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Year In Review: The Top 10 Labor and Employment Law Developments of 2014 For Nevada Employers

Volume 14, Issue 1
January 1, 2015

The year 2014 was in many ways a momentous year for labor and employment law with almost all of the developments of critical importance to some or all Nevada employers. Somewhat uniquely, many involve changes to state law in Nevada. Most of the top developments at both the federal and state levels will likely have far-reaching consequences; only future application of these changes will show if our predictions are accurate.

The following is KZA's take on the year's ten most important labor and employment law developments for employers in Nevada:

No. 10: The Gift That Will Give In 2015: Planned Revisions To the FLSA's "White Collar" Overtime Exemptions

On March 13th, President Obama directed the U.S. Department of Labor (DOL) to revise its regulations on the so-called "white collar" exemptions from the minimum wage and overtime requirements under the Fair Labor Standards Act (FLSA). "Fixing" alleged "problems" with these exemptions so as to expand entitlement to overtime pay has been a major regulatory goal of the Obama Administration. During President Obama's tenure, the DOL has already greatly increased its investigatory and enforcement efforts, including adding a large number of additional wage and hour investigators, and more narrowly interpreting the regulations revised during the Bush Administration.

As reported in KZA's October 14, 2014 Employer Report, the DOL ultimately put off the rule-making process associated with rewriting the FLSA's white collar exemptions until 2015 - past the November 2014 elections.

The DOL's efforts to change these regulations will be something to closely watch during the New Year.

No. 9: Elimination of Nevada's Prohibition of Same-Sex Marriage

On October 7th, Nevada joined the substantial number of states that must recognize same-sex marriages, after the Ninth Circuit Court of Appeals (which hears appeals from Nevada federal courts) issued its Latta v. Otter decision. In Latta, the Ninth Circuit Court ruled that Nevada's definition of marriage as between "a man and a woman" was in violation of the U.S. Constitution. This decision followed the U.S. Supreme Court's 2013 decision in United States v. Windsor, where the high court held that spouses in same-sex unions must be treated as "spouses" under federal law - including with regard to federally-regulated benefits.

In its December 9, 2014 Employer Report, KZA discussed the implications of Latta for Nevada employers.

No. 8: The Ninth Circuit Court Provides Some Sanity To the Legal Analysis of When a Discharge Constitutes Discrimination or Retaliation Under the Americans With Disabilities Act

On December 2nd, in one of the few pro-employer developments of the year, the Ninth Circuit Court affirmed a summary judgment in favor of an employer, the City of North Las Vegas, that terminated a hearing-impaired employee for threatening co-workers and other infractions. In doing so, the appeals court upheld a Las Vegas federal district court judge's decision to dismiss the case before subjecting the City to a jury trial. See Curley v. City of North Las Vegas, Case No: 12-16228.

According to the facts summarized in the court's opinion, Curley presented the classic situation of an employee with serious performance problems claiming to be the victim of unlawful employment discrimination. Michael Curley had a history of threatening behavior directed at coworkers. After requesting an accommodation for a hearing impairment and filing a prior charge of discrimination with the EEOC, Curley had an incident with a co-worker in which he allegedly used profanity. The City placed Curley on administrative leave and began an investigation. The City's investigatory interviews revealed he had "repeatedly threatened his coworkers and their families" including, for example, "threatening to put a bomb under a car, insinuated he had mafia connections," and to vowing to "kick [in the] teeth" of a coworker if he did not join the union. The interviews further revealed that, while on the job, Curley ran a private side business (an "ADA consulting business"), spent excessive time on his cell phone, and solicited disabled employees for lawsuits. The City scheduled Curley for a fitness for duty evaluation to assess whether he could return to work and whether he was a danger to himself or others, which resulted in the doctor concluding Curley was fit for duty and not a danger. The City ultimately terminated Curley for a number of infractions disclosed in the investigation, but did not cite a concern for the future danger he might pose by perpetrating an act of violence.

The court found that, not only did the City's investigation establish legitimate non-discriminatory reasons to fire Curley, but that the City's reasons were not a pretext for discrimination. Even though the doctor opined that Curley was not dangerous and could return to work, the court noted the City had fired him for, among other things, his past history of threatening coworkers and other performance problems discovered during its investigation.

