Laborsphere

FTC Approves Settlement of Noncompetition Case Against Renown Health Voiding Ten Physicians’ Noncompetition Agreements

On November 30, 2012, the Federal Trade Commission voted 5-0 to approve the settlement of a complaint it filed against Renown Health on August 3, 2012. A settlement was promptly reached between the FTC and Renown Health avoiding the unwinding of two acquisitions made by Renown Health of two independent local cardiology groups.

The complaint alleged that Renown Health’s acquisition of competitor cardiology groups in Reno, Nevada, Sierra Nevada Cardiology Associates, Inc. (“NCA”) and Reno Heart Physicians, Inc. (“RHP”), and the employment of the 32 physicians employed by these entities, “is likely to lead to anticompetitive effects including increased prices and reduced non-price competition.” The acquisitions resulted in Renown Health employing approximately 97% of the cardiologists serving private patients in the Reno area. The FTC complaint focused on the fact that all of the employed physicians were subject to employment agreements containing noncompetition and non-solicitation provisions prohibiting them from practicing medicine or soliciting former patients for two years in the Reno area after termination of their employment. As a result of the noncompetition and non-solicitation agreements, competition for cardiology services would have to come from without, which the complaint alleged to be unlikely because of certain barriers to market entry. The State of Nevada, through its attorney general, worked with the FTC in investigating and resolving the matter. The Nevada AG filed a similar complaint and entered into an agreement with Renown Health similar to the FTC consent decree.

The parties reached a settlement this fall through an agreed consent decree that would avoid having to unravel the mergers. The FTC has now approved the consent decree under which Renown Health released up to ten cardiologists previously employed by NCA or RHP from their noncompetition and non-solicitation restrictions.

This result signals a cautionary note for those hospitals and health care systems with an overly large market share in a geographical market who seek to further expand their employed physicians in a given practice area. In this case, the 88% market share for the cardiologists was a daunting statistic for Renown Health to overcome. Going forward, this is just one more potential road block that health care providers must consider before acquiring additional physician practices and increasing its employed physician roles.

New Year, New Laws for California Employers – Religious Dress and Grooming Protected and Breastfeeding Further Protected

Next in our series, “New Year, New Laws for California Employers,” we take a look at new protections given to Religious Dress and Grooming and Breastfeeding under the California Fair Employment and Housing Act. Prepared by Mark Terman, partner in the Los Angeles office, this series looks at some of the significant new regulations becoming law in 2013 affecting private employers doing business in California.

Religious Dress and Grooming Protected

California employers should know that the Fair Employment and Housing Act protects the right of individuals to seek, obtain and hold employment without discrimination on account of religions creed, observance and belief. Similarly, employers are required to reasonably accommodate religious belief or observance of an individual unless the accommodation would be an undue hardship to the employer.

AB 1964 extends these protections to “religious dress practice” and “religious grooming practice.” Religious dress practice includes the wearing or carrying of religious clothing, head or face coverings, jewelry, artifacts and any other item that is part of the individual’s observance of his or her religious creed. Religious grooming practice includes all forms of head, facial and body hair that are part of the individual’s religious observance.

This law may cause some employers to act with more tolerance of religious practices than in the past. For example, the law also states that an accommodation is not reasonable if it requires segregation of the employee from the public or other employees. As such, employees who interface with clients or customers may not be disqualified from those positions based upon their religious dress or grooming. Because the bill does not state that it supersedes existing health and safety laws and regulations, workplace safety rules—such as dress and grooming required of employees who operate machinery—should not be affected by the new law.

Breastfeeding Further Protected

The FEHA also protects against discrimination in employment on the basis of sex, which includes gender, pregnancy, childbirth and medical conditions related to pregnancy and childbirth. AB 2386 adds breastfeeding and medical conditions related to breastfeeding to the FEHA’s definition of “sex.” This clarification in the law, also dovetails with Labor Code secs. 1030-1033, which require reasonable amounts of break time and an adequate private place for mothers to express breast milk at work.

See our earlier post in this series here.

