BSCR Firm News/Blogs Feed Jul 2024 00:00:00 -0800firmwise Court: Discrimination Plaintiffs Need Only Show "Some" Harm to State a Claim Jun 2024Employment & Labor Law Blog<p>ABSTRACT: Title VII plaintiffs need not show &ldquo;significant&rdquo; harm arising out of adverse employment actions to state a claim, Supreme Court holds.</p> <div> <p>In a long-awaited and highly anticipated opinion, the Supreme Court held that a Title VII claimant alleging a discriminatory job transfer must only show that the transfer caused &ldquo;some&rdquo; harm with respect to the terms and conditions of her employment. In <a href=";pddocfullpath=%2Fshared%2Fdocument%2Fcases%2Furn:contentItem:6BTN-PD43-RRWM-C282-00000-00&amp;pdcontentcomponentid=6443&amp;pdislparesultsdocument=false&amp;prid=d76b29cb-004f-48eb-9a60-3f9a257f8c5e&amp;crid=dcc63c38-130f-4dcb-abd7-8193af688757&amp;pdisdocsliderrequired=true&amp;pdpeersearchid=d8cdfbb5-86f5-4e82-bc33-516b643314fb-1&amp;ecomp=5frk&amp;earg=sr0"><i>Muldrow v. City of St. Louis</i></a>, the high court rejected the heightened standard adopted by the Eighth Circuit requiring &ldquo;materially significant&rdquo; harm, as being contrary to the law&rsquo;s plain language.</p> <p><b>Background</b></p> <p>The facts of this case illustrate why&nbsp;<i>Muldrow</i>&nbsp;was the perfect case for challenging the Eighth Circuit&rsquo;s heightened standard. The record depicts Muldrow as a rockstar detective within the St. Louis Police Department. She worked in the Intelligence Division, a leader in both the Gang Unit and the Gun Crimes Unit, and she was deputized to work on a prestigious FBI task force, a &ldquo;premier position&rdquo; in the Department. Muldrow was described as a reliable &ldquo;workhorse&rdquo; and her performance reviews were consistently outstanding.</p> <p>Despite all these positive reviews of Muldrow, her new boss, Commander Deeba, requested she be transferred out of the Intelligence Division when he took over. He stated that a different officer, who happened to be male, would be a &ldquo;better fit&rdquo; for the dangerous work in the Intelligence Division. Deeba also frequently did not use Muldrow&rsquo;s title of &ldquo;Sergeant&rdquo; and referred to her as &ldquo;Mrs.&rdquo; Even though Muldrow did not wish to transfer to a different department, the St. Louis Police Department approved Deeba&rsquo;s request and Muldrow was given a uniformed position in the Fifth District. This new position, while equal in rank, salary, and benefits, was not considered to be as prestigious, and Muldrow&rsquo;s responsibilities were significantly different from her previous position. She also worked on a &ldquo;rotating schedule&rdquo; that included weekend shifts, instead of her previous regular Monday through Friday schedule. She also lost access to her take-home police vehicle.</p> <p><b>Sergeant Muldrow&rsquo;s Title VII Claim</b></p> <p>Muldrow brought a Title VII claim against the City of St. Louis claiming she was removed from her position at the Intelligence Division due to her sex, which adversely affected the terms and conditions of her employment. In her complaint, she states she lost both professional opportunities and material benefits of her job as a result.</p> <p>The District Court granted the City summary judgment, and the Court of Appeals affirmed, stating that Muldrow could not meet her burden of showing a &ldquo;materially significant disadvantage&rdquo; as a result of her transfer. Both lower courts held Muldrow&rsquo;s Title VII claim could not be supported by &ldquo;only minor changes in working conditions,&rdquo; and failed to adduce evidence that claimed losses of networking opportunities actually harmed her career prospects. As she continued to be a supervisor in her new role, her job duties were largely the same, said the District Court, as it disregarded or found immaterial the facts about her new schedule or lack of a take-home car. As a result, she could not establish that the harm incurred was &ldquo;significant.&rdquo;</p> <p><b>Supreme Court&rsquo;s Holding and Analysis</b></p> <p>The language of Title VII and Supreme Court precedent, such as in&nbsp;<i>Oncale&nbsp;v.&nbsp;Sundowner Offshore Services, Inc.</i>, for example, requires Muldrow to show that her transfer caused &ldquo;some&rdquo; negative change in the terms or conditions of employment. The &ldquo;materially adverse&rdquo; employment action standard has been applied by various Courts in determining whether a plaintiff states a claim, consistent with the Eighth Circuit approach. But the Supreme Court has now taken a broader view of &ldquo;terms and conditions&rdquo; of employment to include less valuable, less tangible benefits of employment. And the plain language of Title VII does not require a claimant to show that a negative employment action, such as Muldrow&rsquo;s transfer, caused &ldquo;significant&rdquo; harm.</p> <p>The Court rejected the City&rsquo;s main textual arguments. Title VII&rsquo;s prohibition on hiring, firing or &ldquo;otherwise to discriminate against&rdquo; a person based on a protected class does not mean that only job actions on the level of hiring or firing fit the bill. Rather, harmful discrimination can result from a multitude of employment actions. The Court also rejected the City&rsquo;s argument that the Court&rsquo;s 2006 holding in&nbsp;<i>Burlington Northern&nbsp;v.&nbsp;White</i>, established a &ldquo;significant harm&rdquo; standard. This holding only applies under Title VII&rsquo;s anti-retaliation provision when a retaliatory action has consequences that are &ldquo;materially adverse&rdquo; and cause &ldquo;significant harm.&rdquo; Since this a transfer challenge under the &ldquo;terms and conditions&rdquo; of employment provision, Muldrow is not required to show the job transfer caused material, significant harm. She must only show that some harm resulted.</p> <p>The City also argued, unsuccessfully, that a &ldquo;significant harm&rdquo; standard is necessary to protect the already overwhelmed court system from another flood of Title VII litigation. The Court rejected this argument and stated there are several other ways to dismiss frivolous Title VII claims.</p> <p><b>Big Takeaways</b></p> <ul> <li> <div>The City was likely right that allowing plaintiffs to proceed with claims without demonstrating a &ldquo;significant&rdquo; harm will cause an uptick in Title VII litigation. The fee-shifting provisions of Title VII and &sect; 1981 will very likely make claims with tiny damages more attractive to the plaintiffs&rsquo; bar. Courts should be mindful, however, that the attorney&rsquo;s fees are discretionary and should limit fee awards in proportion to the plaintiff&rsquo;s recovery as a bulwark to a flood of Title VII litigation. Indeed, unlike FLSA litigation where plaintiffs recover relatively small sums with large fee awards, nominal harm under Title VII should not result in massive fee awards.</div> </li> <li> <div>The Court stated that &ldquo;terms and conditions of employment&rdquo; under Title VII should be interpreted broadly, so employers cannot seek shelter in the fact that an employee&rsquo;s salary and title remain the same. Although not addressed by the Court, it would appear that reputational harm (e.g., the mere&nbsp;fact&nbsp;of a change to employment terms and conditions) will be sufficient to state a claim for damage under Title VII.&nbsp; Changes to scheduling, perks, opportunities for advancement, and prestige, and anything of value to employees other than money will be sufficient to state a claim.</div> </li> <li> <div>The opinion&rsquo;s focus on &ldquo;discrimination&rdquo; as meaning&nbsp;any&nbsp;differential treatment, regardless of harm may lend credence to concerns that the Court is moving away from Title VII&rsquo;s remedial purpose in implementing the Reconstruction Amendments.&nbsp;Muldrow,&nbsp;along with&nbsp;Students for Fair Admissions v. Harvard&nbsp;(which does not address Title VII), may add ammunition to challenges to workplace Diversity, Equity and Inclusion (DEI) efforts.