Another Reset of NLRB’s Independent Contractor Test

Q.  What is the current standard for determining whether an individual is an employee or independent contractor for purposes of the NLRA?

A.   On Jan. 25, 2019, the Republican-led National Labor Relations Board affirmed the acting regional director’s decision that drivers of a shared airport ride service were independent contractors, not employees, and therefore not covered by the National Labor Relations Act.

The decision, which reverts back to the common law test for determining independent contractor status, will have a wide-ranging impact on other gig economy companies.

To read the full article, click here.

-Tracey E. Diamond and Susan K. Lessack

Employers May Have to Accommodate Medical Marijuana Users Under Some State Laws

Q: Can my company refuse to hire or terminate an individual because the individual is a medical marijuana user?

A: Not necessarily.  While we have not seen any laws to date explicitly requiring employers to accommodate employees’ use of marijuana for medicinal purposes while at work, in some states at least, employers may not terminate employees for their use of medical marijuana outside of the workplace, even if it means that the employee tests positive in a drug screen.

According to the National Conference on State Legislatures, as of January 23, 2019, a total of 33 states and Washington, D.C.—including every state in the Mid-Atlantic—has a comprehensive medical marijuana program. At the federal level, marijuana still is considered to be an illegal drug under the Controlled Substances Act.  However, the U.S. Department of Justice’s current guidance on prosecution for marijuana-related offenses allows federal prosecutors to decide how and whether to prosecute marijuana-related crimes.

Many state laws governing the use of medical marijuana contain provisions addressing the intersection of medical marijuana and employment. While state governments have an interest in protecting users of medical marijuana from discrimination based on their status as a medical marijuana user, they also have recognized the duty of employers to protect co-workers and the general public by ensuring that medical marijuana users do not come to work or operate dangerous equipment while under the influence of marijuana.

The Pennsylvania Medical Marijuana Act, for example, provides that employers cannot discriminate or retaliate against an employee solely on the basis of the “employee’s status as an individual who is certified to use medical marijuana.” At the same time, employers are not required to accommodate the use of medical marijuana on employer property or premises.  Furthermore, Pennsylvania’s law permits employers to discipline or terminate an employee who is under the influence of medical marijuana in the workplace or who performs work while under the influence of medical marijuana “when the employee’s conduct falls below the standard of care normally accepted for that position.”

Given that state-sanctioned use of medical marijuana is relatively new, there are few cases interpreting state medical marijuana laws with regard to employment. The case Noffsinger v. SSC Niantic Operating Co., LLC, 338 F. Supp. 3d 78 (D. Conn. 2018), is a recent federal court decision interpreting Connecticut’s medical marijuana law.  Connecticut’s law contains an “anti-discrimination provision” that bars an employer from refusing to hire a person or from “discharging, penalizing or threatening an employee” solely because of the person’s status as a “qualifying medical marijuana patient under state law.” The statute also provides, however, that an employer could refuse to hire a medical marijuana user if “required by federal law or required to obtain funding.”

In Noffsinger, the plaintiff accepted a job offer (contingent on passing a drug test) from the defendant employer.  Prior to taking the drug test, the plaintiff informed the employer that she was an approved user of medical marijuana under state law, and that she utilized medical marijuana to treat her post-traumatic stress disorder.  When plaintiff’s drug test came back positive for marijuana, the employer rescinded the job offer and refused to hire the plaintiff.  In doing so, the employer acted on the basis that it maintained a “zero tolerance” drug policy and that marijuana is illegal under federal law.  The plaintiff sued under the medical marijuana law’s non-discrimination provision.

The court granted summary judgment to the plaintiff, finding that the employer violated Connecticut’s medical marijuana law. The court paid little heed to defendant’s argument that it was required to reject plaintiff for employment because the federal Drug Free Workplace Act (DFWA) barred it from hiring plaintiff.  In coming to this conclusion, the court wrote that the DFWA neither required drug testing nor prohibited employers from employing someone who uses medical marijuana outside the workplace.  The court also stated that the DFWA did not require a “zero tolerance” drug policy.  The court then concluded that the Connecticut statute protects a qualified user’s use of medical marijuana outside work hours.

We will surely see an uptick in medical marijuana related litigation as more jurisdictions adopt medical marijuana laws, and as more employers make decisions regarding the employment of medical marijuana users. If one of your employees is a user of medical marijuana and you have concerns about your company’s obligations and/or responsibilities with regard to such use, contact any member of the Pepper Hamilton Labor & Employment team.

