Category Archives: employers

Illinois Supreme Court to Decide Biometric Privacy Case

Contributed by Carlos Arévalo, November 27, 2018

Data breach 2In October of 2017, we first reported on the filing of a class action suit by a group of Chicago-area employees where plaintiffs alleged that their employer’s use of worker fingerprints for time-tracking purposes violates the Illinois Biometric Information Privacy Act (BIPA).  Specifically, the employees claimed that their employer failed to properly inform them in writing of the specific purpose for which their fingerprints were being collected and the length of time their fingerprints would be stored. Plaintiffs also claimed the employer failed to obtain written consent before obtaining fingerprints.

Then, this past June, we reported on a federal court’s decision finding that despite no concrete damage, an employee (and her putative class) might have a triable cause of action for violating her privacy and right to control her biometric data. The allegations in this case also included a failure to inform the specific purpose of collection and failing to obtain written authorization for the collection of biometric data.

On November 20, 2018, the Illinois Supreme Court heard oral arguments in a Rosenbach v. Six Flags Entertainment Corp., a case specifically addressing BIPA. While Rosenbach is not an employment case (it concerns a patron’s access to Six Flags), it nevertheless involves the issue of whether collection of biometric data alone triggers statutory damages even if the plaintiff has not claimed actual harm. The lower appellate court in Rosenbach found that alleging only technical violations of the notice and consent provisions of the statute is not tantamount to alleging an adverse effect or harm. Thus, how the Illinois Supreme Court rules in the next few months is bound to have a significant impact on Illinois employers and potentially elsewhere in the country.

In the meantime, to avoid and/or minimize any BIPA issues or potential liability, we continue to recommend that employers take the following steps:

    1. Establish a written policy that addresses the purpose(s) of biometric data use, how it will be collected, and how it will be stored.
    2. Be prepared to address any requests for reasonable accommodations based on disability, religious, or other reasons.
    3. If biometric data might leave a closed system, ensure that proper safeguards are in place, including contractual liability shifting.
    4. Ensure that employees whose biometric data is used acknowledge the policy, and authorize its use and collection.
    5. Train supervisors on the company’s policies and practices to ensure consistency.
    6. Have biometric data systems audited to ensure that data is not open to the public or a systems breach.
    7. Finally, consult with competent employment counsel to ensure that policies and practices comply with relevant law.

 

U.S. District Court Looks at Change of Employment Terms Sent by Email

Contributed by Michael Faley, November 15, 2018

Email image

Email mailing the world SMS messaging Laptop

The U.S. District Court in Connecticut recently issued an instructive decision on the ever-increasing practice of emailing employees to notify them of changes to the terms of their employment. Financial services giant Morgan Stanley sent employees an email detailing its new mandatory Convenient Access to Resolutions for Employees (CARE) arbitration program. It reflected an effort by Morgan Stanley to expand mandatory arbitration to all employee disputes including previously exempted statutory discrimination claims. After one employee filed a federal lawsuit for age discrimination, Morgan Stanley moved to compel arbitration.

The employee fought back. What was her defense? Well, the employee simply denied that she read her email. She argued that she couldn’t have accepted contract terms she hadn’t even read.

However, the court disagreed and noted that as an at-will employee her employment and its conditions are subject to change. The court found that the former employee had sufficient notice of the change and that her failure to read her email didn’t provide a valid excuse. The court also found it significant that Morgan Stanley provided additional opportunity to review the change by posting it on the company’s intranet. These days, it is “established business practice and expectation for employees both to routinely check email and internal business sites for important updates concerning the business, their employment, or changes in operations or procedures,” the court observed.

Notably, the email stated that employees had a month to opt-out by completing a CARE Arbitration Program Opt-Out Form. By giving an opt-out choice, Morgan Stanley avoided “the condemned practice of ‘unilaterally thrusting’ these changes” on their employees.

