Supreme Court Update

Supreme Court Upholds City's Review of Employees' Text Messages

In a unanimous decision, the U.S. Supreme Court held that the City of Ontario did not violate its employees' Fourth Amendment right to be free from unreasonable searches by reviewing the employees' text messages sent on pagers provided by the City. See City of Ontario v. Jeff Quon (June 17, 2010).

Supreme Court Update

Supreme Court Upholds City's Review of Employees' Text Messages

In a unanimous decision, the U.S. Supreme Court held that the City of Ontario did not violate its employees' Fourth Amendment right to be free from unreasonable searches by reviewing the employees' text messages sent on pagers provided by the City. See City of Ontario v. Jeff Quon (June 17, 2010). The Court did not rule on whether the employees had a privacy interest in the text messages, but instead assumed that they did and held that regardless of such interest, the City's review of the messages did not violate the Fourth Amendment. The Court held that the City's review of the messages did not violate the Fourth Amendment because the search was "justified at its inception" – the City had a legitimate interest in determining that its employees were not being forced to pay out of their own pockets for work-related expenses and that the City was not paying for extensive personal communications – and the measures the City used were "reasonably related to the objectives of the search and not excessively intrusive in light of the circumstances giving rise to the search." For a more detailed discussion of the Court's decision, please see our June 22 Legal Alert, "Supreme Court Upholds City's Review of Employees' Text Messages," located on our web site at: http://www.fordharrison.com/shownews.aspx?Show=6296.

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Arbitrator, Not Court, Decides Issue of Unconscionability

On June 21, 2010, the U.S. Supreme Court held that under the Federal Arbitration Act (FAA) an arbitrator, not a court, should decide whether an arbitration agreement is unconscionable when the parties have delegated the determination of that issue to the arbitrator. See Rent-A-Center West v. Jackson (June 21, 2010). The Court's decision overturns that of the Ninth Circuit, which held that the court has exclusive jurisdiction to determine the issue of unconscionability, even though the parties' arbitration agreement gave the arbitrator that authority.

This case involved an employment-related arbitration agreement that included a clause giving the arbitrator "exclusive authority to resolve any dispute relating to the . . . enforceability . . . of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable." After Jackson was discharged, he sued Rent-A-Center in federal court and the company moved to compel arbitration in accordance with the arbitration agreement. Jackson opposed arbitration claiming the agreement was unconscionable. Rent-A-Center argued that the issue of unconscionability was for the arbitrator to decide, pursuant to the delegation provision quoted above.

The Supreme Court held that the arbitration agreement was the underlying contract and the delegation provision was an agreement to arbitrate threshold issues concerning the arbitration agreement. Previous Supreme Court decisions held that under the FAA, a court must determine challenges to the validity of the agreement to arbitrate, while an arbitrator must determine challenges to the contract as a whole. Because Jackson challenged the arbitration agreement as a whole and not the delegation provision specifically, the Court held that the arbitrator must decide whether the arbitration agreement was unconscionable.

For a more detailed discussion of the Court's decision, please see our June 21 Legal Alert, "Supreme Court holds that Arbitrator, not Court, Should Decide Issue of Unconscionability," available on our web site at: http://www.fordharrison.com/shownews.aspx?show=6295.

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Supreme Court Holds that Two-Member NLRB Lacked Authority to Issue Rulings

In a 5-4 decision, the U.S. Supreme Court held that the National Labor Relations Board (NLRB) improperly delegated its authority to a two-member group after the expiration of two Board members' appointments in December 2007. See New Process Steel v. National Labor Relations Board (June 17, 2010). Accordingly, the two-member Board did not have authority to issue decisions on unfair labor practice and representation cases. It is not clear what will happen with regard to the almost 600 decisions issued by the two-member group from January 1, 2008 until March 27, 2010, when President Obama made two recess appointments to the Board. We will keep you updated as more information becomes available on this issue.

For a more detailed discussion of this case, please see our June 22, 2010 Legal Alert, "Supreme Court Holds that Two-Member NLRB Lacked Authority to Issue Rulings," available on our web site at: http://www.fordharrison.com/shownews.aspx?Show=6297.

DOL Releases New Child Labor Regulations
On May 20, 2010, the U.S. Department of Labor released new regulations governing the employment of children in nonagricultural jobs. The regulations clarify permissible work hours for 14 to 15-year-olds. They also expand and contract the employment opportunities available to minors. The new regulations take effect July 19, 2010.

DOL Releases New Child Labor Regulations

On May 20, 2010, the U.S. Department of Labor released new regulations governing the employment of children in nonagricultural jobs. The regulations clarify permissible work hours for 14 to 15-year-olds. They also expand and contract the employment opportunities available to minors. The new regulations take effect July 19, 2010.

Some of the new employment opportunities include:

• A significant increase in the opportunities available to 14- and 15-year-old minors. For example, so long as certain requirements are met, 14- and 15-year-olds may "perform work of an intellectual or artistically creative nature, such as, but not limited to, computer programming, the writing of software, teaching or performing as a tutor, serving as a peer counselor or teacher's assistant, singing, playing a musical instrument and drawing."
• A 15-year-old minor may now work as a lifeguard at a swimming pool or water amusement park under certain conditions.
• Expansion of the tasks minors are able to perform while preparing food.
• Expansion of opportunities available through work-study programs at schools.

