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Ever since the National Labor Relations Board (“NLRB”) issued its August 2015 decision in Browning-Ferris Industries of California, Inc., holding two entities may be joint employers if one exercises either direct or indirect control over the terms and conditions of the other’s employees or reserves the right to do so, the concept of joint employment has generated increased interest from plaintiffs’ attorneys, and increased concern from employers. Questions raised by the New York Court of Appeals in a recent oral argument, however, indicate that employers who engage another company’s workers on an independent contractor basis would be wise to guard against another potential form of liability, for aiding and abetting acts that violate various anti-discrimination statutes, including both the New York State (“NYSHRL”) and New York City Human Rights Laws (“NYCHRL”) and the New Jersey Law Against Discrimination (“NJLAD”).

On March 28, 2017, the New York Court of Appeals heard oral arguments in Griffin v. Sirva, Inc., to answer three questions that had been certified by the U.S. Court of Appeals for the Second Circuit: (1) does the NYSHRL’s prohibition of employment discrimination based on workers’ criminal records limit liability to an aggrieved party’s “employer”; (2) if so, is the scope of the term “employer” limited to a worker’s direct employer, or does it include other entities who exercise a significant level of control over the direct employer’s discrimination policies and practices; and (3) does the portion of the NYSHRL that prohibits aiding and abetting the discriminatory acts of another apply to a non-New York entity that requires its New York agent to discriminate in employment based on a worker’s criminal history.

Griffin illustrates a concern faced by employers in a variety of industries, who subcontract certain types of work to employees of a separate business entity on an independent contractor basis. Among other tasks, companies may engage contractors to provide cleaning services, security, delivery of goods, installation of purchases or, as in Griffin, packing and moving services.  Such subcontracted services may be performed in a variety of settings, ranging from the company’s premises to its customers’ homes.  With increasing concerns regarding workplace violence, companies often choose to conduct their own criminal background checks on these contract workers, either personally or through an outside vendor, in an attempt to protect the company’s employees, customers, and property. This concern is particularly heightened when, as in Griffin, the contract workers in question will be performing services in the homes of a company’s customers.

In these types of scenarios, a question often arises regarding whether the company that engaged the contractors can be liable for violating state or city laws prohibiting discrimination based on criminal convictions, by virtue of requiring the background check, even though that company was not the workers’ direct employer. In resolving this question, courts typically rely on the concept of joint employment, analyzing the extent to which the company is involved in the hiring or firing of the contractors, or in exerting control over their working conditions. Presumably anticipating this sort of analysis, the parties in Griffin (including the State of New York, which filed an amicus curiae brief and was permitted to participate in oral argument) focused their briefing and arguments on whether a company that performs background checks on its contract workers should be deemed an employer under the NYSHRL.  Through its questions at oral argument, however, the court appeared to indicate that there may be a simpler resolution in this type of case, which does not require addressing the complex question of whether the company requiring the background checks is the workers’ employer or joint employer.

In addition to directly prohibiting discrimination based on criminal history, the NYSHRL states that it is “an unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under [the NYSHRL], or to attempt to do so.” “Person” is defined as including “one or more individuals, partnerships, associations, corporations, legal representatives, trustees, trustees in bankruptcy, or receivers.” Based on this expansive language, several judges seemed to indicate that the NYSHRL’s “aiding and abetting” provision was sufficiently broad to encompass third parties who conduct background checks on contractors, regardless of whether such entities would otherwise be considered the contract workers’ employer or joint employer.  Assuming the “aiding and abetting” provision covers such conduct, multiple judges noted that imposing liability under that provision would be simpler than wrestling with the joint employment issue.  Further, the judges expressed concern that expanding liability under the main section of the NYSHRL to non-employers would render the “aiding and abetting” provision superfluous.

While it is premature to predict how the Court of Appeals may ultimately rule in Griffin, particularly given the recent unexpected death of one of the court’s seven members, Judge Sheila Abdus-Salaam, companies who engage workers on an independent contractor basis should be aware that potential joint employment issues may not be their only concern with regard to such workers. Regardless of whether a company exerts sufficient control over its contract workers to be deemed a joint employer, if the company operates in a jurisdiction whose anti-discrimination laws allow for “aiding and abetting” liability, that provision may serve as an alternative basis of potential liability for a company that conducts criminal background checks on contract workers engaged through a separate business entity.  Specifically, because the NYSHRL, NYCHRL, and NJLAD each include broad provisions that prohibit any person or entity from aiding, abetting, inciting, compelling, or coercing any acts that violate those laws, businesses that operate in New York State, New York City, or New Jersey should ensure that any background check requirement imposed on another entity’s workers complies with all applicable “ban-the-box” and anti-discrimination laws (e.g., NY State Correction Law Article 23-A, the NYC Fair Chance Act, and the NJ Opportunity to Compete Act), in order to avoid potential liability under the applicable “aiding and abetting” provisions in those jurisdictions.

