It’s That Time of Year Again!

It’s that time of year again! Yes, it’s the season to be thankful and there are many holidays on the horizon. And it is also the time where we are overflowing with gatherings and activities for all our organizations and groups. I love the opportunity to connect with our friends and clients and learn and collaborate about all things employment law and everything in between! Here are some highlights:

Photo from Marriott.com … better than the photo I had taken ;)

Photo from Marriott.com … better than the photo I had taken ;)

This past month, I spoke at the Arizona Hospitality Human Resource Association meeting with my colleague, Lisa Coulter. The great thing about this group is it is a perfect excuse to check out amazing hotels around the valley while meeting with other colleagues in the HR industry. This meeting was at the Marriott Renaissance Phoenix Glendale Hotel and Spa. It was a perfect location for the meeting and for those traveling to the Cardinals’ football games.

Anyway, back to the HR stuff. We chatted about The Winding Road of the FMLA and ADA – which I also presented to some Snell clients back at the Employment Toolkit. One creative lawsuit we discussed is Robinson v. Carealliance Health, (D. S.C. 2014). In this case, an obstetrician at a hospital could not remain standing through deliveries due to a broken foot and wanted to perform deliveries and surgeries sitting down. The hospital medical staff suspended his privileges and began an investigation into whether he was competent to perform surgeries. He sued under Title III of the ADA – which requires a place of public accommodation to reasonably accommodate a person with a disability. He didn’t sue under Title I because he is not an employee – he is a contractor. The hospital’s motion to dismiss was denied, and the court explained that Title III is not limited to customers. This case seemed so interesting because typically you only think about the duty to accommodate as it relates to employees – not independent contractors. This case suggests – in that jurisdiction, at least – that companies may need to start considering about whether Title III of the ADA provides any protections to independent contractors.

We also talked about curbing abuse of the ADA - as it seems like we usually focus so much on FMLA abuse. One area companies oftentimes evaluate is whether an employee can/should be able to randomly miss work whenever they need to do so, as an accommodation. There are many examples where administrative employees may not necessarily need to be present and can call in last minute. There are other instances where employees are needed or the rest of the team simply cannot function. Here is one example of a case regarding a neonatal nurse who needed to miss work randomly for her condition and the company was justified in finding that it could not accommodate this request.

“An accommodation that would allow [the employee] to ‘simply . . . miss work whenever she felt she needed to and apparently for as long as she felt she needed to [a]s a matter of law . . . [is] not reasonable’ on its face.”

Samper v. Providence St. Vincent Medical Ctr., 675 F.3d 1233, 1240 (9th Cir. 2012).

Image from http://www.lockheedmartin.com/us/products/f35.html - because I just don't have F-35 (Lighting II) pictures from mid-air.

Image from http://www.lockheedmartin.com/us/products/f35.html – because I just don’t have F-35 (Lighting II) pictures from mid-air.

And then, last week, was the meeting for the National Association of Women in Construction (NAWIC), Phoenix Chapter. We heard from Tauny Woo, the Chief of Engineering and Programs at Luke Air Force Base. The mission at Luke AFB is currently transitioning to accept new Lockheed Martin Joint Strike Fighter (JSF) F-35 aircrafts. This NAWIC group is filled with women from a variety of companies in the construction industry. One area we discussed was the male:female ratio of women in the industry and Ms. Woo’s experience as a woman in the engineering field. It was fantastic to have a leader such as Ms. Woo share her thoughts and I would definitely recommend this group (which I recently joined) to others as well in the industry. [As a side-note, I am a member of my firm’s Women’s Initiative Committee, which was formed as part of our firm’s ongoing commitment to addressing issues and opportunities regarding women in the law on a firm-wide basis. I would encourage all organizations to continue evaluating, as we have done, all aspects of your organization. It is amazing to see what getting some great minds in a room can do.]

photo_4-110And just because I am little behind on my postings – I’ll mention the Fall Seminar in Sedona which is sponsored by the Labor and Employment section of the State Bar. I write about these events fairly often, as I am on the Executive Council of the L&E section of the State Bar, and this particular one is always a solid turnout and represents a great cross-section of attorneys from our state. I actually could only make it to the Friday portion, but am glad I made the trek to Sedona. The schedule was completely packed from beginning to end.

