News

UT Law Graduate Receives Equal Justice Works Fellowship

Kirsten Jacobson, a 2016 graduate of the University of Tennessee College of Law, recently was awarded a competitive, two-year postgraduate fellowship by the nonprofit Equal Justice Works. Jacobson will work with the Tennessee Alliance for Legal Services (TALS) in Nashville to expand access to justice in the state. Her work – which will focus on increasing use of TALS’ existing services, creating a legal wellness evaluation, establishing a forum for legal aid IT staff to share best practices and identifying new technology projects statewide – will be funded by Memphis-based International Paper Company.

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TALS Names 2016 Access to Justice Award Recipients

The Tennessee Alliance for Legal Services (TALS) today named its 2016 Access to Justice Award honorees. The Janice M. Holder Award will go to Jim Barry and Sharon Ryan of International Paper in Memphis. The B. Riney Green Award will go to Craig Barnes of Memphis Area Legal Services and Russell Fowler of Legal Aid of East Tennessee in Chattanooga. And the New Advocate of the Year Award will go to Zachary Oswald with the Nashville office of the Legal Aid Society of Middle Tennessee and the Cumberlands. Learn more about the award recipients and make plans to join colleagues at the Equal Justice Conference on Aug. 31 for the award ceremony.

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Corporate Counsel Courses Now Online

Did you miss the 2016 Corporate Counsel forum? Good news, you can now stream high-quality online videos from the program on our website. Sessions cover ERISA and ACA litigation updates, new federal overtime rules, OSHA investigations and recent developments in employment law.

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Court Adopts New Standard for Shareholder Lawsuits

In a case involving claims between siblings who were shareholders in a closely held family corporation, the Tennessee Supreme Court today adopted a new standard for when a shareholder can file a direct lawsuit on claims that concern the corporation. The decision overturned a ruling by the Court of Appeals and set aside Tennessee’s prior standard. In its place, the court adopted a standard used in Delaware that “is clear and easily understood” and “should facilitate consistent and predictable outcomes in disputes involving shareholder claims.” Chattannoogan.com has the story.

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July 1 Deadline Looms for In-house Counsel

In-house counsel working in Tennessee without a Tennessee law license now have just days to register with the Board of Law Examiners before a July 1 deadline. If they do not file by that date, they face discipline and a bar examination in order to continue practicing in Tennessee, according to the Administrative Office of the Courts. The July 1 deadline marks the end of an amnesty period granted by the Tennessee Supreme Court in January, when changes to the Rules of Professional Conduct and attorney licensing policies went into effect.

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Learn About New Overtime Rule in 1-Hour Webcast

Nashville attorneys Stanley Graham and Andrew Naylor, both of Waller Lansden Dortch & Davis LLP, will explain the new federal overtime rule in a one-hour webcast CLE on June 28 at noon CST. The changes include increasing the minimum salary required for exempt employees from $23,660 to over $47,000 per year. The course, approved for one CLE credit, will replay on July 21. 

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Out-of-state In-house Counsel Must Register by July 1

In-house counsel working in Tennessee without a Tennessee law license have until July 1 to register with the Board of Law Examiners or face discipline and a bar examination in order to continue practicing in the state. Changes to Supreme Court Rule 7 adopted by the court in December set up the amnesty provision and the July 1 deadline. 

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Register Today for the 135th Annual TBA Convention

Join us on June 15-18 in Nashville for the 135th Annual Convention! Registration for the 2016 TBA Convention includes:

  • free access to all TBA CLE programming;
  • the Opening Reception;
  • the Bench Bar Programming and Luncheon;
  • Law School and general breakfasts;
  • the Lawyers Luncheon;
  • the Thursday evening Joint (TBA/TLAW/TABL) Reception;
  • the Thursday night dinner and entertainment at the George Jones Museum;
  • and the Friday night Dance Party.

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Court Upholds Tax Variance on Verizon Parent Company

The Tennessee Supreme Court today upheld a decision by the Tennessee Department of Revenue to impose a tax variance on the parent company of Verizon Wireless and ruled the Commissioner of Revenue was within his authority to impose the variance. The lawsuit, filed in 2007 by Vodafone Americas Holdings Inc. and its subsidiaries, asked Tennessee to refund nearly all state franchise and excise taxes it had paid from 2002-2006. The company claimed the apportionment formula in Tennessee’s franchise and excise tax has been incorrectly applied. The Commissioner of Revenue then decided to impose on Vodafone a tax variance that required the company to pay franchise and excise taxes by a formula that varied from the standard apportionment formula in Tennessee’s tax statutes. The trial court and the Court of Appeals both upheld the Commissioner’s decision to issue the tax variance. Read the majority opinion in Vodafone Americas Holdings, Inc. v. Reagan Farr, authored by Justice Holly Kirby, and the dissent by Justice Jeffrey S. Bivins.

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Pro Bono Event Pushes Fundraising Past Half Million Mark

Tennessee lawyers helped raise more than $45,000 to help legal aid programs in the state at the Corporate Counsel Pro Bono Initiative Gala Saturday in Nashville. Now in its 10th year, the event has raised more than half a million dollars to support pro bono efforts that engage in-house and corporate counsel. This year’s event was hosted by Bass, Berry & Sims, and featured honors for an outstanding law firm and legal department, recognized for ongoing commitment to promoting access to justice programs for low-income and vulnerable Tennesseans. This year, Baker, Donelson, Bearman, Caldwell & Berkowitz and International Paper Company were honored for their successful efforts. Tennessee Supreme Court Chief Justice Sharon Lee provided the keynote address.

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Corporate Counsel Pro Bono Initiative Gala Celebrates a Decade of Service

Event Honors Attorneys, Raises Money for Legal Aid Groups

(NASHVILLE, March 5, 2016) — Tennessee lawyers helped raise more than $45,000 to help legal aid programs in the state at the Corporate Counsel Pro Bono Initiative Gala. Now in its 10th year, the event has raised more than half a million dollars to support pro bono efforts that engage in-house and corporate counsel. This year’s event was hosted by Bass, Berry & Sims, and featured honors for outstanding law firm and legal department, recognized for ongoing commitment to promoting access to justice programs for low-income and vulnerable Tennesseans.

