NLRB GC targets nearly all non-competes in employment agreements

The NLRB's General Counsel seeks to have the Board rule that nearly all non-compete provisions in employment agreements are unlawful unless they are "narrowly tailored to address special circumstances justifying the infringement on employee rights."
[Press Release]
[Memo to Regional Directors]

The Board already applies a similar standard to provisions in severance agreements.

Going after non-competes in current employment agreements - not only in severance agreements - is a big leap. I expect the Board to eventually buy in, so be prepared.

SCOTUS: FLRA can regulate State National Guard labor disputes with dual-status technicians

The Federal Service Labor-Management Relations Statute (FSLMRS) provides for collective bargaining between federal agencies and their employees’ unions; bars each from committing unfair labor practices; and establishes the Federal Labor Relations Authority (FLRA) to investigate and adjudicate labor disputes.

A union representing federal civil-service employees known as dual-status technicians who work for the Ohio National Guard filed an unfair labor practice complaint with the FLRA because the Guard asserted that the Guard was not bound by the FSLMRS when interacting with the Guard’s dual-status technicians.

The US Supreme Court (7-2) holds that The FLRA had jurisdiction over this labor dispute because a State National Guard acts as a federal agency for purposes of the FSLMRS when it hires and supervises dual-status technicians serving in their civilian role. Ohio Adjutant General’s Department v. FLRA (US Supreme Ct 05/18/2023) [PDF]

It all depends on whether the Guard is an "agency" under the statute when acting as a supervisor of dual-status technicians. "Agency" includes the Department of Defense, and each dual-status technician is an employee of the Department of the Army or the Department of the Air Force. Those Departments, in turn, are components of the Department of Defense. Thus, when the Guard employs dual-status technicians, the Guard—like components of an agency—exercise the authority of the Department of Defense, a covered agency.

The DISSENT points out that the majority says the Guard “act[s] as a federal ‘agency,’” “exercise[s] the authority of” a covered agency, and even “functions as an agency," but it is not actually a federal agency – so "the FLRA lacks jurisdiction to enter remedial orders against them."

Here comes the end of Chevron deference

The US Supreme Court has granted certiorari on this question: "Whether the Court should overrule Chevron or at least clarify that statutory silence concerning controversial powers expressly but narrowly granted elsewhere in the statute does not constitute an ambiguity requiring deference to the agency." Loper Bright Enterprises v. Raimondo (US S Ct cert granted 05/01/2023) [Briefs].

This heralds the end of deference under Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984). Chevron held that courts should defer to a federal agency’s interpretation of an ambiguous statute as long as that interpretation is reasonable.

In the Loper case, commercial fishing companies challenged a rule adopted by the National Marine Fisheries Service that requires fishing companies to pay for the costs of observers who monitor compliance with fishery management plans. The DC Circuit ruled (2-1) that the court should defer to the agency's interpretation. Loper Bright Enterprises v. Raimondo (DC Cir 08/12/2022) [Opinion]

In my opinion, Chevron died on March 4, 2019 in BNSF Railway v. Loos (US Supreme Ct 03/04/2019) [PDF]. That was a boring payroll tax case in which the IRS had interpreted a tax statute. In an opinion by seven Justices, there was NO mention of Chevron. See my blog on the BNSF case here.

SCOTUS will decide whistleblower case

The US Supreme Court has granted certiorari to decide whether a Sarbanes-Oxley whistleblower must prove his employer acted with a “retaliatory intent” as part of his case in chief, or whether the lack of “retaliatory intent” is part of the affirmative defense on which the employer bears the burden of proof. Murray v. USB Securities (US S Ct cert granted 05/01/2023) [Briefs].

Trevor Murray claims that UBS Securities fired him in retaliation for reporting alleged fraud on shareholders to his supervisor. Murray sued UBS under the whistleblower protection provision of the Sarbanes-Oxley Act, and he ultimately prevailed at trial. The district court,  however, did not instruct the jury that a SOX antiretaliation claim requires a showing of the employer's retaliatory intent.

So the 2nd Circuit reversed, holding that a whistleblower-employee like Murray must prove by a preponderance of the evidence that the employer took the adverse employment action against the whistleblower-employee with retaliatory intent—i.e. , an intent to "discriminate against an employee ... because of" lawful whistleblowing activity. Murray v. USB Securities (2nd Cir 08/05/2022) [PDF].

We expect oral arguments in the fall, with a decision in 2024.

ChatGPT writes a rap

My prompt to ChatGPT: "Write a rap about arbitrator Ross Runkel." Below is the response. Remember, AI intelligence is artificial.

