Employment Law Update

By Michael Patrick O'Brien

Hot August HR Law Nights

Just over 50 years ago, iconic rock singer and songwriter Neil Diamond released a double album called “Hot August Nights,” a recording of his live August 1972 concerts at the Greek Theatre in Los Angeles. In one song, Diamond described how during a hot August night, a preacher led an old-time tent revival by “starting soft and slow, like a small earthquake, and when he lets go, half the valley shakes.” I think Diamond just as easily could’ve been describing recent HR law developments in the extraordinarily hot Summer of 2023. 

NLRB Shakes Up Employer Conduct Rules and Handbooks

The National Labor Relations Board (NLRB) rocked the summer with a recent ruling that should cause all employers to reevaluate their handbooks and conduct rules. The National Labor Relations Act (NLRA) allows employees even at non-union worksites to speak out and act together to improve working conditions. This is the right to act in concert (just like Neil Diamond)! The NLRB just said that this means the common employer rules requiring civility and respect among co-workers may violate the NLRA. My law partner Marci Rechtenbach knows more about this issue than most Utah lawyers, so I asked her to summarize the new ruling. Please see below for her interesting take on this hot issue. 

New Jersey Court Upholds Catholic School Firing of Unmarried Pregnant Teacher Speaking of heat, don’t be surprised if you hear Catholics in New Jersey and elsewhere debating a parochial school’s termination of a pregnant unmarried teacher. Some critics of the decision might call the move un-Christian and lacking in mercy or compassion. Supporters likely would note that Catholic school teachers should set a good example for their students about following church teaching, including regarding sex outside of marriage. Whatever the public debate, the fired teacher sued. This August, the New Jersey Supreme Court ruled in favor of the school, saying as a religious organization, it had the power to set employment standards based on tenets of the faith. 

Federal Court Opens Door to More Bias Claims

A federal appeals court (covering the states of Texas, Mississippi and Louisiana) recently overturned decades-old case law that held that the federal antidiscrimination law applied only to “ultimate employment decisions” (such as hiring, firing, demotions, etc.) and not to non-ultimate acts like scheduling, discipline or corrective action. Buckle up…the new court ruling could expose many more employers to the heat of discrimination and harassment claims. 

HR Lawyers Forced into Religious Liberty Training? Maybe!

There is breaking news on another federal lawsuit in Texas that is also cranking up lots of heat this August. As first reported in our last Employment Law Update by my employment law partner Sean Monson https://parsonsbehle.com/insights/Employment-Law-Update-August-10-2023 , the case involves a hotly-litigated dispute in which Southwest Airlines is accused of religious bias in the workplace, because it fired a flight attendant who sent repeated messages (and graphic images) on social media to a co-worker who allegedly was pro-choice on the abortion issue. A jury recently ruled in favor of the fired worker. Afterwards, the court held in-house lawyers for Southwest in contempt. The in-house lawyers had sent a message to all employees that the company was disappointed in the ruling and planned to appeal. The judge ruled the in-house lawyers had not followed his order to send a message to all employees saying that the airline does not discriminate based on religion. As a result, the judge (appointed by former President Donald Trump), ordered the in-house Southwest lawyers to attend mandatory training on religious liberty to be conducted by a Christian legal organization. The judge has now paused that contempt ruling while Southwest appeals. We will all have to wait a bit to learn if this novel sanction, imposed by an unhappy judge, will stick. Stay tuned. 

The Summer of our Discontent? Perhaps all this uncertainty and “heat” in the HR law world should not be a surprise. It has been a hot summer, meteorologically speaking, with record high temperatures in many places all over the globe. There have been wildfires in tropical Maui and many heat-related deaths everywhere. Culture wars dominate our politics. Six decades ago, borrowing from William Shakespeare’s Richard III, the Nobel prizewinning writer John Steinbeck published his final novel The Winter of Our Discontent. Maybe Shakespeare and Steinbeck just got the seasons wrong?

Have You Checked Your Employee Handbook Lately?