</div> </li> <li> <div>Numerous lawsuits have already been filed alleging &ldquo;reverse discrimination&rdquo; and other non-traditional discrimination claims. The next few years could significantly change the legal landscape when it comes to employers&rsquo; efforts to address the needs of historically disadvantaged groups. However, the decision in&nbsp;Muldrow&nbsp;provides little clarity to employers navigating the minefield of both recruiting diverse talent and avoiding litigation.</div> </li> </ul> <div><i><em><i>* Allison Garrett, Law Clerk, assisted in the research and drafting of this post.</i>&nbsp;<i><em><i>Garrett</i></em></i>&nbsp;is a graduate of&nbsp;<i>the University of Missouri School of Law</i>&nbsp;and will be sitting for the Missouri Bar Exam in July 2024.</em></i></div> </div> Says Supreme Court's College Admissions Diversity Ruling Does Not Impact Private Employer Diversity Initiatives Jun 2024Employment & Labor Law Blog<p>ABSTRACT: Vice Chair Jocelyn Samuels of the Equal Employment Opportunity Commission recently spoke at the American Bar Association conference on Equal Employment Opportunity law, reiterating her stance that the U.S. Supreme Court&rsquo;s recent decision that race-based university admissions policies are unconstitutional does not apply to the &ldquo;vast majority&rdquo; of private employers&rsquo; diversity, equity, and inclusion efforts. But various state attorneys general and legislators do not share that view, and the issue is far from resolved.</p> <div> <p>During a panel discussion at a recent <a href="">American Bar Association Conference on Equal Employment Opportunity</a> the Vice Chair took the position that the Supreme Court&rsquo;s June 2023 decision that race-based university admission policies are unconstitutional does not apply to the &ldquo;vast majority&rdquo; of private employers&rsquo; diversity, equity and inclusion efforts.</p> <p>The Vice Chair&rsquo;s comments pertain to the recent United States Supreme Court decision (&ldquo;<i>SFFA</i> decision&rdquo;) in a pair of cases &ndash; <i>Students for Fair Admission v. President &amp; Fellows of Harvard</i> and <i>Students for Fair Admissions v. University of North Carolina</i> &ndash; where the high court struck down the affirmative action admission policies at those universities, finding they violated the Equal Protection Clause of the 14<sup>th</sup> Amendment. Ever since that decision, there has been much speculation and discussion as to whether the employment practices of private businesses that focus on Diversity, Equity and Inclusion initiatives would face a similar fate if challenged. Threats, legislation, and lawsuits opposing those initiatives have followed across the nation. In her comments, Vice Chair Samuels cautioned employers against abandoning the DEI programs geared towards diversifying applicant pools and promoting equal employment opportunities in the workplace.</p> <p><b><u>Students for Fair Admission v. Harvard/UNC and the Aftermath</u></b></p> <p>In a 6-3 split decision, the United States Supreme Court ruled the colleges&rsquo; affirmative action policies that explicitly use race as a factor for admissions are unconstitutional and fail strict scrutiny.</p> <p>While the <i>SFFA</i> decision does not mention or address employer&rsquo;s DEI initiatives, Justice Gorsuch&rsquo;s concurring opinion may have opened the door. In his concurrence, while analyzing the issue before the Court under Title VI, Justice Gorsuch directly quoted language from Title VII, noting Congress made it unlawful for employers to discriminate against any individual because of that individual&rsquo;s race, color, religion, sex, or national origin.</p> <p>Following the Supreme Court decision, on July 13, 2023, Attorneys General from thirteen different states jointly sent <a href="">letters</a> to Fortune 100 companies to remind them of their obligations as an employer to refrain from discriminating on the basis of race, whether under the label of DEI or otherwise and threatening legal consequences for the continuation of such programs.</p> <p>Shortly thereafter, on July 17, 2023, Arkansas Senator Tom Cotton sent <a href="">letters</a> to over 50 law firms, threatening investigation and litigation over DEI initiatives that include race-based hiring quotas and benchmarks asserting his belief that the Supreme Court&rsquo;s decision extends to private employers.</p> <p>Democratic Attorneys General <a href="">responded</a> to the July 13<sup>th</sup> letter, reassuring companies that corporate DEI efforts are legal and asserting their position that the Supreme Court decision has no bearing on private employer hiring practices.</p> <p>Additionally, in the wake of <i>SFFA</i>, ten states have enacted anti-DEI legislation, while another fourteen have proposed anti-DEI legislation.</p> <p><b><u>EEOC&rsquo;s Reaction to the Aftermath So Far </u></b></p> <p>Addressing the strong and widely disparate reactions to the Supreme Court ruling, Vice Chair Samuels expressed her view that the discussions surrounding the expansion of the <i>SFFA</i> decision to employment programs are overblown, noting there is nothing about the <i>SFFA</i> decision that applies to the vast majority of DEI programs. Samuels highlighted that one of the EEOC&rsquo;s stated priorities is to support employers in evaluating their DEI initiatives to make sure they are lawful. She also advised the EEOC has various resources available for employers that are aimed at identifying the types of DEI-initiatives the agency thinks remain lawful after <i>SFFA</i>.</p> <p><b><u>What Next? </u></b></p> In the meantime, while we float in these murky waters and await further guidance, here are some things to consider regarding DEI initiatives in the workplace. While we will continue to monitor litigation challenging employment-based DEI initiatives in the wake of <i>SFFA</i>, so should you. Monitor how courts are applying the holdings of <i>SFFA</i> and interpreting anti-DEI legislation. Review current DEI-initiatives and consider amending policies that focus on quotas and benchmarks; instead, make the primary focus of the initiatives the removal of potential biases in recruiting and hiring decisions. Be mindful of your recruitment pool, explore all available avenues to identify qualified candidates, and consider your selection criteria. Draw upon the diversity you already have in the workplace to establish a diverse hiring team. Finally, use the resources suggested and offered by the EEOC, as you shape and amend your initiatives while you strive to meet your obligations to truly be an Equal Opportunity employer. Stay tuned to this evolving legal battlefield, which fight we anticipate is just getting started. <p><i><br /> * <em>Kaleb McKinnon, Law Clerk, assisted in the research and drafting of this post. McKinnon is a graduate of Drake University Law School and will be sitting for the Missouri Bar Exam in July 2024.</em></i></p> </div> Harassment Requires Pervasive Conduct May 2024Employment & Labor Law Blog<p>ABSTRACT: The Missouri Court of Appeals reverses Judgment on gender-based harassment claim, holding a singular comment is not enough to warrant the discriminatory conduct as pervasive, viewed objectively by a reasonable person.</p> <div> <p>Beatrice Young sued her former employer, the Missouri Department of Corrections in the Circuit Court of Jackson County, alleging discrimination, harassment, and retaliation based on her race, sex, and national origin. After a five-day trial, a jury awarded Young actual and punitive damages, and attorney&rsquo;s fees, for gender-based workplace harassment and retaliation. The DOC appealed.</p> <p>Young began working for the DOC as a Corrections Officer I, providing security to prisoners and prison visitors, conducting inmate searches and counts, and supervising prisoner movement and activity. Four years later, Young was promoted to Corrections Officer II, now ranking Sergeant, and was transferred to the Kansas City Reentry Center. There, a subordinate Corrections Officer I who was unhappy with Young&rsquo;s supervisory directives, crudely complained about Young, making a sexually demeaning comment to other employees. The explicit comment came to light when a co-worker made an internal complaint against the Corrections Officer I who made the comment.