On August 22, 2014, the National Labor Relations Board ("NLRB") issued companion decisions in Three D, LLC d/b/a Triple Play Sports Bar and Grille, holding that the employer violated the National Labor Relations Act ("NLRA") by terminating two employees for participating in an online discussion on Facebook.  The Triple Play decision is yet another reminder to employers to exercise caution in imposing discipline against employees for conduct that takes place on social media.  The decision also underscores the need for employers to review their existing social media policies to ensure that the policies are not so overly broad that employees might interpret them to prohibit complaints and conversations about their terms and conditions of employment. Triple Play is a bar and restaurant whose employees are not unionized.  In January 2011, Jillian Sanzone and another employee discovered that they owed more in State income taxes than they had expected due to a withholding error by Triple Play.  While at work, Sanzone complained about this issue to other employees who, in turn, complained to the employer.  In response, the employer planned to hold a meeting in February with its staff members and payroll company to discuss the employees' concerns. On January 31, 2011, Jamie LaFrance, who had left her employment with Triple Play in November 2010, posted the following “status update” to her Facebook page:  "Maybe someone should do the owners of Triple Play a favor and buy it from them.  They can’t even do the tax paperwork correctly!!!  Now I OWE money . . . Wtf!!!!"  Several employees and non-employees responded to LaFrance’s post with various comments, most of which used profanity and criticized Triple Play's owners.  One employee, Vincent Spinella, did not post a comment, but did select the “Like” button under LaFrance’s original comment.  Sanzone posted her own comment, stating:  “I owe too.  Such an asshole.” One of Triple Play's owners learned about the Facebook discussion through his sister, who was a Facebook “friend” of LaFrance.  When Sanzone reported to work on February 2, 2011, Triple Play's owners notified her that she was being discharged because of her Facebook comment.  On February 3, 2011, when Spinella reported to work, Triple Play’s owners called him into a meeting, questioned him about the Facebook conversation, and informed him that he was being discharged because his selection of the "Like" button meant that he supported the "disparaging and defamatory comments" of the other participants in the conversation. The NLRB affirmed the Administrative Law Judge’s decision that the Facebook discussion constituted concerted activity under Section 7 of the NLRA and “was ‘part of an ongoing sequence’ of discussions that began in the workplace about the Respondent’s calculation of employees' tax withholding.”  The NLRB also held that Sanzone and Spinella were engaged in protected concerted activity because the Facebook discussion related to “workplace complaints about tax liabilities, the Respondent’s tax withholding calculations, and LaFrance’s assertion that she owed back wages.”  Notably, the NLRB found that Spinella’s selection of the “Like” button “expressed his support for others who were sharing their concerns and ‘constituted participation in the discussion that was sufficiently meaningful as to rise to the level of’ protected, concerted activity.” In balancing the interest of Triple Play's owners in preventing disparaging comments by their employees, the NLRB held that Spinella's and Sanzone’s comments were not “so disloyal” as to lose protection under the NLRA.  Accordingly, the NLRB affirmed the Administrative Law Judge’s decision that Triple Play violated the NLRA by interrogating and discharging Spinella and Sanzone because of their participation in the Facebook conversation. Notably, the NLRB also found that Triple Play's “Internet/Blogging” policy violated Section 8(a)(1) of the NLRA.  Although the policy did not explicitly restrict protected activity, the NLRB held that the policy, insofar as it prohibited employees from engaging in “inappropriate discussions about the company,” was overly broad.  In light of Triple Play's discharge of Spinella and Sanzone, the NLRB reasoned that Triple Play's other employees could reasonably interpret the policy as prohibiting discussions regarding their terms and conditions of employment.

