Northwestern grant-in-aid scholarship football players are “employees”

American Football 2Paid players are primarily employees, not primarily students.

An NLRB Regional Director has ruled that grant-in-aid scholarship football players at Northwestern University are “employees” and has directed that an NLRB election be held.


The NLRB Regional Director made these basic findings:

  • The players perform services for employer’s (University’s) benefit.
  • The players receive compensation for these services.
  • The pay is not financial aid.
  • The players are subject to the employer’s control.
  • The players are employees under common-law definitions.
  • The players are not primarily students.
  • The players are not temporary employees.

This is the beginning of what is sure to be a long litigation battle.

SCOTUS: Severance payments subject to FICA taxes

taxes-ficaIt should come as no surprise that the US Supreme Court unanimously decided that severance payments made to involuntarily terminated employees are subject to FICA taxes.

United States v. Quality Stores (US Supreme Court 03/25/2014).

[For a list of current employment law cases, see US Supreme Court Watch.]

Arbitration deference on an international scale

arbFamiliar rules, applied to a treaty rather than a contract.

Today’s SCOTUS case: BG Group v. Republic of Argentina (US Supreme Court 03/05/2014).

This case involves an investment treaty between the United Kingdom and Argentina. The treaty authorizes a party to submit a dispute to a local court, and permits arbitration “where, after a period of eighteen months has elapsed from the moment when the dispute was submitted to [that] tribunal . . . , the said tribunal has not given its final decision.”

A dispute arose between BG Group and Argentina. BG Group commenced arbitration without first going to a local Argentine court. Argentina balked, saying the arbitrators had no jurisdiction because BG Group had not complied with the local litigation requirement.

The arbitration panel concluded that it had jurisdiction because Argentina’s conduct (such as enacting new laws that hindered recourse to its judiciary by firms in BG Group’s situation) had excused BG Group’s failure to comply with the local litigation requirement.

The US Supreme Court, applying familiar rules, upheld the arbitrators.

The presumption is that courts decide whether the parties agreed to arbitrate (which they clearly did here), and arbitrators decide procedural preconditions to arbitration (such as time limits and – in this case – the local litigation requirement and whether that requirement was excused).

A totally unsurprising conclusion to a $185 million case.

[For a list of current employment law cases, see US Supreme Court Watch.]

SCOTUS: Employees of private contractors get SOX whistleblower protection

whistleIncludes employees of accountants, auditors, and lawyers.

Today the US Supreme Court decided that Sarbanes-Oxley Act § 1514A’s whistleblower protection includes employees of a public company’s private contractors and subcontractors. Lawson v. FMR LLC (US Supreme Court 03/04/2014) (6-3).

Lawson and others are former employees of FMR and others, private companies that contract to advise or manage mutual funds. As is common in the industry, the mutual  funds served by FMR are public companies with no employees. Both former employees allege that they blew the whistle on putative fraud relating to the mutual funds and, as a consequence, suffered retaliation by FMR.

The 1st Circuit held that the term “an employee” in §1514A(a) refers only to employees of public companies.

The Supreme Court reversed, 6-3, relying on the “ordinary meaning” of the statute. The ordinary meaning of “an employee” in this statute is the contractor’s own employee. The prohibited retaliatory measures enumerated in §1514A(a) – discharge, demotion, suspension, threats, harassment, or discrimination in employment terms and conditions – are actions an employer takes against its own employees. Contractors are not ordinarily positioned to take adverse actions against employees of the public company with whom they contract.

The dissent sees a parade of horribles, for example, “authoriz[ing] a babysitter to bring a federal case against his employer.” Oh my, I’m pretty worried now.

[For a list of current employment law cases, see US Supreme Court Watch.]

SCOTUS will decide compensability of time spent in security screenings

amazonIs time spent in security screenings “integral and indispensable” to employees’ principal job activities?

