Employee Non-Disclosure Agreements Post-Weinstein And #MeToo

The Winter 2018 Edition of Professional Liability Defense Quarterly, published by the Professional Liability Defense Federation (PLDF), features an article by Robert G. Chadwick, Jr., entitled “Employee Non-Disclosure Agreements Post-Weinstein And #MeToo.”



Employers Beware: The Customer Is Not Always Right!

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC

In today’s divisive political and cultural climate, it is not surprising that confrontations between workers and customers are commonplace.

On February 12, 2018, a state trooper who had pulled up to the drive-thru of a Normal, Illinois McDonald’s restaurant was allegedly greeted by an employee with the expletive “F*** the police.” Upon hearing of the incident, the franchise owner made the immediate decision to terminate the offending employee.

In this circumstance, the employer was likely acting within its legal rights in firing the offending employee. After all, the customer did nothing to provoke the employee. The customer was right.

But, what if the circumstances are different? What if a female employee berates or slaps a male customer who gropes her? What if an African American employee curses a Caucasian customer who calls him “boy?” What, if anything, does the employer risk by doing nothing? What, if anything, does the employer risk by disciplining or discharging the employee?

The Risk of Acceding To Customer Preferences

A good starting point for addressing these questions is the clash often faced by employers between customer preferences and employment discrimination laws. The desire to please a paying customer can be a compelling incentive to accede to his or her preferences or demands. However, if the preference or demand is that the employer engage in unlawful employment discrimination, the price of acquiescence can be civil liability.

In Chaney v. Plainfield Healthcare Center, for instance, an African-American healthcare worker challenged, under Title VII of the Civil Rights Act of 1964, a nursing home’s policy of honoring the racial preferences of its residents in assigning health care providers. The nursing home acknowledged it routinely acceded to patient demands for white-only health care providers.

In denying the nursing home’s motion for summary judgment, the 7th Circuit said in a July 20, 2010 opinion: “It is now widely accepted that a company’s desire to cater to the perceived racial preferences of its customers is not a defense under Title VII for treating employees differently based on race.”

In Wilson v. Southwest Airlines, male applicants said they had been rejected for positions as Southwest flight attendants based upon gender, in violation of Title VII. Southwest  admitted its policy of hiring only female flight attendants, but argued their sex appeal was a bona fide occupational qualification.

In rejecting Southwest’s defense, a Texas federal court opined in a June 12, 1981 decision:
“Southwest is not a business where vicarious sex entertainment is the primary service provided. Accordingly, the ability of the airline to perform its primary business function, the transportation of passengers, would not be jeopardized by hiring males. Southwest does not face the situation … where an established customer preference for one sex is so strong that the business would be undermined if employees of the opposite sex were hired.”

To be sure, there may be circumstances where customer preference can be a bona fide occupational qualification. The aforementioned cases, however, show that customer preference cannot always justify otherwise unlawful discrimination against an employee.

The Risk Of Doing Nothing

The issue of customer preference also arises when an employee complains of discriminatory harassment by a customer. The employer may prefer not to upset or lose a customer by taking prompt remedial action. However, if the employer does nothing it risks potential liability to the complaining employee.

In Lockard v. Pizza Hut, another Title VII suit, a female waitress employed by a Pizza Hut franchisee claimed her employer did not respond properly to the inappropriate conduct of “two crude and rowdy made customers” who frequented the restaurant. She specifically testified her employer did nothing when the men made sexually offensive comments to her, such as “I would like to get into your pants”, and one man pulled her to him by the hair, grabbed her breast and put his mouth on her breast.

In denying the employers motion to set aside a jury verdict in favor the female waitress, the 10th Circuit noted in a December 14, 1998 opinion: “An employer who condones or tolerates the creation of such an environment should be held liable regardless of whether the environment was created by a co-employee or a nonemployee, since the employer ultimately controls the conditions of the work environment.”

The Risk Of Firing The Employee

Finally, the behavior of an employee in response to inappropriate conduct of a customer may, viewed in isolation, be considered grounds for discipline or termination. Viewed in context, however, the behavior may arguably be protected opposition under employment discrimination laws. Disciplining or terminating the employee, therefore, may prompt a retaliation claim.

In Folkerson v. Circus Circus Enterprises, Inc., for example. a mime artist punched a casino patron who attempted to embrace her during a performance. For this behavior, the mime was terminated. The mime sued under Title VII arguing her behavior was protected opposition to discrimination.

In an October 16, 1995 opinion, the 9th Circuit agreed that “reasonable defense against physical violence may be protected oppositional activity.” Finding the mime’s reaction reasonable under the circumstances, the court reversed a grant of summary judgment for the employer.

In Van Horn v. Specialized Support Services, Inc., the Title VII plaintiff was a female employee of a company which provides services to developmentally disabled clients.  In her complaint, she detailed the conduct of a client who, over the course of time, said he loved her, and attempted to hug her. Although the female employee complained of the client’s behavior, the employer allegedly did nothing. One day, the client pinched the female employee’s breast. In response, the female employee instinctively slapped the client. For this behavior, the female employee was terminated.

