NLRB Finds Employer’s Workplace Rules Violated Federal Labor Law

Employee HandbookAnother day and another National Labor Relations Board (NLRB) decision about the legality of employer rules. Once again the NLRB issued an opinion about workplace rules that could be (maybe, possibly, sort of, etc.) construed as interfering with workers exercising their federal labor law rights. As explained below, these type of decisions can transform a weak unfair labor practice charge into one that exposes the employer to liability.

Also, this NLRB decision is notable because it highlights the disagreement over the standard for assessing employer rules that do not expressly interfere with labor law rights, but could reasonably be construed as such. It further provides a well-reasoned critical analysis of that standard and for abandoning it.

Beaumont Hospital’s Unlawful Employee Rules.

This particular decision involved Metro-Detroit based William Beaumont Hospital (William Beaumont Hospital 4/13/2016). The NLRB concluded in a 2-1 decision that the hospital violated Section 8(a)(1) of the NLRA by maintaining two rules that:

  • Prohibit conduct that “impedes harmonious interactions and relationships,” and
  • Prohibit “negative or disparaging comments about the . . . professional capabilities of an employee or physician to employees, physicians, patients, or visitors.”

Time to Reconsider the Standard for NLRB Assessment of Workplace Rules?

The dissenting board member, Philip A. Miscimarra, reasoned that it is time to abandon the NLRB’s current legal framework for determining the legality of workplace rules. That framework comes from a case called Lutheran Village-Livonia:

More generally, I believe the time has come for the Board to abandon Lutheran Heritage Village-Livonia (Lutheran Heritage), which renders unlawful all employment policies, work rules and handbook provisions whenever any employee ‘would reasonably construe the language to prohibit Section 7 activity.’ This aspect of the Lutheran Heritage standard applies to policies, rules and handbook provisions that do not expressly restrict Section 7 activity, were not adopted in response to NLRA-protected activity, and have not been applied to restrict such activity.

In contrast, the non-dissenting member majority reasoned that “Lutheran Heritage Village is no obstacle to a hospital employer seeking to promote safe patient care by legitimately regulating employees’ on-the-job interactions.” Further, limiting board review to an employer’s application or enforcement of facially neutral rules “would leave the potential chilling effect of such rules on protected, concerted activity unaddressed.”

Conclusion

There is no meaningful dispute among NLRB members that maintaining specified employment rules may interfere with employee rights. And such interference will violate the National Labor Relations Act (NLRA). But how to determine between lawful and unlawful rules is another story. Whether that story will be re-written as suggest by Mr. Miscimarra remains to be seen.

In the meantime, employers and their management attorneys like us have to worry if the next unfair labor practice (ULP) charge will involve a poorly drafted workplace policy or rule that gives new life to an otherwise factually weak ULP. In fact, much of our defense of ULP charges has arisen in the context of non-union workforces where the investigation invariably expands to assessing the employer’s handbooks and workplace rules. For this reason, it is important to have your company’s HR policies and rules reviewed and revised if necessary to avoid being the next recipient of an unfair labor charge from the NLRB.

For more information about this article or about updating your company’s employee handbooks and contracts, contact employment attorney Jason Shinn. Mr. Shinn routinely represents companies charged with unfair labor practices before the NLRB.

Can an Employer’s Religious Belief Defeat a Discriminatory Firing?

Religious DiscriminationCan an employer’s religious beliefs defeat an otherwise discriminatory termination? Employers in Michigan may soon have much-needed guidance on this issue based on an employment discrimination case filed by the Equal Employment Opportunity Commission (EEOC) in Federal District Court in Michigan.

Specifically, the EEOC filed a lawsuit against RG & GR Harris Funeral Homes, Inc. In 2013 over its decision to fire a transgender funeral director (EEOC v RG & GR Harris Funeral Homes Complaint). Both sides filed motions for summary judgment on April 7, 2016, and awaiting a decision from the District Court Judge.

