Tag: Employment Law

Twitter: Little Statements with Big Consequences for Companies

McBrayer

Twitter is under attack. In recent months, accounts belonging to media giants CBS, BBC, and NPR have all been temporarily taken over by hackers. The Associated Press is the most recent victim. On April 23, 2013, a false statement about explosions at the White House and the President being injured sent shock waves through the Twitter-sphere. The real surprise is the effect the single tweet had in the real world: the Standard & Poor’s 500 Index dropped so sharply moments after the frightening tweet that $136 billion in market value was wiped out. While the hacking of these massive media outlets make headlines, everyday businesses are not safe from the threat, either. In February of this year, a hacker changed the @BurgerKing feed to resemble that of McDonald’s, putting the McDonald’s logo in place of Burger King’s. The hackers posted offensive claims about company employees and practices. If accounts belonging to well-established companies like these are vulnerable, so is yours. If a tweet can have a profound impact on the nation’s stock market, imagine what an ill-contrived tweet could do to your business.

Business owners may have the knee-jerk reaction to delete their Twitter account, but despite the recent blemishes to its security, Twitter remains one of the most important social media sites out there. Just recently, the Securities Exchange Commission made clear that companies could use social media like Twitter when announcing key information in compliance with Regulation Fair Disclosure. Twitter is not just a marketing or PR tool—Twitter is business. And you should never turn your back on existing business. So instead of hanging up your hashtags, consider some steps that can make your Twitter account safer.

Limit Access

Not every employee should have access to the company’s Twitter account. In fact, hardly anyone should, except a few designated employees like the marketing director or business owner. While those with access may never do anything harmful to the account, the more people who have the log-in information, the more likely it is to fall into the wrong hands.

Create a strong password

I know, you already have too many passwords to remember. But a creative password is your best defense against someone seeking to break into your account. Employers should, at minimum, have unique passwords for their most commonly used media sites; please do not use the same word for your Facebook, LinkedIn, and Twitter account. Once a hacker figures it out, they have control of your entire social media presence.

When creating a password, avoid using anything that would be too common. “Password,” “1234,” or the business’s name should never be the only thing standing between you and a hacker. The longer the password, the better. Use a mix of uppercase and lowercase letters, numbers, and symbols.

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Takeover Code Amendments Extend the Rights of Pension Scheme Trustees

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Amendments include new requirements regarding offerors’ intentions, documents provided to trustees, trustees’ opinions on offers, and publication of agreements between offerors and trustees.

On 22 April, the Code Committee of the UK Panel on Takeovers and Mergers (the Panel) published response statement RS 2012/2 (the Response Statement), which introduces amendments to the City Code on Takeovers and Mergers (the Code).[1] The Response Statement follows a consultation to consider extending the rights of trustees of offeree company pension schemes. Broadly, the amendments to the Code provide the following:

  • An offeror is required to state its intentions with regard to the offeree company’s pension scheme.
  • Certain information is required to be published in the offer document or otherwise provided to pension scheme trustees.
  • Trustees are allowed to provide an opinion on the effects of an offer on the company’s pension scheme.
  • Agreements between an offeror and pension scheme trustees that relate to pension scheme funding may be required to be published if they are material.

Background

On 19 September 2011, significant changes were made to the Code, including an extension of the obligations of the offeror and offeree in relation to information to be provided to, and the obligation to publish opinions of, the offeree company’s employees and employee representatives. During the Panel’s consultation on those changes, the pensions industry lobbied significantly for similar provisions to be added to the Code in relation to trustees of pension schemes. Proposed amendments to the Code were published in public consultation paper PCP 2012/2 (the PCP)[2] on 5 July 2012, and a period of consultation followed. The Response Statement sets out the Panel’s response to that consultation and the resulting changes to be made to the Code. Although many of the changes will be adopted as originally proposed in the PCP, certain modifications have been made.