Although the Iowa federal court found insufficient evidence of a hostile work environment, a January 29, 2003 ruling found that slapping the client was protected opposition under Title VII. The Court opined: “when an employer’s failure to act forces an employee to act in self- defense at the workplace, the employee’s defensive conduct is reasonable and the employee cannot be terminated for doing so.”

To be clear, most federal discrimination cases have sided with the employer where an employee responds to perceived discrimination by cursing, shouting or resorting to physical violence. The aforementioned cases, however, show that courts may be more willing to find questionable behavior to be reasonable if it follows inaction by the employer in responding to prior incidents of harassment.

The Risk Of Siding With The Employee

No discussion of the risks arising from confrontations between employees and customers is complete without mention of an employer’s potential liability to customers for discrimination. Federal, state and local laws prohibit discrimination in public accommodations and contracts.  A comprehensive discussion of these laws is beyond the scope of this article. An employer must nevertheless be mindful of such laws before terminating a customer contract or refusing service to a customer based upon a confrontation with an employee.

Takeaway For Employers

When presented with evidence of a confrontation between an employee and a customer, an employer’s first instinct may be to side with the customer. Following that instinct, however, may risk liability under employment discrimination laws. Siding with the employee can also have legal consequences.

As with any unfortunate incident involving an employee, therefore, an employer must  undertake a reasonably diligent and unbiased effort to determine the truth. Sometimes, appearances can be deceiving, and the truth may lie beyond the single incident. Admittedly, a more comprehensive investigation will require more work than a rush to judgment. Still, it is more prudent to work to prevent an unwanted claim, than to work to defend an unwanted claim.

What Austin Employers Need To Know About New Paid Sick Time Ordinance

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

On Friday, February 16, 2018, Austin became the only Texas municipality to enact a paid sick time ordinance applicable to private employers. There is no corresponding Texas state law which mandates paid sick time in the private sector.

What Employers Are Covered By The Ordinance?

The ordinance applies to any “person, company, corporation, firm partnership, labor organization, non-profit organization or association that pays an employee to perform work for an employer and exercises control over the employee’s wages, hours and working conditions.”

The ordinance does not limit its coverage to employers with a minimum number of employees. For employers with less than six employees, excluding family members, the ordinance is not effective until October 1, 2020.  For all other employers, the ordinance is effective on October 1, 2018.

The ordinance does not apply to (1) the United States; (2) a corporation wholly owned by the government of the United States; (3) the state or a state agency; or (4) a political subdivision of the state, or other agency that cannot legally be regulated by municipal ordinance.

What Employees Are Covered By The Ordinance?

The ordinance covers any “individual who performs at least 80 hours of work for pay within the City of Austin in a calendar year for an employer, including work performed through the services of a temporary or employment agency.”  The ordinance does not apply to independent contractors or unpaid interns.

How Much Paid Sick Time Is Mandated By The Ordinance?

An employer must grant one hour of earned sick time for every 30 hours worked for the employer. Earned sick time is available to an employee as soon as it is accrued. Earned sick time accrues only in hourly increments.

The ordinance does not affect employer policies which allow an employee to donate unused accrued sick time to another employee.

Are There Any Caps to Paid Sick Time Mandated By The Ordinance?

An employee of an employers with 15 or fewer employees , excluding family members, can accrue up to 48 hours of earned sick time in a calendar year. An employee of a larger employer can accrue up to 64 hours of earned sick time in a calendar year. All available earned sick time up to the applicable limit shall be carried over to the following year.

An employer is not required to allow use of earned sick time by an employee for more than 8 calendar days in a calendar year.

For What Absences Can Paid Sick Time Be Used By An Employee?

An employee is entitled to available paid sick time if the employee makes a timely request for used of earned sick time before the employee’s scheduled work time.  There is an exception for unforeseeable absences.

Available paid sick time can be requested by an employee for an absence caused by:

  1. the “employee’s physical or mental illness or injury, preventative health care or health condition”;
  2. the “employee’s need to care for a family member’s physical or mental illness, preventative medical or health care, injury, or health condition”; or
  3. the “employee’s need to seek medical attention, seek relocation, obtain services of a victim services organization”, or to participate in legal or court ordered action related to an incident of victimization from domestic abuse, sexual assault, or stalking involving the employee or employee’s family member.”

The tem “family member” is defined as an employee’s “spouse, child, parent, or any other individual related by blood or whose close association with the employee is the equivalent of a family relationship.”

Can an Employer Require Verification Before Paying For Sick Time?

It depends. An employer may adopt reasonable verification procedures to establish that an employee’s request for earned sick time for more than three consecutive work days is for a qualifying absence. The ordinance makes no mention of absences of other durations.

How Is Paid Sick Time Calculated?

