On Friday, April 21, 2017, the Second Circuit affirmed a National Labor Relations Board (“NLRB”) ruling, which found that Pier Sixty, LLC (“Pier Sixty”) violated the National Labor Relations Act (“NLRA”) when it terminated its employee, Hernan Perez (“Perez”), for comments posted on Facebook.

In 2011, after a supervisor had given directions to Perez and other employees in a “disrespectful” manner, Perez used his iPhone to post a message to his personal Facebook account where he called the supervisor a “nasty mother f*******” and said “f*** his mother and his entire f****** family.”  Perez ended his post with “Vote YES for the Union.”  The Facebook post came just days before Pier Sixty employees voted to unionize in an October 2011 election.

The post remained on Facebook for three days before Perez removed it.  The removal, however, was too little too late.  Pier Sixty had already become aware of the profanity-laced post and, following an investigation, terminated Perez on November 9, 2011.

The NLRB, applying a totality of the circumstances test, determined that Perez’s conduct was not “opprobrious”  or offensive, and therefore the termination violated Sections 8(a)(1) and 8(a)(3) of the NLRA, which makes it an unlawful for an employer to terminate an employee based on union related activity.  On appeal, while giving deference to the NLRB’s findings, the Second Circuit based its affirmance on three main aspects: 1) the subject matter of the message; 2) past practices of Pier Sixty; and 3) the location of the message.

The Court first determined that, even though the post was vulgar, its primary subject matter was of workplace concern. Namely, the Court found that the last five words of the profanity-laced tirade—“Vote YES for the Union”—made the post “part of a tense debate over managerial mistreatment.”  Thus, because the comments were not just an “idiosyncratic reaction to a manager’s request,” and rather were connected to the upcoming union election, the subject matter fell within a protected activity under the NLRA.

After finding the subject matter of the post was related to union activities, the Court discussed Pier Sixty’s past practices of tolerating profanity among all employees.  The Court noted that there was “widespread” use of profanity among employees and only five written warnings were given to employees for use of profanity prior to Perez’s termination.  In fact, there was no evidence presented to the NLRB that any employee was terminated solely for the use of profanity or other offensive language.  Based on these past practices, the Court found it “striking” that Perez had been fired for using profanity just days before a Union election was to take place.

Finally, the Court turned to the “location” of the comments – a post on Perez’s public Facebook account.  Pier Sixty argued that the comments were made visible to both actual and potential customers, justifying the termination.  The Court, however, disagreed.  Although customers may have had access to the post, the comments were not made in the “immediate presence” of any customer and did not disrupt any of Pier Sixty’s catering events.  Moreover, the Court stated that online forums like Facebook are a “key medium of communication among coworkers” and it acts as a “tool for organization in the modern era.”  As such, the Court distinguished the comments from a “public outburst,” finding that the NLRB did not err in determining that the Facebook post was protected activity under the NLRA.

Although the Court recognized that this case was on the “outer-bounds of protected, union-related comments,” the Court’s decision reinforces that employers must be cautious when terminating an employee for speech that is, even loosely, related to protected union activity.

Beginning next year, New York will become the fourth state in America to guarantee paid family leave for private sector employees.  On January 1, 2018, the New York State Paid Family Leave Program (the “Program”) will take effect, providing eligible New York workers with coverage during time away from work.

The Program will be phased in over a four year period, beginning with 8 weeks of coverage at 50% of an employee’s salary in 2018 and rising to 10 weeks of coverage at 55% of salary in 2019, 10 weeks of coverage at 60% of salary in 2020, and maxing out with 12 weeks of leave at 67% of the employee’s salary in 2021.  Benefits are capped, however, if an employee’s pay is greater than the State’s average weekly wage which, as of 2016, is $1,305.92.

Three categories of employees are eligible for the program: (1) New parents following the birth or adoption of a child; (2) Employees caring for a sick family member; and (3) Employees with a family member called to active military duty.  An employee must fall into one of these three categories and must also have been employed full time for 26 weeks, or part time for 175 days, by a private employer to be eligible.

Under the maternity/paternity portion of the Program, paid leave only begins after birth and is not available prior to the birth of the child.  Leave must be taken during the first 12 months following the birth, adoption, or fostering of a child.  An employee in New York may also take paid leave to care for a seriously ill relative which includes spouses, domestic partners, children, parents, in-laws, grandparents, and grandchildren.   A serious health condition under the Program is defined as an illness, injury, impairment, or physical/mental condition that involves inpatient care in a hospital, hospice, or health care facility or continuing treatment or supervision by a health care provider.  An employee in New York can also take time under the Program when a spouse, child, domestic partner, or parent of the employee is on active duty in the military, or has been notified of an impending order of active duty.

