Why Your Employer May Not Be Too Small For A Discrimination Claim

Many employees are frustrated to hear that most discrimination and other employment laws don't cover small employers. For Title VII, which covers race, sex, national origin, sexual orientation (at least EEOC thinks it does), color, pregnancy, and religion, and the Americans With Disabilities Act, employers must have at least 15 employees to be covered. For the Age Discrimination in Employment Act, they must have at least 20. For COBRA, it's also 20. Family and Medical Leave Act requires 50 employees with in 75 miles of your work location.

State laws vary, but here in Florida our discrimination law, the Florida Civil Rights Act (which also covers age) covers employers with 15 employees, but some county ordinances like Miami-Dade and Broward cover employers with 5. In California it's five, Texas 15, New York 4. Here's a list of the discrimination laws by state.

But don't despair if your employer is too small to be covered under these laws. The National Labor Relations Board just issued a decision regarding a case against Browning-Ferris Industries that may help. Although NLRB doesn't rule on discrimination cases, this decision was about whether you can count the parent company if you work for a franchise. And this is important, because you may work for, say, a KFC, but your real employer is ABC Company, the tiny company that bought the franchise to your location. So your corporate employer may only have 10 employees. Part of the reason franchises are so popular is that it's a way to escape those pesky employment laws.

But maybe not for long. NLRB said that the parent company may well be liable for the misdeeds of the franchise owner. The test is simple (but complicated, as in all things legal), namely, does the parent company share or co-determine the terms or conditions of your employment? Here's how they explained it:

The Board’s joint-employer doctrine is best understood as always having incorporated the common-law concept of control—as the Supreme Court’s one decision involving the doctrine confirms. In the Greyhound case, as we have seen, the Court framed the issue presented as whether one statutory employer “possessed sufficient control over the work of the employees to qualify as a joint employer with” another statutory employer.64 Thus, the Board properly considers the existence, extent, and object of the putative joint employer’s control, in the context of examining the factors relevant to determining the existence of an employment relationship.

There's actually nothing new in this. That's always been the standard. What is new, and is causing much consternation in management-side circles, is that now NLRB will also consider whether the parent has the ability to control your terms and conditions of employment, even if it doesn't:

Under common-law principles, the right to control is probative of an employment relationship—whether or not that right is exercised. Sections 2(2) and 220(1) of the Restatement (Second) of Agency make this plain, in referring to a master as someone who “controls or has the right to control” another and to a servant as “subject to the [employer’s] control or right to control” (emphasis added). In setting forth the test for distinguishing between employees and independent contractors, Restatement (Second) Section 220(2), considers (among other factors) the “extent of control which, by the agreement, the master may exercise over the details of the work” (emphasis added). The Board’s joint-employer decisions requiring the exercise of control impermissibly ignore this principle.  

Nothing about the joint-employer context suggests that the principle should not apply in cases like this one. Indeed, the Supreme Court’s decision in Greyhound, supra, was entirely consistent with the Restatement (Second) when it described the issue as whether one firm “possessed [not exercised] sufficient control over the work of the employees to qualify as a joint employer.” Where a user employer reserves a contractual right (emphasis added) to set a specific term or condition of employment for a supplier employer’s workers, it retains the ultimate authority to ensure that the term in question is administered in accordance with its preferences. Even where it appears that the user, in practice, has ceded administration of a term to the supplier, the user can still compel the supplier to conform to its expectations. In such a case, a supplier’s apparently independent control over hiring, discipline, and work direction is actually exercised subject to the user’s control. If the supplier does not exercise its discretion in conformance with the user’s requirements, the user may at any time exercise its contractual right and intervene. Where a user has reserved authority, we assume that it has rationally chosen to do so, in its own interest. There is no unfairness, then, in holding that legal consequences may follow from this choice.

Causing additional woe-is-me complaints among management-side lawyers is that the control exercised doesn't need to be direct or immediate. Indirect control is enough.

