On Wednesday, May 23, from 3 – 4 pm ET, Troutman Sanders attorneys, Alan Wingfield, Wendy Sugg, and Meagan Mihalko will present a webinar discussing employment-purpose background screening laws. The federal Fair Credit Reporting Act imposes technical paperwork requirements on employers desiring to obtain background screenings, and many millions of dollars have been paid in individual and class actions based on alleged failures to comply. State analog laws to the FCRA impose their own procedural requirements. State and local “ban the box” laws regulate when and how an employer can request and use background reports on potential hires. The federal Equal Employment Opportunity Act has been used by regulators to attack employer screening policies that allegedly have a discriminatory effect against protected groups. Some states and localities regulate the type of background information, particularly criminal history, that can be collected and used. Meanwhile, tort law remains ready to impose large damages on an employer who is found, after the fact, to have not conducted an adequate background check on employees. Rather than digging deeply into a single legal aspect of background screening, this webinar is designed to give a holistic overview of the entire legal landscape affecting employment-purpose background screening. Companies and professionals who are charged with developing effective compliance strategies for their background screening activities need to have the entire legal context in mind, and our webinar is designed to survey that context and provide guidance for compliance.

One hour of CLE credit is pending.

To register, click here.

We wrote recently about the Trump Administration’s efforts to roll back the Obama-era NLRB’s workplace handbook and rule restrictions. It’s time to update you further on where that effort stands.

As a reminder, the Obama NLRB held in December 2017 in The Boeing Company case that facially-neutral employment policies and rules will now be classified into one of three categories:

  • Category 1 includes policies that are legal in all cases since they can’t reasonably be interpreted as interfering with workers’ rights or because any interference is outweighed by business interests.
  • Category 2 includes policies that are legal in some cases, depending on their application.
  • Category 3 includes policies which are generally always unlawful.

The fact that legitimate business justifications associated with workplace rules would be given more weight when being evaluated by the NLRB was positive news for employers. What was still to be seen was how these categories would be applied to real cases.

A decision issued by an Administrative Law Judge last month gives us more insight on how the Board will apply these categories going forward. The case is Lowe’s Home Centers, LLC, Case No. 19-CA-191665 (NLRB 2018). The case involved a challenge to a provision of the company’s Code of Business Conduct and Ethics which included a section on “Confidential Information,” that stated:

Employees must maintain the confidentiality of information entrusted to them by Lowe’s or its suppliers or customers, except when disclosure is authorized by Lowe’s General Counsel and Chief Compliance Officer or disclosure is required by law, applicable governmental regulations or legal proceedings. Whenever feasible, Employees should consult with the company’s General Counsel and Chief Compliance Officer before disclosing confidential information if they believe they have a legal obligation to do so. Confidential information includes all non-public information that might be of use to competitors of the company, or harmful to Lowe’s, its suppliers or customers, if disclosed. It includes all proprietary information relating to Lowe’s business such as customer, budget, financial, credit, marketing, pricing, supply cost, personnel, medical records and salary information.

The provision’s reference to “salary information,” caused the challenge, but the company argued that its rule did not prevent employees from discussing salary information with each other (which is protected by Section 7 of the National Labor Relations Act), but referred instead to situations involving a person entrusted with non-public information relating to the company, and also that its business justifications for the rule outweighed employees’ Section 7 rights.

The ALJ did not look favorably on this Code provision or the company’s arguments. Her ruling held that the “provision may be read to preclude employees from discussing their salary information with one another, as well as non-employees such as union representatives and Board agents, which the Board has found to infringe on employees’ Section 7 rights to discuss terms and conditions of their employment with others.” Further, the ALJ emphasized that “[e]mployee discussions regarding wages, the core of Section 7 rights, are ‘the grist on which concerted activity feeds,’” and that “the Board has consistently held that rules or provisions which prohibit employees from discussing wages are unlawful.”

