Category Archives: Current Affairs

May 14, 2013

D.C. Circuit Court Tears Down NLRB Poster Rule

The writing’s still not on the wall. On May 7, 2013, the U.S. Court of Appeals for the District of Columbia Circuit rejected the National Labor Relations Board’s (NLRB) controversial poster rule requiring 6 million private employers to post a government-issued notice advising employees of their union-related rights. The rule remains in limbo pending a related appeal in the U.S. Court of Appeals for the Fourth Circuit, and potential appeal to the U.S. Supreme Court.

Poster Rule and Business Group Backlash

The controversial rule was issued in August 2011 under the NLRB’s purported statutory authority to enact rules “necessary” to carrying out the National Labor Relation Act’s provisions. The Board had long been empowered under Section 6 of the Act to engage in administrative rulemaking, but had generally eschewed this power to enforce union-related rights through case-by-case adjudication. In justifying its unusual poster rule, the NLRB claimed that many employees were unaware of their union-related rights. It cited the small percentage of unionized employees in the private workforce, and claimed that immigrants and high school students were particularly unlikely to be aware of their workplace rights.

The NLRB poster rule required all private employers covered by the Act—6 million businesses—to post an 11-by-17 inch government-issued notice in “conspicuous places,” and on intranet or internet sites used to communicate with employees. The poster advised employees of their rights to organize and join unions, to collectively bargain, and to strike and picket. Failure to post was an unfair labor practice, and could separately be used as evidence of an employer’s unlawful motive in other Board cases. The statute of limitations on unfair labor practice charges would also be tolled in cases where employers failed to post.

Business groups excoriated the rule as unbalanced. The poster did not advise employees of their additional rights to decertify unions, to refuse to pay dues in right-to-work states, or to object to dues payments in excess of those needed for representational purposes. The rule also arguably implicated employers’ free speech rights, and exceeded the NLRB’s Section 6 authority because the Act does not expressly mandate that the Board educate employees about workplace rights. Some groups claimed that the Obama administration was also improperly attempting to bypass the legislative process through substantive rulemaking.

District Court Challenges and the D.C. Circuit Court’s Injunction

The rule was originally slated to become effective in November 2011, but implementation was twice delayed due to litigation in the U.S. District Courts for the Districts of Columbia and South Carolina. In the former case, a district court judge upheld the rule as a valid exercise of the Board’s Section 6 power, but invalidated two of its enforcement mechanisms. Nat’l Ass’n of Mfrs. v. NLRB, 846 F. Supp. 2d 34 (D.D.C. 2012). In the latter case, a judge held that the Board had exceeded its Section 6 authority because the Act nowhere required employers to post notices of employee rights. Chamber of Commerce v. NLRB, 856 F. Supp. 2d 778 (D.S.C. 2012).

Both district court opinions were appealed. Just two weeks before it was finally scheduled to become effective—on April 30, 2012— the D.C. Circuit Court enjoined the rule’s enforcement pending resolution of the District of Columbia appeal. The NLRB directed its regional offices to not implement the rule pending resolution of the issues before the D.C. Circuit Court.

D.C. Circuit Court’s Opinion

On May 7, 2013, Judges A. Raymond Randolph, Karen Henderson, and Janice Rogers Brown of the D.C. Circuit Court—all Republican appointees—rejected the rule after finding each of its enforcement mechanisms incompatible with the Act.

Writing for the court, Judge Randolph first noted that the Act’s free speech provision—Section 8(c)—precluded the NLRB from finding employer speech containing no threat of reprisal or promise of benefit to be an unfair labor practice, or evidence of such a practice. But he found that the poster rule did precisely that. It provided that failure to post was both an unfair labor practice, and could be used as evidence of other unfair labor practices. Drawing on First Amendment jurisprudence, he rejected any claim that the government-issued poster merely reflected the Board’s, and not an employer’s, speech. First Amendment principles protect both the “dissemination” and the “creation” of messages. They also protect the right not to speak, so the “right to disseminate another’s speech necessarily includes the right to decide not to disseminate it.” Judge Randolph thus found two of the rule’s enforcement mechanisms invalid.

He next held that the rule’s purported tolling of the statute of limitations in cases where employers failed to post the notice was incompatible with Congressional intent. The Board failed to prove that in enacting the 6-month statute of limitations on unfair labor practice charges, Congress contemplated potential tolling where employers failed to post, or where employees were unaware of their union-related rights. Judge Randolph thus held that the rule’s remaining enforcement mechanism was also invalid.