New Year, New Laws for California Employers – Employer Access to Social Media

California employers received more attention in 2012 with 554 bills introduced in the legislature mentioning “employer,” compared to 346 in 2011. Fortunately, most bills do not become law. However, those that do bring with them new challenges for California employers. As 2013 draws near we begin our series, “New Year, New Laws for California Employers. Prepared by Mark Terman, partner in the Los Angeles office, this series will take a look at some of the significant new regulations affecting private employers doing business in California.

Employer Access to Social Media

Social media is everywhere. Facebook, for example, claims 1 billion users with more than 140 billion friend connections among them. For some employers, this may be too attractive a source of information about employees and job applicants. Balancing employee expectations of privacy against employer business protection needs, AB 1844 prohibits employers from requiring or requesting an employee or applicant to disclose a username or password for the purpose of accessing personal social media or to access personal social media in the presence of the employer or to divulge any personal social media.

It also prohibits employers from discharging, disciplining (or threatening to do so) or retaliating against an employee or applicant for refusing a demand or request by the employer that violates this law.

Excepted from this new law are employer requests to divulge personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, provided that the social media is used solely for purposes of that investigation or a related proceeding.

Nothing in this law limits an employer from requiring or requesting an employee to disclose a username, password or other method for the purpose of accessing an employer-issued electronic device.

At the same time, the National Labor Relations Board and its counsel continue to opine on when an employer’s policies

or actions regarding employee use of social media interfere with the protection of concerted activity of employees to, for example, discuss wages and working conditions, whether it involves union activity.

The NLRB general counsel’s third and most recent report, which may surprise nonunion employers, is at www.calcpa.org/ NLRBsocialmediapolicies.

Deconstructing Costco

Much has been written about the NLRB’s recent holding in the seminal Costco case that the company’s facially neutral social media policy prohibiting postings on the Internet that damage the Company or any person’s reputation violates Section 8(a)(1) of the Act. But it is also important to understand how the Board came to decide that case in order to better evaluate the appropriate employer response.

The controlling law concerning the validity of facially neutral work rules was established in the 2004 decision in Lutheran Heritage Village in which the Board held that in evaluating such rules it must determine whether employees “would reasonably construe” the language as restricting their Section 7 to engage in protected discussions of their terms and conditions of employment, and recognized that the mere fact that a rule could be read as inhibiting employee rights is insufficient to support a finding that the rule is unlawful. The Board also observed that it should apply a “reasonable” interpretation to such rules without “reading particular phrases in isolation” and without assuming the employer intended to interfere with protected rights.

When the Costco case was tried before an Administrative Law Judge in 2010, the Acting General Counsel charged the employer with violating Section 8(a)(1) with respect to a number of provisions in its Electronic Communications and Technology Policy, including the requirement that employees use “appropriate business decorum” on social media sites and the prohibition of postings that “damage” the company or anyone’s reputation, because there was no limiting disclaimer to advise the employees that the rule was not intended to restrict their protected rights. In this respect, the Acting General Counsel argued that the ALJ should reject the Lutheran Heritage Village “would reasonably construe” standard and apply instead the standard from the dissenting opinion in that case by former Members Liebman and Walsh – that an ambiguous rule that does not include a disclaimer is unlawful if it could be perceived as inhibiting Section 7 rights – because the dissenting opinion would likely be accepted by the majority of the newly composed Board. The ALJ rightly rejected that proposition, and specifically recognized that under the controlling Lutheran Heritage Village standard the Board “will not conclude that a reasonable employee would read the rule to [prohibit protected] activity simply because the rule could be interpreted that way . . . [or] could conceivably be read to” encompass protected conduct. The ALJ then determined that neither Costco rule was unlawful under the applicable “would reasonably construe” standard because reasonable employees would understand that the rules were intended to promote civility rather than restrict Section 7 activity.