</p> <p>A successful claim of a hostile work environment requires the plaintiff show: (1) she is a member of a group protected under the Missouri Human Rights Act; (2) she was subjected to unwelcome harassment; (3) the plaintiff&rsquo;s membership in the protected group was a contributing factor in the harassment; and (4) a term, condition, or privilege of the plaintiff&rsquo;s employment was affected by the harassment.</p> <p>On appeal, the DOC only challenged the sufficiency of Young&rsquo;s evidence regarding the fourth element of a sexual harassment claim. In <i>Matthews v. Harley-Davidson, </i>the Missouri Supreme Court clarified that &ldquo;harassing conduct must be severe and pervasive enough to create a hostile or abusive working environment as viewed subjectively by the claimant and as viewed objectively by a reasonable person.&rdquo; The hostility of an environment is analyzed by the totality of the circumstances, including the frequency and severity of the harassing behavior, the extent to which it was physically threatening or humiliating, and whether it unreasonably interfered with the plaintiff&rsquo;s work performance.</p> <p>When analyzing Young&rsquo;s sexual harassment claim, the Court ultimately <a href="">determined</a> Young&rsquo;s claims were not <i>objectively</i> sufficiently severe or pervasive that it altered the conditions of her employment. While the comment was &ldquo;undeniably offensive and inappropriate in the workplace,&rdquo; it was a single comment, made only once. Even though other inmates and employees who learned of the offensive comment expressed sympathy and concern for Young and offered to assist by filing internal complaints against the harassing employee, this singular comment could be construed as &ldquo;pervasive.&rdquo;</p> <p>The Court further observed that there was no evidence to show that the offending comment itself was stated directly to Young or that Young was meant to hear it. Additionally, the intensity of the comment was diminished due to the fact it was made by a subordinate, rather than a superior.</p> <p>Young&rsquo;s success depended on further evidence of offensive conduct. She may have been successful if there were additional comments to &ldquo;describe, invite, or threaten violent or sexual acts.&rdquo;&nbsp; For example, in <i>Bracely-Mosley v. Hunter Engineering</i>, the incidents involved direct physical contact or threatened physical contact, which caused the plaintiff to suffer mental and physical conditions that required medical treatment. However, even with threats of violence, a claim still requires &ldquo;pervasive&rdquo; harassment, typically associated with &ldquo;day-to-day harassment&rdquo; that &ldquo;poisons and permeates&rdquo; the work environment.</p> <p>The Court of Appeals in <i>Young </i>acknowledged that while the behavior in question was unacceptable, &ldquo;some inappropriate behavior objectively does not rise to the level of actionable harassment as a matter of law.&rdquo;</p> While plaintiffs may allege significant facts constituting gender-based harassment, this case reaffirms the notion that conduct must be continually hostile to rise to the level of pervasiveness needed in order to withstand summary judgment or a judgment notwithstanding the verdict. Defendants should be ready to challenge generic allegations that seem to be more of a one-off instance rather than workplace harassment.</div> of Labor announces final rule expanding federal overtime protections. May 2024Employment & Labor Law Blog<p>ABSTRACT: The U.S. Department of Labor&rsquo;s final rule expanding protections under the Fair Labor Standards Act is estimated to increase overtime eligibility for four million workers and puts in place mechanisms to automatically increase salary thresholds every three years.</p> <div> <p>For the first time since 2019, the U.S. Department of Labor announced a final <a href="">rule</a> that expands overtime protections for millions of salaried workers by increasing thresholds required to exempt employees from federal overtime pay requirements.</p> <p>Under the Fair Labor Standards Act (FLSA), eligible salaried employees are to be compensated at a rate of 1.5 times their regular salary for work beyond the normal 40-hour workweek. Salaried workers whose income exceeds the threshold amounts set by the Department of Labor are excluded from these overtime protections. The Department periodically updates these thresholds based on federal income data. The Department&rsquo;s newest final rule, which will go into effect on July 1, 2024, increases the previous threshold amounts and implements a mechanism so that thresholds will automatically increase in the future.</p> <p><b>New Overtime Threshold Requirements</b></p> <p>The final rule announced on April 23, contains three central provisions expanding overtime protections.</p> <ul> <li> <div>Beginning on July 1, 2024, the Department of Labor will update the standard salary level for exemption from its current level of $35,568 per year, to $43,888 per year, and beginning January 1, 2025, to $58,656 per year. This reflects the 35<sup>th</sup> percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Regions based on data collected by the U.S. Bureau of Labor and Statistics. This is an increase from the previous 2019 rule which set the threshold at the 20<sup>th</sup> percentile of weekly full-time salaried employees in the lowest-wage Census Region. The new rule allows workers earning more than $684 per week, but less than $844 per week to be eligible for federal overtime protections.</div> </li> <li> <div>The highly compensated employee total annual threshold will increase from $104,432 per year, to $132,964 on July 1, 2024, and to $151,164 beginning on January 1, 2025. This reflects the 85<sup>th</sup> percentile of full-time salaried workers nationally.</div> </li> <li> <div>The final rule will also include a mechanism to automatically increase the threshold amounts starting on July 1, 2027, and every three years thereafter, based on more current earnings data.</div> </li> </ul> <p><b>Exempt Employees</b></p> <p>Section 13(a)(1) of the FLSA provides an exemption for &ldquo;any employee employed in a bona fide executive, administrative, or professional capacity&rdquo; under what is commonly referred to as the &ldquo;white-collar&rdquo; or executive, administrative, or professional (EAP) exemption. To fall under the EAP exemption, employees &nbsp;must generally meet three tests: 1) they must be paid a salary that is a predetermined fixed amount not subject to reduction based on the quantity of work performed; 2) they must be paid at least a specific weekly salary level; and 3) they must primarily perform executive, administrative, or professional duties as set out under the Department&rsquo;s regulations in <a href="">29 CFR 541.</a></p> <p><b>Impact</b></p> <p>The Department estimates that in the first year the new rule will allow some 4 million currently exempt workers to become eligible for overtime protections, resulting in approximately $1.5 billion in annual transfers from employer to employees. It also estimates employers will accrue approximately $1.4 billion in direct costs to implement the new regulations in the first year.</p> <p>The impact of the final rule will be an increase in federal overtime protections, narrower unintended EAP exemptions, and clearer guidance for employers on how to pay employees for overtime hours. Employers will now have the choice to either increase wages for salaried employees to maintain their existing exempt status, reduce or eliminate overtime hours, pay the 1.5 times overtime premium, or reduce base salaries to offset new overtime pay.