Supreme Court Rules That President Obama's NLRB Recess Appointments Were Invalid

The United States Supreme Court unanimously ruled on June 26, 2014 that President Obama’s three recess appointments to the National Labor Relations Board (NLRB) were unconstitutional and therefore, invalid. The Court’s ruling likely means that hundreds of cases the NLRB decided in 2012 and 2013, while the recess appointees were seated, are now invalid. Many of the affected cases proved controversial, including a decision protecting workers from discipline for criticizing their employer on social media sites and a decision affording unions greater rights in cases of employee discipline.

The controversy began in January 2012 when President Obama named three new members to the NLRB, which at that time was lacking a quorum because of Senate opposition to the President’s appointees in the Senate. President Obama invoked his presidential power to make recess appointments to the NLRB while the Senate was away on holiday break pursuant to a provision of the Constitution which allows presidents to fill agency and other vacancies during a recess without Senate confirmation. Presidents have historically used this power to bypass the Senate confirmation process and to install their appointees during periods when the Senate was not in session.

Noel Canning, a soft drink bottler based in Washington, subsequently appealed an adverse NLRB decision on the grounds that President Obama unlawfully appointed the NLRB members while the Senate was still in session. Although the Senate had been on holiday break when President Obama made the appointments, it was still holding “pro forma” sessions, during which it briefly gaveled in and out every three days without conducting any business. The D.C. Circuit Court of Appeals agreed with Noel Canning and held that President Obama lacked the authority to make the appointments. The D.C. Circuit went further and narrowly defined a “congressional recess” to include only the period between the year-long formal sessions of Congress, rather than a short break in proceedings.

On further appeal, the Supreme Court agreed that President Obama’s appointments were unconstitutional, but rejected the D.C. Circuit Court’s narrow definition of a “congressional recess.” The majority opinion held that presidents may only exercise their appointment powers during congressional recesses of ten days or more.

The Court’s decision will now force the NLRB to revisit the rulings made by the invalidly appointed Board members. Given the Board’s current pro-union majority, however, it is unclear whether such revisiting will make much of a difference. In response to the Supreme Court’s decision, NLRB Chairman Mark Gaston Pearce commented: “We are analyzing the impact that the Court’s decision has on Board cases in which the January 2012 recess appointees participated. Today, the National Labor Relations Board has a full contingent of five Senate-confirmed members who are prepared to fulfill our responsibility to enforce the National Labor Relations Act. The Agency is committed to resolving any cases affected by today’s decision as expeditiously as possible.”

Roetzel & Andress will continue to monitor the fallout from the Court’s decision and its impact on both union and non-union employers.

Nathan Pangrace


NFL / Jimmy Graham Grievance Highlights Importance of Social Media, Arbitration in Employment Arraignments

The New Orleans Saints Tight End Jimmy Graham could be facing the loss of over $5 million dollars, all due to his twitter page. The All-Pro football player is in the middle of an ongoing arbitration process with the NFL Management Council over whether or not his official position on the team is as a Tight End or a Wide Receiver. Graham was recently ‘franchise tagged’ by the Saints, meaning he has to play the 2014 season under a one-year contract. The Saints franchise tagged Graham as a Tight End, his official position on their roster, meaning he will be owed roughly $7 million dollars this season. However, Graham argues that he lines up as a Wide Receiver a majority of the time, meaning he should be owed the $12.3 million that a franchise tagged wide receiver would get.

Among the key pieces of evidence the Saints will present is that Graham refers to himself as “New Orleans Saints Tight End #80” on his twitter page, an admission that could cost him nearly $5 million dollars if the arbitration rules in favor of the NFL. This situation represents an important, two-fold takeaway for employers and employees.

First, it highlights again the importance of caution with social media postings. Even something as innocuous as a twitter bio can come back to haunt an individual, even if it isn’t to the tune of $5 million dollars per year. This caution needs to be exercised by both employers and employees alike.

