Happy 2017, everyone! Well, it’s a new year, and many are wondering what’s in store in the year ahead. While I can’t answer that for each of you personally, I can provide a bird-eye view of some hot-button employment law issues which made an appearance in 2016 and on which you can assume you will see further developments this year. So let’s kick off 2017 with a look at a few of those key concerns. So join me after the jump…
Hope the suspense wasn’t killing you. Seriously, here are what appear to be four top employment law issues to watch out for in 2017:
Class Action Waivers: This, of course, is not a new issue. The real item of concern for employers is that class action waivers are often included with mandatory arbitration clauses in employment agreements. Employers have been fretting since at least January 2012, when the National Labor Relations Board ruled in D.R.Horton Inc that the national homebuilder violated the National Labor Relations Act by including mandatory arbitration clauses with class action waivers in employment agreements. (Click here and here for review).The Fifth Circuit Court of Appeals reversed the NLRB’s decision in December 2013, holding that the NLRB failed to give proper weight to the Federal Arbitration Act (FAA), and finding that the right to file a class action lawsuit is not a substantive right. The NLRB refused to recognize this ruling, and the Fifth Circuit again ruled against the NLRB in two other cases in late 2015. The Second, Eighth and Eleventh Circuits have also ruled against the NLRB in other cases. Similar cases are also pending in the 3rd, 4th, 6th, 11th and D.C. Circuits.
So, if the 5th Circuit has ruled against the NLRB 3 times, and the 2nd, 8th and 11th Circuits have also done so, what’s the issue? Circuit Court decisions are only binding on courts in that particular circuit. What’s more, the 7th Circuit, in Lewis v Epic Systems Corp in on May 26, 2016 ruled that the FAA does not allow class action waiver provisions, and the Ninth Circuit handed down a similar ruling about a similar provision in an agreement offered by Ernst and Young. You see the problem now, right? There is now a split between the circuits, making the matter ripe for an appeal to the U.S. Supreme Court. Epic Systems petitioned the US Supreme Court for a review of the case this past September. The NLRB asked the SCOTUS to review Murphy Oil (one of the other two 5th Circuit cases) and Ernst & Young has also done so. It appears likely that the SCOTUS will hear at least one of those petitions.
So what does it mean for employers? For now, (meaning until the Supreme Court decides the issue) it may depend on where you are employing people. The NLRB only considers itself bound by the US Supreme Court, and has made it clear it will keep pursuing its agenda until it receives a ruling from the SCOTUS (or, the Board composition changes, whichever comes first). So, if you employ people in states that are covered by the 2nd, 5th, 8th and 11th Circuits and you don’t mind taking on the NLRB, then your arbitration clauses with class action waivers will likely be held enforceable. The only problem is you may first be facing an NLRB Unfair Labor Practice Charge or Complaint, and an adverse decision. You would then have to incur significant legal expenses before your case reaches the Circuit Court in question. If you employ people in the 7th and Ninth Circuits, your arbitration and class action waivers will probably be found unenforceable in any case. There is one exception, however. You may continue enforcing class action waiver clauses against supervisors, as the NLRB only has jurisdiction over matters involving non-supervisory employees. If the Supreme Court accepts at least one of the pending petitions, it will be decided by June 30. Bottom Line: If you do not currently have such provisions and are thinking of including them in an employment agreement, you might want to wait. It’s only another six months, and at least then there should be more certainty.
Here too, the NLRB is involved. You may remember me talking about the Browning Ferris decision here. Just a brief recap: The NLRB ruled that Browning-Ferris was a joint employer of temporary employees supplied by Leadpoint Staffing and could be included in a collective bargaining unit consisting of Browning Ferris employees — even though Browning Ferris did not exercise any direct control over those temporary employees. That decision directly contradicted roughly thirty years of precedent on this issue.
Now, admittedly this issue is not pending before the Supreme Court. The case itself is currently pending before the D.C. Circuit Court of Appeals. There were also California and New York State suits against McDonald’s Corp and Domino’s Pizza, respectively (click here and here to learn more). The D.C. Circuit’s decision will certainly be of interest to many of us.
Federal Agencies’ Authority to Interpret Statutory Mandates:
What in the world is this? The best way to answer is by example, so here are some. The U.S. Department of Labor has been facing challenges to its rule requiring companies to state when they have hired union busters, and the new overtime rules that were supposed to take effect on December 1. The Supreme Court is also likely to consider another DOL action, specifically one it took in 2011 when it forbade restaurants to require wait staff to share tips with other employees “in the back of the house” (e.g. dishwashers, cooks, etc. who are not customarily tipped). The Ninth Circuit upheld the DOL’s rule, and the National Restaurant Association and other hospitality groups appealed. The common thread in each challenge is that the DOL is alleged to have exceeded its authority, a common complaint during the Obama years.
Now, I did say there would be four hot items, and there will be. It’s just that this post got kind of long. So I’ll save the last one for next week’s post. See you then!
Contents of this post are for educational/informational purposes only, are not legal advice, and do not create an attorney-client relationship. Consult with competent employment counsel in the state(s) in which you employ people with your specific questions.
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