Labor & Employment Archives - Page 68 of 155

Keep Rollin’ Rollin’ Rollin’: DOL Reissues 17 Opinion Letters That Had Been Withdrawn Under the Obama Administration

In late June 2017, the United States Department of Labor (DOL) announced it would be reinstating Opinion Letters issued by its Wage and Hour Division, which was a practice that had ceased back in 2010. This announcement is significant from both the procedural and substantive basis. From 2010 to July 2017, Opinion Letters were replaced by Administrator Interpretations, which set forth a more general interpretation of the law and regulations as they pertained to a particular industry or set of employees. Opinion Letters, on the other hand, are official written opinions that set forth how wage and hour laws apply in very specific circumstances as presented to the DOL Wage and Hour Division via specific employer questions asking for a formal opinion to guide the employer as to how to proceed. In other words, employers submit questions based on their specific factual circumstances and policies and the DOL issues a written opinion as to the legality of the employer’s policies.

With Opinion Letters back, businesses have been waiting to see what the DOL would do with them. In the first week of 2018, the DOL answered that question by re-instating 17 Opinion Letters that were issued in January 2009 but withdrawn during the Obama administration. The DOL also reissued over a dozen advisory Opinion Letters that had been published during former President Bush’s administration, but were also later rescinded.

Because Opinion Letters answer specific business questions related to wage and hour issues in various business segments, the 17 reinstated Opinion Letters and the dozen plus reissued advisory Opinion Letters may provide businesses specific and tailored guidance on various wage/hour issues under the Fair Labor Standards Act (FLSA).

The reinstated letters cover a wide variety of topics including, appropriate inclusions in an employee’s regular pay rate, types of employment that qualify for the FLSA’s minimum wage and overtime exemptions, and how ambulance service workers’ “on-call” time should be treated for purposes of “hours worked” under the FLSA. Here is the full list of reinstated Opinion Letters (all dated January 5, 2018) and links:

Number	Letter Subject
FLSA2018-1	Construction supervisors employed by homebuilders and section 13(a)(1)
FLSA2018-2	Plumbing sales/service technicians and section 7(i)
FLSA2018-3	Helicopter pilots and section 13(a)(1)
FLSA2018-4	Commercial construction project superintendents and section 13(a)(1)
FLSA2018-5	Regular rate calculation for fire fighters and alarm operators
FLSA2018-6	Coaches and the teacher exemption under section 13(a)(1)
FLSA2018-7	Salary deductions for full-day absences based on hours missed and section 13(a)(1) salary basis
FLSA2018-8	Client service managers and section 13(a)(1)
FLSA2018-9	Year-end non-discretionary bonus and section 7(e)
FLSA2018-10	Residential construction project supervisor and section 13(a)(1)
FLSA2018-11	Job bonuses and section 7(e)
FLSA2018-12	Consultants, clinical coordinators, coordinators, and business development managers under section 13(a)(1)
FLSA2018-13	Fraud/theft analysts and agents under section 13(a)(1)
FLSA2018-14	Calculation of salary deductions and section 13(a)(1) salary basis
FLSA2018-15	Product demonstration coordinators and section 13(a)(1)
FLSA2018-16	Volunteer fire company contracting for paid EMTs – joint employment and volunteer status
FLSA2018-17	Construction supervisors employed by homebuilders and section 13(a)(1)

As demonstrated by the list above, there are a number of broad topics covered, i.e., Section 13(a)(1) of the FLSA, which exempts employees employed in a bona fide administrative function, and a number of extremely narrow ones, e.g., those dealing with helicopter pilots, coaches, construction supervisors employed by homebuilders.

Here is a summary of some of the noteworthy findings in the reinstated Opinion Letters:

Bonus Compensation

The DOL reviewed the issue of whether certain bonuses (or other payments) should be included in an employee’s regular rate of pay under the FLSA. See FLSA2018-5, FLSA2018-9, and FLSA2018-11.

Exempt Employee Deductions

The DOL reviewed the issue of whether a salary deduction is permissible when an exempt employee is absent for a full day, but does not have enough leave time in the employee’s leave bank to cover the entire absence. The DOL concluded that, “if the absence is one full day in duration, the employer may deduct one full day’s pay or less. Therefore, in answer to your first question, if an employee is absent for one or more full days, but does not have enough time in his or her leave bank to cover the entire absence, the employer may make a deduction from the employee’s pay for any portion of the full-day absences that is not accounted for by the leave bank.” SeeFLSA2018-7.

Administrative Exemption

In reviewing whether client service managers at an insurance company qualified as exempt administrative employees, the DOL focused on the “independent judgment” factor in determining that their primary duty was to use independent judgment over matters of business significance when issuing advice and, generally, without first seeking upper-level management approval.

