Category Archives: employers

More Technology, More Headaches for Employers

Contributed by Noah A. Frank, June 7, 2018

Technology is great. I can use my smartphone to change a million TV channels without getting up (of course, there’s still nothing to watch until Game of Thrones returns).

technology

Close up of business man working on blank screen laptop computer 

Employers, too, are reaping the benefits of technology for the most routine areas of employee and facilities management – including timekeeping and building security. But with the transitions from handwritten and manually punched time cards to fingerprint scanner timeclocks, and mechanical keys to retinal scanners, employers face significant risk under privacy laws.

As a result, many states are beginning to pass employee privacy laws related to biometric data (including but not limited to retina or iris scans, fingerprints and voiceprints, and hand and face geometry). And with laws and regulations, comes the need for compliance to stave off lawsuits, including private causes of action and class actions.

For example, a Federal Court in Illinois recently found 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 employer and its timekeeping vendor allegedly failed to:

  • inform the employee of the specific purpose or length of time fingerprints were to be collected, stored or used;
  • make available any biometric data retention policy or guidelines (if there was one);
  • obtain  employee releases and authorizations for the collection and use such biometric data;
  • and implement reasonable procedural safeguards.

The employer is further alleged to have systemically disclosed the biometric data by sharing it with the timekeeping vendor.

Biometric Data Done Right.

Biometric data is not something to be afraid of, as long as it is administered and used appropriately. The following key steps can help businesses ensure that they are complying with relevant laws:

  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 there are proper safeguards 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 the 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.

 

Should Employers Be Grieving the Impending Death of the DOL’s Fiduciary Rule?

Contributed by Rebecca Dobbs Bush, May 31, 2018

Every employer offering a 401(k) plan is faced with decisions about what investment options to make available to participants. Investment options carry different risks as well as different costs. In designing available investment options, most plan sponsors rely on a third-party advisor. Industry estimates indicate that approximately 90% of these financial advisors are brokers, i.e., commissioned-based sales consultants.

Third-party financial advisors may or may not maintain fiduciary status in regards to the 401(k) plan (this depends on the specific terms of each individual plan). Where an advisor does not maintain fiduciary status, an employer is ultimately the party responsible for selection and monitoring of available investment options.

Employer

Person sitting at desk with a sign that says “Employer”

The final rule, issued back on April 8, 2016, increased the level of responsibility for every third-party advisor to a 401(k) plan from a weaker “suitability” standard to a “best interests” standard, meaning they must only offer advice in the best interests of plan participants and beneficiaries and must disclose any potential conflicts of interest. Understandably this is an incredibly difficult standard for a broker/financial advisor to meet and the financial industry has protested the rule vigorously. In March of 2018, the Fifth Circuit Court of Appeals vacated the Department of Labor (DOL) rule and the DOL has indicated they won’t be challenging that decision. On May 7, 2018, the DOL went a step further and issued Field Assistance Bulletin No. 2018-02 announcing a temporary non-enforcement policy.

Should employers be grieving the death of the fiduciary rule? Perhaps, but not necessarily. Ultimately no one will work for free and third-party advisors are no different. If broker/financial advisors can’t collect adequate compensation through commissions, they will likely change their fee structure to charge more direct service fees. At the end of the day, the costs to the plan and its participants would arguably be equivalent. That said, employers relying on third-parties for financial advice in designing and maintaining their plans need to keep this in mind. Blind trust is not an option when there is an inherent conflict of interest due to commission-based compensation. Employers are fiduciaries regardless of the death of the DOL’s fiduciary rule and need to be diligent in ensuring they understand their plan and are protecting the participants.

 

Can Employees Voluntarily Work During FMLA Leave?

Contributed by Allison P. Sues, May 15, 2018

66028068 - fmla family medical leave act ,fmla

“FMLA Family Medical Leave Act” with doctor in background

Last month, the United States Court of Appeals for the Fifth Circuit issued an opinion that provides a helpful reminder about the extent to which an employer may ask an employee to work during a leave taken under the Family Medical Leave Act (FMLA). In D’Onofrio v. Vacation Publications, Inc., a sales representative requested FMLA leave to care for her husband, who had suffered a major back injury. Her employer gave her two options – she could either go on unpaid leave or she could log on remotely a few times per week during her leave in order to service her existing accounts and keep her commissions. The sales representative opted to continue servicing her accounts during her leave. Later, the sales representative sued her employer and alleged, among other claims, that her employer denied her entitlements under the FMLA by requesting that she work during her leave. The court quickly dismissed this claim because the sales representative had voluntarily agreed to the work. The employer had not coerced this work and had not conditioned the sales representative’s continued employment on completing the work during her leave. The court stated that “[g]iving employees the option to work while on leave does not constitute an interference with FMLA rights so long as working while on leave is not a condition of employment.”

