Employment Law Watch : Employment & Labor Lawyer & Attorney : Reed Smith Law Firm

Following the lead of Maryland and Illinois, California is the latest state to stop employers from requesting social media log-in information, such as user names and passwords for Facebook, Twitter, or e-mail, from employees and job applicants. The new law also includes protections from employer retaliation against employees who refuse to provide this personal access information.

Bill AB-1844 broadly defines “social media” to include “an electronic service or account, or electronic content, including, but not limited to, videos, still photographs, blogs, video blogs, podcasts, instant and text messages, email, online services or accounts, or Internet Web site profiles or locations.” The law specifically forbids employers from forcing employees to (1) disclose their username or password for the purpose of accessing personal social media; or (2) access personal social media in the presence of the employer.

The new legislation is not without pro-employer aspects. It does not limit an employer’s ability to discipline an employee or take other action in response to the employee posting defamatory or other untrue comments about the employer. As an exception to the general prohibitions quoted above in the new law, California employers retain their right to demand that an employee divulge her/his personal social media content “reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations.”

But California employers and employers outside California with California-based workers need to tread carefully before requiring an employee to provide access to her/his social media. While the California law may permit the intrusion in limited circumstances, an employer needs to make sure the law permits the “intrusion” in question. In addition, the employer must learn whether the intended search and any resulting discipline is beyond the reach of the National Labor Relations Act as recently “clarified” and arguably expanded the NLRB’s Acting General Counsel. See our earlier alerts on this here and here. Finally, the search may implicate still other federal, state and local laws such as state laws that protect employees from adverse employment actions for engaging in activities that are “not unlawful.” 

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The "new" guidance -- accessible at http://www.eeoc.gov/laws/guidance/qa_arrest_conviction.cfm -- reinforces longstanding EEOC policy prohibiting employers from using arrest and conviction records to exclude individuals from employment. More recently, the EEOC has expanded enforcement efforts to include prohibitions on employer policies that exclude candidates from employment because of criminal history, arrests, and convictions. That is because such policies adversely affect or have a "disparate impact" on minority populations that have statistically higher arrest and conviction rates. The disparate impact analysis has long been used to combat race discrimination in the workplace. The "takeaway" messages for employers are in the EEOC's specific recommendations and stated limitations on how and when criminal background information can be used. Starters are that it must be a conviction, not an arrest, and the conviction must be for an offense related to the job in question, often a tough analysis for employers. The conviction must be relatively recent in time and be of a sufficient gravity to create legitimate concern by the employer.

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California's new Wage Theft Protection Act of 2011 (Labor Code Section 2810.5, effective January 1, 2012), requires employers to provide most new non-overtime-exempt employees with a written notice that contains specified information regarding, among others, wage rate, payday, employer name and address, workers' compensation insurance carrier information, and other information added by the Labor Commissioner as it may deem necessary

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This post was written by Valerie M. Eifert and William Bevan, III.

The District of Columbia Circuit Court of Appeals granted a motion for an injunction pending appeal filed by national trade associations challenging the NLRB Posting Rule that requires all employers covered by the National Labor Relations Act to post a notice informing employees of their rights under the Act.  In granting the motion to enjoin the implementation of the rule pending appeal, the Circuit Court noted that the Board earlier agreed to postpone operation of the rule during the district court proceedings.  The Circuit Court also found that the district court's decision to uphold the posting rule while depriving the Board of its primary enforcement mechanism against noncompliance creates uncertainty regarding the application of the rule and counsels in favor of granting the request for an injunction.  The Circuit Court has expedited the appeal, requiring all briefing to be concluded by June 29, 2012 and oral argument to be held in September, 2012.   

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This post was written by Joel S. Barras and Samantha M. Clancy.

The National Labor Relations Board’s (NLRB’s) Acting General Counsel Lafe Solomon recently issued a report on social media cases handled by the NLRB. This second report—he issued his first in August 2011— provides guidance to employers in developing and enforcing social media policies to comply with the National Labor Relations Act (NLRA). Copies of his two memos are available here and here.

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Attached is a decision from the NLRB in D. R. Horton, Inc. (decided the last day of Member Becker's term). In a 2-0 decision with Member Hayes recusing himself, the Board finds that an employer violates Section 8(a)(1) of the Act when it requires its employees who are covered by the Act, as a condition of their employment, to sign an agreement that precludes them from filing joint, class, or collective claims addressing their wages, hours and working conditions against their employer in any forum, arbitral or judicial. The Board finds such waivers to unlawfully restrict the Section 7 rights of employees to engage in concerted activity for their mutual aid and protection, notwithstanding the provisions of the Federal Arbitration Act.

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California's new Wage Theft Protection Act of 2011 (Labor Code Section 2810.5, effective January 1, 2012), requires employers to provide most new non-overtime-exempt employees with a written notice that contains specified information regarding, among others, wage rate, payday, employer name and address, workers' compensation insurance carrier information, and other information added by the Labor Commissioner as it may deem necessary. The new law requires that the Labor Commissioner create a notice template for employer use, which employers eagerly have been awaiting since the new requirements were signed into law in October 2011. Now the wait is over -- employers can access the Labor Commissioner's template for compliance with the new law at: http://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html.

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For decades, U.S. employment lawyers have stressed the need for employers to inject into employee handbooks and elsewhere that “your employment is at-will, terminable at any time, with or without notice.” This magic language, coupled with the legal presumption that an employment relationship is at-will unless otherwise stated, has generally been sufficient to overcome any argument from a terminated employee that s/he was anything more than at-will. 

According to a recent Illinois appellate case, even the most ironclad at-will proclamations may be insufficient when an employer makes a promise to an employee outside the scope of the actual employment agreement. Take a deep breath, and then read on.

The facts of Janda v. U.S. Cellular Corp. are not unusual. A new boss came into town, shook things up, and his subordinates were none too pleased. To boost morale, the employer held a focus group meeting for the plaintiff and other employees. The employer encouraged employees to be candid, promised to keep their comments confidential, and assured them of no retaliation for anything said at the meeting. Candid they were. Out came brutal honesty, largely centered on bashing the new boss.

The boss later confronted the plaintiff about the “nasty things” said about him at the meeting, apparently leaked to him by another focus group participant. The boss then fired the plaintiff and the other focus group participants, except the alleged informant.

The discharged plaintiff filed suit for breach of contract and promissory estoppel, seeking to hold his employer to its promises and assurances that his comments would be kept in confidence and without repercussions. For promissory estoppel, a plaintiff must prove (1) the defendant made an unambiguous promise to the plaintiff; (2) the plaintiff relied upon the promise; (3) the reliance was expected and foreseeable by the defendant; and (4) the plaintiff relied on the promise to his or her detriment. 

The trial court rejected both claims.  On appeal, the state appellate court affirmed the trial court’s denial of the breach of contract claim, based on existing at-will language in the governing employment documents, but reversed dismissal of the promissory estoppel claim. According to the appellate court, the basis for the promissory estoppel claim were the employer’s promises of confidentiality and no retaliation to encourage openness and honesty at the focus group meeting. Because the plaintiff had relied on those promises and “spilled his guts” to his detriment, his claim for promissory estoppel had validity. In the court’s judgment, a promissory estoppel claim was completely separate from and unaffected by the “at will” pronouncements.

The lesson to be learned? Be sure before you assure, because a court and jury are likely to make you live up to your promises.

The abundant benefits of focus groups obviously can be and often are crucial to an employer’s success and even survival, especially when competing globally. But it comes with a price. To encourage openness and honesty, any employer must make a Las Vegas like promise: “What happens here stays here.” And then, of course, make sure to keep it.

Speak with your Reed Smith employment attorney—or another experienced employment lawyer—about best practices and how to protect your company from irreparable loss of credibility, unnecessary court costs and liability while maintaining and improving a workplace that will encourage and motivate your employees to invest in, and feel invested in by, your company.

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This post was written by Don A. Innamorato and Sherri A. Affrunti.

The NJ DOL has published the new mandatory notice that, by December 7, 2011, must be posted in a conspicuous location and distributed to all existing employees who work in New Jersey. In addition, ALL new employees hired in New Jersey on November 7, 2011 or after must be immediately provided with a copy of this notice. Accordingly, it is recommended to include this notice immediately in all new hire packets, and to post it immediately on all bulletin boards or other locations where you, as an employer, post similar notices. If you have an internet or intranet site for exclusive use by employees and to which all employees have access, electronic posting of the notice on the site will satisfy the conspicuous posting requirement. Similarly, you may provide the notice to employees by email to satisfy the requirement to provide each employee with a copy of the notice. You may access a copy of the notice by clicking here.

The notice summarizes the record-keeping requirements under the following New Jersey statutes: the Wage Payment Law, the Wage and Hour Law, the Unemployment Compensation Law, the Temporary Disability Benefits and Family Leave Insurance Law, the Workers' Compensation law, the Prevailing Wage Act, and the Gross Income Tax Act. It also includes contact information for New Jersey State representatives who are available to provide employees with information or to facilitate their filing of complaints regarding an employer's alleged failure to meet the requirements of these statutes.

Employers risk fines up to $1,000 for failing to comply with the notice and posting requirements, in addition to potential criminal penalties.

This notice follows on the heels of last year's new legislation imposing stricter penalties - including the loss of operating licenses - for New Jersey employers who repeatedly fail to comply with the State's wage, benefit and tax laws. This new law was summarized in an Alert published in June 2010 and can be accessed by clicking here.

If you have any questions concerning the attached posting, the corresponding law, how it will impact your business, or the risks of non-compliance, please contact the authors of this Alert or the Reed Smith attorney with whom you regularly work.

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Last week, the IRS announced the Voluntary Classification Settlement Program (the “VCSP”), allowing eligible employers to voluntarily resolve U.S. past worker classification issues and reclassify workers as employees for federal employment tax purposes. Reclassifying workers as employees, however, raises many issues other than employment tax issues including, for example: retirement benefit plan issues; health and welfare benefit plan issues; and state tax classification, unemployment tax, and workers’ compensation issues. To learn more about the VCSP, please click here.

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In a unanimous opinion, the California Supreme Court has ruled that California's overtime laws apply to workers from out of state who perform work in California for a California-based employer. Sullivan v. Oracle Corp., No. 06-56649 (9th Cir. June 30, 2011). Answering certified questions from the U.S. Court of Appeals for the Ninth Circuit, the court ruled that California laws on overtime pay applied to software trainers employed by California-based Oracle Corporation with respect to work they performed in California, even though the employees resided in Colorado and Arizona. The court noted that "California's overtime laws apply by their terms to all employment in the state, without reference to the employee's place of residence. . . . To exclude nonresidents from the overtime laws' protection would tend to defeat their purpose by encouraging employers to import unprotected workers from other states." The court rejected Oracle's argument that interstate comity required that the employee's resident state's wage law traveled with the employee, as well as Oracle's complaints about the practical burdens on employers that might result from requiring them to apply California law to such employees.

Answering two other certified questions, the court also held that California's Business & Professions Code section 17200 applies to the overtime work issue (providing a four-year limitations period for such claims), but that time-barred FLSA wage claims that had accrued as to work performed in other states could not be resurrected in California under that longer limitations period.

