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On May 16, 2018, we blogged about California’s compulsory arbitration requirements for unionized agricultural workers, the California Supreme Court’s rejection of constitutional challenges to that statute, and the petition for certiorari filed by the employer, Gerawan Farms. A majority of Gerawan’s employees signed a petition seeking an election on whether to decertify the union.  The California Agricultural Labor Relations Board (ALRB ) allowed the election but it refused to count the ballots.  The ALRB found that Gerawan had committed unfair labor practices that tainted the reliability of the petition.  The remedy the ALRB imposed was to ignore the results of the election.

On May 30, 2018, the California Court of Appeal, Fifth Appellate District, vacated the ALRB’s order and remanded for further proceedings consistent with its opinion. The appellate court first held that it had jurisdiction to hear the appeal.  Most ALRB orders dealing with elections are not immediately reviewable because they are not final.  Rather, the employer must refuse to bargain with the union and then appeal from the ALRB order finding that the refusal was an unfair labor practice.

For three reasons, the court held that this “technical refusal to bargain” process did not apply to Gerawan’s petition for review. First, the ALRB’s refusal to count the ballots meant that the technical refusal to bargain process was an inadequate remedy.  If Gerawan refused to bargain, but the union won the election, Gerawan would be guilty of an unfair labor practice.  Second, the court did have jurisdiction to review the unfair labor practice findings and the election remedy was an integral part of those findings.  Third, the rationale for the technical refusal to bargain process is to avoid disrupting the status quo by lengthy, possibly frivolous, litigation.  Here, the status quo remains in effect unless and until the union is decertified.

On the merits, the court sustained some of the ALRB’s factual findings and overturned others. The findings the court sustained were technical and relatively trivial.  For example, Gerawan allowed two workers to devote parts of the regular work day to campaign for signatures on the petition.  On one day, in the face of numerous absences by employees objecting to the union, Gerawan raised the unit price for a packed box of grapes by 25 cents; the court held that this finding was “marginally sustainable.”

The principal legal issue in the opinion is the standard of proof required to set aside an election. The NLRB inquires whether unfair labor practices have violated the “laboratory conditions necessary for a fair election” – a quite lenient standard.  The California court adopted a much more demanding “outcome-determinative” standard – i.e., the employer’s misconduct was sufficiently severe that it “affected the outcome of the election.”

The Court reasoned that, under federal law, a rerun election is usually possible within a relatively short period of time and by essentially the same employees. By contrast, in California, the statute requires at least 50% of peak employment at the time a petition is filed.  Given the seasonal nature of agricultural employment, a year might elapse before a rerun election could legally be held; given the high rate of turnover in agricultural employment, the electorate might be very different.  The court was concerned that this lengthy delay would intrude on employees’ rights not to join a union if they do not want one.

The court also held that, in assessing the impact of employer misconduct, the ALRB must consider the margin of the election. If the vote is close, a lesser level of misconduct might require a rerun; if the vote is 90-10 in favor of decertification, it would require much more egregious misconduct.  On remand, therefore, the ALRB was required to count the ballots.  Given the intensity with which the employees oppose the union, it seems likely that the vote will not be close.

In its initial ruling, the ALRB did not apply the outcome-determinative standard. It held that that standard applied to elections.  Here, though, the ALRB found that Gerawan’s unfair labor practices had “tainted” the petition and, since the petition was therefore invalid, so was the election.  The court thought that the taint standard all but ignored employees’ interest in filing a petition seeking decertification.

Following a dissent in an earlier ALRB case, the court held that the petition was not a jurisdictional requirement for a decertification election, but merely an administrative tool to assist the ALRB in determining whether there was sufficient support for decertification to warrant an election. Moreover, the taint standard assumed widespread dissemination of improper efforts to coerce employees, without either direct or circumstantial evidence to support it.  Finally, the taint standard focuses on the petition rather than the election, but California law strongly favors elections.  So the proper legal standard is whether Gerawan’s alleged misconduct had an outcome-determinative effect on the election.

