Our colleague at Epstein Becker Green has a post on the Wage and Hour Defense blog that will be of interest to our readers in the retail industry: “Federal Court Concludes That 7-Eleven Franchisees Are Not Employees of 7-Eleven.

Following is an excerpt:

In November 2017, four convenience store franchisees brought suit in federal court against 7-Eleven, Inc., alleging that they and all other franchisees were employees of 7-Eleven. The case was filed in the United States District Court for the Central District of California, entitled Haitayan, et al. v. 7-Eleven, Inc., case no. CV 17-7454-JFW (JPRx).

In alleging that they were 7-Eleven’s employees, the franchisees brought claims for violation of the federal Fair Labor Standards Act (“FLSA”) and the California Labor Code, alleging overtime and expense reimbursement violations. The trial court granted judgment in 7-Eleven’s favor, concluding that 7-Eleven was not the four franchisees’ employer under California law or federal law. …

Read the full post here.

Featured on Employment Law This Week:  The Ninth Circuit held that certain auto service advisors were not exempt because their position is not specifically listed in the FLSA auto dealership exemption.

The 9th relied on the principle that such exemptions should be interpreted narrowly. In a 5-4 decision last week, the Supreme Court found no “textual indication” in the FLSA for narrow construction. Applying a “fair interpretation” standard instead, the Court ruled that the exemption applies to service advisors because of the nature of the work.

Watch the segment below and read our recent post.

In any given week, dozens of lawsuits are filed in federal courts across the United States alleging that businesses violate Title III of the Americans with Disabilities Act (“ADA”), which governs the accessibility of places of public accommodation. While many of these lawsuits now focus on website accessibility, a significant number of them continue to focus on the alleged inaccessibility of brick-and-mortar business establishments, particularly restaurants and hotels. These “drive by” ADA lawsuits often focus on the inaccessibility of architectural elements that can be easily assessed by “testers” without even frequenting the establishment in question—e.g., parking spaces, sidewalks, entrances, public restrooms, host/check-in stations, and pools—sometimes even relying on online images. Moreover, the allegations asserted are often highly technical in nature—living and dying by a matter of centimeters—known only to those who specialize in accessibility. Notably, the vast majority of these claims are brought by a relatively small community of serial plaintiffs and plaintiffs’ counsel for whom achieving compliance is secondary to quickly obtaining a settlement payment and attorneys’ fees.

On February 15, 2018, in an effort to curb such drive-by ADA lawsuits, the U.S. House of Representatives passed legislation—the ADA Education and Reform Act (H.R. 620) (“ADAERA”)—that would require that would-be plaintiffs first provide written notice of alleged architectural barriers and a period to cure before being able to commence a Title III litigation in federal court. Under ADAERA, before plaintiffs could file a Title III claim alleging architectural barriers in federal court, they would first have to provide written notice of the existence of barriers to accessibility (containing sufficient specificity, and citations to the relevant sections of the ADA, to allow the barriers to be identified by the business). The business would then have 60 days from receipt of the notice to provide a plan for the remediation of the existing barriers and an additional 120 days to eliminate the barriers or make substantial progress in doing so. If the business does not respond to the initial letter within 60 days or does not make substantial progress in eliminating the barriers within the following 120 days, then the plaintiff can commence a federal Title III litigation. ADAERA also seeks to create a model program for the use of alternative dispute resolution mechanisms in the resolution of federal Title III claims (e.g., a mediation program that stays discovery while the mediation proceeds). Of course, before it can become law, ADAERA still needs to be passed by the Senate (given the Senate’s current composition, there is no guarantee that it will pass) and then signed by President Trump.

It should come as no surprise that ADAERA has been met with a wide range of reactions. Proponents of the bill argue that ADAERA would preserve the intended purpose of Title III—removing barriers to accessibility—but eliminate the existing incentives for plaintiffs’ counsel to flood the courts with lawsuits premised on minute technical architectural violations with the primary goal of churning up and quickly collecting fees via a settlement. Opponents argue that, as the ADA has been law for more than 25 years, businesses that are not currently in compliance with Title III should not get the benefit of notice and additional time to comply with the long-established law. They fear that ADAERA would encourage businesses to ignore their Title III obligations until receiving a notice of deficiency.

