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LABOR & EMPLOYMENT TELEBRIEF By: Howard B. Kurman, Esquire January 29, 2014 Howard Kurman: A couple of Supreme Court developments and you know when the Supreme Court talks in the labor and employment arena or any other arena it is always noteworthy and there are really two developments to report here. One of them is a case that was just announced a decision by the Supreme Court in a case called Sandifer v. United States Steel Corporation. This was announced on January the 27th or Monday and the significance is this. I think that I mentioned in a prior telebrief to those who had tuned in before that the case involving Sandifer involved a steel company and US Steel Corporation is in fact the name of the company whose workers claimed, or about 800 workers claimed, that the time that it took in order to put on flame retardant jackets and pants, work gloves, hard hats and other items should be compensated for as work time under the Fair Labor Standards Act. I think I indicated to you in a prior telebrief that there is exclusion in the Fair Labor Standards Act from the definition of work time for activities that are characterized as changing “clothes.” So, the question before the Supreme Court was simply whether this activity or these activities of putting on these protective items were really within the ambit of what the Supreme Court and the Fair Labor Standards Act would pose as changing clothes or whether they were really personal protective equipment which would take it outside of the ambit of the Fair Labor Standards Act definition of work time. Surprisingly to me, I think a little, this decision was a unanimous decision by the Supreme Court and a decision written by Justice Scalia, and the decision was that this activity on the part of the employees is not, is not considered to be work time under the Fair Labor Standards Act. And the only exception to that would be where a company and a union agreed to compensate these activities within the confines of a collective bargaining agreement. So outside of a collective bargaining agreement the Supreme Court has basically stated that these activities of putting on, that is donning or taking off that is doffing, and that is the words that are used under the Fair Labor Standards Act, these protective items are deemed to be clothes and changing clothes under the Fair Labor Standards Act and thus not considered to be work time or compensable. The reason I said that it was surprising to me is that generally you have the liberal wing of the Supreme Court, people like Ginsburg, Sotomayor, Kagan who were on the employees and union side in this case, it was unanimous decision and basically what Scalia was saying is that the Supreme Court did not want to convert what he called federal judges into time study professionals. What that essentially means is he does not want federal judges making differences and distinctions between different items that you might classify as protective equipment in some context, clothes and others so from a blanket rule standpoint the Supreme Court has spoken on that and spoken early as you know many cases are not decided until the late spring or early summer when the Supreme Court is almost ready to recess, here he had a decision that was announced at the end of January. So it probably did not give them too much heartburn to come up with this decision. Another Supreme Court development, and I know that I have mentioned this case that was going to be argued before the Supreme Court, it’s the Noel Canning case and I have mentioned this before, the significance of the Noel Canning case which was argued on January the 13th before the Supreme Court and the question before the Supreme Court is really what constitutes the senate being in recess, because as you remember or may not remember but I know that I have mentioned this. On January 4, 2012 President Obama contending that he had the right to make three recess appointments to the National Labor Relations Board appointed democrats Sharon Block and Richard Griffin and Republican Terrence Flynn to the Supreme Court and his contention was that he was exercising the rights under the constitution to make recess appointments. The significance of this case which was argued as I said on January 13, is that there was a 2010 decision by the Supreme Court, that case was New Process Steel, LP v. NLRB in which case the Supreme Court decided that the National Labor Relations Board cannot exercise its authority unless it has a quorum and a quorum is decided or defined by three members or more. So, remember the National Labor Relations Board typically has five members and what the board decided in New Process Steel was in order to have a valid decision being promulgated by the NLRB you needed at least three members. Well, the reason that is relevant to the Canning case is that if the Supreme Court is to decide this case against the Federal Government and against the NLRB the decision would be that when Obama appointed these three members to the National Labor Relations Board in January of 2012 they were not valid recess appointments and if they were not valid recess