The court remanded the case to the ALRB for reconsideration based on the unfair labor practices actually supported by the evidence; the proper standard of review; and the vote tally. But it is hard to believe that the ALRB on remand can do anything other than uphold the election.  The court held that the relatively minor unfair labor practices Gerawan actually committed “plainly did not rise to the level or character of employer interference in the decertification process to permit the Board to pronounce the entire worker petition void.”

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 I.       Introduction. 

Unlike federal labor law, the California Agricultural Labor Relations Act (ALRA or Act) authorizes agricultural workers to form unions and engage in collective bargaining.  If the parties cannot reach agreement on the terms of the contract, the Act requires mediation.  If mediation is unsuccessful, the ALRA requires the mediator to dictate the terms of the contract and impose them on the parties without either’s consent.  The California Supreme Court upheld the Act in the face of numerous constitutional challenges.  The employer has now filed a petition for certiorari.

II.       Factual Background.

The employer, Gerawan Farming, Inc., is the largest grower of peaches, plums and nectarines in the United States. It employs approximately 5,000 workers.  In 1990, the United Farmworkers of America (UFW) was certified as the bargaining representative for Gerawan workers.  The parties did some bargaining through 1995 without reaching agreement.  The UFW then vanished for the next 17 years before resurfacing in 2012 and requesting further bargaining sessions.

The parties engaged in several negotiating sessions, although the UFW never put an economic proposal on the table.  In March 2013, the UFW invoked mandatory mediation.  The ALRA has three prerequisites to such mediation:  (1) the parties have not reached agreement for at least a year after the union requested to bargain; (2) the parties have not previously had a binding contract; and (3) the employer has been found to have committed an unfair labor practice.  Here, the unfair labor practice was committed before the union won certification in 1990, 22 years before it sought mediation.

In the meantime, a majority of Gerawan employees twice petitioned the agency that administers the ALRA to decertify the UFW.  The agency ordered a secret vote after the second petition, but refused to count the ballots on account of an alleged unfair labor practice by Gerawan months before the election.

The mediation being unsuccessful, the mediator proceeded to impose terms and conditions on the parties.  Neither Gerawan nor its employees were happy with the contract.  Most workers experienced a reduction in take home pay, because the raises they received were less than the union dues imposed by the mediator.  The contract also disrupted Gerawan’s quality control program and a seniority system that had worked well for both Gerawan and its employees.

Gerawan sought judicial review of the mediator’s ruling in the California Court of Appeals.  That Court found that the ALRA violated the California Constitution by unlawfully delegating legislative power to an administrative agency.  It also held that the Act violated equal protection, by giving the mediator essentially unrestricted power to impose different contract terms on similarly situated employers.  The Court of Appeals did not reach Gerawan’s argument that the ALRA also violated substantive due process.

The California Supreme Court reversed.  It acknowledged that the Supreme Court of the United States had held compulsory arbitration for private employers violated due process. But it also held that these Lochner-era decisions had been completely repudiated by the Court’s New Deal decisions.  It rejected the equal protection argument on the theory that the Act contained sufficient criteria to limit the discretion of the mediator, including such things as the employer’s financial condition; wages, benefits and terms and conditions of similar operations; and the cost of living in the area.

III.      The Certiorari Petition.

The petition presents three arguments as to why the Act violates the Fourteenth Amendment.  First, Gerawan asserts that compulsory arbitration arbitrarily deprives both it and its employees of liberty and property interests.  Imposing contract terms that neither party wants clearly deprives each of them of an economic interest.  But it also deprives the employees of their rights of free association by denying them the opportunity to decertify the union.  California treats a compelled contract as the same as a collectively bargained one.  Under California law, employees cannot seek decertification until the final year of the contract.

