In Wema Hoover v. Brijon Management & Employee Leasing Services, et al., Case No. 3:14-cv-05786-MAS-DEA (D. N.J.), a former employee of Brijon Management & Employee Leasing Services, Inc. (Brijon) and a participant in the Employee Stock Ownership Plan (ESOP) sponsored by Brijon filed a class action complaint alleging that Brijon, its former Chief Executive Officer (CEO), and others violated ERISA when they approved the ESOP’s sale of 100 percent of Brijon’s stock to Defendant CarolBri, LLC (CarolBri), an entity partially owned by Brijon’s former CEO, for an amount that plaintiff alleged was less than the fair market value of the stock.
Greenberg Traurig recently published a multi-country survey InfoPAKSM on covenants not to compete through the Association of Corporate Counsel (ACC). Covenants not to compete are important for employers to consider in order to protect proprietary information such as trade secrets, intellectual property, and highly confidential information. However, these post- employment restrictions vary country by country. These differences should be considered when an employer enters into an agreement with an employee.
On Feb. 26, 2018, the U.S. Court of Appeals for the Second Circuit handed down an en banc ruling in the case of Zarda v. Altitude Express, holding in a 10-3 decision that Title VII prohibits discrimination on the basis of sexual orientation. Addressing a case in which a sky diving instructor was allegedly terminated for being gay, the Court employed three separate theories to reach the conclusion that sexual orientation discrimination constitutes a form of sex discrimination (which, of course, is explicitly banned by Title VII):
- The “Because of Sex” Theory: This theory takes a literal, textualist approach to interpreting Title VII, concluding that the statute’s plain language—which prohibits discrimination “because of . . . sex”—is inclusive of sexual orientation discrimination. In particular, the Second Circuit examined Title VII’s language from a “comparative” posture, reasoning that if an employer would not discriminate against a female employee who dated males (e., a heterosexual employee), but would discriminate against a male employee who dated males (i.e., a homosexual employee), then such discrimination is “because of . . . sex” and is duly outlawed by Title VII.
Massachusetts employers are reminded that the provisions of the Massachusetts Pregnant Workers Fairness Act (the PWFA) take effect April 1, 2018.
The PWFA was signed into law in July 2017, and a previous GT Alert summarizes the law’s major provisions. The PWFA amends the Massachusetts statute prohibiting employment discrimination (MA General Laws Chapter 151B) to expressly prohibit discrimination on the basis of pregnancy or pregnancy-related conditions.
On Feb. 21, 2018, the U.S. Supreme Court held that the anti-retaliation provision of the Dodd-Frank Act (DFA) protects only employees who complain to the Securities and Exchange Commission (SEC) and not those who make only internal complaints.
In a unanimous decision, the justices ruled in favor of Digital Realty Trust (Digital Realty), finding that employees who bring securities law complaints against their employers must first take their allegations to the SEC to be protected by the DFA anti-retaliation provisions.
The decision resolves a long-standing circuit split, discussed in a prior GT Alert, between the Fifth Circuit Court of Appeals which held internal reporting was not protected by the DFA, and the Second and Ninth Circuits which held that internal reporting was protected.
On Feb. 26, 2018, the National Labor Relations Board (NLRB or Board) issued an order reinstating the Browning-Ferris standard for evaluating joint employer status, once again leaving franchisors open to an increased risk of being found to be a joint employer of franchisee’s employees and potentially liable for labor law violations.
The Board’s 3-0 Order (Member Emmanuel did not participate) vacated its recent decision in Hy-Brand Industrial Contractors, Ltd. And Brandt Construction Co., 365 NLRB No. 156 (2017), which had overruled Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015). The Board’s Order is a direct result of a Feb. 9, 2018, report issued by NLRB Inspector General David Berry finding that Member Emmanuel should have been recused from Hy-Brand pursuant to Executive Order 13770, “the President’s ethics pledge,” which “prohibits an appointee from participating in a ‘particular matter involving specific parties’ when the appointee’s former employer or client is a party or represents a party.” According to the Inspector General, Hy-Brand was the same “particular matter” as Browning-Ferris because “the Board’s deliberation in Hy-Brand, for all intents and purposes, was a continuation of the Board’s deliberative process in Browning-Ferris” and “involved and affected the legal rights of the parties of Browning-Ferris.”
On Feb. 8, 2017, the California Supreme Court ruled that California law allows local prosecutors to pursue civil penalties against employers accused of workplace-safety violations under California’s Occupational Safety and Health Act (Cal OSHA). Solus Indus. Innovations, LLC v. Superior Court, No. S222314, 2018 WL 771814 (Cal. Feb. 8, 2018). This means that California employers will be faced with both civil and administrative penalties for violations of workplace safety and health violations. This is significant, as the federal Occupational Safety and Health Act of 1970 does not allow civil penalties. As a result of this novel decision, California employers will be forced to litigate more alleged violations of workplace safety and health standards and regulations. Like other workplace safety and health issues in the past, other states may follow California and allow civil penalties for workplace safety and health violations.
The past year saw many significant developments in the area of labor and employment law at all levels of government. Simply by way of example, new legislation imposed additional obligations on employers that operate in New Jersey and New York; federal Courts of Appeals “clarified” standards applicable to workplace discrimination claims; and under the Trump Administration, several agencies—particularly the NLRB—began to rein in some of the more far-reaching policies and decisions from the Obama era.
Special thanks to Christopher Katsimaglesǂ for his valuable contribution to this GT Alert.
ǂNot admitted to the practice of law.
Marvin A. Kirsner authored an article in Corporate Counsel titled “Sexual Harassment Settlements With Nondisclosure Agreement No Longer Deductible.” The article explores a provision in the new Tax Cuts and Jobs Act which updates the tax code so that payments made for sexual harassment or abuse claims are no longer tax deductible if the settlement includes a nondisclosure agreement.
To read the full article, click here.
Employers with operations in Pennsylvania should beware that a recent Pennsylvania Superior Court opinion confirmed what federal courts in Pennsylvania previously predicted: Pennsylvania law entitles certain employees to more overtime pay than federal law. On Dec. 22, 2017, Judge Jeffery Moulton ruled that the Pennsylvania Minimum Wage Act (PMWA) entitles a nonexempt, salaried employee to an overtime premium of one-and-one-half times the regular rate, as opposed to the half-time premium allowed under federal law.