</p> <p>The Department has long recognized a need to regularly update earnings thresholds to ensure they remain useful in helping distinguish between exempt and non-exempt employees. A new mechanism in the final rule will regularly update the thresholds to eliminate issues that can arise if the Department does not adequately update threshold amounts over long periods of time. For example, between 1975 and 2004, threshold levels remained stagnant while the federal minimum wage continued to increase, resulting in a federal minimum wage earner&rsquo;s income exceeding the long test salary level for a 40-hour workweek.</p> The final rule will not apply to the special salary levels currently set in U.S. territories or the special weekly base rate for employees in the motion picture producing industry.</div> Court Clarifies the "Transportation Worker" Exemption in the Federal Arbitration Act May 2024Employment & Labor Law Blog<p>ABSTRACT: The Federal Arbitration Act carves out &ldquo;transportation workers&rdquo; from its requirement that contractual arbitration agreements be enforced. In Bissonnette v. LePage Bakeries, the U.S. Supreme Court ruled unanimously that whether someone is an exempt transportation worker under the FAA depends on the type of work performed, and not whether the employer is in the transportation industry.</p> <div> <p><b>Factual Background</b></p> <p>Truck drivers Neal Bissonnette and Tyler Wojnarowski signed an agreement to arbitrate when they purchased the rights to distribute Flowers Foods, Inc. products in certain parts of Connecticut. Flowers is the second largest producer and marketer of packaged bakery foods in the United States, including the famous brand &ldquo;Wonder Bread.&rdquo; Throughout the distribution process, Flowers would bake bread and buns and send them to a warehouse in Connecticut where the Petitioners would pick them up and distribute them to local shops within Connecticut.</p> <p>Bissonnette and Wojnarowski brought a class action lawsuit claiming Flowers had underpaid them and other drivers in violation of state and federal law. Flowers asked the district court to dismiss the case or send it to binding arbitration, as stated in the arbitration agreement.&nbsp; The District Court dismissed the case in favor of arbitration, ruling that the plaintiffs waived their right to sue in court, and&nbsp; that the putative class members were not a &ldquo;class of workers engaged in foreign or interstate commerce&rdquo; necessary to exclude them from arbitration.</p> <p><b>The FAA and Transportation Workers - Historical Background</b></p> <p>In 1925, Congress passed the FAA to enforce arbitration agreements within the United States. &sect; 2 of the FAA states generally that arbitration agreements &ldquo;shall be valid, irrevocable, and enforceable &hellip;&rdquo;&nbsp; However, at the time, certain industry groups already had sophisticated dispute resolution processes, so Congress carved out certain classes of people exempt from the FAA&rsquo;s coverage. Those classes of people included seaman and railroad employees.&nbsp; Thus, Congress crafted the &sect; 1 exemption to the broad authority in &sect; 2 stating: &ldquo;nothing herein contained shall apply to contracts of employment of seaman, railroad employees, or any other classes of workers engaged in foreign or interstate commerce.&rdquo;</p> <p>The &sect; 1 exemption became known as the &ldquo;transportation worker exemption&rdquo;. Before Bissonette, the Supreme Court had interpreted this exemption only twice within the past one hundred years. In 2001, the Supreme Court ruled in <i>Circuit City Stores Inc. v. Adams</i> that &sect; 1 exempts from the FAA only &ldquo;contracts of employment of transportation workers&rdquo;. In 2023, the Supreme Court ruled in <i>Southwest Airlines v. Saxon</i> that a Southwest baggage ramp supervisor was within &ldquo;a class of workers engaged in foreign or interstate commerce&rdquo; and thus exempt from the FAA because the employee was a &ldquo;member of a class of workers based on what she does at Southwest, not what Southwest does generally&rdquo;.</p> <p><b>Bissonnette </b></p> <p>On appeal to the Second Circuit, Flowers successfully argued that Bissonnette and his peers were not &ldquo;transportation workers&rdquo; because they worked in the &ldquo;bakery industry,&rdquo; not the &ldquo;transportation industry,&rdquo; thus the exemption under &sect; 1 of the FAA did not apply, and the workers were required to adhere to the arbitration agreement. A month after the Second Circuit&rsquo;s <i>Bissonnette</i> decision, the United States Supreme Court decided <i>Saxon</i>, and the Second Circuit granted panel rehearing in light of Saxon. After the Second Circuit affirmed its original decision, the Supreme Court agreed to review the case.</p> <p>Unanimously, the Supreme Court reversed the Second Circuit&rsquo;s decision because <i>Circuit City</i> and <i>Saxon</i> did not interpret the &sect; 1 exemption to apply as an industry-wide exemption. Rather, the Supreme Court reasoned that Congress meant what it said when drafting the &sect; 1 exemption to include only the kind of employees that shared similar characteristics to seaman and railroad workers.</p> <p>Thus, the Supreme Court clarified &ldquo;a transportation worker is one who is actively engaged in transportation of goods across borders via the channels of foreign or interstate commerce. In other words, any exempt worker must at least play a direct and necessary role in the free flow of goods across borders.&rdquo;</p> <p><b>Takeaways</b></p> <p>A careful reading of <i>Bissonnette</i> magnifies what the Court did not decide. The Court expressed no opinion regarding whether the Petitioners themselves were transportation workers within the Court&rsquo;s clarified rule. Arguably, they were not because their activities were Connecticut-based, and they did not engage in foreign or interstate commerce. Although some worker's rights advocacy groups have heralded Bissonnette a &ldquo;win&rdquo; for workers, the Court&rsquo;s focused ruling&mdash;which clarifies the exemption&rsquo;s requirements&mdash;limits &sect; 1 to its appropriately narrow scope.</p> We invariably expect wage claim litigation to rise after the Court&rsquo;s ruling but expect arbitration agreements to remain in full force and effect with respect to most workers&rsquo; claims.</div>"Unpacking Noah's Ark: Lessons in Unfair Labor Practices and Good-Faith Negotiations" May 2024Employment & Labor Law Blog<p>ABSTRACT: In <i>Noah&rsquo;s Ark Processors, </i>LLC, the NLRB ruled that the company engaged in unfair labor practices by failing to negotiate in good faith, refusing to compromise, withholding relevant bargaining information, and prematurely declaring an impasse during negotiations with the United Food and Commercial Workers&rsquo; Union. The NLRB also found that the company had unlawfully threatened and terminated ten workers for participating in an unauthorized work stoppage. As a result, the NLRB called for severe remedies, which were upheld by the Eighth Circuit Court of Appeals.</p> <div> <p>The dispute in <i>Noah&rsquo;s Ark Processors </i>arose following the expiration of the previous collective-bargaining agreement between the company and the UFCW. Negotiations ensued, but the company&rsquo;s representative, an administrative assistant lacking decision-making authority, hindered progress. Consequently, the Union filed charges with the NLRB, prompting a court-issued injunction compelling Noah&rsquo;s Ark to resume negotiations.</p> <p>However, throughout the resumption of negotiations, Noah&rsquo;s Ark repeatedly presented regressive offers that deviated from previous agreements and sought to roll back established benefits for employees. These offers included proposals to eliminate binding arbitration for labor grievances, subcontract existing operations, cut vacation days, and limit holiday pay. Despite minor concessions on certain issues, the company remained steadfast in its refusal to compromise on critical matters, such as working hours and arbitration of grievances. After only two months of negotiations, Noah&rsquo;s Ark declared another impasse and implemented their proposals.