For many years, employees and customers in the securities industry signed agreements that their disputes must be arbitrated before the self-regulatory organization for broker-dealers, Financial Industry Regulatory Authority (“FINRA”), previously known as the National Association of Securities Dealers (“NASD”). Compulsory arbitration has been the norm for small and large customer claims, employee disputes and large complex cases, excepting only class actions.
Rule 13204 prohibits class actions from being arbitrated under the Code:
Any claim that is based upon the same facts and law, and involves the same defendants as in a court-certified class action or a putative class action, or that is ordered by a court for class-wide arbitration at a forum not sponsored by a self-regulatory organization, shall not be arbitrated under the Code, unless the party bringing the claim files with FINRA one of the following:
(1) a copy of a notice filed with the court in which the class action is pending that the party will not participate in the class action or in any recovery that may result from the class action, or has withdrawn from the class according to any conditions set by the court; or
(2) a notice that the party will not participate in the class action or in any recovery that may result from the class action.
Now, with collective actions having increased in popularity, and despite FINRA having experienced, well-trained arbitrators hearing its cases, FINRA now believes that collective actions under the Fair Labor Standards Act (FLSA), the Age Discrimination in Employment Act (ADEA), and the Equal Pay Act of 1963 (EPA) would best be heard in the courts.
Why should these claims be excluded from arbitration under the Industry Code? The courts see differences between class actions and collective actions. See, e.g., Velez v. Perrin Holden & Davenport Capital Corp., 769 F.Supp.2d 445 (S.D.N.Y. 2011) (compelling arbitration because collective action differs from class action); Gomez v. Brill Securities, Inc., 2010 WL 4455827 (S.D.N.Y. Nov. 2, 2010) (recognizing significant differences between an opt-out class action and an opt-in collective action; Gomez v. Brill Securities, Inc., 2012 WL 851644 (NY App. 1st Dept. Mar. 15, 2012) (denying motion to dismiss or to compel arbitration of class action claims).
Bottom Line for Employers
FINRA claims that the courts have established procedures to manage both types of representative claims. It also believes that the rule change would preserve access to courts for these types of claims for employees of FINRA members. Of course it does, but couldn’t FINRA do so as well?
Last week, we predicted that the NLRB's "employee rights" posting requirement would be postponed. Sure enough, the Board has announced that, in light of the DC Circuit Court of Appeals recent enjoinment against the posting requirement, this new regulation has been delayed.
Therefore, the April 30, 2012 deadline for employer implementation of this rule is no longer in effective. Employers, however, should remain vigiliant, as its likely the Board will continue to press this issue.
This morning, April 17, 2012, the United States Court of Appeals for the District of Columbia granted an emergency injunction delaying the implementation of the NLRB Notice Posting rule. The court will hear oral arguments to fully review the law and issue a ruling expected sometime this summer. This ruling by the court of appeals comes on the heels of the decision on Friday, April 13, 2012 by the District Court of South Carolina invalidating the whole NLRB Notice Posting rule.
The National Association of Manufacturers (NAM) and the Coalition for a Democratic Workplace asked for the injunction after U.S. District Judge Amy Berman dismissed their legal challenge last month.
“The facts in this case and the law have always been on the side of manufacturers, and we believe that granting an injunction is the appropriate course of action for the court. The ‘posting requirement’ is an unprecedented attempt by the board to assert power and authority it does not possess,” said Jay Timmons, NAM’s president and CEO, in a statement.
Other business groups celebrated the injunction.
“For the last several months, [Associated Builders and Contractors (ABC)] has vigorously fought NLRB’s politically motivated policies that threaten to paralyze the construction industry in order to benefit the special interests of politically powerful unions,” said Geoff Burr, ABC’s vice president of federal affairs, in a statement. “The NLRB’s notice posting rule is a perfect example of how the pro-union board has abandoned its role as a neutral enforcer and arbiter of labor law.”
Bottom Line for Employers
In our opinion, these decisions will require the NLRB to postpone the April 30, 2012 date. Check back here for more information.
From our friends over at LaborUnionReport, a must-read posting about an Obama-appointee's recent ruling regarding the NLRB's union posters:
Last week, "Federal Judge Amy Berman Jackson approved the union-dominated National Labor Relations Board’s mandate on nearly all private-sector companies to post so-called “union rights posters.” Additionally, Berman Jackson, an Obama appointee to the United States District Court for the District of Columbia, declined to hear a challenge to Obama’s recent NLRB appointments.