While Sullivan specifically addresses a California-based employer's obligation to follow California's wage and hour laws for its out-of-state-resident employees who perform work in California, the case has implications for all employers with employees working in California who do not reside there. All employers with employees working in California, even on a transient basis, should be prepared to observe the state's wage and hour rules for work performed in the state.

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This post was written by Meghan Offer, Gene Connors and Don Innamorato.

To prevent job applicants with criminal records from automatic hiring rejection, cities and states are considering and already adopting so-called “Ban the Box” laws and ordinances. Among the states that have adopted such a law are Connecticut, Hawaii, Massachusetts, Minnesota, and New Mexico, and the cities of Atlanta, Baltimore, Chicago and Philadelphia. Among the states mulling such legislation are Rhode Island and Nebraska, and the city of Pittsburgh.

This Alert lauds the policy considerations behind “Ban the Box” type of legislation but points out how it can unintentionally create impossible-hiring decisions and pose huge legal risks for employers.

“Ban the Box” legislation, as discussed in the “Philadelphia Joins the Movement To Ban Inquiries into Arrests and Convictions on Employment Applications,” restricts and, in Philadelphia and other locales, limits covered employers from asking about an applicant’s criminal record during the hiring process. The laws in Connecticut, Hawaii, Minnesota, New Mexico, and Massachusetts, and the bill proposed in Rhode Island, forbid covered employers from asking an applicant about a conviction until after assessment of his or her qualifications for the job. Though the laws in Connecticut, Minnesota and New Mexico apply only to public (meaning government) employers, there is mounting support to amend them to cover private employers, as in Hawaii, Massachusetts, and Philadelphia.

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In AT&T Mobility v. Concepcion, U.S., No. 09-893, 4/27/11, an ideologically divided U.S. Supreme Court held that the Federal Arbitration Act (FAA) trumped California law to uphold class action waivers in arbitration. 

According to the majority opinion authored by Justice Antonin Scalia, a blanket prohibition on arbitration provisions requiring individual arbitration in favor of class-wide procedures would undermine the FAA's "liberal federal policy in favor of arbitration."  In so holding, the Court rejected the California Supreme Court rule in Discover Bank v. Superior Court, 36 Cal. 4th 148 (2005) that voided as unconscionable an arbitration clause containing a class action waiver. The Ninth Circuit Court of Appeals had upheld the Discover Bank rule. The U.S. Supreme Court, however, disagreed with both courts and held that the Discover Bank rule impermissibly "interferes with arbitration" under the FAA.

AT&T Mobility v. Concepcion, involving a consumer arbitration provision, has important implications for employers. Employers with mandatory pre-dispute arbitration agreements for employees should consider amending them to make collective class action relief impermissible. 

Stay tuned for further insight into arbitration and class action issues, including the eagerly awaited U.S. Supreme Court decision in WalMart over whether the court-certified class size is too broad. But, in pre-dispute arbitration, AT&T offers potential insulation from class action claims to at least employers and commercial service providers.

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This post was written by Don A. Innamorato and Meghan O. Offer.

On April 13, 2011, Philadelphia Mayor Michael Nutter signed a new city ordinance that bans Philadelphia employers from asking applicants about their convictions during the initial phases of the hiring process and precludes them from ever asking about arrests which failed to result in a conviction. Due to become effective on July 12, 2011, the Fair Criminal Record Screenings Standards Ordinance (“the Ordinance”) applies to all City agencies (other than the courts and law enforcement agencies) and private employers with ten (10) or more employees working within the City of Philadelphia. Similar to the “Ban the Box” legislation passed by several states and other cities such as Atlanta, Baltimore and Chicago, and pending in Pennsylvania cities such as Pittsburgh, the Ordinance aims to prevent applicants with criminal records from being summarily excluded from the hiring process. 

The Ordinance completely bars employers from ever asking about or basing hiring decisions on an applicant’s history of arrests that failed to result in a conviction. The Ordinance broadly defines forbidden inquiries as any direct or indirect method of gathering information through any mode of communication. Forbidden methods would include job applications and a recruiter’s written or oral requests for information. Although not specifically addressed in the Ordinance, this broad language will also likely preclude any “Google” or other electronic background checks to investigate an applicant’s arrest history.  The Ordinance also prohibits employers from asking about or otherwise investigating an applicant’s conviction history until completion of a “first interview” in person or by phone. Without an interview, the employer would have no right to gather any information regarding the applicant’s record of conviction. During the initial interview, the employer cannot ask about or discuss the applicant’s conviction history unless the applicant volunteers this information. After an initial direct interview, however, an employer is free to investigate the applicant’s conviction history. 

The Ordinance specifies that it does not alter the Pennsylvania Criminal History Record Information Act, 18 Pa.C.S. § 9125, that bars employers from denying employment based on a criminal conviction unless:

1. the conviction was for a felony or misdemeanor;
2. the crime has a sufficient connection to the applicant’s suitability for the position, and
3. the applicant is given written notice of the decision not to hire based on the conviction. 

Finally, although a Philadelphia employer may seek information about an applicant’s convictions after a first interview, how it obtains that information and any notice to the applicant remain governed by the Federal Fair Credit Reporting Act, 15 USC § 1681, et. seq.

Penalties:

Each violation of the Ordinance is a “Class III” offense under the Philadelphia Code that involves a possible $2,000-per-violation fine.

What Covered Employers Should Do Before July 12, 2011:

Covered Philadelphia employers need to take several steps prior to the July 12, 2011 effective date of this Ordinance:

1. Review and remove from current job applications, including any online applications, any questions or inquiries regarding an applicant’s arrest or conviction record;
2. Delay any manual or “automatic” criminal background system or procedure (including through third-party vendors) until after a first interview;
3. Warn, in writing, every recruiter, employee, or employer agent involved in the hiring process not to ask questions or otherwise seek information (as in emails) about an applicant’s past convictions until after the first interview and provide these individuals with social media training to avoid inadvertent violations of this Ordinance;
4. Avoid any inquiry into arrests that failed to result in conviction.

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EEOC Publishes Long-Awaited Regulations Under the ADA Amendments Act

More than two years after the Americans with Disabilities Amendments Act (“ADAAA”) became effective, the EEOC has issued Final Rules and Regulations (“Regulations”) that were published in the March 25, 2011 Federal Register. The Regulations, which become effective May 24, 2011, further demonstrate the ADAAA’s objective of broadening employee coverage to the maximum extent permitted. They also continue to shift focus from whether an employee is “disabled” to whether an employer has satisfied its legislative obligations to accommodate without discriminating. 

Although the definition of “disability” remains whether a physical or mental impairment exists that substantially limits one or more major life activities; a record of such an impairment; or being regarded as having such an impairment; how “disability” should be interpreted by employers has changed.  

Coverage under the ADAAA continues to require proof of a substantial limitation, but the Regulations specify that this is not intended to be a demanding standard. The EEOC seeks to implement Congressional intent to establish consistent and workable standards by establishing “rules of construction,” including the requirements that:

• A lower degree of functional limitation be applied
• “Substantially limits” be read broadly in favor of expansive coverage
• Determining whether an impairment substantially limits a major life activity be made without regard to the ameliorative effects of mitigating measures (except for “ordinary eyeglasses or contact lenses”)
• Episodic impairments or impairments in remission still qualify as disabilities if they would when active

The Regulations also expand the definition of "major life activities" through two non-exhaustive lists. The first list focuses on activities, some of which the EEOC has already recognized, such as walking. But some are new and include sleeping, concentrating, thinking and reading. The second list focuses on major bodily functions, such as the immune system, normal cell growth, and digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine and reproductive functions. 

In another broadening of coverage, the Regulations make no mention of any six-month durational requirement for establishing a disability, and instead specify that an impairment for any duration may be a covered disability.   

The Regulations also elaborate on the ADAAA’s coverage of individuals with episodic conditions or conditions in remission. They offer a non-exhaustive list of covered conditions, including cancer, post-traumatic stress disorder, major depressive disorder and multiple sclerosis.

Despite acknowledging that the determination of a disability requires an "individualized assessment," the EEOC lists conditions that will "virtually always" constitute a disability. These include cancer, cerebral palsy, diabetes, epilepsy, multiple sclerosis, major depressive disorder, bipolar disorder, obsessive compulsive disorder and autism. 

“Regarded as” claims also gain support under the Regulations. Such claims may be based upon an alleged perception of impairment, irrespective of whether that impairment is perceived as an actual disability. Though employers need not reasonably accommodate an employee with a “regarded as” disability, they must accommodate employees with a “record of disability,” unless they establish that it would be an undue burden.

Employers consequently should interpret “disability” broadly and focus on properly and fully participating in the interactive process. Employers should use the time before the Regulations become effective to review and sharpen their reasonable accommodation policies and procedures, and to provide training to management, human resources and legal staff on the ADAAA and these EEOC Regulations. 

Feel free to direct any questions or concerns about the ADAAA and the Regulations to the authors of this Alert, or the Reed Smith attorney with whom you work regularly.

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The United States Supreme Court has held that under the Fair Labor Standards Act (“FLSA”), the federal law that requires proper payment of wages and overtime pay, an employer cannot retaliate against an employee who complains about a possible violation of that law, even where the complaint is oral rather than in writing. Kasten v. Saint-Gobain Performance Plastics Corp., No. 09-834 (Mar. 22, 2011).

The FLSA provides that employers cannot “discharge or otherwise discriminate against an employee because such employee has filed any complaint or otherwise instituted any proceeding under or related to the [FLSA].” [emphasis added] The employer in Kasten argued, and the U.S. Court of Appeals for the Seventh Circuit had found, that by using the phrase “filed any complaint,” Congress meant to protect only those employees who put their complaints in writing. The Supreme Court disagreed, finding that interpretation would deter employees, particularly those who are uneducated or illiterate, from coming forward with good-faith concerns about possible violations of the law. At the same time, however, the Court recognized that the reference to filing a complaint “contemplates some degree of formality,” and that for a complaint to be protected, it “must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute.”

The employer also argued that employees should be protected only if they complain to government agencies, not to their employer. Although the Court declined to address that issue, its opinion in this case, and in others where the Court has broadly interpreted anti-retaliation provisions, leaves little doubt that employees who complain about possible FLSA violations – internally or externally, orally or in writing – are protected from retaliation.

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This post was written by Lisa M. Carvalho, Lucas Liben and George M. Linge.

This may be one of the abiding truths of the 21^st Century: the pervasiveness of modern communication technology has revolutionized how business is conducted, law is practiced, and life is lived. Nevertheless, courts remain protective of communications between an attorney and his or her client almost without regard to the form that communication takes.

Since the middle of the past decade, courts have faced the question of whether the attorney-client privilege can be abrogated when an employee uses employer-provided communication technology to email the employee’s personal attorney. Courts examine a variety of factors to answer this question, including:

• Whether the employee was operating an employer-owned computer or his or her own
• Where the computer was located
• Whether the email was transmitted through a company account or a personal account such as Gmail, Yahoo or Hotmail
• Whether the employee’s personal email account was password-protected. Perhaps most importantly, courts look to the language of the employer’s policy on email usage, particularly the policy’s stance on personal use, monitoring of email accounts and web activity, and retrieval of information.