Even if ADAERA, as currently constituted, ultimately becomes law, it could very well have unintended consequences that could create even less desirable circumstances for businesses. First, ADAERA would not prevent plaintiffs from bringing similar cases in state court under state and local accessibility laws, which often are even broader and more liberally interpreted than their federal counterpart. Indeed, plaintiffs often already include such claims as part of their federal actions because, unlike under the ADA, many state and local accessibility statutes allow plaintiffs to seek the recovery of damages and/or civil penalties. Second, as ADAERA does not impose notice requirements for claims under Title III relating to businesses’ obligations to (i) make reasonable modifications to their policies, practices, and procedures, or (ii) provide auxiliary aids and services to enable effective communication, plaintiffs might simply turn their focus to a different type of federal Title III claim. In both of these instances, the result could very well be more protracted litigations under less favorable conditions (e.g., a less efficient forum or less clarity regarding requirements for compliance).

While ADAERA still has a way to go before becoming law, this is the furthest a legislative effort to reform Title III to prevent the rampant proliferation of drive-by filings has progressed, and it is worth tracking.

UPDATE: On March 28, 2018, forty-three Democratic senators united to protest the proposed H.R. 620. The filibuster-proof bloc sent a letter to Majority Leader Mitch McConnell warning that the proposal “will never receive a vote in the United States Senate during the 115th Congress.” The letter also points out the H.R. 620, as contemplated, would do nothing to curb plaintiffs from pursuing damages claims under state/local laws. The senators instead favor investing in greater education about Title III’s requirements and the development of a mediation program.

A version of this article originally appeared in the Take 5 newsletter An Assortment of Legal Issues Hospitality Employers Should Be Considering This Year.”

On March 7, 2018, the New York City Council formally introduced “The Stop Sexual Harassment in NYC Act,” a package of 11 bills, aimed at strengthening protections against, and remedies for, sexual harassment in the workplace. As discussed below, four of these bills, if enacted, would significantly expand the obligations of many employers to prevent sexual harassment and would increase all private NYC employers’ vulnerability to sexual harassment claims.

Mandatory Sexual Harassment Training

Int. 632 would require all private NYC employers with 15 or more employees to conduct annual, “interactive” training on sexual harassment for all full-time and part-time employees who work more than 80 hours in a calendar year in NYC. The training could be in person or through an online program.

Specifically, the annual, interactive training for employees must include the following:

  • An explanation of sexual harassment as a form of unlawful discrimination under local, state and federal law;
  • A description of what sexual harassment is and is not, using practical examples;
  • A description of the employer’s internal complaint processes, if any, available to employees to address sexual harassment claims;
  • A description of the complaint process available through the Commission on Human Rights (“Commission”), the New York State Division of Human Rights and the federal Equal Employment Opportunity Commission, including contact information;
  • An explanation, with examples, of what constitutes “retaliation” under the New York City Human Rights Law (“NYCHRL”); and
  • A discussion of the importance of bystander intervention.

In addition to this general training requirement, NYC employers would also be required to train their supervisors and managers annually on subjects such as their role in the prevention of harassment and retaliation, and how to address sexual harassment complaints.

The bill defines “interactive training” as “participatory teaching whereby the trainee is engaged in a trainer-trainee interaction, use of audio-visuals, or other participatory forms of training as determined by the commission.” The bill further directs the Commission to develop online training modules for small, medium and large workplaces that would satisfy the training requirement, and to allow for the electronic provision of certification each time an employee completes a training module.

Additionally, covered employers would be required to maintain records, for three years, of all training, including a signed employee acknowledgement that must include (i) the date, time, title, duration and location of the training; (ii) whether the training was conducted live or online; and (iii) the name of the person(s) who conducted the training.