Because each of its enforcement mechanisms conflicted with the Act, Judge Randolph rejected the rule’s notice posting requirement after noting that the NLRB had expressly rejected the option of issuing a rule that depended solely on voluntary compliance.

In a concurring opinion, Judges Henderson and Brown agreed with Judge Randolph’s reasoning, but would have taken his decision one step further. They argued that, regardless of whether the enforcement mechanisms were valid, the NLRB lacked Section 6 authority to issue the poster rule. They urged that the Act invested with Board with only reactive power—such as responding to unfair labor practice charges, or responding to election petitions filed by parties—but not any proactive authority to guard against potential statutory violations. “The NLRA,” they concluded, “simply does not authorize the Board to impose on an employer a freestanding obligation to educate its employees on the fine points of labor relations law.” Nat’l Ass’n of Mfrs. v. NLRB, No. 12-5068 (D.C. Cir. May 7, 2013).

Fourth Circuit Appeal and Potential U.S. Supreme Court Review

While the D.C. Circuit Court firmly rejected the poster rule, the related challenge from South Carolina remains pending before the Fourth Circuit. That court heard oral arguments in the case in March 2013, and the parties have already submitted their differing interpretations of the D.C. Circuit court’s opinion in supplemental filings. The Board has not yet updated its website to address the effect, if any, the D.C. Circuit’s opinion may have on its own enforcement position.

Regardless of how the Fourth Circuit eventually rules, the NLRB’s poster rule seems likely to end up before the U.S. Supreme Court. The writing’s still not on the wall, but the Supreme Court is one step closer to posting its own thoughts on the matter.

May 7, 2013

Small Colorado Employers Face Higher Damages for Discrimination Claims

By Mark Wiletsky and Steve Gutierrez

Small businesses beware: your employees now have more incentive to sue you. As of January 1, 2015, employees can recover compensatory and punitive damages for employment discrimination claims against businesses that employ between one to fourteen people under Colorado’s Job Protection and Civil Rights Enforcement Act of 2013, signed into law by Governor John Hickenlooper on Monday, May 6, 2013. But don’t despair. By taking some proactive steps now, businesses can minimize their exposure to potential claims.

Increased Exposure for Small Employers

Colorado’s new anti-discrimination law changes the landscape for small employers by allowing compensatory and punitive damages against Colorado’s small businesses (with 1-14 employees), along with attorneys’ fees and costs to the employee if he or she prevails, back pay, front pay, interest, and other potential relief. Thankfully, the new Colorado law contains some safeguards against outrageous damage awards that would likely put small employers out of business. For businesses with 1-4 employees, compensatory and punitive damages are capped at $10,000. For businesses with 5-15 employees, such damages are capped at $25,000. Businesses with greater than 15 employees are subject to the existing damages caps found in the federal anti-discrimination laws.

The availability of these damages to employees of businesses with fewer than 15 employees will likely result in more discrimination cases filed in Colorado against small businesses, significantly raising the potential exposure for small business owners. That is especially true given that such claims may be filed in state court, which is often viewed by attorneys representing employees as a more favorable forum for such claims.

Age Discrimination No Longer Cut Off at Age 70

The Job Protection and Civil Rights Enforcement Act of 2013 also eliminates the age 70 cutoff for age discrimination claims brought under Colorado law. This brings the state law into line with the federal Age Discrimination in Employment Act which does not have an upper age limit. Consequently, employees age 40 and older are protected from employment discrimination under both state and federal law.

Good Faith Efforts May Avoid Punitive Damages

Under the new Colorado law, employers will not be subject to punitive damages if they can demonstrate good-faith efforts to prevent discriminatory and unfair employment practices in the workplace. In addition, no punitive damages are available in a lawsuit involving a claim of failure to make a reasonable accommodation for a disability if the employer can demonstrate good-faith efforts to identify and make a reasonable accommodation that would provide the disabled employee with an equally effective opportunity and would not cause an undue hardship on the employer’s operation. Small businesses should begin those good-faith efforts now so that policies and procedures to prevent and respond to discrimination are in place when the law goes into effect.

Steps Small Businesses Should Take to Minimize Risk

Unfortunately for small businesses, the mere threat of a lawsuit, however meritless, may stretch tight resources to the breaking point. That is why it is so important to take proactive measures now, which will help minimize the risk of such lawsuits. Among other things, small businesses should:

1) Adopt and distribute policies that prohibit discrimination, harassment, and retaliation in the workplace. Require new and existing employees to acknowledge their receipt of these policies, preferably on an annual basis.