Religious Beliefs and Transgender Discrimination

As to the underlying discrimination suit, the employee had worked for the funeral home beginning in 2007. In July 2013, the employee informed the funeral home and her coworkers that she was undergoing gender transition from male to female and intended to address in appropriate business attire as a woman going forward. But on August 15, 2013, she was fired by the majority owner, Thomas Rost, because he found it unacceptable based on his religious views. He owns 94.5% of the business and claims he is a devout Christian.

The EEOC claimed that the employee, as a transgender woman, was fired because of sex and, therefore, this termination violated Title VII of the Civil Rights Act of 1964. Rost did not dispute that his religion played some role in firing the funeral director in 2013. According to court filings:

Rost sincerely believes that the Bible teaches that a person’s sex (whether male or female) is an immutable God-given gift and that it is wrong for a person to deny his or her God-given sex.

Rost sincerely believes that he would be violating God’s commands if he were to pay for or otherwise permit one of RG’s funeral directors to wear the uniform for members of the opposite sex while at work.

The EEOC, however (and perhaps citing to Deuteronomy 13:1 “Whatever I am now commanding you, you must keep and observe, adding nothing to it, taking nothing away”) responded that Rost’s religious exercise is very selective and based on convenience or profit. Consider for example:

  • Rost’s business employs people of various faiths;
  • Non-Jewish employees sometimes wore traditional Jewish head coverings as a courtesy when hosting Jewish funeral services;
  • The facilities were not decorated with religious fixtures to avoid offending visitors;
  • The business is not a Christian business enterprise, it is not affiliated with a church, and its articles of incorporation “do not avow any religious purpose; and
  • Rost routinely acted against his religious beliefs to stay in business by performing cremations instead of holding funerals or accommodating the non-Christian beliefs of his customers.

The EEOC stopped short of noting that Mr. Rost also chose to ignore God’s directives set forth in Deuteronomy 13:7-11 with respect to the fired employee, the non-Christian employees, and non-Christian customers.

Closing Thoughts

I’ve always found religious discrimination claims to be incredibly fascinating. In part because of the numerous issues – legal, social, and theological – that are often in play. This case is no different and we’ll be monitoring this case for a decision on the competing motions for summary judgment.

But one point that is especially unique and thought provoking here is how much fidelity must an individual give to his or her religion to warrant protections – either as a basis to justify an otherwise unlawful firing or to claim religious discrimination?

As noted above, the EEOC highlighted numerous inconsistencies between the employer’s claimed beliefs that motivated the termination and how the business was run. And we’ve defended a number of religious accommodation cases where individuals often take a very liberal “buffet” approach as to what “sincerely held religious beliefs” they choose to live by and to ignore.

For more information about religious discrimination or other employment legal issues, contact employment attorney Jason Shinn. Mr. Shinn is a Michigan attorney. Since 2001, he has worked with businesses and individuals to address employment law issues under federal and Michigan law.

NLRB Agenda Continues to Focus on Non-Union Employee Rights

employee rights A recent decision of the National Labor Relations Board provides employers with a reason to carefully evaluate disciplining employees who make negative comments about their company’s products. Specifically, on 3/25/2016, the Eight Circuit Court of Appeals confirmed an NLRB decision that a Jimmy John’s franchisee violated the employee rights of six employees when it fired them. The illegal terminations arose out of the Jimmy John’s employees making public complaints about sick leave and tying those complaints to questions about restaurant food safety.

The franchisee, MikLin Enterprises Inc., fired six employees for participating in the publicity campaign. These employees claimed the company’s policy on medical absences compromised the health of the workers preparing customers’ sandwiches.  At issue in the case was a flier that linked worker leave to public health risks. Specifically, union supporters took the dispute public by posting in and near MikLin restaurants fliers that pictured identical sandwiches side-by-side above a message “Can’t Tell the Difference?” The flier further labeled one sandwich as being made by a healthy worker and one by a sick worker. The union supporters asserted that employees didn’t get paid sick days and couldn’t even call in sick. These policies put the public at risk, or so the argument went.

These terminations resulted in an unfair labor practice charge filing with the NLRB. An administrative law judge found the discharges violated Section 8(a)(3) of the NLRA. That section prohibits discrimination due to union activity, and Section 8(a)(1) prohibits interference with employees’ NLRA-protected activity. The Board affirmed this decision in 2014, which was then appealed to the Eighth Circuit Court proceeding. MikLin Enterprises argued the employees had no legal right to make claims it considered false.