Employers must decide whether the advantage of possibly accessing communications between a former employee and his or her counsel outweighs the disadvantages associated with the kind of communications policy necessary to abrogate attorney-client privilege. On the one hand, an employer's interests in information security and full control of its systems mitigates in favor of its having fully transparent access to its employees' electronic communications on the employer's systems, and would have the incidental benefit of possible access to employee communications that are against the employer's interest. On the other hand, an employer may wish, in some limited fashion, to be sensitive to its employees' privacy rights in the context of today's mobile workforce, and may choose not to exert an aggressive information security policy that would go so far as to permit the invasion of the attorney-client privilege.

To read more about the recent rulings and the two-part rule that seems to be emerging, please click here.

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This post was written by Stephanie Wilson, Amy Greer, Carl Krasik, and E. David Krulewicz.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was enacted July 21, 2010. Among other things, it added new Section 21F to the Securities Exchange Act of 1934 (“Exchange Act”). This Section establishes a whistleblower program that directs the SEC (the “Agency”) to pay monetary awards, or what has been viewed as “bounties,” to whistleblowers who voluntarily provide the SEC with original information about violations of the securities laws. If the original information results in the SEC obtaining monetary sanctions exceeding $1 million, the whistleblower can recover between 10 percent and 30 percent of the monetary penalties. The Section also sets forth a robust anti-retaliation framework for whistleblowers. For a detailed discussion of Dodd-Frank’s anti-retaliation provisions, please click here to see our earlier Alert, “Financial Regulators Set Out to Get Their Man: Federally Mandated Bounties and Anti-Retaliation Provisions Designed to Regulate the Financial Services Industry.”

The SEC's proposed regulations recognize that tension exists between an employee's use of his/her company's internal corporate compliance procedures and the lure of a potential bounty by proceeding directly to the SEC. The proposed regulations seek public comment about this particular issue, among others. Regardless of whether this tension is resolved adequately from the employer's perspective, employers can strengthen their position by carefully evaluating their internal compliance process to ensure its effectiveness.

To read the full Alert, please click here.

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This post was written by Samantha M. Clancy and Kimberly A. Craver.

The United States Supreme Court has unanimously held that an employee may bring Title VII retaliation claims where he or she is subject to an adverse employment action, because someone else “closely related” to the employee engaged in protected activity, such as filing a charge of discrimination or opposing discrimination.

In Thompson v. North American Stainless, LP (No. 09-291, Jan. 24, 2011), Eric Thompson and his fiancée, Miriam Regalado, were both employed by North American Stainless. Three weeks after receiving notice that Regalado had filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”), the company fired Thompson for alleged performance-based problems. Thompson filed his own EEOC charge and later sued the company, claiming that he had been fired in retaliation for his fiancée’s EEOC charge. The district court granted the employer’s motion for summary judgment. A panel of judges from the Sixth Circuit initially reversed, but after a rehearing en banc, the full circuit affirmed, holding that Thompson was not protected by the anti-retaliation provisions of Title VII because he did not personally engage in protected activity on his own behalf or on behalf of his fiancée.

The Supreme Court reversed the Sixth Circuit’s decision. Finding that the anti-retaliation provisions of Title VII must be construed broadly to encompass any employer action that might dissuade a reasonable worker from making or supporting a charge of discrimination, the Court said it was “obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired.”

Although the Court refused to identify a fixed class of relationships for which third-party reprisals are unlawful, it noted that firing a close family member will almost always rise to that level, “while a milder reprisal on a mere acquaintance will almost never do so.”

The Court also rejected the employer’s argument that Thompson was not, in the words of Title VII, a “person aggrieved” under that law. The Court applied the “zone of interests” test, which allows suit by any plaintiff “with an interest ‘arguably [sought] to be protected by the statutes.’” The Court concluded that Thompson fell within the zone of interest protected by Title VII because that statute is intended to protect employees, such as Thompson, from unlawful acts by their employers.

Though this ruling does not establish a bright-line test for third-party retaliation claims, employers must take notice. When deciding to take an adverse action against an employee, an employer must take care not only when the employee has engaged in protected activity himself or herself, but also where he or she is closely associated with someone else who has. 

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This post was written by David Weissman, Cindy Minniti and Daniel Schleifstein.

On December 13, 2010, New York Governor David A. Paterson signed the Wage Theft Prevention Act (“Act”). The New York Labor Law currently requires employers to notify employees in writing, at the time of hiring, of their rate of pay, pay date, and overtime rate (if applicable). The Act amends the law to significantly increase the penalties for wage payment violations, particularly for repeat offenders, and now requires employers to provide additional information regarding the payment of wages to employees. All New York employers must revise their pay practices by the Act’s effective date, April 12, 2011.

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This post was written by Joel S. Barras and Michael D. Jones.

On March 15, 2011, the U.S. Department of Justice’s amended Final Rule substantially revising and expanding the regulations implementing the Americans with Disabilities Act will become effective. Compliance, however, is not mandated until March 15, 2012. Among other substantive changes, the amended regulations adopt the 2010 ADA Standards for Accessible Design, which implement new accessibility guidelines for government facilities and commercial places of public accommodation. In addition, the amended regulations address numerous accessibility issues, including selling and issuing tickets to individuals with disabilities; accommodating service animals, wheelchairs and other power-driven mobility devices; providing auxiliary communication aids; and making reservations in places of lodging.

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This post was written by John T. McDonald and Don A. Innamorato.

The United States Bankruptcy Code prohibits an employer from taking adverse action against an existing employee because of a bankruptcy filing.

In December, the United States Court of Appeals for the Third Circuit refused to extend that same protection to applicants for employment. In Rea v. Federated Investors, the court ruled that the phrase "discrimination with respect to employment" in section 525(b) of the Bankruptcy Code was not broad enough to encompass discrimination in the denial of employment, and concluded that an employer may refuse to hire a job applicant based on a prior bankruptcy filing. Thus, the court upheld the dismissal of the plaintiff's case on a motion to dismiss for failure to state a claim. 

Despite this ruling, employers should be wary of using prior bankruptcy filings, and more generally credit reports, when making employment decisions, as several U.S. states have laws strictly limiting the use of such information. Also, the EEOC recently filed a nationwide hiring discrimination lawsuit asserting that an employer's use of job applicants' credit histories discriminated against applicants on the basis of race under the disparate impact theory of employment discrimination under Title VII. EEOC v. Kaplan Higher Education, Inc., No. 1:10-cv-02882 (N.D. Ohio), filed December 21, 2010. In the past, the EEOC expressed its position that unless a credit history is strongly related to the position at issue (e.g., a position in which the employee is charged with handling cash), use of credit histories may be discriminatory, resulting in liability, even if the discrimination was unintentional. 

Thus, employers should review their hiring policies to the extent they use credit checks, and should consult with employment counsel as necessary.

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This post was written by Cindy S. Minniti and Daniel A. Schleifstein.

In light of recent high-profile lawsuits in New York involving defendants such as Starbucks and Del Posto, employers must be aware of important new changes to New York labor laws that can significantly affect their business and profits. 

Minimum Wage Increase for Tipped Employees

Minimum wages for tipped workers in the hospitality industry, such as restaurant and hotel workers, will increase as follows effective January 1, 2011:

• Tipped non-food service employees in the hospitality industry must now receive at least $5.65/hour (up from $4.90/hour)
• Tipped food service employees in the hospitality industry must now receive at least $5.00/hour (up from $4.65/hour)
• Service workers for resort hotels must now receive at least $4.95/hour (up from $4.35/hour)

Employers have until February 28, 2011 to make any necessary changes to their payroll systems, but must pay employees the new wage rates retroactive to January 1, 2011.

Employers May Mandate Tip Pooling

Under the new law, restaurants also may now mandate tip pooling, the distribution of tipped food service workers' gratuities among tipped and nontipped workers. Restaurants using tip pooling must maintain a daily log of tips collected and handed out for at least six years. Tip sharing, when food service workers give a cut of their tips to nontipped employees, is also allowed. However, unlike the practice of tip pooling, employees conduct these transactions themselves.

Tips for Employers

• Maintain accurate payroll records
• Maintain accurate tip pooling records (if applicable)
• Know your employees' current tipping practices and remediate as necessary

Reed Smith is ready to assist employers in complying with all New York and federal labor laws and regulations while minimizing the adverse impact and cost to the employer. Please feel free, at any time, to contact Cindy Minniti, Daniel Schleifstein or any Reed Smith lawyer you work with to discuss these important new changes.

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On January 10, 2011, employers will become subject to new regulations issued by the U.S. Equal Employment Opportunity Commission (“EEOC”) that interpret the Genetic Information Nondiscrimination Act of 2008 (“GINA”). Employers must now comply with GINA’s tough restrictions on the acquisition, use, and disclosure of genetic information about applicants, employees, former employees, and all such individuals’ family members. In particular, employers must take affirmative steps to avoid receiving genetic information about applicants, employees, or any of their family members.

The following addresses some key questions about how the new EEOC regulations will affect employers.

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The National Labor Relations Board (“NLRB” or “Board”) recently issued a complaint against a Connecticut ambulance service accusing it of illegally discharging an employee for posting negative comments about her supervisor on her Facebook page. The NLRB also challenged the employer’s blogging and Internet policy, asserting that it chills employee rights under the National Labor Relations Act (the “Act”). The Act protects the right of all workers, both union and non-union, to communicate with one another about wages, hours, and other terms and conditions of employment, and prohibits employers from taking action against employees for having engaged in such “protected concerted activity.”

According to the NLRB’s complaint, Dawnmarie Souza was asked to prepare an incident report after the company received a customer complaint about her. A supervisor denied Ms. Souza’s request for assistance from her union, Teamsters Local 443, in completing the report. The Board also alleges that the supervisor threatened Ms. Souza with discipline because of her request for union representation.

Later that day, on her own time and using her own computer, Ms. Souza posted negative comments about the supervisor on her Facebook page. In support of Ms. Souza, her coworkers also posted negative comments about the supervisor on the same page. The company discharged Ms. Souza just three weeks later, and the NLRB claims it did so because she violated the company’s Internet policy. The employer, however, contends that it discharged Ms. Souza based on several serious complaints about her behavior. 

Following an investigation, the NLRB’s Hartford office determined that the Facebook postings were “protected concerted activity.” In addition, the Board viewed the company’s Internet and blogging policy, which barred employees from making disparaging remarks when discussing the company or a supervisor and which prohibited employees from depicting the company online without company approval, as a violation of the Act. An NLRB administrative law judge is set to hear the case in January.

Until a decision is rendered, all facts relating to this case, including the company’s Internet and blogging policy, will not be publicly available. The Board’s position, however, is that the policy chilled employees’ rights under the Act by barring employees from making any disparaging remarks or depicting the company in any way on the Internet without prior permission. Such policies are bound to be viewed as overly restrictive by the Board, especially because employees would generally be protected if they engaged in the same sort of behavior on their own time in any public forum.

This is not the first time that the Board has closely examined whether a social media policy infringes upon employee rights. On December 4, 2009, the NLRB’s Office of General Counsel issued an Advice Memorandum analyzing a social media policy adopted by Sears Holdings, which prohibited employees from using social media to disparage “a company’s or competitor’s products, services, executive leadership, employees, strategy and business prospects,” to discuss confidential and proprietary information, or to make explicit sexual references. The Office of General Counsel found this policy was permissible because a reasonable employee, viewing the policy as a whole, would not believe it limited conduct protected by the Act. 

