Cosmetology student was not an employee when working at the school's training salon

Patrick Velarde sued The Salon Professional Academy of Buffalo and its owners (Academy) for wages he claimed were owed under the Fair Labor Standards Act (FLSA) and New York Labor Law §§ 190, 650 et seq. for work he performed during his cosmetology vocational training at the Academy. The district court held Velarde was not an employee of the Academy and granted it judgment on the pleadings. The 2nd Circuit affirmed. Velarde v. GW GJ Inc (2nd Cir 02/05/2019) [PDF].

Velarde enrolled with the Academy, a for-profit cosmetology training school, for a 1,000 hour course of study designed to satisfy the coursework requirement for state licensure. Part of his coursework included working under supervision in the Academy salon. The Academy charged customers reduced rates for services performed by students. Velarde and the other students were not paid for their work but received modest tips from customers. After graduation, Velarde became a licensed cosmetologist and sued the Academy for unpaid minimum wage and overtime on the theory he was an employee when he worked at the Academy salon.

In affirming the dismissal of Velarde's lawsuit, the 2nd Circuit held the "primary beneficiary test" announced in Glatt v. Fox Searchlight Pictures, Inc. (2015) for determining when interns are employees in the commercial setting applied to determine whether a trainee in the for-profit vocational training context is an employee. The court concluded the applicable Glatt factors demonstrated Velarde was the primary beneficiary of the relationship given that the 1,000 hours of instruction from the Academy satisfied the coursework requirement for state licensure. The court concluded the fact the Academy charged customers for student work was immaterial because it was entitled to generate a profit on its operations.

This decision is in accord with decisions of the 6th, 7th, and 10th Circuits addressing the same issue.

Another attack on public sector unions

There's a petition for certiorari pending at the US Supreme Court asking the Court to take up the issue of "Whether it violates the First Amendment to appoint a labor union to represent and speak for public-sector employees who have declined to join the union." Uradnik v. Inter Faculty Organization [Briefs]

Kathleen Uradnik sought a preliminary injunction challenging the constitutionality of an exclusive collective bargaining representative in the public sector, asserting that “the University and State of Minnesota [should] not appoint the Union to speak for her and not force her into an expressive association with it.”

The trial court denied the preliminary injunction, and the 8th Circuit affirmed in December 2018, having decided that Uradnik "cannot show a likelihood of success on the merits of her compelled speech argument."

The Supreme Court may or may not want to hear this case, so we'll just hide and watch.

NLRB overrules 2014 case on how to decide who is an independent contractor

SuperShuttle DFW, Inc. (NLRB 01/25/2019) [PDF]

Part of a series - Employment Law Case of the Week - by Ross Runkel.

The NLRB announced on January 25 a return to its long-standing independent-contractor standard, reaffirming the Board’s adherence to the traditional common-law test. In doing so, the Board clarified the role entrepreneurial opportunity plays in its determination of independent-contractor status, as the D.C. Circuit has recognized.

The case, SuperShuttle DFW, Inc. (NLRB 01/25/2019) [PDF], involved shuttle-van-driver franchisees of SuperShuttle at Dallas-Fort Worth Airport. Applying its clarified standard, the Board concluded that the franchisees are not statutory employees under the National Labor Relations Act but rather independent contractors excluded from the Act’s coverage.

The Board found that the franchisees’ leasing or ownership of their work vans, their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain. These factors, along with the absence of supervision and the parties’ understanding that the franchisees are independent contractors, resulted in the Board’s finding that the franchisees are not employees under the Act. The decision affirms the Acting Regional Director’s finding that the franchisees are independent contractors.

This decision overrules FedEx Home Delivery, a 2014 NLRB decision that modified the applicable test for determining independent-contractor status by severely limiting the significance of a worker’s entrepreneurial opportunity for economic gain.

Chairman John F. Ring was joined by Members Marvin E. Kaplan and William J. Emanuel in the majority opinion. Member Lauren McFerran dissented.

Backpack wars

Image from Jon’s awesome blog

Image from Jon’s awesome blog

Cleveland employment lawyer Jon Hyman tells a bizarre story of his attempt to get to a mediation being held at the Ohio Civil Rights Commission. He had his laptop and all his papers in a backpack, and backpacks were not allowed into the Commission's building.

No metal detectors or pat-downs or other security – just a rule against backpacks.