Just as the common law does not require that control must be exercised in order to establish an employment relationship, neither does it require that control (when it is exercised) must be exercised directly and immediately, and not in a limited and routine manner (as the Board’s current joint-employer standard demands). Comment d (“Control or right to control”) to Section 220(1) of the Restatement (Second) observes that “the control or right to control needed to establish the relation of master and servant may be very attenuated.”  The common law, indeed, recognizes that control may be indirect. For example, the Restatement of Agency (Second) §220, comment l (“Control of the premises”) observes that [i]f the work is done upon the premises of the employer with his machinery by workmen who agree to obey general rules for the regulation of the conduct of employees, the inference is strong that such workmen are the servants of the owner... and illustrates this principle by citing the example of a coal mine owner employing miners who, in turn, supply their own helpers. Both the miners and their helpers are servants of the mine owner. As the illustration demonstrates, the common law’s “subservant” doctrine addresses situations in which one employer’s control is or may be exercised indirectly, where a second employer directly controls the employee.

There are very few franchise parent companies that don't control things like uniforms, time recordkeeping, the specifics of how the work is done (e.g., just how many fries are in a small order, and how long it should take to serve each customer), the equipment used, and even the training. I suspect few parent companies will not be found to be joint employers under this standard. While this case doesn't apply to discrimination and other employment laws outside the National Labor Relations Act, the reasoning is based on common law, which does apply to all these laws. And it will probably be persuasive to other agencies and possibly the courts.

Bottom line: If you work for a franchise, the parent company may be a joint employer, which means you can also count their employees when pursuing discrimination and other employment law claims, and you may have a deep pocket to reach to when suing for violations of these laws. And that's how it should be. The parent companies of franchises have taken a not-me hands off approach to the misdeeds of their franchises all too long. If they are making money off the backs of these employees, they should be responsible for making sure they are treated legally.

No, You Can't Use "Religious Discrimination" To Discriminate (But You Can Use It To Refuse To Serve Alcohol)

With all the brouhaha over the clerk who went to jail for refusing to issue marriage licenses to gay couples, plus being in the midst of the Jewish holidays, I thought now would be a good time to talk about religious discrimination and when employers must accommodate religious beliefs.

Here's what EEOC says about when an employer does not have to accommodate an employee's religious beliefs:

An employer can refuse to provide a reasonable accommodation if it would pose an undue hardship. Undue hardship may be shown if the accommodation would impose “more than de minimis cost” on the operation of the employer’s business.
To establish undue hardship, the employer must demonstrate that the accommodation would require more than de minimis cost. Factors to be considered are “the identifiable cost in relation to the size and operating costs of the employer, and the number of individuals who will in fact need a particular accommodation.” Generally, the payment of administrative costs necessary for an accommodation, such as costs associated with rearranging schedules and recording substitutions for payroll purposes or infrequent or temporary payment of premium wages (e.g., overtime rates) while a more permanent accommodation is sought, will not constitute more than de minimis cost, whereas the regular payment of premium wages or the hiring of additional employees to provide an accommodation will generally cause an undue hardship to the employer. “[T]he Commission will presume that the infrequent payment of premium wages for a substitute or the payment of premium wages while a more permanent accommodation is being sought are costs which an employer can be required to bear as a means of providing reasonable accommodation.”

Costs to be considered include not only direct monetary costs but also the burden on the conduct of the employer’s business. For example, courts have found undue hardship where the accommodation diminishes efficiency in other jobs, infringes on other employees’ job rights or benefits, impairs workplace safety, or causes co-workers to carry the accommodated employee’s share of potentially hazardous or burdensome work. Whether the proposed accommodation conflicts with another law will also be considered.

So how does this play out when applied to some of the recent cases in the news? Here's how:

Elected official refusing to issue licenses: First of all, Title VII exempts elected officials from its application, so the elected clerk refusing to issue licenses to gay couples has no protection under this law. Even if she did, she is not only refusing to issue the licenses but wants to stop her entire staff from issuing them. If the state had to hire an entirely new set of employees to issue the licenses, that would obviously be more than a de minimis cost. Also, the requested accommodation, that she and her entire staff be allowed to refuse to issue the licenses, conflicts with the supreme law of the land, namely, the Constitution. Plus, the accommodation is a demand that the employer's customers be openly insulted and treated as second class citizens. It would clearly be an undue hardship to grant this accommodation. 

