Tag: Employment Law

Implications of Executive Order 14173 on Government Construction Contracts

by Kylie Brooks

April 1, 2025

On January 24, 2024, President Trump signed Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” directing all federal agencies to “terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements” and “enforce our longstanding civil-rights laws and to combat illegal private-sector [diversity, equity, and inclusion] DEI preferences, mandates, policies, programs, and activities.”

Executive Order 14173 Generally.

This Executive Order significantly deviates from longstanding affirmative action and diversity initiatives, which have been in place for decades, and have significant implications for contractors, particularly those who perform federal work. Among other things, this Executive Order:

  • Revokes numerous previous executive orders, including President Lyndon B. Johnson’s Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity);
  • Requires the Office of Federal Contract Compliance Programs within the Department of Labor to immediately cease, among other things, “allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin;” and
  • Prohibits the employment, procurement, and contracting practices of Federal contractors and subcontractors from being considered based on race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.

In sum, the Executive Order terminates DEI discrimination in the federal workforce, and federal contracting and spending. The Trump administration’s goal, according to the White House Fact Sheet published on January 22, 2025, is to require “[F]ederal hiring, promotions, and performance reviews to reward individual initiative, skills, performance, and hard work and not, under any circumstances, DEI-related factors, goals, policies, mandates, or requirements.”

Additionally, the Executive Order requires each agency to include in every contract or grant a term requiring contractors to agree that compliance with all applicable federal anti-discrimination laws is “material” to the government’s payment decisions and to certify that they do not operate any programs promoting DEI that violate federal anti-discrimination laws. Essentially, contractors receiving federal funding are required to agree that they will not engage in illegal discrimination, including the now illegal DEI initiatives.

Unchanged Anti-Discrimination Laws.

Despite these sweeping changes, federal contractors must retain compliance with existing anti-discrimination laws, such as:

  • Title VII of the Civil Rights Act,
  • the Equal Pay Act,
  • the Age Discrimination in Employment Ac,
  • the Americans with Disabilities Act,
  • Section 503 of the Rehabilitation Act, and
  • the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA).

These statutes continue to require affirmative action and non-discriminatory practices.

Federal Funding Implications.

Consistent with this Executive Order, on January 27, 2025, the Office of Management and Budget (OMB) published Memorandum M-25-13: “Temporary Pause of Agency Grant, Loan, and other Financial Assistance Programs,” directing Federal agencies to “identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and requirements” and “temporarily pause and potentially cancel federally funded programs that conflict with the administration’s priorities.” Although Memorandum M-25-13 was quickly rescinded by Memorandum M-25-14 after a federal court in the District of Columbia issued a temporary restraining order, the Trump administration continues to indicate that it intends to freeze federal funds for certain programs for being inconsistent with the Executive Order’s objectives related to DEI.

Status of State and Local Government.

Local governments that receive federal funding for a variety of activities are likely to face obstacles as a consequence of the recent and developing actions of the Trump administration. Following the Trump administration’s lead, Texas lawmakers have introduced legislation that seeks to prohibit state and local government contracts from applying DEI principles. Currently, Texas House Bill 167, titled “The Ending Institutional Racism Act,” seeks to prohibit certain diversity, equity, and inclusion (DEI) initiatives by governmental entities in Texas by introducing Chapter 621 to the Government Code and amend existing laws regarding governmental contracting —including, without limitation, Chapter 2252.911 of the Texas Government Code—prohibiting contracts based on race, color, ethnicity, sex, gender identity, or sexual orientation. If House Bill 167 is signed into law, state and local government contracts would be prohibited from being awarded to any contractor bids based on race, color, ethnicity, sex, gender identity, or sexual orientation.

Conclusion.

While political activity is still evolving and the future remains uncertain, government funded projects are likely to face significant challenges awarding projects based on affirmative action and diversity principles. Contractors should be aware of rule changes and how they affect qualifications, bidding, and the contract process.

To discuss how the Executive Order could impact your business, contact Kylie Brooks at Griffith Davison’s Dallas office at (972) 392-8900, or email Kylie directly at kbrooks@griffithdavison.com. 

OSHA Broadens “Walkaround Rule,”  Potentially Widening Who May Represent Employees during OSHA Worksite Inspections

by Brad Smith

September 10, 2024

New changes to the Occupational Safety and Health Administration’s rules regarding who can represent an injured employee during workplace OSHA inspections raise questions with employers about who may now gain access to its worksites and what steps should be taken to protect its interests.

