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Supreme Court to decide questions of authority in arbitration enforcement

By Natalie M. McMahan

This article appeared as a Guest Column in The Journal Record on November 18, 2021.

Attorney Natalie M. McMahan is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

Arbitration clauses, often included in consumer and employment agreements as an alternative to litigation, require legal disputes to be resolved by the decision of a private third party rather than a court. The 1925 Federal Arbitration Act (FAA) sought to enforce arbitration agreements involving interstate or foreign commerce by limiting courts from reviewing and setting aside arbitration awards. Disputes over federal jurisdiction to confirm or vacate arbitration awards continues to be hotly contested, with the case of Badgerow v. Walters reaching the Supreme Court this term.

On Nov. 2, the Supreme Court heard oral argument in Badgerow v. Walters. In this case, a terminated employee, Badgerow, filed a claim with an arbitration panel, pursuant to her employment contract’s arbitration clause. Badgerow sought damages for tortious interference of contract and for violation of Louisiana’s whistleblower law. When the arbitration panel sided with her former employer, REJ Properties Inc., Badgerow filed a lawsuit in Louisiana state court alleging her former employer obtained the award by fraud. REJ Properties Inc. removed the case to federal court, claiming the underlying issues were based on federal securities law.

The federal court found that it had jurisdiction in the case due to the questions of federal law and confirmed the arbitration award following the “look through” approach, as established in a previous decision, Vaden v. Discover Bank, regarding motions to compel arbitration. In other words, the federal court “looked through” to the underlying dispute involving federal securities law.

At issue is whether federal courts have jurisdiction to confirm or vacate arbitration awards when the only basis for jurisdiction is that the underlying dispute involves a question of federal law. Federal courts, unlike state courts, have limited jurisdiction that can only hear cases and controversies where the Constitution or Congress has granted them such authority.

During oral argument, SCOTUS justices’ questions revolved around two points: one, the Supreme Court’s previous statements that the FAA’s provisions do not automatically establish federal jurisdiction, and two, whether the “look through” approach to determine federal jurisdiction over motions to compel arbitration also applies to motions to vacate or confirm an arbitration award. The ultimate decision likely comes down to whether SCOTUS will extend its reasoning in Vaden to allow federal courts to confirm or vacate arbitration awards where federal courts would have jurisdiction to hear the underlying dispute had the issue been litigated.

Businesses should consider revisiting the arbitration clause language included in its contracts with award confirmation in mind.


For more information on this alert and its impact on your business, please call 405.552.2437 or email Natalie M. McMahan.

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Biden administration aims to limit non-compete agreements

By Janet A. Hendrick and Martin J. Lopez III

This article appeared as a Guest Column in The Journal Record on July 14, 2021.

attorneys Martin J. Lopez III and Janet A. Hendrick

Martin J. Lopez III and Janet A. Hendrick

On July 9, President Biden issued Promoting Competition in the American Economy, a sweeping policy-based executive order that purports to encourage innovation and competition in the American workplace. Earlier that day, the White House issued a press release addressing the initiatives, one of the most notable being a goal of “banning or limiting non-compete agreements and unnecessary, cumbersome occupational licensing requirements that impede economic mobility.”

Although non-competes and similar restrictive covenants are banned or limited in a handful of states, including Oklahoma, they remain alive and enforceable in most states, including Texas, as long as they meet certain requirements – generally that they are reasonable in time and territory and necessary to protect a legitimate business interest. A 2016 U.S. Department of the Treasury report cited data showing that 15% of workers without a four-year college degree were subject to non-competes, as were 14% of workers bringing home less than $40,000 per year. The Biden administration claims that “[c]ompetition in labor markets empowers workers to demand higher wages and greater dignity and respect in the workplace” and that “[r]oughly half of private-sector businesses require at least some employees to enter non-compete agreements, affecting some 36 to 60 million workers.”

So, does the Biden administration’s executive order prohibit or limit non-competes? The short answer is “no” or at least “not yet.” The executive order creates the White House Competition Council and directs federal rulemaking authorities to consider competition-related issues. Specifically, the order asks the Federal Trade Commission to exercise its statutory rulemaking authority to curtail what it deems “the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.”

