On March 12, 2015, the Wisconsin State Assembly introduced companion legislation to the Senate Restrictive Covenant bill, 2015 Assembly Bill 91, available here. We understand that public hearings on the Senate bill will take place in the coming weeks. We will post additional information as it becomes publicly available. For more information, please see our previous blog post addressing this legislative development.
Wisconsin Non-Compete Make Over: Legislation Introduced to Overhaul Wisconsin’s Restrictive Covenant Statute
On March 5, 2015, Senator Paul Farrow of Waukesha County introduced 2015 Senate Bill 69: legislation that would repeal and recreate Wisconsin Statute 103.465, the law that governs restrictive covenant agreements in the state (commonly known as non-compete agreements). A copy of the proposed bill can be found here.
The proposed revised statute applies to restrictive covenants between employees or agents and employers or principals. The following are a few highlights:
- The proposed law would expressly exclude certain confidentiality agreements and certain employee non-solicitation agreements from the definition of a “restrictive covenant.”
- The proposed law would require courts to find that a restrictive covenant agreement is supported by sufficient consideration if the agreement:
- Is signed at the beginning or near the beginning of the employment relationship and employment is contingent on signing the agreement;
- Provides the employee consideration of any value acceptable to an employee that is above and beyond that due to the employee under the terms of some other agreement or promise; or
- Offers the employee monetary consideration; a bonus; additional paid time off; access to a bonus or incentive program or pool; continuation of employment at a rate of pay and benefits the same as or more than those received by the employee before execution of the agreement if continued employment is contingent on signing the agreement; or garden leave (defined by the statute).
- The bill expressly defines “legitimate business interest” and sets forth the factors a court shall consider when determining whether a restraint is reasonable, including rebuttable presumptions that a court is required to apply.
- Courts would likely be permitted to modify restrictive covenants to make them reasonable.If passed, the revised statute will apply to agreements executed on or after the enactment of the new law.
The aforementioned changes would represent a new era of restrictive covenants in Wisconsin, overturning prior court precedent and providing clarification and guidance where there was previously uncertainty. More importantly, the proposed law would likely make enforcement of restrictive covenant agreements more likely, an effect that generally benefits employers.
In a move certain to rekindle the flame of union protests, Wisconsin Senate Majority Leader Scott Fitzgerald announced that the so-called “Right-To-Work” Bill would be put on the fast track in the state legislature.
The bill prohibits employees from having to join or financially support a union as a condition of their employment. If passed, the law would likely first apply to collective bargaining agreements renewed, modified or extended after the law becomes effective.
Republicans hold control of both the assembly and the senate in Wisconsin. Consequently, the bill will likely pass if advanced as expected. Governor Scott Walker has confirmed that he will sign the bill if it reaches his desk.
A draft of the bill can be found here.
The start of the legislative season in Wisconsin is upon us. This week a number of human resources professionals with a passion for government affairs and legislation got together to discuss policy and politics. We discussed what this session of the legislature might look like with a Republican-controlled Assembly and Senate and a Republican Governor.
One of the noticeably aggravating areas of Wisconsin-specific employment laws is our very own family and medical leave law. Wisconsin was ahead of the nation when it enacted its own family and medical leave act before the federal law. When the federal law came along, however, Wisconsin did not repeal or conform its law to the federal law. Now, Wisconsin human resources professionals are left with managing two laws with sometimes varied requirements.
For a summary of the differences between state and federal law, click here. Additionally, one of Godfrey & Kahn’s Labor & Employment Team members can also provide you with a presentation outline noting the differences and nuances.
The state of the law may all change, however, if Wisconsin legislators introduce legislation to do away with or otherwise conform Wisconsin’s family and medical leave law to federal law. In recent legislative sessions, attempts have been made to conform Wisconsin law to federal law. Expect Wisconsin businesses to push legislation repealing or conforming Wisconsin family and medical leave law to federal law this upcoming session.
Last session, the Wisconsin legislature revised Wisconsin’s unemployment compensation statute as part of the 2013-15 biennial budget bill. The changes will largely benefit employers and affect employee claims for unemployment compensation benefits. The changes began affecting unemployment compensation benefit determinations on January 5, 2014.
Each entry in this series of blog posts will address a key aspect of the new unemployment compensation provisions, how the changes may affect employers and any affirmative steps employers may consider taking in response. This post provides a general overview of the changes and a brief discussion regarding attendance policies.