The employer shall pay earned sick time in an amount equal to what the employee would have earned if the employee had worked the scheduled work time, exclusive of any overtime premium, tips, or commissions, but no less than the state minimum wage.

What Does The Ordinance Proscribe?

An employer may not:

  1. require “an employee to find a replacement to cover the hours of sick time as a condition of using earned sick time”;
  2. erase accrued paid sick time upon “an employee’s transfer to a different facility, location, division, or job position”;
  3. “transfer, demote, discharge, suspend, reduce hours, or directly threaten these actions against an employee for requesting or using earned sick time, or for reporting a violation or participating in an administrative proceeding under” the ordinance.

What Records Are Mandated of Employers By The Ordinance?

On at least a monthly basis, an employer must provide electronically or in writing to each employee a statement showing the amount of the employee’s available earned sick time.

An employer that provides an employee handbook to its employees must include therein a notice of employee rights and remedies under the ordinance.

Each employer must display a sign in an conspicuous place or places where employee notices are customarily posted.

Does The Ordinance Provide Employees With A Private Right Of Action?

No. For violations, the ordinance only provides for a civil penalty assessed by the City.

How Is The Ordinance Enforced?

The ordinance is enforced by the City of Austin Equal Employment Opportunity/Fair Housing Office (“Office”).  A complaint alleging a violation must be filed with the Office by or on behalf of an aggrieved employee within two years from the date of the violation.

What Is The Civil Penalty For Violation Of The Ordinance?

For an employer with six or more employees, no civil penalty for a substantive violation may be assessed prior to May 1, 2019.  Thereafter, an employer which fails to cease a violation by the end of the 10th business day after the employer receives notice of the violation by the Office is liability to the City for a civil penalty of up to $500 for that violation.

Civil penalties of $500 per violation for retaliation, however, can be assessed on and after the applicable effective date.

Are Any Affirmative Defenses Available To Employers Under The Ordinance?

The ordinance does not expressly provide any affirmative defense for a failure to pay an employee earned sick time.  Presumably, however, the Office will consider any lawful reason for any adverse employment action taken against an employee who has (1) requested or used earned sick time, (2) reported a violation of the ordinance, or (3) participated in an administrative proceeding under the ordinance.

What Must Austin Employers Be Doing Now?

Depending on the applicable effective date, Austin employers have time to develop policies and procedures to conform to the standards set forth in the ordinance. For planning decisions which must be made long before October 1, 2018, however, larger employers must be cognizant of the unique requirements which will soon be applicable to employees working within the city limits of Austin.

Profanity Can Also Be a Controversial Issue in the Workplace

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

Political controversies, such as President Trump’s alleged use of the term “sh**hole” in reference to third-world countries, serve as a reminder to private employers that profanity in the workplace can also be a controversial issue. There is no federal law which expressly addresses profanity in the workplace, but profanity can still be at the heart of a legal dispute under applicable employment laws.

Protected Profanity?

The National Labor Relations Board (“NLRB”), for instance, has said that concerted activities for the mutual aid or protection of employees can be legally protected under the National Labor Relations Act even if laced with profanity. Several decisions show just how far the NLRB has gone to protect employee speech rights.

On May 19, 2014, an administrative law judge of the NLRB in Hooters of Ontario Mills found that a Hooters’ franchise had unlawfully fired an employee for shouting “you’re a f***ing b**ch” within earshot of customers during a bikini contest. The judge opined that the profanity was tied to a protected complaint that the contest was rigged. The employee was ordered to be reinstated.

On May 28, 2014, in Plaza Auto Center, Inc., the NLRB held that a business owner unlawfully discharged an employee who called him a “f***ing mother f***ing”, a “f***ing crook”, and an a**hole.” The NLRB said these statements were made during a meeting in which the employee lodged a protected complaint as to the calculation of sales commissions. The employee was ordered to be reinstated.

On March 31, 2015, in Pier Sixty, LLC, the NLRB again held that an employer unlawfully terminated an employee for the following Facebook post about his supervisor during a union organizing campaign: “Bob is such a NASTY MOTHER F***ER don’t know how to talk to people!!!!!! F*** his mother and his entire f***ing family!!!! What a LOSER!!! Vote YES for the UNION.” The NLRB opined that the Facebook comments were directed at the supervisor’s asserted mistreatment of employees, and sought redress through the upcoming election, and thus constituted protected, concerted and union activity. The employee was ordered to be reinstated.

Unlawful Profanity?

Under certain circumstances, moreover, workplace profanity may provide the basis for a claim of harassment under federal discrimination laws. Indeed, some decisions have found that severe and pervasive profanity can be the entire basis of a harassment claim.

On October 25, 2013, in Griffin v. City of Portland, an Oregon federal court decided the city’s motion for summary judgment as to a religious discrimination suit under Title VII of the Civil Rights Act of 1964 (“Title VII”) and Oregon law. The employee, a devout Christian, alleged frequent profanity in the workplace, including the use of God’s and Jesus Christ’s name as curse words. The court found genuine issues of material fact existed as to whether the employee was subjected to a hostile work environment because of her religion.