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Corporate Counsel Pro Bono Initiative Gala is March 5

The TBA Access to Justice Committee, in partnership with the TBA Corporate Counsel Section and the Association of Corporate Counsel, is hosting the 10th annual Corporate Counsel Pro Bono Initiative Gala on March 5 in Nashville. The gala, which will be held at the Pinnacle at Symphony Place, will feature remarks from Tennessee Supreme Court Chief Justice Sharon Lee. The CCPBI awards will be presented for outstanding law firm and legal department. The deadline to become an event sponsor or purchase tickets is Friday. Contact Liz Todaro, TBA programs director / access to justice coordinator, for more information.

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Supreme Court Decides King v. Burwell

By Jeffrey P. Justman and Aaron D. Van Oort

On June 25, 2015, the Supreme Court of the United States decided King v. Burwell, No. 14-114, holding that tax credits authorized under the Patient Protection and Affordable Care Act are available to individuals who purchase insurance through a federal exchange.

When Congress passed the Patient Protection and Affordable Care Act (ACA) in 2010, it created three interlocking reforms designed to expand coverage in the individual health insurance market. First, it barred insurers from denying coverage to any person and from charging higher premiums because of the person’s health. Second, it required all individuals to purchase individual health insurance or make a payment to the IRS; it exempted anyone who had to spend more than 8 percent of his income on health insurance. And third, it gave refundable tax credits to individuals with a household income between 100 percent and 400 percent of the federal poverty line. Congress found that the first reforms would not work without a coverage requirement, and the coverage requirement would not work without the tax credits.

Congress also required the creation of insurance “Exchanges” in each state where individuals can shop for health insurance. The ACA specifies that an “Exchange” may be created either by a state, or if a state chooses not to create one, by the federal government, through the department of Health and Human Services (HHS). Sixteen states and the District of Columbia created state exchanges, and the other 34 states have elected to have HHS do so.

The state of Virginia did not establish a state exchange, and instead had one established by HHS (a Federal Exchange). Several Virginia residents who did not wish to purchase health insurance filed a lawsuit challenging a specific interpretation of the ACA—an IRS rule providing that a taxpayer is eligible for a tax credit if he is enrolled in any “Exchange,” whether State or Federal. The ACA states that tax credits are available to individuals who enroll in a health insurance plan “established by the State,” and the Virginia residents argued that the Federal Exchange did not satisfy that definition. If the tax credits were not available to them because the Federal Exchange was not “established by the State,” then the cost of health insurance would exceed 8 percent of their income and they would be exempt from having to buy it.

The United States District Court for the Eastern District of Virginia dismissed the lawsuit, holding that the ACA unambiguously made tax credits available to individuals enrolled through a Federal Exchange. The United States Court of Appeals for the Fourth Circuit affirmed, but under a different rationale: the ACA’s “established by a State” provision was ambiguous, and the IRS’s interpretation of that provision warranted deference under the doctrine of Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). But on the same day, the United States Court of Appeals for the District of Columbia Circuit vacated the IRS rule, holding that the ACA “unambiguously restricts” tax credits to state exchanges only.

The Supreme Court granted certiorari and affirmed, holding that tax credits authorized under the ACA are available to individuals in states with a federal exchange. The Court first rejected the Fourth Circuit’s reliance on so-called Chevron deference, because it was unlikely that Congress would have implicitly delegated to the IRS the task of interpreting a statute that involved “billions of dollars in spending each year” and affected “the price of health insurance for millions of people.”

The Court then applied principles of statutory interpretation, first examining whether the meaning of “established by a State” was plain and unambiguous. Although the Virginia residents’ argument about the plain meaning of that provision—that a “state” did not include the “Federal Exchange”—was “strong,” the Court ultimately held that it was ambiguous when read in context with a view to the “overall statutory scheme.” Part of the ambiguity arose from interpretational absurdities with other parts of the statute; the Court explained that giving the phrase “established by the State” its most natural meaning would render other parts of the ACA meaningless or nonsensical. On top of that, other parts of the ACA assumed tax credits would be made available on both State and Federal exchanges.

Given Congress’s “inartful drafting,” the Court turned to the broader structure of the ACA. That was conclusive: the entire structure of the ACA was designed to expand individual health insurance coverage while controlling costs. The Virginia residents’ reading of the ACA, by contrast, “would destabilize the individual insurance market in any State with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid.” The Court relied upon empirical evidence that 87 percent of people who bought insurance on a Federal Exchange did so with tax credits, and virtually all of those people would have been exempt. “It is implausible that Congress meant the Act to operate in this manner,” the Court explained. Ultimately, the context and structure of the ACA compelled the Court to depart from what would otherwise have been the most natural reading of the phrase, “established by the State.” Such an interpretation avoided the “calamitous result that Congress plainly meant to avoid.”

Chief Justice Roberts delivered the opinion for the Court, in which Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan joined. Justice Scalia filed a dissenting opinion, in which Justices Thomas and Alito joined.

_______________________________________

Aaron D. Van Oort – Partner - Aaron Van Oort is a legal strategist, class action litigator, and appellate lawyer who co-chairs the Faegre Baker Daniels appellate advocacy group. Before joining the firm, Aaron clerked for Justice Antonin Scalia at the United States Supreme Court and for Chief Judge Richard Posner at the United States Court of Appeals for the Seventh Circuit.

Jeffrey (Jeff) P. Justman represents clients with complex business litigation matters in state and federal courts across the country. His two years of experience as a federal law clerk help him identify, craft and present winning legal arguments on behalf of his clients, both at the trial and appellate levels.