In the union rights poster ruling, Berman Jackson ruled that the NLRB did not exceed its statutory authority to require private-sector employers that fall within the scope of the NLRB to post notices to employees advising them of their right to unionize. This means that most companies with two or more employees (outside of the airline or railroad industries) will be required to post the union rights posters (see PDF copy here) on April 30, 2012."
Read the rest of the article over at LaborUnionReport.
Unions need dues to survive, and the Service Employees International Union (SEIU) is certainly no exception. And as the amount of union dues collected across the country continues to plummet, organized labor is devising more and more “innovative” ways to keep its coffers full.
Perhaps unsurprisingly, this campaign to squeeze every last dime out of potential union members—and taxpayers—has found its way to Connecticut.
In-Home Health Care Workers Under Siege
The SEIU has launched an aggressive campaign to collect dues from in-home health care workers. Last December, Governor Malloy signed an executive order paving the way for daycare providers and personal care attendants to collectively bargain. And now, the SEIU is sending innocuous looking union authorization cards to employees’ homes. While the cards ask only if the employees wish to join the union, they do not inform employees of the consequences of replying: If the SEIU receives a majority of all returned cards in its favor, it becomes the exclusive bargaining representative for all of the state's in-home health care employees.
Should these in-home health care workers wind up being represented by the SEIU, Connecticut taxpayers will be de facto paying dues to the SEIU. After all, these in-home caregivers are paid, in part, through a subsidized state program. If chunks of these employees’ subsidized salaries are then passed along to the SEIU, taxpayers will be footing the bill for Organized Labor’s radical political agenda, and its leaders' bloated six figure salaries and out-of-control boondoggles. It’s unlikely that this is the scenario Connecticut taxpayers envisioned when they learned their monies would be subsidizing in-home health care workers.
Bottom Line for Employers
Frightened by underfunded pension plans and declining union membership, the SEIU is getting desperate. But a desperate union is a dangerous union—particularly when the union in question is the SEIU. Employers should view this latest dues-grab as yet another example of how unions are willing to do whatever it takes to remain relevant. And as more and more workers decide union membership isn’t the right choice, organized labor is turning to its political allies (and their access to taxpayer money) for support.
--Ryan O'Donnell is an Siegel O'Connor associate specalizing in union avoidance campaigns.
On January 20, 2012, the Acting General Counsel, Lafe Solomon, of the National Labor Relations Board (Board) issued a memorandum recommending the Board revise its policy for deferring unfair labor practice charges to arbitration. Presently, the Board will defer a charge to the parties collectively bargained arbitration process for resolution.
Under the suggested policy, the Board will not permit deferral of Section 8(a)(1) and 8(a)(3) charges unless the arbitration process can be completed in a year. If it cannot be completed in a year, Acting General Counsel expects the Region to conduct a full investigation of the charge and if found to be meritorious, the case should be sent to the Division of Advice for further action. The change in the deferral policy will not effect of the Board’s approach to Section 8(a)(5) allegations involving breach of contract.
The stated rationale for the Acting General Counsel’s position is his concern that undue delay in the arbitration process caused by deferral renders any potential Board remedy meaningless given the passage of time.
Bottom Line for Employers
This memorandum by the Acting General Counsel continues his trend to revisit long-settled legal principles of the National Labor Relations Board and revise them where he deems it appropriate.
While this week marks the unofficial start of spring training for Major League Baseball, last week marked the official opening for the 2012 State of Connecticut legislative session. At the top of Governor Dannel P. Malloy’s legislative agenda is education reform. However, as part of his State of the State address to the General Assembly, Governor Malloy surprised union leaders with his call to revamp the teacher tenure process. he Governor described the current teacher tenure system by saying “all you have to do is show up for four years.”
Sharon Palmer, President of the American Federation of Teachers Connecticut, was quoted as saying she thought Malloy’s characterization “was a bit harsh and incorrect, but I think we can work our way through it.”
Presently, for teachers to attain tenure, they need to complete forty school months of full-time continuous employment for the same board of education, provided the superintendent offers the teacher a contact to return for the following school year. (C.G.S.A. § 10-151). Once the teacher is tenured, they are entitled to a property right in their position for due process purposes and thus, it makes it extremely difficult for a board of education to dismiss a tenured teacher. Under the Teacher Tenure Act, a tenured teacher can only be terminated for the following reasons:
- Insubordination against reasonable rules of the board of education;
- Moral misconduct;
- Elimination of the position to which teacher was appointed; or
- Other sufficient cause.