Every employer, whether it has a union or not, is now on notice that the NLRB will focus on examining employers’ efforts to limit employees’ use of social media, challenging those it views as likely to chill employee rights to act together to complain about or address work issues. Employers should thus analyze their social media policies to ensure that employee restrictions are not so broad as to interfere with or chill such employee rights. While an employer can restrict disclosure of confidential and proprietary information and require compliance with its harassment policy, it cannot prohibit employees from discussing the employer with other employees on social media sites, at least not where such discussion could be “concerted activity” protected by the Act.

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The California Supreme Court's recent decision in Reid v. Google, Inc. underscores an employer's need to take reasonable steps to eliminate all inappropriate comments from the workplace at every level of the organization. Under Reid, even casual comments made by non-decisionmakers may be used to support claims of discrimination. It is recommended that employers train – and retrain – employees at all levels on proper workplace conduct.

Please click here to read the full alert.

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This post was written by David Krulewicz and Stephanie Wilson.

As stated in our previous blog posting, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or the “Act”) into law on July 21, 2010, with the objective of ushering in a new era of financial regulation and transparency. The Act’s range encompasses not only the usual group of financial services employers, but it extends to mortgage brokers and insurance adjusters as well. Portions of the Act, including those discussed below, went into effect immediately. However, portions of the Act have left more questions than answers as to what long-term impacts the legislation will have on the financial industry. 

A few of the Act’s highlights include bounty provisions, additional changes to the Securities Exchange Act of 1934 and changes to amend SOX’s anti-retaliation provisions in a number of ways. A brief list of actions that employers can take is also noted.

To read the full alert, please click here. 

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This post was written by Daniel J. Moore and Stephanie Wilson.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, created some of the most sweeping changes to the financial industry since the Great Depression. Section 342 of the Dodd-Frank Act requires federal financial agencies to create an Office of Minority and Women Inclusion (“OMWI”), which is responsible for “all matters of the agency relating to diversity in management, employment, and business activities.” This provision could significantly impact the diversity practices of federal financial agencies, agency contractors, and other entities that do business with these agencies.

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This post was written by Daniel J. Moore and Eugene K. Connors.

A little-noticed provision of the 2010 health care reform legislation requires employers to provide nursing mothers with "reasonable break time" to express breast milk for one year after a child's birth.  Section 4207 of the Patient Protection and Affordable Care Act (P.L. 111-148), 29 U.S.C. § 207(r)(1) ("PPACA"), which became effective March 23, 2010, amends the Fair Labor Standards Act ("FLSA") to require employers to provide a break each time an employee needs to express milk, in a location other than a bathroom that is "shielded from view and free from intrusion by coworkers and the public."

The Department of Labor ("DOL") has yet to issue regulations defining a "reasonable" break or what sort of location may be used for lactation.  In July 2010, the DOL did release a "Fact Sheet" that says employers should provide break time to express milk "as frequently as needed by the nursing mother," and that the frequency and duration of the breaks will "likely vary" among mothers.  The Fact Sheet also says that the location provided must be a "functional space" for expressing milk, but need not be dedicated solely for a nursing mother's use, as long as it is available whenever needed.  The Fact Sheet, however, is only intended for general information and is not an official statement of the law, like federal regulations.

Although the new law applies to employers of any size, those with fewer than 50 employees need not provide such breaks if doing so "would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer's business."

Under the new law, these breaks may be unpaid.  That is an exception to the FLSA's rule that breaks of fewer than 20 minutes be paid as compensable time.  But employers should look out for more "generous" state or local laws that "trump" that unpaid exception.  This law does not preempt state laws that offer greater protection for nursing mothers who work, and 24 states and the District of Columbia have laws that apply to such employees.

The law itself contains no penalties for violations.  Both penalties and remedies available to aggrieved employees are likely to be in forthcoming DOL regulations.

Feel free to contact a Reed Smith attorney with any questions or concerns about break times for nursing mothers.  Additional information and the full Fact Sheet are accessible through the DOL Wage and Hour Division website.

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A new law will make it much more costly for Illinois employers that fail to pay employees their earned wages, including final compensation such as accrued but unused vacation pay.  The Illinois Wage Theft Enforcement Act, S.B. 3568 (the "Act"), signed into law July 30, 2010, increases both civil and criminal penalties for violating the state's wage payment law, imposes new risks for employers who ignore or unsuccessfully challenge employees' wage claims, and creates a new cause of action for employees who face retaliation for having complained about unpaid wages.  The Act will take effect January 1, 2011.

Illinois Wage Payment and Collection Act

The Illinois Wage Payment and Collection Act (the "Wage Payment Act") requires employers to pay employees their earned wages no later than a specified period following the date on which the wages are earned, and to pay employees who resign or are terminated all wages they earned through their last day of employment, no later than the first regular payroll date thereafter.  The law applies to every employee in Illinois, exempt or non-exempt, regardless of the employer's size or location.  "Earned wages" includes not only an employee's salary or hourly pay, but also any earned bonuses or vacation pay.  With some limited exceptions such as tax withholdings and authorized deductions for benefits, the Wage Payment Act also prohibits employers from deducting anything from an employee's wages, unless the employee signs an authorization at the time of the deduction.  The law also allows employees to recover damages from any corporate officer or agent of an employer who knowingly permits the employer to violate the Wage Payment Act.

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Tracking the trend of increased federal and state focus on the misclassification of workers, the U.S. Court of Appeals for the Ninth Circuit recently applied California law to hold that plaintiffs were entitled to a trial on the merits against their former employer for improperly classifying its California drivers as independent contractors, notwithstanding that the drivers had all signed independent contractor agreements that provided that Texas law controlled.  Narayan v. EGL, Inc., Case No. 07-16487 (9th Cir. July 13, 2010).

EGL - an international transportation, supply chain management, and information services company headquartered in Texas - retained drivers to pick up and deliver freight in California, classifying them as independent contractors rather than as employees.  EGL required each driver to sign a "Leased Equipment and Independent Contractor Services" agreement that, among other things, referred to the driver as a "Contractor," provided that the parties intended to "create a vendor/vendee relationship," and in which each driver acknowledged that neither the "Contractor nor any of its employees or agents shall be considered to be employees of" EGL.  The agreements also contained a provision requiring that they be interpreted under Texas law.

Several California drivers sued EGL, claiming that they had been misclassified as independent contractors, and demanding damages for unpaid overtime wages, business expenses, missed meal breaks, unlawful deductions from wages, and other relief under the California Labor Code.  Applying Texas law per the agreement, the district court found that the drivers were independent contractors and granted summary judgment in favor of EGL.

The Ninth Circuit reversed.  As a starting point, the court refused to apply Texas law to the dispute.  Noting that the drivers sought entitlement to employment benefits under California's Labor Code and that state's statutory and regulatory scheme, the court held that it was not required to interpret the agreements to decide the case.  The court instead found that California law should apply to determine whether EGL could be liable for violating the California Labor Code.

Turning to the merits of the case, the Ninth Circuit again disagreed with the district court, finding that the drivers had established a prima facie case that they were employees rather than independent contractors.  The appellate court applied California's multifactor test in analyzing whether the drivers worked as employees or independent contractors, citing, among others, the following facts as supporting the drivers' claim that they were employees:

• The delivery services provided by the drivers were integral to the regular business operations of EGL
• EGL's Safety and Compliance Manual and Driver's Handbook instructed the drivers on how to conduct themselves
• The drivers were ordered to report to the EGL station at a set time each morning
• EGL controlled other aspects of the details of the drivers' performance, such as requiring that they wear EGL-branded shirts, safety boots, and EGL identification cards
• EGL supplied branded equipment, such as boxes and packing tape
• The agreement provided for automatic renewal clauses and could be terminated on 30 days' notice, which was a substantial indicator of an at-will employment relationship
• The drivers' occupation did not require a high level of skill
• The indefinite and lengthy duration of the drivers' relationship with EGL (some of whom had worked for EGL for several years)

The court noted that in light of these facts, the drivers' acknowledgment that they were independent contractors was not significant under California law.

In reaching its conclusion, the Ninth Circuit found that once a plaintiff presents evidence that he provided services for the "employer," the plaintiff is presumed to be an employee unless the employer can prove that the individual was in fact an independent contractor.

In light of this case, and the continuing scrutiny by federal and state agencies on the misclassification of workers as independent contractors, companies should audit and analyze their independent contractor agreements with vendors, owner-operators, or contractors, as well as the practices of its contractors, to determine whether the relationship is truly one of independence.  Where there are any questions or concerns about possible misclassification,  experienced employment counsel should be consulted to determine how best to address the situation before any company is forced to defend time-consuming and expensive litigation.

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This post was written by Kimberly A. Craver, with contributions from Joel S. Barras, Scott E. Blissman and Eugene K. Connors.

The U.S. Supreme Court held that a public employer’s review of transcripts of an employee’s text messages on an employer-issued pager constituted a reasonable search under the Fourth Amendment of the United States Constitution. City of Ontario, Calif. v. Quon, No. 08-1332 (June 17, 2010). Although the case involved a public employer, it has some important lessons for private sector employers as well.

Factual Background

Quon worked for the City of Ontario, California, as a police sergeant and as a member of its SWAT team. In 2001, the police department issued pagers to its SWAT team members to help them mobilize and respond to emergency situations. The City’s contract with its wireless service provider had a monthly character limit for each pager, and the City required officers to reimburse it for the additional fees incurred for monthly usage over that limit. When the reimbursement process became burdensome, the City reviewed the communications to determine if the existing character limit was too low for work-related purposes or if the overages were for personal messages.

An initial review showed that several officers had used their pagers for extensive personal text messaging. For instance, many messages sent and received on Quon’s pager were personal in nature, and several were sexually explicit. This prompted the Police Department’s Internal Affairs Division to investigate whether Quon had violated department rules by pursuing personal matters while on duty. The investigation concluded that he had done so, noting for instance that of the 28 messages Quon averaged per shift, only three were work-related.

The City had a “Computer Usage, Internet and E-mail Policy” that permitted incidental, personal use of City-owned computers and equipment. The policy warned employees that personal communications could be monitored, and that employees had no expectation of privacy in such communications. Although the policy did not mention text messages, the City made clear to employees that such messages would be treated like e-mails. The police lieutenant responsible for the City’s wireless contract, however, told Quon that “it was not his intent to audit [an] employee’s text messages to see if the overage [was] due to work related transmissions.” Quon interpreted that comment to mean that the City would not examine the content of his text messages.

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This post was written by Daniel J. Moore, James A. Burns, Jr. and Joel S. Barras.

Just 10 days after taking office, President Obama signed Executive Order 13496, requiring all federal contractors and subcontractors to notify employees of their rights under the National Labor Relations Act (NLRA), including their right to join and support unions, and to include in every contract, subcontract, and purchase order, a pledge to honor the employee notice requirements. The U.S. Department of Labor (DOL) has now issued its final rule implementing the Executive Order, specifying how contractors and subcontractors must comply with those requirements, including a poster describing employees’ rights and how they can file claims with the National Labor Relations Board (NLRB), and the penalties employers will face if they fail to comply. The rule will take effect June 21, 2010.

