1. Employment Law Update Stephanie L. Russ Greg Dimmick

2. EEOC 2014 Activity Charges TotalRaceSexOriginReligionRetaliationAgeDisability 201393,72733,06827,68710,6423,72138,53921,39625,957 201488,77831,07826,0279.5793,54937,95520,58825,369

3. EEOC Guidance – Criminal Background Checks EEOC has issued guidance on use of arrest and conviction records when making hiring decisions Use of such information should be based on business necessity and decisions should make use of the Green factors: 1) nature of the crime; 2) time elapsed; and 3) nature of the job being filled

4. EEOC Guidance – Criminal and/or Credit Background Checks Must provide candidates proper notice that company is obtaining and using background checks and information Notice cannot be part of the employment application The person being checked must give written permission for the company to conduct the background check

5. EEOC Guidance – Criminal and/or Credit Background Checks When relying on third-party background reports to help make adverse employment decisions, Fair Credit Reporting Act requires that prior to taking adverse action, company must: Give employee notice that includes a copy of the consumer report relied on to make decision; and Give employee copy of “A Summary of Your Rights Under the Fair Credit Reporting Act,” company should have received from background check company

6. EEOC Guidance – Criminal and/or Credit Background Checks After company takes adverse action, employee must be told either orally or in writing: Action being taken is because of information in report; Name, address, and phone number of company that provided report; Reporting company did not make employment decision and cannot provide specific reasons for the decision; and Employee has a right to dispute accuracy or completeness of report and to get an additional free report from reporting company with 60 days

7. Continuing EEOC Focus EEOC continues to “combat systemic discrimination” “Pattern or practice, policy, and/or class cases where the alleged discrimination has a broad impact on an industry, profession, company, or geographic location” If issue is not “systemic” – employee will be given right to sue letter even if no investigation has occurred and statutory time period for investigation has passed; mediation backlog

8. Hope for Employers: EEOC v. Sterling Jewelers, Inc. (3 F. Supp. 3d 57, 2014) EEOC alleged that Sterling pays women less than men; brought suit on behalf of 40,000 women Sterling alleged EEOC did not perform nationwide investigation regarding pay practices of 1700 stores at issue Dismissed by the trial court; court found that EEOC produced no evidence that it had conducted investigation; EEOC has burden to prove it has investigated; defending company does not have burden to prove that EEOC failed to investigate On appeal Second Circuit Court of Appeals

9. NLRB Statistics for 2013 Current National Labor Relations Board (“NLRB”) is not your parents’ NLRB. If your company does not have unionized labor, it doesn’t matter: 21,394 charges filed 6,573 settlements 1,272 determinations

10. NLRB Focus – Employee’s Right to Engage in Concerted Activity Section 7 of the National Labor Relations Act (“NLRA”) gives employees right to discuss terms and conditions of employment (engage in “concerted” activity) on their own time whether the discussion is in person or online – pay discussions, complaints about working conditions, etc. remain protected activity; cannot be prohibited in company’s employee handbook or social media policy “Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, …”

11. NLRB Focus – Employee’s Right to Engage in Concerted Activity Section 8(a)(1) states: “It shall be an unfair labor practice for an employer – (1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7...”

12. NLRB Guidance Company Policies (Lutheran-Heritage Test) First NLRB analysis: policy is clearly unlawful if it explicitly restricts Section 7 protected activities Second NLRB analysis: 1) would employees reasonably construe the policy to prohibit Section 7 activity; 2) was the policy instituted in response to union activity; 3) has the policy been applied to restrict Section 7 activities

13. Hills and Dales General Hospital, 360 NLRB No. 70 (April 1, 2014) In 2005, Hospital was struggling with a poor work environment Departments and employee relationships were suffering due to “back-biting and back stabbing” Job satisfaction was low, employees were looking for other jobs, and patients were seeking care elsewhere

14. Hills and Dales General Hospital, 360 NLRB No. 70 (April 1, 2014) Hospital developed employee teams to address culture issues Team developed standards of behavior policy that was included in company’s policy manual and a signed copy was placed in employees’ files

15. Hills and Dales General Hospital, 360 NLRB No. 70 (April 1, 2014) We will not make negative comments about our fellow team members and we will take every opportunity to speak well of each other We will represent Hills & Dales in the community in a positive and professional manner in every opportunity We will not engage in or listen to negativity or gossip; we will recognize that listening without acting to stop it is the same as participating

16. Hills and Dales General Hospital, 360 NLRB No. 70 (April 1, 2014) In response to remarks a former employee had made (the former employee was fired for “playfully throwing a yogurt cup at her boss”), a current employee posted on Facebook: “Holy sh*t rock on [S!]. Way to talk about the douchebags you used to work with. I LOVE IT???” The hospital used the policy to issue a written warning to the employee who made the Facebook post

17. Hills and Dales General Hospital, 360 NLRB No. 70 (April 1, 2014) We will not make negative comments about our fellow team members and we will take every opportunity to speak well of each other We will represent Hills & Dales in the community in a positive and professional manner in every opportunity. We will not engage in or listen to negativity or gossip; we will recognize that listening without acting to stop it is the same as participating. NLRB determined that the policies constituted overbroad restrictions on employee’s Section 7 rights.