Tenured teachers are not at-will employees because of an affirmative decision of the legislature in enacting the Teacher Tenure Act to protect classroom teachers and administrators below the rank of superintendent from the threat of arbitrary discharge. Cimochawski v. Hartford Public Schools (2002), 802 A.2d 800, 261 Conn. 287. By invoking these protections, the Connecticut legislature has made it extremely difficult to terminate an underperforming teacher. Not only is the standard of “incompetence” a burdensome standard to meet, the termination process is expensive and time-consuming, as teachers are entitled to notice, a hearing before the board of education and appeal rights to the Connecticut Superior Court.
Under Malloy’s proposal, “tenure will have to be earned and re-earned” by meeting certain objective performance standards which would include student achievement, school performance and parent and peer reviews. Malloy would like to see the law changed so that a teacher could be dismissed for “ineffective” performance rather than for “incompetence.”
The Governor should be commended for proposing such reforms to the Teacher Tenure Act especially since one of his primary constituent supporters has been labor unions. However, given the current configuration of both chambers of the Connecticut General Assembly, is it realistic to believe that real reform to teacher tenure can be enacted? Certainly, there will be much hesitancy from the Connecticut teacher unions to reform the current system. It will be interesting to see if the Governor’s opening day surprise can garner enough bipartisan support to achieve meaningful reform.
Bottom Line for Educators
If Governor Malloy is successful in enacting legislation to reform the teacher tenure act by lessening the standards for teacher dismissals and limiting teacher’s due process rights, such change would be welcomed by all boards of education.
By news release last week, the NLRB’s Acting General Counsel announced the publication of his second report on social media cases reviewed by the General Counsel’s office. The use of social media by employees and related action by employers became a hot topic for the NLRB in 2011, and continues into 2012.
The report, available on the NLRB website here, summarizes fourteen recent NLRB cases which “present emerging issues in the context of social media.” It follows an initial memorandum released by the Acting General Counsel on August 18, 2011. As the NLRB’s press release summarizes, half of the cases involve questions about social media policies created by employers, finding five of them unlawfully broad, one lawful, and one lawful following revision. The remaining seven cases involved questions of the lawfulness of employee discipline following the posting of comments on Facebook.
The release highlights two important, albeit general, conclusions to be drawn from these cases:
- Employer policies should not be so sweeping that they prohibit the kinds of activity protected by federal labor law, such as the discussion of wages or working conditions among employees.
- An employee’s comments on social media are generally not protected if they are mere gripes not made in relation to group activity among employees.
Bottom Line for Employers
The NLRB’s enforcement of the NLRA as it pertains to employee use of social media and employer enforcement of social media policies is still evolving, and as demonstrated by the cases in the Acting General Counsel’s report, often subject to fact-specific determinations. For now, there is not yet a clear set of rules for employers to follow in this area of law in order to avoid NLRB sanction. As such, it is important that employers contact legal counsel when contemplating discipline arising from employee use of social media. Further, employers should work with counsel to craft social media policies before such circumstances arise in order to avoid becoming an NLRB guinea pig.
It is now past the January 1, 2012 deadline for all Connecticut boards of education to approve their individual districts’ Safe School Climate Plans, the comprehensive procedures to address school bullying that were imposed by last year’s legislative session. The major focus of Public Act No. 11-232, An Act Concerning the Strengthening of School Bullying Laws, was to require each district to implement a Safe School Climate Plan in lieu of their formerly required bullying policies. The act defines “school climate” as “the quality and character of school life with a particular focus on the quality of the relationships within the school community between and among students and adults.”
While the act provided that the State Department of Education would adopt a model Safe School Climate Plan to assist districts in devising their own such plans, this has yet to happen.
The following is a review of the key components of the amended bullying laws, including additional requirements for the Safe School Climate Plans that must be in place by July 1, 2012:
- Definition of “Bullying.” The key is repeated conduct, shown by: (A) either the repeated use by one or more students of a communication that is directed at, or refers to, another student, or (B) an act or gesture by one or more students repeatedly directed at another student that (i) causes harm or damage to property, (ii) places the student in reasonable fear of such harm or damage, (iii), creates a hostile environment at school, (iv) infringes on the student’s rights at school, or (v) substantially disrupts the education process or orderly operation of the school.