This case serves as an example of a black and white rule – an employer may not condition continued employment on completing work while on FMLA leave or otherwise coerce or require an employee to work while out on FMLA leave. However, there is a lot of gray area surrounding this clear rule. While an employer may not require an employee to complete full assignments or regular work during leave, nothing in the FMLA statute or regulations prohibits an employer from contacting an employee during leave with de minimis requests or short and simple questions. For example, an employer may contact an employee on FMLA leave to request a password to access a file, to locate paperwork, or to obtain a quick update on where a particular matter was left.

To best avoid interference claims under FMLA, employers should limit contact with employees who are on leave. Any communication about work assignments should be short and not require the employee to travel to the workplace or otherwise require the employee to expend significant time or effort. Should an employee voluntarily agree to work during leave, the employer should communicate that the work is not required and document the nature of the voluntary agreement. And, if the employee is out on unpaid FMLA and has agreed to complete some assignments, the employer should ensure the employee is compensated to avoid any wage and hour issues.

 

Gun Violence and Changing Laws: What Employers Need to Know

Contributed by Michael Wong, May 3, 2018

YouTube’s experience on April 3, 2018, in which a non-employee with no direct link to the company entered the workplace and started shooting a firearm at employees, highlighted concern for an “active shooter” scenario in the workplace.

gavelAs a result of increased gun violence, state legislatures have been pushing gun control legislation, including laws that would ban bump stocks and high capacity magazines, raise the minimum age to buy a gun to 21, or even ban people from carrying, keeping, bearing, transporting or possessing an assault weapon. Some proposed legislation is not prohibitive, but rather increases the cost to sell guns by requiring a gun dealer licenses, requires certain security protections for gun shops, or increases the waiting time for semi-automatic firearms.

For the most part these proposed laws and ordinances regulate an individual’s access to guns and do not directly change or impact the employer-employer relationship.  However many state laws regarding concealed and/or open carry of firearms in public do implicate employer and employee rights regarding firearms. Many of these laws allow employers to prohibit firearms from being carried in buildings and on the property and premises of employers. Some of those laws also allow employers under certain circumstances to prohibit firearms in parking lots. A majority of the laws though, like Illinois’ Concealed Carry Act, require employers to allow firearms to be stored in vehicles in the parking lot, but allow employers to prohibit employees from displaying and brandishing a firearm in the parking lot, unless for the sole purpose of storing the firearm.

So, what should employers be paying attention to and doing? First and foremost, they should review their policies and procedures, as well as state and local laws, to determine how and what they want to do with regard to firearms. Regardless of whether an employer allows concealed carry in the workplace or prohibits concealed carry, there are certain policies and procedures that they should put into place. This includes specifically addressing workplace violence and prohibited uses of firearms in the workplace. Employers that allow employees to conceal and carry should also consider how firearms are stored in the workplace, limitations on carrying, and whether an application process is needed so the company knows who may be carrying a concealed weapon. For employers that wish to prohibit concealed carry or firearms in the workplace, they should consider whether any carve outs are needed to allow certain positions, such as security guards, to carry a firearm. Additionally, all employers should consider a plan to address what would occur if a weapon is brought into the workplace.  Much like a fire plan, the hope is that you never have to use it, but for safety purposes, employers should consider an “active shooter” plan and provide training or walkthroughs for employees. Likewise, employers should consider what kind of potential liability and insurance coverage they have for these situations. In some cases, workers’ compensation insurance may cover injuries related to workplace violence and in others commercial general liability insurance or other plans may be needed.

The underlining message is that employers should consider and take actions to address this issue and the possibility of workplace violence involving a firearm.

 

So Here’s What I Think About That Former Employee…

Contributed by Carlos Arévalo, April 23, 2018

Unless we have been living under a rock for the last few weeks, it is likely that we may have wondered if former FBI Director James Comey could sue President Trump for defamation. Indeed, President Obama’s former Ethics Chief, Norm Eisen, recently tweeted that the president’s “false, malicious accusation of criminal conduct is libel [published defamation] per se by Trump. @Comey could sue-& might win…”  Without weighing in on the viability of such a claim, however, it is prudent to review a few defamation principles to keep in mind.

gavelAcknowledging that laws vary from state to state, to establish a claim for defamation a plaintiff must show the following: 1) that the defendant made a false statement about the plaintiff; 2) that the defendant “published” the statement to a third party; 3) that the defendant either knew the statement was false or lacked reasonable basis to believe the statement was true; 4)  that the statement was not “privileged”; and 5) that the plaintiff was harmed by the publication of the false statement. In a per se defamation case, the plaintiff may not have to show harm because the statement is so damaging on its face, e.g. the individual is said to have “committed many crimes.”

In the context of employment, such claims typically arise in connection with an employee reference check. These kinds of claims are difficult to prove and laws generally provide certain defenses and privileges or immunities. For instance, truth is an absolute defense – if the statement is true, the claim would fail. In addition, statements of opinion will not be sufficient, even if they are negative and unkind (“slippery…not smart”). An individual making the statement may also have the protection of an “absolute privilege” or immunity, such as the president or other high ranking public officials who enjoy absolute immunity for statements made “in the course of their official acts.” Other types of statements fall under a “qualified privilege,” where the individual has a right to make the statement, such as might be found in the context of an employment relationship where a supervisor is engaged in evaluating an employee. Here, the plaintiff would have to show that the individual acted with malice to establish liability.

