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Legal Briefs for HR

Posted on December 23, 2013

Welcome to Legal Briefs for HR, an update on employment issues sent to over 5000 individual HR professionals, in-house counsel and business owners plus HR and legal professional organizations (who have been given permission to republish content via their newsletters and websites), to help them stay in the know about employment issues.  Anyone is welcome to join the email group . . . just let me know you’d like to be added to the list and you’re in!  Back issues are posted at under Media Center/Legal Briefs and you can also join the group by clicking on “Subscribe.”  

Here’s who’s been naughty and nice:

1. Whistle While You Work – On-line filing of complaints and generous cash bounties offered by federal agencies have the attention of many employees who suspect their employers of wrong doing.  Here are just a few examples:

1. The U.S. Department of Justice announced a $4.2 settlement with a food distribution company, based on alleged overcharging for fresh fruits and vegetables sold to the U.S. government under 15 contracts, and paid the whistle-blowing employee $798.000.00.

2. OSHA has added an on-line complaint form, allowing aggrieved workers to file complaints under 22 federal statutes that have retaliation provisions.  The list of statutes and the time allowed to file a complaint can be found at

3. An employee whistleblower triggered an investigation into the B-1 and H-1B visa and I-9 practices of Infosys Corporation which resulted in a $34 million settlement with the U.S. Department of Justice.

4. OSHA ordered a North Carolina employer to pay more than $1 million to four whistleblowers and reinstate three of them to employment (one died during the proceedings).  The four employees were truck drivers who cooperated with a U.S. Department of Transportation audit of driver logs under the Surface Transportation Assistance Act.

5. The SEC released its 2013 Annual Report to Congress on the Dodd-Frank Whistleblower Program, showing more than 3000 complaints filed in a year with the most common issues being  corporate disclosures and financials (17.2%), offering fraud (17.1%) and manipulation (16.2%). The program is in its third year and paid its largest whistleblower award, in the amount of $14 million, on September 30, 2013. However, of the 6573 individuals who reported to the SEC since the program’s inception, only .09% received a payday.  Most of the tipsters are in NY, FL and TX.  The report can be found at

6. A fired FCPA whistleblower had no protection under Dodd Frank, where he reported a possible securities violation internally (not to the SEC). Asadi v. G.E. Energy (USA) LLC (5 th Cir. 7-13).


2. Socially Unacceptable– Employers know that unkind comments between employees about their worksite, co-workers, pay and more may be insulated from disciplinary action if the discussion is protected under the NLRA.  Usually, if the subject of the screed is terms and conditions of employment and there are at least two employees in the live or electronic discussion, disciplinary action can result in an unfair labor practice claim being filed with the NLRB.  Unless the employees go too far.  In Richmond District Neighborhood Center, a profanity-filled assault (too graphic to reprint here) on a nonprofit organization that provides youth, adult and family programs via Facebook chatter between two employees of that organization crossed that line.  The ALJ agreed with the employer’s argument that the shocking commentary was harmful to the nonprofit’s mission and the two employees were unfit, noting “Respondent receives grants and other funding from the government and private donors.  It is accountable to the middle schools and high schools that it services.  Respondent believed that the Facebook comments jeopardized the program’s funding and the safety of the youth it serves.  Respondent was concerned that its funding agencies and the parents of its students would see the Facebook remarks.  I find that Respondent could lawfully conclude that the actions proposed in the Facebook conversation were not protected under the Act and that the employees were unfit for further service.” 

3. Not That You Would Do This– An ICE investigation of a restaurant in Ottawa, KS, triggered by 14 missing I-9s, took a serious turn with indictment of the manager for continuing to employ individuals who lacked the proper documentation to work in the U.S (after ICE’s notification of that omission), providing them with housing (aka “harboring”) and paying them in cash.  If convicted, the penalty is up to ten years in prison plus a fine of up to $250,000.00 for each count in the indictment. When ICE says you’ve got undocumented workers, you should really let your people go. 

4. New Toy for USCIS and E-Verify– The Director of USCIS announced on November 18 that E-Verify has a new tool that will “lock out” misused SSNs to prevent further abuse.  The tool is described as a combination of algorithms, detection reports and analysis that will block further use of an SSN that appears to be used by imposters.  Woe be to the true owner of the SSN who submits to E-Verify and is tagged with a tentative nonconfirmation (TNC) and forced into the ensuing labyrinth of resolving the TNC with the SSA.  It’s not yet clear how USCIS/SSA will identify the true owner of the misused SSN or avoid locking out a “false positive” such as a person who may hold down more than one job at a time.