The Second Circuit’s recent decision in Moll v. Telesector Resources Group, Inc. is a good reminder to employers that a sexually hostile work environment claim can be based on more than just sexually explicit or sexually offensive statements and conduct.  Such a claim can also be established by facially sex-neutral statements and conduct under certain circumstances. Cindy Moll, the plaintiff in that case, was employed as a Systems Analyst for Verizon from 1997 until 2002.  Ms. Moll alleged that she was subjected to a sexually hostile work environment because her supervisor had done such sexually offensive things as:  leave her three “inappropriate” notes in 1998-1999; repeatedly ask her to come to his hotel room while they were on a business trip in 1999; and leave her a note in 2001 that said he thought about her when he was taking a shower.  She also claimed, however, that other facially sex-neutral conduct engaged in by her supervisor also contributed to the sexually hostile work environment that she experienced.  For example, Ms. Moll alleged that her supervisor:  required her to communicate with him only in person, as opposed to by phone or email; told her she could not be assessed for a promotion because of an alleged promotion freeze, even though two of Ms. Moll’s male colleagues were promoted during the alleged freeze; put Ms. Moll on a job performance improvement plan in 2002; told her she could no longer work from home in 2002, even though other male employees were allowed to do so; denied Ms. Moll’s request to take vacation in 2002, even though the same requests from her less senior male colleagues were granted; and excluded her from work-related social events, including attending professional hockey games. In September 2003, Ms. Moll filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) regarding, among other things, the above conduct that she alleged constituted an unlawful sexually hostile work environment under Title VII of the Civil Rights Act (“Title VII”).  She subsequently filed a lawsuit in the U.S. District Court for the Western District of New York. In response to Ms. Moll’s complaint, Verizon made a motion to dismiss her hostile work environment claim because, it argued, no sexually offensive conduct was alleged to have occurred within the applicable statute of limitations period.  In New York, a plaintiff is generally required to file a charge of discrimination with the EEOC within 300 days of the alleged unlawful conduct.  When a hostile work environment claim is alleged, at least one incident of harassment must be shown to have occurred within the 300 days prior to filing with the EEOC.  Verizon argued that because the last incident of sexually offensive conduct (i.e., the supervisor’s note in 2001) occurred more than 300 days before Ms. Moll’s charge was filed with the EEOC, her hostile work environment claim was untimely and should be dismissed. The District Court agreed with Verizon and dismissed the plaintiff’s hostile work environment claim.  Ms. Moll then appealed the dismissal of her claim to the Second Circuit Court of Appeals. The Second Circuit reversed, holding that the District Court had improperly failed to consider all of Ms. Moll’s allegations in their totality, particularly the alleged conduct that was not sexually offensive in nature.  The Second Circuit determined that, based on Ms. Moll’s allegations, a reasonable fact-finder could have found the alleged facially sex-neutral conduct was sex-based and therefore contributed to the sexually hostile work environment.  As the Second Circuit explained:

To decide whether the threshold has been reached, courts examine the case-specific circumstances in their totality and evaluate the severity, frequency, and degree of the abuse. . . .  Facially sex-neutral incidents may be included . . . among the “totality of the circumstances” that courts consider in any hostile work environment claim, so long as a reasonable fact-finder could conclude that they were, in fact, based on sex.

The Second Circuit reversed the dismissal of Ms. Moll’s hostile work environment claim because the District Court did not consider whether the sex-neutral conduct alleged by Ms. Moll occurred within the applicable statute of limitations period. The Moll decision serves as a good reminder of what must be considered by employers faced with an internal complaint from an employee that he/she is experiencing a sexually hostile work environment.  Even if the sexually explicit statements and sexually offensive conduct about which the employee complains occurred in the distant past, the employer must still review the totality of the circumstances, including all facially sex-neutral statements and conduct alleged by the employee, to determine whether a sexually hostile work environment exists.  If so, the employer must act promptly and decisively to remedy the situation, or else face potential liability.

On August 6, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a proposed rule requiring covered Federal contractors and subcontractors with more than 100 employees to submit an annual Equal Pay Report on employee compensation.  Prior to this proposed rule, President Obama signed a Presidential Memorandum on April 8, 2014, instructing the Secretary of Labor to propose a rule within 120 days to collect compensation data from Federal contractors and subcontractors. The Equal Pay Report applies to contractors and first-tier subcontractors who are required to file EEO-1 Reports, have more than 100 employees, and have a Federal contract, subcontract, or purchase order worth $50,000 or more that covers a period of at least 30 days.  The Report requires contractors to submit:

• Total number of workers within a specific EEO-1 job category by race, ethnicity, and sex;
• Total W-2 wages, defined as the total individual W-2 wages for all workers in the job category by race, ethnicity, and sex; and
• Total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity, and sex.

According to the OFCCP, this data will allow the OFCCP to direct its enforcement resources towards Federal contractors whose summary data suggests potential pay violations.  However, according to a Fact Sheet and FAQs published by OFCCP, the Equal Pay Report will not collect individual pay data or additional factors that may affect pay. The OFCCP is proposing a reporting window of January 1 to March 31.  The data would be based on W-2 earnings for the prior calendar year for all employees included in the contractor’s EEO-1 report for that year. The OFCCP plans to develop a web-based portal for reporting and maintaining compensation information that conforms to applicable IT security standards.  The OFCCP has indicated it intends to protect the confidentiality of the data to the maximum extent permitted under the Freedom of Information Act. Comments regarding the proposed rule must be submitted by November 6, 2014.