The ALJ explained that rules prohibiting employees from discussing salary information are per se unlawful (falling in Category 3), obviating the need to even conduct a balancing test (as would relevant with Category 1 or 2). Even if a balancing test were used, the ALJ found that the adverse impact on the employees’ Section 7 rights outweighed the company’s asserted business justifications. So, the company was ordered to rescind the unlawful policy and to notify employees of the change.

The lesson for employers here is that existing policies need to be carefully reviewed and new policies scrutinized even considering the Board’s current, more employer-friendly analysis. This case shows us that something as seemingly innocuous as the definitions section of an employee policy can still cause an employer significant problems.

In a unanimous decision, the California Supreme Court embraced a standard that presumes workers in California are employees instead of independent contractors. The April 30, 2018 decision in Dynamex Operations West Inc. v. The Superior Court of Los Angeles County moves away from a more flexible classification test that had been in effect for nearly three decades, and it has the potential to upend businesses in the burgeoning gig economy and others whose business models rely on independent contractors.

In the Dynamex case, independent contractor delivery drivers filed a class action suit against their delivery company alleging that they were misclassified and should instead be considered employees, not independent contractors. As employers in California are aware, a finding of worker misclassification can result in awards of unpaid wages, as well as penalties, interest and attorneys’ fees – amounts that can be very significant depending on the number of individuals involved.

The California Supreme Court, in deciding what standard to use in determining whether the workers were employees or not, rejected the prior multi-part test that had been in use for nearly 30 years, but which had led to inconsistent outcomes. Instead, it adopted the “ABC” test used in a few other states, which presumes workers are employees instead of independent contractors for purposes of state wage orders — which govern items such as overtime and meal and rest breaks — and places the burden on employers to prove the workers aren’t employees.

The ABC test requires that for a worker to be considered an independent contractor, the business he or she works for must show that the worker:

(A) is free from its control and direction;

(B) performs work that is outside the usual course of the entity’s business; and

(C) is engaged in an independently established trade, occupation or business.

The alleged employer must prove each of these three elements as to the work for him or her to be considered an independent contractor for purposes of wage orders.

The Court provided an example of what it considered a qualifying independent contractor relationship: a plumber hired by a store to fix a bathroom leak. Conversely, it noted that a seamstress sewing at home using materials provided by a clothing manufacturer would probably be considered an employee, not an independent contractor.

This sea-change ruling raises questions about the potential viability in California of the business model for many gig economy companies that rely on workers to deliver goods or food, transport people, or handle to-do list tasks such as laundry or grocery shopping.  Previously, such companies have attempted to define themselves as “software companies” that only provide a platform for providers and customers to connect, or have argued that they do not exert sufficient “control” over the worker to be considered an employer; this new standard from the Dynamex case will make such arguments far more difficult.

Any California business that engages independent contractors in its core business functions or to accomplish tasks that are in the usual course of the company’s business should reassess those relationships under this ABC test and determine whether an employment relationship may be in effect. As these determinations can be tricky, and can have such a large impact on a business’s model and the financial risks associated with workers, in-house or outside legal counsel should be closely involved in these assessments.

About one year ago, President Trump signed the “Buy American Hire American” (BAHA) Executive Order to “create higher wages and employment rates for workers in the United States, and to protect their economic interests.”  Under the auspices of BAHA, the U.S. immigration landscape has seen many changes in rules, policies, and operations in the past year.  Below, are some of the key changes as well as anecdotal trends we’ve noticed so far.