Discharge Violated Employee Rights and Found to be Unlawful by NLRB

On appeal, MikLin argued the sandwich fliers were false because employees were not precluded from calling in sick. But the Court noted:

  • There was a written company rule that provided, “We do not allow people to simply call in sick;”
  • The company required employees to find their replacements if they were ill; and
  • There was also evidence that the employees were told to report to work while sick.

Accordingly, the Court agreed with the NLRB that there was sufficient evidence to conclude the employees’ claims about MikLin’s leave policy weren’t intentionally false or maliciously motivated.

The dissenting judge, however, disagreed. That judge believed that the NLRA did not protect “calculated devastating attacks upon an employer’s reputation and products.” In this regard, he reasoned the “dramatic poster allegations of food contamination were not necessary to aid the employees’ labor dispute.” And, instead, “the employees punished MikLin by urging customers not to buy its sandwiches out of an unwarranted fear of becoming ill.”

Closing Thoughts on Employee Rights

Jimmy John’s as a brand has taken a few unflattering hits in the last year on its employment policies. In one example, we covered it here, Jimmy John’s franchise came under fire for requiring its low-wage sandwich makers and delivery drivers to sign non-compete restrictions. One concern we had about Jimmy John’s use of non-compete restrictions for its sandwich and delivery is that rarely if ever should an employer have a “one-size-fits-all” non-compete policy.

Similarly, companies can’t assume a blanket policy for disciplining employees who are critical of company products or services will be lawful. In fact, this opinion shows how much controversy surrounds whether employee rights should be given legal protections when it comes to disseminating negative publicity about their company’s products. Accordingly, employers need to consider carefully whether such dissemination is protected activity.

For more information about investigating employee misconduct or responding to an unfair labor practice charge, contact employment attorney Jason Shinn.

EEOC Issues Fact Sheet to Help Small Businesses Comply with Federal Employment Laws

employment law tools To help small businesses comply with their employment law obligations, the Small Business Task Force, established by the U.S. Equal Employment Opportunity Commission (EEOC), recently issued a new simplified, one-page fact sheet. The fact sheet is focused on assisting small business owners to understand their responsibilities under federal anti-discrimination employment laws. The EEOC’s fact sheet, “Preventing Discrimination is Good Business,” provides a short overview of small business legal obligations under federal anti-discrimination laws.

According to the EEOC, its Small Business Task Force is also working on producing a series of short YouTube videos (a definite viral hit waiting to happen) designed to provide additional employment compliance resources. Additionally, the Fact Sheet contains information about other EEOC resources available for small business owners.

What Should be in Your Employment Law Toolbox

Of the points outlined in the Fact Sheet, we find that small businesses routinely face challenges presented by adequately responding and investigating discrimination complaints. On this point, Title VII of the Civil Rights Act of 1964 and related federal nondiscrimination laws prohibit employers from discriminating against employees and applicants based on race, color, religion, sex, age, national origin, citizenship status, disability, genetic information and veterans status. Additionally, employers must also comply with state anti-discrimination laws that may include a more expansive list of protections than federal law.

But what should be covered when it comes to developing an EEOC policy? This question should be addressed to an experienced employment attorney, but here are a few points that need to be part of that discussion:

  • Nondiscrimination clause – First and foremost, every business should have a nondiscrimination clause. This clause will outline your business’ commitment against unlawful discrimination. This is analogous to a “mission statement” for companies that ideally guides the business in all its employment related decisions.
  • Procedures for Reporting Harassment – Your company’s employment policies should explain and provide employees with a confidential means to report discriminatory conduct or harassment. The goal of this provision is to allow employers to discover, investigate, and resolve discrimination or harassment complaints before such matters get turned over to the EEOC or similar state agency. Additionally, the policy should expressly assure employees that their complaints will be handled objectively, promptly, and without reprisals. Further, the policy should provide that an employee’s participation in internal investigations regarding such complaints will not be subject to retaliation or other reprisals.
  • Anti-retaliation Statement – Employers also need to ensure that their EEOC related policies emphasize that employees and applicants are not retaliated against: (i) because discrimination complaints are filed; (ii) for opposing discriminatory practices; or (iii) participating in investigations of such complaints.

