The U.S. 3rd Circuit Court of Appeals ruled May 16 in NLRB v. New Vista Nursing & Rehab. that President Barack Obama’s 2010 recess appointment of Craig Becker to the NLRB was invalid. Becker, a Democrat, served on the Board from April 5, 2010, through January 3, 2012.

The 3rd Circuit ruling follows the January 25 ruling in Noel Canning v. NLRB from the D.C. Circuit. In April, the NLRB asked the U.S. Supreme Court to review the D.C. Circuit’s decision, and the Board also may ask for Supreme Court review of the new 3rd Circuit ruling.

The normal process for filling NLRB vacancies is for the president to submit nominations for confirmation by the Senate, but the Constitution allows the president to put people on the Board without Senate confirmation if the Senate is in recess. Obama appointed Becker in 2010 and Sharon Block and Richard Griffin in 2012 when the Senate wasn’t meeting regularly but remained in “pro forma” session, meaning some kind of session was gaveled in and out every few days. The Obama administration maintains that the Senate, which had failed to act on previous nominations, was essentially in recess when the appointments were made.

A statement from the Indianapolis office of law firm Faegre Baker Daniels explains that the appellate courts considered clauses in the U.S. Constitution addressing appointments. “At issue is when the president can bypass the U.S. Constitution’s appointment clause, which requires that presidential appointments be subject to the advice and consent of the Senate and, instead, can rely on the recess appointments clause,” the firm’s statement explains.

The Faegre Baker Daniels statement goes on to explain that the 3rd Circuit rejected the NLRB’s contention that to invalidate the recess appointments “would give the Senate too much power to engage in mischief designed to prevent the president from exercising his recess appointment power by manipulating the timing of types of adjournments,” the statement says, adding that the court said such abuse is present under any recess definition and could potentially allow the president to engage in mischief.

Alexander (R-Tennessee) said he would oppose the nominations of Democrats Sharon Block and Richard Griffin because “they continued to decide cases after the federal appellate court unanimously decided they were unconstitutionally appointed.”

Block, Griffin, and Republican Terence Flynn were sworn in as Board members in January 2012 after recess appointments by Obama. The Senate hadn’t voted on previous nominations, so Obama used recess appointees to fill the Board’s vacancies while the Senate was in recess. However, the Senate remained in pro forma session, meaning it was gaveled in and out of session every few days.

On January 25, 2013, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the recess appointments were unconstitutional. The Obama administration has appealed that decision to the U.S. Supreme Court.

With the NLRB’s status uncertain, Obama nominated Block and Griffin to the Board on February 13, 2013. (Flynn resigned in July 2012 after reports that he had inappropriately shared nonpublic Board information with a former NLRB member.) On April 9, Obama nominated Republicans Harry I. Johnson III and Philip A. Miscimarra, along with Democrat Mark Gaston Pearce, the current NLRB chairman. Pearce’s term is set to expire on August 27. If all the nominees are confirmed, the Board will have its full complement of five members.

Alexander criticized Block and Griffin for remaining on the NLRB after the D.C. Circuit’s ruling. “Recess appointment have to be made during recesses, or we have a situation where the president can just ignore Article One [of the U.S. Constitution], the principal curb on the power of the executive,” he said.

Alexander said the presence of Block and Griffin “creates [an] enormous opportunity for confusion and waste” and that Obama should find other nominees. “I agree we want certainty, and the best way to have certainty is to have five confirmed members of the Board. The president could nominate two equally qualified members who did not sit on the NLRB when the court had decided that they were unconstitutionally there,” he said.

In April, Alexander introduced legislation that would prohibit the NLRB from taking any action that requires a quorum until membership constituting a quorum has been confirmed by the Senate, the Supreme Court issues a decision on the constitutionality of the 2012 recess appointments, or the first session of the 113th Congress is adjourned.

The Minnesota Marriage Equality Bill, HF 1054, was signed into law by Governor Mark Dayton on May 14, 2013. Effective August 1, 2013, Minnesota will allow individuals of the same sex to marry.

Employers need to review their policies relating to employee health and retirement benefits to reflect this change. What changes are allowed or required will differ based on whether the benefit is governed by state or federal law.

Documents embodying employers’ policies, including plan documents and employee handbooks, should be revised. Similarly, an employer’s implementation of any changes may necessitate adjustments in payroll and tax procedures. In deciding what changes will be made to employee benefits, it is important to understand which changes are required under the law and which, though not required, may promote a diverse workforce.