5. Nothing to Sniff At – A woman hired as a leasing manager at an apartment complex complains to her supervisor that two maintenance workers come to office regularly and, among other things, hover around and sniff her in suggestive manner.  He says “let it slide” and “you know how men are like when they get out of prison.”  She works there for only four days and is fired after complaining, and then files a sexual harassment lawsuit.  Lower court dismisses her claim, saying that conduct was not severe and pervasive.  Plaintiff appeals and Fifth Circuit overturns the decision, saying that the wrong legal standard was used.  It is enough to proceed if plaintiff can show that the conduct was severe (i.e., really yucky) OR pervasive (i.e., happens a lot).  Royal v. CCC&R (5th Cir. 11-13). Lesson learned?  Don’t blow off the seemingly minor annoyances, especially when a lot is packed into a short timeframe which makes the misconduct more pervasive compared to conduct  that is spread out over a longer time period.

6. Off the Clock Roadblock – The experience of a national drug store chain shows the importance of having strong employee handbook policies if you want to nix claims that nonexempt employees worked “off the clock” and were not paid for that time.  The claimed work arose when CVS employees engaged in inter-store transfers (IST’s) of merchandise and prescriptions, shuttling the items from one store to another.  These ISTs allegedly occurred before or after the employees’ shift or when they were otherwise clocked out.  They tried to muster a class action under CA wage and hour law but failed, in part, on the strength of the employer’s handbook policies and testimony about widely varying experiences that undermined the necessary commonality of their claims.  The Court noted with approval that the handbook states “When you work, you must report all of the time you work” and that non-exempt employees were expressly prohibited from working off the clock.  Further, employees were charged with verifying that the hours worked and amounts paid on their paychecks is accurate and told to report any perceived errors or questions immediately.   Employees are also advised that if they work while not clocked in, such as when performing ISTs, they are expected to inform their store manager to ensure payment of all wages.  Ortiz v. CVS Caremark Corporation (N.D. Cal. 12-13).  

7. More Contractor Conundrum – The U.S. Senate will give it another whirl, with the next iteration in a series of bills designed to deter employers from treating employees as independent contractors by amending the FLSA.  The latest version is called the Payroll Fraud Prevention Act (S. 1687) and, if passed, will require employers to [a] accurately classify workers upon hire as employees or independent contractors; (b) give new hires written notice of that classification and directions to the DOL’s website (to facilitate complaints of misclassification); (c) be subject to the presumption that the worker is an employee if there is no written notice to the worker; (d) pay the underpayment due to a misclassification plus a separate amount equal to double the underpayment plus possible civil money penalties of up to $1,100 per person (with the per person penalty rising to $5000 per person if there are repeated or willful violations).  The civil money penalties could kick in for recordkeeping violations and for failure to classify or failure to provide notice of classification even absent an underlying FLSA minimum wage or overtime violation.  The bill also directs the DOL to focus on industries with frequent classification violations and provides for information sharing between the DOL and the IRS, in order to identify and apprehend violators.  You can read full text of the bill and follow its progress via the U.S. Thomas website at

8. To Form a More Perfect Union . . . Or Not– Sen. Orrin Hatch introduced a bill entitled the Employee Rights Act (S. 1712) on Nov. 14, aimed at blunting pro-union moves by the NLRB.  If passed, the bill will (a) require secret ballot elections for initial representation and to call a strike; (b) grant certification only where a majority of the employees in the bargaining unit vote yes, and not just a majority of those who voted; (c) conduct a recertification election when there is a change exceeding 50% of the bargaining unit due to turnover, expansion or alteration by merger; (d) allow employees who are eligible voters to opt out of providing their names and home addresses to the NLRB; and (e) require unions to obtain written authorization from dues-paying members before their dues can be used or contributed to any person or entity for a purpose not directly related to collective bargaining or union contract administration.  Again, you can read full text of the bill and track progress at

9. To the Contrary– While the D.C., 3rd and 4th Circuits have refused to recognize NLRB recess appointments which did not occur during a recess of Congress, the 11th Cir. Has declared that the appointments were valid and therefore the Board was operating with a quorum.  The issue will come to conclusion when the U.S. Supreme Court hears oral argument in the Noel Canning decision, on January 13, 2014.

10. Don’t Mess With Texas– In LB4HR #7 (August 2013), I wrote about nine State Attorneys General who had sent a letter to the EEOC, pointedly questioning and urging rescission of the agency’s guidance on employers’ use of criminal records when making employment decisions.  The Texas AG was not among those who signed the letter, but Texas has now filed suit against the EEOC, seeking to strike down the agency’s guidance.  Texas v. EEOC (N.D. Tex. 11-13). In its pleadings, Texas notes that the guidance is in direct conflict with several Texas laws which prohibit the hiring of felons in certain jobs (e.g., education, healthcare) and that the EEOC has exceeded its authority in interpreting Title VII, making the guidance nonbinding.  It reads, in part, “The State of Texas and its constituent agencies have the sovereign right to impose categorical bans on the hiring of criminals, and the EEOC has no authority to say otherwise.”  ‘Nuff said.