Who Is Affected by Executive Order 13496?

Executive Order 13496 (“the Order”) affects contractors and subcontractors who contract or subcontract with a federal government agency and are covered under the NLRA. The Order does not apply to the federal government, state or local governments, labor unions, or employers who are covered by the Railway Labor Act. The Order also does not apply to prime contracts under the simplified acquisition threshold, currently set at $100,000, or subcontracts of $10,000 or less.

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This post was written by Samantha M. Clancy, E. David Krulewicz and Robert M. Jaworski.

The United States Department of Labor (“DOL”), Wage and Hour Division, recently published an Administrator’s Interpretation that takes the position that mortgage loan officers with certain “typical” job duties are not subject to the administrative employee exemption of the Fair Labor Standards Act. The DOL reasoned that mortgage loan officers’ primary duties are to make sales, and these are not administrative functions as defined by federal regulations. As a result, mortgage loan officers are not exempt from the FLSA’s minimum wage and overtime compensation rules under the administrative employee exemption. The DOL based its new interpretation on the statutory and regulatory framework, as well as on a thorough review and analysis of recent case law. With this determination, the DOL reverses its previously held position and explicitly withdraws Opinion Letters from February 2001 and September 2006, which stated that mortgage loan officers could be considered exempt administrative employees. 

The administrative exemption applies to employees whose job duties and qualifications meet all of the following tests: (1) the employee is compensated on a salary or fee basis as defined in the regulations at a rate of not less than $455 per week; (2) the employee’s primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. 

The DOL’s interpretation focuses on the second test. The DOL noted that a mortgage loan officer’s typical duties include contacting and gathering financial information from customers, entering data into computer programs to determine which loan products may be offered to a customer, assessing the loan products identified, and trying to match the customer’s needs with one of the company’s products. Those duties, combined with other factors, led the DOL to conclude that mortgage loan officers’ primary duty is to make sales, rather than administrative functions.     

In reaching its conclusion, the DOL also relied on the following factors:

• In lawsuits brought by mortgage loan officers, mortgage companies have typically conceded that the officers’ primary duty is sales.
• Mortgage loan officers are usually paid commissions based on sales, and their performance is evaluated based on sales volume.
• The DOL could not find any reported case holding that a mortgage loan officer, whether working inside or outside, had a primary duty other than sales.
• A primary duty to make sales is not directly related to the management or general business operations of an employer or an employer’s customers, a necessary part of meeting the administrative exemption. 

Although Wage and Hour Administrator Interpretations do not have the force of law, they are given considerable weight by the courts.  This new interpretation, therefore, will significantly affect financial institutions and other related organizations that currently consider their mortgage loan officers to be exempt from overtime pay. Such employers should take immediate steps to address this new interpretation, such as by engaging outside counsel to audit current practices and to otherwise ensure full compliance with all parts of the FLSA. And given that the DOL’s new approach does not limit application of other FLSA exemptions to mortgage loan officers, employers should also consider whether other exemptions may apply. For example, mortgage loan officers may qualify as exempt employees pursuant to the FLSA’s exemption for outside sales staff, i.e., employees who are primarily responsible for sales or for obtaining contracts for services, and who are customarily and regularly engaged away from their employer’s place of business in performing such duties. Counsel familiar with FLSA issues can provide valuable assistance in this process. It may also be necessary to reorganize compensation plans or reclassify employees to ensure compliance.

Whatever approach is chosen, in light of the real potential for class action lawsuits seeking double damages and attorneys’ fees on behalf of all mortgage loan officers who an employer has employed going back as far as three years, this Administrator’s Interpretation cannot be safely ignored.

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This post was written by Laurence G. Rees, Sara A. Begley, Eugene K. Connors, Casey S. Ryan, Carl De Cicco, Amber M. Spataro.

In our everyday lives, we've all noticed or become a part of the phenomenon of social media Facebook, Twitter, YouTube, Flickr, MySpace and more. The options offered and growth of the media have been staggering. With that growth has come new legal risks, including employment issues, quite unlike anything we've seen before. And with things happening at lightning speed, it's hard to keep up, much less react when something goes awry.

In October 2009, we published a White Paper on social media and United States law entitled Network Interference: A Legal Guide to the Commercial Risks and Rewards of the Social Media Phenomenon. The response was unlike quite anything we'd ever seen before as clients, friends, and colleagues from around the globe asked for copies and praised the work.

This month, we've published the second edition which includes a chapter on Employment Practices that addresses employment issues arising from the use of social media in both the U.S. and Europe.

Click here for the new edition and bookmark the entry to be sure to get ongoing revisions.  You can also read the employment chapter by clicking here on our sister technology blog, Legal Bytes.

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Lessons for Employers in a Social Media World

This post was written by Don Innamorato and E. David Krulewicz.

Recently, in Stengart v. Loving Care Agency, the New Jersey Supreme Court held that an employee had a reasonable expectation of privacy in her Internet-based emails to her lawyer, despite the fact that she sent such emails from a company-owned laptop and was on notice of the employer’s written policy that emails may not be considered “private or personal.” The opinion is significant not only in recognizing a privacy interest for employees’ communications to their attorneys using company-owned-and-monitored networks, but also in providing important guidelines for employers drafting or updating their policies on use of email and the Internet. In addition, Stengart issues a warning to both in-house and outside counsel involved in the forensic review of employees’ computer-based data and communications.

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On April 7, 2010, the Internal Revenue Service (“IRS”) issued the form employee affidavit that employers can use to claim a payroll tax credit for newly hired employees, made available under the Hiring Incentives to Restore Employment (“HIRE”) Act that was recently signed into law.

As noted in our earlier client alert on the HIRE Act, the law contains two key tax breaks that are available to most employers, including businesses, agricultural employers, tax-exempt organizations, tribal governments, and public colleges and universities. First, it exempts an employer from paying its share of Social Security payroll taxes (normally 6.2 percent) in 2010 for any unrelated employee, hired after February 3, 2010 and before January 1, 2011, who (1) swears under oath that he or she did not work more than 40 hours during the past 60 days, and (2) was not hired to replace another employee, except one who voluntarily resigned or was terminated for cause. To demonstrate that an employee’s hiring meets the first of those tests, employers can have qualified employees sign the form affidavit, also known as a Form W-11.

Second, the Act offers a tax credit to businesses that keep a newly hired qualified employee for at least 52 consecutive weeks, so long as the employee’s wages during the last 26 weeks of that period are at least 80 percent of his or her wages during the first 26 weeks of the period. The credit is equal to the lesser of $1,000 or 6.2 percent of the employee’s wages during the 52-week period.

Additional information about these tax credits available to employers, including a useful set of FAQs, is available at the IRS website.

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A little-noticed provision of the new health care reform law requires employers to provide new mothers with “reasonable break time” to express breast milk for nursing children who are up to 12 months old. Section 4207 of the Patient Protection and Affordable Care Act (P.L. 111-148), 29 U.S.C. § 207(r)(1), amends the Fair Labor Standards Act (“FLSA”) to require employers to allow a break each time that such an employee needs to express milk, and a place to do so, other than a bathroom, that is “shielded from view and free from intrusion by coworkers and the public.” Because Congress did not specify an effective date for this requirement, it went into effect March 23, 2010, when the president signed the bill.

Although the new law applies to employers of any size, those with fewer than 50 employees need not provide such breaks if they can demonstrate that doing so “would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.”

The law provides that employers need not compensate employees for any work time that they spend taking such breaks, an exception to the FLSA’s usual rule that breaks of less than 20 minutes must be treated as compensable time. Employers should keep in mind, however, that more generous state laws may trump that exception.

Because the law does not preempt state laws that offer greater protection for nursing mothers who work, and 24 states and the District of Columbia have passed laws that apply to such employees, employers should be sure to check local law before deciding how to proceed.

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This post was written by Bill Bevan, John DiNome and Joel Barras.

This past weekend, with the Easter Congressional recess just under way, President Barack Obama wasted no time in announcing the recess appointments of his two proposed Democratic nominees to serve as members on the National Labor Relations Board (NLRB). One appointment was Buffalo union-side attorney Mark Pearce; the other was the highly controversial Craig Becker from Washington, D.C., who is counsel to the AFL-CIO and the Service Employees International Union. President Obama decided not to install his Republican nominee, Brian Hayes, as a recess appointment to the NLRB. As a result of these recess appointments, Democrats now occupy three of the four filled seats on the NLRB, with Mr. Hayes awaiting Senate confirmation to occupy the remaining seat. Mr. Becker’s and Mr. Pearce’s appointments will last until the end of the next Congressional session, which coincides with the end of 2011. Notably, the terms of Republican Board Member Peter Schaumber and Republican NLRB General Counsel Ronald Meisburg expire in August 2010. The president, of course, could simply take his time filling Mr. Schaumber’s seat, leaving the Board at three Democratic Members, and let the general counsel’s side of the Agency be run by a career acting general counsel until his administration sees what the makeup of Congress looks like after the 2010 elections. Given Mr. Becker’s published works, which are explicitly pro-union, and his stated belief that the Act can be structurally reformed by Board decision-making and rule-making, it is expected that employers’ rights, particularly during union organizing campaigns, will be greatly diminished through future NLRB decisions. Indeed, Mr. Becker’s stated views in the past are that employers should essentially have no involvement in union organizing elections. As always, we will continue to monitor the NLRB docket and decisions to update you on any legal developments.

Also included in the president's announcement were two appointments to the Equal Employment Opportunity Commission (EEOC), Georgetown Law Professor Chai Feldblum and the former Assistant Secretary of Labor for Employment Standards under President George W. Bush, Victoria Lipnic.

To learn more about the appointments, please read the White House's press release.

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This week, President Obama signed into law a $17.6 billion jobs creation package passed by Congress, H.R. 2847, the Hiring Incentives to Restore Employment Act (“HIRE Act”). This legislation includes tax incentives for businesses to hire and retain the unemployed; extension of infrastructure programs affecting surface transportation, energy, and school construction projects; and continuation of depreciation programs in effect for small businesses.

For more information about the HIRE Act, please read our client alert written by Christopher L. Rissetto, James A. Burns, Jr. and Robert Helland.

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Recent opinions by the California Courts of Appeal should encourage employers to review and assess the enforceability of their arbitration and related employment agreements.

Court Refuses to Enforce Agreement to Shorten Limitations Period on Wage and Hour Claims

In Pellegrino v. Robert Half International, the Court of Appeal found that an agreement to shorten or waive the applicable statute of limitations on wage and hour claims was unenforceable. Plaintiffs, all of whom were classified as exempt administrative employees, worked as account executives for temporary staffing firm Robert Half International (“RHI”). Each employee signed an agreement barring claims made more than six months after termination of employment, and waiving any statute of limitations to the contrary.[1]

More than six months after leaving RHI, the plaintiffs filed suit, alleging that RHI had improperly classified them as exempt employees and seeking damages for California Labor Code violations related to overtime, meal and rest breaks, untimely payment of wages, and itemized wage statements. RHI argued that the plaintiffs’ wage claims were barred by the six-month limitations period in the agreements they had signed. It also asserted that the employees were covered by the administrative exemption.