Flight attendant refusing to serve liquor: The same folks clamoring for the state to accommodate the recalcitrant clerk are unwilling to support accommodating the Muslim flight attendant who refuses to serve liquor. The flight attendant was being accommodated for two years without any problems by having her coworkers serve liquor when requested, but one coworker complained. Now she's suspended. Here's the problem with the employer now claiming a hardship: it accommodated her for two years. How can it claim that there's a sudden hardship? Time will tell, but I think she probably wins. It doesn't seem very hard to pass the drink order to the flight attendant at the other side of the cart and continue to serve soft drinks and coffee.

Employee who thinks a hand scan is the mark of the beast: As crazy as the belief sounds, if it is sincerely held then it needs to be accommodated, absent an undue hardship. When an employee objected to biometric hand scanning, claiming it was the "mark of the beast" in Revelations, he won his suit against the employer who refused to accommodate him, to the tune of $587K.

Bottom line is that you can't refuse to perform your entire job, but you can ask for accommodations regarding part of your job. You can't demand that your employer discriminate against others to accommodate your religion.

You can't be a bartender who refuses to serve liquor; can't get a job at a hamburger shop and refuse to serve meat; can't get a job at a daycare and the refuse to admit the children because you believe a woman should be at home instead of working; can't be a barber who refuses to shave men's beards. 

But if you need a religious holiday off or don't want to participate in a religious ceremony or activity at work, you're entitled to that.

11th Circuit Rules Courts Must Consider Hardship to Employee in Deciding on Florida Noncompete Injunction

Florida's noncompete statute is, no doubt, harsh on employees and extremely favorable to employers. However, the 11th Circuit Court of Appeals just made it a bit less harsh.

The Court ruled that, although Florida law bans the courts from considering hardship on the employee in determining whether or not to enforce a noncompete agreement, Courts must balance the hardships between employer and employee in determining whether injunction is an appropriate remedy. An injunction is, in the case of noncompete agreements, basically an order that you must stop working for your new employer, stop contacting customers of the former employer, or otherwise directing you to cut it out, whatever it thinks you're doing wrong.

The reason this is important is because most employees are facing an army of lawyers and a former employer with a substantial amount of dollars to use against them, and once the judge orders them out of a job they are fighting with no ability to pay a lawyer. It's a loss due to lack of money rather than due to lack of legal defenses.

This ruling means that a Court should balance the financial hardship on the employee in determining whether to yank their job away. The alternative remedy to the employer would be to prove money damages, and most employers can't prove that the former employee working for a competitor cost them a dime. That's because noncompetes are being used as weapons to suppress wages and prevent competition more often than for any legitimate interest.

I actually had an opposing counsel recently brag that they had gotten the same employee fired from three different jobs this way. Despicable.

Here's what the 11th Circuit said about why the courts must consider hardship, even under Florida's horrid noncompete statute:

MacLachlan appeals the lower court’s application of section 542.335(1)(g)1 to the preliminary injunction analysis, which precluded any consideration of the potential hardship to MacLachlan when the court balanced the harms under Rule 65. 

Section 542.335(1)(g) governs the enforceability of restrictive covenants, not the enforcement of an already enforceable restrictive covenant. See Fla. Stat. § 542.335(1)(g). This is evident from the framing, content, and position of the section in the overall structure of the statute. The section begins: “In determining the enforceability of a restrictive covenant, a court . . . .” It then goes on to list four considerations that a court “shall” or “shall not” contemplate when determining whether a restrictive covenant is enforceable. § 542.335(1)(g)1–4. Case: 15-10985 Date Filed: 08/27/2015 Page: 9 of 11 10 One of these—applied by the district court to the motion for preliminary injunction—is that the court “[s]hall not consider any individualized economic or other hardship that might be caused to the person against whom enforcement is sought.” § 542.335(1)(g)1. Section 542.335(1)(g)3 adds that the court “[s]hall consider all other pertinent legal and equitable defenses.” What is clear from the framing and content of sections 542.335(1)(g)1–4 is that the mandated considerations therein are directed towards the determination of whether a restrictive covenant is enforceable. Accordingly, these sections should not be applied when determining the appropriate remedy. 