A new post on the Management Memo blog will be of interest to many of our readers in the retail industry: “‘A Day Without’ Actions – How Can Employers Prepare?” by our colleagues Steven M. Swirsky and Laura C. Monaco of Epstein Becker Green.

Following is an excerpt:

[T]he same groups that organized the January 21, 2017 Women’s March on Washington – an action participated in by millions of individuals across the county – has called for a “Day Without Women” to be held on Wednesday, March 8, 2017. Organizers are encouraging women to participate by taking the day off from paid and unpaid labor, and by wearing red – which the organizers note “may be a great act of defiance for some uniformed workers.”

Employers should be prepared to address any difficult questions that might arise in connection with the upcoming “Day Without Women” strike: Do I have to give my employees time off to participate in Day Without events? Can I still enforce the company dress code – or do I need to permit employees to wear red? Can I discipline an employee who is “no call, no show” to work that day? Am I required to approve requests for the day off by employees who want to participate? As we explained in our prior blog post, guidance from the National Labor Relations Board’s General Counsel suggests that an employer can rely on its “lawful and neutrally-applied work rules” to make decisions about granting requests for time off, enforcing its dress code, and disciplining employees for attendance rule violations. An employer’s response, however, to a given employee’s request for time off or for an exception to the dress code, may vary widely based upon the individual facts and circumstances of each case. …

Read the full post here.

Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the retail industry: “NLRB Acting Chair Dissents Point to Likely Changes to Board Election Rules and Employee Handbook and Email Standards.”

Following is an excerpt:

NLRB Acting Chair Philip Miscimarra has given the clearest indication to date of what steps a new Republican majority is likely to take to reverse key elements of the Labor Board’s hallmark actions of the Obama administration once President Trump nominates candidates for the Board’s two open seats and the Senate confirms. In each of these cases, Miscimarra highlighted his earlier opposition to the majority’s changes in long standing precedents and practices. …

Read the full post here.

The new episode of Employment Law This Week offers a year-end roundup of the biggest employment, workforce, and management issues in 2016:

  • Impact of the Defend Trade Secrets Act
  • States Called to Ban Non-Compete Agreements
  • Paid Sick Leave Laws Expand
  • Transgender Employment Law
  • Uncertainty Over the DOL’s Overtime Rule and Salary Thresholds
  • NLRB Addresses Joint Employment
  • NLRB Rules on Union Organizing

Watch the episode below and read EBG’s Take 5 newsletter, “Top Five Employment, Labor & Workforce Management Issues of 2016.”

Employers Under the Microscope: Is Change on the Horizon?

When: Tuesday, October 18, 2016 8:00 a.m. – 4:00 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Latest Developments from the NLRB
  • Attracting and Retaining a Diverse Workforce
  • ADA Website Compliance
  • Trade Secrets and Non-Competes
  • Managing and Administering Leave Policies
  • New Overtime Rules
  • Workplace Violence and Active-Shooter Situations
  • Recordings in the Workplace
  • Instilling Corporate Ethics

This year, we welcome Marc Freedman and Jim Plunkett from the U.S. Chamber of Commerce. Marc and Jim will speak at the first plenary session on the latest developments in Washington, D.C., that impact employers nationwide.

We are also excited to have Dr. David Weil, Administrator of the U.S. Department of Labor’s Wage and Hour Division, serve as the guest speaker at the second plenary session. David will discuss the areas on which the Wage and Hour Division is focusing, including the new overtime rules.

In addition to workshop sessions led by attorneys at Epstein Becker Green – including some contributors to this blog! – we are also looking forward to hearing from our keynote speaker, Former New York City Police Commissioner William J. Bratton.

View the full briefing agenda here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

Retail employers dismayed by employees publicly airing workplace grievances in disparaging social media posts must think twice before taking disciplinary action.  On August 18, 2016, the National Labor Relations Board (“NLRB”) confirmed the finding by Administrative Law Judge Susan A. Flynn that Chipotle’s social media policy forbidding employees from posting “incomplete” or “ inaccurate” information, or from making “disparaging, false, or misleading statements” on Twitter, Facebook and other social media sites violates Section 8(a)(1) of the National Relations Labor Act (“the Act”).