11. Timely and True – Employers have often disregarded letters and calls from the state unemployment agency requesting information on the reason for a former employee’s departure, especially where the employer is OK with the former worker qualifying for UI benefits.  Those days are ending, due to federal legislation designed to cut down on the award of UI payments to those who don’t qualify and to boost individual state’s trust funds to solvency after years of recession-triggered debt.  This change began with enactment of the federal Unemployment Insurance Integrity Act in 2011.  The Act prohibits states from relieving employers of charges to the UI tax rate (aka chargeback rate) when (a) payment was made because the employer or agent of the employer (think PEO and outsourced UI processing services) are at fault for failing to respond timely or adequately to the UI agency’s request for information; or (b) the employer or employer’s agent has a pattern of failing to respond timely and adequately to such requests for info, even when the individual is later determined to be ineligible for UI benefits.  The Act also forces states to enhance their penalties against individuals who submit false claims, and to adopt legislation to implement these changes by October 1, 2013.  Each state is left to define what is “timely” and “adequate” in terms of employers’ responses to the state agency’s demand for information. Since employers will now remain liable for UI overpayments that could’ve been avoided, take the time to revisit your procedures for handling these calls or risk a higher tax rate.

12. Stated Differently– Here are some hot topics for you multi-state employers:

1. Connecticut– Even though a global release of claims, including  a workers’ comp claim stemming from a back injury, between an employer and employee may be enforceable under common law, it is non-binding on the parties unless the release is approved by the Commissioner as provided for under section 31-296 of the CT Workers’ Compensation Act.  Leonetti v. MacDermid Inc. (Conn. 10-13).

2. Illinois – Effective June  1, 2014, Illinois will be the 16th state to legalize marriage between two people of the same sex via enactment of the Religious Freedom and Marriage Fairness Act.

3. Michigan– Pilot program running for one year, commencing October 29, 2013, will deny unemployment benefits to any person who tests positive for a controlled substance (and had no lawful prescription for the substance) or who refuses to submit to a drug test during a prospective employer’s nondiscriminatory pre-employment drug test, if the employer reports such positive test or refusal to test to the State.

4. Massachusetts – A former staffing company employee did not solicit clients of her former employer by updating her LinkedIn profile to display employment with a competing staffing company.  KNF&T v. Muller and Panther Global Group Inc. (Sup. Ct. 10-13).

5. Minnesota– Effective January 1, 2014, employers may not inquire about, require disclosure of or consider the criminal record or history of an applicant until after the applicant has been selected for interview or, if there is no interview, until after a conditional offer of employment has been made.

6. New Jersey – Effective December 1, employers may not require or request a current or prospective employee to provide or disclose any user name or password, or in any way provide the employer access to, a personal account through an electronic communications device.  Employers may implement policies pertaining to the use of devices and services provided  by the employer or that the employee uses for business purposes.  Employers may also conduct investigations to ensure compliance with applicable law and to look into reports of unauthorized transfer of the employer’s proprietary/confidential information or financial data to a personal account by an employee.  Full text of the new law is available at

7. North Carolina –Effective December 1, employers may not inquire about arrests, charges or convictions that have been expunged. 

8. Virginia– The presence of a single employee in VA who worked out of her home for a company HQ’d outside of VA was sufficient to create a nexus with VA for corporate tax purposes.  While the state law had an exception for employees engaged in the sales of tangible products, the VA Tax Commissioner found it did not apply here since the employee conducted training at various facilities and developed methods of testing related to the training.

13. Calendar This – Break out that fresh 2014 calendar and pencil in May 15 and 16 for the University of Texas School of Law’s 21st Annual Labor and Employment Law Conference in Austin, TX.  The faculty for this program met last month and we’ve put together a great program for HR pros and attorneys alike.  See you there!

14. For the Birds – If you like being tweeted and want breaking news on employment law changes (and the occasional random cheer for K-State . . . bring on the bowl games!), follow me on Twitter.  I’m at @amross.

Here’s wishing you and yours the happiest of holidays with family and friends . . . see you next year!

Audrey E. Mross
Labor & Employment Attorney
Munck Wilson Mandala LLP
600 Banner Place
12770 Coit Road
Dallas, TX  75251

972.628.3661 (direct)
972.628.3616 (fax)
214.868.3033 (iPhone)

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