Earlier this year OSHA modified regulation, 29 C.F.R. § 1903.8(c), also known as the “Walkaround Rule,” to potentially allow non-employee third parties to represent employees during OHSA workplace inspections. Prior to the modification, which took effect on May 31, 2024, employees were typically limited to choosing other employees as their representative during OSHA inspections. Under the new rule, employees may be permitted to select a third-party, non-employee, representative, if the third-party may be “reasonably necessary to the conduct of an effective and thorough inspection based upon skills, knowledge, or experience such as knowledge or experience with hazards or conditions in the workplace or similar workplaces, or language or communication skills.” 

OSHA does not specifically identify the third parties who can now be employee representatives under the modified rule, but the new language is general enough to raise concern about how broadly it will be interpreted and applied. Opponents of the modified rule fear it could mean that parties such as competitors, attorneys, activists, union representatives or other potentially unwelcome visitors could qualify under the broadened language and gain access to worksites, inspections and insight that was  previously more restricted. OSHA, on the other hand, believes the modification brings the rule more in line with its overall intent—to conduct more thorough inspections.

The amendment by OSHA does not change that employers can still limit access to some areas of the workplace to protect trade secrets, the inspections cannot disrupt normal business activities, and does not prevent the Compliance Safety and Health Officer from denying access parties who may be disruptive or are not found to be “reasonably necessary” to conduct an effective and thorough investigation.

Several outside agencies, including the AGC and U.S. Chamber of Commerce have challenged the modification, including filing multiple lawsuits requesting courts to vacate or limit application of the new rule. Whether the amendment will stand up against legal scrutiny or will need to be remodified has not yet been decided.

All employers should be aware of the change and take necessary steps to protect workplace safety, trade secrets, confidential information, and to decrease the risk of liability created by non-employees having access to workplaces during OSHA inspections. Some potential issues that should be addressed are liability waivers, strict rules or protocols for inspections, identifying confidential information that needs to be protected or locations that should have restricted access, and identifying employer representatives that may be necessary to rebut or counter employee representatives. Employers should also be prepared to push back when it appears that application of the new rule will permit unreasonable access beyond the scope and intent of the inspections or cause prejudice to their company. In some severe instances, the employer should consider invoking its right to refuse the OSHA inspection and force OSHA to seek a subpoena. Doing so may permit the employer to limit who is allowed to participate in the inspection.

Workplace In-Civility: The NLRB Changes Course

by Hunter Taylor

February 1, 2024

Employers have a vested interest in establishing and maintaining a professional environment for their customers and employees. It seems odd to even consider an alternative approach. After all, some amount of mental gymnastics is required to imagine a scenario in which the alternative would benefit the employer. But the concept is not free of its issues in execution. Some efforts to maintain “civility” in the workplace through employee and similar handbooks can create unintended consequences. The National Labor Relations Board (NLRB) has not hesitated to respond to these unintended consequences, as evidenced by its recent shifts in interpretation and enforcement of restrictions set forth in the National Labor Relations Act.

As an example, Section 7 of the Act guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” It gives employers the right “to refrain from any or all such activities.” Section 8(a)(1) of the Act also makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the Act.

What constitutes an interference, restraint, or coercion made by an employer is less clear. This issue has been the focus of varying (and at times conflicting) NLRB rulings in which the NLRB has attempted to determine where the Act lands on the pendulum between the: (a) employer’s interests in enforcing so-called “civility” policies, and (b) an employee’s freedom to engage in activities protected by the Act.

Confusingly, the NLRB has held that even when an employer’s facially neutral employment policy does not expressly restrict Section 7 activity, was not adopted in response to a protected activity, and has not applied to restrict a protected activity, the policy may still violate Section 8(a)(1) of the Act. Such a violation would occur if the employee “would reasonably construe the language to prohibit Section 7 activity.” Without sufficient regulatory guidance and clarity, an employer cannot adequately protect itself from an employee who may cleverly or unfairly “reasonably construe” language that violates the Act.

Until 2017, this “reasonableness” qualifier was enforced without substantial deference to objective circumstances, such as an employer’s legitimate interests in maintaining civility policies. This changed in the NLRB’s Boeing decision, in which the NLRB acknowledged the existence of special circumstances relative to the employer’s industry, work settings, and events specific to or resulting in the policy in question. Under Boeing, employers found some degree of stability in understanding the types or categories of policies that do not violate the Act.