Chipotle discovered that an employee responded to a customer’s tweet thanking Chipotle for a free food offer, by tweeting back: “@ChipotleTweets, nothing is free, only cheap #labor. Crew members make only $8.50hr how much is that steak bowl really?”  Then, attaching a news article describing how hourly workers at Chipotle were required to work on snow days while certain high-level employees were not, the employee tweeted his displeasure, specifically referencing Chipotle’s Communications Director: “Snow day for ‘top performers’ Chris Arnold?”  Informed by his manager that Chipotle considered his tweets to be in violation of Chipotle’s social media policy, the employee removed them at Chipotle’s request.  Then, several weeks later, Chipotle fired the employee after he circulated a petition about employees not receiving required breaks.

Finding the provision in Chipotle’s policy prohibiting employees from spreading “incomplete” or “inaccurate” information to be unlawful, Judge Flynn opined that: “An employer may not prohibit employee postings that are merely false or misleading.  Rather, in order to lose the [NLRA]’s protection, more than a false or misleading statement by the employee is required; it must be shown that the employee had a malicious motive.”   Judge Flynn also found the policy provision prohibiting “disparaging” statements to be unlawful, explaining that it “could easily encompass statements protected by Section 7 [of the NLRA]” including “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”   Although Chipotle’s social media policy contained a disclaimer that the policy “does not restrict any activity that is protected by the National Relations Labor Act, whistleblower laws, or any other privacy rights,” Judge Flynn concluded that this “sentence does not serve to cure the unlawfulness of the foregoing provisions.”

The NLRB adopted Judge Flynn’s decision that Chipotle was wrong, not only for firing the employee, but for attempting to limit his commentary on social media by its unlawfully termed social media policy.  While agreeing with Judge Flynn’s reasons for finding the social media policy unlawful, the NLRB disagreed with Judge Flynn’s finding that Chipotle violated the NLRA by asking the employee to delete the tweets.  In particular, while Judge Flynn opined that the employee engaged in “concerted activity” even though he did not consult with other employees before posting his tweets because “concerted activities include individual activity where individual employees seek to initiate or to induce … group action,”  the NLRB disagreed, asserting, with no true explanation, that it did not find the employee’s conduct to be concerted.  Agreeing that Chipotle violated the NLRA by terminating the employee after he engaged in protected concerted activity by circulating a petition regarding the Company’s break policy, the NLRB required Chipotle to, among other things, post signs acknowledging that its social media policy was illegal, and to re-instate the employee with back pay.

The message from the NLRB to retail employers is that, barring malicious misstatements, speech concerning terms and conditions of employment is often protected activity, even for employees who want to criticize their employers on Twitter and other social media websites.  To avoid Chipotle’s fate, ensure that your social media policies are up to date and provide for the increasing protections afforded to employee social media activity by the NLRB.

Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the retail industry: “Can Your Corporate Social Responsibility Policy Make You a Joint-Employer With Your Suppliers? The NLRB May Find That It Does”

Following is an excerpt:

The National Labor Relations Board (NLRB or Board), which continues to apply an ever expanding standard for determining whether a company that contracts with another business to supply contract labor or services in support of its operations should be treated as a joint employer of the supplier or contractor’s employees, is now considering whether a company’s requirement that its suppliers and contractors comply with its Corporate Social Responsibility (CSR) Policy, which includes minimum standards for the contractor or supplier’s practices with its own employees can support a claim that the customer is a joint employer. …

Employers are well advised to review the full range of their operations and personnel decisions, including their use of contingent and temporaries and personnel supplied by temporary and other staffing agencies to assess their vulnerability to such action and to determine what steps they make take to better position themselves for the challenges that are surely coming.

Read the full post here.

Our colleagues Adam C. Abrahms and Steven M. Swirsky, attorneys at Epstein Becker Green, have a post on the Management Memo blog that will be of interest to many of our readers in the retail industry: “NLRB Drops Other Shoe on Temporary/Contract Employee Relationships: Ruling Will Require Bargaining In Combined Units Including Employees of Multiple Employers – Greatly Multiplies Impact of BFI Expanded Joint Employer Test.”

Following is an excerpt:

The National Labor Relations Board (“NLRB” or “Board”) announced in its 3-1 decision in Miller & Anderson, 364 NLRB #39 (2016) that it will now conduct representation elections and require collective bargaining in single combined units composed of what it refers to as “solely employed employees” and “jointly employed employees,” meaning that two separate employers will be required to join together to bargain over such employees’ terms and conditions of employment.” …

The potential for confusion and uncertainty is enormous. In an attempt to minimize these concerns, the Board majority stated that the so-called user employer’s bargaining obligations will be limited to those of such workers’ terms and conditions that it possesses “the authority to control.”