If passed, Int. 632 will take effect on September 1, 2018. Penalties for violations of the law would range from $100-$500 for the first violation and from $500-$2,000 for each succeeding violation. However, an employer would be able to avoid a penalty for a first-time violation if the employer could prove within 60 days of the issuance of the notice of violation that it has complied with the law. 

New Sexual Harassment Poster

Int. 630 would require all employers in New York City to post a sexual harassment rights and responsibilities poster in English and Spanish, and to provide new hires with an information sheet on sexual harassment, which would both be created by the Commission and made available to employers.  If passed, Int. 630 would take effect 120 days after enactment and would carry civil penalties for non-compliance.

More Time to File a Complaint

Int. 663 would lengthen the statute of limitations for harassment claims arising under the NYCHRL. Instead of the current one-year statute of limitations, aggrieved employees would be permitted to file complaints up to three years from the date of the alleged harassment. This longer statute of limitations would apply to claims “based on unwelcome conduct that intimidates, interferes with, oppresses, threatens, humiliates or degrades a person based in whole or in part on such person’s gender.”  This bill would take effect immediately upon enactment.

Expanded Employer Coverage under the NYCHRL

Currently, the NYCHRL applies to employers with four or more employees. Int. 657 would eliminate that employee threshold with respect to gender-based harassment claims, thereby subjecting all NYC employers to potential liability for sex harassment under the NYCHRL.[1]

Conclusion

We will continue to monitor these bills as the legislation proceeds and provide updates on any significant developments.

[1] New York State expanded sexual harassment and discrimination protections to all employees in 2015.

Our colleagues , at Epstein Becker Green, have a post on the Health Employment and Labor blog that will be of interest to many of our readers in the retail industry: “Sixth Circuit Finds Title VII Covers Discrimination Based on Transgender Status.”

Following is an excerpt:

In a significant decision on Wednesday, March 6, 2018, the U.S. Court of Appeals for the Sixth Circuit held in EEOC v. R.G. &. G.R. Harris Funeral Homes that discrimination against a worker on the basis of gender identity or transitioning status constitutes sex discrimination that violates Title VII.

In R.G. & G.R., the funeral home’s owner fired funeral director Aime Stephens after she informed him she intended to begin a gender transition and present herself as a woman at work. In finding gender identity to be covered by Title VII, the Sixth Circuit also upheld the EEOC’s claim that the funeral home’s dress code, which has different dress and grooming instructions for men and women, discriminates on the basis of sex. …

Read the full post here.

Our colleague  at Epstein Becker Green has a post on the Technology Employment Law blog that will be of interest to our readers in the retail industry: “The GDPR Soon Will Go Into Effect, and U.S. Companies Have to Prepare.”

Following is an excerpt:

The European Union’s (“EU’s”) General Data Protection Regulations (“GDPR”) go into effect on May 25, 2018, and they clearly apply to U.S. companies doing business in Europe or offering goods and services online that EU residents can purchase. Given that many U.S. companies increasingly are establishing operations and commercial relationships outside the United States generally, and in Europe particularly, many may be asking questions akin to the following recent inquiries that I have fielded concerning the reach of the GDPR:

What does the GDPR do? The GDPR unifies European data and privacy protection laws as to companies that collect or process the personally identifiable information (“PII” or, as the GDPR calls it, “personal data”) of European residents (not just citizens). …

Read the full post here.

Featured as our top story on Employment Law This Week: Me too At Work – Sexual misconduct in the C-Suite leads to shareholder lawsuits.

Last month on Employment Law This Week, you heard that sexual misconduct allegations would start impacting shareholder value and reputation. Well, now we’ve got a case study in Wynn Resorts. After the Wall Street Journal uncovered multiple sexual misconduct allegations against Casino mogul Steve Wynn, the company’s stock fell nearly 20%. Wynn resigned a week later, but the company’s troubles were far from over. The company’s  stock has lost $3 billion in value. The first shareholder lawsuit was filed the day Wynn resigned, and to date three suits by shareholders claim that Wynn and the Board breached their fiduciary duties to the company and its shareholders. Bill Milani, from Epstein Becker Green, has more.