However, following its invitation for public input (which was notably absent in Boeing), the NLRB changed course in its Stericycle decision. In Stericycle, the NLRB reemphasized a perception-based qualifier as to an employee’s “reasonable” interpretation of a workplace policy and paid particular attention to whether or not an “economically dependent” employee could interpret a policy to restrict Section 7 rights. The decision was a drastic shift in the NLRB’s position on the pendulum because it replaced the NLRB’s use of “categories” of acceptable rules in favor of a case-by-case approach that is contingent on disparate interpretations.

Poised to abandon the precedent it set in Boeing, the NLRB quickly applied the new elements and standards it laid out in Stericycle to Starbucks’ “How we communicate” policy.

Although Starbucks’ policy was facially neutral and included common requirements that its employees practice “professional and respectful” behavior, contained a uniform dress code, and required attendance at HR meetings related to employee benefits, the NLRB determined that Starbucks’ application of these policies created opposing interpretations as to the policy’s true meaning. According to the ruling, Starbucks’ selective implementation of its policies and certain language within its policy suggested there could be negative consequences for union activity. This resulted in the NLRB finding that Starbucks’ policy was “overly broad, vague, and can [be] reasonably construed to intrude on Section 7.” Of note, the NLRB imposed a significant burden of proof on Starbucks, requiring it to demonstrate that it would be “unable” to advance its legitimate interests with a “more narrowly tailored rule.” The impact of a burden of this sort cannot be understated as applied to workplace policies because each employer policy may now be rendered unenforceable if a less “restrictive” alternative is available.

In sum, recent NLRB cases reflect a substantial shift in the legality of workplace “civility” policies that “could” be interpreted to limit union activity and involvement. Further, the NLRB cases serve as a great reminder that employers need to periodically review their handbooks and update the handbooks accordingly. Any such updates should narrowly tailor policies to promote enforceability and hedge against potential contests that a policy violates the Act. 

To discuss how these policy changes could impact your business, contact Hunter Taylor at Griffith Davison’s Dallas office at (972) 392-8900, or email Hunter directly at htaylor@griffithdavison.com. 

This article first appeared in the January 2024 Issue of Dallas Bar Association Headnotes.

NLRB Adopts New Standard for Evaluating Workplace Rules

by Caleb Johnston

November 1, 2023

The National Labor Relations Board (“NLRB”) has prescribed a new legal standard for evaluating whether an employer’s workplace rules tend to interfere with the rights of employees which are protected by Section 7 of the National Labor Relations Act (“NLRA”). Specifically, the NLRB’s decision in Stericycle, Inc., 372 NLRB No. 113 (N.L.R.B. Aug. 2, 2023) sets forth the new standard and overturns the old test established in Boeing Co., 365 NLRB No. 154 (N.L.R.B. Dec. 14, 2017), which had governed employer’s workplace rules for the past six years. Employers should be aware of the changes the NLRB has implemented as it may require an employer to revise its workplace rules to comply with the new Stericycle standard. 

Legal Background. 

Under Section 7 of the NLRA, employees have the right to form, join, or assist labor unions and the right to join together as employees to advance their interests as employees. If an employer implements a workplace rule which interferes with, restrains, or coerces an employee in exercising their Section 7 rights, then the employer will have committed “unfair labor practice” in violation of the NLRA. 

A workplace rule which threatens to terminate an employee for joining a labor union is clearly a violation of an employee’s Section 7 rights. However, the analysis is not as clear when an employer implements facially neutral workplace rule. For example, a workplace rule which prohibits employees from discussing or disclosing “confidential information” is facially neutral. If the term “confidential information” can be interpreted to include information such as individual salaries or work schedules, then the rule may violate Section 7 because employees have the right under Section 7 to discuss and disclose their salaries and work schedules. In these more challenging cases, the standard prescribed by the NLRB will be used to determine whether or not the facially neutral workplace rule in question violates an employee’s Section 7 rights. 

The NLRB recently changed its standard for evaluating facially neutral workplace rules. The old standard, established in Boeing, sought to provide greater clarity and certainty for employers by placing workplace rules into one of three categories: (i) rules that were considered lawful; (ii) rules that were deemed unlawful; and (iii) rules that warranted “individualized scrutiny” to determine whether they violated an employee’s Section 7 rights. The three-category system established in Boeing is no longer in effect, however, as the NLRB recently decided to move to a more rigorous standard for analyzing workplace rules in Stericycle.

The New Stericycle Standard. 

