Second Circuit Holds that Contingent Equity-Based Compensation of Former Lehman Employees are Subordinate to Creditor Claims

In In re Lehman Bros. Holdings Inc. 855 F.3d 459 (2d Cir. 2017), the United States Court of Appeals for the Second Circuit affirmed a district court order subordinating the claims of former Lehman Bros. (“Lehman”) employees for undelivered equity-based compensation to those of the defunct bank’s general creditors. The Court determined the compensation benefits were securities that had been purchased by the former employees when they agreed to receive them in exchange for their labor and the asserted damages arose from those purchases, requiring the claims’ subordination under the Bankruptcy Code. The decision is important to employees and employers weighing the value of hybrid compensation packages and creditors seeking to safeguard their priority position among bankruptcy claimants.   Continue Reading

Mendoza v. Nordstrom – Day Of Rest Rule

The California Supreme Court issued its long awaited ruling in Mendoza v. Nordstrom, in which it clarified California’s so-called “day of rest” rule, which guarantees employees “one day’s rest therefrom in seven,” prohibits employers from “causing” its employees to work more than six days in seven, and exempts employees when, inter alia, the total hours of employment do not exceed 30 hours in any week or six hours in any one day. (Cal. Labor Code §§ 551, 552, 556.) Although part of California law since 1858 in one form or another, the day of rest rule had not been actively litigated until Plaintiffs Christopher Mendoza and Meagan Gordon brought a Private Attorney General Act claim against their former employer, Nordstrom, Inc. for allegedly failing to provide them, and other aggrieved employees, “one day’s rest therefrom in seven.” Nordstrom removed the case to federal court and prevailed at the district court level. On appeal, the Ninth Circuit asked the California Supreme Court to determine: Continue Reading

Unfair Scheduling: How New York City’s New Predictive Scheduling Law Continues The Trend And Makes Operations More Difficult For Employers

In November 2014, San Francisco passed the first predictive scheduling legislation in the country. Since that time, other states and municipalities have followed San Francisco’s lead, and have either proposed or enacted some variation of a predictive scheduling law.

On March 3, 2017, New York became the most recent major city to introduce predictive scheduling legislation. The New York City Council’s Committee on Civil Service and Labor introduced, and ultimately passed, a bill (Int. No. 1396-2016) that would implement predictive scheduling for non-salaried fast food employees. New York City’s legislation requires employers to post a worker’s schedule at least 14 days in advance, and to pay a premium if the schedule is changed with less than 14 days’ notice. Importantly, the bill creates a private right of action for employees seeking to enforce their rights. Mayor Bill de Blasio signed the predictive scheduling ordinance into law on May 30, 2017, and it will become effective in 180 days. Continue Reading

The U.S. Department of Labor Rolls Back Obama-Era Guidance on Joint Employers and Independent Contractors

The U.S. Department of Labor (“DOL”) announced today that it was rolling back an Obama-era policy that attempted to increase regulatory oversight of joint employer and contractor businesses.

Courts and agencies use the joint employer doctrine to determine whether a business effectively controls the workplace policies of another company, such as a subsidiary or sub-contractor. That control could be over things like wages, the hiring process, or scheduling. Continue Reading

NLRB Orders Union To Drop Unlawful Grievance, to Dismiss Suit Seeking to Compel Neutral Employers to Arbitrate Grievance and to Pay The Employers’ Legal Fees and Defense Costs

On May 23, the NLRB issued Road Sprinkler Fitters Local Union 669, finding that U.A. Local 669 (Union) violated the NLRA when it sought to apply and enforce facially valid anti-double breasting language in a national master labor contract to a dispute that it had with Firetrol Protection Systems, Inc. (Firetrol), a non-union company following an unsuccessful organizing campaign, and by, then, suing to compel Firetrol’s corporate parent, MX Holdings (MX), and several of its sister subsidiaries who had no involvement in the dispute to arbitrate and remedy the dispute. According to the Board, the Union’s conduct violated NLRA Sections 8(b)(4)(A) and (B) because it restrained and coerced MX and the other neutral employers with the dual objects of forcing them refuse to do business with Firetrol and forcing Firetrol to recognize and bargain with the Union — even though the Union had never been certified as the bargaining representative of Firetrol’s employees. The Firetrol decision can be found at 365 NLRB No. 83. Mark Ross and Keahn Morris represented Firetrol in this matter. Please do not hesitate to contact Sheppard Mullin with any questions regarding this decision.

7th Circuit Issues Ruling That Waiver of Statutory Rights under FLSA in Collective Bargaining Agreement Must Be Clear and Unmistakable

On May 15, 2017, the Seventh Circuit issued its ruling in Vega v. New Forest Home Cemetery, LLC, finding that an employee was not barred from bringing a Fair Labor Standards Act (“FLSA”) claim in a judicial forum, despite his failure to exhaust the grievance procedure in the applicable collective bargaining agreement (“CBA”). Continue Reading

Update to NYC Salary History Inquiry Ban

In our prior post, we reported that the New York City Council had approved an amendment to the New York City Human Rights Law (“NYCHRL”) prohibiting New York City employers from inquiring about a prospective employee’s salary history during the hiring process. At the time, it was awaiting Mayor de Blasio’s signature. On May 4, 2017, Mayor de Blasio signed the proposed amendment into law. It is now scheduled to take effect on October 31, 2017. Continue Reading

New Freelancer Law Imposes Additional Requirements For NYC Companies Contracting With Freelancers

The Establishing Protections for Freelance Workers Act, also known as the Freelance Isn’t Free Act, (the “Freelance Law”), which was touted by New York City Mayor Bill de Blasio as the first law in the nation aimed at protecting wage payment rights of freelance workers, became effective last Monday, May 15, 2017. The Freelance Law imposes specific requirements on companies located in New York City that contract with freelance workers, including requiring a written freelance contract, requiring companies to pay freelancers timely and in full, prohibiting retaliation against freelancers who exercise their rights under the Freelance Law, and creating penalties against companies who fail to comply with these requirements.   Continue Reading

Comp Time for the Private Sector: House Passes “The Working Families Flexibility Act”

On May 2, 2017, the House of Representatives passed H.R. 1180, better known as The Working Families Flexibility Act. The bill proposes to amend the Fair Labor Standards Act (“FLSA”) to permit private sector employees to “bank” overtime hours for later comp time use. For example, an employee working 50 hours in a workweek could, instead of receiving overtime pay for those 10 overtime hours, roll those hours into his or her comp time bank for later use. Each hour banked would be banked at an overtime rate, meaning that in this example, those 10 overtime hours would be equivalent to 15 banked hours. Continue Reading

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