In determining the new regime, the Panel has been mindful that the intended effect of the changes is to create a framework within which the effects of an offer on an offeree company’s pension scheme can become (i) a debating point during the course of the offer and (ii) a point on which the relevant parties can express their views.

Application of New Code Provisions to Defined Benefit Schemes

The new provisions of the Code are limited to funded pension schemes sponsored by the offeree (or any of its subsidiaries) that (i) provide pension benefits (either in whole or in part) on a defined benefit basis—and (ii) have trustees (or managers, in the case of non-UK schemes). The Code provisions are not limited to UK pension schemes and apply to all such schemes, regardless of size or materiality in the context of the offeree’s group.

The new provisions do not apply to pension schemes that provide pension benefits only on a “defined contribution” basis, as the Panel believes that the provisions of the Code granting rights to employees and employee representatives already create an appropriate framework for discussion in relation to the impact of an offer, and the offeror’s intentions, in relation to such schemes.

Publication of Offeror’s Intentions in Relation to Pension Scheme

An offeror will now be required to include in the offer document a statement of its intentions with regard to relevant offeree pension schemes, including with respect to employer contributions and arrangements for deficit funding, benefits accruals for current members, and the admission of new members to the scheme. However, the Panel has not required that the offeror include a statement on the likely repercussions of its strategic plans for the offeree company on relevant pension schemes. Similarly, the Panel has confirmed that such statements do not need to include an assessment of the future ability of the offeree company to meet its funding obligations to its pension scheme.

The Panel also confirmed that the general rule under Note 3, Rule 19.1 of the Code will apply to statements of intention made in respect of pension schemes. This means that an offeror will be considered to be committed by any such statements for 12 months after the offer ends (or such other period of time as is specified in the offeror’s statement), unless there has been a material change of circumstances.

Under the PCP, the Panel originally proposed to require the offeree to include in its offeree circular its views on the effects of the implementation of the offer—and the offeror’s strategic plans for the offeree—on the offeree’s pension schemes. However, following the consultation, the Panel did not make these changes but did confirm that the offeree board may include its views on these subjects in the offeree circular should it wish to do so.

Provision of Information to Pension Scheme Trustees

The amendments to the Code provide that trustees of the offeree company’s pension scheme will be entitled to receive the same documents that offerors and offerees are required to make available to employee representatives. These documents include the following:

  • The announcement that commences the offer period
  • The announcement of a firm intention to make an offer
  • The offer document
  • The offeree board circular in response to the offer document
  • Any revised offer document
  • The offeree board circular in response to any revised offer document

Pension Scheme Trustees’ Opinion on the Offer

Under the revised Code, pension scheme trustees will have the right to require the offeree’s board of directors to publish the trustees’ opinion on the effects of the offer on the pension scheme, and the offeree will be obliged to notify such trustees of this right at the commencement of the offer. As with employee representatives’ opinions, if the trustees’ opinion is received in good time, the opinion must be appended to the offeree board circular. If it is not received in good time, it must be published on a website, with such publication to be announced on a Regulated Information Service.[3] The Panel has confirmed that the trustees’ opinion may cover more than the impact of the offer on the benefits that the scheme provides to members (and other matters to be included in the offeror’s statement in the offer document) and that the opinion may also extend to the trustees’ views on the impact of the offer on the post-offer ability of the offeree company to make future contributions to the pension scheme (i.e., the strength of its funding covenant).

Unlike employee representative opinions, the offeree will only be responsible for the costs incurred in the publication of the trustees’ opinion and not for any other costs incurred in relation to its preparation or verification.