On-Call Hours

The DOL concluded that on-call hours of ambulance service personnel are not compensable time under the FLSA for purposes of the regular rate and overtime calculations. The issue arose from an ambulance service’s unwritten policy that required on-call employees to arrive for service at the ambulance garage within five minutes of being notified. The DOL determined the five-minute requirement was “not a significant hindrance” to the employees that would require the employer to convert their on-call time to compensable hours worked. Notably, the scope was an ambulance company servicing a small city of approximately 4,000 individuals.

Takeaways:

Nothing New as the DOL Returns to the Prior Opinion Letter Process. The important news is the return to the more focused, less-sweeping means to establishing DOL-interpretation policy. Otherwise the information provided in the reinstated Opinion Letters is not new; it has been available to businesses for years and, as such, most businesses with issues relevant to the topics in the reinstated Opinion Letters are likely already complying. The reinstated Opinion Letters do not take on any topics that had been severely altered during the Obama administration. We addressed this rolling-back issue in our All Things HR in a post titled “The Way We Were: The NLRB’s Time Machine Resets the Clock on Employer Work Rules and Joint Employer Status” demonstrating this is not just a NLRB mantra, it looks to be the DOL’s too.
Ranging Applicability. As the ambulance-employer DOL Opinion Letter demonstrates, some of the reinstated Opinion Letters will have very limited applicability as Opinion Letters are only as good as the overlapping facts in the circumstances presented in them and the business seeking to use them as guidance. Nevertheless, while many Opinion Letters focus on specific legal issues specific to certain employers/businesses/industries, they are still valuable resources and may provide answers or guidance in many areas in wage and hour law.
More Defenses Available to Businesses. Opinion Letters were and continue to be another tool businesses have in their arsenal to help ensure compliance with the FLSA, and another tool in their defense arsenal. Specifically, Section 10 of the Portal-to-Portal provides businesses an affirmative defense to all monetary liability if the business can demonstrate it acted “in good faith and in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation” of the DOL Wage and Hour Division. See 29 U.S.C. § 259 and 29 C.F.R. Part 790.

In addition, Opinion Letters can be used to prove the “good faith” defense against the double liquidated damages penalty available under the FLSA, and the third-year of damages in the case of willful violations, of which the bar is extremely low. See 29 U.S.C. § 260. The availability of newly-issued Opinion Letters means that a business can request and obtain an Opinion Letter addressing a specific practice, policy, and/or factual circumstance for guidance and rely on a favorable Opinion Letter in response to a charge or lawsuit on the same issue.

This is a Good Thing. This is good news for businesses because it demonstrates two things: (1) businesses will be able to have and rely on additional resources to meet their statutory and regulatory wage and hour obligations; and (2) the Trump administration seems intent on turning back the clock to a time pre-Obama administration, but not necessarily instituting new guidance or interpretations (not in the labor and employment context at least). This means that businesses are likely already familiar with what they should be doing and have been doing it.

Written by Sara H. Jodka of Dickinson Wright PLLC.

For more Labor and Employment news go to the National Law Review’s Labor and Employment Page.

Addressing Workplace Sexual Harassment in the Wake of #MeToo

Revelations of the Harvey Weinstein scandal, and those that have followed, have ignited sexual harassment complaints against employers across all industries. Recent news more than confirms that the issue of sexual harassment is not limited to Hollywood. As U.S. Equal Employment Opportunity Commission (“EEOC”) Acting Chair Victoria Lipnic recently said in an interview with Law360, “We see this everywhere. This happens to women in workplaces all over the place.”

With the outpouring of support for victims of sexual harassment, the creation of the #MeToo movement in the last quarter of 2017, and Time magazine’s “Silence Breaker” person of the year, it is clear that this is an issue that employers will need to proactively address in 2018. A study by theBoardlist and Qualtrics, based on a survey conducted this summer, reported that 77 percent of corporate boards “had not discussed accusations of sexually inappropriate behavior and/or sexism in the workplace.” Less than 20 percent of the 400+ people surveyed had reevaluated their company’s risks regarding sexual harassment or sexist behavior, even in light of the recent revelations in the media. Plainly, those numbers are expected to, and no doubt will, increase in the coming year.

Failure to take affirmative steps to prevent harassing behavior and adequately respond to allegations of sexual harassment can have serious consequences. While sexual harassment claims may originate as internal complaints, which must be promptly addressed, they may also result in a discrimination charge filed with the EEOC or the corresponding state or local agency. Since fiscal year 2010, roughly 30 percent of the approximately 90,000 charges of discrimination received by the EEOC each year have alleged sex-based discrimination, and the number of charges alleging sex-based harassment has gradually increased from just below 13 percent to just above 14 percent. Next year, this number is expected to increase because employees are becoming more comfortable reporting and publicizing incidences of sexual harassment in light of recent news, and due to the EEOC’s digital upgrade that allows employees to file EEOC complaints online.

