Shuttleworth PLLC welcomes Alex Hall

Alex HallOriginally from Nashville, Alex completed his undergraduate studies at the University of Georgia, where he graduated from the Terry College of Business with a concentration in Real Estate and Music Business.  He graduated from the University of Memphis Cecil C. Humphreys School of Law in 2015.

While attending law school, Alex served as President of the Student Bar Association and received the Dean’s Award for Distinguished Service to the law school.  He was a Staff Member of the University of Memphis Law Review and received the Law Review Award for Excellence in Legal Writing for Best Memorandum, the Dean’s Award for Excellence in Legal Methods I, and the CALI Award for highest grade in Litigation Drafting.  During his second and third years, Alex was awarded a Cecil C. Humphreys Law Fellowship and served as Research Assistant to Professor Lynda Wray Black and Dean Emeritus and Professor of Law Kevin Smith.  As a 3L he was selected to be a Pupil in the Leo Bearman, Sr. American Inn of Court.

Prior to joining the firm, Alex participated in the Los Angeles Dodgers Accelerator Program as a legal consultant for sports and technology startups.  Alex is a member of the Tennessee Bar Association, the Memphis Bar Association Young Lawyers Division, and the Sports Lawyers Association.

Shuttleworth PLLC Recognized By TLAP

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Shuttleworth PLLC recently received the 2016 “Stephenson Todd Volunteer of the Year” Award from the Tennessee Lawyers Assistance Program at this year’s Camp TLAP retreat.  For the first time in TLAP’s history, the “Stephenson” was given to a group of people rather than to an individual.

The attorneys and staff of Shuttleworth PLLC were recognized for their long-standing support of TLAP, a confidential assistance program providing consultation, referral, intervention, and crisis counseling for lawyers, judges, bar applicants and law students who are struggling with substance abuse, stress or emotional health issues.  Ken Shuttleworth accepted the award on behalf of the firm.

Attorney General Opines Fantasy Sports Illegal In Tennessee

 

By R. Joseph Leibovich
(901) 328-8269

 

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March Madness is over, and many are weeping over their busted brackets.  But could fantasy sports participants be facing something worse than picking a first round Villanova loss?  In Tennessee, theoretically, they could also face criminal charges.

Tennessee Attorney General Herbert Slatery on April 6 issued an opinion holding that all fantasy sports are illegal in the state.

According to the opinion:

Fantasy sports contests fall within the broad definition of “gambling” under Tennessee Code Annotated § 39-17-501(1). The participants pay an entry fee in order to win a prize. A portion of the fees comprise the pot of funds that are paid out to the winning participants. By proffering these entry fees, participants agree to risk something of value for a profit – a portion of the pot. Hence, the only remaining consideration is whether a participant’s ability to win a fantasy sports contest is to “any degree contingent on chance.” While participants may use skill to select players for their teams, winning a fantasy sports contest is contingent to some degree on chance. Namely, the participants do not control how selected athletes perform in actuality on a given day. Athletes’ performances are affected by many fortuitous factors – weather, facilities, referees, injuries, etc.

As a result:
…absent legislation specifically exempting fantasy sports contests from the definition of “gambling,” these contests constitute illegal gambling under Tennessee law. The General Assembly has the power to exclude from the definition of “gambling” any fantasy sports contest that is not prohibited by the state constitution or the federal constitution…

This opinion was requested by Tennessee House Minority Leader Craig Fitzhugh (D-Ripley), presumably to determine how to deal with online fantasy sites such as DraftKings and FanDuel.  Many states have addressed daily fantasy contests (which are the heart of those sites), but the Tennessee opinion is broader than many other opinions in that it applies to all fantasy sports (or, presumably, all those involving entry fees), including season long contests.  This could apply to sites such as ESPN, CBS and Yahoo as well as the daily contest sites.

An Attorney General opinion is not in itself law.  It is an interpretation.  However, such interpretations can be given weight by the courts or legislature.

And, it is possible this opinion could trigger the legislature to carve out some form of fantasy exemptions.

In the meantime, however, how should Tennessee employers deal with this?  Many offices condone March Madness brackets.  And, throughout the country, millions of people participate in various forms of fantasy sports.  Is it likely that the police are going to raid your office because of an NCAA pool?

Probably not.

But, this could create an uncomfortable issue for employers who have policies against illegal activities at work. Do you continue to condone or even encourage the brackets which can be fun and morale building?  Or do you take a hard line approach so as to be consistent in applying policy?