The US Supreme Court today granted certiorari in Integrity Staffing Solutions, Inc. v. Busk, and will review the 9th Circuit’s April 12, 2013 judgment. [Busk v. Integrity Staffing, 713 F3d 525  (9th Cir 04/12/2013)]

Integrity Staffing Solutions provides warehouse space and staffing to clients such as

Two warehouse workers sued claiming that Integrity violated the Fair Labor Standards Act (FLSA) by requiring them to pass through a security clearance at the end of each shift, for which they were not compensated. Employees waited up to 25 minutes to be searched; removed their wallets, keys, and belts; and passed through metal detectors. The trial court dismissed the suit for failure to state a claim, but the 9th Circuit reversed.

The FLSA, as amended by the Portal-to-Portal Act of 1947, generally precludes compensation for activities that are “preliminary” or “postliminary” to the “principal activity or activities” that the employee “is employed to perform.” But preliminary and postliminary activities are still compensable under the Portal-to-Portal Act if they are “integral and indispensable” to an employee’s principal activities. According to the 9th Circuit, “To be ‘integral and indispensable,’ an activity must be (1) ‘necessary to the principal work performed’ and (2) ‘done for the benefit of the employer.’”

The plaintiffs alleged that the screenings are intended to prevent employee theft, and the 9th Circuit found that “plausible” because the screenings are required only when employees leave work. The court said, “As alleged, the security clearances are necessary to employees’ primary work as warehouse employees and done for Integrity’s benefit. Assuming, as we must, that these allegations are true, the plaintiffs have stated a plausible claim for relief.”

Two other Circuits have held that time spent in security screenings is not subject to the FLSA because it is not “integral and indispensable” to employees’ principal job activities. The 9th Circuit distinguished those cases. One involved a nuclear power plant where screening is required of everyone entering the plant. In another case the screenings were mandated by the government, so they did not benefit the employer.

The case will be set for oral argument sometime in October 2014 or later.

[For a list of current employment law cases, see US Supreme Court Watch.]

NLRB jurisdiction over religious institutions

facultystaff-banner-sm-twoMore change seems to be in the air.

Question 1: Does the NLRB have jurisdiction over Pacific Lutheran University, a self-identified “religiously affiliated educational institution”? (Remember NLRB v. Catholic Bishop, 440 U.S. 490 (1979).)

Question 2: Are the University’s faculty members managers rather than employees? (Remember NLRB v. Yeshiva University, 444 U.S. 672 (1980).)

These are the basic questions the NLRB is asking in the Pacific Lutheran University case. The Board is inviting briefs on 12 specific questions. [Invitation] Briefs are due on or before March 28.

New NLRB arbitration deferral standards coming?

arbitrationChange is in the air.

Today the NLRB issued notice that it is reconsidering the standards under which it will defer to an arbitration decision in Section 8(a)(1) and (3) cases. [Official Invitation]

Under the existing standard, the Board defers to an arbitration award when (1) the arbitration proceedings are fair and regular; (2) all parties agree to be bound; and (3) the arbitral decision is not repugnant to the purposes and policies of the Act.  Spielberg Mfg. Co., 112 NLRB 1080 (1955).  Further, the arbitral forum must have considered the unfair labor practice issue.  The Board deems the unfair labor practice issue adequately considered if (1) the contractual issue is factually parallel to the unfair labor practice issue, and (2) the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice issue.  Olin Corp., 268 NLRB 573 (1984).  The burden of proof rests with the party opposing deferral.

The NLRB General Counsel has asked the Board to adopt a different standard.  Under his proposal, the party urging deferral would bear the burden of demonstrating that (1) the collective-bargaining agreement incorporates the statutory right, or the statutory issue was presented to the arbitrator, and (2) the arbitrator correctly enunciated the applicable statutory principles and applied them in deciding the issue.  If the party urging deferral makes that showing, the Board would defer unless the award was clearly repugnant to the Act.

Briefs are due on or before March 25, 2014.