On April 28, 2008, in Reeves v. C.H. Robinson Worldwide, the Eleventh Circuit decided a summary judgment motion as to a Title VII claim of sexual harassment. Unique to the fact pattern in this case was the existence of gender specific vulgarities which were not targeted or directed at women. The plaintiff specifically complained that sexually offensive language, such as “f**k”, “whore”, “b**ch”, “c*nt” and “d**k”, from multiple coworkers permeated the work environment every day. The court denied summary judgment for the employer.

Takeaway for Employers

As with many workplace issues, employers can face a legal tightrope when it comes to profanity in the workplace. An overly broad or aggressive approach can trigger an unfair labor practice charge with the NLRB. Ignoring or tolerating profanity altogether can trigger a harassment complaint. To traverse this legal tightrope, it is imperative that managers and supervisors be trained as to how to lead by example and how to respond to cursing employees. The risk of not doing so can be dire.

The Risk For Employers Of Sexual Harassment Fatigue

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

On October 5, 2017, a New York Times article uncovered multiple sexual harassment complaints against film executive Harvey Weinstein. The article prompted hundreds of women, and some men, to tell their stories of harassment by celebrities and politicians. #MeToo has spread virally as a hashtag on social media. Time magazine named the “Silence Breakers” as its Person of the Year.

This year’s developments have certainly brought the issue of sexual harassment to the forefront of the public consciousness, but not necessarily in a manner supportive of employer efforts to combat harassment in the workplace. Media coverage, for instance, has done little to educate the public as to the meaning of sexual harassment. The focus on sensational stories, such as unwelcome physical contact and quid pro quo harassment (demands for sexual favors as condition of employment), may even leave a misleading impression as to what constitutes harassment. In fact, according to a recent Instamor survey, 1 in 3 men still don’t think catcalling is sexual harassment. The same poll found that 2 in 3 men still don’t regard repeated unwanted invitations to drinks, dinner or dates as sexual harassment. Nearly 1 in 5 men still don’t believe that sexual harassment is a fireable offense.

Furthermore, partisan politics have infected the dialogue regarding sexual harassment. Facts and evidence have often been overshadowed by opinions and social media memes regarding the credibility of accusations and denials.

With no end in sight to the constant media coverage of sexual harassment claims, moreover, a segment of the public will likely grow weary of such coverage, if it has not already done so. Stated differently, some persons will likely succumb to “sexual harassment fatigue.”

Now that sexual harassment is in the spotlight as never before, employers should nevertheless expect greater legal scrutiny of their efforts to combat it in the workplace. This legal scrutiny will likely encompass not just the existence, but also the effectiveness, of training. In a Report published in June 2016, in fact, the EEOC Select Task Force on the Study of Harassment in the Workplace underscored the importance of “effective” harassment training.

As many employers already know, sexual harassment training is frequently met by employees with apathy or ridicule. Indeed, according to a November 15, 2017 article by the Harvard Business Review, “[m]en who score high on a psychological scale for likelihood to harass women come out of training with significantly worse attitudes toward harassment, thinking it is no big deal.” To be sure, there may be employees who will be more inclined to take such training seriously after hearing the stories of alleged victims over the past months. For other employees, however, the recent media storm may prompt the opposite reaction and make them even more apathetic or suspicious towards training.  The challenge for effective training as to this second group of employees, therefore, is overcoming their apathy, suspicions and/or “sexual harassment fatigue.”

The short-term solution may be as simple as a reminder of the personal stake of all employees in maintaining a work environment free of sexual harassment. This personal stake can include continued employment with the employer and personal liability under certain state laws. Indeed, Jonathan Segal is quoted in the June 2016 Report of the EEOC Select Task Force on the Study of Harassment in the Workplace as saying: “[Compliance training] is not training to change your mind. It is training to keep your job.” In short, make it clear that training is a “big deal” for them personally.

Who To Believe When Sexual Harassment is Disputed?

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

News stories, such as the accusations against U.S. Senate candidate Roy Moore and his corresponding denials, serve as reminders of what many employers already know from experience; often, an investigation of a sexual harassment claim yields two conflicting stories. The victim’s story is one of improper behavior by a supervisor, co-worker, customer or vendor. The accused’s story is one of denial and perhaps speculation regarding an ulterior motive for the harassment claim. Especially when there are no witnesses to the alleged behavior, the conflicting stories present the employer with a difficult question – what do I do now?

One action which should not be considered by the employer is the termination of the investigation without any analysis of the credibility of the competing stories. If the employer ultimately takes no remedial action, this action risks a claim by the victim, as part of a legal claim for sexual harassment under Title VII of the Civil Rights Act of 1964 (“Title VII”) or state law, that the investigation was merely cursory. If the employer fires the accused, this action risks a claim by the accused that the investigation was a mere pretext for sexual discrimination in violation of Title VII or state law.

