What Employers Need to Know Now: Neither an agency fee nor any other form of payment to a public-sector union may be deducted from an employee, nor may any other attempt be made to collect such a payment, unless the employee affirmatively consents to pay
Public Union “Agency Fees” Violate Employees’ First Amendment Rights
On the last day of its 2017‑18 term, the Supreme Court handed down a landmark decision protecting the First Amendment rights of public employees.
In Janus v. AFSCME, the Supreme Court overturned an older decision that upheld a union’s right to force non-members to pay an “agency fee”—an amount slightly less than the cost of “full” union membership.
The case was brought by Mark Janus, an Illinois Department of Healthcare and Human Services employee, who argued the “agency fee” he was forced to pay to the American Federation of State, County, and Municipal Employees Union (AFSCME) constituted “forced speech.”
While AFSCME argued these “agency fees” would only be collected as reimbursement for collective bargaining expenses, the Supreme Court rejected this defense. Specifically, the Court recognized what millions of public-sector employees already understand: public union spending is so entwined with politics it’s impossible to determine what—if any activities—are truly non-political.
As such, the Court ruled that by requiring employees like Mr. Janus to pay an “agency fee,” the State was “forcing free and independent individuals to endorse ideas they find objectionable. Such coercion, ruled the Court, violates the First Amendment.
Bottom Line for Public-Sector Employers: In the coming months, public-sector employers should expect a number of inquiries from employees who no longer wish to pay union fees. Employers should contact counsel to discuss how to navigate potential post-Janus legal landmines.Read More
Public performance licensing of music is a well-known issue for anyone who operates a small restaurant or bar. Playing or listening to a song, something that seems so ordinary in everyday life and that most consumers wouldn’t give a second thought about, is suddenly something for which the owner/operator of a small restaurant or bar might now be liable for copyright infringement if proper licensing is not in place. Such licensing and the rates to do so have long been controlled under various antitrust consent decrees between the Department of Justice and the two biggest performing rights organizations, ASCAP and BMI. In the 1940s, ASCAP and BMI came under scrutiny for anti-competitive and unfair licensing practices, and the antitrust consent decrees have been in place ever since to protect music licensees.
As recently as 2016, the DOJ had insisted that the antitrust consent decrees were still needed to protect music licensees from potential abuses, and even reinterpreted the decrees to require 100% “full work” licensing. BMI challenged the 100% “full work” licensing requirement in court, arguing that their consent decrees allow for fractional licensing. BMI won the case at the district court and appeals court levels, and the DOJ has since declined to take the case to the US Supreme Court. This means that fractional licensing stands, and a small restaurant or bar might have to buy licenses from multiple performing rights organizations or other copyright owners to obtain full protection from copyright infringement on any given song they choose to play.
As if this were not burden enough, the DOJ is now reviewing all of the ASCAP and BMI antitrust consent decrees to see if they are still relevant in today’s marketplace. Any consent decrees deem irrelevant will be terminated, potentially allowing ASCAP and BMI to resume anti-competitive and unfair practices. If the consent decrees are terminated, public performance licensing will be thrown into further disarray, and the last shreds of certainty in music licensing will go right out the window.
The man leading DOJ’s review of these consent decrees, US Assistant Attorney General Makan Delrahim, is scheduled to be the keynote speaker at the National Music Publishers’ Association annual meeting on June 13, 2018. That address is sure to provide some illumination on the future of the consent decrees. In the meantime, concerned restaurant and bar operators can make their opinions known to the DOJ by signing onto the National Restaurant Association’s letter advocating for keeping the consent decrees in place. At Siegel, O’Connor, O’Donnell & Beck, P.C., we provide a wide range of legal advice and services to Connecticut restaurant and bar operators, and we want you to be informed about important legal issues effecting your business.Read More
Last week, the Supreme Court issued its ruling in the most important business case this term, Epic Systems Corp. v. Lewis, deciding in favor of employers using individual arbitration agreements with class-action waivers in their employment contracts. The decision is a huge win for the many employers who already use individual arbitration agreements with class-action waivers, and for those employers who do not, the decision is a clear signal that they can now limit their liability for employment-related claims if they change their employment contracts accordingly.