The most significant changes made by the new unemployment compensation provisions were to redefine what behavior and actions will constitute misconduct for unemployment compensation purposes. In addition, the provisions created a two-tier standard that will be used to disqualify applicants for benefits. In addition to disqualification for misconduct, an employee’s benefits may be delayed or denied if the employee was terminated for “substantial fault.” According to the Wisconsin Department of Workforce Development (DWD), “an employee’s behavior may be substantial fault when the employee violates a requirement of the employer but the violation does not rise to the level of misconduct.” These changes allow employers to challenge more benefit claims that are made by terminated employees.
The new provisions also eliminated eight of the eighteen quit exceptions that allow employees to collect benefits after they have resigned or quit their employment. Further, the new unemployment compensation provisions now require that applicants for benefits complete at least four work searches each week to collect benefits. There are additional provisions that limit benefits in certain circumstances, increase consequences for fraud, and provide additional requirements for requalification for benefits following disqualification.
Tardy or Absent Employees and “Misconduct”
In the past, it was much more difficult for employers to contest collection of unemployment benefits by former employees based on terminations for poor attendance. Wisconsin law required that (1) employers establish a very specific attendance policy which defined absenteeism and tardiness, (2) employees be permitted at least five instances of absence or tardiness before termination, and (3) employers demonstrate that the employee was aware of the policy.
The new provisions eliminate these requirements. Under the revised law, misconduct includes an employee who is (1) absent “on more than 2 occasions within the 120−day period before the date of the employee’s termination,” unless the employer has a policy stating otherwise in an employee manual (and of which the employee has acknowledged receipt with his or her signature) or the employee is excessively tardy in violation of the employer’s policy and (2) the employee did not provide his or her employer notice and one or more valid reasons for the absenteeism or tardiness. Wis. Stat. § 108.04(5)(e) (2013-2014).
As a result of these changes, an employer may contest an employee’s application for benefits if the employee was terminated for at least two absences within a 120-day period and the employee failed to give notice and a valid reason for the absences, even if the employer does not have an attendance policy. As a result, employers should revisit their attendance policies with their legal counsel to ensure they can benefit from these recent changes. Employers must ensure they have an acknowledgement from the employee which indicates that the employee received the employer’s attendance policy. Furthermore, in attendance‑based terminations, employers should follow their policies and document an employee’s failure to give notice or an explanation for absences/tardiness if they plan to contest the employee’s application for unemployment benefits.
Wisconsin public-sector employers are still dealing with the aftermath of 2011 Act 10 and the various legal challenges brought by unions concerning the Act. Two federal courts have validated the law in its entirety, but a state-court ruling overturning parts of the law is awaiting decision of the Wisconsin Supreme Court.
Some public-sector employers have negotiated new one-year labor contracts while the validity of the law remains unresolved. Some of these employers have addressed a wide range of subjects of bargaining, while others have decided to negotiate only base wages in discussion with their unions. Others have developed personnel handbooks in a meet-and-confer process with the union, and some have been less transparent in that process. Others have refused to bargain at all, preferring to adopt a wait-and-see approach, given the various conflicting rulings.
Public-sector employers are carefully watching the so-called Colas decision that sits now in the Wisconsin Supreme Court. Judge Colas, in a decision issued last year, invalidated certain parts of the law, including the prohibition on bargaining over subjects other than “base wages” and the annual recertification process. The legal wrangling over the Colas decision on the recertification process has created even more confusion.
While the courts have refused to stay the Colas decision, Judge Colas himself found the Wisconsin Employment Relations Commission (WERC) to be in contempt of his court for the WERC’s efforts and intent to push ahead with recertification elections this month. In finding contempt, Colas was clear that his decision was that the recertification requirement was illegal and as a result was without effect. Some employers decided to embrace collective bargaining, at least over base wages, given the effect of the contempt decision – which shut down recertification processes and fueled union claims that they were still representatives of employees despite, in some cases, deciding not to seek recertification as required by the law.
The state appealed the contempt ruling, and the Wisconsin Supreme Court vacated the contempt award for procedural reasons. According to the Court, the Colas decision had already been appealed and, as a result, Judge Colas did not have any authority to issue a contempt order. We have come full circle, as the WERC has again moved forward with the recertification process.
