LB4HR – April 2016
Welcome to Legal Briefs for HR, an update on employment issues sent to over 6000 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 via reply email you’d like to be added to the list and you’re in! Back issues are posted at www.munckwilson.com under Media Center/Legal Briefs and you can also join the group by clicking on “Subscribe.”
Your mama did not raise a fool . . . read and learn:
- Beauty and the Beast – So what can employers learn from the staggering multi-million jury verdicts recently awarded to Erin Andrews and Hulk Hogan? For starters, these jurors were clearly offended by the type of invasion of privacy visited upon both plaintiffs. Although disclosure of surreptitious naked videos involving employees is rare (but not unknown), other types of privacy can be just as important and command serious damages when breached. Are you aware of the legal and practical lines that should not be crossed? Do you realize that telling your employees “you have no reasonable expectation of privacy” is a good start but not a complete defense? Here are just a few of the privacy protections that you should consider before creating policy/procedure and taking corrective action for perceived misconduct:
- State constitutions and statutes which contain an express or implied right to privacy
- Common law remedies for various forms of invasion of privacy, such as intrusion upon seclusion
- Federal laws, such as the Electronic Communications Privacy Act, which limit your ability to access certain electronic messages . . . even on your own systems
- Federal (and some states’) law that severely limit an employer’s ability to use lie detector tests in employment
- Federal and state laws that restrict whether, in what way and how you use the results of job applicant and employee drug tests
- State wiretap laws which may require dual, rather than single, consent to monitoring
- State laws that mandate notice to employees of electronic monitoring, including GPS on company-issued vehicles and phones
- State laws that prohibit mandated disclosure of job applicants’ and employees’ protected social media accounts
- State laws that make employees’ lawful after-hours and off-premises conduct none of your business
- Eye Spy – One benefit of the Erin Andrews trial is the revelation that anyone can purchase a simple device to reverse a door’s peephole and look in, from the outside. Heads’ up travelers who value their privacy . . . you might want to block that hole in your hotel door! Duct tape? Wad of chewing gum? Tiny message card that says, um, get your jollies elsewhere, creep?
- I-9 Makeover Nearly Complete – USCIS posted its proposed changes to Form I-9 on March 28 and is providing a 30-day comment period. This is on the heels of the prior 60-day comment period that commenced on November 24, 2015. You can read the proposal and submit your pithy comments, if any, at https://www.federalregister.gov/articles/2016/03/28/2016-06883/agency-information-collection-activities-employment-eligibility-verification-form-i-9-revision-of-a. Oh, it also says you can continue using the present Form I-9, which expired on March 31, until the new one is released. I know that was keeping you up at night.
- HR Headaches – Employment-related statutes prohibit certain types of conduct and normally identify the “employer” as the one who will be liable if the law is violated. The FLSA and FMLA definitions of “employer” are distinct from the ones used under Title VII, ADEA and ADA, by specifying that the employer is “any person who acts, directly or indirectly, in the interest of the employer to any of its employees.” So you should not be surprised to read that, once again, an HR Director has been found personally liable for an FMLA violation. Graziado v. Culinary Institute of America (2nd Cir. March 2016) While the HR Director’s boss had “ultimate termination authority” the Court noted that this authority had been delegated. Specifically, the HR Director had reviewed the FMLA paperwork and determined if it was complete, controlled the conditions under which the employee could return to work from leave and sent nearly every communication relating to the decision process. This level of control over the matter was deemed sufficient to support individual liability.
- Heads’ Up, HR – Your friends at the IRS issued a March 1 alert to payroll and human resources professionals to make you aware of a surge in a particular type of phishing scam. You may receive an email purporting to be from your CEO or other company executive, asking for employees’ personal identity information such as copies of the Form W-2 (which contains the employee’s SSN). Other versions of the scam ask for a list of employee names, DOB, home address, salary and SSN. The emails are “spoofs” which appear to actually come from a person within the organization, but don’t be fooled. Instead, march your wise self down the hall and verify before compiling and sending this info to anyone. The IRS’s alert can be found at https://www.irs.gov/uac/Newsroom/IRS-Alerts-Payroll-and-HR-Professionals-to-Phishing-Scheme-Involving-W2s.
