A federal appellate court recently addressed this very issue. The employee, who suffered from a history of psychotic breaks, argued that her employer violated the FMLA because it had a duty to investigate whether she needed additional FMLA leave based on her mental health history, medical leave history, and uncharacteristic behavior pertaining to her leaving work early and her resignation. She further argued that if the employer had investigated, it would have placed her on medical leave rather than accepted her resignation. Rejecting these arguments, the court sided with the employer, who asserted it was entitled to rely on the employee’s statement that she wanted to quit, that there was no FMLA violation.

Although employees are not required to expressly mention the FMLA when requesting protected leave, they must provide sufficient information so that the employer can reasonably conclude that he/she is requesting leave that may be protected by the FMLA. If the employee provides sufficient notice, only then does an employer have a duty to inquire further about whether the employee suffered from a “serious health” condition entitling the employee to FMLA protection.

Against this background, the court concluded that the employer was not put on sufficient notice because 1) the employee failed to request additional leave; 2) she stated that she wanted to quit and that her decision was not coerced; and 3) she submitted a written resignation. The court also stated that the employer was under no duty to inquire whether the employee was fit for work because she had been previously medically cleared to return without restrictions.

While questions of whether an employee has provided sufficient notice to an employer to trigger FMLA obligations will likely remain an area of practical and legal challenge, the recent decision gives employers some confidence that they can take employees at their word if they resign for reasons or under circumstances that do not suggest a need for protected FMLA leave.

As for application to traditional labor environments, Professor Carol Daugherty developed in 1966 a seven-part “just cause” analysis. The seven factors are the following:

1. The employee knew of the company’s policy
2. The company’s policy was reasonable
3. The company investigated to determine that the employee violated the policy
4. The investigation was fair and objective
5. Substantial evidence existed of the employee’s violation of the policy
6. The company’s policy was consistently applied
7. The discipline was reasonable and proportional (the punishment fit the crime)

Labor arbitrators still largely apply this analysis today. If a company cannot meet these factors, a union’s grievance will have a greater chance of being sustained.

But wait. If employment outside of the union context is usually on an “at-will” basis, then isn’t this the opposite of “just cause?” Doesn’t this mean that employment can be terminated for a good reason, a bad reason, or no reason at all, regardless of fairness principles? Not necessarily. For example, state and federal anti-discrimination laws are one enormous exception to the “at-will” doctrine. (Even an “at-will” employee may not be terminated for an illegal reason.) Thus, if an employee in a protected category was treated unfairly under any element of Professor Daugherty’s seven-factor test, then the employee will have better chances of showing that the reason for the unfair treatment must have been based (impermissibly) upon the protected category. For example, if a company terminates an older employee but the investigation was not fair, or the company’s discipline was not consistently applied, or the discipline was not proportional to the violation, then there’s more explaining to do.
The company’s defense becomes more difficult, more expensive, and more vulnerable.

To protect against these risks, company leadership and human resources professionals would do well to take a page from Professor Daugherty and think through internally the seven factors which have come to define the “just cause” standard when it comes to a disciplinary or termination decision. However, where employees are at-will, there is no need, nor generally good reason, to include “cause” or “just cause” language in written employment materials, such as offer letters. Instead, simply thinking through the seven factors in connection with disciplinary decisions may often place employers in a stronger position to justify disciplinary and termination decisions.

A. Overpayment: A mistaken overpayment of wages or commission; adjustments to commissions; cash advances; loans; vacation advances before accrual; payment for classes; or personal purchases charged to the corporate credit card

B. Retention of Property: Failure to return equipment such as a laptop or uniforms

C. Wrongdoing Causing Damage to the Employer: Damage to property; inventory or cash shortages; unauthorized extension of credit; or a violation of a work rule causing damage to the employer.— in the extreme, the employee engaged in criminal activity such as theft, embezzlement, or malicious destruction of property

Employers may be inclined to offset final employee pay by the amount that the employee owes or has damaged the employer. The belief that an offset is appropriate can be particularly strong when the employer’s published policies caution employees that the employer retains the right to deduct any indebtedness from wages or when the employer obtains the employee’s prior authorization to deduct any amount owed to the employer at the time of termination of employment. While this strategy may pass the fairness test (since the debt is often undisputed), such self-help measures are often prohibited, or at least regulated, by state law.

