Thursday, December 27, 2012

Cut Rate Football Playoffs

NFL players do not make that much money as a result of their team's successes after the regular season. In fact, playoff games represent a pay cut for most NFL players, unless they have certain types of incentive clauses built into their contracts.

The distribution of cash is described here.  As the League ponders adding additional playoff teams in lieu of additional regular-season games, the economics would seem to favor more playoffs-the players are paid less and the stadium and advertising revenue for these games is significantly more than for regular-season contests.

Monday, December 24, 2012

A First Amendment Right to Fire Complaining Workers?

From a purely legal perspective, it's hard to beat the combination of federal labor law, employment law, and First Amendment rights under the U.S. Constitution, all arising in one case. But that's what happened in California when a group of newspaper employees, dissatisfied with the editorial policies of their boss, begin the process of union organizing to better negotiate with their management over the paper's editorial content. Part of their organizing efforts included encouraging newspaper subscribers to cancel their subscriptions, as well as making complaints about management's actions restricting the content of some of the reporters' and editors' story selections. Most of the active union supporters who did not resign were eventually fired, leading to the the predictable charge before the NLRB. As is typical under this administration, the Board sided with the employees, finding that the employer committed unfair labor practices.

But the Court of Appeals for the District of Columbia, probably the country's premier appellate court for these types of issues, sided with the company. Why it did is a fascinating look at what happens when constitutional rights collide with collective-bargaining rights.

As an initial matter, the Court noted that a newspaper publisher has "absolute discretion to determine the contents of its newspaper" under the First Amendment of the Constitution. Reporters and editors who are not publishers do not have a legitimate employee concern over the subject matter, at least under the National Labor Relations Act.

Given this straightforward preference for First Amendment rights over mere statutory rights, the Court had little trouble striking down the Board's order reinstating the fired employees.  Nor was the Court enamored of the Board's order that the newspaper publish a particular reporter's column (the column had been eliminated at least in part for the reporters prounion activities)  every week for the foreseeable future.  I have difficulty believing that somebody at the Board thought this was appropriate-such an order requires  the Board to become directly involved with the newspaper publisher's exercise of freedom of the press rights. The Court also chided the Board for ignoring the clear coercive effect of its order to reinstate the terminated prounion reporters and editors:  "It sanctions [the publisher] for trying to discipline employees who sought to remain on its payroll and at the same time called on newspaper readers of Santa Barbara to cancel their subscriptions because [the publisher] would not knuckle under to the employee's demands for editorial control."

The case is noteworthy for non-media publishers mainly because it presents a striking example of the Board's overreach under this administration. Given that the Board will have at least four more years of executive protection, we can expect to see this kind of regulatory stretch continue.

Sunday, December 23, 2012

Gas-Fired (or at least reprimanded)

I am a little speculative about this report from The Smoking Gun, but the letter of reprimand appears real.  In any event, you wonder if there's a disability here, and whether it's possible to accommodate someone with such room clearing talent.

Irresistible Attraction Force Meets Immovable Spousal Object

A case out of the Iowa Supreme Court has generated an unwarranted amount of attention this weekend.  The opinion is noteworthy mainly because it highlights the lines drawn between legitimate at-will and illegal employment decisions that discriminate against a protected group because of that group's status.

The facts--an attractive dental assistant was fired after more than 10 years of good work performance because she was considered by her boss, and more importantly the boss's wife, as a threat to his marriage   Specifically, he terminated the assistant's employment after his wife, who was suspicious of the employee already, discovered they were texting suggestively, and the dentist himself believed that he might eventually have an affair with the woman.  The assistant sued, claiming gender discrimination.

The Iowa Supreme Court got the case after the lower court granted summary judgement for the employer dentist  and affirmed the lower court's decision   The Court noted that the basis for the termination was not the plaintiff's gender, but her threat to the relationship between the dentist and his wife.  The fact that there would not have been a threat if the assistant had been male misses the point, said the Court.  The issue is whether gender was the basis for the decision--it was not.  The employer wins, 7-0.

