Employee Waiver of Class Action Rights to be Decided

Can you require that an employee waive the right to participate in a labor related class action by putting that waiver in the employee's employment agreement? The Supreme Court will decide this year. It has agreed to decide whether class action waivers in employment arbitration agreements violate the National Labor Relations Act (“NLRA”). Granting certiorari in National Labor Relations Board v. Murphy Oil USA (No. 16-307), Epic Systems Corp. v. Lewis (No. 16-285), and Ernst & Young LLP v. Morris (No. 16-300), the Supreme Court has taken up this issue.

The National Labor Relations Board (“NLRB”) has taken the position that employers violate the NLRA when they make class action waivers in arbitration agreements a condition of employment. Disagreeing with the NLRB, in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013), and Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015), the U.S. Court of Appeals for the Fifth Circuit generally held class and collective action waivers do not violate the NLRA. The Second and Eighth Circuits have followed the Fifth Circuit. In May, 2016, the Seventh Circuit, in Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), held arbitration agreements that prohibit employees from bringing or participating in class or collective actions violate the NLRA. The Ninth Circuit followed suit in Morris v. Ernst & Young, No. 13-16599, 2016 U.S. App. LEXIS 15638 (9th Cir. Aug. 22, 2016).

Next up: the Supreme Court.


New Rule for Executive, Professional, and Administrative Overtime Exemption Enjoined: How did That Happen?

Twenty states, including Arizona, filed an action in the South Texas Federal District Court requesting that the March 23, 2014 executive memorandum from the President directing the Department of Labor to modernize and streamline overtime regulation for executive, administrative, and professional employees, and the resulting rulemaking for 29 C.F.R. Part 541, finalized on May 23, 2016, be enjoined. Today, Judge Mazzant issued a twenty page Memorandum Opinion and Order on Plaintiffs’ Motion for a Preliminary Injunction, enjoining the Department of Labor from implementing and enforcing the new regulations.

The plaintiffs argued that the new regulations unconstitutionally regulate states. They contend that the new regulations coerce them to adopt wage policies that adversely affect state priorities, budgets, and services. That is, state governments should have independence to set employee compensation.

In Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985), the Supreme Court ruled that Congress had the authority to impose Federal Labor Standards Act minimum wage and overtime requirements on state and local employees.  How did the Texas District Court enjoin the new regulations while embracing Garcia?

The question is one of administrative authority. In another very important Supreme Court case, Chevron, U.S.A., Inc. v. Nat. Res. Def Council, Inc, 467 U.S. 837 (1984), that Court reviews an administrative agency’s construction and interpretation of statute (i.e., its regulations). The Supreme Court said that one must first look to “whether Congress has directly spoken to the precise question at issue” and follow the intent of Congress, if clear. If there is an ambiguity in Congressional intent, then a court must defer to the agency’s interpretation unless it is arbitrary, capricious, or manifestly contrary to the statute.   

Here, the issue is the meaning intended by Congress for the term “executive,” administrative,” and “professional” for the exemption.  Judge Mazzant found that Congress intended, unambiguously, that those terms meant individuals performing executive, administrative, or professional duties and that the test should be based on duties without a salary requirement. Since the current rule is not at issue, that salary requirement remains; but, the new rule cannot be implemented.

How broad is the ruling? Judge Mazzant issued a nationwide injunction and did not limit this to only the twenty states in the suit, and extended the injunction to all employees and employers.  Stay tuned. One would expect an appeal of this ruling to the Fifth Circuit.

Drug Testing Routinely After an Accident? Not Anymore . . .

Do you have a post-accident drug testing policy? Seems reasonable. Not anymore, though. If your policy requires blanket testing, it may be in violation of a new Occupational Safety and Health Administration Final Rule.

The new requirements set forth in 29 C.F.R. § 1904.35 are to encourage “accurate recording of work-related injuries and illnesses by preventing the under-recording that arises when workers are discouraged from reporting these occurrences.” The new rule, which went into effect on August 10, requires employers to establish reasonable procedures for employees to report work-related injuries and illnesses. So, what is "reasonable" in the drug testing context?  The rule states that a procedure would “not be reasonable” if it would “tend to deter” or “discourage” accurate reporting.

The comments to the final rule maintain that blanket, post-accident drug testing policies “tend to deter” the reporting of job-related injuries and illnesses. They are, by the new rule, not appropriate and prohibited. The logic is that blanket drug testing after accidents could be perceived by employees as threatening or retaliatory, and employees who know they will be drug tested regardless of their role in an accident will be less likely to report the accident when it occurs.