The Supreme Court agreed to hear arguments on the issue after a circuit split at the Court of Appeals level. The issue involved a National Labor Relations Board interpretation from 2012 that individual arbitration agreements using class-action waivers, otherwise enforceable under the Federal Arbitration Act, violated the National Labor Relations Act (NLRA). The Supreme Court held that individual arbitration agreements are enforceable as written under the Federal Arbitration Act and that the NLRA does not displace the Federal Arbitration Act to provide employees with a right to class action. Justice Ruth Bader Ginsburg, in dissent, predicts this decision will result in the underenforcement of federal and state employment and labor statutes, and employees will be less likely to pursue small-value claims on an individual basis. Other critics have observed that this decision will make it more difficult for employees to redress sexual harassment in the workplace, an important concern following the zeitgeist of the #MeToo movement. Regardless of the critiques, the Supreme Court says the law is clear, and only a policy debate in Congress, if ever taken up, might change the law down the road.
For the foreseeable future, employers can limit their liability for employment-related claims by including an individual arbitration provision with a class-action waiver in their employment contracts. This can help employers reduce their expected liability for employment claims because arbitration is less likely to result in “windfall” damage awards, arbitration is quicker and less expensive than traditional litigation, and arbitration decisions are generally non-appealable and do not create precedent for other cases against the employer.
Employers should immediately review their employment contracts to see if they include an individual arbitration agreement with a class-action waiver. If your employment contracts do not include this provision, contact your attorney to find out what you can do to limit your liability for employment-related claims through arbitration.Read More
As the current legislative session enters its final week, state lawmakers are preparing to—once again—sacrifice Connecticut employers and entrepreneurs on the altar of political expediency.
Heralded by Democratic lawmakers as “The Largest Overhaul in Modern Connecticut History of Sexual Harassment Law,” the “Times Up Act” is a potent example of policy created to sound great on the campaign trail—but without regard for the bill’s actual impact. And in this case, such caviler legislating will carry a very real cost, as, the Time’s Up Act would impose crippling new costs and regulatory mandates on Connecticut’s employers.
Although you wouldn’t know it from the hyperbole surrounding the Times Up Act, Connecticut is a leader in creating safe, inclusive workplaces. Indeed, Connecticut is just one of three states that that require private sector employees to provide sexual harassment prevention training, mandating it for supervisors at companies with 50 or more employees. And by every statistical indication, these measures are working: As a result of Connecticut’s rigorous training and enforcement requirements, the number of sexual harassment complaints filed with the Connecticut Commission on Human Rights and Opportunities (CHRO), which handles discrimination and other workplace complaints, is down from a high of 271 in 2001 to about 158 in 2017. To put this in perspective, consider the following: In 2017, the CHRO 2,490 new complaints; only 158—or approximately six percent—of said complaints involved sexual harassment.
When it comes to throwing red meat from the campaign trail, however, championing effective laws already on the books lacks a certain partisan sizzle.
And so, with an eye toward the 2018 elections, Connecticut lawmakers are pushing legislation that targets small-business and entrepreneurs with a series of onerous regulations—hardly the type of legislation needed to reverse the state’s anemic 0.1 percent increase in job growth (a seven-year low).
Under the Time’s Up Act, employers with three or more employees would be required to provide training to all employees. This unprecedented expansion of the current law’s requirements would cost Connecticut’s private sector between $100 million and $130 million in new training fees alone. With the state struggling to attract and retain new industries and new jobs, increasing the cost of doing business in Connecticut is ridiculous—especially when the current sexual harassment laws are demonstrably effective.
Furthermore, current state law provides affirmative defenses for companies that have policies against sexual harassment; train their employees, properly investigate any claim of harassment; take immediate corrective action; and prevent retaliation. In other words, if an employee harasses a colleague and the company conducts a thorough investigation, stops the harassment, and guards against any and all forms of retaliation, that business faces no liability.
In providing such an affirmative defense for employers, Connecticut has done an admirable job balancing the proverbial carrot with the stick, rewarding employers who spend the time, and considerable expense, necessary to combat sexual harassment. The Times Up Act, however, would strip employers of this defense, destroying the existing public-private partnership that has been so effective in reducing sexual harassment in Connecticut workplaces.