Sexual harassment claims may also lead to litigation, which can be expensive and time-consuming and can create negative publicity. For instance, Mr. Weinstein’s former company, The Weinstein Co. (“TWC”), has been named in a $5 million civil suit alleging that executives of the company did nothing to protect women who did business with Mr. Weinstein, despite being aware of his inappropriate behavior. On December 6, 2017, TWC was one of the named defendants in a proposed class-action racketeering lawsuit alleging that TWC helped facilitate Mr. Weinstein’s organized pattern of predatory behavior. Additionally, the New York attorney general’s office is investigating TWC for potential civil rights violations in its handling of claims of sexual harassment.

There may also be unseen consequences of sexual harassment on the makeup of a workforce. Various studies have reported that harassment may lead to the departure of women from the workforce or the transition into lower-paying jobs. Further, women in jobs with a higher risk of sexual harassment often earn a premium over employees in positions with a lower risk of sexual harassment. Sexual harassment, therefore, may have real impact on compensation and implicate the pay gap and pay equity.

For these reasons, many employers are looking to implement and also supplement sexual harassment training seminars provided for their employees in order to combat sexual harassment in the workplace.

Employers should also consider whether their current practices include the following:

A robust complaint procedure. Sexual harassment at work often goes unreported. According to the EEOC, as many as three-quarters of harassment victims do not file workplace complaints against their alleged harassers. Make sure that you have reporting mechanisms in place to receive complaints and consider allowing employees to complain directly to human resources, to a supervisor, or to an anonymous hotline.
A prompt investigation of complaints. Upon receiving a complaint, promptly and thoroughly investigate the allegations, and make sure that your employees do not retaliate against the alleged victim or any person who cooperates in the investigation.
Independent investigations. Ensure impartiality in the process. In certain cases, that may mean hiring an outside consultant or outside legal counsel to conduct the investigation.
Thorough communication practices. A common objection asserted by complainants is that they are not informed about the status of an investigation. While complainants need not (and should not) be notified about the details or even given regular status reports, inform the complainant that an investigation will occur and be sure to provide closure—regardless of the outcome of the investigation.
A proactive approach. Consider conducting employee engagement or climate surveys (with or without a consultant) to better understand the work atmosphere, rather than simply reacting to workplace complaints. Before doing so, consult with counsel to determine whether and how such a survey may be conducted (potentially under the self-critical analysis privilege, depending on the jurisdiction) to avoid it unwittingly becoming evidence in a proceeding.
An atmosphere of inclusiveness. Foster an atmosphere of inclusiveness to help prevent sexual harassment. Make sure that your top-level management is involved in setting the tone, modeling appropriate behavior, and effecting positive change. Some organizations should consider creating a task force to root out and address inappropriate conduct—again with the oversight of legal counsel.
Effective training. While most employers conduct some form of anti-harassment training (and those that don’t offer training, should), make certain that your training is designed to effectively combat sexual harassment. Tailor the training to your specific workplace and audience. Use real-world examples of what is, and is not, harassment, and make sure that managers know how to spot potential issues and respond to any and all complaints.

This post was written by Nathaniel M. Glasser and Yael Spiewak of Epstein Becker & Green, P.C.

For more labor and employment news visit the National Law Review’s Labor and Employment page.

New Year’s Resolution Series – Ringing Your Post-Employment Covenants into the New Year

Many state legislatures spent 2017 tinkering with post-employment covenants. Given the growing trend to legislate locally and the employee mobility issues that seem to nag every employer, we thought the New Year would be a perfect time to review and revisit your post-employment covenants. So for our multi-jurisdictional employers (which seems to be everyone these days), how do your post-employment covenants legally measure up?

Even California got into the act this year. Everyone (well, almost everyone) knows of the long-time California legislative non-compete ban (except in the context of a sale of business or equity). But did you know that as of 2017 California now regulates choice of law provisions in employment contracts? This new Labor Code provisionwas passed in an effort to stamp out the practice of some out-of-state employers who were using choice of law/venue provisions in the hope of applying some other state’s law to their California-based employees, thereby (they hoped) avoiding California’s non-compete ban. A review of that provision is in order for any employer hiring individuals in California.

Other states have gotten into the act by banning or regulating non-competes. Nevada, not known for its active employee mobility legislation, passed legislation this year governing non-competes, joining Colorado, Florida, Georgia, Illinois, and Texas, to name a few. New Jersey is also actively considering similar legislation.

And while Massachusetts tried but failed to pass statewide legislation, don’t overlook specific Massachusetts provisions addressing non-competes for Physicians, nurses, psychologists, social workers, and those in the broadcasting industry.

But don’t stop at a state law review. Remember: many states (and many state statutes) require an assessment of the reasonableness of post-employment covenants. The very best evidence of reasonableness is employer mindfulness regarding what agreements are truly necessary to protect some legitimate interest of the employer – and, most importantly, a deep dive into why they are necessary.