There have been a number of commentators saying how unfair it is that someone could get fired because they were "too attractive."  But that is exactly the lesson of at-will employment.  An employee can be fired for any reason that is not protected by a federal or state statute.  Fairness really isn't the issue--the Court here took a silly and purely gratuitous shot at the employer for not giving the employee more severance pay, but that didn't affect its opinion.You can be fired because you are an impediment to a boss having an affair with another person, and you can be fired because people think you are having an affair with the boss  Those decisions don't have a gender-based motivation.  Of course, you can't be fired legally for personally refusing to have an affair with the boss--that would be quid pro quo sexual harassment, a particular form of gender discrimination 

It's obviously better not to find yourself in a situation like this, but it's a better result if you recognize that there could be a harassment problem coming down the track, and preempt it, rather than letting things get to the full, hostile work environment stage.

Important safety tip--this case arose in the context of a single termination--I suspect the result would have been different if the wife demanded and got the termination of every woman working in the office.  A mass female firing would have raised at least an inference of gender-based decision making, and would have been actionable.

Tuesday, December 18, 2012

Arbitrating the Noncompete Case: The Supreme Court Speaks

The Supreme Court recently ruled that arbitration agreements in non-compete clauses are matters of federal law under the Federal Arbitration Act, notwithstanding the relatively transparent efforts by a state supreme court to deprive federal courts of jurisdiction.

The case arose out of the typical non-compete situation. Two former employees of Nitrolift, having previously signed an agreement with provisions containing confidentiality, noncompetition, and arbitration requirements, went to work for a competitor of Nitrolift. The former employer demanded arbitration in consonance with the terms of the non-compete provision, and the former employees filed suit in state court, asking the court to declare the non-competition agreements invalid. When the state trial court found the contracts arbitration clauses were valid and that an arbitrator was the proper fact finder to resolve the dispute, the former employees appealed to the Oklahoma Supreme Court. That court determined first that it had jurisdiction over the Federal Arbitration Act issue because there was a state statute in effect regarding covenants not to compete. The Oklahoma justices then found adequate and independent state grounds to justify assertion of jurisdiction.

Of course, these two initial findings by the Oklahoma court were simply an attempt to dodge the fact that it has no jurisdiction over these claims because it is a state court. And the U.S. Supreme Court stepped directly into that discussion by noting that the state court could only get jurisdiction by rejecting the federal act requirement that arbitrators should decide a contract's validity. In other words, there was a federal law basis present in the initial court decision, and the Oklahoma Supreme Court could not get around that federal basis.

So the U.S. Supreme Court gets the case, voids the Oklahoma determination, and then finds that the Federal Arbitration Act specifically holds that attacks on the validity of a contract, which are distinct from attacks on the validity of the arbitration clause, are to be resolved by the arbitrator and not a court.

While this was ultimately a win for the employer, and for proponents of arbitration, the lesson here is that non-compete, arbitration and non-confidentiality agreements should not be included in one  employment contract. State law varies dramatically on the enforceability of all three of these types of agreements and the confusion that was generated here (and the basis for state court mistakenly asserting jurisdiction) could have been avoided with better drafting. In other words, at a minimum, consider writing out separate employment contracts for confidentiality, non-compete provisions, and arbitration, especially if you are engaged in multistate operations.

The NLRB’s Attack on At-Will Employment

Recent cases coming out of Region 28 of the NLRB (which is located in Arizona) indicate that the Board is beginning to undermine one of the most basic elements of the American workforce relationship – at-will employment. These Region 28 cases revolved around a relatively uncontroversial clause found in most employee handbooks and union contracts indicating that the employees of the company were at-will and that this employment arrangement could not be changed without the signature of a senior company manager. The NLRB found in both cases that the innocuous provisions were discriminatory because they might cause employees to think they could not change their at-will employment status through collective bargaining or some other qualified protected activity. Note that there was no actual claim that anyone believed that a union contract could not alter at-will employment status, or that anyone was harmed by believing that they couldn't engage in collective bargaining. The Board simply whacked these provisions on some fanciful harm that might occur in the future.