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The Year in Review for NLRB, EEOC and SCOTUS

The purpose of this article is to address broad changes in the law of the workplace over the past 12 months.

I. NLRB Developments

I will start with developments at the National Labor Relations Board (NLRB), beginning by noting three on-going themes:  (1) continuing expansion of the definition of "protected activity;" (2) the attacking of common employer policies as overbroad and illegal; (3) placing limits on confidentiality rules concerning employer investigations and settlements; (4) promotion of union organizing; and (5) joint employment issues.

A. Social Media and Protected Concerted Activity

The use of Facebook is becoming an employment issue as well as a social media. Some employers are actually conducting social media background checks in evaluating candidates for employment or promotion.  There have been some interesting legal developments from such reviews, particularly in light of the fact that some states have laws prohibiting reliance on non-work related issues in employment.  Recently, the NLRB has jumped into the picture.

The General Counsel of the NLRB has issued certain opinions and addressed certain Facebook issues. In one case, a Wal-Mart worker referred to as manager as a "puta," a derogatory Spanish word, on Facebook after an argument over store displays, and an Illinois bartender set forth his desire on Facebook to see the "redneck" patrons on the other side of the bar "choke on glass" as they drove home. The bartender also complained about the employer's policy barring him from sharing in tips given to servers.

In both cases, the workers appealed to the Labor Board to reverse their discharge and other discipline, and in both of the cases the NLRB declined to issue complaints on the workers’ behalf.  However, the NLRB filed a complaint against an ambulance service provider AMR for firing an employee who had called their supervisor a "mental patient" on her Facebook.  The employee had criticized her boss by stating, "love how the company allows a 17 to become a supervisor," with "17" being an insider's term for a psychiatric patient.  Her employer, American Medical Response, had a policy that forbid employees from criticizing the company on-line, but the Labor Board issued a complaint, arguing that such a policy was too broad, and that the on-line griping amounted to "protected concerted activity," for which an employer cannot fire or discipline a worker.  The NLRB basically argued that the Facebook chatter was no different from workers gathering around the water cooler to discuss working conditions.

In general, to be "protected, concerted" activity under NLRB protection, the activity must be both "protected," and "concerted."  To be “concerted” the activity must in some way relate to group action, such as "acting with the authority of" co-workers, seeking to initiate, and induce or prepare for a group action, or "bringing truly group complaints to the attention of management."  On the other hand, if the employees engaging in activities solely on behalf of the employee himself, or if the employee’s comments are deemed "mere griping," they are not protected by the Labor Board against employer retaliation.  The line gets even more difficult when the employee does something that can be argued to be "disloyal," and so outrageous to be beyond the context of being deemed "protected" activity.  In another case, the NLRB General Counsel concluded that an employee did not lose the protection of the Labor Act when she used the term "scumbag" and other similarly negative terms to describe her supervisor in remarks posted on her personal Facebook page.  He stated that "the Board has found more egregious name-calling protected."

B. NLRB Opens up Employer Email System to Union Organizing

In December 2014, NLRB held in Purple Communications that employees' use of an employer's email system to communicate with each other regarding union-related matters is generally a protected activity, at least where employer has given employees access to its email system.  The NLRB ruled that employees have a Section 7 right to use their employer’s email system for union organizing purposes during their non-working time.  Purple Communications, 361 NLRB No. 126 (December 11, 2014).  While the NLRB indicates that an employer may rebut the presumption by demonstrating special circumstances necessary to maintain production or discipline justifying restricting such rights, the discussion indicates that such circumstances will be rare.  The Board majority further indicates that its ruling does not prevent an employer from establishing uniform and consistently enforced restrictions, such as prohibiting large attachments or audio/video segments, if the employer can demonstrate that they would interfere with the email system’s efficient functioning. 

A second issue raised in the dissenting opinions relates to a concern that the decision "effectively requires employers to pay employees for the time reading and writing emails directly or even tangentially relating to terms and conditions of employment.  While the Board expressly limits these new rights to non-working time, the majority recognizes that email use may be more difficult to identify as occurring on working time or non-working time, particularly since the sender may be on non-working time but the receiver may be on working time.  The majority fails to directly answer this concern, other than to acknowledge the blurring of the line between working time and non-working time regarding emails, and to state that it cannot turn the calendar back to a simpler era with clearer boundaries.

In response to the dissenting members’ concerns that the new rule will have a "debilitating impact on productivity," the Board majority acknowledges that employers can monitor for misuse and reduced productivity.  In response to the dissenting members’ concerns that such monitoring will be deemed unlawful surveillance by the NLRB, the Board majority asserts that any surveillance activity by employers will be subject to the same standards that it applies to alleged surveillance in the brick-and-mortar world.  The Board majority asserts that an employer’s monitoring of electronic communications on its email system would be lawful as long as the employer does nothing out of the ordinary, such as increasing its monitoring during an organizational campaign or focusing its monitoring efforts on protected conduct or union activists.  The Board states an employer may notify its employees that it monitors (or reserves the right to monitor) computer and email use for legitimate management reasons and that employees may have no expectation of privacy in their use of the employer’s email system.

The Purple Communications ruling will require almost every employer in the country to revise its email policies.  A further dilemma for an employer will be whether to modify its email policies now, or await a likely review of the Purple Communications ruling by a federal court of appeals.  The nature of the issue, the history of NLRB rulings on the issue, and the strength of the two dissenting opinions, suggest that at least some circuits may not enforce the new NLRB ruling.  The issue will be particularly sensitive in the course of any union organizational campaign, as unions will likely attempt to use the employer’s email system through employee organizers, and ask for an injunction for such use should the employer resist.  Further, even if no injunction is granted, an employer’s policy that follows the earlier Register Guard ruling may result in objections to the election filed by the union should the employer prevail. 

