Employment Law - July 2017 #2

by Manatt, Phelps & Phillips, LLP
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Manatt, Phelps & Phillips, LLP

In This Issue:
  • Union Posters Crossed the Line, Eighth Circuit Rules
  • Title VII Doesn’t Cover Request for Religious Accommodation
  • Single Use of Racial Epithet Sufficient to Bring Suit
  • Healthcare Workers’ Meal Breaks Back Before California Supreme Court

Union Posters Crossed the Line, Eighth Circuit Rules

Why it matters

A group of Jimmy John’s workers lost the protection of the National Labor Relations Act (NLRA) with a disloyal poster campaign, the U.S. Court of Appeals for the Eighth Circuit ruled, refusing to enforce the order of the National Labor Relations Board (NLRB) that the employer ran afoul of the statute by disciplining and terminating the employees involved. As part of a campaign protesting the lack of paid sick leave at Jimmy John’s sandwich shops, the union created a poster with two identical sandwiches, one labeled as having been made by a healthy Jimmy John’s employee and the other made by a sick worker. “Can’t tell the difference?” the poster asked, adding, “That’s too bad, because Jimmy John’s workers don’t get paid sick days.” Several employees were disciplined and/or terminated because of their involvement in the campaign. An administrative law judge (ALJ) and the NLRB found the posters were not maliciously untrue and said the employer acted unlawfully by disciplining and terminating the employees involved. A three-judge panel of the Eighth Circuit agreed but the en banc court reversed, finding the poster so disloyal as to exceed the employees’ right to engage in concerted activities protected by the NLRA.

Detailed discussion

A Minnesota family company, MikLin Enterprises owned and operated 10 Jimmy John’s sandwich shop franchises in the Minneapolis-St. Paul area. Workers at the shops began organizing to join the Industrial Workers of the World union, with issues such as holiday pay and paid sick leave on the table.

In early 2011, the union decided it would focus on the demand for paid sick leave given the approach of flu season. As part of the campaign, the union created posters that featured two identical images of a Jimmy John’s sandwich. Above the first were the words, “Your sandwich made by a healthy Jimmy John’s worker,” while the statement above the second read, “Your sandwich made by a sick Jimmy John’s worker.”

Below the pictures, the poster asked: “Can’t tell the difference? That’s too bad because Jimmy John’s workers don’t get paid sick days. Shoot, we can’t even call in sick.” Slightly smaller font below cautioned, “We hope your immune system is ready because you’re about to take the sandwich test.”

Management removed the posters from store bulletin boards, but the union distributed a press release, a letter and the sandwich poster to local and national media outlets. The employer eventually fired six employees who coordinated the efforts and issued written warnings to three who assisted.

An ALJ concluded that MikLin violated Sections 8(a)(1) and (a)(3) of the NLRA for multiple reasons: discharging and disciplining the employees involved with the posters; soliciting employees to aid in removing the posters; encouraging employees to disparage a union supporter; and removing union literature from in-store bulletin boards.

On appeal to NLRB, a majority of the board affirmed the ALJ’s ruling. MikLin sought further appeal before the U.S. Court of Appeals for the Eighth Circuit, which initially affirmed. But after rehearing en banc, the panel issued a ruling both affirming and reversing the NLRB. While the court agreed with the board that the employer violated the statute by removing union literature from in-store bulletin boards and encouraging employees to disparage a union supporter, it found the workers involved with the posters lost the protection of the act.

The court harkened back to a 1951 U.S. Supreme Court decision, NLRB v. Local Union No. 1229, which involved employer Jefferson Standard Broadcasting Co. In that case, the justices established that the NLRA “did not weaken the underlying contractual bonds and loyalties of employer and employee,” noting that “[t]here is no more elemental cause for discharge of an employee than disloyalty to his employer.”

It is important to note this standard applies even where the disparaging employee communications expressly reference ongoing labor disputes, the Eighth Circuit said, as the Court found “[t]he fortuity of the coexistence of a labor dispute affords [the employees] no substantial defense.”