Second, Gerawan argues that the ALRA violates substantive due process, because the three Lochner-era cases (the Wolff trilogy) expressly held that states could not require compulsory arbitration for private companies. Chas. Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522 (1923), held that the State of Kansas could not impose a wage schedule on an employer and its union. Dorchy v. State of Kansas, 264 U.S. 286 (1924), held that Kansas could not punish a union official for calling a strike in an effort to secure better terms for union members. Chas. Wolff Packing Co. v. Court of Industrial Relations, 267 U.S. 552 (1925), held that Kansas could not impose maximum hours on the parties.

The petition alleges that the Wolff trilogy remains good law, never having been expressly repudiated by the Supreme Court.  It is true that the initial Wolff opinion relied in part on Adkins v. Children’s Hospital, 261 U.S. 525 (1943), and West Coast Hotel Corp. v. Parrish, 300 U.S. 379 (1937), expressly overruled Adkins.  But Adkins was not the only basis for the Wolff trilogy, and the Supreme Court reserves for itself the right to overrule its own precedents, no matter how “moth eaten” they may be. State Oil Co. v. Khan, 522 U.S. 3, 20 (1997).

Third, Gerawan argues that the compulsory arbitration process violates equal protection, because it allows the mediator to impose on employers and employees whatever terms and conditions he or she pleases.  The criteria that the ALRA sets forth are not binding.  The mediator may give those criteria whatever weight he or she chooses to do so.  The mediator may ignore them entirely.  The result is a standard-free imposition of any terms and conditions the mediator wants.

The State and the UFW initially waived their right to file responsive briefs.  The Court, however, ordered them to respond, which suggests the Justices are taking the petition seriously.

The Food Safety Modernization Act (FSMA) provides broad protection to whistleblowers. Section 402 of the statute applies to any person or entity engaged in manufacturing, processing, packing, transporting, distribution, reception, holding or importation of food, but it is not clear whether the provision applies to farms, at least until the food has been harvested.

The FSMA prohibits discharging or otherwise discriminating against an employee who engages in the following kinds of whistleblowing:

Providing or planning to provide information to the employer, the federal government, or a state Attorney General about a violation of the FMSA, or any   order, rule, regulation, standard or ban under it.

Testifying or preparing to testify in a proceeding concerning such violation.

Assisting, participating, or planning to do so in any such proceeding.

Objecting to or refusing to participate in any activity that violates the FSMA.

The whistleblowing need not be the sole cause of the adverse employment action, merely a “contributing factor.” The whistleblower need not be correct about the violation.  It is enough that s/he subjectively believed that action to be a violation of the FMSA and such belief was reasonable.  The regulations borrow from the whistleblowing provisions of Sarbanes-Oxley.

The FMSA allows an employer an affirmative defense: regardless of the retaliation, the employer would have taken the same adverse action.  The employer must prove that defense with clear and convincing evidence.

The statute has a rather cumbersome administrative procedure for enforcement. An employee who claims retaliation for whistleblowing may file a complaint within 180 days of the violation.  The Secretary of Labor has delegated its responsibilities to the Occupational Safety and Health Administration (OSHA).  OSHA has 60 days from the date of the complaint to issue preliminary findings.

If the preliminary findings are in favor of the employee, OSHA must include a preliminary order prescribing relief, which may include reinstatement. Any aggrieved party has 30 days to seek a hearing before an administrative law judge (ALJ).  The hearing would be de novo and on the record.  After the ALJ issues an order, within 14 days, any aggrieved party may appeal to the Administrative Review Board (ARB), which has discretion on whether to accept the appeal.  If the ARB declines to hear the appeal, the administrative process is complete and the ALJ’s order is final.  An aggrieved party then has 60 days to seek review in the court of appeals for the circuit in which the violation occurs.

Unless the administrative process proceeds with unusual celerity, however, the employee has an alternative route to federal district court. The employee may file an action in federal district court if there is no final ruling within 210 days of filing the complaint, or within 90 days of the date of the preliminary order.  Review is de novo and any party may demand a jury.