C. NLRB Explains What Employer Rules are Unlawful and How to Make Them Lawful

On March 18, 2015, the NLRB General Counsel (GC), Richard Griffin, issued a report attempting to reduce some of the mass confusion over the NLRB's policies concerning employer handbooks and other company policies.  The GC acknowledges most employers do not draft their policies with the object of restricting conduct protected by the labor law, but states that the law does not allow even well-intentioned rules that would inhibit employees from engaging in protected activities.  The main principle is that the maintenance of a work rule may violate the law if a rule has a chilling effect on employees' protected activity.  The most obvious way a rule would violate the Act is by explicitly restricting protected concerted activity.  However, even if a rule does not explicitly prohibit protected activities, it will still be found unlawful if:  (1) employees would reasonably construe the rule's language to prohibit protected activity; (2) the rule was promulgated in response to union or other protected activities; or (3) the rule was actually applied to restrict the exercise of protected rights.  The GC states the vast majority of violations are found under the first prong, and the NLRB has issued a number of decisions interpreting whether "employees would reasonably construe" employer rules to prohibit protected activity. 

D. NLRB and EEOC Moving Toward Rulings That Employers Cannot Tell Employees to Keep Investigations Confidential

There have been two significant developments at both the NLRB and the Equal Employment Opportunity Commission (EEOC), suggesting that employers can no longer protect the integrity of their investigations, by telling employees they must keep the investigations confidential.  In the NLRB case, the employer routinely asked employees making a complaint not to discuss the matter with their co-workers while the employer’s investigation was ongoing.  The employee claimed that this request did not comply with his statutory rights to discuss workplace conditions with other workers.  The NLRB, overruling its Administrative Law Judge, agreed.  The Board found that the employer’s generalized concern with protecting the integrity of its investigations was insufficient to outweigh employees’ rights to discuss work conditions with co-workers.  Rather, it was the employer’s burden “to first determine whether in any given investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover-up.”  In this case, the Board found that the employer’s blanket approach clearly failed to meet those requirements, and therefore the employer violated the Labor Act by maintaining and applying a rule or policy prohibiting employees from discussing ongoing investigations of employee misconduct.  Banner Health System, 358 NLRB No. 93 (July 30, 2012).

The Buffalo Office of the EEOC has issued a letter warning an Employer that its policy prohibiting its workers from discussing an ongoing internal investigation of harassment was unlawful.  The EEOC reasoned that an employee’s discussion of his or her complaints of employment discrimination “with anyone” is protected opposition to perceived unlawful employment practices.  Further, the Employer’s policy could be interpreted that an employee could be disciplined for contacting the EEOC if the harassment had been subject to an internal investigation by the Employer.  It is somewhat unclear from the letter whether the second point was sufficient to invalidate the policy, or whether the mere provision of not discussing the investigation with co-workers would also be violative.

These developing policies at the NLRB and EEOC leave an employer in a dilemma as to what to do.  If an employer chooses to be on the safe side, it should not have a blanket policy or rule prohibiting employee discussions of ongoing investigations.   Instead, the employer could assess each situation on a case-by-case basis to determine the need to maintain confidentiality, and issue either directions or suggestions to the complaining employee or witness of the legitimate business need for the confidentiality as to protect everyone’s rights, minimize the potential for workplace gossip or even defamation claims, or the other criteria as set forth in the NLRB ruling in Banner Health.  Further, employers should seek the advice of counsel before disciplining or terminating an employee for violation of such confidentiality direction. 

II. Joint Employment Issues

An issue that crosses both NLRB, and probably Department of Labor and EEOC lines, is the joint employment issue.  This issue may pertain to whether a franchisee or subcontractor and its employees are jointly employed by the primary entity.  The NLRB has issued complaints against McDonald's and its franchisees alleging that they are joint employers of employees who unlawfully retaliated against employees for participating in nationwide fast-food worker protests.  McDonald’s moved for a bill of particulars or, in the alternative, to strike joint employer allegations and dismiss the complaint.  The NLRB denied the motion signaling and expansion of joint employer liability on the part of the franchisor for actions of a franchisee.  362 NLRB 168 (2015).  Additionally, in Browning-Ferris, 362 NLRB No. 186 (2015), The NLRB found: “that two or more statutory employers are joint employers of the same statutory employees if they “share or codetermine those matters governing the essential terms and conditions of employment.” In determining whether a putative joint employer meets this standard, the initial inquiry is whether there is a common-law employment relationship with the employees in question.  If this common-law employment relationship exists, the inquiry then turns to whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.  Central to both of these inquiries is the existence, extent, and object of the putative joint employer’s control.”  The NLRB emphasized that, even where the putative joint employer has not exercised the authority to control the employees’ terms and conditions of employment, the reserved authority to control is relevant to the joint employment inquiry.  The application of this decision to the franchise industry is yet to be determined.

III. EEO Developments

The government agencies, including the EEOC, and the Office of Federal Contract Compliance Programs (OFCCP), have also been active in promoting changes in the Equal Opportunity Agenda.  Perhaps the most important recent developments pertain to transgender and sexual orientation issues, and revisions to the accommodation process for both pregnancy and religion, and additional requirements placed upon federal government contractors and subcontractors. 

A. Government Moving Rapidly on Transgender and Sexual Orientation Issues

The EEOC has filed two lawsuits against two different employers alleging they violated Title VII's prohibition on sex discrimination by firing transgender employees based upon their gender identity.  EEOC v. Lakeland Eye Clinic, No. 14-2421 (M.D. Fla.); EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., No. 14-13710 (E.D. Mich.).  In one of the cases the employee informed the company that she was transgender, and in the other case the employee informed the company that she intended to undergo surgery to transition to a woman. The lawsuits rely upon the EEOC's 2012 ruling in Macy v. Holder, 2012 W.L. 1435995 (April 20, 2012), arising in the federal sector, where the EEOC has adjudicative authority.  In that case, the EEOC held that Title VII's prohibition on sex discrimination is violated when employment decisions are based upon an employee's transgender status or gender identity, or because the employee has transitioned or intends to transition to the different sex.  Both lawsuits seek injunctions to end the discrimination and to force the employers to institute new non-discriminatory policies, as well as compensatory and punitive damages. 

