Department of Labor Formally Kills Obama-Era Persuader Rule and Joint-Employer News

Authors: Eric Baisden and Adam Primm

Obama-Era Persuader Rule is Finally Dead

On July 17, 2018, the Department of Labor (“DOL”) formally announced what has appeared inevitable since President Trump’s election – the Obama-era “Persuader Rule” is officially dead.

The Persuader Rule was initially announced in 2016 when the DOL under President Obama revised its interpretation of Section 203 of the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”). Historically, the LMRDA required employers to report relationships with labor relations consultants hired to persuade employees on organizing and bargaining issues, including money spent on activities. Under Section 203(c) of the LMRDA, indirect advice given to an employer is exempt from the reporting requirement. Thus, advice and materials provided to employers by outside counsel or consultants are not subject to such disclosures. Continue reading

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Supreme Court Lays D.R. Horton Debate to Rest; Rejects NLRB Position That Class Waivers Violate Employee Rights

Authors: Peter Kirsanow and Adam Primm

On Monday, May 21, 2018, the United State Supreme Court, in a 5-4 opinion written by Neil Gorsuch, ended a six-year dispute started by the National Labor Relations Board’s (“NLRB”) 2012 decision in D.R. Horton, 357 NLRB 2277 (2012), which held that mandatory arbitration agreements that contain class and collective action waivers violate Section 7 of the National Labor Relations Act (“NLRA”).

In Monday’s opinion, Justice Gorsuch wrote that the Federal Arbitration Act (“FAA”) instructs that “arbitration agreements providing for individualized proceedings must be enforced” and neither the FAA nor the NLRA suggest otherwise. Therefore, employers do not violate the NLRA if they require workers to forgo the ability to pursue class actions by including the class waiver provisions in arbitration agreements that must be signed as a condition of employment. In January 2017, the Supreme Court consolidated decisions from the Fifth Circuit (Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013, 1015 (5th Cir. 2015)), which rejected the NLRB’s position and upheld class action waivers, and the Seventh and Ninth Circuits (Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), Morris v. Ernst & Young, 834 F.3d 975 (9th Cir. 2016)), both of which followed the Board’s original D.R. Horton decision.

The dispute began in 2012 in  D.R. Horton, in which the Board ruled that D.R. Horton violated Section 7 of the NLRB by requiring employees to agree to mandatory arbitration of employment disputes and forego class and collective action as a condition of employment. The Fifth Circuit refused to enforce the Board’s order, concluding that the decision violated the FAA. D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). In Murphy Oil, the Fifth Circuit again rejected the Board’s D.R. Horton position. The Second and Eighth Circuits followed suit. Sutherland v. Ernst & Young, 726 F.3d 290, 297 n.87 (2d Cir. 2013); Patterson v. Raymours Furniture Co., No. 15-2820 (Sep. 2, 2016 2d Cir.).

However, the Seventh and Ninth Circuits soon created a split among the appellate courts requiring Supreme Court clarification. In Epic Systems, the Seventh Circuit departed from other federal circuits and sided with the Board, ruling that an employer’s arbitration agreement requiring employees to bring wage-and-hour claims in individual arbitrations and prohibiting class and collective actions violates Section 7 of the NLRA. The Seventh Circuit found there was nothing so “concerted” as class action litigation. The Ninth Circuit soon followed in Morris v. Ernst & Young. The Sixth Circuit in NLRB v. Alternative Entertainment, Inc., 858 F.3d 393 (6th Cir. 2017), continued the split by siding with the Seventh and Ninth Circuits.

Thus, in resolving the split and rejecting the NLRB’s stance (adopted by the Seventh, Ninth, and Sixth Circuits), the Supreme Court endorsed the legality of employers’ use of mandatory arbitration agreements that include class action waivers.

Companies should consult with counsel to determine whether such waivers should be included in employment or arbitration agreements.

For more information on this topic, contact a member of Benesch’s Labor & Employment Practice Group.

