By Laura Wetsch and Faith Herndon
We are your legislative co-chairs for this long session. Over the past few weeks, we have seen a number of bills that will potentially impact your practice or your clients. Many of these bills are not likely to pass, but it is too soon to say which will die a lonely, miserable death in a rules committee. We will try to keep you updated, but here’s the list of bills we are watching, so far:
You and I make a deal: You pay me monthly installments and when an event occurs, I will pay you a set amount of money (we’ll call this deal “life insurance”). After several years, I notify you that you have failed to return a required document, allowing me to void the life insurance. The event occurs and I refuse to pay. In most circumstances you could potentially make claims against me for negligent misrepresentation or fraud; constructive fraud; and negligent or intentional infliction of emotional distress. But if I were your employer, all of these claims would be preempted by the Employee Retirement Income Security Act (ERISA).
In Prince v. Sears Holdings Corp., No. 16-1075 (4th Cir. Jan. 27, 2017), the 4th Circuit reiterated that regardless of what a plaintiff calls a claim or how the plaintiff frames the claim, if ERISA applies, then ERISA pre-empts that claim. In 2011, Prince purchased a life insurance policy on his wife through his employer, Sears. Sears sent a confirmation letter and began withholding premiums from Prince’s pay. Later that year, Mrs. Prince was diagnosed with cancer. In 2012, Prince checked his benefits summary with Sears, which confirmed the life insurance. In 2013, Sears notified Prince that he had not returned a required document in 2011—Prince denied receiving the document but had no proof it had not been sent—and, therefore, Prince’s insurance would be canceled. Mrs. Prince died in 2014 and Sears denied Prince’s claim on the insurance policy.
On Dec. 1, 2016, the Occupational Safety and Health Administration (OSHA) began enforcement of the anti-retaliation provisions of its controversial final rule on Recording and Reporting Occupational Injuries and Illnesses.1 OSHA has offered extensive guidance on its interpretation and enforcement of the new anti-retaliation provisions.2 This guidance, along with the rule itself, addresses important issues relating to injury and illness reporting procedures, drug testing policies, safety incentive programs, and disciplinary programs.
The anti-retaliation provisions originally took effect on Aug. 10, but enforcement of these provisions was delayed twice by OSHA as a result of substantial industry pushback on the rule and a legal challenge from business groups.3 On Nov. 28, a federal district judge denied an injunction to block the rule on Nov. 28, allowing OSHA’s enforcement of the challenged provisions to begin on Dec. 1.4
On January 25, 2017, the 4th Circuit U.S. Court of Appeals issued two game-changing companion decisions impacting the test for determining joint and several liability under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§201, et seq., for joint employers.
Salinas, et al. v. Commercial Interiors, Inc., et al., No. 15-1915
In Salinas, the plaintiffs were employees of J.I. General Contractors, Inc. (“J.I.”), a drywall installation contractor. Plaintiff sued J.I. and Commercial Interiors, Inc. – a company offering general contracting and interior finishing services, including drywall installation – in this putative collective action as joint employers, alleging violations of the FLSA and Maryland law. The U.S. District Court of Maryland granted summary judgment to Commercial, holding that it did not jointly employ plaintiffs because J.I. and Commercial Interiors were in a traditional contractor-subcontractor relationship not intended to evade compliance with the FLSA.
Can a company disguise its control over a workforce through a myriad of affiliate companies? Apparently not. DIRECTV recently learned the hard way that its “web of agreements” revealed a joint employer relationship with its affiliates. These entities directly hired the field technicians responsible for installing and servicing DIRECTV’s satellites. The 4th Circuit panel, which included Judges Wynn, Floyd, and Harris, recently clarified in Marlon Hall v. DIRECTV, LLC, No. 15-1858 (argued Oct. 27, 2016). The proper test to determine if an employer could be held jointly and severally liable in a FLSA action as a joint employer.
Background
The Plaintiffs in Hall claimed to be employees, not independent contractors, installing satellite television. Both the panel and the lower court agreed with this assessment. Plaintiffs were hired by affiliate companies based on DIRECTV’s requirements and background checks. Per the employee agreements, Plaintiffs’ work schedules were controlled by DIRECTV and they had to wear the company’s uniform. Further, DIRECTV was their primary, if not only, client.
Consequently, the Plaintiffs in Hall each brought a claim under FLSA against DIRECTV. Two of the plaintiffs, however, also brought an action against DirectSat as an affiliate and joint employer. These cases were transferred to and consolidated in the U.S. District Court for the District of Maryland. The district court dismissed the claims pursuant to a 12(b)(6) Motion holding that Plaintiffs failed to adequately allege that DIRECTV and DirectSat were joint employers. The Fourth Circuit panel reversed and remanded on substantive and procedural grounds.