On July 21, 2014, President Obama issued an Executive Order amending Executive Order No. 11246 to prohibit employment discrimination by federal contractors against LGBT (lesbian, gay, bi-sexual and transgender) employees. 

On December 18, 2014, Attorney General Eric Holder stated that the U.S. Department of Justice will now take the position that Title VII of the 1964 Civil Rights Act’s prohibition against sex discrimination includes bias based on gender identity and transgender status.   

The latest development on transgender issues comes from OSHA.  OSHA has issued A GUIDE TO RESTROOM ACCESS FOR TRANSGENDER WORKERS.  Among other things, the guide indicates that a person who identifies as a woman should be permitted to use women's restrooms, and vice versa, and suggests best practices that also provides certain other options which employees may choose, but are not required to use.  These include:  Single-occupancy gender-neutral (unisex) facilities and use of multi-occupant, gender-neutral restroom facilities with lockable single occupant stalls. 

In a related development, on June 26, 2015, the Supreme Court held in Obergefell, et al. v. Hodges, Dir., Ohio Department of Health, et al. 576 U.S. _____(2015) that the “Fourteenth Amendment requires a State to license a marriage between two people of the same sex and recognizing marriage between two people of the same sex with their marriage was lawfully licensed and performed out-of-State.”  The ruling has spawned a number of questions regarding treatment of same-sex marriages by employers, specifically with regard to benefits granted spouses of employees.   

Prior to the ruling, 34 states allowed same-sex marriage, whether by legislative action or by judicial order.  Some 15 states plus the District of Columbia prohibit discrimination based on gender identity, along with the EEOC, the Office of Federal Contract Compliance Programs, and the Department of Labor.  Additionally, 3 states prohibit discrimination based on gender preference.  In light of these developments, employers should think about adding "gender identity" to their non-discrimination policies.  These legal and policy changes do require consideration of new factors such as how employers should handle sensitive issues such as bathroom use, dress codes and harassment. 

B. Reasonable Accommodation Issues

There have also been major changes concerning the obligation of an employer to make reasonable accommodations in regard to pregnancy and religious issues.

1. EEOC Issues New Pregnancy Discrimination Guidelines and Fact Sheets for Business

For the first time since 1983, the EEOC has issued comprehensive guidance on how employers must treat pregnant employees and applicants.  The controversial guidance was passed by the EEOC commissioners on a vote of 3-2, with two of the commissioners indicating that the guidance went beyond applicable legal precedents.  The guidance, dated July 14, 2014, is accompanied by a "Q&A" document and a Fact Sheet for Small Businesses, a summary of which appears below. 

This document explains the requirements of the Pregnancy Discrimination Act (PDA), as well as the requirements of the Americans with Disabilities Act (ADA) as it applies to women with pregnancy-related disabilities. 

Basic PDA Requirements- The PDA requires that a covered employer treat women affected by pregnancy, childbirth, or related medical conditions in the same manner as other applicants or employees who are similar in their ability or inability to work. 

  • Current Pregnancy.  Under the PDA, an employer cannot take any adverse action against a woman if pregnancy, childbirth, or a related medical condition was a motivating factor in the adverse employment action.  This is true even if the employer believes it is acting in the employee's best interest.
  • Past Pregnancy.  An employer may not discriminate against an employee or applicant based on a past pregnancy or pregnancy-related medical condition or childbirth.
  • Potential Pregnancy.  An employer may not discriminate based on an employee's intention or potential to become pregnant.
  • Medical Condition Related to Pregnancy or Childbirth.  An employer may not discriminate against an employee because of a medical condition related to pregnancy and must treat the employee the same as others who are similar in their ability or inability to work but are not affected by pregnancy, childbirth, or related medical conditions.

Harassment - It is unlawful to harass a woman because of pregnancy, childbirth, or a related medical condition.  Harassment is illegal when it is so frequent or severe that it creates a hostile or offensive environment, or when it results in an adverse employment decision.

Workers with Caregiving Responsibilities - Discrimination against a worker with caregiving responsibilities violates Title VII if it is based on sex, and violates the ADA if it is based on a family member's disability.  For example, an employer violates Title VII by treating a female employee with young children less favorably than a male employee with young children when deciding on work opportunities, based on a belief that the mother should focus more on the children than on her career.  In addition, an employer violates the ADA where it takes an adverse action, such as refusing to hire or denying promotion, against a mother of a newborn with a disability over concerns that she would take off a lot of time for the child's care or that the child's medical condition would impose high health care costs.

Benefits of Employment - An employer must provide the same benefits of employment to women affected by pregnancy, childbirth, or related medical conditions that it provides to other persons who are similar in their ability or inability to work (e.g. light duty policies, leaves of absence, etc.).

The Americans with Disabilities Act - Although pregnancy itself is not a disability, pregnant workers may have impairments related to their pregnancies that qualify as disabilities under the ADA.  Amendments to the ADA made in 2008 make it much easier than it used to be to show that an impairment is a disability.  A number of pregnancy-related impairments are likely to be disabilities, even though they are temporary, such as pregnancy-related carpal tunnel syndrome, gestational diabetes, pregnancy-related sciatica, and preeclampsia.  An employer may not discriminate against an individual whose pregnancy-related impairment is a disability under the ADA and must provide an individual with a reasonable accommodation if needed because of the pregnancy-related disability, unless the accommodation would result in significant difficulty or expense ("undue hardship").

Other Federal Laws Affecting Pregnant Workers - The Family and Medical Leave Act (FMLA) allows eligible employees of employers with 50 or more employees to take up to 12 workweeks of leave for, among other things, the birth and care of the employee's newborn child and for the employee's own serious health condition.