So, how does an employer go about assessing the credibility of two competing stories? In 1999, the Equal Employment Opportunity Commission (“EEOC”) published guidance as to this question.

If there are conflicting versions of relevant events, the employer will have to weigh each party’s credibility. Credibility assessments can be critical in determining whether the alleged harassment in fact occurred. Factors to consider include:

Inherent plausibility: Is the testimony believable on its face? Does it make sense?
Demeanor: Did the person seem to be telling the truth or lying?
Motive to falsify: Did the person have a reason to lie?
Corroboration: Is there witness testimony (such as testimony by eye-witnesses, people who saw the person soon after the alleged incidents, or people who discussed the incidents with him or her at around the time that they occurred) or physical evidence (such as written documentation) that corroborates the party’s testimony?
Past record: Did the alleged harasser have a history of similar behavior in the past?

None of the above factors are determinative as to credibility. For example, the fact that there are no eye-witnesses to the alleged harassment by no means necessarily defeats the complainant’s credibility, since harassment often occurs behind closed doors. Furthermore, the fact that the alleged harasser engaged in similar behavior in the past does not necessarily mean that he or she did so again.

When weighing the credibility of a sexual harassment complaint, moreover, it is not necessary that the employer believe either story “beyond a reasonable doubt.” Indeed, holding the victim or accused to such a burden may itself be discriminatory.  All that is necessary is that the employer reasonably believe one of the two competing stories to be more believable than the other story.

So, what if the credibility assessment is still inconclusive as to the competing stories? Again, the risk of taking no remedial action whatsoever is a legal claim by the victim. At the very least, an employer should formulate and implement a plan to monitor the situation more closely. The employer should also consider sexual harassment training or refresher training if sexual harassment training has previously been provided.

To be sure, credibility assessment is not an exact science. The employer may never know the complete truth even after an investigation. Even if the truth proves to be elusive, however, the employer may still be called upon to defend in litigation the integrity of its effort to determine the truth. Accordingly, the goal of an employer in conducting a sexual harassment investigation must be a reasonably diligent and unbiased effort to determine the truth.  The consequences of not achieving this goal can be liability for discrimination under Title VII or state law.

What Will Become Of Non-Disclosure Agreements After Weinstein Scandal?

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

According to a New York Times article published on October 5, 2017, employees of the Weinstein Company have agreements wherein they agree not to harm the company’s “business reputation” or “any employee’s personal reputation.” According to the article, employees who settled claims of sexual harassment against the company against the company and its co-founder, Harvey Weinstein, also signed agreements whereby they agreed to keep the claims and settlement confidential.  For years, these agreements kept the substance and number of harassment allegations against Harvey Weinstein secret.

Non-disclosure agreements between employees and employers are not unusual. They can provide additional protections for an employer’s trade secrets and confidential data not provided by the Defend Trade Secrets Act of 2016 or state trade secrets law. They can also encompass sensitive data entrusted to an employer by customers, vendors and employees, thereby mitigating the risk of legal exposure for breach of such confidences. Employee handbook provisions addressing the security of trade secrets and confidential data are also common.

Non-disparagement agreements between employee and employees are less prevalent, but also not unusual. They can provide additional safeguards to an employer’s reputation not provided by state defamation or breach of fiduciary duty laws.  Employee handbooks also commonly include disparagement of the employer and employees as a ground for discipline, up to and including termination.

As a condition to receipt of severance pay, or payment of a disputed claim (other than a Fair Labor Standards Act claim), it is also routine for an employer to require a confidentiality agreement in addition to a release. For some employers, a confidentiality agreement has more value than the release. Without a pledge of confidentiality, the employer may decide to pay less or nothing at all for a release of claims.

In the wake of the sexual harassment allegations against Harvey Weinstein, however, what have historically been routine agreements are under new and intense scrutiny. Such scrutiny has raised key questions: Do such agreements enable future discrimination by eliminating unwanted publicity as a deterrent? Are such agreements legal? Do such agreements violate public policy?

With such intense scrutiny, it is likely that some government action as to non-disclosure agreements and non-disparagement is forthcoming.

Equal Employment Opportunity Commission

In EEOC v. CVS Pharmacy, Inc., the Equal Employment Opportunity Commission (“EEOC”) unsuccessfully argued that a severance agreement, which included a confidentiality clause, had the purpose or effect of deterring employees from filing or assisting with charges of discrimination. Considering the aggressive approach by the EEOC in recent years, it is conceivable the Commission will seek to revisit this argument in another suit. The agency may also seek to test in litigation the argument that confidentiality clauses contravene federal employment discrimination statutes by perpetuating silence about unlawful discrimination.