In its decision on appeal, the newly composed Board majority adopted the ALJ’s reasoning that Costco’s “appropriate business decorum” rule was lawful, but found the rule prohibiting comments damaging to the company to be unlawful. In so finding, the Board purports to recognize the continued validity of Lutheran Heritage Village, and gives lip service to the “would reasonably construe” standard, but tacitly applied the “could be read” standard advocated by the Acting General Counsel. In this regard, the Board adopted the approach of the Liebman-Walsh dissent by holding that in the absence of a limiting disclaimer the rule “allows employees to reasonably assume that it pertains to” protected comments critical of the company’s management. It is significant that the Board did not engage in any analysis to determine whether the company’s employees “would reasonably construe” the language of the rule as restricting or prohibiting protected communications, but held the rule to be unlawful only because employees could assume it would in the absence of a limiting disclosure.

The Board has applied the “could be” read standard in two more recent cases. First, in Flex Frac Logistics, LLC, the Board specifically referred to ambiguous work rules as “rules that reasonably could be read to” inhibit Section 7 rights. Then in Karl Knauz Motors, Inc., the Board rejected the employer’s Courtesy Rule, which required employees to be courteous in their interactions with customers and coworkers, because it also prohibited employees from being disrespectful or using profanity. Again giving lip service to Lutheran Heritage Village but applying the standard of the Liebman-Walsh dissent, the Board focused on the “disrespectful” language in isolation and held that in the absence of a limiting disclaimer the rule was unlawful because employees “would reasonably assume” that the employer would punish them for being disrespectful if they raised questions about their terms or conditions of employment. That approach ignores the requirement that rules should be looked at from the perspective of whether employees would reasonably read the entire rule, in context, as restricting their right to discuss terms and conditions of employment, not whether someone – members of the Acting General Counsel’s staff or Board Members – could theoretically reach that conclusion as an academic legal exercise.

In light of these opinions and the Acting General Counsel’s continued focus on non-union social media policies, employers should expect that the Board will continue to take an expansive approach in holding such policies unlawful if they could be read as restricting protected communications. Because the Costco majority adopted the Liebman-Walsh reasoning that it is the absence of an accompanying disclaimer that permits employees to assume that facially neutral rules could be applied to restrict their right to engage in protected activity, employers should at a minimum consider including specific limiting disclaimers in those sections of their policies to make clear that the prohibitions are not intended to restrict or interfere with protected communications.

New Year, New Laws in California

As long as the sun rises each day, regulation of California employers will increases each year. And employers received more attention this year with 554 bills introduced in the California Legislature mentioning “employer,” compared to 346 last year. Fortunately, most bills do not become law. Mark Terman, partner in the Los Angeles office, has compiled an overview of significant new regulation affecting private employers which appears in the December issue of CAL CPA magazine. To read the list in its entirety click here.

David Raizman Quoted in Daily Journal

Los Angeles partner David Raizman was quoted in the Daily Journal in an article titled, “Increasing Disability Discrimination Claims Bring up Fraught Workplace Issues.”

The article discusses the rise of disability discrimination and failure to accommodate disability complaints in California, a state that has long had strong provisions against workplace disability discrimination.

Lawyers on both sides of the fence attribute the increased filings to a growing awareness of workplace disability rights among employees and an increased willingness among judges to put such claims before a jury.

California legislators have long employed a broad definition of disability, for example, to include conditions that merely “limit” various life activities, as opposed to “substantially limit” such activities. Then in 2008, the U.S. Congress adopted many of California’s broad interpretations into federal law.

David, a partner in the Labor & Employment Practice Group, said, “California really led the way here” and, as a result, workers in the state are more likely to see a “less traditional” disability like obesity as something to be accommodated by employers.

David said he tells his clients that if the plaintiff has a medical diagnosis of any kind, a court will most likely consider him or her disabled. He also said that plaintiffs’ lawyers have learned that the claims are likely to go before a jury because they’re “very hard to dispose of at the summary judgment stage.”

He noted that an employer’s claims of undue hardship in accommodating a disabled worker are “frankly, generally squishy concepts that are more subject to factual dispute than others.”

David added that as California’s workers age, claims of workplace disability discrimination will only continue to increase.

“Given the broad definition of disability, the population is getting more disabled,” he said.