If an employer desires to deduct any amount from an employee’s earned wages, whether during employment or upon termination, it is important to review the laws of the state in which the employee is employed. The laws and regulations vary. For example, until recently, New York state had one of the most restrictive wage deduction laws in the country, which formerly prohibited deductions from employee wages even in cases where employees had expressly authorized the deductions immediately before they occurred. However, in response to significant outcry from the business community, Governor Cuomo signed a law passed last year by the New York Legislature significantly liberalizing allowable wage deductions. However, the law requires the New York Department of Labor to draft regulations fleshing out the parameters of the changes to the New York law, but these regulations have yet to issue. Furthermore, even in those states that permit wage deductions, some have limits and in all cases, the deduction cannot result in the employee being paid less than the minimum wage.

The upshot of this broad variance in state regulation of deduction from employee wages is that, before an employer makes such a deduction — even if it seems fair and even if the employee authorizes it — the prudent approach is to ensure the deduction is allowed in the relevant state.

The D.C. Circuit held that by deeming the failure to post the notice to be an unfair labor practice and evidence of unlawful motive, the rule violated Section 8(c) of the NLRA, which protects the expression “of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form” from constituting or being evidence of an unfair labor practice under any provisions of the NLRA, so long as the expression is non-coercive (i.e., contains no threat of reprisal or force or promise of benefit). Comparing the protection of Section 8(c) to the law established under the free speech protections of the First Amendment to the U.S. Constitution, the appellate court concluded that Section 8(c)’s protection of an employer’s right to engage in non-coercive speech about unionization includes the right not to speak, or to be compelled to disseminate a message from the government that violates those rights.

In addition to striking the NLRB’s controversial poster rule, the decision also added the following points of interest:

• The court ruled that the NLRB had no authority to amend the statute of limitations established by Congress in Section 10(b) of the NLRA for the filing of an unfair labor practice charge.
• In a concurring opinion, two of the justices concluded that the rule also was not a valid exercise of the NLRB’s rulemaking authority under Section 6 of the NLRA because the rule was not, as required by Section 6, “necessary” to carry out the express provisions of the NLRA.
• The court initially addressed whether there was a problem with the rule because at the time the rule was published on August 30, 2011, the NLRB was without a quorum under the D.C. Circuit’s blockbuster decision in Noel Canning v. NLRB, finding that President Obama’s January 2012 recess appointments to the NLRB were invalid. The court concluded that the rule was not invalidated under its Noel Canning decision because at the time rule was filed with the Office of the Federal Register — which is the relevant time at which a rule’s promulgation takes place — the NLRB still had a valid quorum.
• The question of the poster rule’s validity also is currently pending in an appeal before the Fourth Circuit. In that case, the district court ruled that the NLRB’s poster rule was invalid.

The D.C. Circuit’s decision is positive news for employers who wish to state their own views regarding unionization and be free from compulsion to communicate messages suggesting support for organized labor. However, it’s important to note that the D.C. Circuit’s ruling does not eliminate the requirement that federal contractors and subcontractors provide notice to employees of their rights under the NLRA, which employers agree to as a term of receiving a federal contract.

Despite such guidance, the challenges to information technology and social media policies persist. On April 19, 2013, an administrative law judge for the NLRB considered a challenge to three policies promulgated by a hospital system. The three policies were: (1) a nonsolicitation policy; (2) an electronic mail and messaging policy (Email Policy); and (3) an acceptable use policy for information technology resources (IT Use Policy). The administrative law judge upheld the nonsolicitation policy, but struck down the other two policies based on their potential effect on employees’ rights to form or attempt to form a union under Section 7 of the National Labor Relations Act (Act).