The U.S. Supreme Court is expected to rule on the federal Defense of Marriage Act in June. Guidance and careful consideration are necessary for you to stay compliant with all aspects of the law. Stay tuned for more detailed coverage on the impact of the new same-sex marriage law in the July Issue of Minnesota Employment Law Letter.

Michael G. McNally is a senior associate at Felhaber Larson Fenlon & Vogt in Minneapolis. You can reach him at mmcnally@felhaber.com.

The workers are not unionized and work in jobs traditionally not targeted by labor unions because the fast-food industry often relies on teen workers holding part-time and seasonal jobs. Since the recession, however, more adults with families have turned to jobs in the fast-food industry.

A statement from Armstrong Teasdale LLP, which has offices in St. Louis and Kansas City, Missouri, and edits Missouri Employment Law Letter, points out that the recent wave of strikes differs from traditional labor unrest. “Although strikes are often associated with labor unions, the workers involved in these impromptu strikes are not unionized. Instead, the efforts are being supported by a coalition of organizations, including labor groups, nominally coined ‘alt-labor,’ that are not legally unions,” the statement says.

Just because the workers aren’t unionized doesn’t mean the strikers aren’t protected by the National Labor Relations Act (NLRA), the law firm’s statement points out. The NLRA gives workers the right to engage in concerted activities to improve their pay and other terms and conditions of employment.

Armstrong Teasdale warns employers to take care in disciplining or discharging employees engaged in protected concerted activities such as a strike. “Even though failing to report for work or even walking out during the middle of a shift impacts an employer’s operations and may in fact violate an attendance policy, depending on the circumstances, an employer may actually be prohibited from disciplining [employees] or questioning them about such protected activities,” the firm’s statement says.

However, employees aren’t protected in some cases such as when they engage in “recognitional picketing,” the firm’s statement says. “This occurs when employees, and perhaps nonemployees, picket an employer with the goal of obtaining recognition. When employees (and nonemployees) picketed Wal-Mart on Black Friday, Wal-Mart filed a charge with the National Labor Relations Board [NLRB].” The charge was resolved when the union involved agreed to stop organizing the employees.

‘Alt-labor’ efforts

One of the workers’ efforts, dubbed the “Fight for 15,” includes an online petition started by workers in Chicago. The workers’ website says they’re demanding $15 per hour and the right to form a union without retaliation. “Employers like McDonalds, Whole Foods, and Sears are raking in enormous profits while workers like us, mostly adults with families, don’t get paid enough to cover basic needs like food, rent, health care, and transportation,” the website says.

New York City workers have joined together to form Fast Food Forward. The group’s website says it is part of a national movement of low-wage workers. The group’s website proclaims, “We can’t survive on $7.25!”

Although the workers aren’t unionized, organized labor is weighing in on their efforts. Mary Kay Henry, president of the Service Employees International Union (SEIU), released a statement on May 9 in support of the St. Louis strikers. According to Henry, “These workers are taking a stand and sending a clear message that they will not sit idly by and continue to make do with so little while the rewards of their hard labor go to already wealthy CEOs. … The 2.1 million SEIU members stand in solidarity with these workers and support their fight for higher wages.”

For some time, Oklahoma employers have been able to contractually prohibit former employees from soliciting workers for a reasonable period of time, but Senate Bill 1031 confirms and reinforces such prohibitions by codifying that a nonsolicitation provision is not an unlawful restraint of trade. Under the law, employers may have contracts that prohibit employees or independent contractors from directly or indirectly soliciting employees or contractors to become employees for another organization.

The new law states that nonsoliciation contracts don’t violate Oklahoma law prohibiting the enforcement of noncompetition clauses. Oklahoma employers also continue to have the right to prohibit current and former employees from soliciting a company’s established customers.

The new law goes into effect November 1. Any employee nonsolicitation agreements signed after that date will be enforceable under the new statute. Employers are advised to consider requiring employees to sign new nonsolicitation agreements after November 1. Employers also should make sure that appropriate consideration (something of value) is provided to the signing employees to support any new agreements.

House Bill 99, titled “an act relating to equal pay,” has cleared both chambers of the Vermont Legislature and is set to be signed into law by Governor Peter Shumlin on Tuesday, May 14.

The final bill amends Vermont’s Fair Employment Practices Act to provide that an employer may pay different wage rates to employees of different sexes only when the differential wages are based on (1) a seniority system, (2) a merit system, (3) a system in which earnings are based on quality or quantity of production, or (4) a bona fide factor other than sex. Employers now will be required to show that any wage differential is based on a factor that “does not perpetuate a sex-based differential in compensation, is job-related with respect to the position in question, and is based upon a legitimate business consideration.”