Public sector employers and their unions (both current and past) need clarity as to Act 10. The sooner that clarity can come the better in terms of establishing the terms of, and rules applicable to, their relationships. And if Act 10 is validated, public-sector employers and employees, with or without their unions, will need to figure out a way to work toward common goals and purposes under the new rules. The Supreme Court will have the final say. Confusion and uncertainty will continue until the Court speaks.
Recently, the press has been abuzz over the United States Senate’s passage of the Employment Non-Discrimination Act (ENDA), which, if signed into law, would prohibit workplace discrimination under federal law on the basis of sexual orientation and gender identity. While the bill faces an uncertain future in the House of Representatives — House Speaker John Boehner has indicated his opposition to the bill, making it unlikely that the bill will be put up for vote during this session of Congress — the political climate in Washington has shifted in a way that makes it likely that ENDA will, at some point in the next few years, become the law of the land.
Should ENDA become law in its current form, its effect would likely be less pronounced in Wisconsin than in some other states. Wisconsin law already includes “sexual orientation” as a protected characteristic, meaning that employers may not discriminate against employees or applicants for employment on the basis of a person’s sexual orientation. Similarly, employers may not retaliate against any employee who opposes sexual orientation discrimination in the workplace, files a complaint of sexual orientation discrimination, or testifies or otherwise assists in any investigation or hearing regarding a sexual orientation discrimination complaint. Because Wisconsin law defines “sexual orientation” more broadly than what is currently proposed in ENDA — to include those individuals who are regarded as having a particular sexual preference regardless of whether or not such a preference actually exists — ENDA’s passage would likely have a negligible effect on Wisconsin employers in the area of sexual orientation discrimination.
Where ENDA would substantially change the current landscape in Wisconsin is in its prohibition of “gender identity” discrimination. Gender identity discrimination is currently prohibited by statute in 17 states (including our neighbors Illinois, Iowa, and Minnesota), but not here in Wisconsin.
The ENDA bill passed by the Senate defines “gender identity” as “the gender-related identity, appearance, or mannerisms or other gender-related characteristics of an individual, with or without regard to the individual’s designated sex at birth.” The bill goes on to address two hot-button issues related to gender identity in the workplace: dress/grooming standards and gender-specific bathrooms. With regard to the former, while the bill states that “[n]othing in this Act shall prohibit an employer from requiring an employee, during the employee’s hours at work, to adhere to reasonable dress or grooming standards not prohibited by other provisions of Federal, State, or local law,” it goes on to state that any employee who has undergone or is undergoing “gender transition” must be allowed to adhere to the same dress or grooming standards as the gender to which the employee is transitioning if they so choose. This means that an employee who informs an employer that the employee is transitioning from male to female, for example, must be allowed to dress as a female if the employee wishes to do so. The term “gender transition” is not defined in the statute; therefore, it is unclear what, if any steps the employee must take in order to qualify for this protection under the law. On the subject of bathrooms, the bill specifies that employers are not required to construct new or additional facilities to comply with ENDA. However, the bill does not address how an employer should handle the issue of employees who wish to use a bathroom designated for members of the other biological sex (for example, employees in “gender transition”).
ENDA is not the law of the land yet, but employers looking toward the future may want to consider what, if any, implications its passage may have on their policies. In the meantime, we will monitor developments and post updates here if and when the bill becomes law.
While Wisconsin has had protections in place for years regarding how employers can treat arrest and conviction record information relating to applicants and employees, this issue has been largely ignored by the federal government until recently. Over the past few years, the Equal Employment Opportunity Commission (EEOC) has ratcheted up enforcement efforts related to this issue. One of the areas that has received increased scrutiny is employer use of criminal background checks when making hiring decisions. Due to disparities in incarceration rates based on race, the EEOC has focused on the potential for a disparate impact when employers use criminal background checks to exclude candidates. Disparate impact occurs when a neutral employment policy (no intent needed) disproportionately affects individuals who fall into a particular protected class (e.g. individuals of a certain race or those 40 years of age or older). Numerous studies have shown that minorities are incarcerated in the United States in disproportionate rates to their presence in the overall population. Accordingly, it is the EEOC’s position that a policy that excludes candidates on the basis of criminal history, without digging deeper into the circumstances surrounding the arrest or conviction, violates Title VII of the Civil Rights Act of 1964, as amended. This is because such a policy potentially excludes disproportionate numbers of minorities from a candidate pool and results in a disparate impact.
