A new wave of class-action lawsuits should concern any employer that regularly uses background checks in making employment decisions. These lawsuits allege violations of the Fair Credit Reporting Act (FCRA), the federal law that regulates the collection and use of consumer credit information. Many employers are unaware that FCRA also imposes obligations on employers that order background reports, including criminal and motor vehicle record checks, from a consumer reporting agency.
Before the employer may obtain a background report on an employee or
job applicant, FCRA requires that the employer provide the individual
with a written disclosure in a stand-alone document and obtain the
individual’s written permission. Additional steps are required if the
employer decides to take an adverse action (such as denial of
employment) based on the report’s contents. Before taking the adverse
action, the employer must provide the individual with a “pre-adverse
action notice” and a summary of the individual’s rights under FCRA. The
employer must then provide the individual with a reasonable period of
time, generally five business days, to dispute the information in the
background report. If the employer still decides to take the adverse
action, FCRA requires the employer to send yet another notice.
Common claims by plaintiffs are that employers included extraneous
information in their written disclosures, failed to provide a
pre-adverse action notice, or failed to wait a reasonable time before
taking an adverse action. FCRA allows plaintiffs to recover actual
damages, including attorneys’ fees and costs. For willful violations,
statuary damages (between $100 and $1,000) and punitive damages are also
available. As a result, many of the class-action lawsuits have resulted
in multi-million dollar settlements for the plaintiffs.
To mitigate the risk of a lawsuit, employers should review their
policies and procedures for conducting background checks of employees
and job applicants. We also advise a careful review of the notices and
disclosures provided to employees to ensure these documents contain the
specific information required by FCRA.
Two suits filed in a California federal court (Cotter v. Lyft, Case No. 13-4065, and O’Connor v. Uber, Case No. 13-3826, U.S. District Court, Northern District of California) will address whether drivers of the popular taxi-alternatives Uber and Lyft qualify as “employees.” If so, they would be entitled to compensation for expenses, which would include gas, maintenance, and cleaning of the vehicles. Currently, drivers for both companies must cover all incidental expenses out-of-pocket, which leaves Uber and Lyft drivers footing the bill for everything from oil changes to car washes.
On January 29, 2014, the federal court judge in the Lyft case stated that “people who do the kinds of things that Lyft drivers do here are employees,” strongly implying that the popular taxi alternative will be liable for added compensation to its drivers.
Drivers for the companies are subject to hiring and firing by their respective organizations, and are required to pass background checks and accept a certain number of rides, all factors that would be indicative of an employer-employee relationship. However, neither company appears to require control over where the drivers operate or what time they do so, factors that would tend to show independent contractor status.
The suit could have a wide-ranging impact nationally as both Uber and Lyft have exploded in popularity, with Uber alone valued at nearly $40 billion dollars. Look for similar lawsuits nationwide to erupt if an employment relationship is found to exist between drivers and their respective companies.
On January 8, 2015, the U.S. House of Representatives passed a bill changing the definition of a full-time employee under the Affordable Care Act (ACA) from a person who works 30 hours per week to one who work 40 hours per week. This change is significant because the ACA requires businesses with 50 or more employees to offer health insurance to their full-time employees or pay a penalty. The 40-hour per week definition would bring the ACA in alignment with other state and federal laws, such as the Fair Labor Standards Act.
Proponents of the bill, called the Save American Workers Act, argue that the current 30-hour threshold pressures businesses to save money by either reducing employees’ hours to avoid mandatory insurance coverage or laying off employees altogether. The Obama administration strongly opposes the legislation on the grounds that it would reduce the number of Americans with health insurance coverage. Additionally, a recent report by the Congressional Budget Office concluded that the bill would add to the federal deficit by decreasing employer penalties for noncompliance with the ACA and increasing the number of persons receiving government-subsidized health insurance instead of employer-provided coverage.
The bill easily passed the House by a vote of 252-172, but it will face increased opposition in the Senate, where Republicans will need 60 votes to overcome a filibuster by Senate Democrats. Further, President Obama has threated to veto the bill if it passes.