So here are a few action items to consider for your post-employment covenants resolution for 2018:

Where are your employees performing services for you? Do your post-employment covenants comply with the legislative mandates applicable in the various jurisdictions in which you have employees?
What impact, if any, do promotions have on your employees? Do they now have access to sensitive information, in addition to expanded job duties? If so, should they have new or different post-employment covenants?
How if at all has your business changed? Are you doing business in new locations or have you abandoned business in other locations?
Are post-employment covenants truly necessary – or will a solid proprietary rights agreement (and the applicable trade secrets law) provide the legal protection you really need?
Are you just as eager to recruit individuals bound by these agreements as you are to enforce your own? Have you considered the possible cognitive dissonance of such an approach?

We hope you have enjoyed our New Year’s Resolution Series and we look forward to a prosperous, productive and compliant 2018!

This post was written by Jennifer B. Rubin of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Handbook Wars – Common Sense Returns NLRB Overhauls Standard for Legality of Work Rules

We have noted many times over the years how the NLRB’s zeal to review employer policies, or more correctly, fragments of employer policies, for lawfulness has led to nettlesome issues that rarely, if ever, involve actual employees. The results have been absurd and have raised an entire cottage industry of attacks on language by unions and vetting of employer policies for lawfulness.

This may be ending. As we noted yesterday, the NLRB issued a significant decision that will have far-reaching implications for both unionized and non-unionized workplaces. In Boeing Company, 365 NLRB No. 154 (2017), the Board established a new standard for evaluating whether facially lawful workplace rules, policies or employee handbook provisions unlawfully interfere with employees’ exercise of Section 7 rights. In so doing, the Board placed in doubt the applicability of scores of decisions issued in the 13-years since Lutheran Heritage, 343 NLRB 646 (2004), was decided. We previously identified this issue as a case that the NLRB would revisit once a new majority was installed.

“Reasonably Construe” Standard

For the last 14 years the Board evaluated whether an employee would “reasonably construe” the language of a work rule to prohibit the exercise of NLRA rights. If it did, then the rule—regardless of whether it actually restricted Section 7 activity—was found unlawful. Applying this standard, an inconsistent line of cases developed. Take, for instance, a sampling or recent decisions concerning “civility in the workplace.” A rule prohibiting “abusive or threatening language to anyone on Company premises” was lawful, while a rule restricting “loud, abusive or foul language” was not. And, as noted, a policy or fragment of a policy could be found unlawful even if there was no evidence that employees read the policy or were even aware of its existence. It was, in terms of the NLRA, a victimless crime.

Policy Considerations Behind Abandoning The Lutheran Village Standard

The new three member Board majority (Miscimarra, Kaplan and Emmanuel) decided to change this standard because employers were often held to an impossible standard of precision in drafting language in which they would need to foresee any potential impact on any Section 7 right, regardless of how remote. An employer would have to foresee the future, which the majority characterized as requiring “perfection that literally is the enemy of the good.” The Lutheran Heritage standard has been criticized as unworkable by many in the employer community, and by various Board members over the years. So it is not surprising that that a new standard was on the agenda.

New Balancing Test

The Board abandoned the singularly-focused and vague “reasonably construe” standard, in favor of a new balancing test, which would consider the impact of the rule on NLRA rights and an employer’s business justification for the rule. Going forward, in order to provide greater clarity and certainty to all parties, the Board indicated it would categorize the results of future decisions in three ways:

Category 1: Lawful rules because (i) when “reasonably interpreted,” the rule does not prohibit or interfere with the exercise of NLRA rights or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. Examples of these types of rules include the no-camera requirement in the Boeing case, where the employer supported its rule with multiple business and security justifications. The Board also found that a rule requiring employees to have “harmonious interactions and relationships” in the workplace, and other rules requiring employees to abide by basic standards of civility would be categorically lawful.
Category 2: Rules warranting individual scrutiny on a case-by-case basis.
Category 3: Unlawful rules because they would prohibit or limit NLRA-protected conduct, and the adverse impact is not outweighed by legitimate business justifications (e.g., a rule prohibiting discussion of wages or benefits with another).

The Board proceeded to use this new framework to find that Boeing’s policy restricting the use of camera-enable devices was justified in light of the employer’s security concerns. As it does in every case in which it overrules precedent and/or sets a new standard, the Board weighed whether to apply this new test retroactively, and decided to apply the standard to all pending cases in whatever stage.

Impact of this Decision

It will be some time before the full impact of the decision will be felt as rules are evaluated under the new standard. However, the fact Lutheran Heritage was overruled likely will inhibit unions from attacking employer policies as the forum for these sorts of claims is less receptive.

Because the Board will evaluate the purpose for the rule, employers should consider clearly articulating the reasons for a rule in the policy.

Also, employers may feel less constrained by the thicket created by the previous standard; however, the true impact of Boeing likely will be felt once the host of pending cases work their way through ALJs and the Board under this new paradigm. Only then will employers understand how the Board’s new categories will work. We will keep you posted…there is sure to be more to follow.

This post was contributed by Mark Theodore and Joshua S Fox of Proskauer Rose LLP.