National Labor Relations Board

The National Labor Relations Act (“NLRA”) protects “concerted activities for mutual protection” by non-supervisory employees, which necessarily encompasses the rights to communicate with one another about collective action, and to seek to improve terms and conditions of employment through channels outside the immediate employer-employee relationship. The National Labor Relations Board (“NLRB”) has confirmed this protection includes discussion of harassment.

Under NLRA jurisprudence, agreements and rules which tend to chill such discussions can be an unfair labor practice under the NLRA even in the absence of enforcement. On March 24, 2017, the D.C. Circuit in Banner Health System v. NLRB found an employer’s Confidentiality Agreement to be an unfair labor practice because it explicitly directed employees not to discuss co-workers “[p]rivate employee information.” On July 29, 2016,  the D.C .Circuit in Quicken Loans, Inc. v. NLRB, also held that a non-disparagement rule in an employment agreement constituted an unfair labor practice where it stated: “You agree that you will not (nor will you cause or cooperate with others to) publicly criticize, ridicule, disparage or defame the Company or its products, services, policies, directors, officers, shareholders, or employees …” For employers with overly broad rules or agreements regarding confidentiality or disparagement, unfair labor practice charges are already a risk.

State Action

On October 13, 2017, New York State Senators Brad Hoylman and Nily Rozic proposed new legislation which would void any contract provision whereby an employee is required to conceal claims of unlawful conduct, including harassment. Legislators in other states may soon follow suit.

Under the jurisprudence of most states, moreover, courts will not enforce agreements if their purpose or effect is to violate public policy. Indeed, many cases have specifically voided confidentiality or non-disclosure agreements which have the purpose or effect of suppressing information regarding criminal conduct.  Especially as to employment rights protected by statute, some courts may be persuaded to void confidentiality provisions which are deemed to be contrary to the purpose of the statute.

Takeaways for Employers

Periodic review of employment rules and agreements is always recommended to mitigate the risks of legal claims.  Employment law, perhaps more than any other area of law, is ever-changing.  What is lawful today, may be unlawful tomorrow.  Employers must thus be prepared to adjust employment rules and agreements as their legality comes under new scrutiny.  If not now for rules and agreements subject to the NLRA, the time may soon come for employers to revisit the viability of their non-disclosure rules and agreements, non-disparagement rules and agreements, severance agreements and settlement agreements.

What Texas Employers Need To Know About State’s New Knife & Sword Law!

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

Prior to September 1, 2017, a person committed a criminal offense in Texas if he or she “intentionally, knowingly, or recklessly” carried on or about his or her person an “illegal knife” anywhere other than “(1) the person’s own premises or premises under premises under the person’s control, or (2) inside of or directly en route to a motor vehicle or watercraft that is owned by the person or is under the person’s control.” An “illegal knife” was defined as including “a knife with a blade over five and on-half inches”, a “hand instrument designed to cut or stab another by being thrown”, a “dagger, including but not limited to a dirk, stiletto, and poniard”, a “bowie knife”, a “sword”, or a “spear.”

Except as to business owners, therefore, it was generally unlawful under the old law for an employee to carry an “illegal knife” onto an employer’s premises. Except within the confines of an automobile being driven by the employee, it was also generally unlawful for an employee to carry an “illegal knife” during work hours away from the employer’s premises.

Effective September 1, 2017, however, there is no such thing in Texas as an “illegal knife.” There is now what is called a “location-restricted knife”, which is defined as a “knife with a blade over five and one-half inches.”  It is unlawful for a person younger than 18 years of age to be in possession of such a knife unless he or she is “(1) on the person’s own premises or premises under premises under the person’s control, (2) inside of or directly en route to a motor vehicle or watercraft that is owned by the person or is under the person’s control, or (3) under the direct supervision of  a parent or legal guardian.”

it is also unlawful for any person to possess a “location-restricted” knife “on the physical premises of a school or educational institution, any grounds or building on which an activity sponsored by the school or education institution is being conducted, or a passenger transportation vehicle or a school or educational institution”, “on the premises of any government court or offices”, “on the premises of a racetrack”, “in a secured area of an airport”, in certain bars, “on the premises where a high school, collegiate or professional sporting event is taking place”, in a “correctional facility”, hospitals, in “an amusement park”, or “on the premises of a church, synagogue or other established place of worship.”

Except as to minors and places enumerated in the new law, therefore, it is now generally lawful for an employee to carry any size or type of knife, sword or spear anywhere during working hours whether at or away from the employers’ premises.  Such carry can be open or concealed.

Accordingly, if a Texas employer wants to prohibit knives, swords or spears at work, it must undertake to do so on its own with the publication and enforcement of an applicable policy. Otherwise, an employee may simply follow the new law.  Such a policy should differentiate bladed instruments which are permissible at work from bladed instruments which are impermissible at work.  That way, an employee will understand that such instruments as letter openers, kitchen knives, and Swiss Army knives are not prohibited.


UPS’s $1.7M Wakeup Call: Does Your Leave of Absence Policy Violate the ADA?