appointments and the NLRB did not have a proper constituency of a quorum of at least three board members during the year 2012 when there were many pro-union, pro-employee, anti-employer decisions being made, the question is what would be the validity, what would be the context that would serve to judge whether or not those decisions have any applicability to the present day or whether, in fact, they would be remanded for further consideration or further decision. And not only does the Supreme Court’s upcoming decision in this case have an impact on the National Labor Relations Board but recess appointments are made by the President all the time not only to the NLRB but to other governmental agencies. So it is a significant decision, in reading some of the questions that were asked by the justices of the attorneys who were arguing on behalf of the government, it seems like many of the justices were giving them a real hard time and so again it would not surprise me that the Supreme Court would affirm the decision of the Appellate Court below and indicate that the supposed recessed appointments by President Obama in January of 2012 were, in fact, invalid. And then the fun will start as to how far, in fact, the Supreme Court will go in articulating whether or not that would have an impact on decisions that were publically announced by the board and which had in many cases a severe adverse effect on employers in 2012 and beyond. So, this is the case that I do expect will probably not be announced, the decision will not be announced until probably late May early June, but as always I will keep you informed if the decision comes up earlier. The next thing I wanted to talk about is what I would considered to be a very noteworthy and notorious case and you have all probably read about it or seen it on TV ad nauseam and it is the Alex Rodriguez case which has just made headlines in the last month both on TV, on the Internet and in newspapers all over the country. And the reason I think that it is noteworthy is because there was an arbitration decision in which Alex Rodriguez as you know was suspended for the entire 2014 season. While some of you out there may not care in the least about baseball or Alex Rodriguez, the reason I think that its interesting is because in my opinion it has many aspects of applicability to internal investigations and discipline of employees that you will undergo in your professional jobs as labor relations and HR professionals. Now, generally, the arbitration decisions that are handed down in the professional baseball leagues are confidential between the union and the baseball teams. And that was pursuant to the collective bargaining agreement between the parties, but what happened in this case is as you know there was an arbitrator who ruled in this case, arbitrator Fredric Horowitz, and he ruled that Alex Rodriguez would be suspended for the entire 2014 season as a result of two offenses. One, numerous violations of the performance enhancing substance policy of the major league baseball players association and the league, and secondly, for obstructing and interfering with the investigation. And what happened after this decision came down some of you may have seen on 60 Minutes, an interview with Tony Bosch who was the supplier to Alex Rodriguez and many other baseball players who have also been suspended. So, 60 Minutes did an interview with Bosch about two or three weeks ago and he was the main witness in this case in this arbitration against Alex Rodriguez and as I said this decision would have remained confidential except for one thing, after the decision came down, Alex Rodriguez’s attorneys of which there are many, its interesting how many attorneys he really has, but it’s a handful, it’s more than a handful for him. After the decision came down, Alex Rodriguez’s attorneys filed a lawsuit in Federal Court in New York seeking to overturn the decision of arbitrator Horowitz and contending that major league baseball violated his rights and also filed a lawsuit against the union that represented him contending that the union did not fairly represent him. And as an exhibit to the lawsuit that Rodriguez’s attorneys filed, they filed the actual arbitration decision, which is a lengthy decision you can certainly find it on the Internet but I want to talk about it for a few minutes because again I think it’s a pretty interesting decision that has applicability for all of you who have responsibilities for internal investigations and discipline of employees. So, I commend it to you as just an interesting read although lengthy but I also think that we can take some lessons away from it that would be applicable to your employees even though they are not Alex Rodriguez or major league baseball players. So, you will recall that Alex Rodriguez has taken a position that he has never tested positive for a performance enhancing substance. And that, therefore, how could the arbitrator rule that he had violated the performance enhancing substance policy between the players association and the company, which gets me to review certain other facts reported by the arbitrator in this decision which are highly intriguing