As to Curley's claims of retaliation, the Ninth Circuit Court agreed with the district court judge in rejecting Curley's argument that the City fired him because of his prior protected activity (seeking an accommodation and filing an EEOC charge). While Curley contended the City's reasons for termination were a pretext for retaliation because the City had tolerated his threatening behavior in the past, the court found it important that, after engaging in protective activity, Curley instigated another incident with a coworker, which prompted the investigation revealing "several additional, independently sufficient reasons for firing him."

The ruling in Curley is an important one because it validates the importance of conducting a thorough, well-documented investigation before taking adverse action against any employee - particularly one who also has a history of threatened workplace violence.

No. 7: The NLRB Gives Unions a Great Holiday Present By Issuing New "Union Ambush" Election Rules

Just over two weeks ago, the Obama Administration took its latest and most important step to boost union organizing: Adoption of new union election rules effective on April 15, 2015, which make profound changes in the election process used by the National Labor Relations Board (NLRB) by, among other things, shortening the time between the filing of the petition and the election - to as little as 15 days.

For more information on these new rules, see KZA's December 15, 2014 Employer Report.

Opponents of the new NLRB union election rules are planning litigation to prevent the rules from going into effect.

No. 6: The NLRB Begins Its Plan to Make Franchisors "Joint Employers" With Franchisees - With the NLRB's General Counsel Authorizing Unfair Labor Practice Charges Against McDonald's

In July, erasing the distinction between franchisor and franchisee - which are entirely separate entities - the NLRB's General Counsel (the "prosecutor" in NLRB cases) issued an Advice Memorandum permitting the filing of unfair labor practice charges against a franchisor, McDonald's, for alleged unfair labor practices committed by a franchisee against the franchisee's employees. As stressed in KZA's September 8, 2014 Employer Report, if upheld by the NLRB and the courts, this development has the potential to significantly impact the franchise model not only in the food industry, but in all industries.

While still in its infancy, this development is one with potentially the most far-reaching effects because it crosses an important threshold. It is possible other federal agencies will follow the NLRB's lead. Indeed, one of KZA's attorneys, months ago, heard a lower-level DOL official discussing the DOL's plan to pursue franchisors for violations by franchisees of federal wage and hour laws.

No. 5: The NLRB Abandons Three Decades of Precedent In Deciding When To Defer Unfair Labor Practice Charges

In another year-end surprise, on December 15th, the ever-activist NLRB changed its standard of 30 years for deciding whether or not it will defer to a grievance arbitration award or a pre-arbitration settlement of a grievance where the underlying issue is also the subject of an unfair labor practice (ULP) charge alleging retaliation for engaging in union and/or other protected activity under the National Labor Relations Act (NLRA). See Babcock & Wilcox Construction Co., 361 N.L.R.B. No. 132 (Dec. 15, 2014). If the NLRB decides not to defer to a resolution reached through the grievance and arbitration procedures of an employer's and union's collective bargaining agreement, the employer will face having to litigate a bargaining unit employee's dispute first before an arbitrator and then again before the NLRB.

In Babcock & Wilcox, the NLRB held that the standard applied since its 1984 Olin Corp. decision "does not adequately balance the protection of employees' rights under the NLRA and the national policy of encouraging arbitration of disputes arising over the application or interpretation of a collective-bargaining agreement." Now, employers requesting deferral must prove that the alleged statutory retaliation issue was specifically considered and addressed by the arbitrator/parties and that NLRB case precedent "reasonably permits" the arbitrator's award or the parties' pre-arbitration settlement.

The NLRB has also changed the standard it uses to determine whether it will concurrently investigate and prosecute ULP charges involving the same incidents that are the subject of a pending union grievance, or if it will instead wait to see if the employer and union resolve the issues using the grievance and arbitration procedures set forth in their collective bargaining agreement.