While the law has developed over the decades in its approach to the question of employee disloyalty, the Jefferson Standard disloyalty principle remains in place, a majority of the en banc court said, permitting an employer to fire an employee for “making a sharp, public, disparaging attack upon the quality of the company’s product and its business policies, in a manner reasonably calculated to harm the company’s reputation and reduce its income.”

The board “fundamentally misconstrued” Jefferson Standard in two ways, the panel said.

“First, while an employee’s subjective intent is of course relevant to the disloyalty inquiry—‘sharp, public, disparaging attack’ suggests an intent to harm—the Jefferson Standard principle includes an objective component that focuses, not on the employee’s purpose, but on the means used—whether the disparaging attack was ‘reasonably calculated to harm the company’s reputation and reduce its income,’ to such an extent that it was harmful, indefensible disparagement of the employer or its product,” the court wrote. “By holding that no act of employee disparagement is unprotected disloyalty unless it is ‘maliciously motivated to harm the employer,’ the Board has not interpreted Jefferson Standard—it has overruled it.”

The NLRB also incorrectly excluded all employee disparagement that is part of or directly related to an ongoing labor dispute. “[T]he Board refuses to treat as ‘disloyal’ any public communication intended to advance employees’ aims in a labor dispute, regardless of the manner in which, and the extent to which, it harms the employer,” the Sixth Circuit said. “As the Court held in Jefferson Standard that its disloyalty principle would apply even if the employees had explicitly related their public disparagement to their ongoing labor dispute, once again the Board has not interpreted Jefferson Standard—it has overruled it.”

Prior case law from the federal circuit has also found that an employee’s disloyal statements can lose Section 7 protection without a showing of actual malice, the court added: “Rather than employee motive, the critical question in the Jefferson Standard disloyalty inquiry is whether the employee public communications reasonably targeted the employer’s labor practices, or indefensibly disparaged the quality of the employer’s product or services.”

Applying this standard, the panel found that the poster crossed the line. “The attack was ‘sharp,’ proceeding ‘in a manner reasonably calculated to harm the company’s reputation and reduce its income,’” the court wrote. “The posters, press releases, and letter were an effective campaign to convince customers that eating Jimmy John’s sandwiches might cause them to become sick. The Sick Day poster warned that the reader was ‘about to take the sandwich test.’ Its enduring image was a MikLin-made Jimmy John’s sandwich that, although appearing like any other, was filled with cold and flu germs.”

Allegations that a food industry employer is selling unhealthy food are likely to have a devastating impact on its business, the panel added, and by targeting the food product itself, “employees disparaged MikLin in a manner likely to outlive, and also unnecessary to aid, the labor dispute. Even if MikLin granted paid sick leave, the image of contaminated sandwiches made by employees who chose to work while sick was not one that would easily dissipate.”

The NLRA “does not protect such calculated, devastating attacks upon an employer’s reputation and products,” the panel said, declining to enforce the board’s order that disciplining and terminating the employees involved with the poster violated the statute. Similarly, because the posters were not protected Section 7 activity, a Facebook post by one of MikLin’s owners encouraging people to take down the posters did not violate Section 8.

However, other findings of the board—that management encouraged employees to harass union workers for protected activities and removed in-store union literature—were affirmed by the en banc Eighth Circuit.

A dissenting opinion from two members of the panel argued that the board’s conclusion was “fully permissible” under Jefferson Standard, as motive is a “vitally important” factor in the disloyalty analysis.

To read the decision in MikLin Enterprises, Inc. v. NLRB, click here.