The administrative law judge allowed the nonsolicitation policy to stand because it was an absolute restriction on the use of email for any solicitation at the workplace. The decision found that while employees do not have the right to use the employer’s email system for Section 7 purposes, because the use of email was banned for all solicitations, and not just union-related solicitations, this policy was acceptable.

The administrative law judge then turned to the Email Policy, which allowed the use of the employer’s email and messaging system for non-work-related purposes, unless such uses were offensive, disruptive, or harmful to morale. Because certain non-work uses of the systems were permitted, while others were banned, the administrative law judge found the rule was ambiguous and could be understood by employees to prohibit activity protected by the Act. The administrative law judge found this possible interpretation could chill employees’ exercise of their rights. The policy also allowed certain email solicitation of support for groups that were approved by the employer’s management, which the judge found was also banned by the Act because it would have required management approval of union-related solicitations.

The administrative law judge also struck down the IT Use policy, which allowed limited personal use of the employer’s IT resources, but forbade certain conduct, including using social media Web sites to disparage or post false or misleading information about the employer. The administrative law judge found this policy also violated the Act for largely the same reasons that the Email Policy did. Namely, the rule was ambiguous and may chill the employees’ protected activities under the Act.

The ongoing lesson from the NLRB’s continual focus on information technology and social media policies is that companies need to make sure their technology-use policies are clear and are not designed to impact employees’ protected rights. For example, a policy that bans all types of a certain activity, such as workplace solicitation through email, is more likely to be upheld. This of course assumes the employer is applying the policy fairly and consistently. However, policies that allow personal use of electronic resources in some, but not all situations, may be problematic. This is especially true where the policies might be interpreted by employees as prohibiting union-related speech, or where management approval of certain uses is required. Scrutiny of technology-use policies is likely to continue, and it is thus recommended that employers review and possibly revise their own policies in light of such ongoing scrutiny.

• Threats
• Interrogating employees about their pro- or anti-union leanings
• Promising benefits if employees will vote against a union
• Soliciting grievances from employees in an attempt to fix problems the union may be using in its campaign propaganda

Once an election petition has been filed with the National Labor Relations Board, so-called “laboratory” conditions go into effect. An employer that engages in unfair labor practices that ruin those “laboratory” conditions can have an election victory reversed and a re-run election ordered or — even worse in rare occasions — be ordered to bargain with a union despite its election loss.
Unions customarily file as many unfair labor practice charges as possible during a campaign — and often regardless of their merits — as a kind of insurance in the event of a loss, particularly a narrow one. The hope is that the National Labor Relations Board will be impressed with — and issue a complaint regarding — at least a few. The hope, too, is that such charges will intimidate the employer and union opponents into silence.

What can an employer legally say during the course of a union organizing drive? Actually, quite a lot — so long as is truthful and non-coercive. Among other things, an employer:

1. Can legally state that it prefers to deal with its employees directly rather than through an intermediary union — and that, under the law, it will be prohibited from doing so if a union is elected
2. Can educate employees about the risks of unionization by providing them with truthful information about the process of “good faith” collective bargaining — and the rights and responsibilities of both employers and unions under the National Labor Relations Act
3. Can educate employees about what can happen when parties cannot reach agreement — including the nature and risk of strikes and their costs to employees and their families
4. Can educate employees about union dues and the provisions of a union’s constitution
5. Can educate employees about incidents of corruption, embezzlement, and violence by union officers and agents

Naturally, an employer who becomes aware of a union organizing drive going on with its employees should consult with professionals trained in the law in the area who can help craft a legal campaign strategy, provide training for managers, and review messaging for compliance with the National Labor Relations Act. Particularly in today’s favorable regulatory environment for unions, employers cannot afford to be silent. By the same token, however, the wise employer should think before it acts or speaks out at what can often be a “make or break” managerial crossroad.