For more on the NLRB go to the National Law Review’s Labor and Employment Practice group page.

Social Hosts Beware: “One More for the Road?” May Be a Bad Idea

The company was hosting its annual holiday party. The company had arranged to hold the event that Saturday night in a hotel ballroom. Moods were festive, especially because the company’s profits were up about 10%. Because he enjoyed doing it and served as a freelance bartender in his spare time, one of the company’s new sales employees, Tom Collins, was helping to tend bar.

Much of the company’s success that year was attributable to the efforts of Johnny Walker, V.P. of Sales, who, for understandable reasons, was in a celebratory mood. When he, at about 11 p.m., bellied up to the bar for a fourth round, Tom couldn’t help but notice that Johnny, normally the epitome of self-control, seemed more than a little impaired. Tom said to Johnny, “Mr. Walker, with all due respect, don’t you think that it may be time to slow down? In fact, given the hour, I’ll be happy to arrange a ride to take you home.” Johnny, now irritated, replied “Tom, you make an excellent highball, but I’d be grateful if you’d mind your own business, OK?” Tom did as he was asked and poured Walker another drink. With that, Johnny, armed with another scotch and soda, disappeared into the crowd.

The next morning, Tom, to his shock, learned that Johnny had gotten into his Volvo to drive home and promptly collided with another driver. The other driver, as a result, was seriously injured and remained hospitalized in a coma for about nine months. He then died.

Candy is dandy, but liquor is quicker, so be careful out there . . .

May an employer with employees in North Carolina, in appropriate circumstances, be held liable for the malfeasance of its employees and, specifically, be held liable as a “social host” because one of its employees served alcohol to a person when the employee knew or should have known that the person was drunk and would soon be driving on public roads and might hurt or kill someone?

Absolutely. The doctrine of “social host liability” was first declared in North Carolina about 25 years ago. The North Carolina Supreme Court, in the 1992 case of Hart v. Ivey, ruled that the plaintiffs had stated a valid claim when they alleged that various defendants had been negligent in throwing a party at which beer was served to an 18-year-old, under circumstances in which the defendants knew or should have known that the young man was intoxicated at the time he was served, that he would drive a motor vehicle from the party, and that he was likely to injure someone.

The court wrote that it had not been able to find a North Carolina case dealing with similar facts, but concluded “that the principles of negligence established by our decisions require that we hold that the plaintiffs . . . have stated a claim.” The court emphasized that it was not recognizing a new claim, but was merely applying the established elements of negligence to find that the plaintiffs stated claims recognized by law.

What had the plaintiffs claimed? Only:

That “the defendants served an alcoholic beverage”;
To a person they knew or should have known was under the influence of alcohol; and,
That the defendants knew that person would shortly thereafter drive an automobile.

The court’s conclusions in Hart, if you think about them, aren’t surprising:

If proof of these allegations were offered into evidence, [then] the jury could find from such evidence that the defendants had done something a reasonable man would not do and were negligent. The jury could also find that a man of ordinary prudence would have known that such or some similar injurious result was reasonably foreseeable from this negligent conduct. The jury could find from this that the negligent conduct was the proximate cause of the injury to plaintiffs.

Sadly, the court later had occasion to encounter just such a claim brought by the estate of a man killed by an employee who had attended a party for a retiring supervisor at the home of an officer of the employer. In the 1995 case of Camalier v. Jeffries, the employer sponsored the party and hired a catering company to help with food and drink service and another company to handle parking arrangements. The catering company and a company that it hired supplied all of the bartenders at the party.

The employee downed three or four gin and tonics and then decided to leave, and was taken by van to his car. He then drove his car into an automobile whose driver suffered serious injuries and then died of the injuries about nine months later. Within two hours after the time of the accident, a blood sample was drawn from the employee showing that his blood-alcohol concentration was well over the legal limit.

In ruling on the case, the North Carolina Supreme Court reiterated the elements of “social-host liability” that it had declared in Hart. In Camalier, the defendant company and one of its officers dodged liability, but only because the evidence was insufficient to show that they knew or should have known that the employee was hammered when he was served alcohol at the officer’s home.

The court observed that there was no question that the defendant employer and its officer caused alcohol to be served to the employee and knew or should have known that the employee would be driving an automobile after the party. Thus, the first and third factors set forth in Hart were not in dispute. But the court also found that the predicted evidence didn’t show that either the employer or the officer knew or should have known that the employee was drunk when he was being served.

The impaired employee who caused injury in Camalier had been served by a vendor hired by the employer rather than by an employee of the defendant employer. It appears that North Carolina’s appellate courts have not yet held an employer liable as a “social host” based on the actions of an employee, but the circumstances in which a court may do so are not difficult to imagine. Such liability can arise from an employer-hosted event at a restaurant, country club, pub, or similar establishment. The location will not matter and a court is likely to find employer liability if there is proof that an employee, under circumstances intended to promote the interests of the employer, served alcohol to a person when the employee, or its representative, knew or should have known that the person was intoxicated and would soon be driving and that a third-party was injured as a result.