Paid leave cannot be used for an employee’s own disability or military event and must be used to care for an eligible family member.  The Program will be fully funded by employees, with payroll deductions beginning as early as July 1, 2017.  Under the Program, an employer may not discriminate against employees for taking paid family leave and employees are guaranteed to be able to return to their job at the conclusion of their absence.

Private Sector Employers in New York should familiarize themselves with the Program and their attendant obligations.  Please visit the blog often for more information regarding when employee payroll deductions will begin under the Program.

The New York City Council approved legislation on Wednesday, April 5, 2017, which bans NYC employers from relying on past salary history when making hiring decisions. The legislation, known as Introduction 1253-A, is intended to prevent the single interview question: “How much did you make at your previous job?”

Proponents of the legislation suggest that the prohibition will combat gender-based wage disparities by preventing employers from setting wages based on previous salaries and help to end the perpetual cycle of women earning less than men insofar as the distinction is based on past practices. In addition, proponents of the legislation believe that withholding such information from employers will likely create more transparency in the hiring process and force employers to set salaries prior to conducting interviews. With this legislation, NYC joins the ranks of Massachusetts and Philadelphia, which recently passed similar laws.

The legislation, however, is not without its opponents and criticism, and it is expected that lawsuits will be filed prior to its implementation. In fact, on April 6, 2017, the Chamber of Commerce for Greater Philadelphia filed a federal lawsuit challenging a similar Philadelphia law on First Amendment grounds. That lawsuit seeks injunctive relief, alleging that the law unduly burdens an employer’s ability to rely on wage history during the job-application process. NYC employers should pay close attention to the Philadelphia lawsuit as a favorable decision for the Chamber of Commerce will likely influence challenges to Introduction 1253-A.

We will keep our readers updated with respect to the implementation of Introduction 1253-A and any challenges brought against it.

As previously discussed on this blog in a post dated November 23, 2016, the United States Department of Labor (“DOL”), in May of 2016, issued a final rule (“Final Rule”) revising its regulations construing the so-called white-collar overtime exemptions of the Fair Labor Standards Act (“FLSA”).  In essence, the Final Rule increased the minimum salary that employers must pay their employees in order to invoke the white-collar exemption, from $23,600 to $47,476 annually, and provided for automatic updates to the minimum salary every three years.

The Final Rule was scheduled to take effect on December 1, 2016, but on November 22, 2016, a federal judge in the Eastern District of Texas issued a nationwide preliminary injunction, preventing the DOL from implementing the rule ( Nevada v. U.S. Dep’t of Labor ).  That litigation continues, and the preliminary injunction ruling is on appeal to the Court of Appeals for the Fifth Circuit.  It is unknown whether the Fifth Circuit will uphold the injunction or reverse, and whether the District Court will ultimately vacate the Final Rule or lift the injunction.   Resolution of these uncertainties appears to be months away.  The Fifth Circuit recently granted the DOL’s request for an extension of time to file its reply brief “to allow incoming leadership personnel adequate time to consider the issues,” and the reply brief is not due until May 1, 2017.

If the District Court lifts the injunction, or the Fifth Circuit reverses, the Final Rule will presumably go into effect, and a troubling question for employers arises: Will courts hold employers liable under the FLSA’s overtime rules based on their failure to comply with the Final Rule since December 1, 2016?

District courts across the country have been wrestling with a similar issue relating to a different set of DOL regulations – those construing the FLSA’s companionship-services exemption.  The new DOL companionship-services regulations, set to take effect on January 1, 2015, removed home health care employees of third-party agencies from the ambit of the FLSA’s exemption.  However, before the new regulations took effect, a federal judge in the District of Columbia vacated the regulations.  Over eight (8) months later, in August of 2015, the Court of Appeals for the District of Columbia reversed the vacatur and upheld the regulations ( Home Care Ass’n of Am. v. Weil ).

Since that time, a distinct split of authority has developed regarding whether employers are liable for overtime for those previously-exempt companionship-services employees during the time that the vacatur of the new DOL regulations was in effect.  On the one hand, some federal judges have concluded that the regulations did not require compliance during the period that the vacatur was in effect.  In contrast, other federal judges have ruled that, because of the D.C. Circuit’s reversal, the District Court’s vacatur, in essence, never occurred, and employers were required to follow the new regulations as of January 1, 2015.  Of course, the latter interpretation puts employers in a distinct quandary to the extent they justifiably relied upon the pronouncements of a district court.