In the end, the court found that Morgan Stanley’s CARE program represented a binding and enforceable change to its employee arbitration policy. The case of Antollino v. Morgan Stanley, Case No. 17-cv-1777 (D. Conn. May 11, 2018) is currently under consideration by the U.S. Court of Appeals for the Second Circuit.

Tips for Employers:

  • Conspicuously label employment changes sent by email
  • Post the changes somewhere else too making them accessible to all employees
  • Consider opt-out options
  • Be sure to create a standardized process for notifying employees of changes

 

Expense Reimbursements – Time to Update Policies

Contributed by Noah A. Frank, October 17, 2018

Effective January 1, 2019, the Illinois Wage Payment and Collection Act requires employers to reimburse “necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.”

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Travel expenses design, with airplane and money

Here’s what you need to know now to prepare

While the law requires reimbursement of expenses which are for the primary benefit of the employer, employers are not responsible for expenses due to (i) the employee’s negligence, (ii) normal wear, or (iii) theft (unless the theft was the result of the employer’s negligence). Employees have at least 30 calendar days to submit supporting documentation, or a signed statement as to why such support is nonexistent, missing, or lost.

An employee is not entitled to reimbursement if he/she fails to comply with an established written expense reimbursement policy. The policy may set guidelines and specifications on what is reimbursable, as long as it is not de minimus or nonexistentBut, if the employer authorizes or requires the employee to incur an expense, or fails to comply with its own policy, then the expense may become reimbursable.

While the Illinois Department of Labor has not clarified what types of expenses are reimbursable, the statute closely tracks California’s Labor Code 2802, which has been interpreted to require reimbursement for: personal automobile use at the IRS rate or the actual costs if higher; personal mobile phones and service used for work (even where minimal); training; business travel; tools; equipment; and uniforms (including apparel and accessories of distinctive design and color).  This list is not exhaustive, nor is it necessarily controlling on Illinois employers.  Both states’ laws provide for attorney fee shifting and penalties for violations.

What to do?  Spoiler alert – Enforce written policies

Review existing policies and procedures:

  • How, when, and where do employees submit receipts?
  • Are there limits on reasonable meal reimbursements?
  • What about class of travel for domestic vs. international flights?
  • Are these policies that the company can and does effectively, fairly, and consistently apply?

As BYOD (Bring Your Own Device) policies become more prevalent, employers must evaluate whether they are required to reimburse for the cost of all or a portion of the device (mobile phone, tablet, computer) and related voice, data, and internet services. Similarly, consider educational and business development expenses which are primarily for the employer’s benefit such as trade and industry subscriptions and memberships. Also address expenses currently incurred without forethought: e.g., curbing practices where employees purchase office supplies as they deem necessary.

Employers should consider having competent employment counsel review expense policies and ancillary documents for compliance and best practices. For example, update template release agreements to acknowledge that an employee received complete expense reimbursements.

 

Main Street Employee Ownership Act Signed

Contributed by William Scogland, October 3, 2018

EMPLOYEE STOCK OWNERSHIP PLAN CONCEPT

Employee Stock Ownership Concept with laptop and phone in background

On August 13, 2018, as part of the John S. McCain Fiscal Year 2019 National Defense Authorization Act, President Trump signed into law the Main Street Employee Ownership Act, which was originally introduced by Senator Gillibrand and Representative Velazquez, a rare bipartisan achievement.

Employee Stock Ownership Plans (ESOPs) are often established using a loan to finance the purchase of company stock by the plan. ESOPs only infrequently default, so this is an area in which the government can be confident that the taxpayers will get their money back. The Small Business Administration (SBA) was authorized to make ESOP loans in 1979, but it was done only infrequently because it was so cumbersome.

The Act facilitates the establishment of ESOPs by revising the rules under which the SBA may assist small employers to transition to employee ownership.