Of course, most employers and their agents will not enjoy “absolute immunity.” Depending on your home state, certain immunities in providing references may apply under a specific statutory framework. To minimize the incidence of such claims, however, it will be critical to establish specific guidelines to ensure consistency in handling reference requests. Designate certain individuals to respond to reference requests. Additionally, employers may want to maintain a database of how to address specific reference requests as there may be, in addition to written guidelines, specific separation agreements that will govern how references will be provided. Finally, managers and supervisors ought to be trained in proper evaluation and performance review methodology to avoid making statements that may be deemed defamatory by a disgruntled employee (e.g., sticking to the handbook policy the employee violated in a write up, as opposed to the opinion of the employee being a criminal or thief). And finally, do not use Twitter or other social media vehicles to address an employee’s performance or separation.

 

FYI, Text Messages and IMs Are Discoverable Too

Submitted by Suzanne Newcomb, April 12, 2018

Back in November we reported on a federal judge ordering several members of management to turn over messages from their personal email accounts and counseled employers to be proactive in managing employees’ use of personal email for company business. The guidance set forth there rings true for text messages and other forms of electronic communication (e.g. WhatsApp, Slack, Trello and myriad others) as well.

49297353 - woman using mobile phone in office workplace.As we explained in our prior post “document production” encompasses not only “documents” in the traditional sense, but all relevant information “stored in any medium” along with its metadata. To be fair, private entities are not required to retain every communication or even every document generated in the course of conducting business. But certain communications are subject to retention regulations and knowledge that litigation is “reasonably foreseeable” triggers a separate and distinct obligation to retain all information relevant to the potential dispute.

Companies that fail to preserve information once an obligation to do so arises run the risk a court will issue a “spoliation instruction” which allows the jury to assume, based on the fact that a party failed to retain relevant evidence, that the evidence it lost or destroyed must have been unfavorable to that party’s position in the litigation. Not a comforting thought for any business.

So, how does a company square the need to keep pace in today’s world of lightning-fast communication and also avoid falling victim to claims of spoliation?

  1. Electronic Communications Are Business Records. Remind employees all communications – including text messages and electronic communications sent via messaging apps — are official business records subject to retention policies and discovery in the event of litigation.
  1. Review your Litigation Hold Notice Form. Make sure it covers not only documents in the traditional sense, but also email, text messages, instant messages, and other forms of electronic communication.
  1. Regulate and Police How Your Employees Communicate. Publish clear policies addressing when texting and other forms of electronic communications are appropriate and when they are not. Can an employee text his/her boss if s/he is going to be late? Is it appropriate for sales personnel to negotiate terms with customers by text?
  1. Involve IT Professionals. Enlist the help of IT professionals to safeguard electronic communications the organization is required to retain and to establish protocols that will allow you to quickly capture communications (along with their metadata) that are relevant to actual or potential litigation when the need arises.

 

Your Company’s Bonuses Are Discretionary, You Say?

By Steven Jados, April 5, 2018

When it comes to employee bonuses, employers often prefer “discretionary” bonus policies—as opposed to more rigid and definite policies and procedures that answer the questions of “who” is eligible to receive bonuses, “when” bonuses will be paid, and “how much” the bonuses will be.

29483972 - bonus of businessmanA problem can arise, however, when the underlying method the employer uses to award bonuses remains consistent from year to year.  Under Illinois law, for example, past practice—even in a non-union setting—can give rise to a legally-enforceable expectation that a given employee is entitled to a bonus under the same method that has been used, uninterrupted, in prior years.

So what is an employer to do to protect itself?

The actual facts behind the company’s method for awarding bonuses will dictate whether a bonus is truly discretionary or not.  But the bottom line is that if your company intends to make changes to a long-used and fairly clearly-defined method of calculating bonuses, such changes should be made and announced to affected employees prior to the start of the bonus year.  Employers should also bear in mind that changes to a bonus procedure made in bad faith (for instance, where it appears clear that bonus procedures were changed specifically to deny a particular employee a bonus) may not withstand a court’s scrutiny.

For companies that truly do use a discretionary bonus system, include language in employee handbooks and other policy documents clearly stating (1) that bonuses are a discretionary, voluntary contribution by the company, based on company profitability and employee performance; (2) that bonuses are not earned until they are actually awarded and, as such, may be withheld, increased, decreased, or discontinued, at any time up to the bonus award date; and (3) that management reserves the unilateral right to change bonus policies at any time and for any reason. Whether the company’s bonus procedure is truly discretionary or not, factors that disqualify employees from bonus eligibility should also be clearly stated in all relevant handbooks and policies documents.

If you have concerns that your company’s discretionary bonus policies may not stand up to court scrutiny, we recommend contacting experienced employment counsel for a comprehensive bonus policy review.  In doing so, employers should bear in mind that state law often controls the question of whether a bonus is discretionary or not, and the law may differ significantly from state to state, so employers must be sure they seek legal advice covering all states in which the employer operates.