Some of the notable restrictions include:

• 14- and 15-year-old minors may not engage in what the DOL calls "youth peddling" or "door-to-door sales." Of course, an exception is made for fundraising activities "such as cookie sales conducted by the Girl Scouts of America or school fund-raising events."
• The type of machinery off-limits to minors has been expanded. For example, the new regulations prohibit the use of chain saws by minors.
• Significantly expanded restrictions on minors' ability to work at poultry and meat slaughtering and processing plants.
• Significantly expanded restrictions on minors' ability to work in the forestry and timber industries.

Increase in Penalties

The new regulations also implement the changes to the child labor penalties enacted by the Genetic Information Nondiscrimination Act of 2008 (GINA). Among other things, GINA amended the FLSA to provide that anyone who violates the child labor laws is subject to a penalty of up to $11,000 for each employee who was subject to such a violation. GINA also permits the assessment of a civil penalty not to exceed $50,000 for each violation of the child labor laws that results in the serious injury or death of any employee under the age of 18. This penalty may be doubled for repeated or willful violations.

On June 17, 2010, the DOL announced that it will implement tougher penalties against employers who violate child labor laws. According to the DOL's press release, under the new penalty structure, employers who illegally employ individuals ages 12 or 13 will face a penalty of at least $6,000 per violation. If a worker is under 12 years of age and illegally employed, the penalty will be at least $8,000. Penalties for illegally employing workers under age 14 could be raised to $11,000 under certain conditions. The press release is available at: http://www.dol.gov/opa/media/press/ilab/ILAB20100843.htm.

This article discusses some of the major changes implemented by the DOL; it is not an exhaustive discussion of all of the changes implemented by the new regulations. Employers with minor employees should read the new regulations, available at: http://edocket.access.gpo.gov/2010/pdf/2010-11434.pdf.

If you have any questions regarding this article, please contact the author, Josh Drexler, an attorney in our Atlanta office, at jdrexler@fordharrison.com or the Ford & Harrison attorney with whom you usually work.

"Plan/Prevent/Protect:" DOL's New Enforcement Strategy
In its Regulatory Agenda Narrative for Spring 2010, the Department of Labor (DOL) announced a new regulatory and enforcement strategy that will require businesses to implement internal programs to monitor compliance with federal employment laws. This new enforcement strategy, entitled "Plan/Prevent/Protect: The Beginning of a Broader Regulatory and Enforcement Strategy," marks a significant change in the DOL's past system of ensuring compliance with such laws.

"Plan/Prevent/Protect:" DOL's New Enforcement Strategy

In its Regulatory Agenda Narrative for Spring 2010, the Department of Labor (DOL) announced a new regulatory and enforcement strategy that will require businesses to implement internal programs to monitor compliance with federal employment laws. This new enforcement strategy, entitled "Plan/Prevent/Protect: The Beginning of a Broader Regulatory and Enforcement Strategy," marks a significant change in the DOL's past system of ensuring compliance with such laws. The Occupational Safety and Health Administration (OSHA), Mine Safety and Health Administration (MSHA), the Office of Federal Contract Compliance Programs (OFCCP), and the Wage and Hour Division (WHD) will propose regulatory actions that require regulated entities to develop programs to address employment law compliance issues within each agency's portfolio. According to statements released by the DOL, the strategy's goal is to replace the "catch me if you can" mentality that some companies maintain with a wide-spread culture of responsibility and compliance, with a focus on prevention, to assure compliance before a Labor Department Investigator arrives at the workplace.

The Plan/Prevent/Protect strategy will propose a requirement that employers create a plan for identifying and resolving both legal violations and other risks to employees. It will then require employers to actively implement their plans and ensure the plan's objectives are met on a regular basis. Employers who fail to follow this new enforcement strategy will be considered out of compliance with the law and may be subject to remedial action.

Several regulatory revisions are part of Plan/Prevent/Protect. For example, OSHA will require employers to develop and implement an Injury and Illness Prevention Program and is considering establishing regulations to address infectious diseases in the workplace. Currently, OSHA is conducting stakeholder meetings to solicit comments in developing the Injury and Illness Prevention proposed rule. See "US Department of Labor's OSHA to Hold Additional Stakeholder Meetings on Worker Injury and Illness Prevention Rule," http://www.dol.gov/opa/media/press/osha/OSHA20100863.htm.

The OFCCP intends to continue work on its Notice of Proposed Rulemaking (NPRM) to revise and update regulations related to the actions federal and federally assisted construction contractors are required to take to implement their affirmative action plans. The NPRM will also address the content of affirmative action plans with respect to recruitment, training, and apprenticeships.