As the EEOC has increased its enforcement efforts, many commentators have opined that the EEOC can be overly aggressive in its prosecution. It has taken a while for some of the disputed cases to get to the federal courts of appeal, but decisions are now being issued that demonstrate that the EEOC will need to be more careful when choosing what cases to prosecute. The Sixth Circuit Court of Appeals recently issued a decision in EEOC v. Peoplemark, Inc. in which it affirmed the award of $751,942.48 in attorneys’ fees to the defendant corporation, Peoplemark, due to costs Peoplemark incurred in defending against the action the EEOC brought against it. The court noted that it was “not focused on the Commission’s theory of the case, but rather, whether the claim was frivolous, unreasonable, or groundless, or whether the Commission continued to litigate after it clearly became so.”
This is not the only award of this type recently granted against the EEOC. In August, an Iowa federal judge ordered the EEOC to pay $4.69 million dollars in fees, costs and expenses that CRST Van Expedited, Inc. incurred in defending itself against a sexual harassment suit filed by the EEOC. During a time when federal budgets are stretched thin and the federal government is in the midst of a fiscal crisis, it is frustrating that tax dollars are being paid out due to overzealous enforcement efforts by the EEOC. Hopefully, this recent string of awards against it will result in more judicious prosecution efforts by the EEOC.
A Dane County judge, Juan Colas, ruled late Friday, September 14, that Governor Walker and the State of Wisconsin violated the state and federal constitutions in the enactment of various provisions of 2011 Wisconsin Act 10. Act 10, enacted last year amidst considerable controversy, stripped most public employees of the right to collectively bargain on most matters other than adjustments to base wages. See our prior posts regarding Wisconsin public sector bargaining and Act 10.
Judge Colas granted summary judgment to the plaintiff in the lawsuit, Madison Teachers, Inc., a labor union representing employees of the Madison Metropolitan School District, and Public Employees Local 61, a labor union representing certain employees of the City of Milwaukee. Judge Colas found that the plaintiffs had established, beyond a reasonable doubt, that certain provisions of Act 10 violated the constitutional right of free speech and association guaranteed by the Wisconsin and United States Constitutions. Judge Colas also found that because the law treats similarly situated classes of workers unequally, Act 10 violated the equal protection law of the United States Constitution. Judge Colas found that the defendants failed to justify the infringement of these constitutional rights.
The ruling by Judge Colas, while recognizing that there is no constitutional right to collective bargaining, stuck down as “null and void” parts of Act 10 that:
- Prohibit municipal employers from collectively bargaining with general employee unions on any subject but adjustments to base wages.
- Require a referendum for wage adjustments above the cost of living for represented municipal and school district employees.
- Bar fair share agreements for general employee unions.
- Prohibit payroll deduction of dues for general employee unions.
- Impose certification and recertification election requirements on general municipal employees.
A federal court previously struck down the certification requirement and the prohibition on collecting dues contained in Act 10.
Municipalities are scrambling on what to do now and how the decision will impact the policies they have developed to address employee relations in the post-Act 10 world. An appeal in this case is certain, and it is evident that Judge Colas will not have the last word on Act 10. The defendants have indicated that they will ask Judge Colas, and perhaps appellate courts, to stay the decision pending appeal.
Municipalities should continue to monitor the case as it unfolds this week. The appropriate response to the ruling may become more apparent later this week. More information will be posted as it becomes available.
Last month, federal Judge William Conley invalidated several provisions of Wisconsin’s Act 10, the law limiting collective bargaining rights for public employees enacted in Wisconsin in March 2011. As might be expected, both the proponents and opponents of the law claimed victory. The decision will likely add fuel to the June 5 gubernatorial recall election ordered by Wisconsin’s Government Accountability Board (GAB).
In his ruling, Judge Conley took issue with two parts of the revised collective bargaining law. He struck down the provision that requires some public sector unions, for the most part school and general employees (though not public safety unions), to hold annual votes by members to remain as the certified representative for the employees. He also invalidated a provision that bars the state and local governments from withholding a worker’s union dues even if the member authorized the deduction. These provisions have been described as key to the survival of Wisconsin’s public sector labor movement.
The basis for the decision was in the differential treatment afforded to the public safety unions who were not subject to either the annual recertification or the prohibition concerning dues deduction. Judge Conley found no rational basis for the distinction.
The decision did not invalidate other limitations contained in the year old law, such as the change that severely curtailed the subjects over which a Wisconsin public employer and a public sector union can bargain.
Both sides will most certainly consider an appeal of this decision as the political battles heat up in Wisconsin.