</p> <p>The Union reacted by filing another complaint. An administrative-law judge found that Noah&rsquo;s Ark's had failed to negotiate in good faith and prematurely declared an impasse. In addition to issuing another bargaining order to keep negotiating with the union, the ALJ ordered Noah&rsquo;s Ark to provide backpay to the ten terminated employees, reimburse the union for bargaining expenses, and required its CEO to read a remedial notice at an all-employee meeting. The Board adopted the ALJ&rsquo;s remedies and imposed additional remedies including ordering Noah&rsquo;s Ark to mail a copy of the remedial notice to every employee, post the notice in its plant, and allow NLRB representatives to inspect the facility for up to a year.</p> <p>On appeal, the Eighth Circuit rejected the company&rsquo;s argument that the Board&rsquo;s extraordinary remedies requiring reimbursement of bargaining expenses and reading of a remedial notice by the CEO were unjustified. Concluding that &ldquo;the remedies in question are not beyond those that have been imposed in other extreme cases&rdquo; &ndash; and additionally noting that Noah&rsquo;s Ark had failed to properly preserve this issue for appeal by raising it before the Board &ndash; the Court granted enforcement of the Board&rsquo;s order in its entirety.</p> The NLRB&rsquo;s General Counsel has urged its regional offices to pursue the &ldquo;full panoply&rdquo; of remedies for employer unfair labor practices, and the <i>Noah&rsquo;s Ark </i>case makes it clear that especially in cases involving egregious facts, that approach will be followed. While the NLRB and Eighth Circuit decisions break no new ground, they serve as a reminder that the duty to bargain in good faith lies at the core of the National Labor Relations Act, and that bad-faith, &ldquo;take it or leave it&rdquo; collective bargaining will not pass legal muster.</div>'s New Rule Effectively Bans Non-Competes – What Now? May 2024Employment & Labor Law Blog<p>ABSTRACT: A new FTC rule bans most non-competes, with the stated objectives of generating over 8,500 new businesses annually, raising wages, lowering healthcare cost, and boosting innovation. The Biden Administration views this as part of a broader effort to address anticompetitive practices.&nbsp; Legal challenges are underway by various business groups; however, the Rule maintains substantial support in other quarters.</p> <div> <p>The Federal Trade Commission issued the <b>Non-Compete Clause Rule</b> (the &ldquo;Rule&rdquo;) on April 23, 2024, by narrow 3-2 vote, banning a vast majority of non-competes nationwide. Both existing and new non-competes are no longer enforceable. &nbsp;Limited exceptions exist for non-competes with &ldquo;senior executives&rdquo;&mdash;defined as workers earning more than $151,164 annually and who are in policy-making positions&mdash;and non-competes created subsequent the sale of a business, which may still be enforced. &nbsp;The Rule states that all employers with now unenforceable non-competes are required to provide notice to affected employees that the non-compete is now void.</p> <p>The Rule was originally posted for comment in January 2023, receiving over 26,000 comments during the required 90-day public comment period&mdash;more than 25,000 of which support this proposed ban.&nbsp; The FTC found non-competes &ldquo;an unfair method of competition, and therefore a violation of Section 5 of the FTC Act,&rdquo; noting there are alternatives to non-compete agreements, such as trade secret laws and non-disclosure agreements; notably, nearly 95 percent of workers with non-compete agreements also have non-disclosure agreements. &nbsp;The FTC argues companies can retain workers previously subject to non-competes &ldquo;on the merits,&rdquo; by raising wages, increasing benefits, and improving their work environment. &nbsp;Other groups in favor of this ban argue non-competes restrict job mobility, depress wages, and quash innovation by limiting employees seeking to start their own companies.</p> <p>Importantly, the Rule traces back to the Biden Administration&rsquo;s 2021 &ldquo;Executive Order on Promotion Competition in the American Economy.&rdquo;&nbsp; That Executive Order encourages all relevant federal agencies to address anticompetitive practices within their scope of jurisdiction.&nbsp; Because of this, opponents argue that the FTC, with this Rule, extends past its jurisdictional reach.</p> <p>The U.S. Chamber of Commerce, along with other prominent groups like the Business Roundtable, immediately sued the FTC in federal court in Texas after the announcement. &nbsp;The USCC contends the FTC lacks authority to promulgate this Rule, stating this type of monumental change in business practice must to be passed by Congressional vote instead. &nbsp;Additionally, many critics state the Rule imposes extraordinary burdens on businesses in protecting their trade secrets, will cause inflation to skyrocket due to predicted wage increases, and ignores state sovereignty since existing state laws already govern non-competes and should continue to do so. &nbsp;While many states have various laws limiting non-competes in some way, only four have banned them entirely prior to this Rule.</p> <p>The lawsuits could take months (or longer) to unfold and may put the status of non-competes, and the employees that hold them, in limbo.&nbsp; The Rule, while final, is not effective until 120-days after the date of its publication in the Federal Register.&nbsp; Currently, the Rule is scheduled for publication on May 7, 2024, putting the Rule into effect September 4, 2024.&nbsp; Therefore, it is vital for employers to assess what steps must be taken now to prepare.&nbsp; Employers not only must inform their current employees of any applicable changes, but must also shift their hiring and retention strategies.</p> <p><b>Key Takeaways</b></p> <p>Even in light of current challenges, employers should remain proactive in preparing for the Rule&rsquo;s publication and enforcement by:</p> <ul> <li>Evaluating current employee contracts for non-compete provisions which violate the Rule, assessing whether revision or rescission is required;</li> <li>Identify ways to meaningful meet employer&rsquo;s goals (protect proprietary information; evaluate trade secrets, non-disclosure agreements, confidentiality practices; etc.) while balancing employee satisfaction and allegiance (performance-focused incentives; benefits; work environment/culture; etc.); and</li> <li>Begin drafting requisite (per the Rule) correspondence to current and former employees about any non-competes no longer enforceable.</li> </ul> </div> Supreme Court establishes elements of a claim for aiding and abetting discrimination, and more Mar 2024Employment & Labor Law Blog<p>ABSTRACT: Missouri Supreme Court establishes elements of claim for aiding and abetting discrimination under the MHRA, and also finds that employees may state a claim for hostile work environment, even if they did not directly witness the discriminatory conduct, because they too may feel the impact of discriminatory acts.</p> <div> <p>In an earlier blog I wrote that the Missouri Court of Appeals, Western District, had overruled the Circuit Court&rsquo;s dismissal of claims for racial discrimination, hostile work environment, and aiding and abetting discrimination filed by several Black employees of Syncreon and Harley Davidson. <i>See</i> <i>Emanual Matthews, et al. v. Harley Davidson Motor Company Operations, Inc., et al</i>., No. WD85267 (May 2023). Subsequently, Syncreon and Harley sought transfer to the Missouri Supreme Court, which was granted. Once transferred, the Missouri Supreme Court reviewed the Circuit Court&rsquo;s grant of the defendants&rsquo; motion to dismiss <i>de novo</i>.