Read the full post here.

Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the retail industry: “Federal Appeals Court Sides with NLRB – Holds Arbitration Agreement and Class Action Waiver Violates Employee Rights and Unenforceable.”

Following is an excerpt:

The US Court of Appeals for the Seventh Circuit in Chicago has now sided with the National Labor Relations Board (NLRB or Board) in its decision in Lewis v. Epic Systems Corporation, and found that an employer’s arbitration agreement that it required all of its workers to sign, requiring them to bring any wage and hour claims that they have against the company in individual arbitrations “violates the National Labor Relations Act (NLRA) and is unenforceable under the Federal Arbitration Act FAA).” …

The decision of the Seventh Circuit, finding that the Board’s view was not inconsistent with the FAA, sets the ground for continued uncertainty as employers wrestle with the issue.  Clearly, the question is one that is likely to remain open until such time as the Supreme Court agrees to consider the divergent views, or the Board, assuming a new majority appointed by a different President, reevaluates its own position.

Read the full post here.

Imagine that an employee asks to come to your office to address concerns about workplace harassment. Pursuant to the company’s open door and non-harassment policies, you promptly schedule a meeting. When the employee arrives, she sits down, sets her smartphone on the desk facing you, and turns on the video camera before beginning to speak. Can you instruct her to turn off the recording device? Can you stop the meeting if she refuses? Would the answer change if the recording was surreptitious?

The answer to questions like these have become more blurry since the decision last year by the National Labor Relations Board (“Board”) in Whole Foods Market, Inc.[1] Conventional wisdom before Whole Foods supported the view that, as a general rule, employers were on safe ground prohibiting audio or video recording in the workplace. In Whole Foods, however, the Board held that an employer may not lawfully adopt a work rule prohibiting employees from workplace recording, if the employees are acting in concert for mutual aid and protection and the employer cannot demonstrate an overriding business interest.

According to the Board, it is unlawful for an employer to prohibit employees from recording images of protected picketing and documenting unsafe equipment or workplace conditions. Similarly, an employer may not prohibit an employee from recording discussions with others about terms and conditions of employment or documenting inconsistent application of employer rules. Perhaps most troubling, even if the conversation or event that the employee wishes to record is not legally protected, the Board has ruled that an employee may record evidence to preserve for later use in administrative or judicial forums in employment-related actions. Get the picture?

Presently, the Whole Foods decision is on appeal before the U.S. Court of Appeals for the Second Circuit. Until then, employers have a few options to address recording devices in the workplace:

  • End the meeting. Employers that do not want conversations with their employees recorded could simply decline to participate in any conversation in which an employee is knowingly recording. This option, however, has several risks, particularly in a harassment scenario where the employer’s liability hinges on whether it took prompt remedial measures that were reasonably calculated to stop the allegedly unlawful conduct.
  • Narrowly tailor the rule. An employer can ensure that its ban on workplace recording is not so overly broad that employees would reasonably construe it to prohibit protected concerted activity. For example, the recording prohibition could be limited to legitimate business interests, such as recording trade secrets, proprietary processes, confidential technology, medical privacy, and information about vendors, customers, and suppliers.
  • Carve out “two-party consent” states. Some states, such as California, Florida, Massachusetts, Pennsylvania, and Washington, require the consent of both parties to a conversation before recording. Those states potentially could be carved out with a revised narrow rule prohibiting workplace recording.
  • Say “cheese” (but not much more). Perhaps the least risky option might be to rescind all rules prohibiting recording in the workplace, assume that everything is being recorded at all times, and act accordingly. If a workplace recording situation arises, an employer could address it on a case-by-case basis and determine whether the conduct violated another existing policy (e.g., anti-harassment) and whether the recording was otherwise protected by law. Another approach that an employer should consider is, in meetings, giving employees an opportunity to say what they wish to say while recording but keeping its own remarks to a minimum. An employer should take the comments under advisement and then respond in writing.

A version of this article originally appeared in the Take 5 newsletter “Five New Challenges Facing Retail Employers.”

[1] See Clare O’Connor, Does Jimmy John’s Non-Compete Clause For Sandwich Makers Have Legal Legs? Forbes (Oct. 15, 2014), http://www.forbes.com/sites/clareoconnor/2014/10/15/does-jimmy-johns-non-compete-clause-for-sandwich-makers-have-legal-legs/; see also Steven Greenhouse, Noncompete Clauses Increasingly Pop Up in Array of Jobs, New York Times (June 8, 2014) http://www.nytimes.com/2014/06/09/business/noncompete-clauses-increasingly-pop-up-in-array-of-jobs.html?_r=0.