Solution? Put the backpack into a shopping bag and carry it in that way?

Dumb? Sure. But it all made sense to the "security" folks.

For the whole story, including a mediator's contribution: What's is the dumbest workplace policy you've ever encountered?

Is Uber next? US Supreme Court case could be a game changer.

Is Uber next? US Supreme Court case could be a game changer.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

New Prime v. Oliveira (US Supreme Ct 01/15/2019) [PDF] held that an interstate truck driver does not have to arbitrate his wage and hour claim – even though he signed an arbitration agreement.

This could have a big effect on lawsuits between Uber and their drivers. It probably turns on whether the drivers are IN interstate commerce.

Some pundits were surprised that the Court would issue a "pro-worker," "anti-arbitration" decision, failing to understand that the Justices all do their best to be faithful to the words Congress puts into its statutes.

Dominic Oliveira is an interstate truck driver whose contract with New Prime designates him as an independent contractor. The contract contains a mandatory arbitration provision and contains a "delegation clause," giving the arbitrator authority to decide threshold questions of arbitrability. Oliveira filed a class action claiming that New Prime failed to pay statutory minimum wage. The trial court denied New Prime's motion to compel arbitration; the 1st Circuit affirmed. The US Supreme Court affirmed unanimously. New Prime v. Oliveira (US Supreme Ct 01/15/2019) http://case.lawmemo.com/us/Oliveira.pdf

The Federal Arbitration Act (FAA) directs courts to compel arbitration, but §1 says that "nothing" in the Act "shall apply" to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."

The Supreme Court held that the trial court – not the arbitrator – must first decide whether FAA §1 excludes Oliveira. This is because the contract's delegation clause (which is merely a specialized type of arbitration agreement) can be enforced only if the FAA applies in the first place.

The Supreme Court also held that FAA §1 excludes Oliveira. The FAA's term "contract of employment" refers to any agreement to perform work. At the time of the FAA's adoption in 1925, the phrase "contract of employment" was not a term of art, and dictionaries tended to treat "employment" more or less as a synonym for "work." Contemporaneous legal authorities provide no evidence that a "contract of employment" necessarily signaled a formal employer-employee relationship.

Emailed click box did not suffice to show assent to employer's arbitration agreement

We live in a digital age. What must an employer do to obtain digital agreement to its arbitration policy? Here is one case that gives one answer.

The New Jersey Appellate Division reversed the trial court's order compelling arbitration of a claim of religion discrimination. The court applied Leodori v. CIGNA Corp., 175 N.J. 293, 303 (2003) to find that there had not been an "explicit, affirmative agreement that unmistakably reflects the employee's assent." Skuse v. Pfizer (New Jersey Ct App 01/16/2018) [PDF].

The employer emailed to its workforce what it called a "training module" which described the company's mandatory arbitration policy. There was a link to the full text of the policy. In the module, employees simply were asked to "acknowledge" it with the click of an electronic button. The module declared that if an employee did not click the acknowledgement, but continued to work for the company for sixty or more days, the employee would be "deemed" to be bound by the arbitration policy.

The court held that the employee "never expressed in written or electronic form her explicit and unmistakable voluntary agreement to forego the court system and submit her discrimination claims against her former employer and its officials to binding arbitration." She clicked a box to indicate that she acknowledged receipt of the arbitration agreement, but nothing indicated she agreed to it. Compliance with the Leodori case requires that the click box contain the word "agree" or "agreement."

The court rejected the employer's argument that the employee was "deemed" to be bound by the arbitration policy because she continued to work for more than sixty days after receiving the arbitration agreement. "Such a proclamation of 'consent by default' is legally insufficient, however, to satisfy the requirements of explicit and unmistakable employee assent prescribed by Leodori."

At SCOTUS: Title VII Exhaustion: Jurisdictional? Waivable?

At SCOTUS: Title VII Exhaustion: Jurisdictional? Waivable?

Part of a series - Employment Law Case of the Week - by Ross Runkel.

The US Supreme Court has granted certiorari to decide whether Title VII’s administrative exhaustion requirement is a jurisdictional prerequisite to suit, as three Circuits have held, or a waivable claim processing rule, as eight Circuits have held. Title VII requires plaintiffs to exhaust claims of employment discrimination with the EEOC before filing suit in federal court. Fort Bend County v. Davis (US Supreme Ct cert granted 01/11/2019) [Order].