Section 4207 of the Patient Protection and Affordable Care Act amended the Fair Labor Standards Act to require employers to provide "reasonable break time" for hourly employees to express breast milk until the child's first birthday.  Employers are required to provide "a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk."  Employers with fewer than 50 employees are not subject to this requirement if it "would impose an undue hardship by causing significant difficulty or expense when considered in relation to the size, nature, or structure of the employer's business."

                       2. Supreme Court Says Jury Issue Created When Employer Fails to Provide Light Duty to Pregnant Workers                         

Employers may be required to provide light duty to pregnant workers because of the U.S. Supreme Court decision in Young v. United Parcel Service, Inc., No. 12-1226.  In the course of her duties as a driver, the plaintiff regularly lifted and moved packages weighing over 20 pounds and up to 70 pounds.  She became pregnant and her healthcare providers recommended that she should not lift more than 20 pounds.  When she sought to return to work, the UPS occupational health manager explained how UPS's then-applicable policy did not allow her to provide plaintiff with a "light duty" assignment.

The collective bargaining agreement specifies that UPS may make alternative assignments available to four categories of workers.  UPS provides temporary alternative work assignments, if available, to employees who are unable to perform their regular jobs because of injuries sustained on the job.  UPS designs these "work hardening" assignments to help those injured on the job rebuild their muscles so that they will no longer have weight restrictions and therefore can resume their normal job responsibilities as soon as possible.  Second, the ADA requires UPS to provide reasonable accommodations for an employee who has a cognizable impairment.  Third, UPS will provide an "inside" job to drivers who lose their Department of Transportation (DOT) certification because of a failed medical examination, revoked or suspended driver's license, or involvement in a motor vehicle accident.  Fourth, a provision specifically deals with maternity issues where required by applicable law in light of legislation in some states requiring employers to provide light duty work to pregnant employees.  Otherwise light duty work assignments were not available to any employees who are unable to perform their normal work assignment due to lifting restrictions or other physical conditions that did not fall within one of the four categories of accommodations.

The plaintiff filed an EEOC charge alleging that UPS's denial of the requested light duty work accommodation constituted sex discrimination.  She later sued under Title VII, as amended by the Pregnancy Discrimination Act (PDA).  The PDA contains an express provision defining sex discrimination to include discrimination "because of . . . pregnancy" and clarifies that "women affected by pregnancy . . . shall be treated the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work." 

The federal district court ruled in favor of UPS on the basis that the undisputed evidence revealed that plaintiff had not shown direct evidence of discrimination; failed to establish a prima facie case of disparate treatment because she could not identify a similarly situated comparator who received more favorable treatment; she could not show that UPS's non-discriminatory application of a neutral policy was a mere pretext for discrimination.  The Fourth Circuit Board of Appeals unanimously agreed, explaining that each of the federal court circuits that have considered the issue had held that an employer does not violate the PDA by denying a pregnant employee an accommodation or benefit pursuant to a pregnancy-blind policy like UPS's. 

The Supreme Court issued its ruling on March 25, 2015, setting forth a new standard different from the positions taken by both the plaintiff and the defendant.  The Court first rejects the plaintiff's approach that once the employer provides one or two workers with an accommodation for some type impairment, regardless of the justification, then it must provide similar accommodations to all pregnant workers, irrespective of the nature of their jobs, the employer's need to keep them working, their ages, or any other criteria.  The Court calls this approach giving pregnant workers a "most-favored-nation" status, which the Court expressly rejects.  It states that this was not what Congress intended, and that the law normally permits an employer to implement policies that are not intended to harm members of a protected class, even if their implementations sometimes harm those members, as long as the employer has legitimate, nondiscriminatory, nonpretextual reasons for doing so. 

However, the Court goes on to reject the defendant's position that the pregnancy discrimination amendments were only intended to add pregnancy to the definition of sex discrimination prohibited by Title VII.  The Court states that Congress intended to do more than that.

The Court adopts a standard instead that a plaintiff alleging that the denial of accommodation constitutes disparate treatment under the pregnancy law may make out a prima facie showing, as in the McDonnell Douglas precedent, that she belongs to the protected class, that she sought accommodation, that the employer did not accommodate her, and that the employer did accommodate others "similar in their ability or inability to work."  The employer may then seek to justify its refusal to accommodate the plaintiff by relying on "legitimate, nondiscriminatory" reasons for denying her accommodation.  If the employer offers an apparent legitimate, nondiscriminatory reason, the plaintiff may in turn show that the employer's proffered reasons are in fact pretextual.  The Court believes that the plaintiff may reach a jury on this issue by providing sufficient evidence that the employer's policies imposes a significant burden on pregnant workers, and that the employer's "legitimate, nondiscriminatory" reasons are not sufficiently strong to justify the burden, but rather – when considered along with the burden imposed – gives rise to an inference of intentional discrimination.

The Court elaborates by stating that the plaintiff can create a genuine issue of material fact as to whether a significant burden exists by providing evidence that the employer accommodates a large percentage of non-pregnant workers while failing to accommodate a large percentage of pregnant workers.  The Court states that this approach, though limited to the Pregnancy Discrimination Act context, is consistent with its longstanding rule that a plaintiff can use circumstantial proof to rebut an employer's apparently legitimate, nondiscriminatory reasons for treating individuals within a protected class differently from those outside the protected class.

There are two critically important features of the majority ruling.  The Court notes that statutory changes made after this case arose may limit the future significance of its interpretation, as in 2008 Congress expanded the definition of "disability" under the ADA to make clear that "physical or mental impairments that substantially limit" an individual's ability to lift, stand or bend are ADA-covered disabilities.  As interpreted by the EEOC, the new statutory definition requires employers to accommodate employees whose temporary lifting restrictions originate off the job. 

This point, together with the Supreme Court's liberal interpretation of when a "material issue of fact" (jury issue) is created in a pregnancy discrimination case, strongly suggests that most employers will want to adopt a pregnancy accommodation policy very similar if not identical to its disability accommodation policy.  Otherwise, a plaintiff may argue that a single or small group of persons were accommodated in some manner, and that the employer discriminated by not making similar accommodations for a pregnant female.