Additionally, the WHD plans to issue a NPRM that will revise the FLSA recordkeeping regulation. The WHD is considering a proposed rule requiring covered employers to notify workers of their rights under the FLSA, and to provide information regarding hours worked and wage computation. The rule would also require any employer who seeks to exclude workers from the FLSA's coverage to perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to WHD enforcement personnel who might request it. The WHD plans to publish a NPRM in August 2010

In addition to enhancing its regulatory and enforcement strategy, the DOL plans to pursue several non-regulatory efforts to support the Plan/Prevent/Protect strategy. Importantly, this effort will focus on the misclassification of employees as independent contractors. When employers reach settlements with the WHD regarding the misclassification of employees as independent contractors, the Employee Benefits Security Administration (EBSA) will work with the WHD to ensure that employee benefit plan issues are addressed in these settlements. The WHD will also require these employers to review their benefits plans, resolve the benefits rights of employees whom the WHD deems to have been misclassified, and report related plan provision violations to the EBSA.

The DOL's new enforcement strategy squarely places on employers the burden of compliance with federal employment laws and regulations. While the final requirements that will be imposed under Plan/Prevent/Protect are currently unknown, employers should be prepared to take steps to ensure compliance with the laws addressed in this strategy. When considering compliance plans, employers should include steps to perform compliance audits, at the direction and under the supervision of experienced employment law counsel, and take corrective action to bring their businesses into full compliance.

If you have any questions regarding this article or other labor or employment related issues, please contact the author, Jade Cobb, an attorney in our Spartanburg office, jcobb@fordharrison.com, or the Ford & Harrison attorney with whom you usually work.

ADA Does Not Require Employer to Transfer Disabled Employee to Jobs Held by Temporary Employees
The Tenth Circuit Court of Appeals recently held that transferring an employee to a position held by a temporary employee is not a reasonable accommodation under the Americans with Disabilities Act (ADA) because the position held by the temporary employee is not considered "vacant." See Duvall v. Georgia Pacific Consumer Products (10th Circuit June 9, 2010).

ADA Does Not Require Employer to Transfer Disabled Employee to Jobs Held by Temporary Employees

The Tenth Circuit Court of Appeals recently held that transferring an employee to a position held by a temporary employee is not a reasonable accommodation under the Americans with Disabilities Act (ADA) because the position held by the temporary employee is not considered "vacant." See Duvall v. Georgia Pacific Consumer Products (10th Circuit June 9, 2010).

In this case, Duvall worked in Georgia Pacific's (GP's) shipping department until the company outsourced his job along with most others in that department. Duvall transferred to a job in another department; however, the air in that department contained a high level of paper dust, which aggravated his cystic fibrosis. Ultimately, Duvall requested a transfer to an area that was free from paper dust and eventually transferred to a lower-paying position in the storeroom.

Subsequently Duvall sued GP under the ADA, claiming the company failed to reasonably accommodate him when it refused to transfer him to positions that were being filled by temporary employees, which would not have required him to take a cut in pay. The trial court ruled in favor of GP and the Tenth Circuit upheld this determination.

Although the court held that the ADA imposes on employers a mandatory obligation to transfer a disabled employee to a vacant position, the court also acknowledged that this obligation is not without limit and it, like all accommodations under the ADA, must be reasonable. The court held that the positions to which Duvall sought to be transferred, which were filled by temporary employees at the time he requested the transfer, were not considered vacant because they were not available for similarly-situated nondisabled employees to apply for and obtain. The court held that if "the term vacant meant anything other than 'available to a similarly-situated nondisabled employee,' we would run the risk of transforming the ADA from an antidiscrimination statute into a mandatory preference statute."

President Orders Federal Agencies to Grant Benefits to Same-Sex Domestic Partners Where Permitted by Law
On June 2, 2010, President Obama issued a memorandum directing federal agencies to extend benefits to same-sex domestic partners of federal employees where permitted by current law. This memorandum follows up a memorandum the President issued last June directing federal agencies to review their current benefits and determine which could be extended to same-sex domestic partners without legislative action.

President Orders Federal Agencies to Grant Benefits to Same-Sex Domestic Partners Where Permitted by Law

On June 2, 2010, President Obama issued a memorandum directing federal agencies to extend benefits to same-sex domestic partners of federal employees where permitted by current law. This memorandum follows up a memorandum the President issued last June directing federal agencies to review their current benefits and determine which could be extended to same-sex domestic partners without legislative action.

Among other things, the June 2 memorandum directs the Office of Personnel Management (OPM) to clarify that children of federal employees' same-sex partners are included in the definition of child for the purposes of child-care subsidies and services and to clarify that the 24 hours of unpaid leave available to federal employees for certain educational and medical needs may be used to meet the needs of the employee's same-sex partner and that partner's children. The memorandum also directs OPM to issue proposed rules specifying that several other types of benefits are available to federal employees' same-sex partners and the partners' children. In accordance with the President's memorandum, OPM recently issued a final regulation making same-sex domestic partners of federal employees eligible for long-term care insurance.

In a separate statement, the President also encouraged Congress to pass the Domestic Partnership Benefits and Obligations Act, which would extend the full range of federal employment benefits to same-sex partners.