  • There has been an increase in sharing of information between the Department of State, the Department of Labor, and the Department of Justice designed to combat and prevent immigration fraud. This is in line with the Administration’s goal to continue to streamline existing and new processes in the immigration system.
  • President Trump has mentioned a need to revamp the H-1B visa category. As such, USCIS has made available two email addresses, one for the H-1B category and the other for the H-2B category, encouraging anyone to report allegations of fraud.  This will likely lead to an increase in reports of alleged fraud (primarily by disgruntled ex-employees) and resulting investigations.  Due to the active information sharing between agencies, a case that begins with the U.S. Department of Homeland Security could lead to a second investigation started by another agency, such as the DOL, who could initiate a wage and hour investigation.
  • Pursuant to BAHA, there will be an increase in employer site visits to confirm H and L visa related jobs. USCIS has indicated it may expand the scope of their visits to include L-1B Specialized Knowledge petitions.  To start out, USCIS will focus on L-1B employees who will spend much of their time off-site at third-party client sites.
  • USCIS has been offering a wider variety of reports and data about work visas to the public in the interest of providing more transparency to U.S. workers.
  • In just one year, USCIS has issued five separate Policy Memoranda related to the H-1, L-1, and TN visa categories.
  • Regarding I-9 enforcement, more employers are expected to get a visit from the government for an audit of their Forms I-9. While anecdotal evidence does not yet point to a big surge in the number of audits this year, smaller companies are being targeted just as often as big companies.  Historically, the government tended to go after the bigger companies; however, a growing number of small- to medium-sized companies have reported being visited by the government within the last year.  This underscores that every employer is fair game, and should have a solid, compliant I-9 procedure in place before the government visits.
  • Anecdotal evidence also suggests an uptick in investigations coming out of the Immigrant and Employee Rights Section (IER), which investigates alleged unlawful discriminatory practices by employers. Note that once again small companies seem to be just as likely to be selected for an investigation.  Additionally, the IER appears to be focusing its investigations on claims of employer practices that seem to prefer certain categories of foreign workers over U.S. workers (e.g., H-2B workers).  Further, they are continuing to go after employers who have a high percentage of List A documents being presented by their employees during the I-9 process.  They receive this information through the E-Verify monitoring unit and have continued to actively pursue these cases.

Hopefully, all these changes and trends make clear that now is a good time to review your company’s immigration practices and procedures and get them in order, especially if you have foreign national workers with U.S. work visas.  Even if your company does not routinely hire foreign nationals, you are still subject to immigration laws that you must comply with, most notably the ones relating to the Form I-9.  Taking a proactive stance and consulting with a legal professional on what should be reviewed and put in order now is critical to avoiding bigger issues down the road.

Many employers require employees and applicants to take personality testing (think Myers-Briggs). Others are seriously considering adding this as a component of their hiring and employee engagement efforts. Companies want to get a sense of an individual’s opinions, attitudes, feelings, motivations, preferences, interests, emotional makeup, and style of interacting with others. This information, some believe, can help employers make predictions regarding job performance and success. At the very least, it allows employers to get to know an applicant through more than just the traditional interview process. These tests, however, raise many legal issues, particularly in the areas of potential discrimination claims and privacy concerns.

As an initial recognition, personality is not a protected class. Indeed, courts have routinely held that someone’s personality is a legitimate, nondiscriminatory reason to not hire an applicant or take adverse employment action against an employee. Yet personality testing still has the potential of violating the Americans with Disabilities Act (“ADA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), and the Age Discrimination in Employment Act (“ADEA”). For example, if an applicant can show that the personality trait for which the employer screened was really a mask for discrimination of a protected class, the employer could be found to violate federal discrimination laws. So, if the employer is screening for a personality trait it connects with a protected class and makes its decisions based on that trait (possibly as a proxy or substitute for that class), that can constitute discrimination.

Furthermore, Title VII, the ADA, and the ADEA all have requirements for all employee testing that employers must adhere to when giving a personality test. For example, Title VII permits employers to administer professionally developed ability tests and take action based on the result. But, such tests must be implemented in a way that does not discriminate against protected classes, and ideally validated in advance as not having a discriminatory effect. Furthermore, employers are prohibited from adjusting the test scores based on an individual’s protected characteristics; using different cut-off scores for different protected classes; or otherwise altering the results of the test in any way. Lastly, the test must be job-related for the position at issue and consistent with a business necessity.