Title VII Doesn’t Cover Request for Religious Accommodation

Why it matters

In a case that was closely watched by employers, the Equal Employment Opportunity Commission (EEOC) has lost an argument that Title VII protected an employee’s request for a religious accommodation. The agency filed suit in Minnesota federal court when Emily Sure-Ondara’s conditional offer of employment was rescinded. After being offered a job as a nurse at North Memorial, she requested to work every other Friday from 11 p.m. to 7 a.m. for reasons related to her religious beliefs as a Seventh Day Adventist. The hospital withdrew its offer, Sure-Ondara filed a charge of discrimination with the EEOC, and the agency sued. But the court granted the hospital’s motion to dismiss, finding the plain language of the statute did not protect a request for accommodation. Instead, the court said that the statute protects only the opposition of an allegedly unlawful denial of a religious accommodation and that Sure-Ondara did not engage in activity falling under the participation clause. “[M]erely requesting a religious accommodation is not the same as opposing the allegedly unlawful denial of a religious accommodation,” the court wrote.

Detailed discussion

In November 2013, nurse Emily Sure-Ondara applied for a position in North Memorial Health Care’s Collaborative Acute Care for the Elderly unit. After multiple interviews, the hospital extended her a conditional offer of employment. Sure-Ondara was scheduled to work the night shift from 11 p.m. to 7 a.m. and, pursuant to a collective bargaining agreement between North Memorial and the Minnesota Nurses Association, was also required to work every other weekend.

After she received the offer, Sure-Ondara reached out to human resources to explain that as a Seventh Day Adventist, she could not work on Friday nights for religious reasons and would need an accommodation. The HR employee explained the terms of the union agreement and said that if Sure-Ondara was unable to work every other weekend, the hospital would need to offer the position to another candidate.

Sure-Ondara responded that she would “make it work,” either by finding a substitute for her Friday-night shift or coming in if she could not find a replacement. Several members of HR later met to discuss the accommodation request and concluded that granting it was not feasible, expressing concern that she would not show up for her Friday-night shift if she couldn’t find a replacement. North Memorial then withdrew its offer of employment.

Asserting a claim that the hospital engaged in religious discrimination by denying her requested accommodation, Sure-Ondara filed a charge with the EEOC, and the agency filed suit on her behalf in Minnesota federal court.

North Memorial responded with a motion to dismiss, arguing that requesting a religious accommodation is not a protected activity. Applying the plain language of Title VII, U.S. District Court Judge David S. Doty agreed.

Under Title VII, an employee engages in protected activity when she either “‘oppose[s] any practice made an unlawful employment practice by [Title VII]’ or ‘ma[kes] a charge, testifie[s], assist[s], or participate[s] in any manner in an investigation, proceeding, or hearing under [Title VII].’” But Sure-Ondara’s claims did not fit into either of the two clauses (commonly known as the opposition clause and the participation clause), the court said.

“Under the opposition clause, a plaintiff must communicate her opposition to a practice that she believes, in good faith, is unlawful,” the court wrote. “There is no evidence that Sure-Ondara believed that North Memorial’s denial of her religious accommodation request was unlawful. And even if she did, she did not communicate that belief to North Memorial. In other words, merely requesting a religious accommodation is not the same as opposing the allegedly unlawful denial of a religious accommodation.”

Judge Doty cited decisions from federal courts in Maryland, New York and Washington, D.C., reaching a similar result.

As for the participation clause, no evidence was presented that Sure-Ondara made a charge, testified, assisted or participated in any manner in an investigation, proceeding or hearing prior to her termination. “The court is unable to fit Sure-Ondara’s accommodation request within the plain language of the statute,” the court said.

The EEOC’s attempts to analogize Title VII to the Americans with Disabilities Act’s (ADA) protection for requesting an accommodation fell short, Judge Doty found, given the differences between the two statutes. Not only does the ADA protect “a broader range of activity than does Title VII,” but Congress clearly knows how to provide protection for requesting an accommodation and has yet to extend it under Title VII.

Although some courts (in Illinois and New York, as well as the U.S. Court of Appeals for the Seventh Circuit) have held that requesting an accommodation is a protected activity under Title VII, “they did so when the issue was not in dispute and without analyzing Title VII’s language,” the court said. The court also refused to rely on the EEOC’s interpretation of Title VII found in agency guidance, which “advise[s] that requesting an accommodation is protected activity under Title VII,” finding it unpersuasive.

