the tent.  In order to prevent unions from using the Specialty Healthcare decision to establish organizing beachheads, employers are now going to fight harder to keep their companies union-free.

Such an unanticipated consequence might toss a bit of cold water on organized labor’s post-Specialty Healthcare celebrations, but employers should still be wary.  The Sixth Circuit’s decision will not only pave the way for an increase in union organizing activity; it will likely also embolden a National Labor Relations Board that already seems intent on giving organized labor an unfair advantage. 

Photo credit: Breitbart.com

Criminal Background Checks and the EEOC: Where's the Evidence?

 

Do pre-employment criminal background checks discriminate against minorities? Not according to the U.S. District Court for the District of Maryland.

Last week, the U.S. District Court for the District of Maryland ruled that the Equal Employment Opportunity Commission failed to show that a nationwide event planning company’s use of criminal background and credit-checks resulted in a disparate impact against black and make job applicants.

In a stunning rebuke to the controversial Enforcement Guidance Regarding Consideration of Arrest and Conviction Records in Employment Decisions, the District Court hammered the EEOC’s evidence, dismissing its analyses as “flawed,” “skewed,” “rife with analytical errors,” “laughable,” and “an egregious example of scientific dishonesty.” Specifically, the court determined that one EEOC expert’s analysis focused on an unrepresentative section of applicants to fit the commission’s theory that pre-hire employee criminal background checks have a disparate impact on minorities. 

EEOC:  Where's the Evidence?  EEOC

The reports furnished by the EEOC were not the only thing that concerned the court; the EEOC also failed to meet its burden of raising triable disparate impact claims because “the commission did not identify a specific employment practice responsible for the alleged impact.” Citing Wards Cove Packing Co. v. Atonio, the court held that “under Title VII, it is not enough to show that ‘in general’ the collective results of a hiring process cause disparate impact. Statistical analysis must isolate and identify the discrete element in the hiring process that produces the discriminatory outcome.”

While the EEOC is still considering an appeal, the court’s ruling was clear: “it is simply not enough to demonstrate that criminal history or credit information has been used,” to advance a discrimination claim based on disparate impact. Granted, the issue of criminal background checks and disparate impact claims remains far from settled, last week’s U.S. District Court ruling should offer encouragement to employers drowning in red tape and over-zealous regulation.

 

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