18. Hills and Dales General Hospital, 360 NLRB No. 70 (April 1, 2014) Prohibitions against negative comments and negativity are unlawful Employees may endorse an unlawful rule, but their agreement does not validate the rule Rules cannot be overbroad and ambiguous, and requiring “professional manner” and prohibiting “negativity” are overbroad an ambiguous

19. Hills and Dales Take-aways Do not prohibit employees from discussing terms and conditions of employment, such as wages, treatment, and work environment Avoid subjective terms such as “professional,” “offensive,” “rude,” “discourteous” Include a specific disclaimer such as, “Nothing in this policy is meant to keep employees from talking with each other about terms and conditions of employment;” avoid broad language such as, “Nothing herein shall interfere with Section 7 rights”

20. Hills and Dales Take-aways Do not include a general non-disparagement provision Rules prohibiting employees from using “profane or abusive language where the language is uncivil, insulting, contemptuous, vicious, or malicious” are still okay Companies can still prohibit activity from interfering with work; an employer will not be liable for discipline imposed as a result of an overly broad rule if it can be established employee’s conduct actually interfered with work of self or work of others or interfered in operations of employer and interference was reason for discipline

21. Purple Communications Inc., 361 NLRB No. 126 (December 11, 2014) “[W]e decide today that employee use of email for statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to their email systems.” Decision overturned a 2007 ruling which had permitted employers to ban all non-work-related email, even if it concerned NLRA-protected emails, as long as the enforcement was non- discriminatory.

22. Purple Communications Take-aways Can no longer have blanket prohibition of non-work-related emails Can still prevent sending and receiving of emails from those outside the company, unless related to business Can monitor use of email under a valid, legal, email use policy and then act upon violations of that policy Can establish and enforce policies related to email use, such as prohibiting large attachments, or audio/video segments, if employer can show policy is needed for efficient functioning of the email system but must be enforced uniformly and consistently

23. Class Action Waivers in Arbitration Provisions: The Courts v. NLRB Many employers have adopted arbitration agreements that include class action waivers whereby employees agree that any dispute with their employer will be resolved through arbitration, rather than in court, and they also agree that their claims will be heard only on an individual basis and not in a class or collective action; and provisions often include jury or bench trial waivers

24. D.R. Horton, Inc., 357 NLRB No. 184 (2012) Employee sought to initiate arbitration claims asserting that he and a nationwide class had been misclassified as exempt from statutory overtime protections in violation of FLSA and asserted that class-action waiver violated the NLRA NLRB ruled that requiring employees sign arbitration agreement with class-action waiver violates NLRA because it restricts employee’s right to act in concert NLRB stated that its ruling does not conflict with the FAA because such agreements preclude employees from bringing joint claims in any forum

25. D.R. Horton, Inc. v. NLRB 737 F.3d 344 (5th Cir. 2013) D.R. Horton appealed NLRB ruling, Fifth Circuit reversed NLRB ruling in part NLRB decision did not give proper weight to FAA; FAA and NLRA are equally important, and courts do not defer to NLRB decisions that conflict with federal statutes But, the court found that D.R. Horton’s arbitration agreement did not make it sufficiently clear that employees retain a right to file unfair labor practice charges with the NLRB

26. Murphy Oil USA, Inc., 361 NLRB No. 72 (October 28, 2014) Instead of appealing Fifth Circuit ruling to Supreme Court, NLRB doubles down on its D.R. Horton ruling Murphy Oil had arbitration and class-action waiver provision; Murphy amended provision and told employees they do not waive right under NLRA to file class action, but that company could seek dismissal of such claims under the FAA

27. Murphy Oil USA, Inc., 361 NLRB No. 72 (October 28, 2014) Using the same rationale it had used in D.R. Horton, NLRB ruled that Murphy Oil’s policy violates NLRA Murphy Oil has appealed; NLRB brief is due May 1, 2015

28. Arbitration Provision Take-aways Weigh cost of defending class actions versus NLRA violation Draft arbitration policies to clearly state employees are allowed to file unfair labor practice charges with NLRB Include opt-out provision in agreements; some employers offer employees an opportunity to opt out within a specific period of time, such as first 30 days; Ninth Circuit has enforced arbitral class action waiver in that circumstance

29. Thank You Stephanie RussGreg Dimmick 972-852-1710972-852-1708 stephanie.russ@mrkpc.comgreg.dimmick@mrkpc.com