Testing clearly presents risks – of claims of discrimination, in addition to actual proof of such behavior. There have been numerous lawsuits related to personality testing under the ADA, Title VII, and the ADEA, with topics litigated including:

  • allegations of bias in determining traits important for the job
  • an employer purportedly asking questions that implicate protected characteristics
  • claims of bias in administration and scoring
  • whether the testing is a prohibited pre-offer medical examination
  • whether the test suggests a disability or a perceived disability based on the results, and
  • allegations of administering the test to discriminate based on age.

So, before you implement, add or change tests for employees or applicants, you will want to consider the risks they pose and balance that against the expected benefits of the testing.

Personality tests also raise potential privacy issues. While personality tests do not appear to violate the federal Employee Polygraph Protection Act, they may violate more restrictive state laws. For example, a Massachusetts law prohibits testing that renders an opinion on a job applicant’s honesty. Employers may also face claims based on the intrusiveness of the questioning (i.e., the questions are highly personal and/or offensive), or a failure to protect the privacy of the results. These state-law claims have thus far been brought have not seen notable success, but they have also not been tested nationwide, and new state and local privacy laws are enacted every year.

As personality testing becomes more and more popular among employers, interpretations of existing laws will inevitably become clearer and more settled. But new laws will likely join them, creating regular confusion and doubt. The best bet is to work your favorite employment counsel to help review and craft a personality testing policy that both conforms with existing law and is flexible enough to evolve as the issue changes over time.

When President Trump fired then-Secretary of State Rex Tillerson earlier this month, he did it in one of the most public ways possible: on Twitter.  The kicker? He had not told Tillerson, who was traveling in Africa at the time, about the decision in person before tweeting it.  (Although White House officials have stated that Tillerson was given the news in advance on a phone call with White House Chief of Staff John Kelly, Tillerson was not told face-to-face before the rest of the world found out). Tillerson’s “termination by tweet” offers a timely reminder to all employers about the right (and wrong) ways to handle the firing of employees.

Separating an employee can be a stressful process for everyone involved.  Prudent employers will keep in mind the following tips to handle the situation in an appropriate way:

Handle an employee termination in person.

Firing an employee by email or letter (or tweet!) might seem like the easy way out. But, even if the employment relationship ultimately is not working out, you owe it to your former employee to discuss the decision in person.

On that note: make sure this in-person meeting occurs in the office, in a private setting.  There is more possibility of confusion when someone is fired in a more informal setting, such as at a company event or offsite meeting.  Additionally, there is more possibility of embarrassment or even public displays of emotion by the employee when someone is fired in front of other people.

While there are some very rare circumstances that may require separating an employee in a way other than through a face-to-face meeting, those should truly be exceptional, and discussed with key HR leaders and legal counsel before they occur to make sure there is not a better way to handle things.

When possible, make sure you’ve given clear signs prior to termination that the employee’s performance is not meeting expectations.

It is important to have a truthful, business-related, and non-discriminatory reason to fire an employee.  When possible, back this up with a clear record of the employee’s behavior, whether it’s poor performance, a bad attitude, or something else, over time, and maintain those records. Make sure you share your thoughts with the employee in formal and informal reviews and evaluations before you fire them.  This gives them the opportunity to improve, and, if they do not, will help minimize the chances for surprise, anger and confusion as the employee will not be able to (legitimately) say they didn’t see (or at least couldn’t have seen) the termination coming.

Also, when firing the employee, make sure that your truthful, business-related reason for the termination is clearly communicated to him or her at the time of the termination.  This will become critical in the event the parties wind up in court.

Keep emotions in check.

Make sure that you never fire someone in the middle of a disagreement or other emotionally charged situation—you do not want a decision about someone’s employment to come out of the heat of the moment.  Take a moment (or longer) to cool down first and make a sound decision.

On the other hand, do not let your personal sympathies for the employee keep you from being clear (and standing your ground) once you have made the decision to fire them. Although you might feel better “letting them down easy,” such behavior will only lead them on, ultimately making the termination more painful and drawn out for everyone involved. Let them respond and ask questions, if they wish, and respond honestly and with courtesy, but avoid getting caught in an argument regarding the decision.

