Labor and Employment Update - Winter 2012



The National Labor Relations Board (Board) recently held that it is a violation of federal law if employees are required to sign an agreement that precludes them from filing “joint, class or collective claims addressing their wages, hours, and/or other working conditions against the employer ….” In DR Horton and Michael Cuda, the arbitration clause provided that all employment-related disputes had to be resolved through individual arbitration. The clause also stated that the arbitrator did not have the authority to issue an award related to a group or class of employees. The NLRB held that this prohibition violated the employees’ rights under federal law to engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection. 

The Board distinguished the U.S. Supreme Court’s 2011 decision in AT&T Mobility, LLC v. Concepcion, in which the Court held that the Federal Arbitration Act (FAA) preempted a California state law that effectively prevented the enforcement of arbitration clauses containing class action waivers. Concepcion involved consumers and whether AT&T had the right to compel them to submit to arbitration even though a California state law permitted consumer class actions. After the Concepcion decision, several courts indicated that Concepcion was limited to consumer class actions. 

The NLRB confronted the issue straight on and effectively held that certain federal employment/labor laws trump the FAA. The NLRB held that DR Horton was different than the Concepcion situation because Concepciondid not involve arbitration agreements in the employment context and also because allowing employees to pursue class action claims in arbitration is consistent with the policies of both the National Labor Relations Act (NLRA) and the FAA.

It is not clear whether DR Horton will be appealed, but employers should be aware that as of now, an arbitration policy that requires resolution of employment disputes through individual arbitration and forecloses an employee’s right to file a class or collective action is a violation of federal law. Employers do not necessarily have to change their written policies immediately; however, they should be aware that these provisions will not be enforceable.

Charles A. Ercole


In EEOC v. Hosanna-Tabor Evangelical Church, the Supreme Court held that religious organizations are free to take employment actions without fear of discrimination claims, because of the “Ministerial Exception.” The exception is based on the First Amendments Free Exercise Clause which has been interpreted to prohibit the application of federal law to certain Church officials. In Hosanna-Tabor, one of the Church’s “called teachers,” Ms. Perich, suffered from narcolepsy that caused her to fall into sudden and deep sleeps from which she could not be awakened. As a result, in January, 2005 a replacement was hired and the Church attempted to negotiate a mutual separation with Perich by “releasing her from her call.” She refused and the Church effectively terminated her for insubordination. Ms. Perich went to the EEOC, which sued Hosanna Tabor on her behalf alleging retaliation under the Americans Disabilities Act.

Ultimately, the Sixth Circuit Court of Appeals ruled that Ms. Perich’s non-religious duties were her primary tasks and that her religious responsibilities were not sufficient to give rise to the Ministerial Exception. The Church appealed and the Supreme Court disagreed with the Sixth Circuit. The Supreme Court refused to apply the lower court’s tests that Ms. Perich worked too little on religious duties for the exception to apply. Conversely, the Court held that the following factors gave rise to the Ministerial Exception: “the formal title given Perich given by the Church, the substance reflected in that title, her own use of that title, and the important religious functions performed for the Church.” 

While this case may have limited application, certain teachers at religious schools may not be entitled to federal employment law protections. If a teacher has a religious title or appointment in addition to their general teaching qualifications, the Ministerial Exception is likely to apply regardless of the fact that the teacher spends the majority of his/her time carrying out non-religious duties.

Charles A. Ercole



Even as employers have more and more ways to conduct surveillance of their employees’ conduct (e.g., electronic monitoring policies, key stroke analysis, security systems, etc.), some employers still go to greater lengths to investigate their employees’ conduct. Sometimes they go too far. 

In a recent case, the Iowa Supreme Court addressed an issue of an employer installing a camera in a bathroom in order to observe a particular employee. In Koeppel v. Spiers, the employer Spiers believed an office colleague, Deanna Miller, was engaged in personal conduct detrimental to the business. Initially, Spiers installed a security camera in the reception area to monitor Ms. Miller’s work station. The camera was battery operated and only had a lifespan of a few hours. When it was operable, Spiers could observe Miller but not see her engage in any misconduct. However, a few weeks later, Spiers found a hypodermic needle in the office parking lot next to the spot where Miller parked her car. As a result, he installed a camera under a shelf in the bathroom. The camera was ultimately discovered by another employee, Ms. Koeppel. She took photographs of the camera and reported it to police. Later, she sued Spiers for invasion of privacy. 

Spiers argued that because the camera never worked while it was in the bathroom, he should not be liable for invasion of privacy. The lower court granted his motion for summary judgment; however, the Supreme Court of Iowa disagreed and remanded the case, stating that the act of intrusion is complete once it is discovered by the plaintiff and he/she reasonably believes an intrusion has occurred. Therefore, it was not particularly relevant whether the camera was operable or not. 

The Koeppel case reminds us that employers can still overstep their bounds in conducting surveillance on their employees. There are many lawful ways to do it, and it is sometimes necessary for legitimate business reasons.   However, employers must still balance employees’ privacy rights. Before installing cameras in private areas such as locker/dressing rooms and bathrooms, employers should consult counsel. 

Charles A. Ercole