</p> <p>The Supreme Court considered two issues: whether the Circuit Court erred in granting a motion to dismiss: (1) the plaintiffs&rsquo; claim for a hostile work environment; and 2) the plaintiffs&rsquo; claims for aiding and abetting discriminatory conduct. The Missouri Supreme Court held that the plaintiffs had sufficiently pleaded claims for both hostile work environment and aiding and abetting, reviving those claims and remanding the case to the trial court.</p> <p><b><i>Hostile Work Environment Claim </i></b></p> <p>Regarding the plaintiffs&rsquo; hostile work environment claim, Syncreon and Harley argued that the plaintiffs failed to properly plead two required elements. First, the defendants argued the plaintiffs failed to plead they were subjected to unwelcomed harassment. The Supreme Court disagreed. The plaintiffs&rsquo; Petition stated that Syncreon and Harley subjected the plaintiffs to a &ldquo;continuous pattern of hostile work environment based on race discrimination &ndash; including outrageous instances such as swastikas, nooses, a noose hanging a doll of a Black woman, and multiple graffiti using vile racial slurs against Black employees,&rdquo; all of which the plaintiffs alleged constituted &ldquo;individually and collectively, racial harassment.&rdquo;</p> <p>As they did before the Court of Appeals, the defendants primarily focused on their argument that none of the plaintiffs pleaded they personally witnessed or experienced any of the incidents that they complained about. The Supreme Court noted the incidents complained of were, by their very nature, targeted, and preyed on all Black employees in the plant. Because the plaintiffs alleged they were &ldquo;subjected to&rdquo; this unwelcome harassment, the Supreme Court held this element of a hostile work environment claim was sufficiently pleaded.</p> <p>The defendants further claimed the plaintiffs failed to plead that a term, condition, or privilege of their employment was affected by harassment &ndash; another necessary element. Again, the Supreme Court disagreed. The plaintiffs had pleaded that the &ldquo;ongoing series and cumulative effect&rdquo; of the racial incidents they alleged &ldquo;was so pervasive or severe as to create a hostile work environment&rdquo; for each plaintiff, which directly caused the plaintiffs damages and injury to their dignity and civil rights. Additionally, the plaintiffs alleged the harassment unreasonably interfered with their work performance and adversely affected their physiological well-being. They also pleaded that the harassing conduct was severe and pervasive as viewed subjectively by the plaintiffs and as viewed objectively by a reasonable person.</p> <p>The Supreme Court held these allegations sufficiently alleged that the plaintiffs were subjected to discriminatory harassment severe or pervasive enough to create an abusive working environment.</p> <p><b><i>Aiding and Abetting Discrimination Claim </i></b></p> <p>Next, the Supreme Court addressed whether the plaintiffs had sufficiently pleaded their claims that Syncreon and Harley aided and abetted violations of the MHRA. This was a matter of first impression, as the Supreme Court had never previously set forth the ultimate facts necessary to support an aiding and abetting claim under the MHRA.</p> <p>Interestingly, the Supreme Court relied on the Restatement (Second) of Torts, which provides, in pertinent part:</p> <p style="margin-left: 40px;"><i>For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he&hellip;. knows that the other&rsquo;s conduct constitutes a breach of duty and gives substantial </i><b><i>assistance or encouragement</i></b><i> to the other so to conduct himself. </i></p> <p style="margin-left: 40px;"><i>The assistance of or participation by the defendant may be so slight that he is not liable for the act of the other.</i></p> <p style="margin-left: 40px;">Restatement (Second) of Torts &sect; 876 cmt. D (1979). Emphasis added.</p> <p>In assessing whether a defendant provided substantial encouragement or assistance, the Supreme Court noted it considers &ldquo;the nature of the act encouraged, the amount of assistance given by the defendant, his presence or absence at the time of the tort, his relation to the other, and his state of mind&rdquo;. <i>Id.</i></p> <p>In applying this standard, the Supreme Court first noted the alleged actions of the defendants, individually, would constitute a violation of the MHRA. However, the Court found the plaintiffs pleaded sufficient additional facts that the defendants further aided and abetted others in creating and fostering a hostile work environment.</p> <p>The plaintiffs specifically pleaded multiple instances that Syncreon provided substantial encouragement or assistance, including allegations it urged employees to stay quiet about incidents that allegedly created a hostile environment, discarded written employee complaints in the trash, and misled an employee as to the status of an investigation into a noose incident. The Supreme Court held all of these actions taken by Syncreon could be inferred to suggest that it not only allowed but also provided substantial encouragement or assistance to create and foster a hostile work environment. The Supreme Court also held the plaintiffs sufficiently pleaded an aiding and abetting claim against Harley Davidson. They alleged Harley had the right to control Syncreon. Further, the plaintiffs claimed Harley&rsquo;s command over the employment structure and the resulting deference shown to its&rsquo; management by Syncreon reinforced the plaintiffs&rsquo; physical segregation and endorsed the ongoing structural conflict between Black and White employees. The Court noted the plaintiffs recited multiple occasions where Harley failed to prohibit Syncreon management or its own employees from engaging in acts creating the alleged hostile work environment.</p> <p>By pleading that either Syncreon or Harley management attempted to destroy evidence of racial harassment, the Supreme Court held the plaintiffs sufficiently alleged that Syncreon, Harley, or both substantially encouraged or assisted the discriminatory conduct that created and fostered a hostile work environment. Similarly, the plaintiffs had also pleaded that a plant manager told a supervisor to dispose of a noose and that an employee witnessed the supervisor cutting up the noose. Because these allegations also amounted to substantial encouragement or assistance, the Supreme Court found the plaintiffs sufficiently pleaded claims against both Syncreon and Harley for aiding and abetting under the MHRA.</p> <p><b>Final Points</b></p> This case raises two important points.&nbsp; First, the Missouri Supreme Court allowed claims under the Missouri Human Rights Act to proceed, even where the plaintiffs did not directly witness the alleged discriminatory acts, emphasizing that the impact of discriminatory acts may extend beyond those who directly witness them. Second, the Supreme Court spelled out for the first time requirements of an aiding and abetting discrimination claim under Missouri law. On February 13, 2024, the defendants filed a motion for rehearing with the Supreme Court. It is unlikely that motion will be granted. Stay tuned.</div> Lacked Substantial Evidence to Find Unfair Labor Practice, Eighth Circuit Finds Feb 2024Employment & Labor Law Blog<p>ABSTRACT: The Eighth Circuit ruled that the NLRB lacked substantial evidence of anti-union animus to support unlawful discharge charges.</p> <div> <p>The Eighth Circuit Court of Appeal has <a href="">reversed</a> a decision of the National Labor Relations Board, ruling that the Board&rsquo;s decision lacked substantial evidence to support an unfair labor practice charge of unlawful termination under the Act. The Court held that the absence of evidence of anti-union animus was fatal to the challenge to an Air Force contractor&rsquo;s decision to terminate 17 employees. The Court&rsquo;s decision provides important guidance about the types of permissible inferences the Board may make in the absence of &ldquo;direct evidence&rdquo; of anti-union animus.