2) Train supervisors, managers and employees. Everyone in the workplace should be trained on your anti-discrimination policies and procedures with specialized training provided to supervisors and managers who must recognize harassment and discrimination and know what to do when they observe it or receive a complaint. In small workplaces, dealing with complaints of discrimination or retaliation can be difficult. Still, if you address it promptly and appropriately, you will be in a better position to avoid or defend against a claim.

3) Document performance issues. We often see meritless lawsuits filed because legitimate performance concerns were not shared with the employee or appropriately documented. If an employee has performance issues, be sure to get it in writing. Focus on the problem, give concrete examples, and warn the employee that a failure to achieve immediate and sustained improvement may result in termination.

4) Arbitration agreements. Consider whether it would be appropriate to have employees sign an arbitration agreement. Such agreements take discrimination claims out of the civil court system, and generally allow for a more streamlined resolution. However, arbitration is not necessarily cheaper than a court proceeding; in fact, in some cases it might cost more. Be sure to consider all the benefits and burdens of arbitration before relying on such agreements. And if you prefer arbitration, make sure your agreement complies with all applicable legal requirements.

Essentially, small employers need the same policies and procedures to deal with discrimination as larger employers do, even though many smaller employers simply do not have the same resources. Take the next 18 months before the law becomes effective to educate yourself, your supervisors and your employees on discrimination issues and take the steps that will help minimize your risk to the damages that will be available soon to aggrieved employees.

May 6, 2013

Colorado Restricts Employers’ Use of Credit Reports

By Mark Wiletsky

Employers using credit reports to evaluate applicants and employees take note: Colorado recently enacted the “Employment Opportunity Act” limiting the use of credit reports in employment decisions. In passing this law, Colorado joins eight other states–California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont and Washington–in restricting employers from obtaining and/or using credit history information when evaluating applicants and employees. The new Colorado law exempts certain job positions from the prohibition on the use of credit reports, but the exceptions are very fact specific. Employers need to analyze the job responsibilities of the position at issue in order to determine if they may use credit information under this new law.

Prohibition on the Use of Consumer Credit Information for Employment Purposes

Effective July 1, 2013, section 8-2-126 of the Colorado Revised Statutes provides that an employer shall not use consumer credit information for employment purposes unless the credit information is substantially related to the employee’s current or potential job. This means that Colorado employers are prohibited from using credit information in the employment context except in those limited situations where credit or financial responsibility is substantially related to the job. The type of information prohibited under this law includes any written, oral or other communication of information that bears on a consumer’s creditworthiness, credit standing, credit capacity or credit history. This includes a credit score, but does not include the name, address or date of birth of an employee associated with a social security number.

“Substantially Related” Analysis Looks to Job Responsibilities

When determining whether a particular position falls within the exception where credit information is “substantially related to the employee’s current or potential job,” employers may not rely on an informal, best-guess determination. Instead, employers must carefully analyze whether the job in question meets the parameters detailed in the new law.

Under Colorado’s law, “substantially related to the employee’s current or potential job” is defined to apply to positions that:

1) Constitute executive or management personnel or officers or employees who constitute professional staff to executive and management personnel, and the position involves one or more of the following:

A) Setting the direction or control of a business, division, unit or an agency of a business;

B) A fiduciary responsibility to the employer;

C) Access to customers’, employees’, or the employer’s personal or financial information (other than information ordinarily provided in a retail transaction); or

D) The authority to issue payments, collect debts or enter into contracts; OR

2) Involves contracts with defense, intelligence, national security or space agencies of the federal government.

Consider this example: you are hiring a human resource specialist who will administer employee benefits within your company. May you obtain and use a credit report on applicants for this position? Assuming this position does not involve federal defense, intelligence, national security or space agency contracts, you first must determine if this position is an executive or management position, or alternatively, if this position is considered professional staff to an executive or manager. In our example, the employee benefits specialist position may or may not be an executive or management position at your company. If not, the position may be considered professional staff to an executive or manager if the position reports to an HR Director, Vice President or other similar high level manager or officer. If we assume this position meets this threshold determination, you next must analyze if the position involves one or more of the four areas of responsibilities where credit information will be deemed substantially related. Because an employee benefits specialist is likely to have access to employees’ personal and perhaps financial information, it appears to fall within the third area of responsibility where credit information will be deemed substantially related to the job, but the answer is certainly not clear-cut.