The Supreme Court of New Mexico, addressing such an issue, highlighted the principles of employers’ and employees’ liability as “social hosts” where the host purchases liquor and causes it to be served to a guest and, as a result, a third person is injured. In the 2011 case of Delfino vs. Griffo, employees of a pharmaceutical company, in the course of their employment, entertained a physician’s employee in several restaurants. The guest consumed considerable alcohol, became very intoxicated, departed in her car, and shortly thereafter caused a fatal accident.

The New Mexico court, discussing liability as a “social host,” observed:

Social hosting need not occur in a home; one may host in a bar or restaurant where the actual delivery of alcoholic beverages to the guests is performed by a licensed server. Factors that are key to determining whether one is a social host in a public establishment are whether the alleged social host exercised control over the alcohol consumed by the guests; whether the alleged social host convened the gathering for a specific purpose or benefit to the alleged social host, such as promoting business good will; and whether the alleged host intended to act as ‘host’ of the event, meaning arrange for the service of and full payment for all food and beverages served to the guests.

The New Mexico court found, based on the facts of the Delfino case, that the employer was a “social host” for the drunk driver and, in such capacity, the employer could be sued and held liable.

Bring your carrier along for the ride . . .

Employers may consider purchasing general liability insurance to insure them against losses arising from the provision of alcohol by their employees to an intoxicated driver who then causes injury or death. A typical general liability insurance policy includes a business liability provision that will pay for damages arising from causing or contributing to the intoxication of a third party, so long as the insured entity is not in the business of manufacturing, distributing, selling, or furnishing alcoholic beverages. Employers can also buy a one-time special event policy if their current insurance doesn’t provide that kind of coverage.

Employers may also try to insulate themselves from “social host” liability by hiring professional caterers or bartenders who maintain such general liability insurance coverage, so that the employer, if it encounters a “social host” liability claim, may at least try to pass the liability to the caterer’s or bartender’s insurance carrier.

Employers should bear in mind, however, if tragedy occurs and litigation ensues, that it is the employer—not the insurance company—that will be sued, and that having insurance does not mean that the employer is immunized from liability. It means only that the insurance carrier may have to pay if the employer is found liable (or, more likely, if the employer convinces the carrier to pay a pre-trial settlement to enable the employer to avoid an embarrassing lawsuit). Moreover, a policy’s limits of liability are not always high enough to cover all claims. The amount of liability can exceed the limits, in which case the employer, if held liable as a “social host,” can, to one degree or another, be on its own to pay a settlement or judgment.

Conclusion

One useful tip for employers who want to celebrate with their employees and host social events at which alcohol is served is to limit the access to alcohol, such as by setting limits on how much or how long alcohol is served at the event. You can’t mandate good judgment, but you can decide how much temptation you’re willing to pour.

This post was written by Grant B. Osborne of Ward and Smith, P.A..

Read more Labor and Employment News on the National Law Review’s Labor and Employment Practice Group page.

Insurance Coverage in the Post-Weinstein Era

With new headlines involving sexual harassment and other inappropriate sexual conduct continuing to emerge on a daily basis, insurance coverage for claims that might emerge is something every company should consider.

Recently, media reports have discussed settlements of shareholder derivative claims against members of the boards of directors and other senior executives of public companies. These settlements illustrate both the type of corporate liability that can ensue from allegations that a company turned a blind eye to, or otherwise failed to prevent, sexual misconduct allegations, causing financial and reputational harm to the organization, and the critical role insurance can play in protecting companies and their executives against such claims.While reports indicate that one or more of the settlements is being funded entirely from insurance proceeds, it is unclear whether the settlement proceeds will be coming from D&O insurance or EPLI insurance, or both. D&O insurance is intended to cover corporate mismanagement claims but typically contains some form of employment practices liability exclusion. EPL insurance is intended to cover employment practices liability claims but may not cover management liability claims arising from allegations of sexual harassment. This creates a potential gap in coverage that could have serious consequences.

D&O and EPLI policies are not standard and contain different wording and exclusions.

WHAT TO DO?

In this environment, it behooves corporate management of every company to understand the scope of insurance coverage for sexual harassment and management liability claims and to ensure that appropriate coverage is in place without coverage gaps.

Here is what policyholders should do: comprehensively review all relevant corporate insurance programs to determine what coverage is in place for sexual harassment claims of any variety, and for claims arising from corporate actions that might be necessary in the wake of an issue or claim, such as claims of wrongful termination and defamation.

Policies to be reviewed should include CGL, EPL, D&O and E&O.

Determine whether coverage gaps exist and if so, consider enhancing coverage to ensure proper protection.

Understand what needs to happen in terms of notice to insurers in the event of a claim or knowledge of circumstances that might lead to assertion of a claim.

And be aware of the potential for coverage before agreeing to any payments or settlements that might preclude or limit coverage.