The Save American Workers Act is the latest attempt by House Republicans to chip away at the Affordable Care Act. Since taking office earlier this year, the House has also passed legislation exempting emergency service volunteers and employees that receive insurance from the Veterans Administration from being counted towards the ACA’s 50-employee threshold.
On Thursday, January 15, 2015, President Obama called on Congress to pass the Healthy Families Act. If passed, the Healthy Families Act, as currently proposed, would require companies to give workers up to seven days of paid sick leave a year. The proposed Act would apply to companies that have at least 15 employees. Employees at those companies would earn one hour of paid sick leave for every 30 hours worked, up to 56 hours of paid sick time per year.
Obama also announced that he will take executive action to give at least six weeks of paid leave to federal employees after the birth or adoption of a child. Obama will grant the paid sick leave to federal employees of the executive branch through a presidential memorandum, a tool similar to an executive order used to direct federal agencies to implement a White House policy. The program will work by advancing unearned sick time to employees, and will cost $250 million a year to implement. The move is intended to encourage states and cities to implement similar paid sick leave policies.
Obama’s actions capitalize on the recent trend of state and local governments to pass workplace regulations on matters like minimum wage and paid leave even as such measures languish in Congress.
In the November elections, ballot measures on sick leave passed in Massachusetts; Trenton and Montclair in New Jersey; and Oakland, California. There are now three states – Massachusetts, California and Connecticut – and 16 cities that offer some form of paid sick leave. There are currently 43 million private-sector workers in the U.S. who do not have paid leave.
Obama believes that paid leave policies have an economic benefit for employers – that is, businesses with paid leave policies have greater productivity and higher corporate profits. Critics argue that legislatively mandated leave policies will result in employers off-setting the cost through decreased wages and/or increased prices passed on to the consumer..
With the changing of the calendar comes a new year and new challenges for businesses across the country. Following these three tips is a great way to ensure that 2015 gets off to a safe start for both you and your employees.
Review your OSHA requirements
January 1, 2015 is particularly important from an OSHA standpoint, as it marks the effective date of the new injury and fatality reporting requirements. Under the new rule, employers must report all work-related fatalities within eight hours of their occurrence. Employers must also report all work-related hospitalizations of one or more employees, eye losses, and amputations within 24 hours. It is worth noting that under the new rule, employers do not have to report a hospitalization if it is for diagnostic testing or observation only.
Update your employee handbook
An out-of-date employee handbook can open you up to a host of issues, from wrongful termination and harassment suits to drawing the ire of the National Labor Relations Board. Setting out the policies of your workplace in detail is absolutely vital to the smooth operation of a business and the avoidance of unnecessary litigation. It would be a prudent move to review, revise, and update your employee handbook regularly to better reflect both changes in the law and changes in your business.
Keep abreast of any wage law changes in your state
With a new year come changes to wage laws across the country. If you own a business in Arizona, Colorado, Florida, Missouri, Montana, New Jersey, Ohio, Oregon, or Washington, be advised that your minimum wage increased as of January 1, 2015. Many states implemented minimum wage changes midway through 2014 and into 2015. If you are in the hospitality industry, you should pay particular attention to any revisions related to tipped employee minimum wage, as changes to the standard minimum wage may differ from those for tipped employees.
On December 18, 2014, the Ohio Supreme Court issued another opinion limiting employers’ liability for intentional torts in the workplace. This decision is the latest in a series of cases that narrowly interpret Ohio’s intentional tort statute, R.C. 2745.01, and make it very difficult for employees to bring these claims.
In Pixley v. Pro-Pak Indus., Inc., the plaintiff worked in the maintenance department of a company that manufactured containers, boxes and packaging materials. On the day of his injury, the plaintiff was examining a malfunctioning motor on a conveyer line. Meanwhile, his coworker was operating a transfer car, which is a vehicle that transports materials between areas in the facility. Unfortunately, the coworker failed to notice the plaintiff kneeling in his path and accidentally drove the transfer car into him, severely injuring the plaintiff’s leg.