Seminar_Brochure

The case study in computer spoliation was phenomenal. It was a great reminder that almost everything can be retraced and uncovered. Just because a party says they deleted an important document does not mean the inquiry necessarily has to stop there.

photo_5-69The restrictive covenants update was really helpful because, as a practitioner, there has been a lot of discussion of Orca v. Noder – both the Arizona Court of Appeals decision, and the recent Supreme Court of Arizona decision issued two weeks ago. The Court of Appeals decision served as a great reminder to ensure that noncompetes and confidentiality agreements are narrowly tailored to a protectable interest. The Supreme Court of Arizona decision tackled the preemption issue- whether the Arizona Uniform Trade Secrets Act (AUTSA) displaces/preempts all common law claims arising from the misuse of confidential or proprietary information. (The court held no, it doesn’t). I always appreciate discussions regarding restrictive covenants as I think it is important for practitioners and companies to always evaluate and reevaluate their strategies to protect their most important assets.

That’s it for now. I hope everyone had a great Thanksgiving weekend.

Turkey

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A Reminder About the Dangers of Employee Misclassification

3d person crowdThe Ninth Circuit provided a clear reminder to companies to ensure that employees are not misclassified as independent contractors. In Alexander v. FedEx Ground, a group of full-time delivery drivers from FedEx challenged their status as independent contractors, asserting claims for employment expenses and unpaid wages under the California Labor Code, along with other claims. The case has a complicated procedural history, as it was initially heard as part of multidistrict litigation involving a class of 2,300 FedEx drivers in California. The facts, however, are largely undisputed and the message is one that should resonate for companies operating throughout the United States.

In determining whether the drivers should be considered employees or independent contractors, the Ninth Circuit focused on FedEx’s right to control the manner in which the drivers perform their work. For example, the drivers are required to deliver packages to FedEx customers, wear FedEx uniforms, follow FedEx schedules and adhere to FedEx grooming standards. Managers from FedEx may join and supervise each driver up to four times per year. The drivers entered into automatically renewing agreements spanning from one to three years and, with consent from FedEx, the drivers are permitted to hire others to help perform their work. The drivers provide their own vehicles, which are required to meet all applicable federal, state and municipal laws and regulations. The vehicles are ultimately approved by FedEx, which specifies the logos and insignias and requires the vehicles to be painted “FedEx white.” Drivers maintain the vehicles at their own expense, but can only use them for FedEx while they are performing work for FedEx. FedEx asserted that the drivers were given “flexibility and entrepreneurial opportunities that no employee has.”

The parties acknowledged that the determination of employment status under California law is governed by the multi-factor test set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations. Borello requires that a number of factors be weighed: “The principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” California courts also consider “secondary” indicia of the nature of the relationship, including:

  • the right to terminate at-will, without cause;
  • whether the one performing services is engaged in a distinct occupation or business;
  • the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
  • the skill required in the particular occupation;
  • whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work;
  • the length of time for which the services are to be performed;
  • the method of payment, whether by the hour or by the job;
  • whether or not the work is part of the regular business of the principal; and
  • whether or not the parties believe they are creating the relationship of employer-employee.

These factors, however, are intertwined with one another and none of them are determinative. Likewise, the fact that the parties contractually agreed that the drivers would be independent contractors was not conclusive. Based on its analysis of the factors, the Ninth Circuit held that the drivers are employees as a matter of law under California’s right-to-control test and remanded to the district court with instructions to enter summary judgment for the plaintiffs on the question of employment status.

It is imperative that every company understand the laws of the various jurisdictions in which it operates. There are various state, federal and administrative tests that are used in determining whether a worker is an employee or independent contractor–including the IRS 20-Factor Test and the economic realities test of the Fair Labor Standards Act. Although, a determination by one court or administrative agency does not guarantee that another court or agency will rule the same as the standards can be different.

