GOOD NEWS, BAD NEWS FOR WALMART
Within the past two weeks there have been two significant employment law decisions involving Walmart.
On Monday June 20, 2011, the United States Supreme Court ruled that a class action could not be certified against Walmart for discrimination on behalf of potentially a million female workers. The Court said that plaintiffs had failed to identify a common corporate policy that led to gender discrimination against workers at thousands of Walmart and Sam’s Club stores across the country. The lawsuit was filed in 2001 and sought to cover every woman who worked at the retailer’s Walmart and Sam’s Club’s stores at any point since December 1998, including those not hired until years after the suit was filed. The women pressing the suit claim they and colleagues across the country were victimized by Walmart’s practice of letting local managers make subjective decisions about pay and promotions. Billions of dollars were at stake for Walmart, the world’s largest private employer.
The Walmart case is being closely watched by many other corporations who are presently being sued for discrimination under class action lawsuits. The case will make it more difficult for employees to pursue class actions and employers may be more aggressive opposing such lawsuits. However, there will likely continue to be potential class action liability in some categories of employee claims.
For example, the Pennsylvania Superior Court recently upheld the majority of a $187,600,000 class action award against Walmart. The trial court had found Walmart violated the Pennsylvania Minimum Wage Act when it required employees to work “off the clock” and through breaks. A significant part of the trial court’s finding was that Walmart’s actual practices in Pennsylvania violated Walmart’s own internal policies requiring employees to get a certain amount of unpaid breaks.
The Court upheld the damages for unpaid overtime; a 25% penalty under the Pennsylvania Wage Payment and Collection Law; and interest. However, the court held that the trial court must re-calculate the attorneys’ fees because it had multiplied the actual attorney time by 3.7 to enhance the award because of the Plaintiff’s success. The Superior Court stated that there appeared to be some errors in the trial court’s calculations or there needed to be additional explanation by the trial to support the enhancement.
This case demonstrates how dangerous the Pennsylvania Minimum Wage Act (or the federal Fair Labor Standards Act) can be to employers. Whether it is because of misclassification of employees (i.e., exempt versus non-exempt) or other seemingly “small” violations (i.e., allowing employees to work through lunch or a break), the damages in wage and hour cases can multiply exponentially because the violations typically apply to broad groups of a company’s employees. Employers should consider having periodic audits of their job classifications and business practices by outside consultants or law firms in order to avoid such pitfalls.
On March 31, 2011, the Philadelphia City Council passed so-called “Ban the Box” legislation. The “Fair Criminal Record Screening Standards” ordinance which takes effect on July 13, 2011, prohibits employers from requiring job applicants to disclose criminal backgrounds on the initial interview or application. The ordinance was passed, in part, to give an individual with a criminal record an opportunity to be judged on his or her own merit during the submission of the application and at least until the completion of one interview. However, the ordinance “should not be construed to require an employer to hire someone with a criminal record, nor to limit an employer’s ability to choose the most qualified and appropriate applicant for the employment opportunity at hand.”
The “box” at issue usually appears on an initial job application form and follows a question of whether the applicant has ever been convicted of a felony or misdemeanor. When the box is checked “yes,” employers typically will then follow up during interviews or criminal background checks to gather more information about conviction to determine if the conviction should disqualify the applicant. Philadelphia’s new ordinance prohibits this practice.
Under the new ordinance, employers may not request disclosure of an applicant’s criminal history or perform a background check until after the first interview. The ordinance covers the “application process,” which, it defines to begin “when the applicant inquires about the employment being sought” and ends “when an employer has accepted the employment application.” The ordinance also covers the period “before and during the first interview,” which is defined by the statute as “any direct contact by the employer with the applicant, whether in person or by telephone, to discuss the employment being sought or the applicant’s qualifications.”
During these times—the application process and first interview—the ordinance prohibits any covered employer from asking about or requiring an applicant to disclose or reveal any information regarding criminal convictions or engaging in any other direct or indirect conduct intended to gather information regarding criminal convictions. Even if an applicant voluntarily discloses a criminal conviction during a first interview, the employer cannot ask during that interview whether the employee has been convicted of other crimes as well. It is only after an applicant completes an application and a first interview that an employer may inquire about criminal convictions or run a criminal background check. An employer may be fined up to $2,000 per violation of the ordinance.
The ordinance applies to any person, company, corporation, labor organization or association with ten or more employees working within the limits of the City of Philadelphia. Despite the ordinance’s new restrictions, employers are permitted to ask about an applicant’s criminal history at any time in the application process when “specifically authorized by any other applicable law,” or for those occupations where a criminal background check is a legal prerequisite, such as banks and healthcare providers.