Again, these are just a few of the “big-ticket” items that businesses need to address in their employee personnel policies and documents. Also, these provisions will ideally be incorporated into a comprehensive employee personnel strategy for eliminating or reducing employment law risks, in addition to making the company an attractive workplace environment.

For more information about federal or Michigan employment law compliance, as well as drafting employee policies and procedures, contact employment attorney Jason Shinn. He routinely works with businesses of all sizes, including start-ups, to provide cost-effective employment law counseling and solutions for complying with federal and Michigan anti-discrimination and employment related laws.

Did Meeting the FLSA Administrative Exemption Get Easier?

Reviewing FLSA Exemptions Michigan employers recently received a favorable Fair Labor Standards Act (“FLSA”) ruling. This decision also provides guidance when it comes to evaluating whether particular categories of employees may be administratively exempt from the FLSA’s overtime requirements.

Procedural Background Leading up to the FLSA Ruling

The decision arose out of the case Lutz v. Huntington Bancshares, Inc., (3/2/16). This started in an Ohio federal district as a class action. The class was made up of underwriters who worked with residential loan products. The district court eventually granted summary judgment to the bank concluding the underwriters were overtime-exempt employees under the FLSA.

On appeal, the employees did not fare any better. Specifically, a divided U.S. Court of Appeals for the Sixth concluded that the residential loan underwriters employed by Huntington Bancshares were administrative employees who were not eligible for overtime compensation under the FLSA.

The FLSA’s Administrative Exemption

Under Section 207(a)(1) of the FLSA, employers are required to pay overtime to employees who work more than 40 hours in a week. However, overtime protection does not extend to an “administrative” employee who is:

  1. Compensated on a salary or fee basis at a rate of not less than $455 per week;
  2. Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
    Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
  3. An employee who satisfies all three elements falls within this “administrative exemption.” The parties did not dispute that the underwriters met the first element of the exemption. But the plaintiff employees contend that they do not satisfy the second and third elements.

The first element was not disputed. The majority opinion of the Court found the plaintiffs met both the second element (the “duties” requirement) and the third element (“exercised sufficient discretion and independent judgment) to fall within the FLSA’s administrative exemption.

Interestingly, in addressing the “discretion and independent judgment” element, the majority opinion acknowledged that Huntington’s underwriters in performing their jobs reviewing the loan files of residential applicants must follow written materials that “span thousands of pages” and include manuals, policies, and procedures. Even so, the Court said underwriters have the discretion to rely on their personal experience or judgment in making risk assessments about loan applications. Further, they have the authority to recommend that customers consider alternative loan products when they don’t qualify for the loans they originally sought.

The dissenting judge, Hon. Helene N. White, however, highlighted what she believed to be a flaw in this conclusion:

[Plaintiffs] make no such independent discretionary decisions. Rather, [Plaintiffs] must follow Defendants’ very explicit and detailed manuals and guidelines … Because [Plaintiffs] are evaluated based on the number of files reviewed, and the default rates of loans they approve are not even tracked, much less used as a basis of performance evaluations, a reasonable fact finder would likely infer that [Plaintiffs] do not exercise discretion and independent judgment concerning ‘matters of significance.’

Take Away for Employers

To be sure, the decision discussed above is very fact specific, as are most FLSA cases. Even so, a finding that employees who are subject to very detailed (thousands of pages in this case) of written guidelines may still exercise “independent judgment” required for the FLSA administrative exemption to apply is a significant development.

For this reason, employers should carefully audit their exempt and non-exempt overtime classifications. This audit should focus on employee job descriptions and corresponding internal policies, procedures, and guidelines for those positions to consider if they accurately reflect the exercise of judgment and discretion in that position such that the FLSA’s administrative exemption may be appropriately applied.

For more information about the Fair Labor Standards Act, including auditing exempt and non-exempt positions, contact employment attorney Jason Shinn.

