Category Archive: Case Brief

Nov 16

NLRB Adjusts Reimbursement Calculation for Unlawfully Discharged Employees

By Natalie Russell.

In a recent decision issued by the National Labor Relations Board (the “Board”), King Soopers, Inc. and Wendy Geaslin, persons who were wrongfully terminated may receive full reimbursement of search-for-work and interim employment expenses. Case 27-CA-129598 (2016). For over 80 years, the Board has awarded search-for-work damages. However, the Board’s traditional calculation of these damages failed to make a dischargee whole because the search-for-work damages were considered offsets to a dischargee’s interim earnings. This meant that if a dischargee spent more money searching and relocating for an interim job than they actually earned at that job, they would only be repaid up to the amount of the interim wages they earned. Id. at 5. In King Soopers, Inc., the Board found that the traditional approach, which limited the damages, not only “fail[ed] to make victims of unlawful discrimination whole . . . [but also] discourage[d] discriminatees in their job search efforts.” Id. at 5.

Faced with the challenge of balancing fairness to the wrongfully terminated with the authority granted to the Board through Section 10(c) of the National Labor Relations Act (the “Act”), the Board concluded that it has “ ‘broad discretionary’ authority to order remedies that will ‘effectuate policies’ of the Act.” Id. at 3 (quoting NLRB v. J.H. RutterRex Mfg., 396 U.S. 258, 262–63 (1963)). The Board not only has a duty to the wrongfully terminated, but also must create deterrents so that employers are discouraged from engaging in unlawful and discriminatory conduct. Id. at 3. By granting make-whole relief in the form of full reimbursement of search-for-work and interim-employment damages, the Board has fulfilled its duty.

The story of Juana Perez is a primary example of the positive impact make-whole relief will have on the wrongfully terminated. Ms. Perez worked at a location, earning $1,000 per month prior to her unlawful discharge. In seeking interim employment, Ms. Perez spent $6,000 on relocation costs, training, and job searching. She ultimately found employment, earning $750 per month for two months. Under the Board’s traditional reimbursement approach, Ms. Perez would receive only $1,500 because the search-for-work expenses would only be offset against the interim earnings. Id. at 5. However, under the new make-whole formula, Ms. Perez would be reimbursed for the full $6,000 of search-for-work expenses, regardless of how much she earned from her interim employment.

By providing full reimbursement of search-for-work and interim employment benefits, the Board assures that the wrongfully terminated employees are made whole.

Oct 12

Columbia University: Board Overrules Brown University and Classifies Student Assistants as Employees

By Divya Acharya.

Section 2(3) of the National Labor Relations Act (the “Act”) broadly defines an employee as “any employee,” subject to specified exceptions. Additionally, the Supreme Court has noted that the definition encompasses “any person who works for another in return for financial or other compensation.” Tasked with interpreting the wide-ranging breadth of this definition, the National Labor Relations Board (the “Board”) has rendered pendular decisions in cases such as New York University (2000), Brown University (2004), and, most recently, Columbia University (2016).

The Board issued a 3-1 decision in Columbia University, holding that student assistants working at private and nonprofit universities classify as employees pursuant to § 2(3) of the Act. In Columbia University, the Board revisited its earlier decisions in Brown University and New York University, which led to overturning the former and reinstating the latter.

In Columbia University, the majority reversed Brown University, which held that student assistants were primarily students and, therefore, had an educational, rather than an economic, relationship with the school. The Board found that it “deprived an entire category of workers of the protections of the Act without a convincing justification.” In Columbia University, we observe the Board embracing the rationale it applied in New York University, where it found that graduate assistants were employees pursuant to both § 2(3) of the Act and the common law agency doctrine.

Here, the Board did not find a compelling reason to exclude student assistants from the protections afforded by the Act. It is within the Board’s authority to treat student assistants as statutory employees when they are directed by the university to perform work for which they are compensated. In this case, the common law agency doctrine reflects a master-servant relationship between the student assistants and Columbia University: the university-employer has the right to control the student assistant-employee’s work, and the work is performed in exchange for compensation. Thus, since the standards for an employer-employee relationship are met under the common law test, it is sufficient to establish that the student assistant is a § 2(3) employee for all statutory purposes.

