The political shift in the U.S. Congress last November forced labor-union supporters to focus their efforts on federal regulatory agencies. Their efforts paid off this quarter. The National Labor Relations Board (NLRB) and the Department of Labor (DOL) proposed regulations that, if adopted, will substantially diminish employer's free speech rights and limit communications with employees regarding union representation issues.

Also in this quarter, the U.S. Supreme Court's 2011 term wrapped up with several decisions that have the potential to significantly impact employers. In two significant decisions, the Court raised the bar for class-action certifications and made it easier for companies to limit class actions through arbitration agreements. And in Chamber of Commerce v. Whiting, the Court upheld the controversial Legal Arizona Workers Act, which requires all employers in that state to use the E-Verify system and sanctions employers, by suspending or revoking their business license, if they knowingly hire "unauthorized aliens."

We kick off this quarter's update with reminders about H-1B sponsorship caps and deadlines, and a discussion of energy infrastructure giant Kinder Morgan's agreement with the Department of Labor to pay more than $830,000 in overtime back wages.

Kinder Morgan Settles with the DOL for Alleged FLSA Violations

Kinder Morgan and Kinder Morgan Energy Partners have agreed to pay over $830,000 in back wages to 4,659 current and former employees after federal regulators said the workers were shorted on overtime wages. The back wages will resolve a Department of Labor lawsuit that alleged the pipeline and energy storage giant violated provisions of the Fair Labor Standards Act requiring non-discretionary bonuses, such as performance bonuses and safety incentives, to be included as part of the employee's regular rate of pay for purposes of computing overtime. Many employers are unaware that they have to include non-discretionary bonuses, which include bonuses related to meeting or exceeding production, efficiency or attendance goals, and this large settlement should highlight the importance of reviewing current payroll practices and accurately calculating overtime pay.

H-1B Deadline and Caps Reminder

Employers desiring to sponsor employees for H-1B for the upcoming year (beginning on October 1, 2011), should not delay. As of July 22, 2011, the U.S. Citizenship and Immigration Services had received 21,600 petitions for 65,000 available positions, and 13,300 out of 20,000 for available positions for Masters degrees.

DOL Proposes Expansive New Definition of Reportable "Persuader" Activity

Under the Labor-Management Reporting and Disclosure Act, employers and their advisors are required to file publicly available reports with the DOL anytime they engage in activities undertaken for the purpose of "persuading" employees regarding union organizing, collective bargaining, or any protected concerted activity, such as a strike, in the workplace.

Currently, employers who receive assistance from lawyers and consultants regarding legal-compliance advice, review or drafting of speeches and written materials, and training of managers and supervisors are generally not required to report these activities due to a provision in the law commonly known as the "advice" exception. Under the proposed regulations, reportable "persuader" activity would be expanded to include not only direct contact with employees, but even indirect attempts to persuade employees. Because this would limit the ability of law firms to advise employers faced with union organizational efforts, we anticipate that there will be legal challenges to these new regulations. In the meantime, V&E has filed comments with the DOL opposing the rule.

NLRB Proposes Significant Changes to "Speed Up" the Union Election Process

The NLRB has proposed sweeping changes to the rules and regulations that govern the pre- and post-election procedures in union representation cases. In a statement released by the NLRB, "[t]he proposed amendments are designed to fix flaws in the Board's current procedures that build in unnecessary delays [and] allow wasteful litigation . . . ." In reality, the new regulation would drastically reduce the time between filing an election petition and holding elections, and in the words of dissenting Board Member Brian Hayes, "effectively eviscerate[s] an employer's legitimate opportunity to express its views about collective bargaining."

The proposed changes would, among other things, set pre-election hearings for seven days after a hearing notice is served. At the time of this hearing, employers would be required to state their positions on such issues as the appropriateness of the bargaining unit, in a detailed "statement of position." Issues not raised in this position statement would potentially be forfeited. The rules would also defer consideration of voter eligibility issues involving less that 20 percent of the bargaining unit until after the election and eliminate pre-election review of rulings by the Regional Director. Furthermore, the time to furnish a voter eligibility or "Excelsior" list, containing employee names and addresses (and phone numbers and email addresses, if available) would be reduced from seven days to two days.

U.S. Supreme Court Rejects Class-Action Suit Against Wal-Mart

In Dukes v. Wal-Mart, the Supreme Court held in a 5-4 decision that the certification of the nationwide class of 1.5 million current and former female employees was not consistent with Federal Rule of Civil Procedure 23(a), which requires the party seeking class certification to prove that the class has common "questions of law or fact." Going forward, the Court majority made it clear that only workers who have a truly common legal claim may sue as a group, and even that claim will require rigorous proof that each worker suffered from the same kind of bias. Anecdotal evidence and statistics will not suffice.

All justices unanimously agreed that the plaintiff's claims for back pay were improperly certified under the more specific provisions of Federal Rule of Civil Procedure 23(b)(2) because claims for monetary relief cannot be certified under that provision when the monetary relief is not incidental to the requested injunctive or declaratory relief.

U.S. Supreme Court Decision on Class-Action Waivers in Arbitration Agreements

In AT&T Mobility LLC v. Concepcion, the Supreme Court held that a consumer contract containing an arbitration clause prohibiting class-wide arbitration was enforceable. The case involved an arbitration clause in a contract for cell phone services between AT&T and two customers, which provided for arbitration of all disputes between the parties, and required claims to be brought in the parties' "individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding."

The 5-4 ruling held that the Federal Arbitration Act (FAA) preempts states from stipulating that arbitration agreements are only valid if they permit class-wide arbitration. Such a stipulation "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." The Court stressed that the FAA reflects a "liberal federal policy favoring arbitration," and under the FAA, arbitration agreements are to be "enforced according to their terms." The Court's reasoning suggests that an arbitration agreement that contains a class-action waiver would also be valid in agreements to arbitrate employment-related disputes. Employers may want to consider such waivers as a means to limit the expense and exposure of wage and hour and employment discrimination class actions. V&E has experience developing arbitration agreements for employment-related disputes.

U.S. Supreme Court Decision on Unauthorized Workers

In Chamber of Commerce v. Whiting, the Supreme Court issued a 5-3 decision (Justice Kagan recused herself) upholding the Legal Arizona Workers Act, which provides that the licenses necessary to do business in Arizona may be, and in certain circumstances must be, suspended or revoked if the employer knowingly or intentionally employs an unauthorized alien. The law also requires that all Arizona employers use E-Verify — an Internet-based system administered by U.S. Citizenship and Immigration Services, which allows businesses to determine the eligibility of their employees to work in the United States. The Arizona law is one of many state laws that have been enacted in the last couple of years. The Supreme Court's approval of the Arizona law suggests that similar laws that have been enacted in various states over the last several years will also survive federal challenges. Therefore, employers not only need to make sure that they conform to federal requirements, but that they also conform to the laws of the states in which they do business.

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