– Lee E. Tankle

Are No-Hire Provisions Now Void and Unenforceable Under Pennsylvania Law?

Q.  Can two business entities agree not to hire each other’s employees?

A.  On January 11, an en banc panel of the Superior Court of Pennsylvania affirmed a trial court’s decision declaring that a no-hire provision in a commercial contract between two businesses was void and unenforceable under Pennsylvania law. Over the past 18 months, no-poach and no-hire provisions have received nationwide attention for their effects on employees’ wages and mobility. They have been attacked by antitrust authorities, politicians and the plaintiffs’ bar as illegal agreements under state and federal antitrust laws. But the Superior Court’s analysis of the no-hire provision under common law — not antitrust law — may have more far-reaching ramifications for commercial contracting in Pennsylvania, as it could make all no-hire provisions unenforceable. In its opinion, the Superior Court departed from other authority holding that ancillary no-hire provisions between commercial parties are generally enforceable so long as they protect a party’s legitimate interest and are reasonable in scope and duration. This case is worth watching to see if it is appealed and, if so, whether the Pennsylvania Supreme Court allows the decision to stand.

For more information, click here.

A. Christopher Young and Robyn R. English-Mezzino

ADEA Waivers Must Be Written in Plain Language to Be Enforceable

Q.  I’m the HR Director of a large company that is planning a reduction in force in one of our divisions. We intend to offer early retirement incentives to some of the individuals, contingent on them signing an agreement to waive all future claims against the company under the applicable discrimination laws, including the Age Discrimination in Employment Act (ADEA).  What information needs to be included in the waiver to comply with ADEA requirements?

A.  Companies with plans to implement a reduction in force should proceed with caution following a recent decision in which the court found that a waiver and release of claims signed by an outgoing employee violated federal age discrimination laws. On January 11, 2019, in Ray v. AT&T Mobility Services, LLC, a federal judge in the Eastern District Pennsylvania held that AT&T violated the ADEA by giving employees a waiver that failed to meet the strict informational requirements of the Older Worker Benefit Protection Act (“OWBPA”).  The court found that the waiver lacked sufficient details regarding members of the overall decisional group, and therefore, affected employees did not have the information necessary to make an informed decision about whether to waive their right to assert claims against the company under the ADEA.

The OWBPA requires employers to include specific language and to follow certain safeguards when asking employees over age 40 to sign a waiver giving up their right to sue the company for age discrimination under the ADEA. This information must be provided to the employee “in writing in a manner calculated to be understood by the average individual eligible to participate.”

Among the other OWBPA requirements, exiting employees must be advised in writing that they have the right to consult an attorney before signing the waiver. If waivers are presented to a group of employees (i.e., in a RIF), each employee must be given at least 45 days to decide whether or not to sign it.  If the waiver is presented to a single employee, in the absence of a RIF, the employer must give the employee 21 days to decide whether to accept it.  In either case, after signing the waiver, employees have seven days to revoke the decision.

As demonstrated by Ray v. AT&T Mobility Services, LLC, however, the OWBPA’s most challenging requirements flow from the employer’s duty to provide information about its decision-making process, specifically in terms of the factors used to select the employees to be released.  In the context of a reduction in force, a waiver must clearly describe the group of employees under consideration and must delineate the eligibility factors relevant to the decision making process, including the job titles and ages of all individuals in the group selected and not selected for the reduction in force.

In Ray v. AT&T Mobility Services, LLC, the plaintiff, a former sales director, received a “surplus notification” letter from AT&T, informing her that she was losing her job due to a reduction in force in the company’s mobile phone sales and services division.  Employees targeted by the reduction in force were given the option either to remain in their current job while searching for other positions in the company, or to sign a waiver and release of claims ending their employment, after which they would be eligible for severance benefits.  The plaintiff decided to stay put, but after failing to land another job within the company during the 60-day period, she was terminated.  She then submitted the signed waiver and release, and the company paid her severance benefits.

Despite signing the waiver, the plaintiff filed a complaint, alleging that the waiver did not meet the “knowing and voluntary” requirements of the ADEA.

The waiver provided by AT&T informed employees that the pool from which the terminated employees were chosen was “the combined Affected Work Group(s)” in the ADEA listing, which for its part described the group as being “comprised of positions at the same level with similar definable characteristics from which the surplus employees are selected,” and further stated that the affected groups could be “any portion of an organization, described in terms of level, job title, similar job functions, geography, lines of organization or other definable attributes based on needs of the business.”