Sun Tzu's seminal work “The Art of War” has long been required reading in leading business schools.  As a definitive work on strategy, the impact of “The Art of War” crosses a great many sectors.  In its most basic sense, Sun Tzu has a great deal of wisdom to offer anyone charged with motivating a workforce, changing a culture, achieving collective goals, and negotiating with and/or defeating hostiles. This leads us to the Art of War’s relevance to litigation, and in particular, employment litigation.  Of course, we do not equate the trials and tribulations of employment litigation with the sacrifice and horrors of actual war, but we use Sun Tzu merely as a guide to the importance of strategy in litigation.  As we are all keenly aware, profligate employment claims bring with them attendant legal fees, in terrorem settlements, potential runaway juries, and loss of time and energy.  For every in-house counsel and human resources executive overseeing such claims, reference to this ancient text can serve as a valuable guidepost to effectively manage the case from the proverbial “General’s” chair. Sun Tzu:  Now the general who wins a battle makes many calculations in his temple ere the battle is fought.  The general who loses a battle makes but few calculations beforehand. Strategy is an often overlooked complement to litigation defense.  Each case is different, making rote defenses unacceptable.  At the very outset of the case, the “General” needs to know:  what is our strategic plan for confronting this particular case, before this particular judge, on these unique facts. Sun Tzu:  What the ancients called a clever fighter is one who not only wins, but excels in winning with ease. Winning with “ease” in employment cases means winning pre-trial and preferably pre-discovery.  Consequently, a threshold question is:  do we have a motion to dismiss? Courts have become far more accepting of dismissing complaints that are based solely on conclusory allegations.  See, e.g., Zucker v. Five Towns College, 2010 WL 3310698 (E.D.N.Y. 2010) (granting motion to dismiss, finding that allegations concerning plaintiff’s satisfactory work performance, termination, and much younger replacement do not -- by themselves -- suffice to plead an age discrimination claim).  If a motion to dismiss is available, it could save discovery costs or possibly paying an in terrorem settlement to avoid those discovery costs.  An ill-conceived motion to dismiss, however, only runs up unnecessary costs and, in the view of the deciding judge, may undermine the credibility of any subsequent motion for summary judgment.  Dig down deep into the case law to find cases within the jurisdiction in which complaints with similar factual allegations have been dismissed. Sun Tzu:  There is no instance of a country having benefited from prolonged warfare. Winning after expensive discovery and an expensive trial is not, in Sun Tzu’s philosophy, truly “winning.”  This brings us to the concept of a “reasonable” settlement.  Often times, there is a fear that if we settle, every terminated employee will believe they can exact a payout upon the mere presentation of a complaint, even if that complaint is utterly specious.  On the flip side, standing on principle and “fighting to the death” is expensive and time-consuming. Perhaps the most important thing to consider with such a conundrum is:  who is our judge?  Some judges have no problem granting pre-trial motions to dismiss or for summary judgment.  Other judges virtually never grant a pre-trial motion.  Knowing this at the outset is critical.  Even if standing on principle is important, if you know that winning the case will in all likelihood require the cost of a full blown trial, settling at the inception of the case for less than the defense costs to win at trial (and taking away the risk of losing at trial and paying prevailing party fees) may be the better part of valor. Sun Tzu:  Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting. At first blush, this sounds vastly easier said than done.  But, one way to subdue an enemy in employment cases is to make the enemy defend against a counterclaim.  In our experience, viable counterclaims are often overlooked.  Enter the “faithless servant” doctrine.  If a former employee plaintiff has been terminated for misconduct, that employee may be subject to a claw-back of all of the compensation he/she was paid during the period of such misconduct.  The possibility of not only losing the employment claim but also having to forfeit back already received compensation dramatically changes the leverage in terms of settlement or making the plaintiff simply go away.  See, e.g., William Floyd Union Free Sch. Dist. v. Wright, 61 A.D.3d 856, 877 N.Y.S.2d 395 (2d Dep't 2009) (affirming grant of summary judgment which required employees to forfeit all compensation during the period of their disloyalty and to forfeit all forms of deferred compensation). Sun Tzu:  If we do not wish to fight, we can prevent the enemy from engaging us even though the lines of our encampment be merely traced out on the ground.  All we need do is to throw something odd and unaccountable in his way. Something “odd and unaccountable” in the eyes of a plaintiff, and most particularly in the eyes of a plaintiff’s lawyer, is the possibility of fee-shifting not just against the plaintiff, but also against the plaintiff’s lawyer.  The availability of prevailing party fees to the plaintiff creates a Damoclean incentive to settle.  Little known, however, is that in some cases the threat of fees against the plaintiff, and more specifically the plaintiff’s lawyer, can quickly level that playing field. A hidden gem in federal law allows for full fee-shifting against a plaintiff’s lawyer who has been put on notice that the plaintiff’s complaint is frivolous.  28 U.S.C. § 1927.  While a plaintiff’s lawyer may initially laugh off such a threat, do not hesitate to send the lawyer a case where a substantial fee shift was imposed.  See, e.g., Capone v. Patchogue-Medford Union Free Sch. Dist., 2006 U.S. Dist. LEXIS 96016 (E.D.N.Y. 2006) (imposing full fee-shifting against plaintiff’s counsel in employment case).  When done right (notice, etc.), a fee-shifting claim can be a potent weapon in an employer’s self-defense arsenal. Conclusion Litigation is about strategy -- playing offense when available, breaking the enemy when possible, and avoiding a prolonged fight.  There is no one rote method of responding to an employment discrimination claim.  In-house counsel and human resources executives should be provided by their counsel with a full range of options and facts to support those options, particularly as to whether the current case -- as assigned to a specific judge -- ought to be quietly and quickly settled or vigorously litigated.