Michigan Supreme Court Rejects Expansion of Whistleblower Protection of Employees

ThinkingRemember the movie Minority Report starring Tom Cruise? The premise of that movie was that in the future a special police task force (the “pre-crime division”) could identify wrongdoers who would go on to commit crimes and charge them before those unlawful acts actually occurred. A similar science fiction plot recently made its way to the Michigan Supreme Court except it involved Michigan’s Whistleblowers’ Protection Act (WPA) and whether employees are protected if the employee reports future unlawful activity by an employer.

The Michigan Supreme Court was not interesting in expanding the WPA to cover future conduct. In other words, the Court concluded that an employee cannot bring a claim under Michigan’s WPA if the employee is only reporting or going to report future, planned or anticipated unlawful conduct by the employer.

In the case, Pace v. Edel-Harrelson (2-1-2016), the plaintiff worked for a nonprofit entity that provided services to survivors of domestic violence and the homeless. The plaintiff claimed that she was wrongfully terminated in violation of the WPA. Plaintiff alleged that her manager represented that she intended to use grant money to purchase a stove for the manager’s daughter. Plaintiff further alleged that the manager suggested that Plaintiff should cover up the unauthorized purchase by documenting it in the name of a client. After Plaintiff had reported her manager’s plan to the executive director, Plaintiff was terminated and she filed a whistleblower lawsuit.

Michigan’s Whistleblowers’ Protection Act

Michigan’s WPA restricts employers from discharging, threatening or otherwise discriminating against an employee who “reports or is about to report” to a public body, “verbally or in writing, a violation or a suspected violation of a law or regulation or rule.”

But the Michigan Supreme Court concluded what the WPA does not cover is reporting future misconduct. In other words, an employee must, at least, have a belief that the violation of law has occurred or is ongoing Having a good faith and reasonable belief that a violation of the law will take place in the future or is being actively planned is not enough.

Because plaintiff reported [her manager’s] announced intention to buy a stove with unauthorized grant funds, which constituted an expression of an intent to act in the future, not an accomplished or ongoing act, plaintiff has not established conduct that qualifies as ‘a violation or a suspected violation of a law’ under [Michigan’s WPA]. Consequently, plaintiff did not engage in ‘protected activity’ under the WPA as a matter of law.

Accordingly, the Michigan Supreme Court reversed the decision of the Court of Appeals, which had found in favor of the plaintiff.

Take Away for Employers

This is a decision where I think the right result was reached by the Court, but it is a result that you do not necessarily have to like. Take for instance the disastrous decisions leading up the deplorable situation involving Flint and its water. Under the reasoning of the Court, an employee who may have believed that environmental laws or regulations

Under the reasoning of the Court, an employee who may have believed that environmental laws or regulations would be violated by improperly using the Flint River for the city’s water supply would not have been protected under the WPA until the violation actually occurred. Such a result is despicable public policy, but it is consistent with the Court’s reading of the plain language of the Michigan’s WPA. And to change that language is a meaningful job for the Michigan legislature, which means it is a likely a job that is not going to get done.

Michigan’s Whistleblower Protection Act remains one of the more complicated and nuanced statutes that employers and employees face. And while the case discussed above is obviously a favorable decision for employers, it is not a silver bullet against whistleblower lawsuits. Instead, it is important for companies to respond carefully to employee complaints before taking an adverse employment action. This is because it may not be entirely clear if an initial report concerns a suspected future violation or a suspected existing violation. This fine line may be the difference between having a subsequent lawsuit dismissed or spending money and resources in on-going litigation.

For more information about complying with Michigan’s Whistleblowers’ Protection Act, contact employment attorney Jason Shinn. He routinely works with employers to lead workplace investigations and in offering pre-termination assessments focused on avoiding later claims that a termination was discriminatory or unlawful. These assessments have proven an invaluable tool for avoiding costly employment discrimination litigation and liability.

Would Yelp Get a Favorable Review from the NLRB for Blog Post Termination?

