The Beat Goes On: D.C. Circuit Upholds NLRB View That Orchestra Musicians Are Employees

Last week, a federal appeals court enforced a ruling by the NLRB that orchestra musicians are employees, not independent contractors. The import of the decision in Lancaster Symphony Orchestra v. NLRB is sure to reverberate in concert halls throughout the country – particularly those with small to medium-sized orchestras, which often rely on contracted players – but it also holds lessons for employers outside the music industry.

The case began in 2007, when a local chapter of the American Federation of Musicians filed a petition seeking to represent the musicians of the Lancaster (Pennsylvania) Symphony Orchestra. The Orchestra challenged the petition on the grounds that its musicians were independent contractors, not employees covered under the NLRA, but the Board disagreed. Applying a multi-factor test derived from the common law of agency, the Board found the balance of factors pointed toward employee status.

On appeal, the U.S. Court of Appeals for the District of Columbia noted that it would adopt a “middle course” in reviewing the Board’s decision and uphold it as long as it was supported by substantial evidence. In other words, the Court did not decide how it would “classify the musicians in the first instance, but only whether the Board confronted two fairly conflicting views.”

After reviewing the evidence, the Court found that several factors pointed toward employee status. For example, the Court agreed that the Orchestra exerted extensive control over the means and manner of the musicians’ performance, including controlling the musicians’ posture and limiting their conversations during rehearsals and performances. The Court also found that the Orchestra’s conductor exercised “virtually dictatorial authority” over the manner in which the musicians performed and circumscribed their independent discretion. Further pointing toward employee status, the Court noted that the musicians were in the business of performing music and their work therefore comprised a part of the Orchestra’s regular business. Although the musicians were free to perform with other symphonies, the Court found that provided only limited entrepreneurial opportunity, as the musicians could increase their income only by taking a job with another orchestra.

At the same time, the musicians’ high degree of skill, coupled with the short amount of time they were engaged by the Orchestra (approximately 140 – 150 hours per year), pointed toward the musicians’ status as independent contractors. The Court also noted that the musicians provided most of their critical tools, i.e. their instruments, but it also noted, as the Board had found, that the Orchestra supplied other necessary tools, such as music stands, chairs, and the concert hall.

Faced with these “two fairly conflicting views,” the Court deferred to the Board’s conclusion that the musicians were employees, not independent contractors. Because of the Court’s standard of review – and because the outcome of the case rested on standards that the Court admitted were “decidedly unharmonious” – the Lancaster decision is by no means a coda on the issue of employee classification. Other courts and agencies, for example, have found orchestra members to be independent contractors for purposes of anti-discrimination laws (Lerohl v. Friends of Minnesota Sinfonia), state unemployment laws (Portland Columbia Symphony v. Oregon Employment Department), and state labor laws (Waterbury Symphony Orchestra v. AFM, Local 400). Still, the Lancaster decision shows that the NLRB does not intend to slow the tempo of its pro-employee agenda.

Labor & Employment Law: Determining the Accrual Date of a Wrongful Discharge Action

Preti Flaherty's Peter G. Callaghan and Gregory L. Silverman recently authored an article in the April 20th, 2016 edition of the New Hampshire Bar Association's Bar News. 

An employee has three years to bring a common law wrongful discharge claim in New Hampshire. Determining the exact date a wrongful discharge claim accrues remains an area of uncertainty under New Hampshire law.

Resolving the date after which a wrongful discharge claim is time-barred depends on the nature of the claim and whether the employee is alleging wrongful termination, a constructive discharge, or that the employer wrongfully failed to renew or offer a new contract....

Read more here.

Legislative Update on Maine’s Substance Abuse Testing Law

In legislative news, a bill that would have implemented new changes to Maine’s substance abuse testing law has died after the House and Senate failed to agree on amendments to the bill from the Committee on Labor, Commerce, Research and Economic Development.

As originally drafted, LD 1384 proposed a number of changes to the current law, including a revision to the probable cause standard that would have permitted an employer to find probable cause based on a single work-related accident that results in personal injury or significant damage to property. The current law prohibits a single work-related accident from forming the basis of probable cause to believe an employee may be under the influence of a substance of abuse.

In February, the Maine Department of Labor issued a lengthy report recommending other changes to the current statute, including the development of a uniform drug testing policy to be used by employers in the state.  The report followed a workgroup convened by the Department to study issues related to the impairment of workers due to the use of medical marijuana, opiates, prescription drugs, and other legal and illegal substances.

The Department’s report included a draft amendment to LD 1384 that was presented to the LCRED committee.  However, the amendment did not receive unanimous approval from the committee, which issued a divided report largely along party lines, and the House and Senate subsequently voted to pass competing amendments to the bill, resulting in the bill dying between houses.  This means that the Department’s recommended changes to the current law will remain just that—recommendations—for now.