</p> <p>Strategic Technology Institute, Inc. had a contract with the Air Force to repair components of C-130 cargo planes at a base near Little Rock, Arkansas. Importantly, the supervisor for this unit of aircraft mechanics worked remotely from Texas and was generally not present in Little Rock. An employee resigned from his position with STI, and in an exit survey, he disclosed that deteriorating working conditions had caused workers to explore unionizing. That employee spoke with the supervisor and mentioned that employees were considering unionizing. The previous year, the International Association of Machinists and Aerospace Workers successfully petitioned to represent a group of employees with another employer at the same base. Thus, according to the ALJ and the Board, there was ample evidence of union activity as a backdrop to the events that followed.</p> <p>Then, a screwdriver was found on or inside an engine component, and the Air Force issued a Corrective Action Report to STI. STI responded by discharging three employees for the safety violation and reporting to the Air Force &ndash; inaccurately &ndash; that prior training, re-training, and counseling had been ineffective in correcting the employees&rsquo; prior performance problems. Shortly after the discharges, the STI manager instructed the on-site assistant manager to rate all 41 employees at the Little Rock location. The assistant manager rated all 41 employees a &ldquo;3&rdquo; (out of 5), and because each employee had the same rating, they were ranked at random. The bottom 14 employees on the list were all discharged. Additionally, following the discharge, the manager placed identical verbal counseling forms in the 14 terminated employees&rsquo; personnel files, indicating, falsely, that each had received prior instances of training, re-training, and counseling, as well as a history of failure to comply with instructions from management.</p> <p>The Board affirmed the ALJ&rsquo;s decision finding that STI discharged the 17 employees in violation of Section 8(a)(1) and (a)(3) of the Act. The Board found that management had actual knowledge of union organizing efforts but acknowledged there was no traditional &ldquo;direct evidence&rdquo; of anti-union animus of management. Management denied knowledge of union organizing, but the Board applied the &ldquo;small plant doctrine,&rdquo; which raises an inference of knowledge in small and open work sites where employees have made no effort to hide their union activities.</p> <p>The Board also affirmed the ALJ&rsquo;s finding that STI management&rsquo;s planting &ldquo;outright lies&rdquo; in the discharged employees&rsquo; personnel files made its proffered explanation pretextual. As a result, the Board was permitted to make an inference of anti-union animus. The Board ordered a make-whole remedy for the employees, including reinstatement with back pay and benefits.</p> <p>STI petitioned the Eighth Circuit to review the Board&rsquo;s decision. The Court granted the petition, vacated the Board&rsquo;s decision, and remanded the case. The Court applied the <i>Wright Line </i>standard for determining an unlawful discharge. Under that standard, where the motive for termination is disputed, and an employer articulates a facially legitimate reason for the termination, the Board&rsquo;s General Counsel must prove that protected activity was a &ldquo;substantial or motivating factor&rdquo; in the decision. If the GC meets that burden, the employer then must show that it would have taken the same action in the absence of the protected activity. The Court emphasized that to meet the substantial evidence standard, the Board could draw reasonable inferences from the evidence but could not rely on speculation, suspicion, or surmise.</p> <p>The Court&rsquo;s decision is primarily based on the lack of evidence of anti-union animus, which made any inferences of anti-union animus unreasonable, and in turn, meant the decision was not supported by substantial evidence. The Court rejected the Board&rsquo;s application of several inferences to determine that the discharges violated the Act. First, while the &ldquo;small plant doctrine&rdquo; may be sufficient to impute knowledge, in the Eighth Circuit, that doctrine alone is insufficient to infer anti-union animus. Second, the temporal proximity between union activity and the discharges was not sufficient to raise an inference that anti-union animus motivated STI&rsquo;s decision in the absence of additional evidence of animus.</p> <p>Third, pretext alone is insufficient to create an inference of anti-union animus. The Court found that falsified verbal counseling forms could create suspicion, they did not amount to substantial evidence of a violation of the Act, noting that under Arkansas law the employees were employed at will. Finally, the Court rejected the application of a &ldquo;mass discharge&rdquo; or &ldquo;mass layoff&rdquo; inference that would relieve the GC of the burden of showing a correlation between union activity and adverse action on an individual basis. Under that standard, the presence of union activity and any mass discharge permits a plant-wide inference of anti-union animus.</p> <p><b><i>Key Takeaways:</i></b></p> <ul> <li>The ALJ noted that the GC asked that the Board overrule its 2019 decision in <i>Tschiggfrie Props., Ltd.</i>, which requires the GC to prove a nexus between anti-union animus and the termination. The ALJ declined to overrule <i>Tschiggfrie</i>, so the requirement remains in force. However, the <i>Wright Line </i>standard was clarified by the Board&rsquo;s 2023 <i>Intertape Polymer Corp.</i> decision to affirm that the Board may support its decision with either direct or circumstantial evidence.</li> <li>This case involves the common, more difficult situation in which there is no &ldquo;direct evidence&rdquo; of anti-union animus, such as a manager&rsquo;s disparaging remarks or an employer&rsquo;s open efforts to resist unionizing.&nbsp; The Eighth Circuit&rsquo;s analysis tracks with the more familiar <i>McDonnell Douglas</i> burden-shifting framework, which requires more than just evidence of pretext to establish a claim, but requires a showing of pretext <i>and </i>evidence of discriminatory intent.</li> </ul> <p>The NLRB has petitioned for an <i>en banc</i> rehearing of the case. If rehearing is denied, or the panel&rsquo;s decision affirmed, it is unclear whether the Board would petition for certiorari with the Supreme Court. Given the Court&rsquo;s recent trend towards limiting administrative agencies&rsquo; discretion, an appeal is unlikely to succeed.</p> <p><i>*&nbsp;</i><em>Kaleb McKinnon, Law Clerk, assisted in the research and drafting of this post. McKinnon is a 3L student at Drake University Law School.</em></p> </div> quiet so far after new standard is adopted for challenging workplace rules under the NLRA. But stay tuned….. Jan 2024Employment & Labor Law Blog<p>ABSTRACT: The NLRB&rsquo;s <i>Stericycle</i> decision was the subject of hundreds of articles and employment law blogs when issued in August 2023, due to its adoption of a new employee-friendly standard for challenging workplace rules as unlawful under the NLRA. Employers were plainly fearful of what was to come. Since then, however, things have seemingly been relatively quiet on the topic. But the Board has remanded for further consideration some pending cases in which Administrative Law Judges reviewed workplace rules under the previous <i>Boeing </i>standard. Join us for a quick status update, as we examine a few recent decisions issued by the NLRB that touch on this new standard.</p> <div> <p>The NLRB issued the <i>Stericycle, Inc.