YelpLast week a former employee working for Yelp’s food delivery unit, Eat 24, was fired for violating the company’s internal “terms of conduct.” The termination came after the customer-service rep, Talia Janes, wrote a critical blog post about her low pay and working conditions in an open letter to Yelp’s CEO. The interesting issue for legal geeks like me is whether this termination or the company’s terms of conduct violate federal labor law.

The National Labor Relations Act and Social Media

The National Labor Relations Act (NLRA) protects concerted employee activity. This includes speech related to an employee’s job, compensation, and terms. An employer violates the NLRA by restricting such speech, including statements made outside the workplace.

For the past couple of years, the agency that enforces the NLRA, the National Labor Relations Board (NLRB), has focused on protecting the right of employees to discuss the terms and conditions of the workplace online. This has resulted in the NLRB finding many companies in violation the Section 7 rights of workers under overly broad or ambiguous social media policies. The theory is that these policies “could” potentially restrict the employees’ ability to act regarding the terms and conditions of their employment.

The Blog Post that Violated Yelp’s Terms of Conduct

Turning to the Yelp termination, here are excerpts of what Ms. Janes wrote:

  • Every single one of my coworkers is struggling. They’re taking side jobs, they’re living at home. One of them started a GoFundMe because she couldn’t pay her rent. She ended up leaving the company and moving east, somewhere the minimum wage could double as a living wage. Another wrote on those neat whiteboards we’ve got on every floor begging for help because he was bound to be homeless in two weeks. Fortunately, someone helped him out.
  • They get holidays and weekends off! Can you imagine?
  • Speaking of that whole training thing, do you know what the average retention rate of your lowest employees (like myself) are? Because I haven’t been here very long, but it seems like every week the faces change. Do you think it’s because the pay your company offers is designed to attract young people with no responsibilities …
  • Yelp could save about $24,000 in two months if the company stopped restocking flavored coconut waters since no one drinks them … I wonder what it would be like if I made $24,000 more annually.

Ms. Janes’ examples certainly relate to terms of employment, benefits, and compensation. So the question becomes whether Yelp’s terms of conduct violate the NLRB’s current social media enforcement regime.

Social Media, the NLRB, and Overly Broad Policies

I have not reviewed Yelps’ terms of conduct, but as noted above, the NLRB has been very aggressive when it comes to rules that can reasonably be read to prohibit protected concerted criticism of an employer, or its terms of employment will often be found unlawfully overbroad. And this is true even when the rule prohibits employees from engaging in disrespectful, negative, or rude language towards an employer or management.

So with this in mind, Yelp may find that the NLRB is not going to favorably review its terms of conduct or firing the employee after she blogged about the terms of her employment and benefits – no matter how unfavorable the employer may view the offending blog post.

For more information about drafting social media policies that comply with applicable federal and state laws, contact employment attorney Jason Shinn.

Improperly Investigating Employee Misconduct Could Land You in Court

Shooting-Self-in-Foot.jpgInvestigating employee misconduct is, unfortunately, a common occurrence companies and their HR professionals experience. But if the investigation is not properly handled, it could expose the employer to liability, including being sued for defamation.

Consider for example a recent lawsuit in which an employee sued her employer and its supervisors because of the manner in which an investigation and subsequent termination were handled (Duma v Carson City Hospital 1/21/2016). Specifically, Carson City Hospital terminated the employment of Plaintiff based on allegations that she violated various hospital procedures to misappropriate prescription painkillers. Further, Defendants claimed Plaintiff was altering patient files to redirect prescription drugs for her personal use.

However, Plaintiff denied these allegations and later sued her employer and three supervisory employees for defamation. She further claimed that one supervisor, Diaz, notified every employee in the emergency room and even a former ER supervisor as to why plaintiff was terminated. These reasons included she (i) had wrongfully diverted medications; (ii) had wrongfully diverted medications; (iii) had stolen narcotics; and (iv) was fired for altering charts and stealing narcotics. These statements are considered defamatory per se, meaning that she committed a theft crime.

Defendants argued that the Complaint should be dismissed for various procedural reasons, including because the statements were made in the course of investigating employee misconduct and, therefore, privileged. Plaintiff countered that Defendants shared the account with too many individuals and only to stop rumors.