Updates to Safe School Climate Plans (Due July 1, 2012)
- Complaint Investigation Procedures. Any student, parent or guardian may make a written report of bullying to any school employee (defined by the Act; see below). Once received, the Safe School Climate Specialist must supervise the investigation of the report, to be completed promptly. Within 48 hours of completion, if a verified act of bullying is found, the school must invite the parents or guardians of the student who committed the act to meet with the parents or guardians of the victim, at which the school will inform them of the measures being taken to ensure the victim’s safety and to prevent further bullying. The school must document and maintain records of each such investigation report, along with a list of the number of verified acts of bullying, which shall constitute a public record. The district shall protect from retaliation any person who makes or investigates a bullying report.
- Safe School Climate Coordinator. This person should be identified in your Safe School Climate Plan as a district-wide administrator with responsibility for overseeing the Safe School Climate Specialist at each individual school.
- Safe School Climate Specialist. This person must be the school principal (or designee) at each school in the district, and is responsible for supervising the processing of bullying complaints
- Safe School Climate Committee. This committee is established by the Safe School Climate Specialist at each school, and must include at least one parent/guardian of a student enrolled in the school. The committee must receive copies of completed investigation reports, identify and address patterns of bullying, review and amend relevant school policies, make recommendations concerning the Safe School Climate Plan, provide education on bullying, and assist with data collection pertaining to bullying incidents. The act includes an exception prohibiting the parent/guardian member of this committee from taking part in any activity that may compromise student confidentiality.
- New Responsibilities for School Employees. Any person who has regular contact with public school students in the performance of his or her employment duties (broadly defined to include substitute teachers and contracted service providers), and who witnesses bullying or receives a report of bullying, must orally notify the Safe School Climate Specialist within 1 school day, with a written report within 2 school days. Any such person making a good faith report of bullying shall be indemnified by the board of education for any action arising from the making of such report. School employees must also attend annual training on bullying prevention strategies, including related topics such as Internet safety and youth suicide prevention.
- Criminal Conduct. The Safe School Climate Specialist must notify law enforcement of any bullying incidents that he or she believes may constitute “criminal conduct.”
- Cyberbullying. The law defines cyberbullying as “any act of bullying through the use of the Internet, interactive and digital technologies, cellular mobile telephone or other mobile electronic devices or any electronic communications.” A mobile device, as defined by the statute, is broad enough to include video gaming devices and cameras. It’s a smart idea to have a detailed cyberbullying policy that complements your student discipline policies, as well as those policies pertaining to acceptable electronic network and equipment use by both students and staff.
Bottom Line for Educators
The deadline for amending the Safe School Climate Plans to incorporate the new bullying requirements is fast approaching. Please contact Siegel O'Connor's Education Law attorneys for specific guidance on the new school bullying laws and related issues.
--Melanie E. Dunn is an associate in the Hartford office of Siegel, O’Connor, O’Donnell & Beck, P.C., where she represents boards of education with an emphasis on special education and other legal issues pertaining to students.
Lost amongst the fervor of the President’s recess appointments to the National Labor Relations Board (NLRB) was the prior announcement by the NLRB of its postponement of the effective date of its controversial new notice-posting rule from January 31 to April 30, 2012.
The rule, first proposed by the NLRB on December 22, 2010, and made final on August 30, 2011, requires most private-sector employers to notify employees of their rights under the National Labor Relations Act (NLRA). The required notice may be accomplished by posting an 11 by 17 inch poster similar to other federal workplace posters containing notices of rights, rules and policies. The poster must advise employees of their rights to organize and bargain collectively with their employers, among other NLRA guarantees.
When the rule became final, the effective date of the notice-posting requirement was November 14, 2011, but was subsequently postponed to January 31, 2012. At the time of postponement, the NLRB stated that it had postponed the effective date “in order to allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses.” It is likely, however, that the NLRB was motivated to postpone by the filing of several lawsuits by business and trade organizations seeking to block the rule by challenging its legality. In announcing its most recent postponement of the rule’s effective date on December 23, 2011, the NLRB expressly stated that it was doing so “at the request of the federal court in Washington, DC hearing a legal challenge regarding the rule. The Board’s ruling states that it has determined that postponing the effective date of the rule would facilitate the resolution of the legal challenges that have been filed with respect to the rule.”
Bottom Line for Employers
The new notice-posting rule puts significant, new and unprecedented burdens on employers which can only lead to contentious relationships between managers and employees and disrupt otherwise harmonious workplaces. Given that the new rule has already been postponed twice, employers should wait to comply until April 30, 2012, or whenever the litigation over the rule’s lawfulness is resolved, assuming of course, it is declared lawful at all.