Watch the segment below and read our recent post.

Retail employers with international operations and who have executives who engage in cross-border travel may particularly wish to read and take note of Daniel Levy’s post, “It’s a Brave New World: Protecting Trade Secrets When Traveling Abroad with Electronic Devices.”

Following is an excerpt:

Consider the following scenario: your organization holds an annual meeting with all Research & Development employees for the purpose of having an open discussion between thought leaders and R&D regarding product-development capabilities. This year’s meeting is scheduled outside the United States and next year’s will be within the U.S. with all non-U.S. R&D employees traveling into the U.S. to attend. For each meeting, your employees may be subject to a search of their electronic devices, including any laptop that may contain your company’s trade secrets. Pursuant to a new directive issued in January 2018 by the U.S. Custom and Border Protection (“CBP”), the electronic devices of all individuals, including U.S. citizens and U.S. residents, may be subject to search upon entry into (or leaving) the U.S. by the CBP. …

Read the full post here.

What happened?

On January 17, 2018, a federal judge stayed enforcement of New York City’s (“City”) recently-enacted Fast Food Deductions Law (the “Deductions Law”). The order, entered by consent, was entered in a lawsuit challenging the law filed against the City by two leading foodservice advocacy organizations (Restaurant Law Center, et al. v. City of New York, et al., 1:17cv9128).  The stay is currently in place until the earlier of the determination of the parties’ dispositive motions or March 30, 2018.

What is the Fast Food Deductions Law?

The Deductions Law, which took effect November 26, 2017, was enacted as part of New York City’s Fair Work Week Laws to facilitate fast food employees’ ability to contribute to not-for-profit organizations that advocate on their behalf. Under the Deductions Law, “fast food employers” (defined in the law) must honor employee requests to deduct voluntary payments from their paychecks and must send the funds to the designated not-for-profit organization, provided it has a registration letter from New York City’s Department of Consumer Affairs (“DCA”).  The law does not permit contributions to “labor organizations,” as defined in the law.

Who is challenging the Deductions Law and why?

On November 21, 2017, the Restaurant Law Center and the National Restaurant Association, together, filed a lawsuit against the City challenging the law alleging that it:

  1. Violates the First Amendment because it requires fast food employers to “calculate, deduct, collect, administer, and remit employee deductions to political and ideological groups that employers may choose to oppose, and should not be forced to support.”
  2. Is preempted by the National Labor Relations Act because it “purports to grant [New York City] the authority to decide what is and is not a “labor organization”; and
  3. Is preempted by the Labor Management Relations Act (“LMRA”) because it “requires covered employers to pay funds without regard to the restrictions of the [LMRA], exposing employers to federal criminal liability and an impossible choice between compliance with federal or local law.”

What should employers do now?

Continue to monitor developments in this area. We will continue to provide updates on further developments.

On January 11, New York’s City Council passed Int. No. 1186-A, which amends the New York City Human Rights Law to expand the definition of the terms “sexual orientation” and “gender.”  Previously, the law defined sexual orientation as meaning “heterosexuality, homosexuality, or bisexuality.” The new definition takes a broader view and offers a more nuanced definition that recognizes a spectrum of sexual orientations, including asexuality and pansexuality.  As amended, the law defines sexual orientation as:

[A]n individual’s actual or perceived romantic, physical or sexual attraction to other persons, or lack thereof, on the basis of gender. A continuum of sexual orientation exists and includes, but is not limited to, heterosexuality, homosexuality, bisexuality, asexuality, and pansexuality.

The law also offers clarity on the definition of “gender,” and continues to include a person’s gender-related self-image, appearance, behavior, expression, or other gender-related characteristic within its scope.

The new law will take effect on May 11, 2018.