President Biden’s recently confirmed FTC chair, Linda Khan, appears to be a zealous advocate of the goals of the executive order, at least as it relates to the use of non-compete agreements in the employment context. In a 2019 law journal article, she took the position that non-compete agreements “deter workers from switching employers, weakening workers’ credible threat of exit, and diminishing their bargaining power” and suggested that “the FTC might consider engaging in rulemaking on this issue.”

While such rulemaking is a possibility, it is unclear to what extent the FTC will address the issue. The administration will also certainly face multiple legal challenges by businesses, leading some to predict the FTC will approach this rulemaking cautiously.

Phillips Murrah’s Labor and Employment attorneys continue to monitor this development.


Janet Hendrick portrait

Janet Hendrick is a Shareholder and a member of the Firm’s Labor and Employment Practice Group.

For more information on this alert and its impact on your business, please call 469.485.7334 or email me.

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Hendrick presenting at 2021 Texas Diversity Equity & Inclusion Conference

Janet Hendrick, a Shareholder in Phillips Murrah’s Dallas office, will present at the 6th Annual Texas Diversity Equity & Inclusion (DEI) Conference on June 16, 2021. The conference will run from June 15-17 and is sponsored by Toyota, Texas Capital Bank, Southwest Airlines, Parkland Hospital, and other partners.

Janet Hendrick

Janet Hendrick is a Director and member of the Firm’s Labor and Employment Practice Group.

Hendrick will discuss “The Future of DEI Efforts: What We’ve Learned and How Companies Can Do Better,” with the goal of informing attendees on the state of DEI efforts, including what the events of 2020 have taught us and how companies can make their DEI efforts more effective.

“2020 brought many changes in the workplace, including an increase in DEI initiatives,” Hendrick said. “While many companies have ramped up their efforts, studies show DEI initiatives are still falling short of accomplishing necessary change in the business world. In this session, we will discuss the impact of 2020 events on DEI efforts, advances in DEI, and what’s ahead for DEI in the workplace.”

Conference attendees will network with other business professionals from around the state, hear remarks from national speakers about the importance of diversity in the workplace, and attend breakout sessions designed to help businesses to grow and thrive.

Janet Hendrick is an experienced employment lawyer who frequently speaks on matters relating to diversity and inclusion. She is also a member of the North Texas LGBT Chamber of Commerce’s Governing Committee.

For more information about the conference, visit the North Texas LGBT Chamber of Commerce’s website here.

United States Department of Labor launches Essential Workers, Essential Protections initiative

By Phoebe B. Mitchell

In another demonstration of its pro-worker agenda, President Biden’s Administration has launched a new webpage: Essential Protections During the COVID-19 Pandemic[1]. The webpage, created by the United States Department of Labor (DOL)’s Wage and Hour Division (WHD), is aimed at furthering the WHD’s goal of “protecting and enhancing the welfare of workers during the COVID-19 pandemic.”

Phoebe B. Mitchell is a litigation attorney who represents individuals and both privately-held and public companies in a wide range of civil litigation matters.

Online trainings are among the many resources provided in the Essential Protections webpage. The training page, titled Essential Workers, Essential Protections,[2] states: “Workers in grocery stores, health care, delivery services, retail establishments, agriculture, and other essential industries have remained on the job despite many potential risks to their own health or that of their families. The Wage and Hour Division is committed to ensuring that these, and all workers, receive the workplace protections provided under the law.”

The Essential Protections During the COVID-19 Pandemic webpage includes a new Frequently Asked Questions platform which combines many existing articles the WHD has promulgated during the COVID-19 pandemic. The Frequently Asked Questions address many common issues facing employers and employees during the pandemic, including questions about pay under the Fair Labor Standards Act and employee leave under the Family and Medical Leave Act. Additionally, the platform touches upon the plethora of sub-topics affecting employees amid the pandemic, such as business closures, COVID-19 testing in the workplace, quarantining, and teleworking.

The WHD’s revamped website also includes a page entitled “How to File a Complaint.”[3] The page includes user-friendly information for potential claimants regarding the necessary steps to file a complaint, the investigative process, and the nearest WHD office.

The DOL’s renewed focus on worker rights means employers should be more vigilant than ever to comply with federal, state, and local employment laws. Phillips Murrah’s labor and employment attorneys continue to monitor developments to provide up-to-date advice to our clients regarding the DOL’s policies.