The new standard in Stericycle replaces Boeing’s categorical approach with a case-by-case analysis of workplace rules. The Stericycle standard also implements a burden shifting framework. First, the NLRB must prove that the challenged workplace rule “has a reasonable tendency to chill employees from exercising their Section 7 rights.” At this stage, the workplace rule is interpreted from the perspective of a “reasonable employee.”  In other words, if an employee could reasonably interpret the workplace rule to interfere with, restrain, or coerce the employee in exercising their Section 7 rights, then the workplace rule is presumptively unlawful. 

The burden then shifts to the employer to rebut the presumption. This will require the employer to prove “that the rule advances a legitimate and substantial business interest, and that the employer is unable to advance that interest with a more narrowly tailored rule.” If the employer can satisfy its burden, then the challenged workplace rule is upheld as lawful.

Practical Considerations. 

The new Stericycle standard went into effect on August 2, 2023, and applies retroactively, meaning that all workplace rules which are challenged as violating Section 7 of the NLRA will be reviewed by the NLRB under the Stericycle standard moving forward. As a result, workplace rules that were previously lawful for an employer to maintain under the Boeing standard may now be held unlawful under Stericycle. For example, a “no recording” rule which prohibits an employee from recording workplace conversations was categorically approved as lawful under Boeing. Today, however, the same rule may be held unlawful under Stericycle if the rule is not narrowly tailored to serve the employer’s legitimate and substantial business interest.

Employers should consider reviewing their employee handbooks, manuals and other documents containing work rules or policies to ensure compliance with the NLRB’s newly announced standard in Stericycle. In addition, employers should consider adopting a policy which specifically sets out an employee’s Section 7 rights under the NLRA and explains that the employer’s workplace rules should not be interpreted as restricting those rights. While there is no guarantee that such policy would save an employer’s workplace rule from violating the NLRA, the General Counsel for the NLRB has taken the position that such policy should create a presumption that an employer’s rules are lawful.

To discuss how Stericycle may impact your workplace rules, please feel free to contact one of our attorneys at (972) 392-8900. 

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This update should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Further, this update shall not create a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult an attorney regarding the contents hereof.

Contractor Sentenced to Three Years in Prison Following Employee Death

December 17, 2019

On November 3, 2017, Gerardo Juarez began his first day of work for James Coon Construction. The next day Juarez fell from a roof he was repairing, suffering injuries which later proved fatal. Following the accident, James Coon, owner of Coon Construction, pled guilty to involuntary manslaughter and workers’ compensation fraud and was sentenced to three years in prison.

Coon Construction was hired to repair a roof at a three-story apartment complex in Akron, Ohio. New-hire Juarez was placed on the crew tasked with making the repairs. After two years of criminal litigation following the accident, it was discovered Coon did not provide Juarez with safety equipment adequate for work performed at such height, which is a felony. Evidence suggested that his fall could have been prevented had he been wearing adequate fall protection. Coon also failed to provide workers’ compensation coverage, another felony.

Criminal prosecution for failure to provide a safe environment for employees is an increasing trend. Federal law requires employers to instruct each employee in the recognition and avoidance of unsafe conditions and the systems applicable to his or her work environment to control any hazards or other exposure to illness or injury.  Failure to follow applicable safety laws and provide workers’ compensation insurance as required by law can expose employers to possible criminal action.

Reporting Fraudulent Information to the Workers’ Compensation Board Results in Criminal Charges

December 12, 2019

Lying to the workers’ compensation authorities in order to reduce premiums can result in criminal charges. On September 5, 2019, Manhattan D.A. and other New York state investigators announced the indictment of unlicensed labor broker Salvador Almonte and insurance broker Steven Asvasadourian on multiple fraud charges after they were caught in a scheme which included lying to the New York State Insurance Fund about the status and work of construction employees. Almonte and his accomplice underreported the size of Almonte’s companies and lied to insurance carriers about the type of work being performed to evade more than $1 million dollars in insurance premiums. In doing so, the pair left more than one hundred construction workers underinsured. In one instance, Almonte claimed that workers he sent to perform dangerous tasks on high-rise construction projects were cleaners, thereby drastically lowering the premium rates he paid.  Investigators found that more than 12 of Almonte’s workers have been injured in the past four years, one fatally, and Almonte refused to acknowledge to the New York Workers’ Compensation Board that he was their employer.

While this case illustrates extreme examples of fraud in the workers’ compensation system, the exposure to potential criminal liability for fraudulently reporting information to the workers’ compensation board is a legitimate, serious consequence of such actions.