Requesting Employee Consent to Obtain a Credit Report

In addition to the prohibition on the use of credit information for employment purposes, the new Colorado law prohibits employers or their agents from requiring an employee to consent to a request for a credit report that contains information about the employee’s credit score, credit account balances, payment history, savings or checking account balances, or savings or checking account numbers as a condition of employment unless:

1) The employer is a bank or financial institution;

2) The report is required by law; or

3) The report is substantially related to the employee’s current or potential job andthe employer has a bona fide purpose for requesting or using information in the credit report and is disclosed in writing to the employee.

The written disclosure requirement here is a new procedural step with which most employers meeting this exception will not be familiar. Employers meeting these criteria now need to provide applicants/employees with a notice of their business purpose for requesting credit information.

Employee May Be Allowed to Explain Circumstances Affecting Credit

In those cases when an employer is permitted to use credit information because it is substantially related to the job, an employer may ask the employee to explain any unusual or mitigating circumstances that affected their credit history. For example, if the credit report shows delinquent payments, the employer may inquire further allowing the employee to explain circumstances that may have caused the delinquencies, such as an act of identity theft, medical expense, a layoff, or a death, divorce or separation.

Adverse Action Disclosure Required

If the employer relies on any part of the credit information to take adverse action regarding the employee or applicant, the employer must disclose that fact and the particular information relied upon to the employee. This disclosure must be made to the employee in writing but can be made to an applicant via the same medium in which the application was made (e.g., if the application was submitted electronically, this disclosure may be sent electronically).

FCRA Obligations Still Apply

Employers who are permitted to obtain and use credit reports under the Colorado law must also comply with the requirements of the Fair Credit Reporting Act (FCRA) in order to obtain a credit report from a consumer reporting agency. These additional FCRA duties include:

1) Providing a clear and conspicuous written disclosure to the applicant/employee before the report is obtained, in a document that consists solely of the disclosure, that a consumer report may be obtained;

2) Getting written authorization from the applicant/employee before obtaining the report;

3) Certifying to the consumer reporting agency that the above steps have been followed, that the information being obtained will not be used in violation of any federal or state equal opportunity law or regulation, and that, if any adverse action is to be taken based on the consumer report, a copy of the report and a summary of the consumer's rights will be provided to the consumer;

4) Before taking an adverse action, providing a copy of the report and a summary of FCRA consumer rights to the applicant/employee; and

5) After an adverse action is taken, sending an adverse action notice to the employee/applicant containing certain FCRA-required statements.

Credit Check Compliance

Colorado employers need to review and update their background check policies as they relate to conducting credit checks on applicants and existing employees. In addition to FCRA obligations, employers wishing to use credit reports have additional restrictions and duties under state law.

Employers now must analyze whether each position for which they wish to obtain credit reports meets the “substantially related to the employee’s current or potential job” criteria. If the position meets that criteria and the employer wishes to obtain a credit report on an applicant or existing employee, the employer first must provide a written disclosure to the applicant/employee describing the bona fide purpose of obtaining the credit information. If the credit report reveals questionable or negative information, the employer may (but is not required to) ask the applicant/employee to explain any unusual circumstances that may have led to the unfavorable credit information. If the employer rejects the applicant/employee for the position based in any way on the credit report, the employer must provide the required FCRA adverse action notices as well as a written explanation of the particular information in the report that led to the employer’s decision.

Multi-state employers face unique challenges when obtaining and using credit reports for employment purposes as they must comply with various state laws that now restrict such use. Given the intricacies of complying with the FCRA and applicable state laws, employers are wise to consult with their counsel to review and update their credit check policies.

April 25, 2013

BUZZ KILL: Employee Legally Fired For Off-Duty Marijuana Use

By Emily Hobbs-Wright & Brad Williams

The Colorado Court of Appeals issued a precedent-setting decision today upholding an employee’s firing for off-duty marijuana use. Citing federal law, the court held that using pot during non-working hours is not “lawful activity” under the state’s lawful off-duty activity statute. The decision provides the first direct guidance on terminating workers for off-duty marijuana use since Amendment 64 legalized the drug’s use and possession last November.

The case involved a quadriplegic employee licensed to use pot under the state’s medical marijuana amendment. The company terminated his employment after he tested positive for drugs in violation of company policy. The terminated worker claimed that he used the drug within the limits of his license, had never smoked on his employer’s premises, and had never been under the drug’s influence at work.