As with its opinion on off-duty employee access to the workplace, the Board seems to be making up its jurisprudence on the fly. For whatever reason, it has decided to interpret at-will employment provisions that state that the relationship can only be modified with the consent of senior management as affecting Section VII concerted activity rights. Of course, most of these at-will employment provisions were adopted in response to state court holdings that a company's failure to explicitly state that the at will employment relationship could only be modified in a particular way could lead to the inadvertent formation of employment contracts as a result of publishing employment policies in things like employee handbooks. Is the Board trying to set employers up for breach of contract claims, or is it simply trying to undermine the at-will relationships established over a century of employment jurisprudence? Who knows, but the uncertainty reflected in these Board decisions is simply going to make it more difficult for employers and strengthen the hand of unions in their interactions. Given the administration's reliance on unions for campaign financing and muscle, that may be the best explanation of all.

UPDATE:  Shortly after these decisions were issued, the NLRB General Counsel issued an updated guidance that distinguished the Arizona cases and actually moved the needle back in favor of the employer.  The GC noted that context was an important factor in assessing employer policies, and specifically noted, among other things, that the use of the personal pronoun "I" in the Arizona policy language indicated a waiver by employees of their rights to modify the at-will relationship.  These are very fine distinctions, in my opinion, that really don't give us much guidance on anything but the hairsplitting nature of the NLRB opinions.

Homelessness Discrimination?

Under the category of “is this really a problem?”, comes news that Rhode Island enacted a “Homeless Bill of Rights” that included a provision that makes it illegal to discriminate against an employee or a job applicant because they don’t have a fixed home address or permanent mailing address. Nor can an applicant be rejected for employment because she lists a homeless shelter or a social services provider as a mailing address. There is apparently a push for similar legislation in other states.

I would be very interested to see if this is really a problem, or to know how many people are turned down for a job because they list a post office box as their home address.

Controlling Access to Your Place of Business

Terrible events in Connecticut recently highlight the absolutely crucial ability of employers to be able to control access to their  places of business. How ironic is it that the NLRB has significantly eroded the ability of an employer to control off-duty employee access to the workplace?

For over a generation the NLRB interpreted the National Labor and Relations Act to allow an employer to deny access to its property by off-duty employees. Typically, an employer’s policy that limited access had to do so solely with respect to the inside of the plant and/or working areas, be clearly explained to all employees, and apply universally to prohibit access to the plant by any off-duty employee for any purpose. These rules were consistent with other Board requirements relating to uniform and consistent application of employer policies, regardless of union presence.

But in several recent decisions, the Board found that any employer policy allowing off-duty employees back onto the facility for work related purposes (for example to pick up a paycheck or attend an employer sponsored evening event) were too sweeping in scope to be enforced. I usually don’t quote Board opinion language, but the facts here are important to understanding the bizarre way the Board reasoned to strike down these policies. In J.W. Marriot, the Board determined that a requirement that employees who were returning to their work area post-shift “obtain prior approval from your manager” was unenforceable because it gave managers “absolute discretion to grant or deny access for any reason, including to discriminate against or discourage" protected, concerted activity.  

        Now, there was no actual circumstance where any manager had refused to allow an employee access to a work area after hours for the purpose of preventing a protected meeting or discussion; the Board based its holding on the mere possibility of discrimination at some undefined future time. In other words, an employer cannot retain discretion in its management team to allow limited purpose access to its facility for off-duty employees, it must either reject all off-duty returns under all circumstances, or none. Of course, this holding represents a significant departure from previous Board opinions. And since most employers are not going to be put in a situation where they refuse to allow access to off-duty employees who, for example, might forget their medicine at work, the Board's ruling effectively opens the door to access by all off-duty employees. The Board did indicate that there might be special circumstances where an employer could allow reentry, but gave virtually no guidance on this, and the language of the Board’s opinion indicates that these would be unique circumstances, indeed.