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

The uncertainty associated with indefinite leaves of absence has prompted many employers to adopt policies which place a cap on the length of leaves of absence. A policy previously adopted by UPS is a common example:

“…if you are absent from your regular occupation for 12 months, you will be administratively separated from employment, regardless of your status on STD [short term disability] or LTD [long term disability].”

Uniform enforcement of a policy providing for administrative termination after a one-year leave of absence has, in fact, been found sufficient to defeat a claim of retaliatory discharge for filing a worker’s compensation claim. See Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386 (Tex. 2005).

For eight years, however, UPS fought a suit brought by the EEOC alleging the aforementioned policy violated the Americans with Disabilities Act (“ADA”). On July 28, 2017, UPS finally agreed to a proposed consent decree with the EEOC. The proposed consent decree, which has not yet been approved by the court as of the date of this writing, requires UPS to, amongst other things, (1) “seek legal advice before terminating the employment of an employee who has reached the end of the medical leave of absence or residual duty/disability period; and (2) pay a group of aggrieved former employees $1,718,500.

What Does the ADA Require?

The ADA prohibits an employer from discriminating against an “qualified individual with a disability” who is an applicant or employee. One form of prohibited discrimination is the use of “qualification standards, employment tests, or other selection criteria that screen out or tend to screen out an individual with a disability or a class of individuals with disabilities unless the standard, test or other criteria …. Is shown [by the employer] to be job-related for the job in question and consistent with business necessity.”

Another form of prohibited discrimination is the failure to make “reasonable accommodations to the known physical or mental limitations of an otherwise qualified individual with a disability … unless [the employer] can demonstrate that the accommodation would impose an undue hardship on the operation of the business of [the employer].”

Can a Leave of Absence or Leave Extension be a Reasonable Accommodation?

Most courts agree that a leave of absence or a leave extension can constitute a reasonable accommodation under the ADA “in some circumstances.” What this means for employers is that a leave of absence or leave extension simply cannot be excluded “in all circumstances” as a possible accommodation to an otherwise qualified individual with a disability. Especially, if a leave of absence or leave extension is being requested by a disabled employee, compliance with the ADA mandates that the employer consider whether such an accommodation is “reasonable” or would impose an undue hardship.

Does a FMLA Leave Policy Satisfy the ADA?

The Family & Medical Leave Act (“FMLA”) provides limited rights to medical leave, which may not be available to all employees of an employer. Specifically, FMLA rights may not be available to an employee who (1) has worked less than 12 months, or (2) works at a location with less than 50 employees within 75 miles. The FMLA also generally provides only for 12 weeks of leave.

The ADA otherwise operates independently of the FMLA. Indeed, Department of Labor regulations provide that an “employer must … provide leave under whichever statutory provision provides the greater rights to employees.” 29 C.F.R. § 825.702(a). Since ADA may provide greater leave rights than that provided by the FMLA, a FMLA leave policy does not necessarily satisfy the ADA.

Is Indefinite Leave a Required Accommodation?

Most courts agree, however, that the ADA does not require that an employer provide a disabled employee with indefinite leave. In addressing a claim brought under the Rehabilitation Act of 1973, the Eleventh Circuit, in in Luke v. Board of Trustees of Fla. A&M University, reasoned in a December 22, 2016 opinion: “While a leave of absence might be a reasonable accommodation in some cases … an accommodation is unreasonable if it does not allow someone to perform his or her duties in the present or immediate future.” The court thus affirmed summary judgment in favor of the employer as to a claim that it improperly denied a six-month extension of medical leave.

In addressing an ADA claim, the Fifth Circuit, in Moss v. Harris County Constable, similarly reasoned in a March 15, 2017 opinion: “[R]easonable accommodation is by its terms … that which presently, or in the immediate future, enables the employee to perform the essential functions of the job in question.” The court thus affirmed summary judgment in favor of an employer which terminated an employee who was taking leave without a specified date to return.

More recently, the First Circuit in Echevarria v. Astrzeneca Pharmaceutical, L.P., found, on May 2, 2017, that a proposed accommodation of an additional twelve months of leave, after the employee had already been on leave for five months, was “facially unreasonable.” Still the Court cautioned:

“Although we have previously suggested that ‘there may be requested leaves so lengthy or open-ended as to be an unreasonable accommodation in any situation’ … we need not – and therefore do not – decide that a request for a lengthy period of leave will be an unreasonable accommodation in every case.”

So, What did UPS Allegedly do Wrong?

According to the EEOC suit and the proposed consent decree, UPS’s 12-month leave of absence cap violated the ADA in two respects. First, the cap was so inflexible that it automatically provided for termination of employment, without regard to the possibility that a short extension could be a reasonable accommodation which did not impose a hardship on UPS. Second, the cap acted as “as a qualification standard, employment test or other selection criteria that screen[ed] out or tend[ed] to screen out a class of individuals with a disability and [was] not job related or consistent with business necessity.”