The plaintiff brought an intentional tort suit against his employer under R.C. 2745.01, which limits claims against employers to circumstances demonstrating a deliberate intent to cause injury to an employee. The plaintiff relied on part (C) of the statute, which provides for a rebuttable presumption of intent to injure if the employer deliberately removes an equipment safety guard. The plaintiff argued that the employer deliberately bypassed the transfer car’s safety bumper. This bumper was designed to compress when force was applied and shut off power to the transfer car’s motor.
The Supreme Court held that summary judgment for the employer was proper because the plaintiff failed to establish an intentional tort claim. The Court noted that the “deliberate removal” of an equipment safety guard occurs when an employer makes a “deliberate decision to lift, push aside, take off, or otherwise eliminate that guard from the machine.” The mere failure of an equipment safety guard is insufficient to raise the presumption that the employer intended to injure the employee. Rather, the employee must show a “careful and thorough decision to get rid of or eliminate an equipment safety guard.”
Here, there was some evidence that the safety bumper failed to operate on the day of the accident. However, the plaintiff failed to present any evidence showing that the employer deliberately removed it or otherwise caused it to fail. The plaintiff did not offer any evidence of tampering or evidence that the employer disabled or eliminated the safety bumper. To the contrary, employees were required to routinely inspect the safety bumper and make repairs as necessary. Therefore, the plaintiff could not establish the existence of an intentional tort.
The Court declined to address the other issue for submitted review: whether the definition of equipment safety guard is limited to protecting “operators” only. Regardless, the Court’s decision is another victory for employers in the ongoing battle over Ohio’s intentional tort statute. At least for now, a majority of the justices are determined to recognize the General Assembly’s decision to restrict liability for intentional tort claims.
Ohio Supreme Court Rules Former Testimony in a Products Liability Suit is Inadmissible in a Worker’s Compensation Suit
Donald Burkhart was employed as a maintenance worker for H.J. Heinz Company from 1946 to 1986. While employed at Heinz, Burkhart was frequently exposed to asbestos, including times where he was instructed to collect fallen asbestos, beat it into small pieces, mix it into a paste, and reapply it to pipes. Mr. Burkhart was subsequently diagnosed with mesothelioma and died in 2007.
Prior to his death, he gave deposition testimony in a product liability action filed against several asbestos manufacturers whom he believed were responsible for his diagnosis. Following his passing, his wife filed a claim against H.J. Heinz Company seeking workers’ compensation death benefits (Heinz was not named in the suit against the asbestos manufacturers). In bringing this suit, the widow of Mr. Burkhart attempted to use this prior deposition to show that Heinz injuriously exposed him to asbestos. The Industrial Commission denied her claim, and the case eventually made its way to the Ohio Supreme Court.
Mrs. Burkhart attempted to introduce the deposition under Rule 404(B)(1) of the Ohio Rules of Evidence, which permits former testimony of an unavailable declarant, provided the party against whom the testimony is offered is a predecessor-in-interest and had an opportunity to examine the declarant in the prior preceding, and that the two entities would have had similar motive to develop the testimony by direct, cross, or redirect examination.
Mrs. Burkhart contended that the manufacturers of the asbestos litigation could be considered predecessors-in-interest to Heinz because the workplace exposure would concern both entities. She also argued that Heinz could not object to the use of the deposition testimony because they were also using it to disprove Burkhart’s exposure claim.
The Supreme Court held that the deposition was inadmissible, as “neither H.J. Heinz nor any predecessor-in-interest to H.J. Heinz had an opportunity to cross-examine Burkhart in the prior products-liability litigation, nor was there a similar motive to develop his testimony during his depositions.” The Court held that a similar interest in the material facts and outcome of an asbestos case is not enough to create a predecessor-in-interest relationship. This represents yet another important decision in the ever-growing list of asbestos related litigation.