More importantly, the ongoing grievance procedure highlights the usefulness of arbitration clauses for employers. Even if an employee is not due the millions that an NFL player would receive, a well-crafted arbitration clause in an employment contract would make potential litigation far less costly and time consuming, as it would channel certain employee claims directly to binding arbitration, as opposed to lengthy court litigation. 

Contact: Marcus Pringle

Obama Administration Announces Executive Order Protecting LGBT Employees of Federal Contractors

Last week, the White House announced that President Obama plans to sign an executive order barring federal contractors and subcontractors from discriminating on the basis of sexual orientation or gender identity.  The order is expected to be finalized in the coming weeks.

According to the Center for American Progress, federal contractors legally bound to comply with the executive order employ approximately 22% of all U.S. civilian workers. That means that nearly a quarter of the American workforce will be entitled to LGBT workplace protections, once President Obama signs the order.  There continue to be 29 states that offer no employment protections on the basis of sexual orientation and 32 with no protections based on gender identity.  Many LGBT workers in those states will now have workplace protections for the first time ever. 

The president’s executive order would stipulate that contracts with the federal government worth more than a certain amount – $10,000 is the general threshold – require the cosigner to have a policy against LGBT discrimination.  In other words, if a company wants to do business with the federal government, the executive order will require that company to have internal policies and rules prohibiting LGBT discrimination.

Last year, the Senate passed a version of the Employment Non-Discrimination Act (ENDA) – which would ban all employers from firing, refusing to hire, or otherwise discriminating against any employee on the basis of sexual orientation or gender identity – but its chances of passing the Republican-controlled House remain slight.  The latest version of the ENDA includes a religious freedom exemption for employers; meaning that an employer will be exempt from the ENDA if the ban on sexual orientation discrimination violates the religious beliefs of the employer.  It will be interesting to see if the executive order includes any similar type of religious freedom exemption.   

It will also be interesting to see if the Supreme Court’s decision in Sebelius v. Hobby Lobby affects the executive order.  Later this week or early next week the Supreme Court is expected to announce its decision in the Sebelius v. Hobby Lobby case.  That decision will determine whether for-profit, private corporations have religious freedom rights.  If the Court rules in favor of Hobby Lobby and finds that corporations do have religious freedom rights, then private employers will have standing to sue the federal government for requiring them to engage in practices that violate the religious beliefs of their owners – whether that’s providing contraception or ruling out potential employees, or discriminating against current ones, based on their sexual orientation or gender identity.  If the Supreme Court does rule in favor of Hobby Lobby, it is likely that some company (ies) will challenge the executive order on the basis of religious freedom and discrimination.  The challenging company (ies) will argue that the religious beliefs of their owner(s) would be violated by a policy that prohibits sexual orientation discrimination, and therefore the executive order has a religious based disparate impact on them by making them ineligible for federal contracts.

Stay tuned for further updates on these evolving areas of employment law. 