- Not Persuaded – As expected, the U.S. Department of Labor’s final version of the “persuader rule” guts the advice exemption by requiring employers to disclose the hiring of consultants, including attorneys, who provide oral or written recommendations relating to union elections. The prior version of the rule required disclosure only if the consultant had direct contact with employees. See http://www.dol.gov/olms/regs/compliance/ecr_finalrule.htm for a copy of the rule and related info (including a particularly curious comparison of labor consultants to the Wizard of Oz . . . as a native Kansan, I think their analogy is as inept as the Tin Man without his oil can). A lawsuit has been filed in AR to block implementation of the rule, by the National Ass’n of Manufacturers and other business groups. The plaintiffs claim the final rule is unconstitutional, violates the Administrative Procedures Act and the Labor Management Reporting and Disclosure Act and cannot be harmonized with attorney/client privilege. See http://online.wsj.com/public/resources/documents/2016_0330_persuader.pdf.pdf for a copy of the lawsuit.
- More Handbook Hiccups – It’s not hard for the NLRB to find an employee handbook it does not like. The agency has been on a tear, nixing common sense pronouncements on collegial behavior on the premise that some employee might interpret the policy to mean that he or she cannot complain about work-related issues, which is a protected right under the NLRA. The most recent case, involving Chipotle, is interesting because the employer had already fixed the offending policy, but that did not matter because supervisors were still applying the old version. What was in the old version?
- A social media policy that banned “disparaging, false, misleading, harassing or discriminatory statements about or relating to Chipotle, our employees, suppliers, customers, competition or investors” . . . the fired employee had posted Tweets on being required to work on snow days and working for low wages & had been “asked” by the company to remove those Tweets; the ALJ noted that employers may not ban posts that are merely false or misleading . . . it must be shown that a malicious motive was at work
- A social media policy that said “If you aren’t careful and don’t use your head, your online activity can also damage Chipotle or spread incomplete, confidential or inaccurate information” . . . the ALJ said that the undefined use of “confidential” was too vague and could mislead employees about their Section 7 rights
- An ethical communication policy that banned exaggeration, guesswork and derogatory characterization of people and their motives
- A ban in improper use of the company’s name or trademarks . . . without explaining what would be “improper”
An easy lesson on this one is to couple any newly-released guidance with supervisory training or similar clear messaging to ensure that your fix is implemented and the unfortunate old policy is gone, gone, gone.
- EEO Oh No – It did not take Congress long to push back on the EEOC’s plan to gather pay info along with the usual race/gender data via its annual EEO-1 reporting exercise. The EEOC Reform Act (S.B. 2693), if passed, would require the EEOC to do a better job of establishing the cost to employers by applying the new rule, on a test basis, to federal employers only. After gathering the data from this test run, the EEOC would be required to calculate the number of hours needed by agency staff to analyze the data and the number of staff and hours that were diverted from processing charges of discrimination. The study would be published and reported to Congress as an annual exercise. Only after the first annual report and the development of plan that explains how the data would be used, could the EEOC seek OMB’s OK to extend the requirement to private sector employers.
- DOL Dissed – The Protecting Workplace Advancement and Opportunity Act (S. 2707 & H.R. 4773), if passed, will slam the brakes on pending changes to the FLSA’s white collar exemptions and require detailed study of its effects before it can be unleashed on employers. The bill states that the U.S. Department of Labor (DOL) failed to evaluate the economic impact of doubling the minimum salary needed to preserve several FLSA exemptions or the effect of automatic annual increases to that number. The bill identifies nonprofit, public sector and small business as being particularly vulnerable to what the DOL has proposed. The bill also addresses the concern that unilateral changes to various duties tests could drop on employers at any time, by requiring a notice-and-comment period prior to any change to those duties tests. DOL sent the revised regs to the OMB on March 15 in a transparent attempt at a quick launch of the revised reg, to avoid nullification via the Congressional Review Act at a point in time when a White House veto of Congressional action might not be a sure thing.