On July 15, 2014, the Occupational Safety and Health Administration ("OSHA") issued a policy memorandum to its Regional Administrators, explaining in greater detail the agency’s Temporary Worker Initiative ("TWI").  The TWI, which was launched on April 29, 2013, is an initiative intended to prevent work-related injuries and illnesses among temporary workers.  Employers who have temporary employees hired through staffing agencies should be aware that OSHA has a particular focus on the health and safety of those temporary employees, and should ensure that those temporary employees are provided with proper protective equipment and training to minimize any potential workplace hazards. Perhaps the most interesting portion of the memorandum is the agency’s explanation that “in general, OSHA will consider the staffing agency and host employer to be ‘joint employers’ of the workers in this situation” and, thus, that both employers will be responsible for protecting the safety and health of the worker.  OSHA noted that these “obligations will sometimes overlap” and that -- depending on the circumstances of any violations of the Act -- the agency will “consider issuing citations to either or both of the employers.”  Notably, while the memorandum states that a host employer will normally have “primary responsibility for determining the hazards in their workplace and complying with worksite-specific requirements,” it adds that the temporary agency or staffing firm also has a “duty to diligently inquire and determine what, if any, safety and health hazards are present at their client’s workplaces.”  The memorandum includes the following example:  “If a staffing agency is supplying workers to a host where they will be working in a manufacturing setting using potentially hazardous equipment, the agency should take reasonable steps to identify any hazards present, to ensure that workers will receive the required training, protective equipment, and other safeguards, and then later verify that the protections are in place." The memorandum indicates that additional bulletins and a compliance directive regarding the TWI will be issued.

On July 31, 2014, President Obama signed the "Fair Pay and Safe Workplaces" Executive Order, which requires bidders on federal procurement contracts for goods and services (including construction) in excess of $500,000 to disclose labor law violations that have occurred within the three-year period immediately preceding the bid.  In addition, the Executive Order requires federal contractors to provide individuals who perform work under the federal contract with information regarding hours worked, overtime hours, pay, and any additions made to or deductions made from pay.  The Executive Order also prohibits federal contractors with contracts in excess of $1,000,000 from entering into mandatory pre-dispute arbitration agreements with their employees or independent contractors to resolve complaints under Title VII of the Civil Rights Act ("Title VII") or tort claims arising out of alleged sexual assault or harassment. For procurement contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000, each bidder must disclose whether there has been any administrative merits determination, arbitral award or decision, or civil judgment against the bidder within the preceding three-year period for violations of any of the following labor laws and Executive Orders:

• the Fair Labor Standards Act;
• the Occupational Safety and Health Act;
• the Migrant and Seasonal Agricultural Worker Protection Act;
• the National Labor Relations Act;
• the Davis-Bacon Act;
• the Service Contract Act;
• Executive Order 11246 (Equal Employment Opportunity)
• Section 503 of the Rehabilitation Act;
• the Vietnam Era Veterans' Readjustment Assistance Act;
• the Family and Medical Leave Act;
• Title VII;
• the Americans with Disabilities Act;
• the Age Discrimination in Employment Act;
• Executive Order 13658 (Minimum Wage for Federal Contractors); and
• equivalent state laws.