“As a result, the court holds that requesting a religious accommodation is not protected activity under Title VII, and summary judgment is therefore warranted,” Judge Doty wrote.

To read the order in EEOC v. North Memorial Health Care, click here.

Single Use of Racial Epithet Sufficient to Bring Suit

Why it matters

The single use of a racial epithet was sufficient to establish a “severe or pervasive” hostile work environment in order to bring suit, the U.S. Court of Appeals for the Third Circuit has ruled. A pair of African-American contract workers for Chesapeake Energy Corp. claimed that despite having more experience than their white coworkers, they were not permitted to work on the pipelines other than to clean them; they also found racial comments written on their sign-in sheets. The final straw was a supervisor’s use of the “n word.” Both men were fired after complaining about the use of the epithet, and they sued under Title VII. A district court granted the employer’s motion to dismiss, holding that the single use of the word was insufficient to support their lawsuit, but the federal appellate panel reversed. Clarifying that the correct standard under the statute was “severe or pervasive,” the court said the plaintiffs had “pled a plausible claim of a hostile work environment under either theory—that the harassment was ‘severe’ or ‘pervasive.’”

Detailed discussion

STI Group, a staffing placement agency, hired Atron Castleberry and John Brown as general laborers. The two African-American males were assigned to a Chesapeake Energy Corp. worksite, where they claimed they were subjected to a racially hostile work environment.

Not long after they began working at the site, they found an anonymous person had written “don’t be black on the right of way” on their sign-in sheets. Both men also alleged that although they had significant experience working on pipelines (and more than their non-African-American coworkers), they were permitted only to clean around the pipelines rather than work on them.

One day, while working on a fence removal project, a supervisor told the crew including Castleberry and Brown that if they “n*****-rigged” the fence, they would be fired. Both plaintiffs reported the offensive language to a superior and were fired two weeks later with no explanation. Although both were rehired, they were terminated again shortly after.

Castleberry and Brown then sued, alleging harassment, discrimination and retaliation in violation of Title VII. A district court judge granted the employer’s motion to dismiss, determining that the plaintiffs failed to state sufficient evidence of a discriminatory work environment.

On appeal to the U.S. Court of Appeals for the Third Circuit, the panel recognized that its precedent on the correct standard to apply to harassment claims was “inconsistent.” In some cases, the court has held that a plaintiff making a harassment claim must establish the discrimination is “pervasive and regular,” while other decisions used a standard of “severe and pervasive,” and some opinions were based on a standard of “severe or pervasive.”

“Thus we clarify,” the court said. “The correct standard is ‘severe or pervasive.’” This standard is based on precedent from the U.S. Supreme Court, the panel said, which has discussed on several occasions that “severity” and “pervasiveness” are alternative possibilities, with some harassment severe enough to contaminate an environment even if not pervasive and other, less objectionable conduct contaminating the workplace only if it is pervasive.

Under this standard, the employer argued that the supervisor’s single use of the “n word” was neither severe nor pervasive.

Citing opinions from the Fourth, Seventh, Eleventh and D.C. Circuits, the panel determined “it is clear that one such instance can suffice to state a claim.”

“Here Plaintiffs alleged that their supervisor used a racially charged slur in front of them and their non-African-American coworkers,” the court wrote. “Within the same breath, the use of this word was accompanied by threats of termination (which ultimately occurred). This constitutes severe conduct that could create a hostile work environment.”

The “pervasive” alternative was also satisfied, the panel found. “Plaintiffs alleged that not only did their supervisor make the derogatory comment, but ‘on several occasions’ their sign-in sheets bore racially discriminatory comments and that they were required to do menial tasks while their white colleagues (who were less experienced) were instructed to perform more complex work,” the court said. “Plaintiffs have pled a plausible claim of a hostile work environment under either theory—that the harassment was ‘severe’ or ‘pervasive.’”

Every case relied on by the employer was resolved at summary judgment, the panel noted, reminding the defendants that claims of employment discrimination necessarily survive a motion to dismiss so long as the prima facie elements have been established.