Update on Publication of the New FLSA Overtime Regulations

The final overtime rule is edging closer to release: the U.S. Department of Labor (USDOL) has sent its final changes for determining which workers are eligible for overtime pay to the Office of Management and Budget (OMB) for an administrative review.  Procedurally, this is the final step before a new regulation is published as a final rule.  OMB’s final review could take several months or just a few weeks.  Once complete, the final rule will be published in the Federal Register and take effect within 60 days of publication.

Commentators believe that the final rule will work its way quickly through OMB and most likely be published by July 7, meaning it would take effect on Labor Day, Sept. 5.  That has obvious symbolic meaning.  Alternatively, considering other significant events taking place this fall, if the rule is published on September 2 -- the Friday before Labor Day -- it will take effect on November 1, the day prior to Election Day.

Although the proposed regulations were issued in July 2015, the differences between those proposed regulations and the final rule won't be made public until the final rule is actually issued.

According to the Unified Agenda and Regulatory Plan, published in November 2015 by OMB, the earliest the final rule could be released would be in July. Timing is important. Under the Congressional Review Act, a joint resolution from both houses of Congress and the President can undo laws and rules passed during the final 60 legislative days of the previous Congress.  In other words, the Obama Administration must work quickly so that the regulations take effect before President Obama leaves office and to protect the new regulations from being overridden, if a Republican wins the White House.

Employers ought to be planning now for implementation of the new regulations.  Among the changes likely to be reflected in the new regulations when they are published include:

• The salary threshold under which employees would be required to receive overtime pay (regular hourly rate x 1.5 for all hours worked beyond 40 hours in a given workweek) would be the 40th percentile of average weekly earnings in the U.S. The USDOL has projected that the 40th percentile weekly wage in the final rule will be $970, or $50,440 per year for a full-time employee.  This represents a significant jump from where it currently stands -- $23,660.
  
• This new salary-level threshold will be annually updated, based either on the percentile or indexed to inflation.
  
• For highly compensated employees (considered exempt without regard to any duties test), the new annual salary threshold will be $122,148, which is up from the current level of $100,000.

It remains to be seen whether changes in the applicable duties test will be incorporated into the new regulations.  No proposed changes to the duties test were reflected in the proposed rule published in 2015.

To avoid paying overtime to employees who would need to be reclassified as nonexempt, employers might consider increasing the employees’ salaries to a level above $50,440.   Alternatively, employers might considering reducing the hours of employees who would be newly non-exempt and eligible to receive overtime.  A third option is to adjust the hourly rates of newly non-exempt employees downward so that, when their additional overtime pay is considered, their overall weekly compensation remains unchanged.  Most employers will implement some combination of these tactical options in order to control the financial implications of the new regulations.

New Developments in Medical Marijuana and the Workplace

According to the National Conference of State Legislatures, twenty-three states now have medical marijuana laws on the books.  The conventional wisdom is that these laws bring with them greater protections for employees who are users of medical marijuana.  Court rulings over the last several years, however, have shown that this conventional wisdom is not always correct and that not all state medical marijuana laws are created equal.

For example, last summer the Colorado Supreme Court held that although Colorado law allowed for the use of medical marijuana, that law did not prevent an employer from terminating a medical marijuana user who had tested positive for marijuana in violation of the company’s zero-tolerance drug policy.  Reaching a similar conclusion, a federal district court in Washington recently dismissed an employee’s discrimination complaint and found that the law in Washington does not require employers to accommodate the use of medical marijuana where they have a drug-free workplace policy.  Swaw v. Safeway, Inc. (W.D. Wash. 2015).  In Swaw, the court pointed to an earlier 2011 decision from the Washington Supreme Court, which held that Washington’s medical marijuana law “does not regulate the conduct of a private employer or protect an employee from being discharged because of authorized medical marijuana use.”

That courts in Colorado and Washington (and California and Oregon, to name a few others) have construed medical marijuana laws in favor of employers does not mean that employers in other states with medical marijuana laws can assume their courts would reach similar interpretations.  This is because the medical marijuana laws in some states, such as Washington and Colorado, simply de-criminalize medical marijuana without providing any specific employment protections.  Other states, however, such as Maine, include specific protections that prohibit employers from taking adverse action against an employee based on his or her status as a medical marijuana user.  Consequently, court rulings from “de-criminalization” states should not be viewed as indicative of how a court would rule in another jurisdiction, such as Maine, where the applicable law expressly provides for some level of employment protection for medical marijuana users.