The court found RHI’s arguments unpersuasive. It held that the agreement shortening the applicable wage and hour statute of limitations unlawfully restricted the plaintiffs’ ability to vindicate their claims. It noted the state’s strong public policy in ensuring that non-exempt employees receive overtime compensation and commissions, meal and rest breaks, itemized wage statements, and timely payment of wages. On public policy grounds, plaintiffs’ statutory rights could not be waived through private agreements. The court also relied on Labor Code section 219, which provides that the type of wage claims at issue in Pellegrino could not “in any way be contravened or set aside by a private agreement, whether written, oral, or implied.” The court thus concluded that enforcing the shorter limitations period found in RHI’s agreements would “result in barring legitimate, unwaivable statutory wage and hour claims asserted by misclassified employees who were unable to discover their employer’s classification error and assert appropriate claims.”

The court also rejected RHI’s position that it had properly classified the plaintiffs as exempt administrative employees. The court focused on evidence that the plaintiffs had presented a showing that their duties as account executives did not directly relate to RHI’s management policies or general business operations. Rather, the plaintiffs placed candidates with clients, pitched RHI’s services, and engaged in other sales activities, and did not supervise other employees. Based on these facts, the court found that RHI had misclassified plaintiffs as exempt from overtime.

Arbitration Agreements Providing for Minimally Sufficient Discovery Are Enforceable

In Dotson v. Amgen, Inc., the Court of Appeal upheld the enforceability of an arbitration agreement that limited each party to one non-expert deposition, unless the party could demonstrate a need for additional depositions. 

After Amgen terminated Dotson, an in-house attorney, after four years of employment, he filed suit in the Superior Court for the County of Ventura, alleging wrongful termination. Amgen moved to compel arbitration, but Dotson opposed the motion on the grounds that the arbitration agreement was unconscionable because, among other things, it allowed him to take only one non-expert deposition. 

The court rejected Dotson’s position, finding that the limit on depositions was not substantively unconscionable. The court reasoned that arbitration is principally designed to streamline litigation, and that discovery limitations, such as restricting the number of depositions, represent one way to further that goal. Although Amgen’s agreement purported to restrict discovery, it did so in a way that ensured each party could conduct adequate discovery to prove its claims or defenses. The arbitrator, after all, retained “broad discretion … to order the discovery needed to sufficiently litigate the parties’ claims.” Because Amgen’s agreement differed from agreements to arbitrate that granted additional discovery only on a demonstration of a “substantial” or “compelling” need, it was not unconscionable.

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The U.S. Department of Labor (“DOL”) recently released its 2010 regulatory plan, which envisions a major change in how DOL interprets the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”) as to when an employer must disclose its use of attorneys or consultants to help persuade employees not to unionize. In particular, DOL will be seeking to narrow a longstanding exemption that allows employers not to report having received “advice” from lawyers and consultants on union organizing.

LMRDA requires employers to file annual reports with DOL identifying every “agreement or arrangement with a labor relations consultant or other independent contractor or organization” pursuant to which such a third party: (1) engages in “activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising,” their right to unionize; or (2) supplies the employer with “information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding.” 29 U.S.C. § 433(a). Employers must also report any payment made pursuant to such an arrangement. Id.   LMRDA imposes a similar reporting requirement on those who provide such services. 29 U.S.C. § 433(b). Willful violations of the law, as well as knowing material misstatements or omissions, are a crime. 29 U.S.C. § 439.

In a key exception, LMRDA does not require employers to report “services of [a] person by reason of his giving or agreeing to give advice to [an] employer” in the covered areas. 29 U.S.C. § 433(c). In the union organizing context, DOL has traditionally distinguished between “direct persuaders,” who communicate directly with employees on behalf of employers and are covered by the reporting requirements, and “advisors,” who have no direct contact with employees and are not covered. Until now, DOL has construed “advice” to include a consultant's review of and comments on persuasive materials prepared by the employer, as well as the consultant's preparation of materials for the employer to use that the employer is free to reject.

Moreover, under current regulations, reports need not be filed as to services that consist of “representing or agreeing to represent an employer before any court, administrative agency, or tribunal of arbitration,” or “engaging or agreeing to engage in collective bargaining on behalf of an employer … or the negotiation of an agreement or any question arising thereunder.” 29 C.F.R. § 406.5(b). Reports filed by attorneys need not include “information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship.” 29 U.S.C. § 434 (emphasis added); see also 29 C.F.R. § 406.5(d). Neither the law nor the regulations mention communications by an attorney to a client, presumably because that falls within the more general “advice” exception.

In announcing DOL’s regulatory agenda for 2010, Labor Secretary Hilda Solis said that the agency will seek to expand the LMRDA reporting requirements by narrowing what DOL treats as exempt “advice.” Although DOL has not yet signaled what specific changes it may implement, one model may be regulations that the Clinton administration implemented in its final days. Under those rules, employers would have been required to disclose all persuasive scripts, letters, videotapes, or other materials that were prepared by attorneys or consultants if one goal of the materials was to persuade employees regarding their union rights – even if the attorney or consultant who prepared the materials had no direct contact with employees. The Bush administration quickly rescinded those rules, but Secretary Solis’s 2010 agenda suggests that DOL may be looking to adopt a similar approach.

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President Obama has signed the Department of Defense Appropriations Act for Fiscal Year 2010 (H.R. 3326). Section 8116 of that Act significantly restricts the ability of defense contractors and subcontractors to enter into or enforce agreements that require employees or independent contractors to arbitrate certain claims.

In particular, section 8116 provides that no funds appropriated under the Act may be spent on any federal contract in excess of $1 million that is awarded 60 or more days after the effective date of the Act, unless the contractor agrees not to:

(1) enter into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention; or

(2) take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.

Section 8116 also provides that no funds appropriated by the Act may be spent on any federal contract in excess of $1 million that is awarded 180 or more days after the effective date of the Act, unless the contractor certifies that each of its subcontractors that has a subcontract worth more than $1 million has agreed not to enter into or seek to enforce any provision of any agreement described above with respect to any employee or independent contractor who is or will be performing work related to the subcontract.

The Secretary of Defense may waive the application of these provisions to a particular contractor or subcontractor for the purposes of a particular contract or subcontract if the Secretary or the Deputy Secretary personally determines, with a specific explanation, that the waiver is necessary to avoid harm to national security interests of the United States, and that the term of the contract or subcontract is not longer than necessary to avoid such harm.

Congress is considering more sweeping restrictions on arbitration that would apply to every employer. The Arbitration Fairness Act (H.R. 1020, S. 931), which now has 106 cosponsors in the House and 11 cosponsors in the Senate, would prohibit the enforcement of all pre-dispute agreements to arbitrate employment disputes (other than in collective bargaining agreements), civil rights disputes, consumer disputes, or franchise disputes, and would require courts, rather than arbitrators, to decide the validity or enforceability of any such agreement.

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As employers seek to avoid substantial exposure for alleged violations of wage and hour laws, including the continuing flood of class actions, many are asking outside counsel to review or audit their pay practices so that any problems can be fixed to minimize such risks. In a welcome development, the California Supreme Court recently rejected an effort to force an employer to disclose the results of such a review to managers who had sued, affirming that such advice is protected by the attorney-client privilege.

For more information on this recent ruling, please see the following client alert.

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This post was written by John A. DiNome, Remy Kessler, Joel S. Barras and Marytza J. Reyes.

A series of wage and hour collective actions initially filed in New York and Pennsylvania have begun to swell across the country. Plaintiffs’ attorneys are targeting health care facilities over their alleged failure to comply with meal break rules. Specifically, such suits claim that employers have automatically deducted 30 to 60 minutes of time for employees’ meal periods, even if employees never took the breaks. The plaintiffs allege that by failing to provide unpaid meal periods free of interruptions from work, or by failing to fully compensate the employees for the time they were not relieved of duty, health care facilities have violated the Fair Labor Standards Act (“FLSA”) and other laws. Because employees can recover for violations that took place as many as three years before suit is filed, damages in these cases can be substantial. Employers may be liable for double the employees’ overtime rate of pay for the unpaid meal breaks that were improperly deducted. In addition, plaintiffs are entitled to recover their attorneys’ fees and costs, which often exceed the actual damages. 

Not surprisingly, the Internet has become an effective tool for plaintiffs’ lawyers seeking to identify deep-pocket defendants. Some attorneys have even gone so far as to set up websites to provide information to employees about their investigations of health care employers. (See, e.g., www.hospitalovertime.com or www.overtimecases.com.) Such websites have become an easy way for a plaintiffs’ counsel to gather information about a particular health care employer’s practices, reach employees throughout the country, and publicize large settlements in wage and hour lawsuits.

Health care facilities throughout California have experienced a recent wave of wage and hour lawsuits. In 2008, at a time when registered nurses were in high demand and hospitals across the country were struggling financially, California completed implementation of landmark legislation passed almost a decade before, mandating minimum nurse-to-patient ratios. Not surprisingly, the shortage of nurses and other medical professionals has made it increasingly difficult for employers to comply with California laws requiring them to provide employees who work more than six hours with an uninterrupted 30-minute meal period. While many nurses acknowledge that the demands of their positions do not always permit an uninterrupted meal period, they uniformly object to not being compensated when they are unable to take the breaks to which they are legally entitled. 

In addition to requiring payment of overtime when an employee works more than 40 hours per week, California law requires overtime pay when an employee works more than eight hours per day. Depending on the length of the shift, California employees who are denied meal periods may be entitled not only to overtime, but also to an additional hour of a “premium wage” for each missed meal period. California law permits employees to seek damages for meal period violations going back three years before suit is filed; but if the same allegations are brought under California’s Unfair Competition Law (Business & Professions Code Section 17200), the statute of limitations is four years.

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U.S. employers with 15 or more employees must post workplace notices to inform applicants and employees about their rights under federal anti-discrimination laws. The Equal Employment Opportunity Commission (EEOC) has recently published an updated version of its required “Equal Employment Opportunity is The Law” poster, updated to refer to the employment provisions of the Genetic Information Nondiscrimination Act (GINA) that will go into effect November 21, 2009, as well as changes resulting from the ADA Amendments Act of 2008 that took effect in January.

All employers should replace their existing federal EEO poster with the new version, or add a new supplementary poster, also available from the EEOC. Links to the new poster and the supplement, as well as instructions on how to order multiple printed copies from an EEOC clearinghouse, can be found at the EEOC's website. The EEOC says that Spanish, Chinese, and Arabic versions of the posters will become available before GINA takes effect.

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This post was written by Irene M. Recio and Lorraine M. Campos.

The Federal Acquisition Regulation (“FAR”) provision requiring Federal contractors to use the E-Verify System became effective on September 8, 2009, following nearly a year of litigation. The E-Verify System is a free internet-based program operated by the U.S. Department of Homeland Security, U.S. Citizenship and Immigration Service (“CIS”) that allows employers to verify the employment eligibility of new hires. All federal contracts awarded and solicitations must now include a clause mandating the use of E-Verify for all new employees, as well as all employees who perform work on the contract during the contract period except those who perform support work such as indirect or overhead functions. Institutions of higher education, state and local governments, and governments of federally recognized Native American tribes need verify only those employees who are assigned to a covered Federal contract, rather than all newly hired employees.