</i> decision, 372 NLRB No. 113 (2023), last August, which was widely reported on and the subject of many blog posts because the Board had adopted a new legal standard for evaluating employer work rules (i.e., handbook policies) that were challenged as &ldquo;facially unlawful&rdquo; under Section 8(a)(1) of the National Labor Relations Act. That decision threw employers into a tizzy, leaving them concerned about potential attacks on their Employment Handbooks and other workplace policies, and rightfully so. Surprisingly, since August it has been relatively quiet with the NLRB not making much noise about workplace policies. For this reason, we sought out and reviewed some of the most recent decisions to see where things stand on <i>Stericycle</i>.</p> <p>First, let&rsquo;s talk briefly about the new <i>Stericycle</i> standard. It focuses on whether a workplace rule could <i>reasonably</i> be interpreted to chill employees Section 7 rights, and the General Counsel&rsquo;s burden is to prove that a challenged workplace rule has a reasonable tendency to chill employees from exercising their rights. The <i>Stericycle</i> Board found that &ldquo;if an employee could reasonably interpret the rule to have a coercive meaning, the General Counsel will carry her burden,&rdquo; creating a presumption that the rule is unlawful &ldquo;even if a contrary, noncoercive interpretation of the rule is also reasonable.&rdquo; Another critical change was that the Board will now analyze the workplace rule from the perspective of an &ldquo;economically dependent&rdquo; employee, who contemplates engaging in protected activity. Under <i>Stericycle</i>, the employer may rebut the presumption that its workplace rule is unlawful by establishing that the rule advances a &ldquo;legitimate and substantial business interest&rdquo; and that the employer is not able to advance that interest with a more narrowly tailored rule. The employer&rsquo;s intention in creating the rule is irrelevant.&nbsp; Previously, the Board had applied the standard set forth in its <i>Boeing </i>&nbsp;decision (365 NLRB No. 154 (2017)), where it would determine whether employee Section 7 rights had been infringed, by balancing the nature and extent of the potential impact on NLRA rights, against an employer&rsquo;s legitimate justifications associated with the rule. This would be examined from the perspective of an &quot;objectively reasonable employee who is aware of his legal rights but who also interprets work rules as they apply to the everydayness of his job.&quot;</p> <p>Since the <i>Stericycle </i>ruling, the Board has remanded several pending cases challenging workplace policies, where the Administrative Law Judge had applied the <i>Boeing </i>standard in reaching a determination.&nbsp; Here is a summary of a few of those decisions:</p> <p>In <i>Phillips 66 Company and Wayne Micheal Terrio</i>, Case 15-CA-263727, decided on December 6, 2023, the Board largely upheld an ALJ&rsquo;s ruling (under <i>Boeing </i>standards) sustaining the validity of several workplace policies, finding that they passed muster under <i>Stericycle. </i>But the ALJ&rsquo;s ruling on a work rule restricting employees&rsquo; use of cameras did not pass Board scrutiny.While the Judge had found the employer&rsquo;s rule to be categorically lawful under <i>Boeing</i>, the Board noted that the recent <i>Stericycle</i> case rejected the categorization of certain types of work rules as always lawful to maintain. For this reason, the Board severed and remanded the issue of whether the camera-use work rules were unlawful under <i>Stericycle</i> back to the ALJ.</p> <p>Likewise, in <i>Harbor Freight Tools USA and Daniel Ruiz, Sr.</i>, Case No. 28-CA-232596, the Board reviewed exceptions submitted to the ALJ&rsquo;s decision after a 2020 trial. This underlying case involved a complaint that alleged three workplace policies in an Employee Handbook violated Section 8(a)(1).</p> <p>The challenged policies were a &ldquo;Proprietary and Confidential Information&rdquo; policy, a &ldquo;Social Media and Networking Guidelines&rdquo; policy, and a &ldquo;Solicitation and/or Distribution&rdquo; policy. The ALJ found the first and third policies violated the National Labor Relations Act. In reviewing the decision, the Board affirmed the Judge&rsquo;s finding that the portion of the &ldquo;Solicitation and/or Distribution&rdquo; rule restricting employees&rsquo; solicitation activity was overly broad in violation of Section 8(a)(1).&nbsp; The Board severed and remanded the complaint allegations related to the &ldquo;Proprietary and Confidential Information&rdquo; policy, directing the Judge to consider the policy under the new <i>Stericycle</i> standard.</p> <p>Interestingly, the employer&rsquo;s solicitation policy was determined to be overbroad because it failed to clarify that the solicitation restriction did not apply to working areas during non-working time. Under the current standards, while an employer may ban solicitation in work areas during working time, an employer may generally not extend the solicitation ban to work areas during non-working time. <i>See Stoddard-Quirk Mfg. Co.</i>, 138 NLRB 615 (1962). While the rule expressly allowed the employees to solicit coworkers during breaks, lunches, and other non-working times, it was determined the workplace rule unlawfully limited the solicitation to non-work areas.</p> <p>In this regard, in its December 2023 decision, the Board ordered the employer to cease and desist from maintaining an overly broad work rule that prohibits nonretail employees from engaging in protected solicitation during non-working time in working areas and that prohibits retail employees from engaging in protected solicitation in non-selling areas of a retail store, including any areas where retail employees perform &ldquo;actual work&rdquo; and &ldquo;any areas where customers or clients may congregate or employees may perform work.&rdquo; Based on this ruling, employers may be wise to review for compliance any policies limiting or restricting workplace solicitation.</p> <p>Regarding the &ldquo;Proprietary and Confidential Information&rdquo; policy, since the underlying decision finding that policy unlawful had been based on the application of the former <i>The Boeing Co.</i>, standard, the Board severed and remanded the workplace policy issue to the ALJ, directing the Judge to consider the policy under the new <i>Stericycle</i> standard.</p> <p>Similarly, in <i>ExxonMobil Global Services Company and Leo R. Suarez</i>, Case 16-CA-269606, the Board reviewed an ALJ ruling on a complaint that a &ldquo;Corporate Assets Policy&rdquo; violated Section 8(a)(1). In evaluating the workplace rule, the ALJ had applied the former <i>Boeing</i> standard. As a result, the Board remanded the case to the ALJ and directed the Judge to address the complaint allegations under the new standard adopted by <i>Stericycle</i>. Responding to a dissenting opinion, the Board made clear that <i>Stericycle</i> created a new standard, in that it makes explicit that an employer can rebut the presumption that a rule is unlawful by providing that it advances legitimate and substantial business interests that cannot be achieved by a more narrowly tailored rule. The dissenting board member, however, took issue with the Board&rsquo;s decision to remand the case. The dissenting Board member argued that remand was futile as no judge could possibly find a rule unlawful under <i>Boeing</i>, as the ALJ had, but lawful under <i>Stericycle</i>.&nbsp; For this reason, the dissenter took the position remand was simply a waste of everyone&rsquo;s time and money.</p> <p><b>Takeaway</b></p> Although it has been relatively quiet the past several months with little to no cutting-edge post-<i>Stericycle</i> NLRB decisions on challenged workplace rules, as expected, workplace policies continue to be challenged as unlawful under the NLRA. Presently, due to its retroactive application of the new <i>Stericycle</i> decision, the Board is routinely remanding cases that come up for review decided under the former <i>Boeing</i> standard and directing the administrative law judges to evaluate the challenged policies under the <i>Stericycle</i> standard. Stay tuned as these cases and others make their way through the system and we begin to obtain a clearer view of the impact of the new standard.</div>