3. Religious Accommodations

In June, a reasonable accommodation issue arose in the religious context in EEOC v.Abercrombie & Fitch Stores, Inc., 2015 WL 2464053 (June 1, 2015).  The Court addressed the interesting question whether the prohibition of refusing to hire an applicant in order to avoid accommodating a religious practice applies only where an applicant has informed the employer of his need for accommodation.  In this case, the complaintant, a practicing Muslim, wore a headscarf for a religious reason when she was interviewed for a job.  She was rejected because her scarf violated the dress code for employees.  The evidence suggests that the decision makers knew that complaintant was a Muslim and she wore the headscarf for religious reason, but she was never asked why she wore the headscarf and she did not volunteer that information.

A lower court held that applicants or employees must initially inform employee areas of religious practices that conflict with a work requirement and their need for a reasonable accommodation for them.  The Supreme Court indicates that the complaintant need not always inform the employer of a need for an accommodation, as long as the complaintant can show that his need for an accommodation was a motivating factor in the employer's decision.  Thus, according to the majority opinion, an employer who acts with a motive of avoiding accommodation may violate Title VII even if it has no more than an unsubstantiated suspicion that accommodation would be needed.  The opinion leaves somewhat fuzzy the question of whether that the motive requirement itself is not met unless the employer at least suspects that the practicing question is a religious practice.  In the facts of the Abercrombie & Fitch case, however, the employer knew or at least suspected that the scarf was worn for religious reasons. 

In another important point, the Court states that ". . . Title VII does not demand mere neutrality with regard to religious practices – that they be treated no worse than other practices.  Rather, it gives them favored treatment, affirmatively obligating employers not 'to fail or refuse to hire or discharge of any individual. . . because of such individual's' 'religious observance and practice'". 

The Abercrombie & Fitch case is quite significant in that the general thinking about religious accommodation in the past was that an employee had to give notice to trigger an employer's obligation to address an accommodation.  Here, the opinion suggests that if the employer suspects the employee needs an accommodation for religious reasons, the employer may need to follow up and ask questions about the potential need for an accommodation based on religious needs that is likely or may be needed

IV. Department Of Labor (DOL) Developments

A.  What Constitutes Compensable Work

The Department of Labor (DOL) and the courts have long struggled with the issue of what constitutes compensable "work" under the Fair Labor Standards Act (FLSA).  Congress responded to the controversy in 1947 by enacting the Portal-to-Portal Act, which exempted employers from liability for claims based on two categories of work-related activities: Walking on the employer’s premises to and from the location of the employee’s "principal activity or activities," and activities that are "preliminary or postliminary" to "said principal activity."

The DOL has issued interpretive bulletins (IB) regarding what constitutes compensable preliminary and postliminary activity under the FLSA.  Under these IBs, checking in and out and waiting in line to do so, changing clothes, washing up or showering, and waiting in line to receive pay checks are not normally compensable.  Of particular concern is that once some type of work activity begins, under a concept known as the "continuous workday" rule, any activity that occurs after the beginning of the employee’s first principal activity and before the end of the employee’s last principal activity is excluded from the scope of the Portal-to-Portal Act’s exception, and is compensable.  This is why waiting to don protective gear at the beginning of the day is generally considered non-compensable time, but waiting to doff the protective gear and doffing the protective gear at the end of the work day is normally deemed compensable.

These issues were confronted again in the December 9, 2014 ruling of the U.S. Supreme Court.  Integrity Staffing Solutions, Inc. v. Busk, 23 WH Cases 2d 1485.  This case involved a fact pattern in which the employer required its employees to undergo a security screening before leaving the warehouse at the end of each day, during which employees removed items such as wallets, keys, and belts from their persons and passed through metal detectors.  The screenings were conducted to prevent employee theft and the employees alleged this time was compensable because it was done solely for the benefit of the employer.

A lower court in Integrity Staffing Solutions found that the post-shift activities involving security screenings were compensable as integral and indispensable to the employees’ principal activities because the post-shift activities were necessary to the principal work performed and done for the benefit of the employer.  The Supreme Court reversed, stating that: "[A]n activity is not integral and indispensable to an employee’s principal activities unless it is an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform those activities."  "The screenings were not an intrinsic element of retrieving products from warehouse shelves or packing them for shipment and Integrity Staffing could have eliminated the screenings altogether without impairing the employee’s ability to complete their work."  The Court also noted that the screenings were not the "principal activity or activities which [the] employee is employed to performed," and that the "integral and indispensable test is tied to the productive work that the employee is employed to perform."  It is insufficient to constitute compensable work merely because an employer requires an activity. 

The Integrity Staffing Solutions case is an important one, and surprisingly was a unanimous opinion, although there was a concurring opinion.  Lower courts in the future will focus on how the Supreme Court described an "integral and indispensable" activity in determining whether future cases involving preliminary and postliminary activities are compensable.  Employers will argue that emphasis in the opinion on the "productive work that the employee is employed to perform" will affect numerous donning and doffing cases that have been and are being litigated.  Plaintiffs will say the opinion has no effect on donning and doffing law, but merely reaffirms existing precedents.

B. Limitation Of White Collar Exemptions To Overtime Still Expected

President Obama has made many public announcements over the last few months expressing a desire to implement significant legal change in this country based on his Executive Powers as President, without the need to rely on Congress for approval.  The President has also expressed concerns about income inequality.  Some recent developments under these plans pertain to the federal minimum wage, the minimum wage required for government contractors, and the overtime exemption for salaried employees. 

With regard to the exemption for salaried employees, the Department of Labor has issued a Notice of Proposed Rulemaking (NPRM) significantly increasing the salary requirements for exempt employees.  More specifically, the proposal would:

1.set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually);

2.increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and

3.establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.