For more information about this article, please call Phoebe B. Mitchell at 405.606.4711 or email her at pbmitchell@phillipsmurrah.com.

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Attorney Lauren Voth leads SmartTalks presentation on medical marijuana in the workplace

SmartTalks Virtual User Group Meeting:
Medical Marijuana in the Workplace

Thursday, Aug. 15
12 PM to 1 PM (CST)

Free to participate with registration

 

Employers can still enforce drug-free workplace policies and implement drug-testing policies even after their state legalizes Medical Marijuana.  However, you must ensure your policies comply with state law.

Phillips Murrah Attorney Lauren Symcox Voth will review what your company can do to ensure the safety and security of your workforce and organization even after the legalization of medical marijuana.

To register, click here.

Presenter:

Lauren Voth

Lauren Symcox Voth

Lauren Symcox Voth is a member of Phillip’s Murrah P.C. Labor and Employment Practice Group. She represents individuals and both privately-held and public companies in litigation, administrative matters, mediations and negotiations. Specifically, Lauren has experience representing large and small corporations in employment-related matters.

Possible Relief for FMLA Administration Pain Points

It’s no secret that employers have found administration of leave under the Family and Medical Leave Act (FMLA) to be a significant pain point. Relief, however, may be on the way.

In a spring regulatory agenda notice, the U.S. Department of Labor announced that it is considering making some changes to the FMLA. The Department has asked the public for feedback on how to:

“(a) better protect and suit the needs of workers; and (b) reduce the administrative and compliance burdens on employers.”

Although DOL has released no specifics, many believe that the White House’s labor policy adviser, James Sherk, will be the driving force behind any upcoming changes.  Sherk’s earlier outspokenness about the shortcomings of the FMLA leave provides good insight into his thoughts about what needs to change.

In his 2007 Heritage Foundation report, Sherk outlined his views on employee FMLA abuse. His report portends changes could be on the horizon that will:

  • narrow the definition of what constitutes “a serious health condition;”
  • provide more power to employers to investigate an employee’s condition;
  • allow employers to require workers to take leave in half-day, rather than smaller, increments; and
  • allow employers to count FMLA leave against attendance bonus policies.

What changes could mean for employers

If Sherk really is the man behind the plan, employers may get the relief they seek.

First, limiting the definition of “a serious health condition” should make it more difficult for employees to abuse the FMLA. In his report, Sherk highlighted several instances where “irresponsible” employees were taking advantage of the current vague definition by calling routine colds, stress, or even an injured toe a “serious health condition”—even when the condition has no impact on the employee’s ability to perform job duties. This would also help to lessen the burden on other employees who are required to pick up the slack when co-workers abuse FMLA leave.

Second, providing employers with more power to investigate employees’ conditions would resolve the communication barrier between employers, employees, and health care providers when issues surrounding the complex and lengthy paperwork arise—satisfying the goal of reducing administrative burdens.

Third, allowing employers to require workers to take leave in half-day increments would decrease the heavy administrative burden of tracking an employee’s leave in minute increments. Rather than tracking the 12-weeks of allowed FMLA leave a minute at a time, a more manageable tracking unit of half-day increments would make what once was a monumental task for employers more manageable.

Finally, allowing employers to count FMLA leave against attendance bonus policies would both help employees with favorable attendance not feel cheated when those with spotty attendance are nonetheless rewarded and incentivize employees not to abuse FMLA. The DOL has found that because an employer may not punish an employee for using FMLA, even workers who miss 50 days a year due to FMLA leave can still be eligible for a perfect attendance bonus, diluting the incentive these bonuses are intended to provide. Correcting this would allow employees with excellent attendance to reap due awards and hit FMLA abusers where it hurts—their bank account.

Conclusion

While employers will have to wait for definite answers as to what changes, if any, we will see, the good news is that it appears that employer concerns about FMLA abuse are not falling on deaf ears. In the meantime, employers should continue to monitor the situation and hope that relief is on the way.


Janet Hendrick Profile portrait

Janet A. Hendrick

By Janet A. Hendrick and Matt Andrus

If you have questions about this decision, contact Janet Hendrick, who represents and counsels employers on issues including proper classification, in the Dallas office of Phillips Murrah at (214) 615-6391 or at jahendrick@phillipsmurrah.com.