When a worker is misclassified, the employer may be responsible for substantial penalties, including taxes that should have been withheld from the employee, overtime pay, failure to pay workers’ compensation and failure to provide minimum healthcare coverage. A company should not wait to evaluate the classification of its independent contractors until a complaint has already been made or an agency investigator is waiting at its doorstep.

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The General Counsel of the NLRB Opens the Door for Franchisors to be Liable for the Actions of their Franchisees

3d-person-at-restaurant with hamburgerBy Ashley T. Kasarjian, Michael J. Coccaro and Gerard Morales

In a directive that has rocked the franchise world, the National Labor Relations Board (“NLRB” or the “Board”) Office of the General Counsel determined that McDonald’s USA, LLC, as the franchisor, could potentially be held liable for the actions of its franchisees under the “joint employer” theory. The General Counsel’s decision has authorized numerous unfair labor practice complaints based on alleged violations of the National Labor Relations Act (“NLRA”) to potentially proceed against both the franchisor and franchisee entities.

According to the NLRB’s Office of Public Affairs, 64 cases are currently pending investigation and 43 additional cases have been found to have merit, potentially resulting in McDonald’s—the franchisor—being named in numerous ongoing matters relating to the franchisee entities. In total, McDonald’s has over 3,000 franchisees. With over 35,000 locations worldwide and more than 14,000 of those locations being in the United States, only a small fraction of the McDonald’s restaurants are company-operated.

This decision is consistent with an earlier amicus brief that was filed approximately one month ago on behalf of the NLRB General Counsel in Browning-Ferris Industries of California, Inc. The amicus brief argued that the Board “should abandon its existing joint employer standard” that finds joint employer liability when an employer exercises direct or indirect control over significant terms and conditions of employment of another entity’s employees and, instead, “adopt a new standard that takes account of the totality of the circumstances, including how the putative joint employers structured their commercial dealings with each other.”

Subjecting a franchisor to liability otherwise reserved for the franchisee-employers could potentially obliterate the heart of the franchise business model and affect businesses throughout the United States. Franchisors simply do not exert the level of control (or in many cases any control) over the franchisees’ employees’ terms and conditions of employment so that the franchisors would be considered “employers.” Until now, franchisors have not been involved in the run-of-the-mill disagreements among employees and the franchisees. If franchisors are suddenly brought into such disputes, as the General Counsel of the NLRB has suggested may occur here, it essentially eliminates one of the prime reasons a potential franchisor may choose to enter into the franchise model as opposed to just obtaining investors or lenders. Franchisors may be forced to exercise more control and, as a result, spend more money and provide more oversight of the day-to-day tasks of their franchisees. It chips away at much of the upside of the franchisor/franchisee relationship for the franchisor, and will arguably make it more difficult and costly for small business owners and individuals to become franchisees.

The directive really becomes a catch-22 for franchisors who, based on the presumption that they may be viewed as a joint employer, must now consider whether they need to exercise more control over the terms and conditions of the franchisees’ employees’ employment. Do they need to weigh in on wages, hiring decisions, terminations, disciplinary issues and other actions that are typically delegated contractually to the franchisees? And if the franchisors do those things, have the franchisors now perpetuated the argument that they now, in fact, should be treated as joint employers?