Similarly, under the Pennsylvania Constitution and the Pennsylvania Criminal History Record Information Act, it is illegal to summarily reject an individual for employment on the grounds that the individual has a prior criminal record unless in doing so the employer is furthering a legitimate public objective.
In light of this new Philadelphia ordinance, affected employers should modify their job applications and eliminate questions inquiring into an applicant’s criminal history. Further, employers should refrain from inquiring about the applicant’s criminal background until after the first interview has been completed.
NLRB ISSUES ADVICE MEMORANDA CONCERNING IMPLEMENTING AND ENFORCING SOCIAL MEDIA POLICIES
In this age when people regularly communicate with each other using social media sites such as Facebook, Twitter, and MySpace, employers have been and will continue to be confronted with the question of whether disciplining or terminating an employee for that employee’s postings on these sites would violate Section 8(a)(1) of the NLRA. Just as challenging has been the employer’s task of drafting a policy that lawfully protects the employer’s interest in maintaining a good public reputation but does not violate because it is overly broad. The NLRB appears to have recognized that there is a need for guidance in this area. On April 12, 2011, the Office of General Counsel issued a Memorandum to all Regional Directors making it mandatory for them to submit to the Division of Advice questions involving “employer rules prohibiting or disciplining of employees for engaging in protected concerted activity using social media, such as Facebook or Twitter.”
For example, on April 21, 2011, the Advice Division of the Arizona Regional Office of the NLRB issued an opinion finding that the employer, Lee Enterprises, Inc., d/b/a Arizona Daily Star, did not violate Section 8(a)(1) by terminating an employee for posting unprofessional and inappropriate tweets to a work-related Twitter account. There, the charging party worked as a reporter for the Daily Star who, at the time of his termination, was assigned to cover the crime and public safety beat. Over a year before the employee was terminated, the Daily Star had begun to encourage its reporters to use Twitter and other social media sites to provide news to people who might not read the paper and to drive readers to the paper’s website. The charging party opened a Twitter account and started seeking out coworkers and others who also had such accounts, began following them on Twitter, and amassed a group of his own followers. While the charging party opened the account, decided his own screen name and password, and controlled the content of his tweets, he did identify himself as a Daily Star reporter, included a link to the paper’s website, and referred his readers to the paper’s website for stories. At the time the newspaper did not have a written social media policy.
In late January or early February 2010, the employee tweeted, “The Arizona Daily Star’s copy editors are the most witty and creative people in the world. Or at least they think they are.” This was in response to a series of sports headlines using a play on words. Before the tweet, the employee had raised his concerns about such sports headlines with the Executive Editor but had not discussed his concerns with any of his coworkers. In response to this tweet, among other things, various editors of the paper met with the charging party and told him that he was prohibited from airing his grievances or commenting about the paper in any public forum. The charging party continued to tweet but did not make public comments about the Daily Star. Among others, over a three week period, he tweeted:
“You stay homicidal, Tucson. See Star Net for the bloody deets.”
“What?!?!? No overnight homicide? WTF? You're slacking Tucson.”
“Suggestion for new Tucson-area theme song: Droening [sic] pool’s ‘let the bodies hit the floor’.”
“I’d root for daily death if it always happened in close proximity to Gus Balon’s.”
“Hope everyone’s having a good Homicide Friday, as one Tucson police officer called it.”
“My discovery of the Red Zone channel is like an adolescent boy’s discovery of his . . . let’s just hope I don’t end up going blind.”
He also posted a tweet calling local television reporters, “stupid” because the reporters misspelled a word in a tweet they posted. In response, the Managing Editor told the charging party that he was not permitted to tweet about “anything work-related” because he was “drawing negative attention” to the paper. Ultimately, he was terminated for cause for his repeated disregard of the paper’s “Respectful Workplace Guidelines” and its professional courtesy and conduct expectations to refrain from damaging the goodwill of the company.
In evaluating the lawfulness of the employer’s actions, the Board emphasized that it has consistently held that an employer violates Section 8(a)(1) by imposing discipline under an unlawfully overbroad policy. In this case, the Board acknowledged that the employer had made statements that “could be interpreted to prohibit activities protected by Section 7.” Nevertheless, the Board sided with the employer because: (1) the employer statements did not constitute orally-promulgated overbroad “rules” in that they were made to only one employee in response to specific inappropriate conduct; and (2) the employer did not violate the NLRA - even though it implemented an unlawful rule - because the charging party’s conduct was not protected and concerted in the first place. The Board explained that “a discharge for conduct that violates an unlawful rule is not unlawful if the employer can establish that the conduct interfered with the employee's own work or that of other employees,” and that it was for this reason that the employee was discharged.