A bidder's disclosure of labor law violations will not necessarily automatically disqualify the bidder from receiving the federal contract, but the information will be considered in determining whether the bidder is a responsible source that has a satisfactory record of integrity and business ethics.  Federal contractors are also obligated to require prospective subcontractors to disclose labor law violations within the preceding three-year period, and are required to consider the information obtained in awarding subcontracts.  During the performance of a federal contract, each federal contractor subject to the Executive Order is required to update its own labor law violation disclosure and to obtain an updated labor law violation disclosure from each subcontractor every six months. Federal contractors who are awarded procurement contracts for goods and services (including construction) in excess of $500,000 are also required to provide each individual performing work under the contract with a document containing information regarding the individual's hours worked, overtime hours, pay, and any additions made to or deductions made from pay.  Employees who are exempt from the overtime compensation requirements of the Fair Labor Standards Act need not be given information regarding their hours worked.  Compliance with any state or local requirements that the Secretary of Labor has determined are "substantially similar" to the requirements of the Executive Order (such as, presumably, the requirements of the Wage Theft Prevention Act) will be deemed compliance with the terms of the Executive Order.  If a federal contractor is treating an individual performing work under the federal contract or subcontract as an independent contractor, the federal contractor must provide the individual with a document informing the individual of this status. Finally, the Executive Order provides that for all contracts where the estimated value of the supplies acquired and services required exceeds $1,000,000, federal contractors and subcontractors must agree that the decision to arbitrate claims under Title VII or tort claims arising out of alleged sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after the dispute arises.  Thus, federal contractors and subcontractors may not enter into mandatory arbitration agreements with employees or independent contractors to resolve Title VII claims or sexual assault/harassment tort claims before a dispute actually arises.  This prohibition does not apply to employees who are covered by a collective bargaining agreement, nor does it apply to employees or independent contractors who entered into a valid arbitration agreement prior to the contractor or subcontractor bidding on a contract covered by the Executive Order. The Executive Order directs the Federal Acquisition Regulatory ("FAR") Council (in consultation with the Department of Labor and the Office of Management and Budget) to amend the Federal Acquisition Regulation to identify considerations for determining whether serious, willful, or pervasive violations of the labor laws demonstrate a lack of integrity or business ethics.  In addition, the Secretary of Labor is directed to develop guidance and processes to implement the provisions of the Executive Order.  The Executive Order will apply to all solicitations for contracts as set forth in any final rule issued by the FAR Council.

On July 14, 2014, the U.S. Equal Employment Opportunity Commission ("EEOC") issued its Enforcement Guidance on Pregnancy Discrimination and Related Issues.  The purpose of the Enforcement Guidance is to explain the EEOC’s current interpretations of the Pregnancy Discrimination Act of 1978 ("PDA") and the interplay between the PDA and the Americans with Disabilities Act ("ADA").  This interplay is important because although pregnancy by itself is not a disability under the ADA, it is often accompanied by one or more medical impairments which would entitle an employee to the ADA’s protections. Perhaps the most significant take-away from the new Enforcement Guidance concerns those situations when the PDA and ADA do not overlap, i.e., when pregnant employees do not have ADA-covered disabilities.  The EEOC’s interpretations make clear that it views pregnancy as a preferred status for enforcement and litigation purposes, such that pregnancy alone can give rise to certain job protections that would not be afforded to comparable non-pregnant co-workers. As an amendment to Title VII of the Civil Rights Act of 1964, the PDA prohibits discrimination on the basis of an applicant's or employee’s pregnancy, childbirth, or related medical conditions.  It requires that women affected by pregnancy be treated the same as non-pregnant employees who are “similar in their ability or inability to work.”  Courts generally interpret this to mean that employers need not adjust their normal policies and practices to accommodate work restrictions caused solely by pregnancy.  This is unlike under the ADA, which affirmatively requires that employers reasonably accommodate otherwise qualified individuals who are unable to perform the essential functions of their jobs due to disabilities. Despite earlier court decisions, the EEOC Enforcement Guidance instructs that employers must generally honor work restrictions for pregnant employees, even if no ADA-covered condition exists to require a workplace accommodation.  Similarly, if an employer provides light duty assignments to employees who experience on-the-job injuries (as many employers do to lower workers’ compensation costs), it is the EEOC’s position that pregnant employees must be given the light duty option.  This is the EEOC's view even if light duty work is not available to similarly situated employees whose job restrictions result from an injury suffered outside of the workplace. The EEOC issued its Enforcement Guidance less than two weeks after the U.S. Supreme Court decided to hear the case of Young v. UPS, Inc.  The Fourth Circuit held in Young that the PDA does not require pregnancy-related accommodations or light duty assignments since this would effectively grant non-disabled pregnant employees preferential treatment relative to co-workers who are not otherwise covered by the ADA or an employer’s light duty policy (such as an individual who suffered a temporary, off-the-job injury) – a result which was never intended by Congress.  Critics view the Enforcement Guidance as an attempt by the EEOC to politicize a question of judicial interpretation in advance of the Supreme Court ruling. The Enforcement Guidance also describes the EEOC’s position on other pregnancy-related issues affecting the workplace, which will be discussed in a future blog article.  In the meantime, as we noted in our January 2, 2013, blog post, the issue of accommodating pregnancy-related limitations will continue to be one of the EEOC’s top enforcement priorities.  Accordingly, prudent employers should evaluate their internal policies and practices for compliance with current legal standards, and ensure that those policies and practices are being applied in a consistent and non-discriminatory manner. The EEOC has also issued a Questions & Answers to summarize its new Enforcement Guidance, as well as a Fact Sheet for Small Businesses.