By Marci Rechtenbach

The National Labor Relations Board (NLRB or “the Board”) has shaken things up yet again, announcing a new, less employer-friendly approach to analyzing whether employer work rules (including those in employee handbooks) are lawful. On Aug. 2, 2023, the Board issued a long-anticipated opinion in a case called Stericycle, Inc. In Stericycle, the Board reversed precedent and held that an employer work rule is unlawful to maintain if a “reasonable employee” could interpret that rule in a way that restricts employee rights under Section 7 of the National Labor Relations Act (NLRA).

As a refresher, Section 7 gives non-supervisory employees the right to engage in protected, concerted activity regarding terms and conditions of employment, including discussing such topics and taking action together to improve their lot as workers. The NLRA has long prohibited employer rules that expressly limit such activities (e.g., rules against talking about pay or advocating for a union). Most employer rules, however, fall into the category of “facially neutral” rules, or those that do not restrict Section 7 rights on their face. Since 2017, the NLRB has evaluated facially neutral employer rules using a balancing test set forth in a case called The Boeing Company. Under that test, an employer’s legitimate business reasons for maintaining a rule were weighed against any potential infringement on employee Section 7 rights. Under Boeing, certain categories of work rules (including civility and conduct rules) were presumptively lawful for employers to maintain. Employers welcomed the clarity provided by the Board’s decision in Boeing.

In Stericycle, the Board’s majority rejected the Boeing standard as being too permissive for employers, arguing that it allowed employers to enact overbroad work rules that infringed on employee NLRA rights. Instead of Boeing’s balancing test and categories of lawful rules, the Board announced that work rules will be analyzed on a case-by-case basis to determine whether they “have a reasonable tendency to chill employees from exercising their Section 7 rights.” In this analysis:

·        The Board will read a work rule from the perspective of a “reasonable employee” who is considering engaging in Section 7 activity and is afraid of being disciplined or losing his or her job. Applying this perspective, the Board will be much more likely to find that a rule limits Section 7 rights than under the prior balancing test.

·        If that “reasonable employee” could interpret the rule in a way that limits Section 7 rights, the rule will presumptively be unlawful, regardless of whether the rule could also be interpreted in ways that do not infringe on those rights.

·        The employer’s intent in maintaining the rule is irrelevant.

·        To avoid liability, the employer will have to prove that a legitimate and substantial business interest justifies the rule and that the rule could not be crafted more narrowly and still advance that interest.

This Stericycle test will be applied retroactively, including to rules that were adopted under the more employer-friendly Boeing standard. The Board’s dissenting member assailed the majority’s decision as creating a near-impossible hurdle for employers, saying that “employers would be well advised [to retain] competent labor counsel to craft, for inclusion in their employee handbooks, language that would make it impossible—even for my colleagues’ version of the reasonable employee—to interpret any rules contained therein to restrict Section 7 activity.”

The upshot for employers is that, once again, it’s time to revise employee handbooks and work rules. Common categories of rules that have drawn the Board’s scrutiny in the past include those regarding civility and conduct, confidentiality, conflicts of interest, use of employer communication systems, social media, communicating with media and third parties, restrictions on cameras and recordings, dress codes and others. Because of the challenges involved in satisfying this new Stericycle standard, employers should consider working with experienced labor and employment counsel in reviewing their handbooks and other work rules. 

Question Corner

Damages to Company Property

 By Jason R. Mau and Nickie Hardesty

Q.       Can we legally require employees to reimburse the company for damage to customer or company property (i.e., the full amount of damages or insurance deductible)?  

A.       An employer should always be aware of state and federal law when seeking reimbursement from an employee for the value of lost, damaged or unreturned property. While an employer may wish to deduct money from the employee’s regular or final paycheck to cover the cost of such damages, this implicates federal wage and hour laws under the Fair Labor Standards Act (FLSA). For example, requiring reimbursement from an employee who is exempt from overtime pay jeopardizes an employee’s exempt status. Further, employers are prohibited from requiring nonexempt employees to pay for damages to the employer’s tools or equipment if doing so would reduce a nonexempt employee’s pay below minimum wage or below any overtime pay that is due to the employee. Additionally, under Idaho law, deductions are only allowed where permitted by applicable law or when the employer has obtained an employee’s prior written authorization. Montana, Nevada and Utah laws are similar to Idaho’s. Check with legal counsel to understand the respective requirements in your state.