These allegations are consistent with the position taken by the EEOC in a publication, dated May 9 2016, entitled “Employer-Provided Leave and the Americans with Disabilities Act.” In this publication, the EEOC opined that “although employers are allowed to have leave policies that establish the maximum amount of leave an employer will provide or permit, they may have to grant leave beyond this amount as a reasonable accommodation to employees who require it because of a disability, unless the employer can show that doing so will cause an undue hardship.” The publication suggests communication with an employee nearing the end of maximum leave asking if the employee needs additional leave as a reasonable accommodation to the employee’s disability, and then engaging in an interactive process with the employee regarding leave.

What Should Employers Learn from UPS’s Experience?

As the First Circuit recognized in Echevarria, “[w]hether [a] leave request is reasonable turns on the facts of the case.” A policy which establishes a cap on leave may not necessarily be a violation of the ADA, but a refusal to consider any leave which extends beyond the cap may violate the Act in certain circumstances. Any such policy must thus allow room for a reasonable accommodation assessment whereby the cap can be modified as to a particular individual with a disability. Indeed, employers would do well to voluntarily follow the protocol which UPS will soon be required to follow and seek legal counsel before terminating an employee who has exhausted leave. Otherwise, the result may be a prolonged and expensive lawsuit, such as that experienced by UPS.

Are Workplace Recording Bans Legal?

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje, PLLC.

Smart phone technology, and the ability of video and audio recordings to be uploaded to social media sites, has prompted many employers to adopt rules regulating the surreptitious recording of workplace interactions.  The “no recording” rule adopted by Whole Foods Market Group, Inc. is a common example:

“It is a violation of [Company] policy to record conversations, phone calls, images or company meetings with any recording device (including but not limited to cellular telephone, PDA, digital recording device, digital camera, etc.) unless prior approval is received from [management], or unless all parties to the conversation give their consent. Violation of this policy will result in corrective action up to and including discharge.”

The business justifications for such a rule can include (1) prevention of workplace bullying, harassment and retaliation, (2) protection of trade secrets and proprietary information, (3) protection of private or embarrassing information shared in confidence, (4) protection of vendor and customer relationships, and (5) encouragement of open dialogue among employees.

The National Labor Relations Board (“NLRB”), however, has long held that a work rule violates Section 8(a)(1) of the National Labor Relations Act “if it would reasonably tend to chill employees” from engaging in concerted activities for mutual aid or protection. Such a work rule can violate the Act even if adopted by a non-union employer. Subject to review and enforcement in federal court, the NLRB has the power to order an employer to (1) revise or rescind a work rule determined to violate Section 8(a)(1), and (2) post notices prescribed by the Board.

On June 1, 2017, the U.S. Court of Appeals for the Second Circuit affirmed and enforced a 2015 NLRB Decision ordering that Whole Foods’ “no recording” rule be rescinded or revised. The NLRB opined that the rule unqualifiedly prohibited all workplace recordings, including recordings in pursuit of concerted activities for mutual aid or protection.  The Board found that the rule could reasonably chill the employees in the exercise of their protected rights, such as “recording images of protected picketing. documenting unsafe workplace equipment or hazardous working conditions, documenting and publicizing discussions about terms and conditions of employment, documenting inconsistent application of employer rules, or recording evidence to preserve it for later use in administrative or judicial forums in employment-related actions.”

The Second Circuit also enforced an order from the NLRB Decision requiring that a notice be posted at all Whole Foods’ facilities companywide.  The prescribed notice includes the following statement: “The National Labor Relations Board has found that we violated Federal labor law and has ordered us to post and obey this notice.”  The prescribed notice also reminds Whole Foods’ employees of their right to “form, join or assist a union.”

To be clear, the Whole Foods decisions only addressed a rule which unqualifiedly prohibited all workplace recording. The decisions did not go so far as to declare all “no recording” rules unlawful under Section 8(a)(1).  Indeed, at least one previous NLRB decision found that an employer rule that prohibited the use of cameras for recording images in a hospital setting did not violate Section 8(a)(1), in light of the compelling patient privacy interests at stake.

As noted in a previous post on this blog, it is strongly recommended that employee handbooks be periodically updated.  The Whole Foods decisions show why such periodic updates are important.  For any employee handbook with a workplace recording ban similar to the Whole Foods’ rule above, the time for such an update is now.

In this regard, the first remedial action contemplated in response to the Whole Foods decisions need not be the elimination of a recording ban altogether. Indeed, the legal risks of such an option may be prohibitive for certain employers.  Rather, the first remedial actions contemplated should be analyses of two questions:  (1)  Does the existing rule have a potential chilling affect on the exercise of protected employee rights?;  and (2) if so, can the language of the rule be modified to serve its underlying business justifications without the collateral damage of a potential chill on protected employee rights?  Ultimately, the best option may be to maintain the “no recording” rule, albeit with a narrower scope.  Of course, any “no recording” rule should be reviewed with legal counsel prior to adoption.