Contractors Beware: “Blacklisting” Rule Finalized

Today, on August 25, 2016, the Department of Labor issued final Guidance implementing Executive Order 13673, Fair Pay and Safe Workplaces, bleakly referred to by the contractor community as the “blacklisting” order.  The same day, a Final Rule  and Guidance was added to the Federal Acquisition Regulation (FAR) to implement that Executive Order, by the Department of Defense (DoD), General Services Administration (GSA) and National Aeronautics and Space Administration (NASA).

The “blacklisting” order places a new focus on labor and employment issues during the federal procurement process. Covered federal contractors and subcontractors must now disclose to the government previous violations of fourteen different federal labor and employment laws, plus equivalent state counterparts.  Pre-award disclosures must be made before a contract can be awarded to ensure the company is a “responsible” labor source.  Updated reports then are required every six months post-award.  The rule also imposes limits on the arbitration of certain employment claims, and requires specified paycheck disclosures and transparency.

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Federal Government Seeks to Raise Awareness Regarding Religious Discrimination in the Workplace

The issue of religious background has generated substantial discussion during the current election cycle. Recently, the federal government highlighted the issue of religious discrimination and accommodation in the workplace.

On July 22, 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced the release of a one-page fact sheet specifically designed to educate young workers of their rights and responsibilities under the federal employment anti-discrimination laws prohibiting religious discrimination. The fact sheet stresses that employers may not discriminate against an employee on the basis of religion, and notes that employees have a right to ask that certain workplace accommodations be made to respect their religious preferences. Also outlined by the sheet are various examples of proper and improper employment practices under federal law. The fact sheet encourages employees to report suspected religious-based discrimination.

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Eleventh Circuit: Arbitration Agreement Enforceable Despite Terms that Violate USERRA

In Bodine v. Cook’s Pest Control Inc., No. 15-13233, 2016 WL 4056031 (11th Cir. July 29, 2016), the Eleventh Circuit held that a forced-arbitration agreement in an employment contract is enforceable, despite the fact that certain provisions of the arbitration agreement violated the Uniform Services Employment and Reemployment Rights Act (“USERRA”).

Rodney Bodine, a member of the U.S. Army Reserve, was part of the sales force at Cook’s Pest Control, Inc. (“Cook’s”) in Alabama. His employment contract with Cook’s contained an arbitration clause, which included provisions that 1) permitted the arbitrator to re-apportion costs and attorneys’ fees, and 2) set the statute of limitations for filing a claim under the agreement at six months. After being terminated, Mr. Bodine brought suit against Cook’s under the USERRA, 38 U.S.C. § 4301, and state law, alleging, inter alia, discrimination based on military service.

USERRA provides statutory protection to members of the military against discrimination by employers because of their military service. 38 U.S.C. § 4301(a)(3). It also contains a non-waiver provision, which provides that the chapter “supersedes any” contractual agreements that “reduces, limits, or eliminates in any manner any right of benefit provided by t[he] chapter.” § 4302(b). USERRA also states that there is no statute of limitations for bringing a claim under the Act, § 4327(b), and that no court costs or fees may be charged to a USERRA plaintiff, § 4323(h)(1). Mr. Bodine alleged that, because the statute of limitations and fee provision of the arbitration agreement conflicted with USERRA, the entire arbitration provision was void under USERRA’s non-waiver provision.

Cook’s moved to compel arbitration. Although it conceded that the two provisions Mr. Bodine complained about did indeed violated USERRA, Cook’s argued that the court could use the employment contract’s severability clause to excise the two invalid provisions while retaining and enforcing the remainder of the arbitration agreement, pursuant to the Federal Arbitration Act’s (“FAA”) “liberal policy favoring arbitration agreements.” The district court agreed and, under Alabama’s severability law, it struck the statute of limitations and fee provisions from the arbitration agreement. The court dismissed the suit without prejudice and ordered Mr. Bodine to submit his claims to arbitration.

Over a dissent by Judge Martin, a panel of the Eleventh Circuit affirmed the district court’s order and concluded that “USERRA’s non-waiver provision should not be read to automatically invalidate an entire agreement with USERRA-offending terms. Instead, the plain language of [USERRA] contemplates modification of an agreement by replacing USERRA-offending terms with those set forth by USERRA.” (Emphasis added.) The Court held that the “USERRA’s non-waiver provision does not conflict with the FAA: both statutes provide a mechanism for striking from an arbitration agreement a term in conflict with USERRA.”