Listen up y'all, I'm about to tell a tale
'Bout an arbitrator who never fails
Ross Runkel's his name, he's a legal whiz
With his keen mind, he settles disputes with ease

Arbitrator Ross Runkel, he's the man
When it comes to resolving disputes, he's got a plan
He's fair and impartial, he's the real deal
If you're in a legal bind, Ross Runkel's who you need to feel

He's got the law down pat, he knows it inside out
With his vast knowledge, there's no need to doubt
He's got a sharp eye for detail, and a way with words
In the courtroom, he's the king of the nerds

He's got a reputation that's second to none
With his sharp mind, he gets the job done
From labor disputes to employment law
He's the arbitrator who knows it all

So if you're ever in need of an arbitrator's hand
Look no further than Ross Runkel, he's your man
With his expertise and legal know-how
He'll settle your dispute, and do it right now

Arbitrator Ross Runkel, he's the one to call
He's got the skills and expertise, to settle it all
So if you want justice, and you want it fast
Give Ross Runkel a call, and he'll make it last

Almost illegible arbitration agreement

Many California car dealers are using an arbitration agreement that uses type that makes it almost impossible to read. Outrageous! Yet OK says the California Court of Appeal in a 2-1 decision.

In a familiar sequence, an employee signed an arbitration agreement and later sued the employer, the employer moved to send the case to arbitration, and the employee claimed the agreement was unconscionable.

In California (as in most states) in order for an agreement to be found unconscionable there must be both procedural unconscionability (that is, the way the agreement was formed) and substantive unconscionability (that is, the actual terms contained in the agreement). One or the other alone is not enough.

In Fuentes v. Empire Nissan (Cal Ct App 04/21/2023) [PDF] the California Court of Appeal held (2-1) that the agreement was procedurally unconscionable but not substantively unconscionable. So the agreement is enforcable.

The DISSENT argued that the agreement was substantively unconscionable simply because it was so incredibly difficult to read. Here's how the dissent put it: "The print is so fine it is unreadable without magnification. See if you can read it without giving up."

The dissent's basic reasoning is that because of the difficulty in reading the agreement, the employer knows what it contains but the employee does not.

Grossman update on employment discrimination

Free and valuable: The inimitable Paul Grossman has just put out a 99-page supplement to Lindemann, Grossman & Weirich, Employment Discrimination Law (6th ed. 2020).

To get on the mailing list, email to Cathy Smith-Joo, cathysmithjoo@paulhastings.com

With a few exceptions, this update begins with cases decided after January 1, 2018. It focuses almost exclusively on Court of Appeals and Supreme Court decisions.

Biometric Information Privacy Act claims are preempted

William Walton filed a class-action complaint against his former employer alleging that the collection, use, storage, and disclosure of Walton’s and similarly situated employees’ biometric data violated the Illinois Biometric Information Privacy Act. The Illinois Supreme Court held that his claim is preempted by Section 301 of the Labor Management Relations Act. Walton v. Roosevelt University (Illinois 03/23/2023) [PDF].

Basic reasoning: Walton belonged to a union that had a collective bargaining agreement with the employer. The CBA had a "broad" management rights clause, so his claim involved interpreting the CBA. Thus, his claim has to be decided by an arbitrator, who will interpret the CBA. Of course, by now, it's probably too late to file a grievance under the CBA.

This case will mean that, in Illinois, almost any unionized employee will need to proceed under the CBA grievance procedure rather than bringing a lawsuit.

What I find interesting is that the management rights clause is pretty standard stuff:

“Subject to the provisions of this Agreement, the Employer shall have the exclusive right to direct the employees covered by this Agreement. Among the exclusive rights of management, but not intended as a wholly inclusive list of them are: the right to plan, direct, and control all operations performed in the building, to direct the working force, to transfer, hire, demote, promote, discipline, suspend or discharge, for proper cause, to subcontract work and to relieve employees from duty because of lack of work or for any other legitimate reason. The Union further understands and agrees that the Employer provides an important service to its tenants of a personalized nature to fulfill their security needs, as those needs are perceived by the Employer and the tenants. Accordingly, this Agreement shall be implemented and interpreted by the parties so as to give consideration to the needs and preferences of the tenants.”

Also interesting is that the court at one point said there is an arguable claim for preemption: "[W]e defer to the uniform federal case law on this matter and find that when an employer invokes a broad management rights clause from a CBA in response to a Privacy Act claim brought by bargaining unit employees, there is an arguable claim for preemption. Accordingly, because we do not believe the federal decisions were wrongly decided, and here the CBA contained a broad management rights clause, we find Walton’s Privacy Act claims are preempted by the LMRA."

Pending Supreme Court case on arbitration

[Watch the video]

After Coinbase was sued (in two cases), they moved to compel arbitration and to stay the court proceedings. The trial courts denied the motions to compel arbitration – one on the ground of unconscionability, the other on the ground that the arbitration agreement did not apply to the issue at hand.

The trial courts also denied the motions for a stay. Coinbase filed interlocutory appeals at the 9th Circuit, but the trial courts allowed the court litigation to proceed. The 9th Circuit refused to grant a stay.

Now the cases are consolidated in the US Supreme Court – Coinbase v. Bielski [Briefs], and oral arguments are scheduled for March 21.

NOTE: This is not an employment law case, yet it will be important for employment lawyers.

Federal Arbitration Act Section 16 provides for an interlocutory appeal from the denial of a motion to compel arbitration, but it says nothing about a stay. FAA Section 3 requires a stay when a court does compel arbitration.