On February 9, 2017, the delightfully-named Linda O’Risky filed a whistleblower lawsuit against Mead Johnson Nutrition Co. Ms. O’Risky was formerly a global compliance director for Mead Johnson.  In early 2015, she learned of a defective seal on 8-ounce bottles of Mead Johnson baby formula.  She alleged that she made repeated unsuccessful efforts to induce Mead Johnson to fix the problem and to report it to the FDA.  She also alleged that Mead Johnson terminated her services in retaliation for her efforts and falsely claimed her position was eliminated as a result of a reduction in force.

Ms. O’Risky filed her administrative complaint on March 28, 2016. OSHA did not complete the administrative process within the required 210 days, thus enabling her to sue in district court.

FSMA whistleblower cases will likely be both expensive and difficult to defend. A discharged former employee is always a sympathetic plaintiff and proof that retaliation played at least some role in the termination is not hard to find.  At best, the employer may find itself facing a red-light swearing match featuring the plaintiff’s testimony against that of his or her manager.

The best way to avoid whistleblower claims is strict compliance with the FSMA. An employer will never get summary judgment on the subjective issue of whether the plaintiff actually believed there was a violation.  Whether that belief was reasonable, however, is an objective standard that can support summary judgment.  If the employer can prove that it was in compliance with FSMA, plaintiff’s belief to the contrary is likely to be unreasonable.

On August 3, Judge B. Lynn Winmill of the District of Idaho ruled that Idaho’s new “ag-gag” law is unconstitutional. Judge Winmill struck down the law on the grounds that the law violated the 1st Amendment and selectively targeted individuals critical of factory farm practices.

“Ag-gag” refers to a range of laws intended to curb undercover investigations of agricultural operations, such as large poultry, pork, and dairy farms. Idaho’s governor signed Idaho’s “ag-gag” into law in February 2014 after a California-based animal rights’ organization produced undercover footage of dairy workers beating and abusing cows on an Idaho farm.

The ban made it a misdemeanor that was punishable by up to one year in prison to make secret recordings or misrepresent one’s identity to gain entrance to an agricultural facility. The law further allowed the owner/employer to recover publication damages pursuant to a restitution provision that requires payment for twice the “economic loss” the owner/employer suffers as a result of any exposé revealing animal abuse or unsafe working conditions.

The federal judge described the ban as a law that criminalized employment-based undercover investigations and criminalized whistleblowing by employees, investigative journalism, or “other expository efforts.” He dismissed the state’s argument that the statute’s purpose is to protect private property by noting that “food and worker safety are matters of public concern.”

Expansion of whistleblower protections has been a prevailing theme across all areas of employment law over the past five years, supported by efforts from the Equal Employment Opportunity Commission (EEOC), the Securities Exchange Commission (SEC), and the Occupational Safety and Health Administration (OSHA). This pro-whistleblower decision continues that theme and is a significant win for rights’ activists in the state of the food supply, whether it’s animal welfare, food safety, worker rights, or the environment. The decision will likely encourage similar challenges in the seven other states with “ag-gag” laws, including Iowa, Kansas, Missouri, Montana, North Carolina, North Dakota, and Utah.

On January 6, 2015, Husch Blackwell obtained summary judgment for ConAgra Foods, ending a two-year collective action filed by supervisor employees alleging they had been misclassified as exempt under federal and state wage and hour laws. The case is Evelyn Garrison, et al. v. ConAgra Foods Packaged Foods, LLC, No. 4:12-cv-00737-SWW. With this result, the firm preserved the management structure that exists in many industrial processes – particularly those in the food processing and packaging industry.