Contact: Alex Kipp


Six Tips for Accommodating Disabled Employees

As most employers (hopefully) know, the Americans with Disabilities Act (ADA) requires them to provide disabled employees with reasonable accommodations that allow the employees to perform their jobs. The ADA’s regulations are complex, however, and we often get questions from employers about when, why, or how they should accommodate a disabled employee.  Below are six tips addressing issues that frequently arise under the ADA:
  • Request for Accommodation: The disabled employee has the obligation to request an accommodation from the employer. In making the request, however, the employee may use “plain English” and does not need to mention the ADA or the words “reasonable accommodation.” Also, the employee may make the request orally rather than in writing. 
  • Interactive Process: Once the disabled employee requests an accommodation, the employer must engage the employee in an “informal interactive process.” This process is typically a conversation in which the employer asks questions about the nature of the employee’s disability and limitations. The purpose is to clarify what the employee needs and identify an appropriate accommodation.
  • Doctor’s Note: An employer can require the employee to provide medical documentation from his or her physician describing the employee’s disability and limitations. If the employee’s documentation is insufficient, the employer can require him or her to visit the company doctor or a doctor of the employer’s choice.  The exception to this rule is that the employee cannot ask for medical documentation when the employee’s disability is “obvious” (e.g., an employee who uses a wheelchair).
  • Leave: Leave is a form of reasonable accommodation. A disabled employee may take leave for obtaining medical treatment or recuperating from an illness or an episodic manifestation (i.e. a flare up) of the disability. Employers should generally allow the employee to exhaust paid leave first, then provide unpaid leave as necessary. Employers must provide leave under the ADA in addition to other types of leave required federal law, such as family and medical leave.
  • Reassignment: Reassignment to a vacant position is also form of reasonable accommodation. The disabled employee must be qualified for the vacant position, however. Also, reassignment is not required if it would violate a collective bargaining agreement or an established seniority system. 
  • Undue Hardship: An employer is not required to provide an accommodation if it would impose an undue hardship. Whether an undue hardship exists depends upon the financial resources of the employer and the extent to which providing the accommodation would disrupt the employer’s operations.
The tips above are not an exhaustive list of an employer’s responsibilities in providing reasonable accommodations under the ADA. For additional guidance or questions about accommodating disabled employees, please contact a Roetzel & Andress attorney.

Contact: Nathan Pangrace

Deadline Looming to Amend Retirement Plans for Same-Sex Benefits

The recent IRS Notice 2014-19 provides much needed guidance on how qualified retirement plans should treat the marriages of same-sex couples following the Supreme Court’s decision in United States v. Windsor. The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act (“DOMA”) that barred married same-sex couples from being treated as married under federal law.

Many questions were left unanswered in the wake of the Windsor decision, most notably those relating to the application of the decision (including retroactive application) on federal laws affecting employee benefits. Employers were left questioning how, if at all, they needed to change their plans to comply with the Supreme Court’s decision.

Prior to this most recent guidance, the IRS had issued Revenue Ruling 2013-17 and a different set of Frequently Asked Questions providing that same-sex couples legally married in a jurisdiction with laws authorizing same-sex marriage will be treated as married for federal tax purposes, regardless of whether the couple resides in a state where same-sex marriage is recognized. This IRS approach recognizing same-sex marriages based on the “state of celebration” took effect September 16, 2013. At that time, the IRS promised to issue additional guidance regarding the retroactive impact of the Windsor decision. The most recent guidance now addresses the retroactivity issue.

Notice 2014-19 clarifies that, effective as of June 26, 2013, retirement plans must be administered in a manner that reflects the Windsor ruling. Notably, Notice 2014-19 provides that plans are not required to retroactively recognize same-sex spouses prior to that date. In addition, plans that initially applied a “state of residence” approach, as opposed to the IRS’ state of celebration approach, are not required to retroactively adopt the state of celebration approach prior to September 16, 2013. (A state of residence approach means the plan extended spousal rights and benefits only to same-sex spouses legally married and residing in a jurisdiction where same-sex marriage is legal or recognized.)

The deadline for adopting plan amendments pursuant to the Notice is the later of (1) December 31, 2014 or (2) the deadline under Revenue Procedure 2007-44 (i.e., the later of [A] the end of the plan year in which the change is first effective or [B] the due date of the employer’s tax return for the tax year that includes the date on which the change is first effective). Special amendment timing rules apply to governmental plans and 403 plans. In the case of a governmental plan, an amendment does not need to be adopted until the end of the first regular legislative session that ends after December 31, 2014. The deadline for adopting an amendment to a 403(b) plan is the last day of the plan’s remedial amendment period.

Before an employer decides to implement the Windsor decision retroactively, the sponsor should discuss these issues with their legal counsel. Recognizing same-sex spouses for all purposes prior to June 26, 2013 may result in requirements that are difficult to implement and create unintended consequences.