The comments explain that there is not a complet ban on drug testing in the workplace, but cautions that there should be a “reasonable possibility that drug use by the reporting employee was a contributing factor to the reported injury or illness” for an employer to require a drug test after an accident.

OSHA will begin enforcing this new rule on November 1, 2016. If you have a blanket post-accident drug testing policy, it should be reviewed and revised. Contact an experienced employment law attorney to assist you.

Arizona, Voting, Employers: Three Hours to Vote

Arizona allows workers to vote, so prepare.

An Arizona employee may take leave if there are less than three consecutive hours between the opening of the polls and the beginning of employee's shift or between the end of employee's shift and the closing of the polls. Time off may be taken to provide three consecutive total hours. Employer may specify when leave may be taken.

Employees may take leave to vote if, either

  • there are less than three consecutive hours between the opening of the polls and the beginning of the employee's regular workshift or
  • between the end of his/her regular workshift and the closing of the poll.

How does this work?

  • If an employee has less than three consecutive hours to vote, the employee may take leave for the length of time (at the beginning or end of the employee's shift) that, when added to the time difference between workshift hours and the opening or closing of the polls, will provide a total of three consecutive hours.
  • An employee shall not be penalized (or suffer any deduction in the employee's usual salary or wages) for taking time off to vote.

What must -- or should -- the employee do?

  • The employee taking time off to vote must request time off from the employer prior to election day.
  • The employer may specify the hours during which employees may take leave.




December 1. Exempt or Non-Exempt. Questions To Ask Now

On December 1, 2016, the the minimum salary more than doubles form the current minimum for classifying an employee as exempt from overtime ($455 a week to $913 a week, or $23,660 to $47,476 per year). Are you prepared?

  • Do you have your list of potentially affected employees?
  • What is the cost of increasing an affected party salary to the new minimum? Is it less than the cost of keeping a salary lower and paying overtime?
  • Even if you raise a salary to the new minimum, do you meet the “duties test”?
  • Will you take advantage of your right under the new rule to use bonuses, commissions, or other incentive compensation as a credit toward the new salary threshold?
  • Are your supervisors ready to manage the compliance costs for overtime? Do they understand what kinds of hours are considered “hours worked” (e.g., certain travel time, time spent working from home or remotely, time spent using technology for business purposes, etc.)?
  • Have you considered the alternatives to paying reclassified employees on an hourly basis?
  • Do you understand what kinds of compensation will have to be included in the “regular rate of pay” for overtime purposes?


Posters. New Posters. Get Your New Posters.

The Department of Labor requires posters in the workplace to keep employees informed of the law. The DOL issued updated posting requirements for the Employee Polygraph Protection Act and the Employee Rights Under the Fair Labor Standards Act.

Update your posters: it's the law. There are two new posters, on for the FLSA and one for the Polygraph Protection Act. You can print out copies here:

Dennis L. Hall   


Employment Termination in Arizona

Terminating an employee. It happens, for many reasons, and it is becoming more dangerous simply because employee complaints are easy to make to the EEOC or NLRB, and can be difficult for employers to win. At a minimum, the time and expense of responding to complaints is a cost to be avoided, if possible. What should an employer know about Arizona?

Arizona employees are at-will employees, unless the employee and employer “have signed a written contract to the contrary.”  The legislature made that clear with "The Arizona Employment Protection Act," A.R.S. § 23-1501. In Arizona, any "implied contract claims," which can be thought to be employer representations or statements, customs, or practices, cannot create employment contract rights for employees. But, the breach of an express written agreement (i.e., and employment contract or a policy in a employee manual that could be interpreted as a contract) limits the employer’s right to fire at-will.

"At-will" means that an employer is free to discharge individuals 'for good cause, or bad cause, or no cause at all,' and the employee is equally free to quit, strike, or otherwise cease work." The exception, of course, is that the termination cannot be for a reason "contrary to public policy."  It is the exceptions that matters. "At-will" does not mean unrestricted.

One note. "At-will" and "Right to Work" are different. A Right to Work law guarantees that no person can be compelled, as a condition of employment, to join or not to join, nor to pay dues to a labor union. Section 14(b) of the Taft-Hartley Act affirms the right of states to enact Right to Work laws. Arizona is one of twenty-five state that have a Right to Work law.

Is there a written employment contract? Is there a contract because of a poorly crafted employee manual? Is the employee protected by public policy? Public policy? That means that the a termination cannot be motivated by the protected classes of race, religion, age, national origin, or sex; or in retaliation for asserting a public policy right; or being a whistleblower; or exercising employee organizing rights (which are very broad); and other areas. Is the employee subject to the Americans with Discrimination Act? Are there Family Medical Leave Act issues? The exceptions are numerous.

Ready, aim, well . . .  analyze.