- Peek-A-Boo Noncompetes – In a 36-page report issued on March 31, the U.S. Treasury Department suggests that noncompete agreements can be used for societal good, but many are not, and the solution is to  make them more transparent when offered (so that employee really understands what he or she is getting into);  “encourage” employers to stop using overbroad noncompetes which are not enforceable (but may have the desired effect because the employee does not know any better); and  require that employers provide consideration (read: real money) to employees signing noncompetes, so that employers are incentivized to reduce the number of noncompetes they require. It’s an interesting read, at https://www.treasury.gov/resource-center/economic-policy/Documents/UST%20Non-competes%20Report.pdf. Could this be a step toward federal policy which preempts the crazy quilt of state laws which currently regulate enforceability of noncompetes? Hmmm.
- Out of Joint – In response to the NLRB’s pronouncement of joint employer status between two distinct business entities in Browning-Ferris Industries, not to mention the DOL’s stated opinion on this issue, five states have amended their business franchise laws to specify that a franchisee is a sole employer of the employees it provides pay/benefits to unless the franchise agreement (between franchisor and franchisee) expressly states an intent to enter into a joint employer arrangement. Michigan is the most recent state to take this action (on March 22), joining LA, TN, TX and WI.
- Expensive Lesson from a Laptop – North Memorial Health Care of MN (“NMHC”) shared sensitive personal health information (PHI) with a contractor. The contractor’s employee had this info, in unencrypted form, on a password-protected laptop. The laptop was stolen from the employee’s locked car, putting the PHI of 9947 individuals is in the wind. NMHC properly reports the breach. The contractor settles with the MN attorney general for $2.5 million for violations of HIPAA and state laws. NMHC pays the U.S. Department of Health and Human Services $1.55 million (for its failure to have a business associate agreement with contractor and failure to conduct electronic PHI risk analysis) and agrees to a comprehensive corrective action plan to add the missing policies, procedures and employee training relating to protection of PHI.
- Look Before You Leap – Individuals with pending USCIS permanent residency applications who want to change positions or jobs, hold your horses and check out the March 18 final version of guidance on how to do it properly at https://www.uscis.gov/sites/default/files/USCIS/Laws/Memoranda/2016/Final_Same_or_Similar_Policy_Final_Memorandum_3-18-16.pdf.
- Labor and Employment Law Conference – If you are looking for a solid update that caters to both lawyers and to HR professionals, check out the University of Texas School of Law Labor and Employment Law Conference, to be held in Austin on May 3 and 4. For more info and to register, go to https://utcle.org/conferences/EL16.
- Stated Differently – Here are some hot topics for you multi-state employers:
- California – Time to update your state law notices! The Pregnancy Disability Leave and Family Rights Act have been amended, so the existing notices have been revised. See the agency website at http://www.dfeh.ca.gov/Publications_Publications.htm. These changes take effect April 1.
- California – On March 31, the legislature OK’d a bill which will raise the state minimum wage to $15/hour over the next six years. Governor Brown said he would sign it on Monday, April 4. The current state minimum wage is $10/hour and will jump to $10.50/hour on January 1, 2017. The next raise would be to $11/hour on January 1, 2018, and then add $1/hour each January 1 until 2022. Businesses with fewer than 26 employees are given an extra year to comply.
- California (Pasadena) – Effective July 1, employers of 26+ employees must pay at least a minimum wage of $10.50/hour to all employees who work within the city limits and at least two hours per week. The rate will rise to $12.00/hour on July 1, 2017, and go to $13.25/hour on July 1, 2018. The same rates apply to employers of fewer than 26 employees, but add one year to each of the effective dates.