On July 22, 2014, Governor Cuomo signed a bill that amends the New York Human Rights Law by adding a new Section 296-c entitled, “Unlawful discriminatory practices relating to interns.”  The amendment prohibits employers from discriminating against unpaid interns and prospective interns on the basis of age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, marital status, or domestic violence victim status, with respect to hiring, discharge, and other terms and conditions of employment.  The amendment further prohibits employers from retaliating against unpaid interns who oppose practices forbidden under the Human Rights Law or who file a complaint, testify, or assist in a proceeding brought under the Human Rights Law.  The amendment also makes it unlawful for employers to compel an intern who is pregnant to take a leave of absence, unless the pregnancy prevents the intern from performing the functions of the internship in a reasonable manner.  The amendment also prohibits employers from subjecting interns to sexual harassment or any other type of harassment based on a protected category. This legislation was introduced following a 2013 case in which the United States District Court for the Southern District of New York dismissed a sexual harassment claim asserted by an unpaid intern who alleged that her boss had groped her and tried to kiss her.  In that decision, the Court was bound by the language of the statute that existed at that time and the court decisions interpreting that language, which provided that the Human Rights Law only applied to paid employees and did not apply to unpaid interns.  The purpose of the legislation is to give unpaid interns the same right to be free from workplace discrimination and harassment as paid employees. Employers who have unpaid interns or expect to have unpaid interns in the future should consider revising their anti-discrimination and anti-harassment policies to explicitly provide that discrimination and harassment against interns will not be tolerated, and that complaints made by interns regarding alleged unlawful harassment will be investigated in the same manner as complaints made by employees.  In addition, as we noted in a 2010 blog post, employers should also make sure that unpaid interns truly qualify as unpaid interns, and would not be considered "employees" who are entitled to the minimum wage and overtime protections of the Fair Labor Standards Act and New York wage and hour laws.

As expected, President Obama signed an Executive Order today which amends Executive Order 11246 to prohibit federal contractors from discriminating against employees or applicants based on their sexual orientation or gender identity.  The prohibition against discrimination based on sexual orientation is not new to federal contractors who operate in New York State, because the New York Human Rights Law already prohibits employment discrimination based on sexual orientation.  Nevertheless, all federal contractors in New York should take this opportunity to review their policies and practices to ensure compliance with the new Executive Order.  Specifically, all anti-discrimination and anti-harassment policies should specifically list sexual orientation and gender identity among the protected categories, and all solicitations for employees should include a statement that qualified applicants will receive consideration for employment without regard to sexual orientation or gender identity (in addition to the other protected categories). The Secretary of Labor has been directed to issue regulations implementing the amendments to Executive Order 11246 within 90 days.  The amendments to Executive Order 11246 will apply to federal contracts entered into on or after the effective date of the regulations issued by the Secretary of Labor.