Some employers are already torn on this issue due to the perceived or actual productivity sink fantasy sports causes.  Some studies show that fantasy football costs companies as much as $16 billion a year in lost productivity. While others say the loss is certainly less than that and office fantasy sports can be a great team building experience.

In employment law, we often have to wear two hats – lawyer and Human Resources advisor. If strictly wearing the lawyer hat, I’d have to say that in Tennessee and other states with opinions or legislation declaring fantasy sports illegal, employers should absolutely not allow or condone participation in those activities at or through work.  Failure to ban such activities could lead to an argument that your anti-illegal activity policies are not consistently applied and could arguably lead to a disparate treatment claim at some point.

The Human Resources hat answer is probably a little more complicated.

For now, however, employers in Tennessee should at least be aware of the fact that the Attorney General has opined that fantasy sports  – all fantasy sports – are illegal in the state.  At least until the legislature acts.  And, I won’t lay odds on whether or not that will happen, as fantasy legislature contests are probably in the same bracket as fantasy sports.

The above article is meant to be a general discussion and is not intended to be legal advice.  For specific legal advice, contact an attorney.

 

DOL Issues Guidance On Joint Employment

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By R. Joseph Leibovich
(901) 328-8269

The United States Department of Labor today issued an Administrator’s Interpretation (AI) as to when joint employment situations exist for purposes of cases under the Fair Labor Standards Act.  The DOL indicated it has issued these guidelines to protect workers in “fissured workplaces,” in which it is likely that an employee is working for multiple employers. This can often be the case is situations involving staffing companies.

The AI looks at so called “Horizontal” and “Vertical” joint employment situations.

Under the guidance, Horizontal Joint Employment “should be considered” when an individual is employed by technically separate entities that are actually related or overlapping. As an example, the AI points to a server who works for two different restaurants that are sufficiently associated. The AI lists non-exclusive factors to be analyzed to determine whether or not Horizontal Joint Employment exists.  These are:

–  Who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners);

–  Do the potential joint employers have any overlapping officers, directors, executives, or managers;

– Do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs);

–  Are the potential joint employers’ operations inter-mingled (for example, is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for);

– Does one potential joint employer supervise the work of the other;

– Do the potential joint employers share supervisory authority for the employee;

– Do the potential joint employers treat the employees as a pool of employees available to both of them;

– Do the potential joint employers share clients or customers; and

– Are there any agreements between the potential joint employers.

The AI notes that joint employment does not exist if the employers “are acting entirely independently of each other and are completely disassociated.”

In Vertical Joint Employment situations, one employer typically has made an arrangement to provide labor for another entity while handling some employer functions such as hiring and/or payroll. In determining whether or not an individual is an employee, the DOL will look at seven factors utilizing an “economic realities test”:

Directing, Controlling, or Supervising the Work Performed. To the extent that the work performed by the employee is controlled or supervised by the potential joint employer beyond a reasonable degree of contract performance oversight, such control suggests that the employee is economically dependent on the potential joint employer. The potential joint employer’s control can be indirect (for example, exercised through the intermediary employer) and still be sufficient to indicate economic dependence by the employee. See Torres-Lopez, 111 F.3d at 643 (“indirect control as well as direct control can demonstrate a joint employment relationship”) (citing pre-1997 MSPA regulation); Antenor, 88 F.3d at 932, 934; 29 C.F.R. 500.20(h)(5)(iv). Additionally, the potential joint employer need not exercise more control than, or the same control as, the intermediary employer to exercise sufficient control to indicate economic dependence by the employee.

Controlling Employment Conditions. To the extent that the potential joint employer has the power to hire or fire the employee, modify employment conditions, or determine the rate or method of pay, such control indicates that the employee is economically dependent on the potential joint employer. Again, the potential joint employer may exercise such control indirectly and need not exclusively exercise such control for there to be an indication of joint employment.

Permanency and Duration of Relationship. An indefinite, permanent, full-time, or long-term relationship by the employee with the potential joint employer suggests economic dependence. This factor should be considered in the context of the particular industry at issue. For example, if the work in the industry is by its nature seasonal, intermittent, or part-time, such industry condition should be considered when analyzing the permanency and duration of the employee’s relationship with the potential joint employer.

Repetitive and Rote Nature of Work. To the extent that the employee’s work for the potential joint employer is repetitive and rote, is relatively unskilled, and/or requires little or no training, those facts indicate that the employee is economically dependent on the potential joint employer.