The trial court agreed with the Defendants’ argument and dismissed the case. However, the Court of Appeals disagreed and reversed the decision. In doing so, the Court cited numerous Michigan Court decisions contrary to Defendants’ position:

… caselaw is contrary to the circuit court’s conclusion that defendants had a qualified privilege to defame [Plaintiff] to the entire ER staff, other hospital employees, and a former CCH employee. These employees were not supervisors and had no role in hiring or firing. Defendants could have reinforced its policies by providing a more general communication about procedures and grounds for termination.

Take Aways

Michigan recognizes that an employer has a qualified privilege when it comes to making statements that may otherwise be defamatory towards an employee. But an employer cannot make such defamatory statements to employees who have no supervisory role and no duty that should interest them in the subject matter of the misconduct. Simply put, an employer’s privilege does not extend to stopping “the rumor mill,” restoring morale, or satisfying the curious, whether they be employees or customers.

Accordingly, employers conducting any investigation into employee misconduct need to plan carefully. This includes deciding what should be communicated and to whom. And if the investigation for the next piece of the puzzle, Dan Schwartz of the Connecticut Employment Law Blog has an insightful article for terminating an employee. See How to Fire Your Employee Without Getting Sued.

For more information about this article or conducting workplace investigations, contact employment attorney Jason Shinn. Jason has worked with employers since 2001 to investigate a range of workplace issues, including discrimination, harassment, computer/Internet misconduct, and misappropriation of company assets.

Job Applicant’s Lawsuit under Fair Credit Reporting Act Barred by Statute of Limitations

Employee HandbookEmployers in Michigan and surrounding states conducting background reports on job applicants received a favorable decision from the Sixth Circuit Court of Appeals when it comes to limiting liability for claims under the Fair Credit Reporting Act (FCRA). The decision was issued on February 18, 2016, in the case Rocheleau v. Elder Living Constr., LLC (2/18/16). In that case, an applicant asserted a prospective employer improperly obtained a background report, and a third-party screening provider wrongfully disseminated it. As explained below, the statute of limitations ultimately barred the claim.

The Fair Credit Reporting Act

One of the purposes of the FCRA is to promote “the accuracy, fairness, and privacy of information in the files of consumer reporting agencies.” It also provides consumers with rights related to the way their information can be obtained and used. Concerning job applicants, before a report may be shared with an employer or potential employer the FCRA requires written consent from the applicant.

Also, employers must provide certain notices to job applicants before making adverse employment decisions based to any degree on information obtained from a consumer reporting agency. The FCRA’s “statute of limitations requires claims to be commenced no later than two years after the date of discovery of the violation that is the basis of liability, or five years after the date on which the violation occurs—whichever date falls earlier.”

Plaintiff Waits to Long to File his Fair Credit Reporting Lawsuit

On Sept. 15, 2011, Elder Living ordered a background report of the plaintiff in conjunction with his employment application. A search revealed four criminal convictions associated with his name and date of birth. In September 2011, the plaintiff received three notices from the screening provider. These notices included a copy of the report and explained that information obtained in the report may adversely affect his employment status and informing him that he was not selected for employment based at least in part on the information collected in the report.

Importantly, the notices also included a mandatory three-step dispute resolution process for challenging the accuracy of the information contained in the report. But Plaintiff did not contest the accuracy of the report. Instead, he called the screening provider several times in September 2011 and complained that he had not authorized the release of his information.

In November 2013, Plaintiff filed his complaint asserting that his background report was obtained and distributed in September 2011 violated the FCRA. But the U.S. District Court for the Eastern District of Michigan granted summary judgment to the companies, finding that plaintiff’s claims were time-barred.  The Court of Appeals agreed with the trial court.

In reaching this decision, the Court rejected the plaintiff’s argument that the companies’ alleged failure to follow a mandatory three-step resolution process tolled the limitations period because it applied only to disputes about the accuracy and completeness of the information contained in the report. Specifically,

At no point has [plaintiff] disputed the ‘completeness or accuracy’ of his background report, either on appeal, in his district court filings, or in his many communications with LexisNexis. Because [plaintiff] has not contested the accuracy of his credit report, the district court properly concluded that [the] dispute process ‘has no relevance to this action and does not affect the applicable statute of limitations in any way.’ Accordingly, his claims were time- barred.