Wage inquiries

Under the new law, employers may not require, as a condition of employment, that employees not disclose the amount of their wages to coworkers or inquire about or discuss other employees’ wages. An employer, however, may prohibit an HR manager from disclosing other employees’ wages. The new law wouldn’t require an employee to disclose the amount of her wages in response to an inquiry from a coworker.

Flexible working arrangements

The law also provides that employees may request flexible working arrangements, i.e., an intermediate or long-term change in their regular working arrangements. This may include changes in the number of days or hours worked, changes in the time the employee arrives at or leaves work, working from home, or job-sharing. It doesn’t include vacation, routine scheduling of shifts, or other forms of employee leave.

Employers are required to discuss their employees’ requests in good faith and may propose alternative arrangements during the talks. Employers are required to consider requests that wouldn’t be inconsistent with their business operations or their legal or contractual obligations. The term “inconsistent with business operations” includes the imposition of additional costs on the employer, a detrimental effect on employee morale in the aggregate, a negative impact on the employer’s ability to meet consumer demand, an inability to reorganize work among existing staff or recruit additional staff, a detrimental impact on business quality or business performance, a lack of work during the periods the employee proposes to work, and planned structural changes to the business.

Paid leave study

Finally, under the new law, a committee will be created to study the issue in Vermont and make recommendations about whether and how paid family leave may benefit the state’s citizens. Its report is due by January 15, 2014, in time for next year’s legislative session.

A more detailed look at the new law and other employment-related legislation from this session will be provided in the June edition of Vermont Employment Law Letter.

Sophie E. Zdatny is a lawyer in the Employment Practice Group at Dinse, Knapp & McAndrew, P.C., in Burlington and is one of the editors of Vermont Employment Law Letter. She may be reached at szdatny@dinse.com.

On May 2, Governor Rick Perry signed the newly enacted Texas Uniform Trade Secrets Act, which takes effect September 1. Texas is the 48th state to pass the law, proving that while Texas may not always be first, it is never last!

The law, put simply, is a big deal. It wipes away, with a stroke of the governor’s signature, all existing case law regarding misappropriation of trade secrets. So what will be a trade secret under the new law? “Information, including a formula, pattern, compilation, program, device, method, technique, process, financial data, or list of potential customers or suppliers.”

The inclusion of financial data and customer lists was a decision of the Texas Legislature, as those items are not included in other states’ Uniform Trade Secrets Act.

The law has a real bite to it for those who abscond with a company’s trade secrets, including extension of an injunction to eliminate “commercial advantage” gained by the swiper, an award of unjust enrichment damages for any damages caused by the misappropriation, and, in some cases, imposition of liability for reasonable royalties. If the misappropriation is shown to be willful and malicious, punitive damages may be assessed in an amount not to exceed twice the actual damages.

Further, a court may award attorneys’ fees if a claim of misappropriation is made in bad faith or if a motion to terminate an injunction is made or resisted in bad faith. The law also instructs courts to take steps during litigation to preserve the secrecy of trade secrets.

In application of the new law, Texas courts will look to the law of other states for assistance interpreting the language of the Uniform Trade Secrets Act. Gasp! You heard it here first—we’ve gone from talk of secession to joining the rest of the union!

Mike Maslanka is a partner at Constangy, Brooks & Smith, LLP, and the editor of Texas Employment Law Letter. You can reach him at mmaslanka@constangy.com.

The NLRB issued the rule in 2011, but it was never implemented because of court challenges. Had it gone into effect, all employers under NLRB jurisdiction—including nonunion employers—would have been required to post an 11-by-17-inch poster explaining that employees have the right to act together to improve wages and working conditions; to form, join, and assist a union; to bargain collectively with their employer; and to refrain from any of those activities.

“Today, manufacturers claim an important victory in the fight against an activist NLRB and its aggressive agenda,” Jay Timmons, president and CEO of the National Association of Manufacturers, said after the appeals court ruling. “The poster rule is a prime example of a government agency that seeks to fundamentally change the way employers and employees communicate. The ultimate result of the NLRB’s intrusion would be to create hostile work environments where none exist.”

Timmons also stressed that his group is not relaxing because of the court victory. “The ruling is a significant moment for manufacturers, but we will not assume the threat of an activist NLRB is eliminated,” he said. “Instead, we will remain consistently vigilant to ensure that manufacturers are protected from any future oversteps by this rogue agency.”