Integral to Business. If the employee’s work is an integral part of the potential joint employer’s business, that fact indicates that the employee is economically dependent on the potential joint employer. Whether the work is integral to the employer’s business has long been a hallmark of determining whether an employment relationship exists as a matter of economic reality.

Work Performed on Premises. The employee’s performance of the work on premises owned or controlled by the potential joint employer indicates that the employee is economically dependent on the potential joint employer. The potential joint employer’s leasing as opposed to owning the premises where the work is performed is immaterial because the potential joint employer, as the lessee, controls the premises.

Performing Administrative Functions Commonly Performed by Employers. To the extent that the potential joint employer performs administrative functions for the employee, such as handling payroll, providing workers’ compensation insurance, providing necessary facilities and safety equipment, housing, or transportation, or providing tools and materials required for the work, those facts indicate economic dependence by the employee on the potential joint employer.

The joint employer issue is a thorny one, and the AI could subject entities to scrutiny by the Department of Labor when it seeks to enforce wage and hour laws. Potential joint employers – particularly companies that utilize temporary workers from an agency – should be aware of this potential liability, and should make sure that the employees working for their benefit are being paid as required by law.  Even if that pay is coming from a different company.

Firm Wins Case For Financial Institution

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Shuttleworth PLLC attorney Lane Wolfenbarger recently obtained a judgment for one of the firm’s banking and financial law clients.  In that matter, a post-foreclosure collection case in the Circuit Court of Grainger County, Mr. Wolfenbarger was able to show that a borrower had defaulted on its obligations in which the bank had a valid security interest.

The Court not only awarded a judgment in the client’s favor in the amount of $59,701.45, but also granted the client possession of and the right to sell any and all property covered by and/or subject to all UCC Financing Statements the parties had previously executed.

Summary Judgment Decision On Premises Liability Upheld

Shuttleworth PLLC attorneys Lane Wolfenbarger and Scott Hickerson recently obtained a summary judgment ruling in a premises liability matter involving a fall on a client’s property.  On appeal, the Tennessee Court of Appeals upheld the judgment finding that the defendant had negated essential elements of the plaintiffs’ claims by showing that the plaintiffs could not identify the object that caused the fall, and thus could not establish that the defendant caused the dangerous condition of which the plaintiffs complained or that the defendant had actual or constructive notice that the condition existed long enough for it to be discovered by proper diligence.

The Court of Appeals further found that while the defendant might be responsible for a myriad of conditions throughout its business, the plaintiffs could not establish that any of those conditions caused the fall without identifying the object responsible, and that without any additional evidence concerning the identity of the object, the trial court did not err in granting the motion for summary judgment under Tenn. Code Ann. § 20-16-101 because the evidence was insufficient to establish the causation element of plaintiff’s claim.

Willis v. McDonald’s Rests. of Tenn., Inc., 2015 Tenn. App. LEXIS 987 (Tenn. Ct. App. Dec. 23, 2015).

NLRB Decision Could Create Significant Issues For Franchisors

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By R. Joseph Leibovich
(901) 328-8269

The National Labor Relations Board (“NLRB”) has issued a ruling that could have a profound impact on franchisors throughout the nation.  The NLRB in a case involving Browning-Ferris Industries of California (“BFI”) issued a 3-2 decision along party lines that expands the concept of who is a “joint employee”.  The decision stated:

The Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating the allocation and exercise of control in the workplace, we will consider the various ways in which joint employers may “share” control over terms and conditions of employment or “codetermine” them, as the Board and the courts have done in the past.

In applying this test, the Board found that BFI was a joint employer with a company that it contract with to provide workers at a sorting facility.

Many believe this decision will also be applied to franchisors/franchisees.  This is significant in the area of potential unionization efforts.  For example, say Tasty World, Inc. (a fictional company) is a national fast food franchisor with franchisees across the country.  One is operated in Peoria, Illinois by John Doe Enterprises, Inc.  In this hypothetical, a union campaign to organize the workers at the Peoria location based on the issue of pay in excess of the minimum wage.  The union succeeds.  Now, John Doe Enterprises, Inc. must collectively bargain with the union.  But in addition to that, under the BFI decision, Tasty World, Inc. would also be drawn into the collective bargaining process.  This is a situation that many franchisors are not happy with.

In addition to the collective bargaining issue, the BFI decision could lead to franchisors being liable for potential unfair labor practices committed by the franchisee, even if the national franchisor has no actual knowledge of these alleged violations. Using the same hypothetical, if John Doe Enterprises, Inc. improperly threatened potential bargaining unit employees during the unionization effort, Tasty World may face liability even if it wasn’t aware of the threats or, for that matter, of the union campaign at all.