In other words, the conflict resolution process exclusively applied to disputes about the completeness or accuracy of information provided to a consumer reporting agency and plaintiff didn’t contest the accuracy of his credit report.

Take-Aways

First, employers routinely conduct background checks on job applicants. But compliance or understanding with statutes applicable to conducting background checks is not regularly followed or understood — by either employers or job applicants. The above case perfectly illustrates this point. In fact, in working with companies to implement HR best practices for complying with employment laws and regulations, we almost always need to address the employment application process to some degree.

Second, we wrote earlier this week about the importance of understanding the applicable statute of limitations when it comes to employment discrimination and related lawsuits. See Whistleblower Protection – Not So Much if You Ignore the Time for Filing the Claim. The bottom line, procrastination can be fatal for employees or a gift wrapped in a pretty bow for employers.

For more information about conducting employment background checks and best practices for conducting employee job screenings, contact employment attorney Jason Shinn.

Whistleblower Protection – Not So Much if You Ignore the Time for Filing the Claim

Saving-Time.jpgProcrastination can be an employer’s best friend when it comes to employment discrimination lawsuits. This is especially true for claims under Michigan’s Whistleblower Protection Act (WPA). This is because Michigan’s WPA has one of the shortest statutes of limitations (i.e., the time in which a lawsuit must be filed) under any employment-related law. That limitation period is 90 days. But figuring out when that 90 day limitation period begins to run is not always straightforward. Nonetheless, Courts are not going to be sympathetic if that limitation period is not followed. This issue recently played out in a Michigan lawsuit asserting a claim under Michigan’s WPA.

Overview of Michigan’s Whistleblower Protection Act

Michigan’s WPA provides a remedy for an employee who suffers retaliation for reporting or planning to report a suspected violation of law, regulation, or rule to a public body. An action for relief under the WPA must be promptly filed “within 90 days after the occurrence of the alleged violation of this act.” MCL 15.363. Courts applying this limitation construe it to mean that an action under for violation of the WPA accrues when the retaliatory or discriminatory acts occur. In other words, the actual “occurrence” of the discrimination or retaliation is the trigger for when the clock begins to run on a WPA claim.  And this can create harsh results for employees who wait too long to pursue a WPA claim.

Whistleblower Protection Claim Must be Timely Filed

For example, in Bradford v. MGH Family Health Ctr. (1/12/2016), a panel of the Michigan Court of Appeals recently held that an individual waited too long to file her action under Michigan’s Whistleblower Protection Act (WPA) because she failed to file within 90 days of the alleged violation. Accordingly, the Court granted the defendant employer’s motion to dismiss.

As to the case, the plaintiff filed her complaint on 2/19/2014. But she claimed that she engaged in protected activity and was suspended from employment on 10/1/13. She further alleged that she was notified on 10/14/13 that her contract which was to expire on 12/1/13, would not be renewed. Plaintiff unsuccessfully argued that she was discharged on December 1, 2013, because that was the date her salary and benefits ended. She further argued that this December 1 date was when her economic damages began.

However, the court rejected her argument that not renewing her contract was a “discharge” prohibited by the WPA. It also rejected the argument that her cause of action should be considered to have accrued when her damages accrued. In the words of the Court:

In this case, plaintiff was suspended on October 10, 2013, and defendants decided and notified plaintiff her contract would not be renewed on October 14, 2013. These acts occurred more than 90 days before plaintiff filed her complaint.

Accordingly, the Court affirmed the trial court’s dismissal of the WPA claim because it was not timely filed within the 90 days provided for under the statute.

Take Aways

Winning an employment discrimination lawsuit can be hard. But it is impossible to win if you are barred from even filing the lawsuit because it is untimely. For this reason, it is important for both employers and employees to understand what event or events trigger a lawsuit and when that lawsuit must be filed.

For more information about Michigan Whistleblower Protection claims, as well what steps employers need to take to avoid violating the statute, contact employment attorney Jason Shinn.

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