In sum, take a “what not to do” lesson from the President and make sure you keep the above tips in mind the next time you find yourself handling an employee termination.  If you need assistance in managing the process or have questions, reach out to your favorite lawyer – before you fire that problem employee.

For the past several years, folks in the HR space have had to pay special attention to the language in their handbooks and employment policies out of fear of violating rules established by a series of decisions from the National Labor Relations Board (NLRB). Those decisions established a tough standard for evaluating facially neutral employment policies that complied with their interpretations of labor law. Combined with an aggressive NLRB enforcement strategy, employers have understandably been on edge with respect to their workplace rules and policies.

Under that standard, the NLRB found that employers violated the National Labor Relations Act (NLRA) by maintaining workplace rules that did not explicitly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities, if the rules would be “reasonably construed” by an employee to prohibit the exercise of his or her NLRA right to engage in “protected, concerted activity.”

On December 14, 2017, however, the NLRB replaced that standard with a new one. In The Boeing Company, 365 NLRB No. 154 (2017), the NLRB established a new test for workplace rules and policies:  when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the NLRB will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.

This standard is much more favorable to employers. Many policies which would have violated the previous standard will now be considered appropriate and lawful.

Additionally, the NLRB also announced three categories of rules will be delineated to provide greater clarity and certainty to employees, employers, and unions:

  • Category 1: This will include rules that the NLRB designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. (An example of a Category 1 rules is the no-camera requirement maintained by Boeing in the case.)
  • Category 2: This will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.
  • Category 3: This will include rules that the NLRB will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.

In the Boeing case, the NLRB concluded that Boeing lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit.  The NLRB explained that the rule potentially affected the exercise of NLRA rights, but that the impact was comparatively slight and outweighed by important justifications, including national security concerns.

Overall, while employer policies and rules must still be evaluated to ensure compliance with the NLRA, such policies and rules will now be judged under much less stringent standards than they have been for the past several years, which is very good news indeed for employers.

Reversing itself, the Second Circuit held on Monday, February 26, that sexual orientation discrimination is discrimination “because of . . . sex” under Title VII in Zarda v. Altitude Express. The Second Circuit’s decision aligns it with the Seventh Circuit and places it squarely at odds with the Eleventh Circuit.

Continue Reading at Above The Law

Last year, we heard the federal government announce that it would increase the number of raids and site inspections to ensure businesses were going through the proper procedures to hire employment-authorized workers.  Well, we are beginning to see the government live up to its word.

On January 10, Immigration Customs and Enforcement (ICE) agents visited 98 7-Eleven stores in 17 states and in Washington, D.C. in search of undocumented workers and employers who hired them.  The raid ended with 21 arrests, the largest operation against a single employer since January 2017 when President Trump took office.  Then, just a few weeks later, ICE visited 77 businesses in northern California, serving Notices of Inspection that typically give employers 3 days to comply with their document requests.  A raid of this scale devoted to a single region is also unprecedented.

ICE has always been in the business of conducting raids such as these to catch individuals who are in the U.S. without proper status (and therefore has no authorization to work for a U.S. employer).  But after ramping up the scale of their activities, ICE has been in the limelight more recently.  Some experts posit that the goal of these large-scale raids at places of employment is to discourage undocumented workers from showing up to work.  Whereas previously ICE agents typically arrested undocumented workers at their residences, ICE is shifting its focus to place greater pressure on employers who hire such workers.  Indeed, ICE Deputy Director Thomas D. Homan stated following the 7-Eleven raids that this was to “send a strong message to U.S. businesses that hire and employ an illegal workforce.  ICE will enforce the law, and if you are found to be breaking the law, you will be held accountable.”  This year, ICE is planning to increase worksite enforcement actions by 4 to 5 times.

Northern California became a regional target due to its reputation for protecting immigrants from the reaches of the government.  But in other places throughout the United States, it seems that there is no particular industry or size of business that ICE is making their priority.  Also, since the agencies enforcing employer compliance have increased their staff by about 4 times, the chances of being audited are greater than before.