Business groups are vocally critical of this decision and its potential impact on franchisors.  Furthermore, this decision could potentially lead franchisors to reconsider the entire franchisor/franchisee model.  It will be interesting to see how courts apply the joint employer definition in labor relations issues, and to see if or how franchisors adjust their business based on the potential impact of the decision.

Some states, including Tennessee, have enacted statutes that specifically state that employees of a franchisee are not employees of a franchisor.  For example, a recently enacted Tennessee law states “Notwithstanding any voluntary agreement entered into between the United States department of labor and a franchisee, neither a franchisee nor a franchisee’s employee shall be deemed to be an employee of the franchisor for any purpose.” (Tenn. Code Ann. 50-1-208).

For issues that come under the NLRB’s purview, however, these state laws will likely not provide insulation from the Board’s decision.

EEOC Rules Sexual Orientation Discrimination Prohibited

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By R. Joseph Leibovich
(901) 328-8269

Employers cannot discriminate against employees on the basis of sexual orientation, according to a ruling by the Equal Employment Opportunity Commission (EEOC).  The question is, will this ruling ultimately persuade federal courts to agree?

No federal law currently explicitly prohibits employment discrimination on the basis of sexual orientation.  Several states do have such laws.

The case in question involved a federal air traffic controller who claimed he was denied a permanent position, in part, because he is gay.  In a 3-2 opinion, the Commission held that discrimination on the basis of sexual orientation because it is gender based discrimination, which is illegal under Title VII of the Civil Rights Act of 1964.

In coming to this conclusion, the Commission noted that sexual orientation discrimination directly relates to gender.  The opinion stated

For example, assume that an employer suspends a lesbian employee for displaying a photo of her female spouse on her desk, but does not suspend a male employee for displaying a photo of his female spouse on his desk.  The lesbian employee in that example can allege that her employer took an adverse action against her that the employer would not have taken had she been male.That is a legitimate claim under Title VII that sex was unlawfully taken into account in the adverse employment action.

In addition to this, the Opinion applied cases involving race discrimination to note that discrimination based on sexual orientation was “associational” discrimination.  That is, discrimination based on associating with an individual who is in a protected class.  In addition, the Commission stated that sexual orientation discrimination can be based on gender stereotypes, and is therefore illegal.

The EEOC’s decision only directly applies to federal employees.  However, federal courts do give deference to the Commission’s interpretation of Title VII.  Certainly, all the federal circuits could either accept or reject the EEOC’s interpretation.   Any courts that disagree with the Commission decision could find that had Congress intended to provide protection for sexual orientation in Title VII, it would have explicitly done so.

The likely result of this will be a split in the federal circuits, which would probably lead to the Supreme Court having the final say.  Of course, new legislation could moot this issue one way or the other.

Until this issue is clarified legislatively or by the Supreme Court, private employers covered by Title VII – those with 15 or more employees – should be aware that the EEOC’s decision has put sexual orientation discrimination on the table, and the agency will likely accept charges based on such alleged discrimination.

Now may be a good time to review policies and training to attempt to minimize potential exposure for the new charges and litigation that are almost certain to ensue.

Supreme Court Rules Religious Accommodation Does Not Require Actual Knowledge By Employers

By R. Joseph Leibovich
(901) 328-8269

The United States Supreme Court on June 1 issued a ruling on religious accommodations under Title VII of the Civil Rights Act of 1964 that should effect how employers make hiring decisions.

In EEOC v. Abercrombie & Fitch Stores, the clothing store refused to hire Samantha Elauf, a practicing Muslim.  At the time she applied for a position she was wearing a head scarf as mandated by her religion.  The individual interviewing her was concerned this violated Abercrombie & Fitch’s “Look” policy, that forbids caps.

Although no one asked Ms. Elauf what her religion was, the interviewer told her superiors that she felt the scarf was likely due to religious reasons.  She was told that the scarf would violate the Look policy, and she was told not to hire Ms. Elauf.

The EEOC sued Abercrombie & Fitch alleging religious discrimination against Ms. Elauf, and the agency won on summary judgment.  The Tenth Circuit reversed, holding that an employer cannot be liable for failing to provide a religious accommodation if it has no actual knowledge of the need for one.

The Supreme Court reversed the Tenth Circuit in an 8-1 opinion written by Justice Scalia.  The opinion held that actual knowledge is not required, and  “Instead, an applicant need only show that his need for an accommodation was a motivating factor in the employer’s decision.”