According to the Banner Health decision, an employer may prohibit employees’ discussions about workplace investigations only if it demonstrates that it has a legitimate and substantial business justification that outweighs the Section 7 rights of its employees. This means from the Board’s perspective that an employer must show more than a generalized concern about the need to protect the integrity of its investigations. Instead, the Board requires that an employer “determine whether in any give[n] investigation witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, and there is a need to prevent a cover up.” The Board thus deems a blanket rule prohibiting employee discussions of ongoing workplace investigations to be invalid regardless of the employer’s actual practices because it does not take into account the employer’s burden to show on a case-by-case basis that it has a business justification for the requirement
of confidentiality that outweighs employees’ Section 7 rights.

Should employers abandon employment policies that are meant to protect the integrity and efficacy of workplace investigations because of Banner Health? The answer should be “no” because even the Board recognizes that such policies, if properly drafted, have a legitimate and substantial business justification. The Board’s recent Advice Memorandum makes this clear.

In that Memorandum, issued by the NLRB’s Office of the General Counsel, dated January 29, 2013 and made public on April 16, the Board’s Associate General Counsel evaluated another employer’s employment policy that prohibited its employees from discussing ongoing workplace investigations in conjunction with the Banner Health decision. It specified:

“[Employer] has a compelling interest in protecting the integrity of its investigations.” In every investigation, “[employer] has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up.” To assist “[employer] in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain strict confidentiality, we may be subject to disciplinary action up to and including immediate termination.”

The Associate General Counsel concluded that the policy language in the first two sentences lawfully set forth the employer’s interest in protecting the integrity of its investigations, but that policy still violated Section 8(a)(1) because he deemed the last two sentences to be overbroad and indicative of interference with Section 7 rights since these do not take into account the employer’s burden to show on a case-by-case basis that the employer has a business justification for the requirement of confidentiality that outweighs employees’ Section 7 rights.

Most important, the Associate General Counsel also stated that the employer could modify the last two sentences of the policy to lawfully advise employees consistent with the Banner Health decision that: “[Employer] may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If [employer] reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.”

Hence, employers should not abandon employment policies that are meant to protect the integrity and efficacy of workplace investigation. Instead, they should review applicable policy language and modify the language as necessary so that it conforms to the recommendation contained in the Advice Memorandum.

Additionally, unless a court or the Board overturns Banner Health, an employer should only require and enforce strict confidentiality pertaining to workplace investigations and discipline employees who violate confidentiality obligations on a case-by-case basis. It should do so only if it can demonstrate for purposes of the particular investigation that “witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, and there is a need to prevent a cover up,” or another legitimate and substantial business justification that outweighs the Section 7 rights of its employees.

On February 28, 2013, the OFCCP rescinded the June 2006 Systemic Compensation Standards and Voluntary Guidelines for Self-Evaluation of Compensation Practices and issued OFCCP Directive 307  titled, “Procedures for Reviewing Contractor Compensation Systems and Practices.” Although it has received much press, at its core, Directive 307 simply states that the OFCCP:

1. Will continue to investigate compensation discrimination by federal contractors
2. Will use Title VII’s case-by-case approach to investigate compensation discrimination and prosecute federal contractors with violations
3. Will use various investigation techniques, including comparisons of individual pay differences, statistical analyses of class compensation disparities, and interviews of employees, to “tailor the compensation investigation” to the facts of the particular case
4. May go onsite if the contractor refuses to supply requested compensation data to the OFCCP

With regard to the particular procedures that the OFCCP will use in assessing a federal contractor’s compensation data, Directive 307 indicates that the contractor will be asked to provide compensation data as part of the initial desk audit scheduling letter. The compliance officer will then typically:

1. Conduct a preliminary analysis of the contractor’s summary compensation data
2. Analyze individual employee-level data
3. Use “a range of investigative and analytical tools” to determine the best approach for investigating compensation disparities
4. Evaluate “all employment practices that may lead to [c]ompensation disparities,” including differences in base pay, differences in job assignment or placement, differences in training, earnings, or advancement opportunities, and differences in compensation “add-ons” such as bonuses
5. Create its own pay analysis groups of “comparable” employees in order to investigate “systemic, small group and individual discrimination”
6. Test and evaluate the various factors identified by the contractor as relevant to the contractor’s compensation decisions before deciding which factors will be used for the analysis
7. Conduct additional onsite and offsite analyses (including employee interviews and requests for additional data), where necessary

Directive 307 also makes it clear that “the order in which these procedures occur may vary based on the facts and circumstances of each review. At any stage in the process, OFCCP may determine, based on the evidence, that it is appropriate to close the review or may determine that further review is warranted.”