Jeopardizing franchisor/franchisee relationships is only the tip of the iceberg. There are also broader implications with this new guidance that extend far beyond the potential that franchisors may arguably be considered “employers” under the NLRA. It remains to be seen whether the NLRB will begin more actively pursuing “joint employer” cases against parent companies or corporations that would otherwise not have been included in the earlier definition of “employer” under the NLRA. It also begs the question as to whether other agencies, such as the Equal Employment Opportunity Commission or Department of Labor, will follow the NLRB General Counsel’s lead. For example, the issue of “joint liability” comes up in the context of the Fair Labor Standards Act (FLSA), which follows the “economic realities” test when determining liability for claims by subcontractors and independent contractors. The Family and Medical Leave Act (FMLA) addresses “joint employer coverage” in its regulations and identifies when two or more businesses may be considered joint employers under the FMLA. Similarly, many statutory and common law tests focus on the level of control an entity has over another company and/or that company’s employees. Accordingly, the issue of joint employer liability is important for any company to understand that utilizes temporary agencies, subcontractors, independent contractors, leased employees or operates any business model in which services or work is performed by entities or employees other than its own. It is essential because companies may be individually and jointly responsible for those entities’ compliance with the laws.

The investigation of the charges against McDonald’s franchisees is still ongoing. McDonald’s has issued a statement that it “will contest this allegation in the appropriate forum.” Procedurally, the next step will be for McDonald’s to address any complaints filed against it before an administrative law judge and, then, the issue could arguably go up to the full Board and even the Supreme Court. McDonald’s reiterated in its statement that it does “not direct or co-determine the hiring, termination, wages, hours, or any other essential terms and conditions of employment of [its] franchisees’ employees.” This is definitely one super-sized issue that will be making the headlines for a while.

*This article was authored by me and my colleagues, Michael Coccaro and Jerry Morales, and was originally sent out earlier today by Snell as a Legal Alert. My personal opinion is that the article will have the most impact if enjoyed with a soda, hamburger, and side of fries.

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For the Arizonans – Fantastic Local Organizations

desert Arizona landscapeAs readers of Employment and the Law know, I try to focus the blog posts on issues that impact Arizonans the most. After posting several years worth of employment law articles and best practices (where has time gone??), I wanted to take a minute and highlight some fantastic local organizations. I realized I have a diverse group of Arizonans who follow my blog who are not only as passionate about employment law as I am, but ALSO equally involved in our community. Here are the three organizations I wanted to highlight. Drum roll please…

image002Colleen’s Dream Foundation is an organization that supports ovarian cancer research for early detection and improved treatment. I had the honor of meeting the woman behind The Dream when I was – of all things – taking the bar exam in 2007 (it turns out this post is law-related!). 2007 also turned out to be the same year that Colleen was diagnosed with ovarian cancer. A superstar mom of four daughters, as well as a daughter, sister, and friend to many, Colleen was the inspiration behind The Dream.

At Colleen’s Dream Foundation, we feel it is important to raise money for research that will lead to reliable early detection testing and improved treatment for ovarian cancer. Because so little is known about ovarian cancer in proportion to other women’s health issues, we have an incredible opportunity for research and education.

We are working with some of the top research hospitals and universities that are researching ovarian cancer.  Offering seed funding ($5,000-$10,000 grants) to young investigators, we will fund cutting-edge research by some of the brightest, young minds in the world.

Readers of my blog know that- if there is an infographic – it will find its way to this blog. One thing that is great about Colleen’s Dream is that the organization not only works to fund groundbreaking research, but also works to bring awareness to women who might not otherwise know the signs and symptoms of ovarian cancer.

image001

If you want to get involved, plan on going to their signature event- an annual Golf Tournament and Evening of Dreams in February of each year. It is truly among the best events of the year, and it makes you feel all warm and fuzzy inside** because it’s for a great cause. And there’s also Kicking for the Dream, a project that engages young kicking specialists in an effort to raise awareness and fundraise for ovarian cancer research. There’s no doubt you’ll be hearing more and more about this project and likely even see many of the players at the Evening of Dreams.

Valley Youth Theatre. This is where talent meets cute meets hard work and fun. Valley Youth Theatre holds auditions all year long for kids 7 to 19 to perform in the organization’s musicals and plays. And these productions are TOP NOTCH. Their past season included classics like Snow White & the Seven Dwarfs, Peter Pan, and the Winnie the Pooh Christmas Tail.

Founded in 1989, Valley Youth Theatre (VYT) is a professional-quality theatre company dedicated to helping young people achieve their full potential through meaningful engagement, education, and excellence in the performing arts.