This post was written by Seth B Schafler of Proskauer Rose LLP.

Learn more at the Insurance Law Page on the National Law Review.

“Newly Minted” NLRB Majority Begins to Roll Back Decisions of the Obama Board

In two recent developments, the “new” National Labor Relations Board (“NLRB” or the “Board”), which includes two Members nominated by President Trump, has commenced the anticipated roll back of decisions and procedures rendered by the previous Administration’s NLRB.

1. The NLRB General Counsel can no longer demand settlements with a full remedy for all violations.

In UPMC, 365 NLRB No. 153 (December 11, 2017), the Board reversed a 2016 decision that prohibited settlements of NLRB complaints over the objection of the NLRB General Counsel (Prosecutor) and the party filing the charge, unless the settlement provided complete remedies for all violations alleged in the Complaint. The 2016 decision, United States Postal Service, 364 NLRB No. 116 (2016), had overturned decades-long NLRB precedent established in Independent Stove, 287 NLRB 740 (1987).

In the UPMC majority’s (Chairman Philip Miscimarra, Member William Emanuel, Member Marvin Kaplan) view, requiring a settlement of all violations with a full remedy for the employees (and union) “imposed an unacceptable constraint on the Board itself which retained the right under prior law to review the reasonableness of any … settlement terms” offered by Respondents (employers and unions). According to the UPMC majority, the 2016 USPS decision unduly restricted the settlement of NLRB cases and ignored the risks inherent in NLRB litigation. The UPMC decision now allows a Respondent, with approval of the Administrative Law Judge, to settle a case without providing full and complete relief, so long as the resolution is “reasonable.” This approach should facilitate more settlements, and reduce the costs and uncertainty inherent in litigation (for employers and the NLRB).

The dissent strongly disagreed with what it called “an eleventh hour” decision during Republican Chairman Miscimarra’s last week as a Board member. However, Chairman Miscimarra will soon likely be replaced by another Republican.

2. The NLRB seeks comments on quickie elections – is more change likely?

The day after the UPMC decision, the NLRB published a Request for Information (“RFI”) in the Federal Register seeking prompt public comments about the controversial 2014 Election Rule, commonly referred to as the “quickie election” rule.

Specifically, the RFI seeks public input from December 13, 2017 until February 12, 2018 regarding the following three questions:

Should the 2014 Election Rule be retained without change?
Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
Should the 2014 Election Rule be rescinded?

The “quickie election” rule, effective since April 2015, impacted NLRB elections in three main ways:

It significantly shortened the time period between the date a petition for election is filed and the date of the election. As a result, elections frequently took place approximately three weeks after the petition was filed. This period shortened employers’ time to respond to the union’s campaign efforts from approximately 6 weeks to 23 days.
It considerably restricted the scope of any pre-election challenges that might result in litigation, such as individual voter eligibility issues, unless the question relating to eligibility affected twenty percent (20%) of the proposed unit. Eligibility issues, including determining who is a supervisor and thus is precluded from voting, were generally delayed until after the elections if the union won.
It forced employers to disclose a substantial amount of private employee information to the unions, including providing unions with employee contact information. In particular, the employer is required to disclose, for the first time, employee personal email addresses and phone numbers, including all cell phone numbers. Previously, only mailing addresses needed to be disclosed.

While the “quickie election” rule has not substantially increased union election win percentage, opponents of the rule have objected to the limited time it provides employers to communicate with employees regarding the election, the deferral of election eligibility issues until after the election, as well as the procedural challenges.

Takeaways

Moving forward, interested parties should monitor the new Board’s actions. The recent developments indicate the new Board could likely overturn some of the decisions rendered and procedures proffered by President Obama’s NLRB.

This post was written by W. Terrence Kilroy and Henry J. Thomas of Polsinelli PC.

Learn more at our Labor and Employment Practice Group Page.

PHMSA Raises Random Drug Testing Rate to 50% for 2018

The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration announced December 8, 2017 that during calendar year 2018, the minimum random drug testing rate will be increased to 50%.

Operators of gas, hazardous liquid, and carbon dioxide pipelines and operators of liquefied natural gas facilities must randomly select and test a percentage of all covered employees for prohibited drug use. The minimum annual random drug testing rate was 25% of all covered employees for calendar year 2017. However, the PHMSA regulations require the Administrator to raise the minimum annual random drug testing rate from 25% to 50% of all covered employees when the data obtained from the Management Information System reports (required to be filed by covered entities under PHMSA regulations) indicate the positive test rate is equal to or greater than 1%. In calendar year 2016, the random drug test positive test rate was greater than 1%. Therefore, the PHMSA minimum annual random drug testing rate shall be 50% of all covered employees for calendar year 2018.

This post was written by Kathryn J. Russo of Jackson Lewis P.C.

Check out the National Law Review Labor and Employment page for more information.

How Prevalent is Harassment in Organizations?