The National Federation of Independent Business (NFIB) also praised the appeals court ruling. “Today’s decision is a monumental victory for small-business owners across this country who have been subject to the illegal actions of a labor board that has consistently failed to act as a neutral arbiter, as the law contemplates,” Karen Harned, executive director of NFIB’s Small Business Legal Center, said following the ruling.

“The court acknowledged that the choice to speak includes ‘the choice of what not to say,’ and that the NLRB overstepped its authority by compelling small-business owners to post a pro-union notice,” Harned said.

Union leaders were quick to voice their disapproval of the court’s ruling. AFL-CIO President Richard Trumka said the D.C. Circuit “has once again undermined workers’ rights—this time by striking down a common-sense rule requiring employers to inform workers of their rights under federal labor law.”

Trumka said the ruling is inconsistent with laws requiring employers to display posters explaining wage and hour rights, health and safety and discrimination laws, and even emergency escape routes. “The court’s twisted logic finds that ‘freedom of speech’ precludes the government from requiring employers to provide certain information to employees,” he said. “This is absurd: When workers know their rights, the laws work as intended.”

The D.C. Circuit is the same court that jeopardized the NLRB’s status in a January 25 ruling that invalidated three recess appointments made by President Barack Obama in January 2012. Since the appointments were ruled invalid, all the Board’s actions since the recess appointees joined the agency have been thrown into question.

Utah’s Internet Employment Privacy Act (IEPA) goes into effect May 14, making Utah the latest state to prohibit employers from requiring employees or job applicants to disclose their passwords or user names for personal social media accounts. Similar legislation has been enacted in California, Delaware, Illinois, Maryland, Michigan, and New Jersey.

The law provides that employers may not:

• Request that employees or applicants disclose user names and passwords that allow access to their “personal Internet accounts”; or

• Take adverse action against, fail to hire, or otherwise penalize employees or applicants for failing to disclose user names and passwords.

The law doesn’t prohibit employers from viewing information on social media websites that can be obtained without a username or password. If an employer violates the IEPA, the employee or applicant can sue for damages, but a court can’t award more than $500.

Exceptions

The IEPA does not prohibit employers from:

• Requesting or requiring employees to disclose user names or passwords needed only to gain access to (1) an electronic communications device supplied by or paid for in whole or in part by the employer or (2) an account or service provided by the employer, obtained by virtue of the employee’s employment, and used for the employer’s business purposes;

• Disciplining or discharging an employee for transferring the employer’s proprietary or confidential information or financial data to a personal Internet account without the employer’s consent;

• Conducting an investigation or requiring employees to cooperate in an investigation to ensure compliance with applicable laws, regulatory requirements, or prohibitions against work-related employee misconduct if (1) there is specific information about activity on an employee’s personal Internet account or (2) the employer has specific information about an unauthorized transfer of its proprietary or confidential information or financial data to an employee’s personal Internet account;

• Restricting or prohibiting employees’ access to certain websites while they are using (1) electronic communications devices supplied by or paid for in whole or in part by the employer or (2) the employer’s network or resources in accordance with state and federal law; or

• Monitoring, reviewing, accessing, or blocking electronic data stored on electronic communications devices supplied by or paid for in whole or in part by the employer or stored on the employer’s network in accordance with state and federal law.

More information is available in the May issue of Utah Employment Law Letter.

Darryl J. Lee is a shareholder with Kirton McConkie in Salt Lake City. He can be reached at dlee@kmclaw.com or 801-328-3600.

A quadriplegic employee who used marijuana under the state’s medical marijuana amendment filed a lawsuit after he tested positive for drugs in violation of company policy and was fired. He claimed his employer violated the Colorado’s lawful off-duty activity statute, which prohibits termination for any “lawful activity” conducted off an employer’s premises during nonworking hours.

In its April 25th ruling, the appeals court held that the employee’s use of marijuana wasn’t lawful activity because “for an activity to be ‘lawful’ in Colorado, it must be permitted by, and not contrary to, both state and federal law.” Since marijuana use is illegal under federal law, the employer didn’t violate the law in terminating the employee.

The state’s medical and recreational marijuana use amendments don’t require employers to “permit or accommodate” marijuana use. In fact, they expressly permit policies restricting the use of marijuana. Before the appellate court’s ruling, however, courts hadn’t decided whether state or federal laws define “lawful activity” under the statute.