The uncertainty surrounding the effective date (for employer-compliance purposes) of the DOL’s companionship-services regulations may have implications for the obligations imposed by the Final Rule.  In the event that the Texas judge’s injunction against the enforcement of the Final Rule is lifted or reversed, it is entirely unclear whether courts will determine that employers were obligated to comply with the Final Rule’s new minimum salary requirement as of December 1, 2016.  This lack of clarity is further compounded by the uncertainty surrounding the new administration’s position with respect to the Final Rule and its motivation to pursue the appeal.

Employers who would be affected by the obligations imposed by the Final Rule should carefully evaluate the relevant legal and business risks in determining whether to meet the Final Rule’s minimum salary requirements while the injunction remains in place.

We will keep our readers updated with respect to the state of the law surrounding the Final Rule.

Whether you are starting a new business in 2017 or gearing up for another year with an existing company, the New Year brings the excitement of fresh opportunities.  That enthusiasm, however, should not overshadow employment related legal pitfalls that commonly befall companies and can impact the bottom line through unnecessary litigation.  Outlined below are five areas where employers can take proactive measures in 2017 to protect their business.  Entrepreneurs and business owners would be wise to take advantage of the energy of a new year to evaluate these areas, reduce the potential for future disputes, and place themselves in a good defensive position should an issue arise.

  • Proper Worker Classification and Compensation

Business owners both large and small routinely confront issues relating to the accurate classification of workers as “employees” or “independent contractors”, as well as setting the correct compensation for employees’ hourly and overtime work.  These determinations are particularly important for employers in 2017, with the anticipated updates to the Fair Labor Standards Act set to take effect, as discussed in more detail previously here.  While the enforcement of these new rules remains in limbo due to pending litigation, employers should be prepared to address the impact of the updated wage requirements, both from a financial and practical perspective, in 2017.

  • Workplace Policies and Procedures

A formal handbook or collection of written corporate policies helps protect a company when disputes arise and ensures uniform application of the company’s expectations for all workers, even in at-will employment situations.  Some common policies that employers should strongly consider adopting (or revising) in 2017 include paid vacation and sick leave policies, anti-discrimination rules, equal opportunity employment policies, medical and family leave procedures, social media and/or internet usage guidelines, “bring your own device” parameters, and a company code of conduct, just to name a few.

  • Adequate Documentation of Business Relationships

Although the “handshake” agreement may be easy to enter and inexpensive, it can create uncertainty and result in arguments down the road.  To ensure clarity of expectations for both parties’ duties and obligations in 2017, owners should document relationships among the company’s founders or investors, as well as with customers, executives, vendors, employees, and other service providers.  Not every situation calls for an onerous, formal written agreement; sometimes a confirming letter may do the trick.  But, executives should avoid the temptation to close any business deal based only on a verbal discussion.

  • Protecting Valuable Intellectual Property and Confidential Information

One of the largest assets in many modern businesses is intellectual property, “know-how”, technological advances, or other “secret” information that the company exploits for profit.  Protecting such valuable information can be done effectively and efficiently through mechanisms such as Confidentiality Agreements, Non-Competition or Non-Solicitation Agreements, and by registering trademarks and other intellectual property.  Formally safe-guarding these assets will not only maintain their value for the company, but it will provide the business with means to prohibit others from utilizing those assets without permission and block former employees from taking those resources with them should they chose 2017 as the year to make a career move.

  • Insurance Coverage

While some insurance coverage may be required, such as workers’ compensation or disability insurance, other types of insurance may be beneficial to protect a business in the event a dispute arises in 2017.  For example, Employment Practices Liability Insurance (EPLI) can cover the costs of defending losses incurred in discrimination, wrongful termination, harassment, and/or retaliation lawsuits.  Likewise, Directors and Officers Insurance indemnifies corporate executives for claims brought against them in their corporate capacity.  In addition, Key Employee Insurance may lessen the burden of the loss of a high performing or important individual employee in a small business.  Employers should consider implementing or expanding the scope of insurance coverage in these categories for 2017.

By starting the New Year on the right foot through adopting or revising these and other areas of habitual discord, business owners may avoid costly and unnecessary litigation.  Where a dispute does arise from a venture gone wrong, employers will be happy they invested in these defensive measures as they will be equipped with ammunition to protect the company’s interests.