In the lawsuit, the terminated worker claimed that the company’s actions violated Colorado’s lawful off-duty activity statute, which prohibits termination for any “lawful activity” conducted off an employer’s premises during nonworking hours. Before today, Colorado courts had never squarely addressed whether the statute prohibits termination for off-duty marijuana use, when it is permitted under Colorado law.

Invoking a dictionary definition of the term “lawful,” the Court of Appeals held that “for an activity to be ‘lawful’ in Colorado, it must be permitted by, and not contrary to, both state and federal law.” Because marijuana use remains illegal under federal law, termination for off-duty pot-smoking does not violate the statute. The court also noted that its interpretation maintained the “balance between employer and employee rights” reflected elsewhere in Colorado law.

The decision is hugely important for Colorado employers. Amendment 64, like the medical marijuana amendment before it, did not require employers to “permit or accommodate” pot use, and expressly permitted policies restricting such use. But before today, courts had never previously decided whether state or federal law defines “lawful activity” under the statute.

The decision may not be the final word. Further appeal to the Colorado Supreme Court is possible, and other legal theories based on disability and similar laws remain untested. But for now, the decision provides the best guidance yet on terminating marijuana users, suggesting that courts will protect employers’ rights to enforce drug policies notwithstanding Colorado’s legalization of marijuana. It further reinforces the importance of employers defining illegal drugs as those prohibited under both state and federal law in drug policies.

This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

April 25, 2013

Tips for Complying with Utah’s Internet Employment Privacy Act

By Elizabeth Dunning

Effective May 14, 2013, Utah employers may not request employees or applicants to disclose information related to their personal Internet accounts. The Internet Employment Privacy Act(IEPA), recently signed into law by Utah Governor Gary R. Herbert, prohibits employers from asking an employee or applicant to reveal a username or password that allows access to the individual’s personal Internet account. In addition, employers may not penalize or discriminate against an employee or applicant for failing to disclose a username or password. A similar restriction applies to higher educational institutions through passage of the Internet Postsecondary Institution Privacy Act.

With enactment of the IEPA, Utah becomes the fifth state to pass legislation that limits an employer’s access to social media accounts, joining California, Illinois, Maryland and Michigan. New Mexico passed a similar law shortly after Utah and New Jersey’s law passed the legislature and is awaiting the governor’s signature. A bill introduced in February in the U.S. House of Representatives called the Social Networking Online Protection Act (H.R. 537) is stuck in committee.

Public Online Accounts Are Fair Game under the IEPA

The IEPA does not restrict or prohibit employers from viewing or using online information about employees and applicants that the employer can obtain without the employee’s username or password. Any online information that is available to the public may be accessed and viewed by employers without violating the IEPA. Consequently, individuals who set privacy settings on their online accounts to allow “public” access effectively opt themselves out of any protections offered by this new law.

Utah Restriction Applies to Accounts Used Exclusively for Personal Communication

In prohibiting employers from requiring disclosure of online usernames and passwords, the IEPA draws a distinction between personal Internet accounts and those used for business related communications. The law only restricts employer access to personal online accounts that are used by an employee or applicant exclusively for personal communications unrelated to any business purpose of the employer. It does not, however, restrict access to accounts created, maintained, used or accessed by an employee or applicant for business related communications or for a business purpose of the employer.

In practice, the line between personal and business related accounts may be blurred as many employees use their personal online presence to network and communicate for business reasons. Consider the sales person who uses his or her LinkedIn account to communicate with potential buyers within a particular industry, or the CPA who posts tax reminders on his or her Facebook page. Are those accounts accessible under the IEPA since they are not used “exclusively” for personal communications? A plain reading of the law suggests that may be the case, thereby watering down the potential protections offered by the IEPA to applicants and employees.

Steps for Complying with the IEPA

Utah employers should review their HR forms, policies and practices to ensure that they do not ask applicants and/or employees to provide a username or password to their personal Internet accounts. Train supervisors and managers not to ask for this information as well. In fact, take the opportunity to remind supervisors and managers not to “friend” subordinates on personal online platforms, such as Facebook. In addition, reinforce that employees and applicants may not be penalized or treated adversely for failing to provide a username or password for personal online accounts.

Remember, too, that even though the IEPA does not prohibit accessing an employee’s or applicant’s public social media accounts, viewing such information creates other risks. Employers may view information regarding the individual’s religion, race, national origin, disability, age, or other protected group status that could give rise to a discrimination claim. Furthermore, online information is unreliable and ever-changing, meaning that employers should not rely on what they see online when making employment decisions. To stay out of trouble, consult with legal counsel before viewing or using social media in the employment context.