The Final Rule exempts contracts that are for less than $100,000 or fewer than 120 days in duration. The Rule also exempts contracts where all work is performed outside the United States or those for commercially available off-the-shelf items (“COTS”), including nearly all food and agricultural items. Subcontractors to federal contractors are also required to use E-verify, as the Rule extends the E-Verify requirement to subcontracts for services or construction with a value of more than $3,000. It will also apply to existing indefinite-delivery/indefinite-quantity contracts if the remaining period of performance extends at least six months after the Rule’s effective date of September 8, 2009.

For employers not covered under the new Rule, E-Verify continues to be a voluntary program.

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As we predicted in our September 14 piece on the Employee Free Choice Act (EFCA), organized labor’s increased pressure on Congress to pass such legislation is starting to bear fruit.  At this week’s AFL-CIO convention, Sen. Arlen Specter (D-Pa.), a leader in the Democrats’ effort to forge a bill that can withstand a Republican filibuster, announced the outlines of a compromise that he has been discussing with a small group of senators, which he predicted would become law before year-end.  Specter’s prediction echoes comments by Sen. Tom Harkin (D-Iowa), who said last week that there had been 60 votes to pass some compromise form of EFCA in July, and that the Senate could act on the bill later this year.

Sen. Specter said that he and his colleagues had reached a “consensus” on three “core principles:”

• No card check, but speedier elections and union access.  Any revised version of EFCA would not include the widely attacked “card check” provision found in the current version of EFCA, under which employees could find themselves represented by a union without any vote.  Saying that no bill that did away with secret ballot elections could be passed, Specter described the proposed compromise as requiring such elections to take place promptly after a petition for certification was filed with the National Labor Relations Board (rather than the current approach, which allows elections to take place as late as six weeks later), and giving unions a right to enter the workplace to campaign.  Specter did not specify how long the shortened election period would be, or give any details about how and when unions could visit employees at work.
• Mandatory “baseball style” arbitration.  The bill would retain the binding interest arbitration found in the current version of EFCA, so that if an employer and union failed to reach agreement on a first contract within so many days following the election, federal arbitrators could step in and impose an agreement on the parties dictating employees’ wages, benefits, hours, layoff procedures, and so on.  To address concerns that this approach would give parties an incentive to make unreasonable proposals, Sen. Specter said the bill would require the arbitrators to adopt the last best offer of one party or the other, so-called “baseball style” arbitration.  He said no decision had yet been reached on how long the parties would have to sign a contract before they would be forced into arbitration.  The current version of EFCA allows 120 days.
• Treble back pay.  The bill would include significantly increased penalties like those found in the current version of EFCA, under which employers who discharge employees because they join or support a union would face treble back pay.

Shortly after Sen. Specter announced this framework, however, labor officials said they had not agreed to it.  Incoming AFL-CIO president Richard Trumka said “card check” remained in play, and the AFL-CIO’s director of governmental affairs said the labor federation had not agreed to any compromise.  Business leaders were equally dismissive, describing Specter’s approach as permitting “ambush elections,” contracts imposed by a “government-appointed bureaucrat,” and acting as a smokescreen for a last-minute return of card check.

All sides agree that any revision of EFCA cannot and will not move forward until the Democrats have 60 votes, which will depend on when Massachusetts selects a replacement for the late Sen. Ted Kennedy.  Although the special election to replace Kennedy will not take place until January, the Massachusetts legislature is considering a bill that would give the Democratic governor authority to name an interim replacement, meaning that a new Democrat could join the Senate within the next few weeks.

We will continue to keep a close eye on EFCA so that our clients can be fully prepared for whatever bill may emerge.

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While many suspected that the Employee Free Choice Act (“EFCA”) might become law within the first 100 days of the new Administration, that has not come to pass. Indeed, with the focus in Congress on the recession and the Administration’s push for healthcare reform, EFCA seems to have been all but forgotten. Like the disappearing canine in the old childhood song that we all remember, “Oh Where, Oh Where Has My Little Dog Gone,” EFCA seems to be lost in the Congressional agenda. 

But has it been forgotten? As we headed into Labor Day, EFCA emerged in the news. Although Senate Majority Leader Harry Reid (D-Nev.) announced last week that EFCA was unlikely to be considered until some time next year because Congress had “too many other things on [its] plate,”¹ staunch supporters of the bill within organized labor beg to differ. Indeed, Andy Stern, president of the Service Employees International Union, was quoted in The New York Times as saying that he not only expected to see EFCA pass, but that it would still include “card-check” — the provision, widely attacked by Republicans and the business community — that would mandate union representation on employees without any secret ballot election in which employees could vote.² While EFCA may be on the back burner, for now it is unlikely that labor will let it remain there for long. 

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This post was written by David Weissman, Cindy Schmitt Minniti, and Daniel Schleifstein.

The New York Legislature recently passed a new law that requires greater communication and transparency from employers in the hiring and firing process. Employers who fail to comply risk incurring penalties and unwanted scrutiny of labor and employment policies and practices. The Labor & Employment team at Reed Smith is here to help employers comply with this new statute and avoid undesirable consequences.

Pursuant to McKinney’s Labor Law § 195, New York employers must now provide any new employee hired on or after October 26, 2009, with information on the following subjects:

• Rate of Pay: Employers must provide the employee with the employee’s regular hourly rate of pay, overtime rate of pay (if applicable), and regular payday at the time the employee is hired.
• Written Acknowledgement: Employers must obtain written acknowledgment of the rates of pay and the regular payday from each employee at the time the employee is hired. The form and content will be provided by the Commissioner of Labor at a later date.
• Payday Changes: Employers must notify employees of any change in paydays before the change.
• Wage Statement: Employers must provide each employee with every payment of wages, listing gross wages, deductions and net wages, and must, at the employee’s request, explain how the wages were computed.
• Recordkeeping Requirements: Employers must establish, maintain and preserve records showing the hours worked, gross wages, deductions, and net wages for each employee, for not less than three years.
• Time-Off Policies: Employers must notify employees in writing or by publicly posting the employer’s policy on sick leave, vacation, personal leave, holidays and hours.
• Termination: Employers must notify any employee terminated from employment – in writing – of the exact date of termination, as well as the exact date of cancellation of employee benefits connected with the termination. Notice must be provided within five working days of the actual date of termination. Failure to notify an employee of cancellation of accident or health insurance subjects an employer to penalties, including a fine of up to $5,000 paid to the Commissioner of the New York State Department of Labor, as well as potential liability in a civil action brought by the employee in which damages may include reimbursement for medical expenses that were not covered by the insurer because of the termination of the employee without notice.

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Just 10 days after taking office, President Obama signed Executive Order 13496, requiring all federal contractors and subcontractors to notify employees of their rights under the National Labor Relations Act (NLRA), including their right to join and support unions. On Aug. 3, 2009, the U.S. Department of Labor (DOL) issued a proposed regulation specifying how contractors and subcontractors must comply with that Order, including a poster describing employees’ rights, and how they can file claims with the National Labor Relations Board (Board). Parties wishing to comment on the proposed rule must do so by Sept. 2.

Executive Order 13496

Citing the government’s need to deal with “contractors whose work will not be interrupted by labor unrest,” and a belief that industrial peace is best achieved when employees are “well informed of their rights,” Executive Order 13496 requires most federal departments and agencies to include in virtually all government contracts, provisions that require the contractor to post a notice for employees describing their rights under the NLRA, to follow all DOL rules relating to the Order, and to be subject to penalties for noncompliance that can include debarment from future contracts. The Order exempts two types of contracts: collective bargaining agreements, and contracts for purchases under the “simplified acquisition threshold” of $100,000. The Order also requires contractors to include such provisions in every subcontract they enter into in connection with the government contract. The Order directs the DOL to issue regulations implementing its requirements, and they will take effect when those regulations become final.

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The Illinois Supreme Court has held that under that state’s Human Rights Act (the “Act”), an employer is strictly liable for sexual harassment by any of its supervisors, even if the harasser does not supervise the victim. Sangamon County Sheriff’s Department v. Illinois Human Rights Commission, Nos. 105517 and 105518 consolid. (Apr. 16, 2009). In other words, an employer is automatically responsible if any of its supervisors sexually harasses any of its employees, regardless of whether the supervisor has any direct or indirect authority over the employee.

Facts

A sheriff’s department records clerk complained that a supervisor named Yanor, who did not supervise her, pressed himself on her and kissed her, and asked her a month later if she would go with him to a motel for the night. Two months after that, the clerk received a letter on official stationery of the state public health department which said that she might have been recently exposed to a communicable or sexually transmitted disease according to a confidential source who tested positive. Frantic, the clerk reported the letter to a friend in management at the sheriff’s department. The department investigated and determined that Yanor had written and sent the fraudulent letter. After Yanor explained that he had meant the letter as a joke, the employer suspended him for four days without pay and urged the clerk not to take the matter any further.

Despite that request, the clerk filed a complaint with the Illinois Human Rights Commission, alleging in part that the sheriff’s department had sexually harassed her in violation of the Act. The Commission agreed, finding that Yanor had engaged in a series of acts “that cumulatively constituted a hostile work environment,” and because he was a supervisor, the department was liable for his conduct.

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This post was written by Stephanie Wilson and E. David Krulewicz.

On January 1, 2009, the ADA Amendments Act of 2008 (the “ADAAA”) took effect, bringing with it what many expect to be sweeping reforms to the landscape of federal disability discrimination law. This Act, which was widely lauded by both members of the House of Representatives and the Senate, was signed into law by President Bush on September 25, 2008. Employers who are not fully familiar with the changes the ADAAA brings must quickly learn the nuances of the new law – and the impact it has on the meaning of a “disabled employee” – as it will likely open the flood gates for a new wave of employees seeking reasonable accommodations and the number of discrimination lawsuits. There is good news, however, for employers and attorneys in New Jersey, as these amendments essentially conform the ADA to the “handicap” protections mandated by New Jersey Law Against Discrimination (“LAD”) and interpretative New Jersey Supreme Court decisions.

Click here to read the full article.

This article was originally published in the February 2009 issue of New Jersey Lawyer Magazine, a publication of the New Jersey State Bar Association, and is reprinted here with permission.

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Illinois employers need not pay certain workers’ compensation benefits to employees fired for cause, according to a recent state appellate court decision. Interstate Scaffolding, Inc. v. The Workers’ Compensation Commission, et al., 385 Ill. App. 3d. 1040, 896 N.E. 2d 1132 (3d Dist. 2008).

The case involved an employee injured while working, who then returned to light duty work. The employer accommodated the employee’s work-injury-related restrictions. After returning to work, the employee admitted writing graffiti on the employer’s walls, and was fired.

The court addressed the issue of whether the employee should continue receiving temporary total disability (“TTD”) benefits after his termination for cause. The court first explained that in Illinois, an employee is temporarily totally disabled from the time the injury renders him unable to work until he is as recovered as the permanent character of his injury permits. An employee seeking TTD benefits must prove both that he did not work and that he was unable to work.

Although the court ruled that the employee still had a temporary total disability when fired from his light duty job, it decided that he forfeited his right to TTD benefits when his employer fired him for cause.

The court said that the “overriding purpose” of Illinois’ workers’ compensation laws is to “compensate an employee for lost earnings resulting from a work-related disability.” The court reasoned that because this employee’s lost earnings resulted from his own admitted misconduct unrelated to his work-related disability, he forfeited his right to any TTD benefits.