I simply can’t imagine a better place for kids to learn the performing arts, build friendships with other children, and get out of the summer/winter/fall/spring heat (yes, all four seasons have heat).

Maricopa Community Colleges Foundation. I have been on the Board of the MCCF for several years now. The Foundation is a 501(c)(3) nonprofit organization designated by the Maricopa Community Colleges to receive and manage gifts on behalf of the ten colleges, two skill centers and numerous education centers dedicated to educational excellence and meeting the needs of the businesses and citizens of Maricopa County.

Amber Cruz (left) is the first recipient of the Snell & Wilmer Leader Scholarship!

Amber Cruz (left) is the first recipient of the Snell & Wilmer Leader Scholarship!

Annually, the Colleges educate more than 250,000 students. Many are completing the first two years of a four-year degree while thousands of others are readying themselves for entry into the workforce through state-of-the-art career programs. Since the Foundation’s inception in 1977, more than $21 million in grants and scholarships have been awarded.

The Foundation’s scholarships are wide-ranging and impactful. To give a few examples, I have heard first-hand how they have permitted working single mothers to attend a few classes at a time and still pay the mortgage, they have allowed underrepresented students to be the first in their families to graduate college, and allowed students to attend focused classes to develop their trades.

This past year I spoke at the Heroes of Education dinner, which honors those who have a proven personal and professional commitment to supporting students and educational opportunities. The 2014 recipient was Vince Roig, Founding Chairman of the Helios Education Foundation. For those who are wanting to get involved, mark your calendars – the 10th Heroes of Education Dinner will be on April 16, 2015 at the Sheraton Downtown Phoenix Hotel.

**Speaking of “warm and fuzzy,” the cutest dog in the world was auctioned off to a good home at the Colleen’s Dream 2014 gala. To make it EVEN sweeter, Neil Rackers and his wife won the puppy, but when another person approached Neil at the bar and told him that his wife really wanted the dog, they BOTH agreed to make the full donation of the winning auction amount to Colleen’s Dream and Neil gave the gentleman the dog to take back to his wife. How sweet is that? Double the donations for a great cause!

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Labor and Employment State Bar Convention

photo_5-53

photo_4-87There are so many big developments in employment law that I feel like I am playing catch-up with my posts, but I couldn’t skip the post about the Labor and Employment Section’s all-day seminar at the State Bar Convention in Tucson. The Convention was at the Westin La Paloma Resort and Spa. As usual, the L&E crowd had an all-day program planned for the Friday of the Convention.

Fun Fact:  In Tucson, attendance at the Convention usually averages around 1,200 (with about 500 to 600 more attendees in Phoenix).

Some of the highlights include breakfast with William Gould, a professor at Stanford and former Chair of the National Labor Relations Board. He was a speaker and also joined in a superstar panel discussing employment issues in sports law. My favorite panel was the data and privacy chat with Dan Oseran, Privacy Counsel from eBay, and Becky Winterscheidt a partner at Snell & Wilmer. We discussed privacy policies for HR, the risks with BYOD, litigation implications (i.e., challenges with the collection of documents for discovery), and even touched on employee data in the EU.

photo_3-118Anyway, the point of this post isn’t to recap everything I learned from the Convention but, instead, to convince the readers who don’t regularly go to start going. I just completed Chairing the CLE Committee of the L&E Section of the State Bar, and truly believe the programs our section offers are invaluable- for knowledge, networking, and just getting out of the office and seeing a pretty view (…take a look at my pictures below).

The view from my room at the hotel.

The view from my room at the hotel.

Same view. Same day. Different time.

Same view. Same day. Different time.

Mark your calendars, the Convention next year is June 24-26, 2015 at the Arizona Biltmore Resort & Spa. What that really means is that on June 26 I will be playing chess on the life-sized chess board on the lawn of the Arizona Biltmore. It never gets old. And if it gets hot, the pool is a few feet away. And, of course, I have no doubt the Section’s program will continue to be top notch.

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