The plaintiffs in this case were Team Leaders in ConAgra Foods’ Russellville, Arkansas facility. The plaintiffs conceded that they performed most of the duties necessary to make them exempt under federal and state wage and hour laws, but argued they lacked the authority to hire or fire, or to make recommendations as to the hiring, firing, etc. of subordinate employees, so they could not be executive employees. The court conditionally certified a class of plaintiffs under the Fair Labor Standards Act and discovery proceeded after all individuals had an opportunity to join.

ConAgra Foods filed for summary judgment on all claims by all plaintiffs, arguing that the plaintiffs had significant input into their subordinate employees’ performance, discipline and discharge, scheduling (including overtime), retention, and promotions/demotions. ConAgra further argued that, even though these employees lacked the ultimate authority to implement these status changes, upper management gave particular weight to the Team Leaders’ recommendations, making them exempt under federal and state wage and hour laws. The United States District Court for the Eastern District of Arkansas agreed and entered its opinion and order with a full grant of summary judgment.

The Husch Blackwell team of Joe Glynias, A.J. Weissler, and Brittany Falkowski led the effort for ConAgra Foods. As many of our clients are aware, the management structure in place in Russellville is common in the food processing and packaging industry, and it has become a target for plaintiffs’ lawyers across the country. We are pleased to have obtained this victory on behalf of our client and partner, ConAgra Foods, and to have added this further safeguard for the management structure of many other companies.

In June, four Hawaii growers agreed to pay $2.4 million to settle claims related to the growers’ use of Thai H2-A visa workers supplied by farm labor contractor Global Horizons. The EEOC, which filed suit on behalf of the Thai workers, alleged that Global Horizons misled impoverished Thai workers to pay high registration fees to come to the United States as guest workers, effectively placing them into a situation of debt bondage, and then subjected them to unfair pay, unfair quotas, denial of adequate food and water, and unsanitary and over-crowded living conditions.

In the race/national origin discrimination and retaliation lawsuit, the EEOC named Global Horizons and six growers, asserting that the growers were joint employers with Global Horizons and therefore liable for the farm labor contractor’s acts. In addition to the June settlement by four of the growers, a fifth grower settled in 2013 for $1.2 million; the claims against Global Horizons and the sixth grower remain pending.

EEOC General Counsel David Lopez said the settlement “reflects the Commissions redoubled effort to challenge discriminatory practices against the most vulnerable workers who often live and work in the shadows of the economy.” Indeed, the EEOC’s strategic enforcement plan for fiscal years 2013 – 2016 includes as one of the Commission’s six national priorities: “Protecting Immigrant, Migrant and Other Vulnerable Workers.”  EEOC Regional Attorney Anna Park characterized the settlement as “a reminder to the agricultural industry to remain ever-vigilant in hiring and monitoring farm labor contractors.” More information about the case can be found here.

According to Federal Judicial Caseload Statistics, nearly five percent more Fair Labor Standards Act cases were filed between April 1, 2013 and March 31, 2014 than during the same period in 2012-2013.  This 2013-2014 total of 8,126 newly-filed FLSA cases is nearly 2,500 more than the 2008-2009 total of 5,644.

 

 

 

 

 

 

Source:  Federal Judicial Caseload Statistics

All employers should evaluate their wage and hour practices to ensure they are in line with current applicable law and regulation.  In particular, the FLSA’s agricultural exemptions can be difficult to understand—particularly given the differences between federal and certain state law.  Child labor restrictions, unpaid breaks, and travel time are some of the issues that can easily trip up agricultural employers. 

FLSA litigation is expensive and time-consuming.  An ounce of prevention is definitely worth a pound of cure in this area.

“Ban the Box” laws continue to crop up across the country. “Ban the Box” laws prohibit employers from inquiring about an applicant’s criminal history prior to the first or second interview or until an offer is made. While “Ban the Box” laws do not prevent employers from considering and even rejecting applicants at later stages of the hiring process based on criminal history, they do prohibit the rejection of applicants at the outset.