This case gives Illinois employers some additional comfort level if they have cause to fire an employee who has returned to work on light duty after filing a workers’ compensation claim. Now, employers (and their workers’ compensation insurance carriers) can discontinue TTD benefits under such circumstances.

Employers should, however, continue to exercise extreme caution before terminating employees who have filed workers’ compensation claims. The employee fired for cause in the recent appellate court case admitted writing the graffiti, giving the employer uncontested cause to fire the employee. Additionally, this recent case did not involve any retaliatory discharge claim by the employee. Illinois still makes it illegal to fire an employee in retaliation for having filed a workers’ compensation claim, subjecting the employer to possible compensatory and punitive damages. Employers who fire employees who have filed workers’ compensation claims without such clear-cut grounds for termination may have to continue paying workers’ compensation benefits and defend a retaliatory discharge claim.

The lesson for Illinois employers? If you are thinking about firing an employee who recently filed a workers’ compensation claim, then you should have rock-solid, non-retaliatory grounds for doing so. Only then can you avoid continued TTD payments, and successfully defend a retaliatory discharge claim.

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This post was written by Sherri A. Affrunti and E. David Krulewicz.

Responding in part to a 2007 study which found that New York employees were largely unfamiliar with State laws regulating an employer’s use of past convictions for employment-related decisions and in support of the State’s goal to prevent discrimination on the basis of criminal records, the New York Legislature recently amended the State’s general business and labor laws to require employers to disseminate and post notice to job applicants and employees of their rights with respect to, and an employer’s limitations on the use of, information on criminal convictions. The posting and notice requirements take effect on February 1, 2009. 

Background 

Section 296 of the New York Executive Law makes it unlawful for an employer to deny employment to an individual based upon his or her having been convicted previously of a crime, or by reason of a finding of lack of “good moral character” due to his or her prior conviction of a criminal offense, when such a denial is a violation of New York’s Correction Law Article 23-A (Licensure and Employment of Persons Previously Convicted of One or More Criminal Offenses). N.Y. Executive Law § 296. 

Under Article 23-A, employers of 10 or more employees are expressly proscribed from making adverse hiring or termination decisions based upon an individual’s conviction record unless: (1) there is a direct relationship between the prior criminal offense(s) and the specific employment position sought or held by the individual; or (2) hiring or continuing to employ the individual would involve an unreasonable risk to property or the safety or welfare of specific individuals or the general public. Before determining that an individual’s criminal conviction record bars employment or continued employment, Article 23-A requires that those employers carefully consider each of the following factors:

• New York’s public policy encouraging the employment of previous convicts;
• The specific duties and responsibilities of the employment position sought or held by the individual;
• The bearing, if any, the criminal offense(s) for which the person was previously convicted will have on that individual’s fitness or ability to perform one or more job duties or responsibilities;
• The time that has elapsed since the occurrence of the criminal offense(s);
• The age of the applicant or employee at the time of the conviction;
• The seriousness of the offense(s);
• Any information produced by the person or on his or her behalf, regarding rehabilitation and good conduct; and
• The employer’s legitimate interest in protecting its property as well as the safety and welfare of its employees and clients as well as the general public.

Notably, an employer must also give consideration to any certificate of relief from disabilities or certificate of good conduct issued to an individual, which certificate, by law, creates a rebuttable presumption of rehabilitation regarding the offenses to which it relates. 

N.Y. Correction Law § 750, et seq.

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On October 9, 2008, Governor Ed Rendell provided a victory for nurses’ unions by signing the Prohibition on Excessive Overtime in Health Care Act. The Act prohibits employers from mandating overtime for direct patient caregivers, including nurses and nurses’ assistants, in Pennsylvania’s hospitals and health care facilities. Effective July 1, 2009, hospitals and health care facilities will be prohibited from requiring nurses and nurses’ assistants to work hours beyond a predetermined, regularly scheduled daily work shift. The Act also includes an anti-retaliation provision, which prohibits employers from retaliating against workers who refuse to work extra hours.

The new law contains a relatively narrow exception, permitting employers to mandate overtime in certain unforeseen emergency circumstances. These circumstances include the following:

• A declared national, state or municipal emergency
• A highly unusual or extraordinary event that substantially affects the provision of needed health care services or increases the need for health care services
• An act of terrorism
• A natural disaster
• A widespread disease outbreak
• An unexpected absence, discovered at or before the commencement of a scheduled shift, which could not be prudently planned for by an employer, and which could significantly affect patient safety. (This cannot be used to overcome habitual short-staffing.)

If such an emergency occurs, the employer is permitted to mandate overtime as a last resort and only after: (1) exhausting reasonable efforts to obtain other staffing; and (2) providing the employee with up to one hour to arrange for the care of the employee’s minor child, or elderly or disabled family member.

While the statute does not address whether this Act supersedes any provisions in an existing collective bargaining agreement that permits an employer to mandate overtime, the legislative history and prior case law suggest that such a provision would continue “as is” until the expiration of that labor agreement.

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This post was written by Catherine S. Ryan and Andrew T. Quesnelle.

On June 13, 2008, Gov. Ed Rendell signed into law the Pennsylvania Clean Indoor Air Act (S.B. 246) (the “Clean Indoor Air Act” or the “Act”). The Clean Indoor Air Act will take effect on September 11, 2008. 

The Clean Indoor Air Act prohibits individuals from smoking in a public place. A “public place” is defined as an “enclosed area which serves as a workplace, commercial establishment or an area where the public is invited or permitted.” In addition, “workplace” is further defined as “an indoor area serving as a place of employment, occupation, business, trade, craft, professional or volunteer activity.” Several categories of business establish-ments are explicitly excluded from the Act’s coverage, including certain drinking establishments, many private clubs, certain fundraisers or charitable events, and designated areas within sports and recreational facilities. 

Any establishment where smoking is prohibited, which includes any public place for which there is no specific exception, is required to prominently post “No Smoking” signs. Likewise, any entity where smoking is permitted by the Clean Indoor Air Act is required to prominently post a “Smoking Permitted” sign at every entrance to the establishment. 

The Clean Indoor Air Act provides for a variety of penalties for entities that fail to post the required signage or that permit smoking in places where it is prohibited. The penalties increase in severity depending on the number of offenses within certain periods of time. An entity is subject to a $250 fine for a first violation, a $500 fine for a second violation within one year, and a $1,000 fine for a third violation within one year of the second violation. Violations are considered administrative if they are found by the Pennsylvania Department of Health, state licensing agency or county board of health, and criminal if they are found by a law enforcement officer; but the fines remain the same whether the offense is considered administrative or criminal. It is an affirmative defense for an entity to demonstrate, through a sworn affidavit, that it “made a good faith effort” to prohibit smoking. 

Employers should be aware that the Clean Indoor Air Act contains anti-retaliation provisions, which prohibit employers from discharging, refusing to hire or otherwise retaliating against an employee because the employee exercised his or her right to a smoke-free workplace under the Act. 

Covered entities must begin compliance with the Act’s provisions by September 11, 2008. The Pennsylvania Department of Health has printable “No Smoking” and “Smoking Permitted” signs on its website, along with other pertinent information about the Act. 

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This post was written by Sherri A. Affrunti and Meghan O. Offer.

Provided that the bill is signed into law by Governor Corzine, New Jersey employees will be entitled effective July 1, 2009 to collect up to six weeks of paid family temporary disability leave benefits during any 12-month period (42 days for “intermittent leave”) when caring for children, spouses, domestic or civil union partners, or parents with serious health conditions, or to be with their newborns or newly adopted children during the first 12 months following birth or placement for adoption. As proposed, family temporary disability leave benefits will be paid at the same level as state-funded temporary disability benefits (currently two-thirds of an employee’s weekly wages, up to a maximum benefit rate of $524 for disabilities beginning on or after Jan. 1, 2008).

The bill provides that state family disability leave benefits will be funded through employee tax deductions to be implemented Jan. 1, 2009, unless an employer is covered by an approved private disability plan for benefits during periods of family temporary disability leave, or is exempt from the provisions of the law. Thus, for the 2009 calendar year, each worker covered by the state plan will be required to contribute to the Family Temporary Disability Leave Account an amount equal to 0.09 percent of wages earned (anticipated to be about $33 per year for each employee in the state), in addition to any amount contributed to the State Temporary Disability Benefits fund for their own covered non-occupational illness, accidents or disabilities.

Unless otherwise prohibited by law, the bill permits New Jersey employers to allow or require employees to use up to two weeks of paid sick leave, vacation or other paid time off before collecting family temporary disability leave benefits under the proposed bill. It also permits employers to offset the total number of days of family temporary disability leave benefits paid to an employee during a period of a family temporary disability leave, by the number of days paid by the employer at full pay, not to exceed two weeks. Further, if an employer requires an employee to take two weeks at full pay, its employees must be permitted to take that fully paid leave during the waiting period for state family temporary disability leave benefits.

While the proposed amendments to the New Jersey Temporary Disability Benefits Law provide for the payment of certain family leave benefits, they do not provide for any leave entitlement such as those mandated under the federal Family and Medical Leave Act (“FMLA”) or the New Jersey Family Leave Act (“NJFLA”). Employers should nevertheless be cognizant of the interplay of these Acts if this bill is signed into law – particularly when making decisions on whether to restore employees to their positions following periods of family temporary disability leave. Notably, while the bill states that it is not intended to “increase, reduce or otherwise modify” any right of an employee to return to work under the NJFLA or the FMLA, it provides an express safe harbor from claims—including those alleging discharge in violation of public policy—for small businesses (employing less than 50 employees) not covered by the NJFLA.

Because the bill is expected to be signed into law, employers are encouraged to consult with counsel when drafting and implementing policies; performing any necessary amendments to private temporary disability benefit plans; and responding to requests for leave or benefits; and to assure compliance with statutory amendments when distributing information to employees.

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This post was written by Sherri A. Affrunti and Meghan O. Offer.

The New Jersey Department of Labor and Workforce Development has now published the form mandated to be used by New Jersey employers to provide notice of mass layoffs or the transfer or termination of operations under the Millville Dallas Airmotive Plant Job Loss Notification Act (“Millville Dallas Act” or state “Baby WARN”). An interactive copy of the form is attached, along with the Department’s Summary of the Law.

Employers who have been in operation three years or longer and who have at least 100 or more full-time employees are required to use the form to provide a minimum of 60 days’ advance notice of plant closings or mass layoffs to: (a) all affected employees and their collective bargaining unit representatives (if any); (b) the Commissioner of Labor and Workforce Development; and (c) the chief elected official of the municipality where the business is located.

Employers must insert the following information into the form:

• The number of employees whose employment will be terminated
• The date(s) each employee termination will occur
• The reasons for the mass layoff or transfer or termination of operations
• A list of all available employment opportunities, including the pay, benefits, location, and other terms and conditions of such alternate employment
• A summary of employee rights with respect to the payment of wages, severance, pension, and other benefits in connection with the termination, including rights based on an existing collective bargaining agreement or other existing employer policy

Employers who fail to timely provide notice face substantial penalties, including mandatory severance to each affected employee equal to one full week of pay for each full year of employment, in addition to the payment of other available severance benefits.

Use the following link for an interactive copy of the Millville Dallas Form.

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