The court rejected this “vague and circuitous” language, explaining that the waiver did not provide terminated employees with “any meaningful information as to how the process of identifying those included in the reduction-in-force was conducted.” Moreover, the “combined Affected Work Group(s)” that constituted the decisional unit were created solely to effectuate the reduction, and thus “terminated employees such as [plaintiff] had no meaningful understanding of their composition or origin.”

In granting partial summary judgment to the plaintiff, the court pointed out that the company had disclosed ages and job titles only for those employees selected or not selected within certain groups it determined would be impacted by the reduction. Instead, the court explained, the company should have disclosed the job titles and ages of every employee in its sales and services division who was selected or not selected for inclusion in the decisional unit.  In other words, the company could not simply describe a subset of the larger decisional group without explaining the process by which the subgroup itself was cleaved from the division overall.  According to the court, AT&T’s “circuitous decisional unit definition is precisely the type of disclosure the OWBPA seeks to prevent.”

For companies implementing a reduction in force, the Ray v. AT&T decision serves as a reminder to pay close attention to the strict requirements of the ADEA and the OWBPA when providing waivers to outgoing employees, and to draft the language in a way that it is easy for employees to understand.  Aside from the ADEA/OWBPA rules, employers also should note that other laws may be triggered by a RIF, depending on the specific circumstances.  For example, the Worker Adjustment and Retraining Notification Act (“WARN”) requires employers to provide 60 days written notice for certain plant closings and mass layoffs. Moreover, federal and/or state anti-discrimination laws could be implicated if the RIF has a disparate impact on a protected group.

As the Ray v. AT&T court explained, the major underlying policy of the OWBPA disclosure requirements is to “arm employees with enough information to make an informed decision whether to release any potential ADEA claims against an employer.”  While it may seem counterintuitive to “arm” outgoing employees with information that might result in a lawsuit against your company, the case shows that a lack of transparency could result in liability despite the lack of discriminatory intent.  Given the myriad of rules and regulations potentially applicable to a RIF, employers should seek legal counsel prior to taking action to ensure compliance and avoid liability.

Rogers Stevens

SOCIAL MEDIA JOB POSTINGS AND AGE DISCRIMINATION

Q:        Does using social media advertisements targeted to younger potential applicants raise age discrimination concerns?

A:        The Age Discrimination in Employment Act (“ADEA”) makes it illegal to discriminate against workers over the age of 40 in employment advertising, recruiting, hiring, and other employment opportunities.  The publication provision of the ADEA generally makes it unlawful to “print or publish” job notices or advertisements “indicating any preference, limitation, specification or discrimination, based on age.”  Age preferences for younger employees are only appropriate when age is demonstrated as a bona fide occupational qualification that is reasonably necessary for the normal operation of the business.

Age discrimination claims pursuant to the ADEA have been rising steadily in the past 10 years. The number of age discrimination complaints submitted to the U.S. Equal Employment Opportunity Commission totaled about 18,000 in 2017 — about 20% of all complaints filed with the federal agency.

At the same time, the manner and method by which employers are posting job advertisements has been changing and evolving. Not surprisingly, given the rise of social media usage, many employers are turning to sites like Facebook to recruit new hires.  However, using such sites to target specific demographics, such as younger applicants, may run afoul of the ADEA.

In December 2017, a group of some of the largest U.S. employers found themselves in federal court, facing tough questions about their social media hiring practices. A class action lawsuit was filed against the various employers, alleging that they used Facebook-provided targeting tools and algorithms to direct ads to younger potential applicants, thereby discriminating against older applicants in violation of the ADEA.  The individual plaintiffs in the case, who are all recently unemployed workers over the age of 40 who use the social media site, claim they have been denied the opportunity to view certain employment advertisements simply because of their age. Because they could not view the ads, consequently, they could not apply for the posted jobs.

Although we do not yet know the outcome of the pending litigation, it is likely similar claims will follow. So what can an employer do to mitigate the risks associated with posting jobs on social media sites?  Treat the online posting no differently than any other publication, such as a newspaper.  Avoid using language that may be deemed discriminatory (i.e. “young” or “new grad”).  Research the social media site’s advertising policies and procedures.  When completing the criteria for the posting, do not affirmatively limit how the advertisement will be shared among different age demographics who use the site.  Ensure that your company’s advertisements are accessible and open to potential applicants of all ages.

Leigh McMonigle