June 2018 – Vol. 20, No. 6
The Employer E-Letter: Labor and Employment Law News
from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.
Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218-722-4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
This Month’s Topics:
- NLRB GENERAL COUNSEL RELEASE GUIDANCE ON HANDBOOK RULES
- U.S. SUPREME COURT UPHOLDS ARBITRATION AGREEMENTS
- AT-WILL EMPLOYMENT REAFFIRMED
- WRITTEN CONSENT IS SUFFICIENT FOR FLSA PARTY STATUS
- Tip Of The Month
NLRB General Counsel Releases Guidance on Handbook Rules
In December 2017, the National Labor Relations Board rendered a decision that changed its standard for determining whether Employee Handbook Rules violate Section 8(a)(1) of the National Labor Relations Act. Prior to its decision in The Boeing Company, the Board prohibited all Handbook rules that could be interpreted as restricting protected activities. 365 NLRB No. 154 (Dec. 14, 2017). Now, the Board focuses on the balance between the subject rule’s negative impact on employees’ ability to exercise Section 7 rights and the rule’s connection to the employer’s right to maintain discipline and productivity in the workplace. Last week, the NLRB General Counsel issued a Memorandum with guidance to employers on how the Board will enforce Handbook rules in the post-Boeing era. The Memorandum describes categories of rules. Category 1 rules are those that are “generally lawful to maintain” because, when reasonably interpreted, they (a) do not prohibit or interfere with the exercise of employee rights, or (b) any potential adverse impact on employee rights is outweighed by the business justifications for the rule. An example of a Category 1 rule is a prohibition of “boisterous and other disruptive conduct.” Category 2 rules are those “warranting individualized scrutiny.” The legality of these rules, the Memorandum states, will often “depend on context.” An example of a Category 2 rule would be prohibiting false or inaccurate statements.” Finally, Category 3 rules are those that are “unlawful to maintain” because they prohibit NLRA-protected activity. Such rules would include those prohibiting disclosing salaries or information pertaining to the performance of job duties. The Memorandum, which can be found at https://www.nlrb.gov/reports-guidance/general-counsel-memos will serve as a helpful resource when reviewing or considering new workplace rules.
U.S. Supreme Court Upholds Arbitration Agreements
In a 5-4 decision with recently appointed Justice Gorsuch writing for the majority, the U.S. Supreme Court held that employees can waive the right to participate in certain collective action under the Fair Labor Standards Act, specifically class actions, by signing a written waiver that requires the employee to arbitrate employment disputes on an individual basis. The Court made it clear that neither lower courts nor state legislatures may invalidate arbitration agreements just because they involve an agreement to arbitrate collective actions. The Court explained that under the Arbitration Act savings clause only those defenses that apply to all contracts generally permit courts to invalidate arbitration agreements, such as fraud, duress or unconscionability. Moreover, contrary to the view expressed in the dissenting opinion (Justice Ginsburg), the National Labor Relations Act provision authorizing employees to engage in concerted action is not violated by a waiver of right to engage in class and collective action as it generally only applies to organizational and bargaining rights. Epic Systems Corp v. Lewis, Docket No. 16-285 (2018).
AT-WILL EMPLOYMENT REAFFIRMED
In a recent case, the 8th Circuit Court of Appeals interpreted Minnesota law with regard to the concept of “employment at will.” In that case, a manufacturer and seller of power supply products hired an individual and promoted him. With the promotion, the employee signed a document entitled “Compensation Agreement” for his new position as Executive Vice President and General Manager for Latin America. In his new position, he was given a new salary and bonus structure. The Compensation Agreement stated that the “plan will remain in place until sales reach $115 million USD”. He was terminated prior to reaching that sales level and argued that the sales level was a condition of termination of his contract. The court dismissed his claims as not involving “clear” language to modify his status as an at-will employee. The court noted “typically an employee must establish clear and unequivocal language by the employer evidencing an attempt to provide job security”, thus the language of the Agreement does not overcome the “strong presumption of at-will employment under Minnesota law.” The Court also dismissed the idea that an at-will relationship should be indicated specifically in the contract by stating that this would make irrelevant the strong presumption that the contract is one at will. There was a dissent, and it did point to the fact that the contract did not have an at-will provision. Ayala v. CyberPower Systems (USA), Inc., 8th Cir. App. No. 17-1852 (2018).
Note: An at-will provision is recommended, if intended, and arguments often come up when salary is stated for a number of years.
WRITTEN CONSENT IS SUFFICIENT FOR FLSA PARTY STATUS
In a case of first impression the Eleventh Circuit recently ruled that an “opt-in” plaintiff only needs to file a written consent to become a party plaintiff under the FLSA. This matter resulted from a suit claiming that an employee had been misclassified as an independent contractor. After the case was filed, three individuals filed written consents to opt into the litigation. Subsequent to the filing of the consents, the original plaintiff moved to certify the collective action, but the request was denied by the district court stating it was untimely. The original plaintiff and defendant then settled the case without the inclusion of the three additional opt-in plaintiffs. The district court ruled that the three opt-in plaintiffs were never properly added as plaintiffs and thus were not able to further pursue their claims, but this decision was reversed by the Eleventh Circuit. The Eleventh Circuit stated that only the written consent is required in order to opt into the litigation and the court is not required to provide conditional certification. Mickles, et al. v. County Club, Inc. Case No. 16-17484 (11 Cir. April 18, 2018).
TIP OF THE MONTH: Nearly 20% of U.S. workers admit to lying at work at least once a week. By far, the most significant reason is to appease a customer, but second is to cover up a mistake or a failed project. Many employers are adopting a policy that might, in general, state as follows: “Honesty is an important employee attribute. No misrepresentation of facts or falsification of records, including on employment applications, personnel records, medical records, leave of absence documentation, and expense accounts, will be tolerated. The same honesty standard applies to any company investigation. Any violation of this policy will result in discipline, up to and including termination.”
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty. Richard Burns is now of Counsel.
The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.
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Copyright 2018 by Hanft Fride, P.A. All rights reserved. Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802. Phone 218.722.4766; Fax 218.529.2401.