Finally, the Times Up Act ignores a number of potential, practical reforms that could further strengthen Connecticut’s already formidable sexual harassment laws. For example, employers find navigating the CHRO process almost Kafka-esque in its procedural complexities and seemingly endless duration. Genuine reforms to the CHRO investigatory process could include efforts to streamline the process and resolve claims faster—as well as a more efficient method of dismissing cases that fail to meet certain basic criteria.
Such common-sense reforms won’t garner splashy headlines. But they will help ensure our state remains on the cutting edge of sexual harassment prevention—without sacrificing job growth or economic revitalization.Read More
On May 18, 2016, the U.S. Department of Labor finally released its rules updating the overtime regulations under the Fair Labor Standards Act (“FLSA”) which will take effect December 1, 2016. Not surprisingly, the updates significantly increase the salary threshold for executive, administrative and professional workers (“white collar employees”) and for highly compensated employees and include automatic updates to these thresholds going forward.
Under the new rules, any employee earning less than $47,476 a year ($913 a week) will be a covered non-exempt employee entitled to overtime. This new threshold, up from $23,660 ($455 a week), equals the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region. Additionally, unlike the previously static threshold, the new rules will be adjusted upward every three years to reflect cost of living adjustments with the first update taking effect on January 1, 2020.
The new rule also increased the total annual compensation threshold for highly compensated employees from an annual salary of $100,000 to $122,148 (linked to 90th % percentile of earnings of full-time salaried workers in the lowest-wage Census Region). Connecticut employers should not rely on this change as Connecticut does not recognize the highly compensated employee exemption.
Although the new rules do not change the “duties test” under the FLSA, they do amend the “salary basis test” to allow employers to credit nondiscretionary bonuses and incentive payments (including commissions) towards satisfying up to 10% of the new salary threshold, so long as employers pay those amounts on a quarterly or more frequent basis.
Given the new rules, employers must now either raise salaries of affected employees to meet the new threshold or begin treating these employees as nonexempt. Employers must ensure that all “exempt” employees meet the duties tests for their applicable exemption and earn a salary that is high enough to satisfy the new threshold. Employers should also take this opportunity to confirm that each “exempt” employee actually performs duties that meet their applicable exemption, regardless of the employee’s title or job description.Read More
As if the National Labor Relation Board’s aggressive expansion of social media protection wasn’t enough, Connecticut businesses must now contend with new legislation targeting employer’s online activity. On May 19, 2015, Governor Malloy signed into law “An Act Concerning Employee Online Privacy.” With this Act, Connecticut joins more than 20 other states to have legislation restricting an employer’s access to the social media accounts of applicants and employees. The Act, which goes into effect October 1, 2015, prohibits employers from requiring employees or applicants to:
- Provide their user name and password or any other access to an employee’s personal online account;
- Access an online account in the employers presence
- Accept an invite or other invitation from the employer to join a group associated with the employee’s online account. The Act applies to both private and public employees and offers few limited exceptions.
Fines for violations of the Act range from $25 against applicants and $500 against employees and can increase to $500 and $1,000 for continuing or repeat violations.
Fortunately, this new Act doesn’t cover any account created, maintained, used, or accessed by an employee or applicant for the employer’s business purposes. Furthermore, employers will still be able to monitor, review, access or block electronic data stored on an electronic communications device paid for by an employer, or traveling through or stored on an employer’s network.
Additionally, employers can conduct an investigation: based on receiving specific information about activity on an employee’s or applicant’s personal online account to ensure compliance with (a) applicable state or federal laws, (b) regulatory requirements, or (c) prohibitions against work-related employee misconduct.
An employer conducting these investigations can require an employee to provide access to a personal online account, but cannot require disclosure of the user name, password, or other means of accessing the personal online account. For example, an employee or applicant under investigation could be required to privately access a personal online account, but then provide the employer with access to the account content.