[footnote 1 explains: The statute concludes with instructions for enforcement: first, it addresses public policy considerations, § 542.335 (1)(i), then, specific remedies, § 542.335(1)(j), and finally, attorney’s fees and costs, § 542.335(1)(k). These sections are clearly demarcated from the determination of whether a covenant is enforceable. See, e.g., § 542.335(1)(j) (“The violation of an enforceable restrictive covenant creates . . . .”) (emphasis added). ] 

Here, the district court erred when it applied section 542.335(1)(g) in determining whether a preliminary injunction was an appropriate and effective remedy for the enforceable restrictive covenant. See § 542.335(1)(j). Having erroneously applied section 542.335(1)(g), the district court failed to consider any harm that MacLachlan would suffer if the injunction issued. 

If Florida, and not just federal, courts follow this analysis, it could be the beginning of some relief for Florida employees.

Is It Time To Start a Union At Your Workplace?

While you're enjoying your long weekend, thanks to the labor movement, enjoying a weekend at all thanks to unions, getting paid a living wage thanks to unions, and getting ready to go back to your safe workplace thanks to the labor movement, it's time to think about this: should you start a union at your workplace?

Many of my readers have tried to change things by complaining to management, to no avail.

If management isn't listening, if working conditions are terrible, if your coworkers and you are fed up, then start thinking about forming a union at work. It isn't that hard. You might even be able to form a micro-union to represent a single department rather than the entire workplace like 41 Macy's cosmetics workers did. Don't assume you're too small to have a union.

Here's how to get started:

1. Find some coworkers you trust (and be careful who you trust) and speak to them about whether they would be interested in finding out more about starting a union. You are legally protected when you talk to coworkers about working conditions (unless you're a supervisor or someone else not covered by the National Labor Relations Act). Talk to them about what changes you would like to see made and why you think you might need help from a union. You might also join an organization like Working America to familiarize yourself with the issues affecting workers and be part of a group even before you unionize.

2. Contact a union organizer. It may seem early to do this, but I spoke to a friend at AFL-CIO and he said that just contacting them is legally protected, and they keep records of your contacting them. This contact could be evidence if your employer fires you or retaliates for your protected organizing activities. Here's where to contact an AFL-CIO union organizer to find out more about the process. The organizer may tell you to do more work before they get involved, but they can give you some guidance from the beginning.

3. Figure out which union is right for you. Different unions represent different types of employees, and which union might represent you is not necessarily intuitive. There are unions for electrical workers, engineers, communications workers, actors, writers, office workers, pretty much any job you have, there's a union for you.

4. Form an organizing committee. Your coworkers from step one will likely form the core of an organizing committee. Your union organizer can help guide you with this. You will want to develop a plan of action and how to convince a majority of coworkers to join. You'll have to do some research on wages, benefits, and other workplace issues.

5. Get a majority to sign on. The union organizer will help you prepare cards to present to coworkers who want to join. If you can sign a majority, then you will get to have an election.

6. Be prepared for employer attacks. There is a whole army of lawyers and anti-union folks who will help employers fight unions. Your union organizer can help you get ready to deal with attacks and make sure you are legally protected.

7. Win the election. You'll have to convince your coworkers that a union is the right thing for them. Again, your organizer can help you with figuring out the best way to do this.

8. Negotiate a contract. Once you're unionized, you will negotiate a contract with your employer and they can't change terms and conditions of employment without negotiating first.

There are things you can do to improve your working conditions even before you think about unionizing, but sometimes a union is the only way to get an employer to take its workers seriously.