United States: US Employment Litigation Round-Up for June 2015: A Review of Key Cases and New Laws Affecting Employers

Keywords: employer handbook policies, disability, wage and hour dispute, disparate-treatment

A Review of Key Cases and New Laws Affecting Employers

National Labor Relations Board Continues to Scrutinize Employer Handbook Policies

Decisions: In a pair of recent decisions, the National Labor Relations Board (NLRB) provided additional guidance concerning employer handbook policies. In Boch Imports, Inc., a split panel of the NLRB ruled that a car dealer violated the National Labor Relations Act (NLRA) by maintaining overly broad dress code, social media and confidentiality policies. The panel found NLRA violations based on the employer's 2010 policies, even though the employer had replaced all but the dress policy in 2013, with assistance from an NLRB regional office. Relying on NLRB precedent, the panel explained that an effective repudiation must be timely, unambiguous, specific in nature to the coercive conduct, adequately published to the employees involved and provide assurances to employees that in the future the employer will not interfere with the exercise of their rights under the NLRA. Additionally, there must be no proscribed conduct on the employer's part after the repudiation. The panel determined that Boch Imports did not meet these criteria because the offending dress code policy remained in the new handbook and the employer did not make assurances to employees that, in the future, it would not interfere with employees' NLRA rights.

In the second decision, Macy's, Inc., an NLRB Administrative Law Judge (ALJ) found that: (i) Macy's maintained unlawful confidentiality policies because those policies could reasonably be construed as interfering with employees' rights to discuss their terms and conditions of employment with fellow employees, as well as their ability to notify a union of other employees who might be interested in participating in the union movement; (ii) Macy's violated the NLRA by requiring employees to notify company representatives prior to participating in a governmental investigation; and (iii) the savings clause in Macy's employee handbook was insufficient to cure any unlawful polices because it was written in a generic manner, rather than using language that was specific in nature to the coercive conduct and that expressly referenced the unlawful rules.

Impact: These decisions serve as an important reminder to employers to regularly review their employee policies—particularly those related to the use of confidential information and employees' participation in governmental investigations—to ensure that they comply with the most recent pronouncements from the NLRB and other relevant government agencies, including the Equal Employment Opportunity Commission. Further, to the extent employers revise their policies after an unfair labor charge has been initiated with the NLRB, they should work with counsel and the NLRB to ensure that those revisions constitute an effective repudiation that will relieve them of liability.

California Court of Appeal Holds that Boss-Induced Stress Is Not a "Disability"

Decision: In Higgins-Williams v. Sutter Medical Foundation, a California Court of Appeal ruled that the plaintiff's alleged disability—an inability to work under a particular supervisor because of anxiety and stress related to the supervisor's oversight of her job performance—was not a disability recognized under the California Fair Employment and Housing Act (FEHA). The plaintiff was granted a stress-related leave of absence due to alleged stress from dealing with her supervisor and the human resources department. When plaintiff returned to work, she received a negative performance evaluation from her supervisor and had several other altercations with her supervisor. Plaintiff was granted another leave of absence, despite having exhausted her statutory leave rights. After several months, her employer advised plaintiff that it would terminate her employment unless she provided information as to when she could return to work and whether additional leave, as an accommodation, would effectuate her return to work. Plaintiff did not supply the information and the employer terminated her employment. Plaintiff sued, alleging disability discrimination claims. The trial court granted the employer's motion for summary judgment on all claims.

The Court of Appeal affirmed, holding that plaintiff failed to satisfy the first prong of a disability-related claim: that she suffered from a FEHA-recognized mental disability. According to the court, plaintiff's inability to work under a particular supervisor did not constitute a disability under FEHA. The court also held that the employer had a legitimate reason for terminating plaintiff's employment and that the employee could not adequately show that the reason was pretextual.

Impact: This decision rejects employee disability discrimination claims when the sole basis for the discrimination claim is the stress of working for a particular supervisor. However, employers should proceed with extreme caution on any claim for mental disability to ensure that there is a clear record regarding the employee's claimed disability prior to terminating any employee for supervisor-related stress, and should engage in a documented interactive process with the employee.

California Court of Appeal Holds Forum/Choice-of-Law Clause Unenforceable in Wage-and-Hour Dispute

Decision: In Verdugo v. Alliantgroup, L.P., a trial court granted a motion to stay based on a clause in the plaintiff's employment agreement that designated Harris County, Texas, as the forum for disputes arising out of the employment and Texas law as governing all disputes. A California Court of Appeal reversed.

All of the employee's wage-and-hour claims were brought under the California Labor Code. Because the underlying claims were based on statutory rights that cannot be waived, the employer had the burden to show that enforcement of the forum selection clause would not be unreasonable or unfair. The employer did not demonstrate that forcing the employee to litigate her claims in Texas under Texas law would not diminish the employee's California statutory rights. 

Impact: Employers cannot assume that forum/choice-of-law clauses in their agreements with California employees will be enforceable. Because of the variances among the wage-and-hour laws of each state, employers are unlikely to meet the burden of establishing that an employee would not be prejudiced by enforcement of a forum/choice-of-law clause that takes an employee's dispute out of the jurisdiction where he/she works.

US Supreme Court Holds Employer's Actual Knowledge Not Required for Disparate-Treatment Claim Under Title VII

Decision: In Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc., the US Supreme Court held that an applicant raising a disparate-treatment claim under Title VII need not show that the employer had actual knowledge of the applicant's need for accommodation of a religious practice. Rather, the applicant need show only that the need for a religious accommodation was a motivating factor in the employer's decision. Mayer Brown's complete summary of the decision is available online.

Impact: The decision sets forth an unequivocal prohibition against making adverse employment decisions based on even the unconfirmed belief that an applicant's religious practice requires an accommodation.

Originally published on June 30, 2015

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