Employers that limit access by off-duty employees to their work place but allow exceptions in very limited circumstances risk having that policy struck down. Moreover, a policy that requires manager permission for reentry is similarly likely to violate the Board's new interpretation of Section 8(a)(1) because of potential, but undefined harm to union organizers. redesign your workplace security plans accordingly.

Friday, December 7, 2012

Hugs and Kisses and Correspondence

This story in The Atlantic details a practice with which I am totally unfamiliar-the appending of "xoxox" to digital correspondence, almost exclusively by women.  Apparently this is a trend that's been developing for some time, although it's used more in certain industries then in others.

Well. Since the meaning of this term is "hug and kisses" (and please note, it's apparently common enough that my Dragon voice recognition software automatically puts the letters in rather than the words), I would not recommend that you close business correspondence this way. Moreover, I would not recommend that you close any correspondence in the workplace this way, especially if you're a guy writing to a female coworker or subordinate, or vice versa. It goes without saying that you should not address your boss this way, but I would have thought it goes without saying that this is generally inappropriate in any professional communication, and I would've been wrong.

I'll leave it to the readership to figure out whether this is a passing fad or representative of some deep-seated genetic thing. My personal view is that I am not thrilled about any trend that introduces even more ambiguity into communications that are already misinterpreted enough.

When Your Employees Might Be Guilty

There are certain cases under various state and federal laws when both the corporate entity of the company and its individual employees face separate liability for their joint conduct. A typical example is a sexual harassment case that involves allegations of physical contact. The company is potentially liable because its employees have allegedly created a hostile work environment; the individual supervisor involved in the alleged conduct is potentially liable because of the assault on the person of the plaintiff. Another example might involve allegations of securities fraud-both the company and individual executives can face criminal liability stemming from securities transactions in which the employees were involved.

As a result, lawyers like me who defend these cases have to tread very carefully at the very beginning of our investigation. While I am representing a company in the case, I'm also representing the individual employees in their management capacity as representatives of the company.  Of necessity, I am frequently representing the employees in their individual capacity, too, because their interests (i.e. their version of events) and the company's coincide. But what happens if, during the course of the investigation, I discover that the individual employee has, in fact, committed securities fraud? Or has committed an assault? At that point, the interests of the employee and the interests of the company diverge-the company might well want to be able to say that the employee acted outside the scope of her employment, and therefore the company has no liability.

Obviously, this puts the lawyer in an untenable situation where he is representing two clients with diametrically opposed interests: the company wants to throw the employee under the bus, and the employee wants to shift as much claim to the company as possible. In that case, the lawyer must withdraw from representing both clients and turn the case over to someone else.

Just about the only way to avoid this situation is with what is called a joint defense agreement. Basically the lawyer advises the employee that she is representing both the company and the employee, but that if their interests diverge, the lawyer is staying with the company, and the employee must get her own counsel. The agreement also specifies that both sides can share whatever information is uncovered up to the point that their interests begin to diverge and that each side waves its right to disqualify the lawyer because of a conflict of interest.

But if the lawyer doesn't get a joint defense agreement, and continues the representation, he's in real trouble. As we see in this case.

I'll follow up when I see the decision here, but the lesson for corporate clients is clear-make sure you understand up front the exposure that you are facing and the exposure that your employee is facing, if any. Where both sides have exposure, make sure your counsel is not in the process of disqualifying himself when he starts the investigation.

Wednesday, December 5, 2012

Not Your Typical Supervisor-Employee Counseling Session

I have absolutely no idea whether any of this is true, but as a general rule, poorly performing store managers should not be physically assaulted, choked, or have their faces rubbed in the dirt by senior company managers.