Hunton Employment & Labor Perspectives

On September 7, 2012, the National Labor Relations Board invalidated Costco Wholesale Corp.’s policy of prohibiting employee electronic posts in its first decision involving an employer’s social media policy.  In Costco Wholesale Corporation and UFCW Local 371, Case No. 3A-CA-012421, the Board held, among other things, that Costco’s rule prohibiting employees from posting statements electronically that “damage the Company, defame any individual or damage any person’s reputation” was overly broad.  The Board reasoned that the policy language contained no restrictions on its application and, thus, clearly encompassed protected concerted communications, such as speech that is critical of Costco or its agents.  Accordingly, the rule had a tendency to chill employees’ protected activity in violation of Section 8(a)(1) of the National Labor Relations Act, which makes it an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of their rights guaranteed by Section 7.

Employers, payroll vendors and executives should be planning for the additional Medicare tax that will apply to high wage earners beginning in 2013.  The 2010 Health Care Reform Act imposes an additional Medicare tax of 0.9% on employee’s wages in excess of the applicable dollar amount for the employee’s filing status (as shown below):

• Married, filing jointly —  $250,000
• Married, filing separately — $125,000
• Single — $200,000
• Head of household (with qualifying person) — $200,000
• Qualifying widow(er) with dependent child — $200,000

Thus, for employees above the threshold, the Medicare tax rate will increase from 1.45% to 2.35% (on the employee portion) for wages in excess of the threshold.  The employer portion of the tax will remain unchanged at 1.45%.

On August 20, 2012, the Eleventh Circuit Court of Appeals affirmed the ruling of the U.S. District Court for the Southern District of Florida in Seff v. Broward County, finding that premium surcharge imposed under Broward County’s employee wellness program did not violate the American with Disabilities Act (ADA) because it was part of a bona fide benefit plan.

A recent case from Ohio highlights the evolution of both “cat’s paw” liability and “gender stereotyping” claims in employment litigation.  In Koren v. The Ohio Bell Telephone Company, No. 1:11-cv-2674 (N.D.Ohio Aug. 14, 2012), plaintiff Jason Koren, then known as Jason Cabot, first worked for Ohio Bell from 2000 to 2006.  He told his co-workers he was gay and had AIDS.   He left his employment on good terms and subsequently married his partner in Massachusetts, taking his husband’s last name of Koren.  Koren was rehired by Ohio Bell as a sales consultant in 2009.   Koren alleged one of his managers refused to recognize his marriage or name change and persisted in calling him Cabot.  Koren also described a number of allegedly discriminatory job actions.  In 2009, Koren’s father died, and he missed nine days of work.  Ohio Bell terminated Koren for excessive absences.  He sued for gender and disability discrimination under Federal and Ohio law.

The Seventh Circuit gave an unexpected answer when asked:  is the Age Discrimination in Employment Act (ADEA) the exclusive remedy for federal age discrimination?   Deciding an issue of first impression for that court, it said no.  Levin v. Madigan, 7th Circuit, No. 11-2820, August 17, 2012.   The Seventh Circuit is an outlier, as every other circuit to consider the question (the 1st, 4th, 5th, 9th, 10th and D.C. Circuits) has held the ADEA is the sole remedy for federal age discrimination claims.

The Texas Supreme Court just accepted certified questions from the Fifth Circuit on two Texas employment law issues of first impression for the high court.  Sawyer v. E.I. DuPont De Nemours & Co., No. 12-0626.  The Texas Supreme Court will decide:  (1) whether at-will employees may bring fraud claims against their employers relating to the loss of their employment; and (2) if not, whether employees subject to a 60-day cancellation-upon-notice collective bargaining agreement that limits their employer’s ability to discharge its employees only for just cause constitute at-will employees under Texas law.

On July 24, 2012, the Fifth Circuit Court of Appeals issued what may turn out to be one of the more significant Fair Labor Standards Act rulings in recent years.  In Martin v. Spring Break ’83 Productions, LLC, the Fifth Circuit held that, under certain circumstances, a settlement agreement between an employer and its employees involving FLSA claims is enforceable notwithstanding the fact that neither the Department of Labor nor a court approved the agreement.  This ruling is the first appellate-level decision enforcing a private FLSA settlement and potentially opens the door for other circuits and district courts to follow suit.

The U.S. District Court for the Western District of Pennsylvania held recently that the U.S. Equal Employment Opportunity Commission’s “pattern and practice” disability discrimination claims are subject to a 300-day limitations period, furthering a pronounced split among federal district courts on the issue.  In the case, the EEOC took the position that its pattern or practice claims under the Americans with Disabilities Act were not subject to the limitations period, or, in the alternative, that the employer’s violations constituted a “continuous violation” and the EEOC’s claims were, thus, exempt from the 300-day limitations period.  The court, however, agreed with the employer’s position that the EEOC’s claims were subject to the limitations period based upon the plain language of the statute.  The decision holds the EEOC subject to the same limitations period applicable to individual claimants in any Title VII context.

As reported on Hunton and Williams LLP’s Privacy and Information Security Law Blog, on August 8, 2012, the Federal Trade Commission announced a settlement agreement with employment screening company HireRight Solutions, Inc. (“HireRight”). In its first enforcement action against an employment background screening company for Fair Credit Reporting Act (“FCRA”) violations, the FTC alleged that HireRight functioned as a consumer reporting agency, but failed to comply with certain FCRA requirements. The proposed consent order imposes a $2.6 million penalty on ...

The NLRB has again asserted its willingness to encroach upon employers’ long standing legitimate employment policies in a non-unionized workforce.  In Banner Health System, 358 NLRB No. 93 (July 30, 2012), the Board held that a blanket policy prohibiting an employee from discussing an ongoing investigation violates section 8(a)(1) of the National Labor Relations Act.