The proposal would be an improvement. Contract interpretation by an arbitrator may or may not track the usual decision-making performed by the NLRB. Worse, under the current rule it is not even necessary that the parties agree that the arbitrator should decide an unfair labor practice.

SCOTUS: No pay for time spent donning and doffing protective gear

donningBecause employees spent “the vast majority” of time on actual “clothes.”

Sandifer v. United States Steel Corp (01/27/2014) generated a unanimous opinion from the US Supreme Court.

Employees wanted to be compensated for time spent at the beginning and end of their shift donning and doffing clothes and protective gear.

The Fair Labor Standards Act (FLSA) might have required payment, except for Section 203(o) which says that the compensability of time spent “changing clothes or washing at the beginning or end of each workday” is a subject appro­priately committed to collective bargaining. And (importantly) these employees were working under a collective bargaining agreement that provided that this time was not compensable.

The Court’s opinion has a lot of discussion about what is “clothes” rather than equipment, suggesting that safety glasses, ear plugs, and a respirator are not clothes.

The Court didn’t like the idea of taking the pre-shift and post-shift time and slicing it up into little bits of “clothes time” and “equipment time” (my quotes). Instead, the instructions are for courts to

ask whether the period at issue can, on the whole, be fairly characterized as “time spent in changing clothes or washing.” If an employee devotes the vast majority of that time to putting on and off equipment or other non-clothes items, the entire period would not qualify as “time spent in changing clothes” under §203(o), even if some clothes items were also donned and doffed. But if the vast majority of the time is spent in donning and doffing “clothes” as defined here, the entire period qualifies, and the time spent putting on and off other items need not be subtracted.

My high school math teacher would wonder about the difference between “majority” and “vast majority.” Justice Scalia tries to help by also using the phrase “on the whole.” Sounds like more than 50 percent plus one.

Union membership rates: public sector 35.3%, private sector 6.7%

UnionMembership2014_0In 2013, the union membership rate – the percent of wage and salary workers who were members of unions – was 11.3 percent, the same as in 2012, the U.S. Bureau of Labor Statistics reported today.

The number of wage and salary workers belonging to unions, at 14.5 million, was little different from 2012. In 1983, the first year for which comparable union data are available, the union membership rate was 20.1 percent, and there were 17.7 million union workers.

Public-sector workers had a union membership rate (35.3 percent) more than five times higher than that of private-sector workers (6.7 percent).

For details and charts, go here.

SCOTUS takes on 1st amendment retaliation case

1stPublic employee claims discharge was for compelled court testimony.

Lane v. Franks – certiorari granted by the US Supreme Court on January 17 – will be one of the more interesting cases of this year.

It raises an issue left undecided in Garcetti v. Ceballos, 547 US 410 (2006). Garcetti is famous for holding that a public employee who speaks or writes as part of that employee’s job duties enjoys no 1st amendment protection. The employer can fire that employee for speaking or writing. The reasoning is that the employee was not speaking or writing as a citizen.

The issue in Lane v. Franks is whether a public employer is free to fire an employee for giving truthful subpoenaed testimony. The 11th Circuit said yes. Lane v. Central Alabama Community College (11th Cir 07/24/2013) (unpublished).

Lane, as part of his community college job, uncovered evidence that a legislator was engaged in some corrupt activities. Later, Lane testified under subpoena in a federal criminal trial involving the legislator. When Lane got laid off or terminated from his job, he sued Franks, president of the college, claiming retaliation in violation of the 1st amendment.

It’s important to note that the content of Lane’s testimony was all derived out of the performance of his job. Yet testifying was not one of his job duties. So that’s the twist in this case. Testifying was not a job duty, but the content of the testimony was all about what Lane discovered as part of his job duties.

The gut issue here is whether Lane was speaking as a citizen or as an employee. It seems pretty simple to me. When an employee is subpoenaed to testify in criminal court, that employee is speaking as a citizen. (Police officers are a different question because testifying is party of an officer’s job duties.)

[For a list of current employment law cases, see US Supreme Court Watch.]