Therefore, a “neutral” policy can lead to a disparate-treatment claim when an employer decides not to hire a person because of potential religious accommodations.  As the Court explained,”…the rule for disparate-treatment claims based on a failure to accommodate a religious practice is straightforward: An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions. For example, suppose that an employer thinks (though he does not know for certain) that a job applicant may be an orthodox Jew who will observe the Sabbath, and thus be unable to work on Saturdays. If the applicant actually requires an accommodation of that religious practice, and the employer’s desire to avoid the prospective accommodation is a motivating factor in his decision, the employer violates Title VII.”

Employers need to realize that merely avoiding asking someone’s religion will not shield them from liability if they are, indeed, refusing to hire a person to avoid a religious accommodation.  In short, a neutral policy and claiming ignorance of an applicant’s religion will not protect employers if they decide not to hire someone because of a perceived religious accommodation, even if the employer technically does not know for sure that the individual is even a member of that religion.  The courts will be analyzing an employer’s intent, and not it’s knowledge, and that can make things very interesting.

 

Supreme Court Allows Judicial Review For EEOC Conciliation Efforts

By Joe Leibovich
(901) 328-8269

The Supreme Court in a unanimous decision this week struck a blow to the Equal Employment Opportunity Commission’s ability to file lawsuits against employers without trying in good faith to work out the issues first.

The EEOC is the federal agency that enforces the anti-discrimination provisions of Title VII of the Civil Rights Act of 1964.  Under Title VII, if the EEOC investigates a charge of discrimination and finds reasonable cause to pursue it, the agency must make efforts to remedy the alleged discrimination through an informal conciliation process prior to filing a lawsuit in federal court.

In Mach Mining, LLC v. EEOC, a woman claimed she had not been hired as a coal miner due to her gender.  She filed a charge with the EEOC, and the agency determined that the employer had discriminated against the individual and women in general.  The EEOC did send a letter to the company and the complainant inviting them to conciliate.  The record does not indicate what happened next, but about a year later the EEOC advised Mach Mining that conciliation efforts had been attempted and were unsuccessful, and the EEOC filed suit.

Mach Mining contended that the EEOC had not properly attempted conciliation efforts as required by Title VII.  The trial court requested the opportunity to review the efforts to conciliate. The EEOC was allowed to take up an immediate appeal as to whether or not judicial review is proper.  The Seventh Circuit held it was not.  The Supreme Court, however, disagreed.

Justice Kagen’s opinion holds that a court can review the EEOC’s conciliation efforts.  She stated “Absent such review, the Commission’s compliance with the law would rest in the Commission’s hands alone. We need not doubt the EEOC’s trustworthiness, or its fidelity to law, to shy away from that result.”

The opinion also set forth the level of review that is appropriate, and did so narrowly.  The Court had to take into account the fact that conciliation efforts are protected by confidentiality.  Thus, the Court held that:

1.  The EEOC must inform the employer about the specific allegation, such as through a “Reasonable Cause” letter;

2.  The Notice must describe what the employer did and which employees (or classes of employees) have suffered as a result; and

3;  The EEOC must try to engage the employer in some form of discussion in an effort to give the employer a chance to remedy the alleged discriminatory practice.

The opinion states that a court should not go beyond this bare bones review to determine whether or not the EEOC complied with its conciliation obligations.

The Mach Mining decision is helpful to employers as it should afford them a genuine opportunity to address alleged discriminatory practices prior to the EEOC filing a lawsuit against them.  Nothing in this opinion affects an individual’s right to file a suit after receiving a Dismissal and Notice of Rights letter from the EEOC.  So, although this opinion only applies in certain Title VII lawsuits, it is one that can help limit lawsuits by the EEOC where an employer has truly not been given the opportunity to remedy a problem.

Interestingly in light of this week’s grand opening of the Bass Pro Shop in the Pyramid in Downtown Memphis, this was an issue in a lawsuit by the EEOC against that company.  In 2011, the EEOC filed a lawsuit against Bass Pro alleging race discrimination.  In that case, Bass Pro argued that the lawsuit should be dismissed as it claimed the EEOC did not give it a proper opportunity to conciliate the case.  A federal judge in Texas ultimately did review the conciliation efforts and determined that the EEOC had not acted unreasonably or arbitrarily, and, therefore the court refused to dismiss the lawsuit. The issue is now on appeal to the Fifth Circuit.