The court also allowed the plaintiffs’ disparate treatment and retaliation claims to move forward but affirmed dismissal of their disparate impact claim, which is unavailable under Title VII.

To read the opinion in Castleberry v. STI Group, click here.

Healthcare Workers’ Meal Breaks Back Before California Supreme Court

Why it matters

The California Supreme Court has again taken up the issue of meal periods for workers in the healthcare industry, in a battle between the state’s Labor Code and wage orders, now complicated by a new state law. Although Section 512(a) of the California Labor Code establishes the requisite number of meal periods required for workers in the state, Wage Order 5 permits healthcare employees to voluntarily waive their right to one of their meal periods when they work a certain amount of hours. Three former hospital workers filed a putative class action claiming that the two provisions were in conflict and that the Labor Code trumped, mandating pay for their missed meal breaks. A trial court sided with the hospital but an appellate panel reversed, holding that the more permissive wage order was partially invalid and finding that retroactive application on the issue was appropriate. While the dispute was pending before the state’s highest court, the legislature enacted a law affirming the validity of meal period waivers. Now the California Supreme Court has agreed to hear the case again, this time to decide whether the subsequent legislation constituted a change or clarification in the law, whether the wage order is partially invalid, and how the language of the Labor Code affects the analysis.

Detailed discussion

The dispute began when three healthcare employees filed suit against Orange Coast Memorial Medical Center, seeking to represent a class of workers who waived their rights to a second meal period on days they worked shifts of more than 12 hours.

California Labor Code Section 512(a) provides: “An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.”

Section 516 adds: “Except as provided in Section 512, the Industrial Welfare Commission may adopt or amend working condition orders with respect to break periods, meal periods, and days of rest for any workers in California consistent with the health and welfare of those workers.”

The plaintiffs argued that Section 11(D) of the Industrial Welfare Commission’s (IWC) Wage Order 5—which states that “[n]otwithstanding any other provision of this order, employees in the healthcare industry who work shifts in excess of eight (8) total hours in a workday may voluntarily waive their right to one of their two meal periods”—operates in conflict with the Labor Code. The wage order sanctions second-meal-period waivers for healthcare employees who work shifts of more than 12 hours, the workers said, but the Labor Code permits such waivers only if the total hours worked is no more than 12 hours.

Alternatively, the hospital told the court that it used valid meal period waivers in compliance with state law. A trial court agreed with the hospital, but an appellate panel reversed in 2015.

The two provisions were clearly in conflict, the court said, and the IWC lacked the power to create additional exemptions from the meal period requirement beyond those provided by the legislature. Finding that the IWC exceeded its authority, the panel declared Wage Order 5 partially invalid to the extent it authorizes healthcare workers to waive their second meal periods on shifts longer than 12 hours.

Further, the court said its decision should have retroactive effect, allowing the plaintiffs to seek premium pay for any failure by the hospital to provide mandatory second meal periods within the three-year statute of limitations period.

After the employer appealed to the California Supreme Court, the legislature stepped in, enacting Senate Bill 327 to affirm the validity of meal period waivers in the healthcare industry. The new law took immediate effect upon Governor Jerry Brown’s signature on October 6, 2015.

The state’s highest court then directed the appellate court to vacate its decision and reconsider the action in light of SB 327. In March, the appellate panel affirmed summary judgment for the hospital. The court determined that the wage order is in fact valid and that the new law should apply retroactively, meaning second-meal-period waivers signed by the plaintiffs were valid and enforceable.

This time, the plaintiffs appealed to the California Supreme Court, which agreed to answer three questions: “(1) Did Senate Bill 327 constitute a change in the law or a clarification in the law? (2) Is the Industrial Wage Commission Wage Order No. 5, section 11(D) partially invalid to the extent it authorizes health care workers to waive their second meal periods on shifts exceeding 12 hours? (3) To what extent, if any, does the language of Labor Code section 516 regarding the ‘health and welfare of those workers’ affect the analysis?”

To read the California Supreme Court’s docket for Gerard v. Orange Coast Memorial Medical Center, click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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