The justification cited for these laws is that postponing the question gives the prospective employee an opportunity to present themselves to the employer in personal interviews, demonstrating the person they have become and explaining the circumstances of the crime.

At last count, more than 60 cities and counties and 12 states, plus the District of Columbia, have passed “Ban the Box” legislation for government and public employers. Four states, including Minnesota, Massachusetts, Hawaii, and Rhode Island, have extended the prohibition to private employers.

All employers should review their employment applications and state and local law to determine whether they are in compliance with these obligations.

Yesterday, a group of nine Senate Democrats proposed new legislation (S. 2486) that would increase the amount of salary that must be paid to certain employees.  Led by Senator Tom Harkin, D-Iowa, the group seeks to change the Fair Labor Standards Act (“FLSA”) in two significant ways, and those changes mirror those requested from the U.S. Department of Labor (“DOL”) by President Obama earlier this year.  Both changes would apply to employees who are exempted from the FLSA’s overtime requirements under the widely-used “white collar” exemptions.

Since 2004, employees earning more than $455 per week on a salary basis meet the first white collar requirement for exemption from the overtime provisions of the FLSA.  On an annual basis, that weekly salary translates to $23,660 for exempt employees.  While this weekly amount was an increase over levels previously required by the DOL, and though many exempt employees earn well more than the weekly minimum, President Obama and Senator Harkin’s group believe the minimum needs to be adjusted to keep up with changing income levels. Continue Reading Proposed Legislation Would Alter the FLSA’s “White Collar” Exemptions

Colorado has gained widespread attention and notoriety (or acclaim, depending on your point of view), for its attempts to legalize marijuana use.   While Amendment 64, Colorado’s 2012 constitutional amendment authorizing the use of recreational use of marijuana, has dominated media attention, courts are primarily focused on Amendment 20 passed in 2000, legalizing the use of medical  marijuana.  Amendment 20 prohibits state and local law enforcement officials from prosecuting authorized users of medical marijuana and their caregivers. 

The Colorado Supreme Court has decided to hear a case concerning Amendment 20’s impact on the workplace.  Under Colorado’s Lawful Off-Duty Activities Statute (“LODAS”), employers are prohibited from discharging employees for engaging in “lawful” conduct away from the workplace.  Sometimes known as the smokers’ rights statute, LODAS was passed in the early 1990s with a strong push from the tobacco lobby. 

The Colorado Supreme Court has decided to hear the issue of whether an employer can discharge an employee for authorized use of medical marijuana during non-working hours.  In the case of Coats v Dish Networks, both the trial court and the Court of Appeals ruled that an employer may discharge an employee for testing positive for medical marijuana because the use of marijuana for any purpose is illegal under the federal Controlled Substances Act.  So far, no employer has lost before a court addressing whether an employer must accommodate the use of medical marijuana by its employees.  The unanimity on the topic raises questions about why the Supreme Court granted certiorari.  It could be that the Supreme Court seeks to put its imprimatur on a burgeoning issue affecting the legal system and Colorado’s workplaces, or it could be that the Supreme Court has a different take on the subject than its lower courts.

Husch Blackwell is submitting an amicus (a friend of the court) brief on behalf of various members of Colorado’s business community encouraging affirmance of the lower courts.  Whatever the merits of medical marijuana, or recreational marijuana, employers must be able to rely on the plain terms of the LODAS:  its protections extend only to employees engaged in “lawful” activities and anything illegal under federal law cannot be lawful. Moreover, Colorado’s employers must not be put in between a rock and hard place. Employers are subject to a myriad of laws restricting the use of marijuana, such as the Drug Free Workplace Act and Department of Transportation guidelines.  Employers are accountable for their employees’ conduct in innumerable ways, from their employees’ interactions with customers and the general public, to the privacy of customers’ personal health or financial information, to the safety of its workplaces.  Customers, consumers, employers, and other employees all benefit when employers have the discretion to enforce drug-free workplace policies that promote safety and accountability.