Recently it seems that we are constantly learning about another high profile individual who has allegedly engaged in sexual misconduct / harassment in the workplace. These disclosures beg the question of how prevalent is sexual (or other forms of unlawful) harassment in our workplaces. It is easy to believe that for every high profile individual who has misbehaved, there are countless of other employees who have similarly misbehaved. Moreover, many of the recent disclosures suggest that the employer in question knew or had reason to know of the alleged misconduct, which had occurred over an extended period, but failed to take any prior action. So what should organizations do now?

First, organizations should ensure that they have a comprehensive anti-discrimination policy, which includes a procedure for employees to share any concerns about harassment. Second, organizations must educate its employees at all levels of the organization of its policy and procedure so that they become part of the organization’s culture. Third, organizations can conduct training on its policy and the law prohibiting harassment.

Supervisors need to be regularly trained to identify conduct that could be considered harassment and how to address it, not ignore it.

Employees need to know that they are entitled to work in a harassment free environment, that they will be held accountable for their behavior at work and for their behavior out of work that can affect the work environment, and that the organization wants them to report any concerns regarding harassment so that they can be addressed. With these steps, an organization should be able to create a culture that can quickly deal with any concerns of harassment before they present legal liability.

Authored by: Michael Colgan Harrington of Murtha Cullina

Go to the National Law Review’s Labor & Employment Page for more information.

Illinois Employers Face A Recent Rash of Class Action Lawsuits Filed Under State Biometric Information Privacy Law

Illinois enacted its Biometric Information Privacy Act (“BIPA”) in 2008 to regulate, among other things, employer collection and use of employee biometric information. Biometrics is defined as the measurement and analysis of physical and behavioral characteristics. This analysis produces biometric identifiers that include things like fingerprints, iris or face scans, and voiceprints, all of which can be used in a variety of ways, including for security, timekeeping, and employer wellness programs.

Illinois is not the only state with a biometrics privacy law on its books, however, its version is considered the nation’s most stringent. BIPA requires a business that collects and uses biometric data to protect the data in the same manner it protects other sensitive or confidential information; to establish data retention and destruction procedures, including temporal limitations of three years; to publish policies outlining its biometric data collection and use procedures; and to obtain prior, informed consent from any individuals from whom it plans to obtain and use biometric data. The statute also requires businesses to notify employees in the event of a data breach.

Protection of biometric data is viewed as critical because, unlike passwords comprised of letters, numbers, or typographical characters, biometric data is unique and cannot be replaced or updated in the event of a breach. Technology now allows biometric data to be captured surreptitiously, such as recording a voice over the phone, or face mapping individuals in a crowd or through photographs, increasing the risk for its theft or unauthorized or at least, unknown, use. In fact, these more furtive methods of collecting and using biometric data is what led to the filing of five BIPA class action lawsuits in 2015 – four against Facebook, and one against online photo website Shutterfly – that alleged these companies used facial recognition software to analyze online posts, but did not comply with BIPA’s consent or other procedural requirements. These first lawsuits brought attention to the private right of action authorized under BIPA, which provides that any “aggrieved” person may sue and recover $1,000 for each negligent violation and $5,000 for each intentional or reckless violation, or, in both circumstances, actual damages if greater than the statutory damages. Prevailing parties may also recover their attorneys’ fees and costs.

The plaintiffs’ employment bar recently has gotten seriously into the BIPA class action game; since August 2017, approximately 30 lawsuits have been filed in Cook County, Illinois (where Chicago is), alone. These putative class actions have been filed against employers in many industries including gas stations, restaurants, and retail, and typically involve the employer’s use of fingerprint operated time clocks. The cases allege that the defendant employers failed to obtain proper informed consent or fail to maintain and inform employees about policies on the company’s use, storage, and destruction of biometric data. Many of these lawsuits also allege the employer companies have improperly shared employee biometric data with third-party time clock vendors, and some even name the vendor as a defendant.

In addition to the obvious cost of class action litigation, these suits present additional legal challenges because many aspects of BIPA remain untested. For example, the statutory term “aggrieved” person leaves open the question whether a plaintiff must be able to prove actual harm in order to recover. The U.S. District Court for the Northern District of Illinois and U.S. District Court for the Southern District of New York both have dismissed BIPA suits for lack of standing where the plaintiffs did not allege actual harm. The latter case, Santana v. Take-Two Interactive Software, is currently before the United States Court of Appeals for the Second Circuit, which heard oral argument in October 2017, but has not yet issued its ruling. Other aspects of BIPA also remain in flux – such as whether facial recognition through photography is biometric data, as defined under the statute, and what forms of consent are compliant. On the other side, defendants are challenging the constitutionality of the damages provisions, arguing that their potentially disproportionate nature to any actual harm violates due process. As these issues are flushed out under BIPA, they are certain to affect other states who have already enacted, or may seek to enact, laws regarding use of biometric data.

For more Labor & Employment legal analysis go to The National Law Review

Category: Labor & Employment