Matt Andrus is a second-year law student at Oklahoma City University and works as a law clerk for Phillips Murrah during Summer 2019.

Hendrick to give keynote presentation at Texas Business Equality Conference

Janet Hendrick

Janet Hendrick is an experienced employment litigator who tackles each of her client’s problems with a tailored, results-oriented approach.

Janet A. Hendrick, Director and member in the Firm’s Labor and Employment Practice Group, will provide an update on legal developments in LGBTQ workplace protections on June 11 at the 4th Annual Texas Business Equality Conference hosted by the North Texas GLBT Chamber of Commerce.

Her presentation will highlight current state and federal legislation, upcoming Supreme Court cases, and best practices for maintaining compliance and educating employers on navigating areas where potential workplace could arise.

Attendees will network with other business professionals from around the state, hear remarks from national speakers about the importance of diversity in the workplace, and attend breakout sessions designed to help businesses to grow and thrive.

Janet is an experienced employment litigator who tackles each of her client’s problems with a tailored, results-oriented approach. Whether training managers on employment law compliance to minimize an employer’s legal risk or representing the employer in court or arbitration, she brings years of experience and in-depth legal knowledge to deliver results.

For more information about the conference, visit the North Texas GLBT Chamber’s website here.

Medical Marijuana and Drug Testing in the Construction Industry

This article discusses procedures the Oklahoma construction industry employers need to develop with the legalization of medical marijuana, including how to handle drug testing.

With the passage of State Question 788 and the decision by the Governor not to call a special session, many of the ancillary questions regarding the impact of medical marijuana will remain unanswered until the next legislative session in 2019. But, in jobs where safety is key, such as construction, employers will need to develop procedures now to ensure that they are complying with safety rules and regulations as well as not stepping on an employee’s rights.

Q: How does the passage of State Question 788, medical marijuana, affect my safe work site and drug free policies?

A: The provisions of State Question 788 provide that an employer can take action against an employee who uses or possesses medical marijuana at the place of employment or during work hours. Thus, a contractor’s safe work site policy that prohibits the use of drugs or alcohol on the job is allowable under the law. However, unless an employer can show an imminent risk of losing a monetary or licensing benefit under federal law or regulation, an employer cannot refuse to hire, terminate, or otherwise discriminate against an employee simply because the employee has a medical marijuana card.

Q: If one of my employees with a medical marijuana card is “high” on the job can I still terminate him or her?

A: Maybe. Contractors will need to carefully differentiate between being impaired at work (ie, under the influence of marijuana and its attendant effects) and drug testing positive for medical marijuana although the employee may not be impaired. Unlike alcohol, scientific research has not been able to put a specific number on the THC levels (the compound in marijuana that makes one “high”) that impairs a person’s ability to drive or work safely—and THC may appear in a blood or urine screen well after it is consumed. So, unless the legislature choses a legal level of THC, the key will likely be whether, based on an objective observation, the employee was able to safely function.

Q: My company is working on federal projects, how can I mesh the state law requirements and federal law requirements?

A: Federal law still considers marijuana to be a Schedule I Narcotic under the Controlled Substances Act. Thus it is against federal law to consume or possess marijuana, medical or not. Additionally, most, if not all, federal projects are subject to the federal Drug Free Workplace Act which requires employers to have a drug free work place policy prohibiting the unlawful possession or use of drugs in the workplace and make an ongoing good faith effort to maintain a drug free workplace. These policies include requiring the employee to report to the employer and the employer to report to the contracting agency any workplace criminal drug conviction. However, the distinctions are fine and the interplay between federal law and the imminent risk of losing federal contracts or licensing has yet to be defined by Oklahoma or Federal courts and not by the federal or state government.

ADA Lawsuits Add Pressure to Business Websites

The Americans with Disabilities Act (ADA) prohibits discrimination against people with disabilities in several areas, including employment, transportation, public accommodations, communications, and access to government programs and services.

Kathryn Terry

The emphasis of Kathryn D. Terry’s litigation practice is in the areas of insurance coverage, labor and employment law and civil rights defense. She also represents corporations in complex litigation matters.