Eric Baisden | ebaisden@beneschlaw.com | 216.363.4676

Peter Kirsanow | pkirsanow@beneschlaw.com | 216.363.4481

Adam Primm | aprimm@beneschlaw.com | 216.363.4451

Severson Stands: Long-Term Leaves of Absence are No Longer Reasonable Accommodations Under the ADA

Author: Emily C. Fess

Management-side attorneys and their clients can breathe a sigh of relief after the Supreme Court declined to take up a challenge to the Seventh Circuit’s ruling in Severson v. Heartland Woodcraft, Inc.  872 F.3d 476 (7th Cir. 2017).  In Severson, the Seventh Circuit clarified employers’ obligations under the Americans with Disabilities Act (“ADA”) when it ruled that multi-month leaves of absence are not reasonable accommodations.  Continue reading

U.S. Customs and Border Protection Updates Directive on Searches of Electronic Devices

Authors: H. Alan Rothenbuecher and Karly B. Johnson

U.S. Customs and Border Protection (“CBP”) recently updated its 2009 directive pertaining to border searches of electronic devices. The Supreme Court of the United States has deemed warrantless searches by CBP legal and “reasonable” in light of national security concerns. With the advent of this digital age, CBP has now expanded its directive to include searches of electronic devices, which include password-protected laptops, phones, and other handheld devices. Continue reading

Title VII Prohibits Employment Discrimination Based on Sexual Orientation – So Says the 2nd Circuit

On February 26, 2018, the full Second Circuit Court of Appeals held that Title VII of the Civil Rights Act of 1964 prohibits discrimination based on an employee’s “sexual orientation.”  This decision, Zarda v. Altitude Express, Inc., makes the Second Circuit the second federal appellate court to reverse its precedent that Title VII’s prohibition against sex discrimination does not encompass employees’ “sexual orientation.”  The Seventh Circuit was the first to break the mold with its 2017 decision, Hively v. Ivy Technical Community College of Indiana.

 

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Browning-Ferris Valid for Joint Employer Analysis Once Again

Authors: W. Eric BaisdenPeter N. KirsanowSteven M. MossAdam Primm

Just over two months after the National Labor Relations Board (“NLRB”) reversed the Browning-Ferris decision that re-wrote the test the NLRB used for joint employment (see our December 15 alert here), the Board vacated its decision in Hy-Brand Industrial Contractors and reinstated Browning-Ferris. Continue reading

The National Labor Relations Board Caps a Busy Week by Throwing Out Micro-Unit Bargaining Units And Returns To Decades-Old Test for Implementing Changes During an Expired Contract

On the heels of Thursday’s groundbreaking decisions reversing Browning-Ferris and Lutheran Heritage Village-Livonia (see our 12/15 alert here), in another important decision on Friday, the National Labor Relations Board scrapped the Obama-era decision, Specialty Healthcare, 357 NLRB 934 (2011), which made it far easier for unions to organize subsets of a company’s employees – in effect cherry-picking a group favoring organization as a way of getting foot in the door. The smaller units proposed by employees and unions protected by Specialty Healthcare are commonly referred to as “micro-units.”

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Change is Coming: New NLRB General Counsel Issues Memorandum Rescinding Controversial Policies and Signaling Change

The National Labor Relations Board’s new General Counsel, Peter Robb, has made the most of his first month in office.  Robb, who was nominated by President Trump to replace controversial predecessor Richard Griffin, was sworn in on November 17.  Now still in the first month of his four-year term, Robb has issued Memorandum GC 18-02: a directive to the Board’s Regional Directors and other officers that makes several critical and immediate changes to Board policy. Continue reading

House of Representatives Passes Legislation Limiting Joint-Employer Liability and Reversing Browning-Ferris

On November 7, the House of Representatives voted to pass a bill that would reverse the National Labor Relations Board’s (“NLRB”) ruling in Browning-Ferris Industries, 362 NLRB No. 186 (2015), that greatly expanded joint employer liability for business. Under Browning-Ferris, the NLRB held that a company that has “indirect” or “potential” control over the employees of another company may be considered a joint employer of those employees. That decision is currently on appeal before the D.C. Circuit Court of Appeals. Continue reading