We originally addressed this topic on November 9, 2012, discussing the National Labor Relations Board's scrutiny of employer handbooks containing employment-at-will provisions.  Since these disclaimers are widely used in handbooks – as well as employment applications and offer letters – the NLRB’s sudden focus on such provisions was potentially significant.  Employers drew some comfort from two 2012 Advice Memoranda issued by the NLRB’s General Counsel’s Office (Case 32-CA-086799 & Case 28-CA-084365), but both of those Advice Memoranda warned employers that “the law in this area remains unsettled.” Fast forward to July 2014.  Is there anything new on this topic and if so, should employers be concerned?  In fact, there have been two noteworthy developments this year. First, on February 25, 2014, the General Counsel’s Office issued a memorandum on “Mandatory Submissions to Advice” which noted there should be “centralized consideration of certain issues” by the General Counsel's Office.  The memo went on to cite “cases involving ‘at-will’ provisions in employer handbooks” as an area identified for such centralized oversight.  Accordingly, the NLRB’s 26 regional offices will submit cases involving at-will provisions to the General Counsel’s Office for guidance, to the extent that prior NLRB case law precedent or earlier Advice Memoranda do not definitively resolve the legal issues being faced.  In sum, look for continuing developments coming straight from Washington, D.C., on this subject. Second, the General Counsel’s Office recently found the following at-will policy of Lionbridge Technologies in Redmond, Washington, did not obstruct employees from organizing a union or interfere with other concerted activity under Section 7 of the National Labor Relations Act:

Employment at [the Employer] is on an at-will basis unless otherwise stated in a written individual employment agreement signed by the [Senior Vice President of] Human Resources.  This means that employment may be terminated by the employee or [the Employer] at any time, for any reason or for no reason, and with or without prior notice. No one has the authority to make any express or implied representations in connection with, or in any way limit, an employee’s right to resign or [the Employer’s] right to terminate an employee at any time, for any reason or for no reason, with or without prior notice.  Nothing in this handbook creates an employment agreement, express or implied, or any other agreement between any employee and [the Employer]. No statement, act, series of events or pattern of conduct can change this at-will relationship.

(Brackets in original). In finding the above provision to be lawful, the GC’s Office reasoned:

• the language, on its face, did not expressly limit any union organizing or concerted activity;
• the employer did not promulgate the disclaimer in response to union organizing or concerted activity;
• the employer had not applied the policy unlawfully;
• employees could not reasonably construe the provision to prohibit union organizing or concerted actions;
• the language did not threaten discipline for employees seeking to unionize to change their at-will status; and
• the policy did not ask employees to waive any rights they held under Section 7.

In concluding the policy was lawful, the General Counsel’s Office essentially aligned with what employers have long intended regarding their at-will disclaimers:  such provisions have everything to do with providing a rock-solid defense to claims by ex-employees for breach of an implied employment contract and nothing whatsoever to do with inhibiting union organizing or other concerted activity.  While the latest news from Washington, D.C., is clearly favorable and pro-employer, employers should nevertheless carefully review any at-will policy to ensure it is lawful, in light of the NLRB’s continued interest in scrutinizing such provisions.

On June 30, 2014, the U.S. Supreme Court held, in Burwell v. Hobby Lobby Stores, Inc., that a for-profit corporation is a “person” that has religious rights under the Religious Freedom Restoration Act of 1993 ("RFRA").  Therefore, guidance under the Affordable Care Act ("ACA") that requires all 20 FDA-approved contraceptive measures to be covered with no employee cost sharing as a part of women’s “preventive services” does not apply to closely-held businesses where this mandate interferes with the ability to conduct business in accordance with their religious beliefs.  The Court determined that the $100 per day, per person, penalty that applies under the ACA for failure to satisfy the contraceptive mandate was a “substantial burden” on those corporations.  That burden could not be relieved by dropping health coverage and paying the (also substantial) $2,000 per employee annual penalty that would apply if even one employee got subsidized coverage on a state or federal exchange, according to the Court. The Court had difficulty reconciling ACA regulations that provide employees of nonprofit religious corporations access to contraceptives by requiring that insurers provide a contraceptive rider at no cost to the employer or employees.  This, the Court noted, provides a path to satisfying the government’s compelling interest in guaranteeing cost-free access to the challenged contraceptive methods.  However, the economies of this measure (saving the insurance companies the cost of undesired pregnancies) does not translate to self-funded health plans where the third-party administrator obtains no cost savings.  Third party administrators have no economic interest in the performance of self-funded plans, because all claims are paid from the general assets of employers, or from trusts. In New York, the Hobby Lobby decision would apply only to self-funded plans.  New York Insurance Law Sections 3221(l)(16) and 4330(cc)(1) require health insurance contracts to include a rider covering all FDA-approved contraceptive drugs and devices.  The exception for “religious employers” is both narrow and specific, requiring that all of the following conditions be met:

• The inculcation of religious values is the purpose of the entity;
• The entity primarily employs persons who share the religious tenets of the entity;
• The entity primarily serves persons who share the religious tenets of the entity; and
• The entity is a nonprofit organization.