Although Maine’s courts have had little opportunity to weigh in on the issue of medical marijuana, Maine’s Department of Labor has recently issued a report that recommends several changes to the state’s drug testing law.  The report is the culmination of a workgroup that was convened by MDOL to explore a number of issues relating to substance use and abuse in the workplace, including the medical use of marijuana. The report, which is available here, recommends two changes.  The first change is directed at streamlining the process to approve drug testing policies and recommends the use of a uniform drug testing policy, which would be prepared by MDOL and used by all employers in the state. The second change involves replacing the “probable cause” standard for drug testing with a program whereby employers would receive training to detect impairments, regardless of their cause, and employers would then have the option to refer the alleged impairment case to a “preferred occupational provider” to confirm the impairment and make recommendations to address or accommodate the cause.

Federal Court Finds Employee’s Explanation for Failed Drug Test Insufficient to Provide Notice of a Disability

Most employers are well aware that, under state and federal disability laws, an employee with a disability is entitled to reasonable accommodations in the workplace.  What can sometimes be less clear for employers is determining at what point the obligation to provide a reasonable accommodation arises.  Not surprisingly, the answer often depends on the facts.

As a case in point, a federal district court recently held that an employee’s disclosure that he was taking oxycodone for his back pain was not sufficient to put the employer on notice that he had a disability or that he required an accommodation.  Angel v. Lisbon Valley Mining Co., LLC (D. Utah, Nov. 23, 2015).  The employee disclosed that he was taking oxycodone after he had failed a drug test. Although the employee told human resources that the medication was for a back impairment and provided them a copy of his prescription along with a physician’s note, the court found neither the prescription nor the doctor’s note was sufficient to notify the employer that he was claiming a disability or asking for an accommodation.  In this case, the court held that the employer’s mere awareness of the employee’s physical condition (i.e. back pain) was insufficient to show that it was aware of an alleged disability or a request for accommodation.

Although it is difficult to generalize from the facts of a particular case, the outcome in Angel nonetheless confirms that the duty to provide a reasonable accommodation is triggered only after an employee has put the employer on notice of a disability and a desire for an accommodation. Although an employee’s accommodation request can be in “plain English” and does not need to use any special words, it must still be sufficient to notify the employer that the employee needs a modification at work and that the modification is related to a medical condition.

Maine’s Law Court Blows the Whistle on McDonnell Douglas

Maine’s highest court has closed out the year with two notable decisions involving the state’s Whistleblowers’ Protection Act (WPA).  The decisions revise the method for analyzing WPA cases on summary judgment and, as a result, are likely to have impacts that are more procedural than substantive. 

When a party files a motion for summary judgment, they are essentially arguing that no factual dispute exists with respect to the key aspects of the case and that a court can therefore decide the case as a matter of law, without having to go to a trial.  In employment discrimination cases, courts have for years relied on a framework developed by the U.S. Supreme Court to determine whether or not a factual dispute exists that would prevent summary judgment from being awarded. The framework, known as McDonnell Douglas, generally sets out a procedure for presenting evidence of discrimination.  The procedure involves shifting burdens, where the employee must first establish a prima facie case of discrimination, which the employer must then rebut with an explanation as to why it had legitimate reasons for any actions it took.  Assuming the employer provides that explanation, the burden then shifts back to the employee to point to sufficient evidence in the record that would allow a jury to conclude that the employer’s conduct was nonetheless motivated, at least in some measure, by discrimination. 

In Brady v. Cumberland County (November 10, 2015) and Cormier v. Genesis Healthcare, LLC (December 15, 2015), the Law Court announced that it would no longer use the McDonnell Douglas framework for adjudicating WPA cases on summary judgment.  In brief, the Law Court noted that because of the way a WPA claim is defined under Maine law, an employee must produce evidence of causation—i.e. evidence that the employer had an unlawful motive for taking an adverse action—as part of his or her prima facie case.  This is in contrast to claims under Title VII, where employees are not required to produce evidence of causation until the third step of the McDonnell Douglas framework—after the employer has produced a legitimate non-discriminatory explanation for its actions. Noting this difference between the WPA and Title VII, the Law Court concluded that, for WPA cases, the second and third steps of the McDonnell Douglas framework are duplicative.  Consequently, rather than employing the McDonnell Douglas burden-shifting framework, the Law Court explained that when analyzing WPA cases on summary judgment, it will consider evidence in a “unitary way and simply determine whether the record as a whole would allow a jury to reasonably conclude that the adverse employment action was motivated at least in part by retaliatory intent.” 

In a sense, then, the Brady and Cormier decisions do not signal a significant change.  In WPA cases, employees and employers will still need to present the same evidence to prevail on summary judgment; the difference is that the Law Court will not go through the exercise (or require the parties to through the exercise) of sorting that evidence through a burden-shifting framework.  Instead, in a nod to judicial efficiency, the Court will simply consider all the evidence at once to determine whether there is sufficient evidence to suggest that an adverse employment action was motivated at least in part by protected activity.