The 4th, 9th, and 11th Circuits hold that exhaustion is jurisdictional, so courts lack subject matter jurisdiction over claims that were never presented to the EEOC. The 1st, 2nd, 3rd, 5th, 6th, 7th, 10th, and DC Circuits treat failure to exhaust as a claim processing rule that is subject to waiver, forfeiture, and other equitable defenses. The Department of Justice is on record as describing Title VII’s exhaustion requirement as jurisdictional, and the EEOC has taken the position that it is not jurisdictional.

The Court will review the 5th Circuit's judgment in Davis v. Fort Bend County (5th Cir 06/20/2018) [PDF], which held that the defendant forfeited its exhaustion argument by not raising it in a timely manner before the district court.

Justice Kavanaugh’s 1st opinion: Arbitration

Justice Kavanaugh’s 1st opinion: Arbitration.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

The US Supreme Court has held – unanimously – that courts must enforce an arbitration delegation clause even if the merits appear to be "wholly groundless." Henry Schein v. Archer & White (US Supreme Ct 01/08/2019) [PDF]. This is Justice Kavanaugh's first Supreme Court opinion. Eight pages.

[This is not an employment law case, yet it will have an impact on employment agreements that contain an arbitration clause.] Archer & White Sales sued Henry Schein alleging antitrust violations and seeking both money damages and injunctive relief. Schein moved to compel arbitration, citing an arbitration clause in the parties' contract. Archer & White argued that the dispute was not subject to arbitration because its complaint sought injunctive relief, at least in part, and the arbitration agreement had an exception for injunctive relief. Schein contended that because the rules governing the contract provide that arbitrators have the power to resolve arbitrability questions, an arbitrator – not the court – should decide whether the arbitration agreement applied. Lower courts held that the argument in favor of arbitration was "wholly groundless," and so the trial court could – and did – decide that the arbitration agreement did not cover this dispute. The US Supreme Court unanimously reversed.

The US Supreme Court held that the "wholly groundless" exception to arbitrability is inconsistent with the Federal Arbitration Act (FAA) and the Court's precedent. Under the FAA, arbitration is a matter of contract, and courts must enforce arbitration contracts according to their terms. The parties may agree to have an arbitrator decide not only the merits of a particular dispute, but also "gateway" questions of arbitrability. Therefore, when the parties' contract delegates the arbitrability question to an arbitrator, a court may not override the contract, even if the court thinks that the arbitrability claim is wholly groundless. "[A] court may not 'rule on the potential merits of the underlying' claim that is assigned by contract to an arbitrator, 'even if it appears to the court to be frivolous.'"

Joint Employers - the NLRB’s latest word

Joint Employers - the NLRB’s latest word.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

In 2015 the NLRB revised its joint-employer test by (1) putting the focus on whether a putative employer has the right to control the workers (even if that right is not exercised) and (2) considering indirect control (not merely direct control) as a factor. The DC Circuit has affirmed that formulation, although the case was remanded for greater articulation of the scope of "indirect" control. Browning-Ferris v. NLRB (DC Cir 12/28/2018) [PDF]

Most workers at Browning-Ferris's recycling plant are employed by a staffing company, who “has the sole responsibility to counsel, discipline, review, evaluate, determine pay rates, and terminate” the workers that it provides. When a Teamsters union petitioned to represent these workers, the NLRB decided that Browning-Ferris and the staffing company were joint-employers of the workers.

The DC Circuit held that "the right-to-control element of the Board’s joint-employer standard has deep roots in the common law. The common law also permits consideration of those forms of indirect control that play a relevant part in determining the essential terms and conditions of employment. Accordingly, we affirm the Board’s articulation of the joint-employer test as including consideration of both an employer’s reserved right to control and its indirect control over employees’ terms and conditions of employment." However, the court faulted the NLRB for failing to distinguish evidence of indirect control that bears on workers’ essential terms and conditions from evidence that simply documents the routine parameters of company-to-company contracting. Therefore, the court remanded to the NLRB for it to "explain and apply its test in a manner that hews to the common law of agency."