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The following is a quick look at some recent opinions from our neck of the woods:
First, in McAdams v. N.C. Dep’t. of Com., No. COA16-196 (N.C. App. December 6, 2016) (https://appellate.nccourts.org/opinions/?c=2&pdf=34582), the Court of Appeals of North Carolina upheld the trial court’s 12(b)(6) dismissal of the plaintiff’s wrongful discharge and whistle blower claims.
In Brown & Pipkins, LLC v. Service Employees International Union, Local 32BJ, No. 15-1931 (4th Cir. Jan. 23, 2017) (http://www.ca4.uscourts.gov/Opinions/Published/151931.P.pdf), the Fourth Circuit affirmed the district court’s confirmation of four labor arbitration awards, relying primarily on its review of a labor-arbitration decision under a CBA, and holding that the Union waived its claim for attorneys’ fees by not complying with Federal Rule of Civil Procedure 54.
Finally, in The Goodyear Tire & Rubber Co. v. Comm’r of Lab. of State of N.C., No. COA16-520 (N.C. App. Jan. 17, 2017) (https://appellate.nccourts.org/opinions/?c=2&pdf=34823), the Court of Appeals of North Carolina affirmed a lower court ruling—and NCOSHA order—finding that the company violated 29 C.F.R. § 1910.23(c)(1) by failing to install certain elevated railings surrounding its tire presses.
By Robin Shea
Many lawyers who represent private sector employers are familiar with the (some might say “harsh”) position on social media policies taken by the National Labor Relations Board during the Obama Administration. The NLRB’s position is that overly vague social media policies have a “chilling effect” on employees seeking to exercise their rights to engage in concerted activity under Section 7 of the National Labor Relations Act.
Under the NLRB’s analysis, social media policies that require “courtesy,” or that prohibit employees from “disparaging” the company or its management, or posting in a way that “adversely reflects on the company” violate Section 7. This applies to both union and non-union employers.
But the NLRA doesn’t cover federal, state, or local government employees, which is great if you represent a government employer . . .
. . . right?
Apparently not. Although public employers do not have to worry about the NLRA, they do have to worry about this little thing called “the First Amendment.”
A recent decision from the U.S. Court of Appeals for the Fourth Circuit, Liverman v. City of Petersburg (Virginia), indicates that there may not be much practical difference between a First Amendment analysis of public employer social media policies and a Section 7 analysis of private employer policies.
For the past couple of years, the nonunion employment bar has watched as the National Labor Relations Board upended the law surrounding handbooks, waivers, arbitration agreements and a host of other aspects of the employment relationships. The Equal Employment Opportunity Commission, apparently not content to allow the NLRB to have all of the fun, has stepped up the use of its authority to attack separation and employment agreements.
In EEOC v. CVS Pharm., Inc., 809 F.3d 335 (7th Cir. 2015), the EEOC contended that CVS’ standard severance agreement constituted a pattern and practice of resistance to the full enjoyment of rights in violation of Section 707(a) of Title VII (42 U.S.C. § 2000e-6). The EEOC pointed to seven specific clauses it believed violated Title VII. EEOC v. CVS Pharm., Inc. Cmplt. ¶ 8.a.–f. (last visited Dec. 6, 2016). The EEOC contended the clauses each contained language that interfered with an employee’s right to file a charge with the EEOC or to participate in an EEOC investigation.
I imagine that, if you are reading this blog, you have heard the big news: after 5 p.m. on the Tuesday before Thanksgiving, a federal judge in Texas issued an order granting a nationwide preliminary injunction that will prevent the DOL overtime regulations from going into effect today, Dec. 1, as everyone had planned.
According to the court, the plaintiffs had demonstrated a “likelihood of success on the merits” due to the fact that the DOL, in enacting the new overtime rule, had exceeded its authority through its significant increase of the salary threshold. The court took particular notice of the fact that an estimated 4.2 million workers currently ineligible for overtime would automatically become eligible, regardless of duties, due to the increased threshold. This, in the eyes of the court, would create “essentially a de facto salary-only test.” After analyzing the other requirements of a preliminary injunction, the court enjoined the DOL from “implementing and enforcing” the new overtime rule.
In Beverage Sys., LLC v. Associated Beverage Repair, LLC, 368 N.C. 693, 784 S.E.2d 457 (2016), the North Carolina Supreme Court clarified that North Carolina adheres to the “strict blue pencil rule;” that is, a trial court may strike distinct unreasonable restrictions in a noncompetition agreement but may not re-write provisions in order to make them enforceable, even if the parties, in the contract, authorize judicial revisions. The court sent a message it is not interested in expanding blue-penciling, noting no good could come from changing the role of the trial court:
Allowing litigants to assign to the court their drafting duties as parties to a contract would put the court in the role of scrivener, making judges postulate new terms that the court hopes the parties would have agreed to be reasonable at the time the covenant was executed or would find reasonable after the court rewrote the limitation. We see nothing but mischief in allowing such a procedure.