Specifically, it:

  • Permits the SBA to make loans to companies that can then re-lend to ESOPs (prior law only allowed direct loans made to ESOPs, but commercial ESOP loans are almost always made to the company and relent to the ESOP);
  • Permits ESOP loans to be made under the SBA’s preferred lender program, which should expedite the process;
  • Provides that ESOPs do not need to have full voting rights to qualify, which aligns more closely with Federal income tax rules;
  • Makes an exception to an SBA rule that sellers of a company cannot have an ongoing role in the firm (the Act codifies in statute a recently released SBA policy that allows the seller to stay on as an owner, officer, director, or key employee of the company, when the ESOP acquires a controlling interest i.e., 51 percent or more, but any seller who remains as an owner, regardless of percentage of ownership interest, would be required to provide a personal guarantee, which is often required in commercial ESOP loans in any event);
  • Helps finance transition costs, which can be expensive, by allowing transaction costs to be financed as part of the SBA loan; and
  • Grants SBA the authority to waive equity requirements (SBA currently requires an equity injection of at least 10 percent of the total project cost for loans that finance change of ownership, but under the Act SBA may waive that requirement on a case by case basis for loans that finance a change of ownership to an ESOP).

Small businesses, which may be considering a switch to employee ownership, should be aware of these changes that may make the transition easier. In some limited circumstances, one or more of these changes may even be the deciding factor in proceeding with a transaction.

 

New Forms! FMLA & FCRA

Contributed by Noah A. Frank, September 27, 2018

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hand with pen over form

In September 2018, the U.S. DOL published “updated” FMLA forms and the U.S. Consumer Financial Protection Bureau published updated FCRA forms.

DOL – Family and Medical Leave Act Forms

The DOL’s September 4, 2018 update is trivial: only the expiration date changed (now extended to August 31, 2021). There are no other changes to information, questions, or even layout (indeed, they maintain their prior revision date). Nonetheless, employers should promptly update their files with these new template forms. 

The forms are all available from the DOL’s  Wage and Hour Division be individually downloaded by clicking on the following links, or simply send an email and we will gladly provide them to you:

CFPB – Fair Credit Reporting Act Form Notice

On September 12, 2018, the CFPB released an updated Fair Credit Reporting Act Notice.  This is an important document to be provided to employees when using a third-party provider to obtain a “consumer report,” such as criminal background check or financial history inquiry.

Enforced by the U.S. EEOC in the employment context, failure to strictly comply with the FCRA has resulted in a significant increase in employment class action and discrimination lawsuits, including by professional plaintiffs — those who never really intended to work for the company, but found an opportunity to make a few dollars from a noncompliant company through threatening litigation and obtaining a nice settlement.

As part of the company’s regulatory compliance, ensure that the company and any third-party vendor immediately updates their FCRA notices, available from the CFPB in English and Spanish. 

As always seek the advice of competent employment counsel if there are any concerns with the use, completion, or interpretation of any of these government documents.

 

Failed Drug Test: Diet Coke & A Poppy Seed Muffin

Contributed by Noah A. Frank, September 21, 2018

We’ve all heard Seinfeld’s Elaine Benes’s defense to a failed drug screen for opium: she eats a poppy seed muffin every day. With Coca-Cola recently announcing that it was exploring a cannabidiol-infused beverage line, companies should again buckle-up for the next wave of employment-based substance screening.

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Magnifying glass over the words “Drug Testing”

Is the Benes Defense valid? Could a poppy seed muffin a day actually result in a false-positive?

Maybe. The U.S. Department of Health and Human Services occasionally changes the cutoff levels for initial and confirmatory testing thresholds for metabolites. This testing does NOT show impairment, rather it shows how much a particular substance (like opioids, cocaine, amphetamines, etc.) are in the blood, urine, or other body tissue sampled. If a drug screen set the threshold too low, it is possible that it could detect trace amounts of opioids from that poppy seed muffin. This is why confirmatory testing using recognized standards is so important when employment decisions are to be made. So, there may be some validity to the defense, but very unlikely!