DISSENT: The dissent would have issued no decision at all because the NLRB is now engaged in a rulemaking process directed at precisely the issues that were decided in this case. On the merits, the dissent argued that under the common law "employees of a true independent contractor [here, the staffing company] cannot be considered employees of the company [here, Browning-Ferris] who hired the contractor." The dissent also faulted the majority for ignoring the fact that the common law of joint-employer may vary according to the nature of the business arrangement between companies.

NOTE: The NLRB is engaging in a rulemaking process regarding its joint-employer standard. Interested parties may file comments on or before Monday, January 14, 2019.

No ministerial exception for Catholic grade school teacher

No ministerial exception for Catholic grade school teacher.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

Is a fifth grade teacher at a Catholic school a “minister” for purposes of the ministerial exception? Court says “No” 2-1.

Kristen Biel was fired from her fifth grade teaching position at a Catholic school after she told her employer that she had breast cancer and would need to miss work to undergo chemotherapy. The trial court granted summary judgment to the employer on the ground that the 1st amendment's ministerial exception barred her claim under the Americans with Disabilities Act. The 9th Circuit reversed, 2-1. Biel v. St. James School (9th Cir 12/17/2018) [PDF]

The court applied the analysis in Hosanna-Tabor v. EEOC to conclude that, under the totality of the circumstances, Biel did not qualify as a "minister" for purposes of the ministerial exception.

  1. The school did not hold Biel out as a minister by suggesting to its community that she had special expertise in Church doctrine, values, or pedagogy beyond that of any practicing Catholic.

  2. Biel's title "Grade 5 Teacher" did not reflect any religious meaning. There was no religious component to her liberal studies degree or teaching credential, and the school had no religious requirements for her position.

  3. Nothing in the record indicates that Biel considered herself a minister or presented herself as one to the community. She described herself as a teacher and claimed no benefits available only to ministers.

  4. Biel taught lessons on the Catholic faith four days a week. She also incorporated religious themes and symbols into her overall classroom environment and curriculum, as the school required.

The DISSENT argued that Biel was "entrusted with teaching and conveying the tenets of the faith to the next generation." The substance reflected in her title and the important religious functions she performed outweigh her formal title and whether she held herself out as a minister.

Lawyers: Do mandatory bar dues violate the 1st amendment?

Lawyers: Do mandatory bar dues violate the 1st amendment?

Part of a series - Employment Law Case of the Week - by Ross Runkel.

The 8th Circuit brushed away a constitutional challenge to the way bar associations collect and spend dues, but the US Supreme Court ordered the 8th Circuit to reconsider the question in light of Janus v. AFSCME (US Supreme Court 2018).

ADEA applies to local governments regardless of size

US Supreme Court: ADEA applies to local governments regardless of size.

Part of a series - Employment Law Case of the Week - by Ross Runkel.

In a unanimous decision, the US Supreme Court holds that the Age Discrimination in Employment Act (ADEA) applies to local political subdivisions regardless of their size. This is rejection of the argument that the ADEA applies only when a political subdivisions has 20 or more employees. Mount Lemmon Fire Dist v. Guido (US Supreme Ct 11/06/2018) [PDF]

Following Congressional amendments in 1974, the ADEA has two key sentences in its definitions: (a) "The term ‘employer' means a person engaged in an industry affecting commerce who has twenty or more employees … ." (b) "The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State … ."

The Court said, "We hold … that §630(b)'s two-sentence delineation, and the expression 'also means' at the start of the second sentence, combine to establish separate categories: persons engaged in an industry affecting commerce with 20 or more employees; and States or political subdivisions with no attendant numerosity limitation."

The Court stressed the use of the phrase "also means," which appears dozens of times in the US Code, and typically carries an additive – rather than clarifying – meaning. Also, the second sentence in §630(b) pairs political subdivisions with agents, a discrete category that carries no numerical limitation. Although Title VII applies to local governments only if they meet a numerosity specification, that is a consequence of the different language Congress chose to employ.

The Supreme Court decision affirmed the 9th Circuit, and rejected contrary interpretations by the 6th, 7th, 8th, and 10th Circuits.

Class-action arbitration - Dead or Alive at the US Supreme Court?

Class-action arbitration - Dead or Alive at the US Supreme Court? Lamps Plus v. Varela, argued at the US Supreme Court on October 29.

Issue: " Whether the Federal Arbitration Act forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements."


Part of a series - Employment Law Case of the Week - by Ross Runkel.