It is critically important that businesses take proactive steps to do an internal review/audit of their records before they are visited by ICE (this is because remedying I-9 errors to the extent possible before an audit can reduce the amount and degree of fines).

For starters, ensure that an I-9 Employment Eligibility Verification form is completed for every employee following an offer and acceptance of employment. Even if you completed an I-9 for an employee but it ends up going missing, that is the same as if an I-9 was never completed (and that’s a serious violation).   Then, conduct an internal audit of the Forms I-9 with the help of an experienced immigration attorney.  The earlier you examine and assess where your violations lie and identify ways to avoid those violations in the future, the sooner you will begin to eliminate perpetual I-9 errors and thereby reduce the overall penalties should you be faced with an I-9 audit.

An immigration attorney with I-9 experience can also advise you of the difference between certain I-9 violations.  While some errors are considered technical and can be corrected, some are substantive and cannot be remedied after the fact.  Being able to identify what the substantive violations are and taking proper actions to avoid repeating errors in the future is vitally important to demonstrating that the employer has made a good faith effort to comply with the rules.

Lastly, train your workforce so they know how to respond when a government agent pays you a visit.  For example, employees who will be the first to interact with them need to know what information to obtain, and where to direct them.  The designated point of contact needs to know things such as whether the company wants their attorney to handle the situation, where the Forms I-9 are kept, and whether there are any laws or regulations that need to be complied with before any forms are handed over to the government.  An unprepared workforce might be more susceptible to acquiescing to an officer’s request prematurely, and other inadvertent mistakes can be committed to the detriment of the employer.

Believe it or not, there’s a growing trend among some employers to offer a new benefit: “pawternity leave,” or leave for new pet owners.  Offerings range from a few days of leave up to a week or more, and might come in addition to other pet-related benefits, such as pet insurance, pet adoption consulting, bereavement leave—and even bring-your-pet-to-work policies.  So, should you join the trend?

Admittedly, while “pawternity leave” is certainly unique, this type of benefit might not work for many businesses.  However, its growing popularity offers a good reminder for all employers:  you should be thinking about the types of benefits your workforce might want—even if those benefits are a little untraditional. In doing so, the following tips can help.

First, know your workforce.  What are their values, what matters most to them, what do they enjoy?  Employers offering pet-related benefits know that the type of employees they hope to attract and retain value the presence of a furry companion in their lives—so much so that they consider their pet part of the family.  This might not be true for your workforce.  But if that’s the case, then what does top your employees’ list? If you don’t know, it’s worth finding out. Consider going straight to the source: conduct surveys to ask your workforce what benefits they’d like to see most. Not all suggestions may be viable, but they’ll provide valuable insight on your employees’ priorities either way.  Or, perform market research regarding similar companies to try and find out what matters most to employees in your industry.

Second, think outside the box.  Once you’ve got a handle on what your workforce wants, how can you best offer it to them?  Think creatively, and don’t be afraid to see what your competitors are offering.  “Pawternity leave” has been a popular benefit offering among employers who tend to attract a younger workforce and are in urban areas, likely because such employees tend to own pets in higher percentages.  But other employers might find that their workforce prefers different benefits.  Perhaps purchasing season tickets to a popular area sports team for employee rewards and use, stocking healthy prepackaged meals at the office, or providing college counseling assistance for employees with high-school aged children, might be better fits.

Third, recognize that a benefits offering doesn’t have to cost a lot of money to make a big impact.  Even a small change can really make a difference if it’s targeted at your workforce’s biggest priorities.  Regardless, employee satisfaction will often pay for itself in spades.  Plus, it’s certainly more cost-effective (and more beneficial) than paying for benefits that your workforce won’t use, or doesn’t appreciate.  Study after study has shown that happiness is key to productivity.  Happy employees are productive employees (who are also less likely to jump ship for a competitor).  Your employees are one of your most valuable resources, so consider what you can offer to ensure that they remain that way.  And heck, who wouldn’t want time off to play with a new puppy?