No. 4: The Nevada Supreme Court Announces Use of the "Economic Realities" Test To Determine Whether a Worker Is an "Independent Contractor" or "Employee"

On October 30th, the Nevada Supreme Court made its first foray into providing guidance to employers in determining whether a worker is an "employee" under Nevada's minimum wage law or an "independent contractor." Although the case, Terry v. Sapphire/Sapphire Gentlemen's Club, pertained to whether or not exotic dancers are independent contractors or employees, the case has far broader application and provides considerable direction to all employers as to how the courts will view workers classified as "independent contractors," but performing work on an employer's premises and subject to company policies. The Court adopted the "economic realities" test standard used to determine issues of federal law under the FLSA. Having only one standard for guidance is useful and less likely to lead to inconsistent results. Another advantage is the availability of a large body of legal analysis found in the U.S. Department of Labor's guidance and opinions, and the hundreds of court decisions applying the "economic realities" test.

The "economic realities" approach adopted by the Nevada Supreme Court in the Sapphire case applies to all Nevada employers who engage an asserted contractor to perform any service, or classify a worker as an "independent contractor," and makes clear that the same analysis applies in considering compliance with both the FLSA and Nevada state law. In KZA's December 9, 2014 Employer Report, we reviewed the "economic realities" standard as applied by the Nevada Court and provided guidance in addressing independent contractor issues.

No. 3: The U.S. Supreme Court Unanimously Decides That Time Spent During Post-Shift Security Checks of Employees Is Not Compensable.

On December 9th, employers won one, when the U.S. Supreme Court unanimously ruled that the employer did not have to pay employees for the time they spent undergoing post-shift security checks. In so doing, the Court overruled the Ninth Circuit Court's ruling that the security screenings constituted paid time because they were "necessary" to the employees' primarily work, which involved the retrieval and packaging of products for delivery to customers of Amazon. In Integrity Staffing Solutions v. Busk, the Supreme Court discussed the distinction between activities that are the employee's "principal activity" - retrieval and packaging of shipments - and those which are "postliminary" to that principle activity, namely the security checks to deter theft. KZA's Employer Report, published on the same date as the Court's decision, reviews the key holdings in relevant detail.

Two of the "hot" current issues in wage and hour law involve whether employees should be paid for specific "preliminary" or "postliminary" tasks and which activities are "principal activities." The Integrity Staffing Solutions decision offers considerable guidance in determining whether to pay employees for pre- and post-shift tasks that are not directly related to their work.

No. 2: The NLRB Decides Employees May Use Employer's Email For Union Activity

In another December development affecting employers nationwide, the NLRB overruled a decision it issued in 2007 and held that employees have a "statutory right to use their employers' e-mail systems for Section 7 purposes." The NLRB's ruling in Purple Communications, Inc., 361 N.L.R.B. No. 43 (Dec. 11, 2014) forces unionized and non-unionized companies with employees who have access to company e-mail systems for work to allow such employees to use company e-mail, during their non-working time, to communicate with others regarding union organizing and other protected concerted activities. Employers can attempt to justify a total ban on non-work-related use of company email systems only by demonstrating that "special circumstances" make such a ban necessary to maintain production or discipline. KZA's December 11, 2014 Employer Report on the Purple Communications decision addresses the impact of this important decision. Undoubtedly, this decision will be appealed as, once again, the NLRB has eroded employer's property rights to advance union organizing without regard to the burdens it creates.

No. 1: The Nevada Supreme Court Determines That Most of the Long-Time Exemptions From Nevada's Minimum Wage Laws Vanished After Passage of Nevada's 2006 Minimum Wage Constitutional Amendment

In June, the Nevada Supreme Court was faced with the question of whether long-time statutory exemptions from the obligation to pay the state's minimum wage remained after the 2006 Constitutional Minimum Wage Law enacted by popular vote. The exemptions, codified in NRS 608.250(2), pertained to outside sales employees paid by commission, taxi and limousine drivers, certain agricultural employees, as well as casual babysitters.

In Thomas v. Nevada Yellow Cab Corp., the Supreme Court held that the exceptions set forth in NRS 608.250(2) were completely superseded by the 2006 Minimum Wage Amendment to the Nevada Constitution. As discussed in KZA's June 27, 2014 Employer Report, this decision was a substantial blow to companies employing limousine drivers, taxicab drivers and outside salespersons.

The Yellow Cab decision also demonstrates the complexity of deciding how to compensate employees, as Nevada employers must consider compliance with federal laws, such as the FLSA, as well as Nevada's two-tier minimum wage law (premised on whether qualifying health insurance has been offered to employees), and Nevada's overtime laws.

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.