D.C. Hotline: Ruling voids ambush elections
The National Lumber and Building Material Dealers Association (NLBMDA) applauded the Federal Court decision voiding the National Labor Relations Board’s (NLRB) move to curb employer and employee rights by speeding up union elections. The rule change had gone into effect on April 30 and cut in half the amount of time permitted for voting on unionization. With as few as 15 days notice, employers would have insufficient time to seek counsel and freely speak and negotiate with employees ahead of a vote. A February report by Bloomberg Government found that unions win 87% of elections held within 15 days of a request, while only 58% of workplaces stand by their decision to unionize when they have the time to debate and vote after 36 to 40 days.
Judge James Boasberg of the U.S. District Court in Washington, D.C., found that the NLRB’s December 2011 vote on the “ambush-election” rule was null and void because a quorum of three was not present. The union election rules in force before April 30 will be restored until NLRB takes further action. The court case was brought by the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace. The NLRB is now expected to revote and re-implement rules that have long been pushed for by large labor unions as they face dwindling membership.
Employment practice insurance might cover wage-and-hour defense costs
Employers should not assume that their employment practices liability (EPL) insurance excludes any cost related to a wage and hour claim, according to Barry Buchman, an attorney with Gilbert LLP in Washington, D.C.
It is very common these days for an EPL policy to have an exclusion for claims arising under the Fair Labor Standards Act (FLSA), he acknowledged. This has been partly in reaction to the rise in FLSA litigation over the past 10 years.
But Buchman wants to get the message across to employers that the FLSA exclusion is not the be-all, end-all defense that insurers would have employers believe it is.
Often the costs of defending a claim are covered, and often the costs of defending are more than the ultimate liability, he added.
Typically, plaintiffs allege multiple claims, including under different statutes and common law. Some of the claims are covered by insurance, while others are not. And cases often settle without specifying the amount of settlement for each claim, leaving open the argument that some of the settlement costs might be covered by EPL insurance.
Liability arising under state wage and hour statutes might be covered by insurers as well, said Ken Remson, an attorney with Dickstein Shapiro in Los Angeles.
Some insurance plans, however, state that not only FLSA claims, but also similar state law claims, are not covered by EPL policies.
It’s well-established case law that for an exclusion to be valid the policyholder must be informed clearly and unambiguously about what is not covered. To the extent that an exclusion is ambiguous, the policyholder is entitled to the benefit of the doubt, Remson said.
The word “similar” injects an element of ambiguity, he emphasized. Some requirements under state wage and hour law might be identical to FLSA mandates, while others might be completely different. Many fall somewhere on the continuum between these extremes.
So, in California, when there have been state law claims of daily overtime and violated meal and rest breaks, arbitrators have gone both ways as to whether these claims are clearly encompassed by an FLSA exclusion, Remson remarked.
Read the fine print
Christine Howard, an attorney with Fisher & Phillips in Tampa, Fla., said that in her experience EPL carriers typically will cover defense costs up to a limit, but not FLSA judgments or settlements. EPL insurance “might cover an FLSA retaliation claim, as opposed to the underlying FLSA claim, since those claims are more akin to a discrimination or retaliation claim,” she stated.
Given the uncertainty of the potential exposure, including liquidated damages (double damages) of a large FLSA class action, “carriers may be willing to experience the risk associated with defense costs, but not indemnity,” she remarked.
“Research the various carrier options and assess what makes sense for the business,” Howard recommended. “Do they have potential exposure, for example positions in which employees might claim off-the-clock work or positions that are not consistently found to be exempt under the wage and hour laws?”
Kami Quinn, another attorney with Gilbert, said that there are instances in which employers are willing to pay enough that an insurer will provide FLSA liability coverage, but she said that such coverage is expensive.
Misconceptions about EPL insurance in the context of wage and hour claims are common, according to Howard. Employers often will assume that “there is no coverage at all, or the opposite, they assume their coverage goes beyond defense costs.”
Allen Smith, J.D., is manager, workplace law content, for SHRM.
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Employment situation changes little in May
The unemployment rate held steady at 8.2% — up from 8.1% in April, according to figures released today by the U.S. Bureau of Labor Statistics.
All told, May saw an increase of 69,000 nonfarm jobs. Employment increased in health care, transportation and warehousing, and wholesale trade but declined in construction. Employment was little changed in most other major industries.
Construction employment declined by 28,000 in May, with job losses occurring in specialty trade contractors (-18,000) and in heavy and civil engineering construction (-11,000). Since reaching a low in January 2011, employment in construction has shown little change.
A year ago, the unemployment rate stood at 9.2%.