For more information about permissible actions and potential damages under the Utah Internet Employment Privacy Act, please see our Client Alert.

April 18, 2013

How a Colorado Bill Could Provide Up to 24 Weeks of FMLA Leave

By Brian Mumaugh

Could Colorado employees be entitled to take up to 24 weeks of job-protected leave every 12 months? Yes, in some circumstances, if the bill recently passed by the Colorado House of Representatives and progressing through the Senate is signed into law. Although greatly downsized from its original form, House Bill 1222 expands the group of family members for whom Colorado employees are entitled to take leave from work under the federal Family and Medical Leave Act (FMLA) to include care for civil union partners and domestic partners. In certain circumstances, this expansion could result in an employee being entitled to 24 weeks of FMLA leave in a given year. Let’s look at what the bill provides.

Leave to Care for Civil Union and Domestic Partners

Colorado employees currently must look to the federal FMLA for job-protected leave benefits. Federal FMLA provides an eligible employee up to 12 weeks of leave during a 12-month period to care for a spouse, child or parent who has a serious health condition. The federal FMLA, however, does not permit leave for an employee to care for his or her civil union partner or domestic partner. If signed into law, House bill 1222, called the Family Care Act, would allow an eligible employee to take leave to care for the employee’s partner in a civil union or the employee’s domestic partner (if the employer recognizes the person as the employee’s domestic partner or the domestic partnership is registered with the municipality or the state, as applicable). The employer would be permitted to require the employee to provide reasonable documentation or a written statement of the family relationship, in accordance with the FMLA. The employer also would be allowed to require the same medical certification as may be required under the FMLA.

“Double Dipping” of FMLA Leave

The bill states that FMLA leave taken by an employee under this new law would run concurrently with leave taken under the FMLA and that the new law would not increase the total amount of leave to which an employee is entitled during a 12-month period. This seems to suggest that “double dipping” would not be permitted. However, federal regulations provide that the FMLA does not supersede any state law that provides greater leave rights than those provided by the FMLA. Further, the regulations state that if state law provides for a certain amount of leave, which may include leave to care for a seriously-ill “spouse equivalent,” and leave was used for that purpose, the employee is still entitled to his or her full FMLA leave entitlement, as the leave used under state law was provided for a purpose not covered by the FMLA. 29 C.F.R. § 825.701(a)(3). On the other hand, if FMLA leave is used first for a purpose that is permitted under both state and federal law and state leave has thereby been exhausted, the employer would not be required to provide any additional leave to care for the “spouse equivalent” during that 12-month period.

What does this mean? It means that the order of state vs. federal leave matters. If leave to care for a seriously-ill civil union partner under state law is requested first, the employee potentially may “double dip” if he or she subsequently requests leave provided under the federal law. This could lead to a total of 24 weeks of leave in a single 12-month period. However, if leave that qualifies under the federal FMLA occurs first and the employee takes the full 12 weeks of leave at that time, no leave is available should the employee need to care for his or her civil union partner or domestic partner under state law.

Next Legislative Steps

Having passed the Colorado House, the Family Care Act moved to the Colorado Senate where it has passed unamended on second reading. The Senate needs to pass the bill on third reading to be sent to Governor John Hickenlooper to be signed into law or vetoed. Rest assured that we will continue to monitor this bill and will pass along updates as warranted.

March 19, 2013

Checklist for Complying with the New FMLA Regulations

Have you updated your Family and Medical Leave Act (FMLA) policy and poster? You should have. New regulations that implement changes to the FMLA went into effect on March 8, 2013. Covered employers need to take action now to ensure compliance with the new rules.

A summary of the changes to the FMLA as well as a checklist for complying with the new regulations is available here. Be sure to update your FMLA policies, poster, certification forms and notice of rights immediately. In addition, ensure that your leave administrators, supervisors and human resources personnel are trained on the new rules. FMLA compliance isn't hard, but it does take work!

February 26, 2013

Who Owns Your Employees’ LinkedIn Profiles? The Answer Might Surprise You.

By Mark B. Wiletsky

If your employees use LinkedIn to establish and maintain contacts for business purposes (such as sales), what happens to those accounts—and contacts—when the employee quits or is fired? Can an employer who has access to an employee’s LinkedIn profile change her password and replace information in her profile following her termination? No, says at least one federal judge in Pennsylvania recently, though that case is not yet over. As explained below, employers should be careful before assuming that they own their employees’ LinkedIn profiles.