So, now what is an employer to do with the possibility of CannabidOLA hitting the shelves?

Initially, it is important to understand the two main substances involved derived from cannabis plants:

  • Cannabidiol or “CBD” is a non-psychoactive component of cannabis;
  • Tetrahydrocannabinol or “THC” is the psychoactive compound that provides the euphoric stoned or high sensation.

Both CBD and THC are believed to have medical benefits. While marijuana remains unlawful under federal law, over 30 states and Washington D.C. have made some form of medical use permissible, with 10 of these approving recreational (adult) use. The lawful medical and recreational use numbers are growing.

Companies that consider entering into the CBD-infused market should understand and ensure that their products comply with the highly regulated patchwork of state and local laws. For example, ensuring that their products will not cause the average (or even heavy) consumer to rely upon the Benes Defense.

For employers, the legality of medical and recreational use is becoming more prevalent. Prepare for these changes now – including understanding that off-duty use of (but never at-work use of or impairment from) lawful substance may be protected under disability and/or privacy laws. To the extent substance screening is used, employers may need to closely evaluate the metabolite threshold to ensure that they meet both the company’s actual policies and their enforcement (e.g., zero tolerance vs. zero impairment).

As always contact competent counsel in navigating these highly evolving laws.

 

Illinois Amends Nursing Mothers in the Workplace Act to Expand Rights of Breastfeeding Mothers

Contributed by Allison P. Sues, September, 19, 2018

96042497 - baby milk bottles and pacifier on white background

baby bottles and pacifier on white background

Illinois employers should be aware of amendments to the Illinois Nursing Mothers in the Workplace Act that expand the rights of employees who need to express milk while they are at work. Both before and after the amendments, the Act requires employers to provide a private space, other than a toilet stall, for mothers to pump at work. The amendments, which went into effect immediately when Governor Bruce Rauner signed House Bill 1595 on August 21, 2018, make some key changes to the law, each discussed below:

  • Employers cannot require employees to pump during their break time. Formerly, the Act provided that the employee’s pumping break “must, if possible” run concurrently with other break times provided. The amendments now provide that the pumping break “may” coincide with other break times, but adds that employers must provide “reasonable breaks each time the employee has the need to express milk for one year after the child’s birth.” These amendments provide moms with greater control in scheduling pump breaks according to their needs, and confirm that an employer cannot require an employee to schedule pumping breaks around other previously scheduled breaks.
  • Employers cannot reduce pay for pumping breaks. The prior version of the Act required employers to provide “unpaid” breaks for pumping mothers. The amendments remove the word “unpaid,” and instead state that an “employer may not reduce an employee’s compensation for the time used for the purpose of expressing milk.” While the Act does not expressly provide that all pumping breaks must be paid, it does prohibit employers from reducing an employee’s pay for pumping breaks. Under a fair reading of these amendments, employers should pay employees exactly as they would have if they were not taking pumping breaks. If an employee needs to pump during a regularly scheduled unpaid break, the employer does not need to pay her for that time.  However, if an employee needs to pump during a time period that is regularly paid, the employer cannot reduce her pay for that time spent pumping.
  • Employers may only restrict employees from pumping if it causes an undue hardship. The former act provided that an employer is not required to provide this break time if it would “unduly disrupt the employer’s operations.” Under the new amendments, an employer may only restrict mothers from pumping at work if it can satisfy the higher burden of showing an undue hardship, as defined by the Illinois Human Rights Act. This means an employer would need to show that a pumping break would be prohibitively expensive or disruptive given the employer’s size, financial resources, and operation, among other factors.

As before, this Act applies to employers who have more than five employees. The requirement that employers provide a private space to pumping mothers in close proximity to their work area remains unchanged. In light of these amendments, employers should review their workplace lactation policies and reach out to employment counsel with any questions.