The third section of ADA, Title III, addresses places of public accommodation, such as retailers, hospitals and state agencies. Under these rules, and in general, places of business are obligated to provide access to physical locations in the form of wheelchair ramps, signs that feature braille, and other means by which patronage of businesses is made possible for disabled persons.

Currently, similar attention is being focused on websites, as many businesses offer information and opportunities and conduct commerce via their website. Lawsuits are being brought claiming that these websites should be fully usable for persons with disabilities, just like brick-and-mortar locations.

To address Title III compliance, the World Wide Web Consortium developed an evolving set of standardized guidelines for improving accessibility to website content. The most recent, widely accepted version is called Web Content Accessibility Guidelines 2.0 AA, commonly referred to as WCAG 2.0 AA, which recommend, among many suggestions, text alternatives to graphics for visual disabilities, and captions to audio for those with hearing impairments.

Within the past few years, growing exponentially in 2017, lawsuits on behalf of disabled persons have been filed claiming website-related violations of ADA Title III. Recently, the lawsuits have been coming in waves, with online retailers being the first obvious targets, followed by online financial institutions, such as banks and credit unions, both large and small.

While there are no laws mandating WCAG 2.0 AA compliance at this time, the absence of any regulatory requirement does not shield businesses from ADA liability under Title III. Most businesses that have more than 15 full-time employees are subject to the ADA, and even if a business has less than 15, Oklahoma’s state law still applies.

However, in Oklahoma, there is a new statute that requires prior notice and an opportunity to cure the website issues in advance of any litigation under state law only. Businesses should consider this statute carefully if they receive a demand or lawsuit of ADA noncompliance for their website.

Many businesses are smartly getting ahead of this issue by reviewing their websites to identify potential accessibility barriers and implementing WCAG 2.0 AA guidelines as part of regular IT upgrades.


By Phillips Murrah Director Kathryn D. Terry

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on May 10, 2018.

Kathryn D. Terry is a director at the law firm of Phillips Murrah.

EEOC lawsuits see sharp increases as action on pending litigation begins

Fall is a time of change. But this fall, the transition from summer isn’t the only change we’re experiencing. This fall has also brought extraordinary action from the Equal Employment Opportunity Commission. Starting in July, the EEOC has filed a flurry of federal lawsuits against both private and public employers.

Byrona J. Maule is a Director and litigation attorney as well as Co-Chair of the Firm’s Labor & Employment practice group. She represents executives and companies in a wide range of business and litigation matters with a strong emphasis on employment matters.

In July 2017, the EEOC filed 20 lawsuits, compared to eight in July 2016, according to EEOC.gov’s announcements. At first, I thought this was some type of anomaly, but it continued into August 2017 with another 20 lawsuits filed, compared to eight last August. In September, they filed a whopping 69 lawsuits, as opposed to 22 in September 2016. To date, the EEOC has filed 241 lawsuits in 2017, compared to 86 in all of 2016. With three months left in 2017, there is no reason to believe the rest of 2017 will trend any differently.

Other changes in the EEOC’s activity include an inclination to file suit against an employer in a single plaintiff case, as opposed to lawsuits in which the outcome would have a broad impact on society. The EEOC’s 2012-2016 Strategic Plan emphasized using litigation mechanisms to identify and attack discriminatory policies and other instances of systemic discrimination. This emphasis seems to have waned.

Considering the life cycle of an EEOC lawsuit from charge to the EEOC’s decision to file a lawsuit takes multiple years, this sharp spike in the number of merit lawsuits being filed does not indicate that workplace behavior has drastically changed in recent months. Rather, the change appears to be in the decision-making process of the EEOC when deciding if it is going to file a lawsuit and what types of lawsuits the EEOC pursues. In one recent case involving Home Depot, the EEOC filed charges despite the company’s position it had reached agreement with the EEOC on the major terms of a settlement.

What does it all mean? It is difficult to know at this point. The real significance for employers is there are significantly more lawsuits being brought by the EEOC in 2017 than at any time between 2012 and 2016. Employers need to be very aware of this, and approach EEOC charges with increased attention.


By Phillips Murrah Director Byrona J. Maule

Gavel to Gavel appears in The Journal Record. This column was originally published in The Journal Record on October 5, 2017.

Byrona J. Maule is a partner and co-chair of the labor and employment practice group at Oklahoma City-based law firm Phillips Murrah.