So which will it be? Automatic stay? Or within the trial court's discretion?

FLSA collective action chaos

Welcome to FLSA forum shopping. The US Supreme Court has ducked a chance to clarify whether a federal court – in an FLSA collective action – has jurisdiction over claims arising in another state. Circuit courts are split. About 50 district courts are split about 50-50.

After Christa Fischer filed an FLSA collective action against Fed Ex in federal district court in Pennsylvania, other employees from other states opted in. However, the 3rd Circuit held that the district court had no jurisdiction over the claims arising outside of Pennsylvania. Fischer v. Federal Express, 42 F.4th 366 (3rd Cir 2022).

Fischer petitioned the Supreme Court for certiorari, pointing out that Circuit courts were split 3-1 and district courts split 26-24. But the Court denied certiorari on March 6, 2023.

We can now expect plaintiffs to shop around for the most favorable circuit, which, for now, is the 1st Circuit.

SCOTUS: Highly paid executive – paid on a daily basis – entitled to FLSA overtime

The US Supreme Court has ruled that a highly paid executive (over $200,000/year) gets overtime under the FLSA. Under the regulations, an employee falls within the “bona fide executive” exemption only if (among other things) he is paid on a “salary basis.”

The question raised was whether a high-earning employee is compensated on a “salary basis” when his paycheck is based solely on a daily rate—so that he receives a certain amount if he works one day in a week, twice as much for two days, three times as much for three, and so on. The Court held that such an employee is not paid on a "salary basis," and thus is entitled to overtime pay. Helix Energy v. Hewitt (02/22/2023) (6-2 on the merits, with one Justice saying the Court should not have decided the case at all) [PDF].

Michael Hewitt worked for Helix on an offshore oil rig, typically working 84 hours a week while on the vessel. Helix paid Hewitt on a daily-rate basis, with no overtime compensation. The daily rate ranged, over the course of his employment, from $963 to $1,341 per day. His paycheck, issued every two weeks, amounted to his daily rate times the number of days he had worked in the pay period. So if Hewitt had worked only one day, his paycheck would total (at the range’s low end) $963; but if he had worked all 14 days, his paycheck would come to $13,482.

The Court said: "Helix did not pay Hewitt on a salary basis as defined in §602(a). That section applies solely to employees paid by the week (or longer); it is not met when an employer pays an employee by the day, as Helix paid Hewitt. Daily-rate workers, of whatever income level, are paid on a salary basis only through the test set out in §604(b) (which, again, Helix’s payment scheme did not satisfy)."

FAA preempts California's AB 51

Click image for video

9th Circuit: The Federal Arbitration Act preempts California’s Assembly Bill 51, so employers are free to require employees and applicants to agree to arbitrate employment law disputes. 2:15 minute video – also on YouTube: https://youtu.be/4LkzTXD4rOk

Overrule TWA v. Hardison?

On April 18 the US Supreme Court will hear oral arguments in Groff v. DeJoy [Briefs] – which asks the Court to overrule the key holding in Trans World Airlines, Inc. v. Hardison, 432 U.S. 63 (1977).

Title VII generally prohibits an employer from discriminating against an individual “because of such individual’s * * * religion.” The statute defines “religion” to include “all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate to an employee’s or prospective employee’s religious observance or practice without undue hardship on the conduct of the employer’s business.”

In the Hardison case, the Supreme Court stated that an employer suffers an “undue hardship” in accommodating an employee’s religious exercise whenever doing so would require the employer “to bear more than a de minimis cost.”

The Hardison case was wrong, and should be overruled.

The "no more than a de minimis cost" rule was pulled out of thin air, and has no connection at all to Title VII's text.

The current Court has shown an eagerness to ensure that religious interests are treated no less favorably than secular interests.

I say Hardison R.I.P.

Webinar replay

Free replay of the webinar - 4 Pending Supreme Court employment law cases:  https://www.dropbox.com/s/1wcr7hdhnqt91xu/video1129740458.mp4

4 Pending Supreme Court employment law cases

Register now for my webinar on 4 Pending Supreme Court employment law cases.
Advance registration is required at this link:
https://us02web.zoom.us/webinar/register/WN_iKQo2dPBSU-0VCPvUT0MzQ

When: Tuesday, January 17 at 10:00 AM Pacific Time
This webinar will be about 45 minutes long.

Cases to be covered:

Glacier Northwest v. Teamsters: NLRA preemption of alleged tortious destruction of employer's property.

Fischer v. FedEx: FLSA collective actions and federal court jurisdiction.

Helix Energy v. Hewitt: FLSA overtime for highly paid supervisor.

Ohio Adj Gen v. FLRA: FLRA authority to regulate state militia labor practices.

A $15 fee helps cover my costs. Thank you.

After registering, you will receive a confirmation email containing information about joining the webinar.

Thank you!!

Ross Runkel
Arbitrator & Mediator
(503) 551-1360
www.RossRunkel.com