and interesting. So, the arbitrator states as a finding of fact that the record reflects that this guy, Tony Bosch who was allegedly supplying Rodriguez on numerous occasions spoke on the telephone 53 times because they had phone records and exchanged 556 text messages in 2012. Now, at the hearing Rodriguez’s attorneys stated that, and this is reported by the arbitrator, Rodriguez did not produce his Blackberry or similar device with a content of the text messages contained on such devices despite receiving omnibus information requests from major league baseball. Counsel for Rodriguez represented the Blackberry that Rodriguez used to communicate with Bosch was deactivated on March 15, 2013 and was no longer in Rodriguez’s possession. Now, it does not take a genius to figure out that what the arbitrator was really saying is, come on really, you have a Blackberry and all of a sudden it disappears and all of the text messages on it disappear as well. He goes on to say review of all the evidence and argument presented by all parties in this proceeding clearly and convincingly establishes Rodriguez committed multiple violations of the Joint Drug Policy warranting a substantial disciplinary penalty, and so he goes on and he says, because he had tested the credibility or analyzed the credibility of the prime witness against Rodriguez who is this guy, Bosch. He said the evidence confirms that Rodriguez used and/or possessed three discrete performance enhancing substances banned by the collective bargaining agreement during the three years in question and he names them testosterone, IGF and HGH. It says direct evidence of those violations were supplied by the testimony of Anthony Bosch and corroborated with excerpts from Bosch’s personal composition notebook, text messages exchanged between Bosch and Rodriguez and reasonable inferences drawn from the entire record of evidence. He goes on and he says significantly Bosch’s testimony regarding the use and possession of these three substances was neither refuted nor contradicted with testimony under oath by Velazquez or Sucart who were other supposed suppliers whom Bosch identified as witnesses or by Rodriguez, himself. It is significant that Rodriguez never took the stand under oath to refute the allegations that were made by this guy, Bosch in the five day hearing before arbitrator Horowitz and as the arbitrator stated the credibility of those witnesses is always determined by a trier of fact whether a judge, jury or mutual arbitrator on a case by case basis. It says that in this case the testimony under oath from Bosch about the violations by Rodriguez was direct, credible and squarely corroborated by excerpts from several of the hundreds of pages of his personal composition notebooks that were stolen in late December 2012 or early 2013. Not only did Horowitz find that in the absence even of a positive test by Rodriguez but there were numerous indicia of his use of these performance enhancing substances by virtue of other evidence that was produced and the credible testimony under oath of this guy, Bosch. In addition to the substance violations of Rodriguez, the arbitrator also states that Rodriguez attempted to obstruct the major league baseball investigation. So, he says in this case the evidence considered in its entirety supports a minimum of two such violations. Rodriguez having himself publically denied being treated or advised by Bosch, a denial which he knew to be false played an active role in inducing Bosch to issue his own public denial on January 29, 2013, which Rodriguez also knew to be false. Rodriguez also attempted to induce Bosch to sign a sworn affidavit on May 31, 2013 attesting that Bosch never supplied Rodriguez with performance enhancing substances and had no personal knowledge that Rodriguez had ever used them, statements that Rodriguez also knew to be false. So, he finds that activity to be tantamount to obstruction of the investigation thereby supporting a suspension and what he says is based on the entire record from the arbitration. Major league baseball has demonstrated with clear and convincing evidence there is just cause to suspend Rodriguez for the entire 2014 season for having violated the substance abuse policy and for having obstructed major league baseball’s investigation. While this length of suspension may be unprecedented for a major league baseball player so is the misconduct he committed. The suspension by major league baseball is modified herein is suspended. So, I want to point out several things to you which I think are takeaways from a very notorious case. First it was Rodriguez’s attorneys who made this particular decision public by virtue of attaching it as an exhibit to their lawsuit. Otherwise, it would not have been public information. Secondly, those of you who engage in workplace investigations, and I have said this before, can be comfortable with the fact that you are the judge of the credibility of the witnesses that you interview. The credibility of those witnesses is judged by the demeanor of the witness, other evidence that you may come across, whether that is written evidence or text messages or some other kind