The Board reasoned that extending student assistants the right to engage in collective bargaining would not only preserve, but also advance the policies of the Act: to encourage collective bargaining and to protect a worker’s rights to freedom of association, self-organization, and designation of representatives of their own choosing.

It is important to note that when the New York University and Brown University decisions were rendered, the Board’s composition changed from that of a democratic majority to a republican majority. The Columbia University decision is the product of today’s democratic majority Board. Given that its changing members directly influence the Board’s decisions concerning this issue, it will be interesting to observe whether the looming presidential election will keep the pendulum swinging.

Apr 12

Friedrichs v. California Teachers Association

By Ross Pollack.

On March 29, 2016, the Supreme Court issued a divided 4-4 opinion in Friedrichs v. California Teachers Association, thus upholding the decision of the Ninth Circuit Court of Appeals. The one sentence opinion belies the importance of the case, which only two months earlier appeared as though it would nearly certainly cripple public sector unions’ ability to collect funds. At issue in the case was whether a public sector union could charge agency fees (the equivalent of Union Dues) to employees who elected not to join the Union. The teachers who brought the case argued compulsory agency fees violated their first amendment rights to use money as free speech because the Union might spend the money on political or ideological causes the employees did not support. In its 1977 decision, in Abood v. Detroit Board of Education, the Supreme Court ruled that compulsory agency fees were constitutional. Following this precedent in Friedrichs, the Ninth Circuit found that the Union was allowed to charge compulsory agency fees. Since the Supreme Court did not issue a majority opinion, that ruling and the Abood precedent stand.

However, the outcome in Friedrichs does not mean the debate over the legality of compulsory agency fees has been resolved. The two previous Supreme Court cases illustrated that several Justices would like to change the current precedent. In 2012, writing for the majority opinion in Knox v. Service Employees International Union, Local 1000, Justice Alito suggested that with regard to compulsory agency fees, “our prior decisions approach, if they do not cross, the limit of what the First Amendment can tolerate.” Next, in the 2014 Harris v. Quinn decision, Justice Alito used even stronger language to voice opposition to the precedent on agency fees: “Abood failed to appreciate the difference between the core union speech involuntarily subsidized by dissenting public-sector employees and the core union speech involuntarily funded by their counterparts in the private sector.” Union opposition groups took these decisions as a signal that the time was ripe to find a case that directly challenged the Abood precedent on First Amendment grounds.

Friedrichs became that case. The Supreme Court granted certiorari to hear arguments on whether compulsory agency fees violate the free speech rights of non-member public employees. Justice Scalia was considered to be the swing vote in this case until reports emerged that the questions he asked during oral arguments indicated he did not support the Abood precedent. The New York Times even ran the headline, “Supreme Court Seems Poised to Deal Unions a Major Setback.” However, after Justice Scalia’s sudden passing in February, the remaining justices were left deadlocked on the issue. Rather than let the case sit indefinitely until a new justice was appointed, the Court issued a divided 4-4 opinion, which by default lets the Abood precedent stand.

However, the issues of whether compulsory agency fees are constitutional has not been definitively settled. In confirmation hearings for the new justice, the public should expect to hear Senators asking questions that allude to this first amendment issue. Also, expect a case with similar facts to arrive on the Supreme Court’s docket once a new justice is appointed.

Apr 04

TYSON FOODS, INC. v. BOUAPHAKEO

By Courtney Sokol.

On March 22, in Tyson Foods, Inc. v. Bouaphakeo, the U.S. Supreme Court, in a 6-2 decision, upheld an Eighth Circuit ruling that certified a group of workers at Tyson Foods as a class under both a Rule 23(B)(3) class action and a Fair Labor Standards Act of 1938 (FLSA) collective action. Tyson Foods did not pay its employees for time spent “donning and doffing” necessary protective gear. The employees argued that Tyson Foods violated FLSA and the Iowa Wage Payment Collection Law by not paying appropriate compensation for time spent putting on and taking off the protective clothing at the beginning and end of the day and lunch break. While the central issues addressed by the Court address certification of a class with non-identical members, of which many were uninjured, the decision offers broader implications for the strength of worker protections.