- Idaho – Enforcing a noncompete against certain folks is getting easier. A bill signed by the governor on March 31 provides, in part, that a rebuttable presumption of irreparable harm is established where a key employee or key independent contractor breaches a noncompete agreement or covenant. To rebut, the person must show that he or she has no ability to adversely impact the employer’s legitimate business interests. “Key employee or key independent contractor” is one who is among the highest paid 5% of the employer’s employees and contractors. For full text, see http://legislature.idaho.gov/legislation/2016/H0487.pdf.
- Mississippi – A MS Supreme Court decision allows an employee to sue his employer for wrongful discharge after being fired for having a gun in his locked car on the employer’s premises. Swindol v. Aurora Flight Services Corp. (Miss. March 2016). MS is one of several states which allow employers to ban guns in their buildings and company cars, but not in employees’ locked vehicles while parked on the employer’s premises. The lower court dismissed the lawsuit and Swindol appealed. The 5th Circuit asked the MS Supreme Court to opine on the tension between the gun law and employment-at-will. The Supreme Court noted that the gun law did provide immunity to employers from civil suit arising from the transportation, storage, possession or use of a firearm covered by the law but concluded that the immunity was intended to protect employers from liability arising from the actions of an employee or third party (e.g., workplace violence) but not from the employer’s own failure to comply with the law. This case created the third exception to the employment-at-will doctrine in MS.
- North Carolina – On March 23, legislators called a special session and passed the Public Facilities Privacy and Security Act (H.B. 2) which blocks local governments from passing civil rights laws and wage and hour laws that are more generous than the state’s version. The measure was designed to negate a Charlotte city ordinance which prohibits discrimination based upon LGBT status and allows transgender individuals to use the restroom of their choice. The Charlotte ordinance was to take effect April 1. The state law, which applies to schools and public agencies, requires that individuals use the restroom consistent with the gender noted on their birth certificate. Commentators noted that the broad reach of the language negates common law causes of action in employment discrimination cases and several corporations (e.g., Dow Chemical, Biogen, Inc.) have expressed their disapproval of the legislature’s action. The NC governor signed the bill into law late on March 23 and a lawsuit was filed on March 28 in an attempt to block the law as being unconstitutional, on both equal protection and privacy grounds. Stay tuned.
- Tennessee – An employer’s provision of 3000 hours of supervised real estate appraisal work, enabling an employee to obtain a real estate appraiser’s license, was not sufficient to support a post-employment noncompete restriction. Davis v. Johnstone Group, Inc. (TN Ct. App. March 2016). At trial, the Court found that the employer had provided neither specialized training nor confidential information which could’ve been proper consideration for the post-employment restrictions. It also noted that the employee took no confidential client info or business records, there was no “secret” method of appraising used by the employer and the appraisal training provided was not unique.
- Utah – Effective May 10, 2016, UT prohibits post-employment restrictive covenants that last more than one year from the date employment ends. A longer restriction is deemed void. This includes agreements that the employee will not compete with his or her employer in providing products, processes or services that are similar to those the employer provides. The prohibition does not apply to other types of post-employment restrictions such as nondisclosure and nonsolicitation agreements.
- Wisconsin – The state has repealed a state law prohibiting, among other things, possession of a switchblade knife and moves knives under the state’s Concealed Carry Law (2011), which allows carrying of concealed weapons with a state-issued license. As with guns, property and business owners can choose whether to permit concealed weapons on their premises. If you policy and/or signage on this issue was limited to guns, you may want to revise it to include covered knives.
- For the Birds – If you like being tweeted and want breaking news on employment law changes (and the occasional random cheer for K-State), follow me on Twitter. I’m at @amross.
Until next time,
Audrey E. Mross
Labor & Employment Attorney
Munck Wilson Mandala LLP
600 Banner Place
12770 Coit Road
Dallas, TX 75251
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