of documentary evidence. But just because you do not have an out and out confession by the alleged perpetrator in an investigation does not mean that you cannot take adverse action against the perpetrator based upon credible evidence coming out of the mouths of other witnesses or text messages or other kind of documentary evidence. The other takeaways from the Rodriguez case, is that the lack of cooperation of an alleged perpetrator in a work place investigation is an offence in and of itself and thus disciplinable. So in this case, even if Rodriguez had taken a performance enhancing substance test and passed, that would not necessarily have meant that he would not have faced any discipline, because it was clear that he obstructed the investigation in many ways and frequently you will be in a situation where you are undergoing an investigation where the person that you want to interview, whether that is a witness or whether it is the alleged perpetrator may not cooperate and may not agree to testify or present his or her version of the facts. You should have in your handbook a statement which indicates that as a condition of employment all employees agree to cooperate in any workplace investigation and that failure or refusal to do so is a separate offence which is disciplinable up to and including termination. And so the Rodriguez case teaches us many things; one of which is that it does not matter how notorious the person may be, that if you are making that decision or however high up in a particular organization the person is, if you have credible evidence and you have done an internal investigation which is worthy and which is thorough and complete, it will stand you in good stead whether you are before the Equal Employment Opportunity Commission or whether you are before any outside agency or a judge or a jury. So do not be afraid to make decisions or to make credibility decisions if you are looking at the person’s demeanor, the consistency of his testimony and evaluating any other kind of documentary evidence. The last thing I wanted to mention today is a settlement which was reported sort of in the industry papers very recently on January the 16th. It involves a settlement for $450,000 that was approved in an unpaid intern class action suit against the company called Elite Model Management, and you have heard me talk about the issue of interns before, it’s coming to the forefront and here you have a settlement for $450,000 for the payment to people who allegedly worked as unpaid interns. The interesting thing about this is that the terms of the settlement agreement to over an hundred interns who make up the class was anywhere from $700 to $1,750, guess where the balance of the other money went from the $450,000, that would go of course to the attorneys who brought the suit. So, these wage and hour collective actions are certainly increasing with great regularity and the cost of those collective actions can be very substantial, which again I would recommend that those companies who have not done it should undergo wage and hour audits. It is not all that costly to do but in the long run it can save you thousands if not hundreds of thousands of dollars if you have liability as many of you probably do under the Fair Labor Standards Act. So those are the developments for the day. Obviously if anybody has got any questions I am happy to answer them you can take your phones off mute. As I said the next telebrief will be the second Wednesday in February, February the 12th and if you have a personal question that you want to ask me you can always call me at 410-209-6417 or my email address email@example.com. Any questions? Ann: Yeah, hi Howard this is Ann. Going back to Sandifer, I am not sure how we handle the putting on of work clothes. The press room is where that principally happens but also the janitors. So we have probably treated it as work time. But the labor contracts do not address it. We have probably got an under an FLSA understanding. Wouldn’t we have a problem now with the past practice potentially? Howard Kurman: You would have a problem, Ann. Ann: Yeah, that is what I thought. Howard Kurman: I think you would either have to amend it by CBA or perhaps you could use this decision and you and I can offline about this but we may be able to use the decision in a little proactive way but I think it has to be done carefully. Ann: I think so, too yeah you just confirmed that thanks. Howard Kurman: Sure, any other questions? Okay, well as always I appreciate everybody’s participation and the only other thing I would mention we are going to have our executive breakfast session in the spring we are going to change it up a little and I think what we are going to do is rather than having two separate sessions I am probably going to have a half a day workshop on the really important developments in labor and employment law in the first half of the year. More about that later but I think that is probably what we are going to do and we are also going to institute a CEO telebrief and briefing that we are probably going to put out some information on in the near future. So again thanks to everybody and have a good day.