(see Wage and Hour Fact Sheet discussing the NPMR)

_________________________

James W. Wimberly Jr., an AV rated attorney, is a founding principal of the firm and of the Wimberly Lawson Network. In over 40 years as an attorney, in private practice and early on with the U.S. Department of Labor, and as a professor of labor law, he has built a national reputation for excellence in comprehensively addressing the needs of employers.

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Letter from the Chair

Please enjoy our second section newsletter for this bar year, which looks at the most recent SCOTUS decision on the Affordable Care Act and the decision on same gender marriage. Thanks to Bill Seale for serving as newsletter editor for another year. 

Have you researched a topic that would be of interest to other members? Please consider sharing that information in our section’s newsletter. We’re not looking for law review articles; we’re looking for readable accounts of real world law situations. So fire away!

I’m excited to announce that Wayne Hood has agreed to serve as vice chair for the section this year. I would also like to thank the new members of the section’s Executive Council.

Each year the Executive Council plans the annual CLE program for our section. We’ve moved the event to a later date this spring in hopes of avoiding the snow and ice that made life difficult the past two years. Our program is set for Friday, April 8. 

If you have questions, please email or call me at 615-479-1832.

Norma Shirk
2015 -2016 Section Chair

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From the Editor

If you have any interest in submitting an article for publication or some humor that may be entertaining to our readers, please email or call me at (865) 450-4138.  All help will be greatly appreciated, especially great jokes (although, every article/joke may not be published).  We would appreciate articles that would be especially helpful to corporate counsel, however, articles of general legal interest will also be considered for publication.

And now for the legal stuff -- I would be remiss if I did not mention that while the articles in our Section newsletter may express the views of the author of the article, the articles do not express the opinion of the TBA or Corporate Counsel Section. 

Thanks,

Bill Seale
Vice President General Counsel, Bush Brothers & Company

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Pro Bono Work to be Honored at Memphis Reception

Celebrate the pro bono accomplishments of Memphis attorneys and law firms at a Pro Bono Reception Oct. 29 at Martin Tate Morrow & Marston. Special honorees are the law firms, governmental agencies and corporate legal departments who have sponsored the Saturday Legal Clinics. The event is sponsored by BankTennessee and The Marston Group. The law firm is located on the 10th floor of International Place, Tower II.  For more information, contact Cindy Ettingoff at Memphis Area Legal Services.

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Former Erlanger CEO Receives Settlement in Termination Suit

Former Erlanger interim chief executive officer Charlesetta Woodard-Thompson will receive $600,000 to settle a wrongful-termination lawsuit she filed against the Chattanooga hospital more than two years ago, the Times Free Press reports. Woodard-Thompson claimed that she was the target of racial remarks and e-mail hacks when she filed a $25 million lawsuit after being terminated while on medical leave. “This settlement is comparable to what Erlanger had agreed to pay Woodard-Thompson more than two years ago, but was refused by her at that time,” Pat Charles, an Erlanger spokeswoman, said.

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Chancellor Lyle to Speak on New Business Court

Davidson County Chancellor Ellen Lyle will speak about the Tennessee Business Court at Memphis Law School on Sept. 24 at 3 p.m. Chancellor Lyle is the first judge of the new business court, a pilot project to centralize certain business-related cases in a court of specialized jurisdiction and knowledge. RSVP by Sept. 22.

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Department of Justice Prioritizes Prosecution of Corporate Execs

The Justice Department issued new policies Wednesday that press for prosecution of Wall Street individuals -- not just their companies -- and push corporations to turn over evidence against their executives, CNBC reports. "Corporations can only commit crimes through flesh-and-blood people," Deputy Attorney General Sally Q. Yates said. "The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom."

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TBA Files Comments on New Admission Rules

In comments filed today, the TBA told the Tennessee Supreme Court that better rules on practice pending admission are needed by those seeking comity admission; that lawyers eligible for in-house counsel registration need a new period in which to apply; that lawyers licensed in other jurisdictions who are graduates of schools approved in their home state should be eligible to sit for the Tennessee bar exam; and that spouses of military service members should be granted renewable one-year temporary licenses because they are subject to frequent moves. The comments are part of a comprehensive rewrite of the rules governing admission initiated by the Tennessee Board of Law Examiners.

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Learn More about Nashville’s New Business Court

The Tennessee Supreme Court’s pilot Business Court opened May 1 in Davidson County. Presiding Chancellor Ellen Hobbs Lyle and staff attorney Justin Seamon shared the “how-to” about the process and operations of the court during a one-hour webcast that is now available for replay. The course will remain live on the TBA CLE website for one year. Learn more about the business court in this announcement from the court or watch the webcast now. 

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Business, Legal Leaders Join in Launch of New Court

Tennessee Supreme Court Chief Justice Sharon Lee and Davidson County Chancellor Ellen Hobbs Lyle today launched the state’s first Business Court to a gathering of more than 100 business and legal leaders in Nashville. “Keeping businesses here in Tennessee and bringing in new ventures means more jobs for Tennesseans,” Lee said. “This has long-term benefits and is good for all Tennesseans.” The court is a pilot project that officials hope will be expanded to other cities across the state.

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TBA Honors 2 Memphis Companies for Providing Free Legal Services

Wyatt Tarrant & Combs, Medtronic to receive awards Saturday in Nashville

NASHVILLE, March 4, 2015 — The Memphis office of law firm Wyatt Tarrant & Combs and global medical technology giant Medtronic will be recognized for their commitment to providing free legal services to Tennesseans at the Ninth Annual Corporate Counsel Pro Bono Initiative Gala this Saturday in Nashville.

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Lunch for In-House Lawyers

Connect with Corporate Counsel lawyers at a lunch sponsored by Counsel on Call this Friday at noon in Nashville. The lunch is part of a full day of CLE touching on compliance issues and ethics for in-house counsel. Learn more or register online.

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