Employer Access to High Level Executive Profiles

Edcomm, Inc., a banking education company, strongly urged its employees to create LinkedIn accounts using their company email addresses as a business networking tool. It had employee policies governing online postings and specified that if employees identified themselves as an Edcomm employee, they needed to use a specific template that contained pre-approved content about the company and referred to the company’s website. The company provided a photographer to take professional photos for employee use on their LinkedIn accounts. It also allowed some Edcomm employees to access, develop and administer the LinkedIn accounts of senior management, such as responding to invitations, inviting new contacts and researching good news stories to include on their LinkedIn pages.

After being acquired by another company, Edcomm, Inc. terminated its company president and founder, Linda Eagle, as well as several other top executives. After her termination, Edcomm locked Eagle out of her LinkedIn profile by changing her password. It then changed the information on the profile to that of the new acting CEO.

Company Argues LinkedIn Account was Akin to a Client List

Eagle sued Edcomm alleging numerous violations of state and federal law, including invasion of privacy by misappropriation of identity, misappropriation of publicity, identity theft and conversion. Edcomm argued that the LinkedIn accounts were used to contact new clients and promote the company’s services. As such, the company claimed that its take over of Eagle’s account was similar to the company keeping possession of a client list after an employee is terminated.

The Judge didn’t buy it. At a recent hearing, Judge Ronald Buckwalter stated that Edcomm likely had no right to change Eagle’s LinkedIn password and change her profile information. He noted that the company had no internal policy that would hand over ownership of employee profiles when employees left the company and that the LinkedIn accounts belonged to the individual employees.

Be Prepared For An Employee’s Departure

Although it is wise to implement a social media policy to address employee use of company information on personal or company-sponsored social media accounts, you need to be wary of who owns the rights to such information. First, as indicated in the Edcomm case above, you risk potential invasion of privacy and other claims. Second, the employee might have rights to the account independent of the employer, as established in an agreement between the service provider and the employee. At a minimum, consider implementing specific policies that address these issues up front, and consider what services your employees are using to establish and maintain connections with clients. The fact that contacts are connected through LinkedIn, Facebook, or some other social media site can significantly impact an argument that such contacts are protectable trade secrets. Lastly, don’t forget that forcing access to employees’ social media can be risky. Four states have enacted legislation to prohibit or restrict employers from asking for social media access and many other states are currently debating similar restrictions.

February 12, 2013

FMLA and Facebook Don’t Mix – Vacation Pictures Catch Employee in a Lie

By Mark B. Wiletsky

Co-workers “friend” each other on Facebook all the time. But sometimes those “friends” turn against their own, providing employers with evidence of wrongdoing. In a recent case (Lineberry v. Richards), an employee learned the hard way that posting pictures on Facebook can come back to bite you.

Lineberry, who worked as a full-time Registered Nurse, claimed she needed Family and Medical Leave Act (FMLA) leave after suffering severe pain in her lower back and legs. Her employer granted her request.

About four weeks into her leave, Lineberry took a prepaid, planned vacation to Mexico. As many people do today, Lineberry posted photos of her Mexico trip on her Facebook page. Her co-workers, who had legitimate access to Lineberry’s Facebook page, saw the photos, including pictures of Lineberry riding in a motorboat, lying on her side while holding up two bottles of beer, standing while holding a grandchild on each hip and making trips to Home Depot. Based on the Facebook postings, the co-workers complained to Lineberry’s supervisors. Responding to her supervisor’s inquiry about her activities, Lineberry wrote that she had used a wheelchair at both airports while on her trip.

When Lineberry was released to return to work, her employer called her into an investigative meeting. Initially, she stood by her claim that she had used wheelchairs in the airports on her trip, but after questioning, she admitted that she lied and had never used a wheelchair while on vacation. A week later, Lineberry was terminated for dishonesty and falsifying or omitting information, a violation of the company’s policies. Lineberry sued, claiming that her employer violated her FMLA rights.

Termination Was Based on Dishonesty, Not FMLA

During her deposition, Lineberry admitted again to lying about her use of a wheelchair while on vacation. Because of the undisputed evidence of Lineberry’s dishonesty, the Court ruled that her employer had the right to terminate her without regard to her leave status. The Court explained that the FMLA does not afford an employee greater rights that he or she would have if not on FMLA leave. Because her employer had the right to terminate Lineberry for dishonesty whether or not she took leave, the termination on that basis was permitted by the FMLA.