Despite the Court’s holding, employers are wise to consider USERRA’s provisions when drafting employment contracts and arbitration agreements. In addition to the statute of limitations and fee provisions at issue in Bodine, USERRA contains provisions pertaining to jurisdiction, § 4323(b), and venue, § 4323(c). The Act also requires employers to “provide to persons entitled to rights and benefits under this chapter a notice of the rights, benefits, and obligations of such persons and such employers under this chapter.” § 4334(a).

Employee Pay and the Bankruptcy Stay – Potential Pitfalls Part 2: Garnishment Issues

In a prior post, we set forth the potential liability of employers for collection of debts owed by employees in violation of the bankruptcy stay. To protect themselves from such liability, employers that accrue claims against their employees in the ordinary course of business should implement written protocols designed in consultation with bankruptcy counsel.

However, even employers that do not ordinarily accrue claims against employees must be careful to avoid violating the automatic stay – most notably when complying with creditor garnishment demands under state law.

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Telecommuting Employees Entitled To FMLA If Office To Which They Report Meets 50-Or-More Employee Threshold

With more and more employees working off-site or from home, employers must be aware of the impact on courts’ interpretation of the FMLA’s eligibility requirements.

In June, the U.S. District Court for the Eastern District of Louisiana held in Donahoe-Bohne that the FMLA’s 50-employee threshold was met since the office to which a remote or telecommuting employee reported had at least 50 employees, even though the employee worked from home several states away.

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EEOC Issues Sample Notice for Employers Offering Wellness Programs

We have written on several occasions about the Equal Employment Opportunity Commission’s (“EEOC”) proposed rules on wellness programs, and the extent to which employer-sponsored wellness plans must comply with the Americans with Disabilities Act. The new rules were finalized in May 2016 and state that employers may offer limited financial and other incentives to employees to participate in wellness programs.

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The Defend Trade Secrets Act And How Employers Can Take Advantage Of It

The newly-enacted Defend Trade Secrets Act (DTSA) represents a significant new weapon for companies to prosecute trade secret violations. Among other features, the DTSA creates a federal cause of action for theft of trade secrets and a provision for judicial ex parte seizure of stolen property, double damages, and attorneys’ fees. Please join Hunton & Williams LLP for a complimentary webinar on August 3, 2016, 1:00 p.m. – 2:00 p.m. (EDT) that will cover the important aspects of the law, including the language that needs to be inserted into employment and confidentiality/non-disclosure agreements to ensure your company can take full advantage of the law.

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Jimmy John’s Will Stop Using Non-Compete Agreements in New York

In December 2014, the New York Attorney General’s Office initiated an investigation into Jimmy John’s corporate office and its New York franchises. Jimmy John’s is a sandwich shop with franchises throughout New York and the United States. The investigation in New York concerned whether the use of a non-compete clause that barred departing employees from taking a job with any employer within two miles of a Jimmy John’s store that made more than 10 percent of its revenue from sandwiches was legal.

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Fifth Circuit Approves Texas’s Suit Against EEOC Over Guidance On State “No-Felon” Hiring Policies

The Fifth Circuit held recently that the State of Texas had standing to sue the Equal Employment Opportunity Commission (“EEOC”) over the Commission’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII” (the “Guidance”) issued in April 2012, which warned employers that blanket policies against hiring felons could disproportionately exclude minorities and thus be deemed discriminatory. Texas originally sued the EEOC in late 2013 seeking an injunction against enforcement of the Guidance and a declaratory judgment that state agencies be allowed to maintain their policies, as instituted under state law, barring categories of convicted felons from state employment. In its complaint, the State also claimed that the EEOC’s Guidance improperly preempted state law. The lower court granted the EEOC’s motion to dismiss on grounds that Texas lacked standing to sue the EEOC because the Commission cannot bring an enforcement action against the state for failing to comply with the Guidance. The lower court also held that the EEOC Guidance did not constitute a “final agency action” under the Administrative Procedure Act (“APA”), and thus the Guidance was not subject to judicial review.

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NLRB Takes Another Step Towards Joint Employer Abyss

Earlier this week, the NLRB issued yet another troubling decision in the joint employer space, a world the Board already turned upside-down last summer with its landmark Browning Ferris ruling. In Miller Anderson, the Board overturned Bush-era precedent and held that a union seeking to represent employees in bargaining units that combine both solely and jointly employed employees is no longer required to obtain the consent of the employers, provided the proposed bargaining unit is appropriate under “traditional” Board precedent. Under the prior rule established in the Board’s 2004 Oakwood Care decision, the Board would not allow employees from nominally different employers to form a single bargaining unit without consent, because employers who join a multi-employer bargaining unit must all consent to their inclusion (a sound policy given the host of practical and legal variables that can arise when separate employers agree to bargain together).

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