Many of the investigation techniques and procedures described in Directive 307 have already been used by the OFCCP during recent years and therefore are not necessarily “new.” However, the OFCCP’s current approach to compensation analysis (now made explicit by Directive 307) will likely continue to increase costs for those contractors who are audited by the OFCCP.

For instance, contractors will be forced to evaluate the pay groups created by the OFCCP and argue for modification of groups that contain dissimilar employees. Additionally, contractors will have to provide legitimate, non-discriminatory reasons for nearly all pay differences. Finally, as the OFCCP manipulates and analyzes compensation data in a variety of ways and using various techniques, contractors will likely be asked to respond to multiple supplemental data requests over an extended period of time.

In light of these additional costs and burdens, in advance of an audit or upon receiving notice of an audit by the OFCCP, contractors should take the following actions (in conjunction with inside or outside counsel) to prepare for the OFCCP’s eventual compensation analysis:

1. Review job groups and identify smaller groups of similarly situated employees within those groups
2. Identify pay disparities within job titles and begin compiling information regarding the legitimate, nondiscriminatory reasons for those pay disparities
3. Examine employment practices related to hiring, training, promotion, and bonuses to see whether there are any practices that may affect compensation and/or explain compensation disparities
4. Prepare for a lengthy audit process and budget defense costs accordingly

By taking these steps in advance of an audit (or during the very early stages of an audit), contractors will be better able to properly defend against the more burdensome compensation investigations that appear likely in light of Directive 307.

Further, DHS has rejected requests that it give leeway to employers who start using the new Form I-9 a day late (on May 8) even though DHS’s initial announcement may cause this misunderstanding. Employers that fail to use the new version of the Form I-9 on and after May 7, 2013 may be subject to penalties. Therefore, it is very important for all employers to prepare for the new I-9 Form in the next few weeks and to begin using it no later than May 7, 2013. For information about the new I-9 Form, please see our earlier update which highlights some of the key changes.

The DOL applies a six-part test to decide whether a worker is properly classified as an unpaid intern as opposed to an employee. First, the internship must be similar to training the intern would receive from an educational institution. This means that the internship should be structured around a classroom or educational environment. Second, the internship should benefit the intern as opposed to the employer. A red flag is raised in a situation where the employer relies on the intern to do the company’s work. Third, the intern must not displace existing employees. Thus, employers should be careful about bringing in interns on the heels of a layoff, and should not use interns to augment the workforce. Fourth, the employer should not receive any advantage from using the intern and, in fact, a showing that the employer’s operations are sometimes impeded by training the intern is good evidence of a true internship. Fifth, the intern should not be entitled to a job at the end of the internship. This means that using internships as trial periods for employment is risky. Finally, the employer and the intern must understand that the intern is not entitled to wages.

With this test in mind, there are several important practice pointers to follow when using unpaid interns:

• If you pay your interns a “stipend,” make sure it is minimal, bears no connection to work performed, and is understood to be a stipend and not wages.
• Do not assign work to an intern that you would assign to a regular employee. Instead, have interns trail employees in order to learn from them and engage them in special projects that are educational in nature.
• Do not become reliant on the intern as you would an employee. Ask yourself, “would the intern’s absence pose a problem in the workplace?” If the answer is yes, the intern probably qualifies as an employee and should be paid according to applicable state and federal wage laws.
• Enter into a written agreement with the intern specifying the parameters of the internship, confirming that the internship is unpaid, and documenting any educational experience and educational credits the intern will earn for participating in the internship.
• Ideally, work with an educational institution to ensure that the internship provides appropriate educational experience and is approved by the institution.

Use of interns should be closely monitored to ensure compliance with the DOL’s test and to help avoid liability for misclassification.