One day after issuing its decision in Hobby Lobby, the Supreme Court issued orders in six other cases that were decided by various federal appellate courts relating to religious objections to covering contraceptive measures in employee health plans.  Those orders signify that the Court’s reasoning in Hobby Lobby may not necessarily be limited to the four methods of contraception that were challenged in that case (two “morning-after” type drugs and two intrauterine devices), and may extend to all 20 FDA-approved contraceptive methods. It remains to be seen how employees in a self-funded health plan maintained by a religious employer can obtain contraceptive coverage without cost, as the Supreme Court suggests.  Undoubtedly, the Obama Administration and the Department of Health and Human Services are puzzling over changes to the ACA guidance to achieve this goal without violating the RFRA.  

On June 26, 2014, the U.S. Supreme Court affirmed the decision issued by the U.S. Court of Appeals for the District of Columbia Circuit that President Obama's recess appointments to the National Labor Relations Board ("NLRB") on January 4, 2012, were unconstitutional.  The Supreme Court's decision in NLRB v. Noel Canning means that the NLRB did not have a valid quorum of three members from the date of the recess appointments to early August of 2013, when four new members were sworn in after being confirmed by the Senate.  Every decision issued by the NLRB during that approximately 19-month time period without a valid quorum has been rendered invalid by the Supreme Court's Noel Canning decision.  It remains to be seen how the NLRB will deal with this development, but it may now have to reconsider and issue new decisions in each and every case that was decided without a valid quorum in place.  However, in light of the fact that the majority of the NLRB members is still staunchly pro-union, it would be unrealistic to expect significantly different outcomes in cases that were decided against employers. Although the Supreme Court affirmed the D.C. Circuit's conclusion that President Obama exceeded his authority under the Recess Appointments Clause of the U.S. Constitution, the Supreme Court disagreed with the D.C. Circuit's narrow interpretation of the Recess Appointments Clause.  The Recess Appointments Clause permits the President to "fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session."  The D.C. Circuit held that the phrase "the Recess of the Senate" applies only to recesses that occur in between sessions of the Senate -- not to breaks in activity that occur during a session of the Senate.  The January 4, 2012, recess appointments were not made during a recess that occurred in between sessions of the Senate.  The D.C. Circuit also interpreted the phrase "Vacancies that may happen during the Recess of the Senate" to mean that the vacancy actually must arise during the Senate's inter-session recess in order for the President to have the authority to fill the vacancy without going through the Senate confirmation process.  None of the three vacancies that President Obama sought to fill on January 4, 2012 arose during the Senate's inter-session recess. The Supreme Court adopted a broader interpretation of the scope of the President's authority under the Recess Appointments Clause.  The Supreme Court held that the phrase "the Recess of the Senate" applies both to inter-session recesses (breaks that occur between sessions of the Senate) and intra-session recesses (breaks that occur in the midst of a formal session of the Senate) of substantial length.  The Supreme Court also held that the phrase "Vacancies that may happen during the Recess of the Senate" applies both to vacancies that first arise during a recess and vacancies that initially occur before a recess but continue to exist during the recess.  The Supreme Court nevertheless determined that President Obama's recess appointments during a three-day intra-session recess of the Senate were unconstitutional because the three-day recess was not of substantial length.  The Supreme Court held that a recess of less than ten days is presumptively too short to permit the President to make recess appointments, but left open the possibility that unusual circumstances might require the President to exercise recess appointment authority during a recess of less than ten days. Some of the NLRB decisions that have now been rendered invalid include:  (1) the NLRB's September of 2012 holding in Costco Wholesale Corp. that an employer's social media policy was overly broad and in violation of Section 8(a)(1) of the National Labor Relations Act ("NLRA"); (2) the NLRB's December of 2012 holding (and reversal of 50 years of precedent) in WKYC-TV, Inc. that an employer's obligation to check off union dues continues after the expiration of a collective bargaining agreement; (3) the NLRB's December of 2012 holding (and reversal of 35 years of precedent) in American Baptist Homes of the West d/b/a Piedmont Gardens that witness statements related to employee discipline are not necessarily shielded from disclosure to the union; and (4) the NLRB's July of 2012 holding in Banner Health System that an employer violated Section 8(a)(1) of the NLRA by asking employees not to discuss ongoing investigations with their co-workers. Although these decisions and many others will likely be revisited, it seems unlikely that the NLRB will issue significantly different rulings.  Accordingly, employers should assume at this point that the invalid decisions will be affirmed by the current NLRB.