Delivering the opinion of the Court, Justice Kennedy noted the grueling and dangerous conditions that Tyson’s workers experienced along with the necessity of such gear. Until 1998, the workers were paid under a system called “gang-time,” where employees were compensated for time spent only at their workstations. This time did not include when they were required to put on or take off protective gear. In response to a federal-court injunction, Tyson in 1998, began to pay all employees for an additional 4-minute period called “K-code time.” The four-minute period is the time estimated by Tyson for how long employees needed to put on their gear. However, in 2007, Tyson stopped K-code time, and instead only paid some employees beyond their gang-time wages for time spent dressing and undressing.

In response to this change, the employees filed suit in the United States District Court for the Northern District of Iowa, alleging FLSA violations. FLSA requires that a covered employee who works more than 40 hours a week receive excess time worked “at a rate not less than one and one-half times the regular rate at which [the employee] is employed.” 29 U.S.C. §207(a). Additionally, FLSA requires employers to pay employees for activities which are integral and indispensable to their regular work, even if the work does not occur at the work station.

Here, the employees argued that putting on and taking off their protective gear were integral and indispensable to their hazardous work, and therefore, compensation for such is required by FLSA. The employees raised the same claim under the Iowa Wage Payment Collection Law, which includes FLSA mandated overtime.

At trial, the employees had to prove that they worked 40 hours or more per week in order to qualify for FLSA overtime. Respondents proposed to bifurcate proceedings by requesting that the District Court address first, whether the time spent preparing their protective gear was compensable under FLSA and how long the activity took on average; and second, a statistical methodology be used to determine how much each employee would recover.

Tyson Foods did not move for a hearing regarding either of the above issues raised by the employees, but instead challenged the class certification under FRCP Rule 23(B)(3) and FLSA collective action. Tyson Foods argued that the varying amounts of time it took employees to don and doff different protective equipment made the lawsuit too speculative for class-wide recovery.

The Court turned to its decision in Anderson v. Mt. Clemens to explain that when employers violate their statutory duty to keep proper records, which prevents employees from establishing how much time they spent doing uncompensated work, the “remedial nature of [FLSA] and the great public policy which it embodies . . . militate against making” the burden of proving uncompensated work “an impossible hurdle for employee[s].”

The court held that the class members were joined under a common question, which satisfies the requirements for a class-action suit irrespective of differences among the members. Although the case was decided on procedural grounds, Kennedy’s majority opinion put great emphasis on the danger of the Respondent’s profession paired with the necessity of the protective gear. In evoking the remedial nature of FLSA, the Court is seemingly united behind pro-labor sentiment.

Mar 07

Supreme Court Upholds ERISA Preemption of State Recording Laws

By Ross Pollack.

On March 1, in Gobeille v. Liberty Mutual Insurance Co., the U.S. Supreme Court upheld a Second Circuit decision finding that a Vermont law requiring self-covered entities to report healthcare information was preempted by the Employee Retirement Income Security Act of 1974 (“ERISA” or the “Act”). At issue in the case was whether states could require self-funded and self-insured healthcare plans covered by ERISA (“covered entities”) to submit members’ information regarding healthcare claims and services for inclusion in a statewide database. After Vermont demanded this information from a third party insurer, Liberty Mutual, a plan covered by ERISA, asserted that the law should be preempted by ERISA.

Delivering the opinion of the Court, Justice Kennedy first noted the sweeping nature of the statute’s language, which explicitly preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” 29 U. S. C. §1144(a). He then moved to the Court’s recent jurisprudence, which limits the potentially all-encompassing statute to state laws that either (1) directly reference ERISA plans or (2) indirectly interfere with the core functions of ERISA plans. See, e.g., New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 650 (1995) and Egelhoff v. Egelhoff, 532 U.S. 141, 148 (2001).

Next, the Court held that because ERISA requires covered entities to submit similar types of data to the Secretary of Labor, such reporting is “central to, and an essential part of, the uniform system of plan administration contemplated by ERISA.” Thus, the Court ruled that Vermont’s law was preempted because it interfered with a core function governed by ERISA. Justice Ginsburg dissented, arguing that the law was not burdensome enough on covered plans to be preempted by ERISA.

The most intriguing part of the case was the concurrence written by Justice Thomas. He argued that ERISA’s preemption clause may be entirely unconstitutional. He contended that §1144(a) of the Act violated the Constitution’s Supremacy Clause because it regulates matters that are not interstate commerce even though they relate to ERISA. Should the Court adopt this view in future ERISA preemption cases, there could be a dramatic shift in the regulation of covered plans.