March 2015 - Laborsphere

Workplace Anxiety and the ADA

For employers, weighing an employee’s health issues with workplace concerns, such as employee safety and productivity, often requires a delicate balance. The challenge may be even greater when handling issues related to mental health. Questions abound on both sides: employees wonder if they should tell their employers about personal events that may be affecting their mental well-being, and employers struggle with difficult decisions concerning employment status when they have an ineffective worker.

The Americans with Disabilities Act (“ADA”) generally bars discrimination against an employee with a disability who is able to perform the essential functions of his or her job with or without a reasonable accommodation. The ADA defines “disability” as a “physical or mental impairment that substantially limits one or more major life activities.” The associated regulations define “mental impairment” as encompassing “any mental or psychological disorder, such as intellectual disability, organic brain syndrome, emotional or mental illness, and specific learning disabilities.” Navigating these definitions and avoiding lawsuits and potential liability for claims of mental disability present a serious challenge for employers.

Earlier this month, the U.S. Court of Appeals for the Fourth Circuit attempted to clarify the terrain. In Jacobs v. N.C. Admin. Office of the Courts, No. 13-2212, 2015 U.S. App. LEXIS 3878 (4th Cir. March 12, 2015), the Fourth Circuit reversed the lower court’s summary judgment dismissal of a lawsuit in which the plaintiff, who alleged that she suffered from “social anxiety disorder,” claimed that her former employer violated the ADA by: (1) discriminating against her on the basis of her disability; (2) failing to provide her with a reasonable accommodation; and (3) retaliating against her for seeking to exercise her rights under the ADA. The plaintiff, a deputy court clerk, alleged that her disability left her unable to engage in social interactions with the public at the courthouse’s front counter. In particular, she asserted that “working at the front counter caused her extreme stress and panic attacks.” The plaintiff alleged that, approximately three weeks after requesting reduced public interaction, the defendant terminated her employment.

The Jacobs Court, the first Court of Appeals to address “social anxiety disorder” under the ADA in the employment context, held that interacting with others is a major life activity and that social anxiety disorder can substantially limit one’s ability to engage in this activity. Thus, according to the Court, social disability disorder may constitute a disability under the ADA. The Court also considered the fact that many deputy court clerks at the defendant courthouse did not regularly interact with the public and, therefore, public interaction was not an essential function of the job. The Court concluded that a reasonable jury could find evidence supporting each of the plaintiff’s ADA claims. Accordingly, it reversed the lower court’s judgment and remanded the case for trial.

According to the National Alliance on Mental Illness, approximately 1 in 4 adults suffer from a mental health disorder. These disorders include depression, bipolar disorder, panic, post-traumatic stress and generalized anxiety disorders. Given the statistics, it is important for employers to understand their obligations under the ADA and similar state and local laws, and to consult with counsel when questions arise.

House Joins Senate in Passing Resolution to Disapprove New NLRB Election Rule

Last week, the U.S. House of Representatives voted 232-186 in favor of passing a resolution to disapprove the National Labor Relations Board’s (“NLRB’s”) new “quickie election” rule, which becomes effective April 14 and is expected to give unions a decided “edge” in winning union representation elections. The House’s vote comes as no surprise and follows a similar March 4th vote by the Senate also disapproving the NLRB’s election rule. The White House has announced that President Obama will veto the joint Congressional resolution.

A Republican-led Congress came out strongly against the new rule when the NLRB finalized the election rule in December 2014. Dubbing it an “ambush election” rule, Congress quickly sought to disapprove the new election rule under the Congressional Review Act, with top Republicans on the Senate Labor Committee citing major concerns such as the speed in which elections would progress and privacy issues arising from forced disclosure of employee personnel information.

Upon passing the resolution (S.J. Res. 8), House Education and the Workforce Committee Chairman John Kline (R-MN) stated “The board’s ambush election rule will stifle employer free speech, cripple worker free choice, and jeopardize the privacy of workers and their families. The House and Senate have firmly rejected this radical scheme.”

Lawsuits have also been filed to challenge the legal sufficiency of the NLRB’s election rule. On January 5, the US Chambers of Commerce filed a complaint against the NLRB over the election rule in the DC Federal District Court. This is the same court that struck down the NLRB’s prior attempt to implement new election rules in 2011. At that time, the U.S. District Court held that the rule had been finalized without a necessary quorum of at least three validly appointed NLRB Members. Business groups in Texas, including the Associated Builders and Contractors of Texas, Inc., filed suit in a federal court in Texas also challenging the NLRB’s new election rule.

Despite attack on two fronts, the NLRB shows no signs of withdrawing or postponing the election rule’s effective date. To the contrary, the NLRB actively is moving forward with implementation efforts, and began training all NLRB regional office employees on the new rule beginning March 16. Regional offices will offer educational meetings to labor practitioners from March 23 through April 13. Likewise, employers should begin to prepare for implementation of the new election rule, by reviewing and updating labor relations policies and practices for responding to a likely increase in union organizing campaigns.

Joint Employer Liability on the Rise

The Issue: Could my company be liable as a joint employer for California Labor Code violations of our subsidiary or third-party staffing company?

The Solution: Companies with subsidiaries and staffing companies in California should take steps to limit exposure.

Analysis: Parent corporations are generally presumed to be separate entities from their subsidiaries, and therefore not liable for the unlawful treatment of their subsidiary’s separate employees unless they exercise significant control over day-to-day operations. Recent developments, however, call this precedent into question.

In Castaneda v. Ensign, 229 Cal. App. 4th 1015 (2014) (review denied), the California Court of Appeal held: “an entity that controls the business enterprise may be an employer even if it did not ‘directly hire, fire, or supervise’ the employees.” (emphasis added). The parent company at issue claimed a lack of control over wages, hours and working conditions of its subsidiary operating companies’ employees. In reversing summary judgment for the parent and sending the case to be tried by a jury, the court highlighted evidence that the parent provided centralized human resources, accounting, payroll, and other key services to its subsidiary; controlled the mechanisms used to track subsidiary employees’ hours; handled subsidiary employee discipline, benefits and workers’ compensation claims; required subsidiary compliance with parent policies, practices, templates, forms, and training; and set the pay rate for some subsidiary employees.

Castaneda also resurfaced recent California Supreme Court precedent that “[m]ultiple entities may be employers where they control different aspects of the employment relationship…This occurs, for example, when one entity (such as a temporary employment agency) hires and pays a worker, and another entity supervises the work…Supervision of the work, in the specific sense of exercising control over how services are performed, is properly viewed as one of the ‘working conditions’…control over how services are performed is an important, perhaps even the principal, test for the existence of an employment relationship.” In other words, the worksite employer who supervises the worker may be liable to workers for Labor Code violations and other alleged wrongs even if it is not the employer of record who issues paychecks.

The California Legislature is not sitting on the sidelines, either. Effective January 1, 2015, AB 1897 imposed joint employer liability on many companies who engage labor contractors such as staffing agencies that fail to pay required wages to, or secure valid workers compensation insurance for, the workers they supply—regardless of the “control” test discussed above. Please see our prior blog post on this new law here.

Likewise, the California Department of Industrial Relations has clarified that California’s new paid sick leave law will apply equally to staffing agencies and their “joint employers.” Please see our prior blog post on this new law, here.

Given this upward trend in joint employer liability, companies with the help of counsel should evaluate their subsidiary and staffing relationships. Corporate structure—in name and in operations—should be separate and independent. Companies who prefer centralized corporate services by the parent company should weigh the risk that efficiency may indicate control over wages, hours, and working conditions. Careful selection and some oversight of, and indemnity agreements with, labor contractors should be considered.