Hunton Employment & Labor Perspectives

On June 25, the government issued final rules regarding the use of “bona fide employment-based orientation periods” in connection with the Affordable Care Act’s 90 day waiting period limits. These final rules largely track the proposed rules issued in February.

On June 23, 2014, the California Supreme Court announced a landmark ruling that arbitration agreements with mandatory class waivers are generally enforceable while carving out one notable exception.  That exception consists of representative claims brought under the Private Attorneys General Act (PAGA) which is unique to California.

In Euchner-USA, Inc. v. Hartford Cas. Ins. Co., No. 13-2021-cv, 2014 U.S. App. LEXIS 10797 (2d Cir. June 10, 2014), the United States Court of Appeals for the Second Circuit found that an insurer must defend its insured in a case alleging ERISA violations because the facts alleged (as opposed to the embedded legal conclusions) created a reasonable possibility of coverage under the general liability policy’s employee benefits coverage part. Central to the court’s decision was its finding that Euchner’s alleged misclassification of the plaintiff as an independent contractor ...

In the most anticipated labor law case in years, the Supreme Court issued a unanimous judgment yesterday holding that the President’s January 2012 “recess” appointments of three members to the National Labor Relations Board was an invalid exercise of his Article II powers.   Noel Canning v. NLRB arose from a labor dispute in which the employer – Noel Canning – had unlawfully refused to execute a collective bargaining agreement with a labor union.  Noel Canning contested the Board’s unfair labor practice ruling on the grounds that, because three of the five Board members were invalidly appointed to the Board when the Senate was not in recess, the Board lacked a quorum to act and therefore had no authority to issue its ruling.

On February 12, 2014, President Obama announced Executive Order 13658, “Establishing a Minimum Wage for Contractors.”  The order seeks to raise the hourly minimum wage paid to workers performing services on covered Federal contracts to: (i) $10.10 per hour, beginning January 1, 2015; and (ii) beginning January 1, 2016, and annually thereafter, an amount determined by the Secretary of Labor in accordance with the Order.

Consistent with a trend in assailing employers’ workplace policies, the NLRB recently struck down nine employee policies, and  the confidential information and non-disclosure agreement of Hoot Winc LLC (d/b/a Hooters), all of which employees signed upon initial hiring.  NLRB Judge William Nelson Cates found that the policies at issue, which dealt with discussion of tips, employee conduct, disclosure of company material and business affairs, and social media, were over-broad and interfered with employees’ rights to engage in  activity protected by Section 7 of the National Labor relations Act (“Act”).  Likewise, the judge found that the restaurant chain’s non-disclosure agreement also infringed on employees’ Section 7 rights.

On May 29, 2014, the California Supreme Court issued its long-awaited opinion in Duran v. U.S. Bank National Association, remanding the case to the trial court due to the trial court’s flawed trial methodology.

Last week, the EEOC invited public comment on potential revisions to the regulations implementing Section 501 of the Rehabilitation Act of 1973, which governs the federal government’s employment of people with disabilities. Specifically, the EEOC aims to clarify what it means for the federal government to “be a model employer of individuals with disabilities” pursuant to Section 501.  While any revised regulations will only apply to the public employees, how the EEOC defines a “model employer” could impact future interpretations of the Americans with Disabilities Act (ADA), which apply to most private employees. To the extent any resulting regulation is viewed as reasonable, it may have implications for private employers as courts often look to case law interpreting the Rehabilitation Act to assist in interpreting the ADA.

In a budget report released by the House Appropriations Committee on May 8, 2014, lawmakers expressed their concern with “the EEOC’s pursuit of litigation absent good faith conciliation efforts.”   The Committee’s report, which sets out the Committee’s recommended funding proposals for various federal departments and agencies, directs the EEOC “to engage in [good faith conciliation] efforts before undertaking litigation and to report, no later than 90 days after enactment of this Act, on how it ensures that conciliation efforts are pursued in good faith.”

In the past few months, the EEOC has filed two federal lawsuits challenging what might be considered “run of the mill” separation agreements. Such separation or severance agreements have become a relatively common practice when the employment relationship is terminated, as the employer can offer a severance payment in exchange for a broad release of potential claims. These agreements provide employers with the finality that is necessary for making business decisions, risk assessments, long-term plans, and the like. In cases in which there are potentially viable claims, settling them immediately avoids the time and expense of litigation. And even if the employee would not have had any viable claims against the employer, merely avoiding the possibility of litigation and its costs is usually well worth the amount of the severance payment. The indication that EEOC is taking a closer look at these agreements is thus concerning to employers and the lawyers who represent them.