Employer Lessons

A few key pointers for employers:

1) Although you should always be cautious before disciplining or terminating an employee on protected leave, keep in mind that the employee’s leave status is not a free pass to lie or commit fraud.

2) Of course, before firing or taking disciplinary action against an employee on leave, make sure you have all the facts. If you have a progressive discipline policy, follow all procedures set forth in the policy. The employer in Lineberry waited to make its termination decision until it called Lineberry in for an investigative meeting, as was required under its discipline policy. Failure to follow your own procedures can lead to lawsuits even when your underlying reasons for discipline or termination are justified.

3) Don’t “friend” your employees so that you can surf their Facebook pages – you could be liable for invasion of privacy. In addition, you could learn characteristics that you otherwise would not know (e.g., religion, national origin, disability, etc.) that could later serve as the basis for a discrimination claim. However, if others who legitimately obtained information from Facebook report it to you, treat it like any other workplace complaint and conduct an appropriate investigation.

February 11, 2013

Wage and Hour Collective Actions Face Higher Class Certification Standard

By Jeffrey T. Johnson

Employers can thank the Seventh Circuit Court of Appeals for raising the standard that employees must meet when seeking final certification of a Fair Labor Standards Act (FLSA) collective action or state wage and hour law class action. In an opinion written by Judge Richard Posner, the Court recently refused to certify a proposed class of 2,341 employees, finding that a trial would not be manageable due, in large part, to the differences in damages among the class members. Espenscheid v. DirectSat USA, LLC, No. 12-1943 (7th Cir. Feb. 4, 2013). The ruling will likely make it more difficult for plaintiffs to get a wage and hour class certified at the critical final certification stage.

Court Finds No Reason for Different Certification Standards

FLSA collective actions are similar in many respects to class actions brought under Rule 23 of the Federal Rules of Civil Procedure—both permit an individual (or small group) to file suit on behalf of all similarly situated individuals. One key difference, however, is that Rule 23 sets forth relatively rigorous standards for certifying a class while FLSA collective actions are reviewed under a more lenient “similarly situated” analysis, typically pursuant to a two-step approach. The Seventh Circuit’s recent decision turns that distinction on its head.

Noting that Rule 23’s procedural provisions are intended to promote efficiency, Judge Posner stated “there isn’t a good reason to have different standards for the certification of the two different types of action.” Moreover, he wrote that “[s]implification is desirable in law,” especially given the fact that plaintiffs often join a collective action and a class action in one lawsuit. This collapse of differing class certification standards gives employers beneficial language to argue against collective action certification on the basis of Rule 23 commonality, numerosity and typicality requirements.

Decertification Proper Where Trial would be Unmanageable

The Court went on to reject certification of the proposed DirectSat “class,” finding that the plaintiffs had not presented a feasible trial plan. The proposed “class” consisted of 2,341 technicians who installed and repaired home satellite dishes. They worked directly in customers’ homes and were paid on a per job basis, not a fixed hourly wage. They alleged that DirectSat forbid them from recording time spent on certain tasks, such as filling out paperwork and picking up tools, and that they often worked more than 40 hours a week without being paid overtime.

Plaintiffs’ arguments to achieve class certification failed. Judge Posner held that lack of uniformity on the amount of damages suffered by each technician doomed certification. Plaintiffs’ proposal to use 42 “representative” members of the class to determine damages on behalf of the entire class was rejected. A further complication was the piece-rate pay basis where those technicians who completed jobs quickly made a higher “hourly” rate than those who worked slower. In the end, plaintiffs’ counsel admitted that it would “be difficult for Plaintiffs to provide an objective framework for identifying each class member within the current class definitions without making individualized findings of liability.” The failure to provide a feasible litigation plan to address these complexities doomed the plaintiffs’ effort to obtain final class certification.

Good Development for Employers

This is a significant decision for employers facing wage and hour collective actions. The standards for final class certification are not very well-developed in most jurisdictions, and Judge Posner’s well-reasoned opinion will carry substantial weight well beyond the Seventh Circuit. Further, if the more stringent Rule 23 standard is to be applied upon final certification, it is only logical that courts will also begin applying it at the earlier conditional certification stage, thereby making class certification more difficult for plaintiffs. Judge Posner and the Seventh Circuit have provided employers with an important tool to defend against these types of class and collective claims.