Connecticut’s regulatory environment just got a little more challenging, and, as a result, employers should review their Internet policies and practices to ensure compliance.Read More
For organized labor, Christmas has come early. Unfortunately, Americas’ employers received a lump of a coal
Late last week, President Obama’s National Labor Relation’s Board finalized the so-called “ambush election rules”—a gift that was at the top of every union’s wish list. By speeding up the timeframe for representation elections, this new regulation will significantly handicap employers’ ability to contest union organizing drives.
As Siegel O’Connor has previously noted, the average time between when a union files a representation petition—the first step in organizing a workplace into a union—is 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.
Employers across the country have strongly criticized the change. For instance, the Retail Industry Leaders Association (RILA) issued the following statement:
This flawed rule is harmful to both workers and employers. By dramatically changing the procedures that govern union elections, the rule limits the information available to employees prior to entering the voting booth, potentially subjects employees to harassment at home and undermines the due process rights of employers.
Bottom Line for Employers
Fortunately for America’s employers, these new regulations don’t go into effect until April 2015; additional legal and legislative challenges are likely. In the interim, however, Employers should contact their respective members of Congress and demand an end to the Obama NLRB’s hyper-partisan antics. Employers are also urged to contact their labor counsel and begin developing a strategy for contesting ambush elections.Read More
Earlier this week, the National Labor Relations Board (NLRB) issued a decision (Purple Commc’ns Inc) giving employees the right to use employers’ email systems for non-business purposes—including union organizing. This ruling overturns the Board’s 2007 decision in Register Guard, and opens up yet another front in the partisan Board’s war against employers.
In its decision, the Board declared the analysis in Register Guard to be “clearly incorrect,” and one that focuses “too much on employers’ property rights and too little on the importantance of email as a means of workplace commutation.” As a result of this ruling, agues the Board, the NLRB “failed to adequately protect employees’ rights under the Act” and abdicated its responsibility to “adapt the Act to the changing patterns of industrial life.” Indeed, throughout its analysis, the Board justifies its ruling by referencing email’s new role as the “primary means of workplace discourse.”
Having dismantled Register Guard, the Board will now adopt a “presumption that employees who have been given access to the employer’s email system in the course of their work are entitled to use the system to engage in statutorily protected discussions about their terms and conditions of employment while on nonworking time.”
In an attempt to mollify employers, the Board offers the following three limitations on employee’s ability to use email for organizing purposes:
- This decision applies only to employees who have been granted access to the employer’s email system in the course of their work; employers are not required to provide such access
- Employers may justify a total ban on non-work use of email by demonstrating that special circumstances make the ban necessary to maintain production or discipline.
- This decision does not address nonemployees or any other type of electronic communication.
These limitations, however, offer little solace to employers already struggling to comply with the avalanche of union-friendly regulations churned out by an increasingly hostile NLRB.
A Powerful Dissent
The Board’s decision in Purple Commc’ns Inc., is unprecedented. As Board Member Philip Miscimarra notes in his dissent, “The [National Labor Relations] Act has never previously been interpreted to require employers, in the absence of discrimination, to give employees access to business systems and equipment for NLRA-protected activities that employees could freely conduct by other means.” Furthermore, it is all but impossible “to determine whether or what communications violate restrictions against solicitation during working.”
Member Johnson, who penned his own 32-page dissent, hammered the majority’s decision for essentially forcing employers to subsidize speech in violation of the U.S. Constitution. Johnson argues, “The First Amendment violation is especially pernicious because the Board now requires an employer to pay for its employees to freely insult its business practices, services, products, management, and other coemployees in its own email. All of this is now a matter of presumptive right…”
Looking forward, Johnson’s dissent warns that “Taken to its extreme, the majority’s…rationale would just as easily apply to taking over an employer auditorium, or conference room in the middle of the workday during an employer presentation/conference.
The Road Ahead
On a practical level, however, employers must now re-evaluate their internal rules and regulations regarding employee use of company email. Specifically, Purple Commc’ns Inc has now rendered most employee handbooks obsolete; employers should, over the next few weeks, review their employee email communications policy, and contact their labor counsel to examine how this stunning new decision will impact existing company policies.Read More
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.
Specifically, 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.Read More
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.
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.Read More