Agreements Entered into Between an Offeror and Pension Scheme Trustees

The revised Code also contains certain provisions relating to any agreements between an offeror and the trustees of an offeree pension scheme, for example, in relation to the future funding of that scheme. Following the consultation, the Panel determined that any such agreements should be treated in the same manner as any other offer-related agreement, with certain variations. As a result, the amendments contain the following requirements for agreements between offerors and pension scheme trustees:

  • Where any such agreement is a material contract for the offeror within the meaning of the Code, it should be published on a website in the same manner as any other material contract.
  • Where such an agreement is not material, but is nevertheless referred to in the offer document, there will be no requirement to publish it on a website.
  • Where such an agreement relates only to the future funding of the pension scheme, it will be excluded from the general prohibition on offer-related agreements contained in Rule 21.2(a).[4]

Pensions Regulator

The Panel has confirmed, following discussions with the UK Pensions Regulator, that there will be no obligation under the Code for the offeror or offeree to send offer-related documentation to the Pensions Regulator, nor will there be any obligation on the Panel to notify the Pensions Regulator of takeover offers. Accordingly, it is for the offer parties (and any other interested parties) to decide whether they wish to engage with, or seek clearance of the offer from, the Pensions Regulator.

Entry into Force

The amendments introduced by the Response Statement will take effect on 20 May 2013, and an amended version of the Code will be published on this date.

[1]. View the Response Statement here.

[2]. View the PCP here.

[3]. The UK Financial Conduct Authority has published a list of information services that are approved Regulated Information Services in Appendix 3 of the Listing Rules, which is available here.

[4]. The Panel, however, emphasised that any obligations or restrictions on the trustees regarding any other offeror or potential offeror would not be permissible.

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Worker Adjustment and Retraining Notification Act (WARN) Liability And Private Equity Firms

DrinkerBiddle

Last month’s decision out of the Delaware District Court in Woolery, et al. v. Matlin Patterson Global Advisers, LLC, et al. was an eye opener for private equity firms and other entities owning a controlling stake in a faltering business.  Breaking from the norm, the Court refused to dismiss private equity firm MatlinPatterson Global Advisers, LLC (“MatlinPatterson”) and affiliated entities from a class action WARN Act suit alleging that the 400-plus employees of Premium Protein Products, LLC (“Premium”), a Nebraska-based meat processer and MatlinPatterson portfolio company, hadn’t received the statutorily-mandated 60 days advance notice of layoffs.

According to the plaintiffs, Premium’s performance began to decline in 2008 and, upon the downturn, the defendants became more and more involved in Premium’s day-to-day operations, including by making business strategy decisions (e.g., to enter the kosher food market), terminating Premium’s existing President, and installing a new company President.  Things got bad enough that, in June 2009, the defendants decided to “furlough” all of Premium’s employees with virtually no notice and close the plant.  The defendants then, in November 2009, converted the furlough to layoffs, and Premium filed for bankruptcy.  According to the plaintiffs, Premium’s head of HR raised WARN Act concerns back in June, when the decision to close the plant and furlough the employees was made, and the defendants ignored the issue.

With Premium in bankruptcy, the plaintiffs, unsurprisingly, turned to MatlinPatterson and the other defendants as the targets of their WARN Act claim, asserting that they and Premium were a “single employer.”  The Court then applied the Department of Labor’s five-factor balancing test, namely (1) whether the entities share common ownership, (2) whether the entities share common directors or officers, (3) the existence of de facto exercise of control by the parent over the subsidiary, (4) the existence of a unity of personnel policies emanating from a common source, and (5) the dependency of operations between the two entities.  This test often favors private equity firms, and on balance it did so in Woolery too, with the Court finding that the plaintiffs had made no showing as to three of the five factors.  The Court nevertheless refused to grant the defendants’ motion to dismiss, holding that the complaint alleged that the defendants had exercised de facto control over Premium and then essentially giving that factor determinative weight.

No one should be surprised by the decision given the plaintiffs’ allegations, which had to be accepted as true at the motion to dismiss stage.  They presented an ugly picture of a private equity firm dictating the most critical decisions (to close plant, layoff employees) and then attempting to duck the WARN Act’s dictates. The decision is nevertheless a cautionary tale for private equity firms and at first blush it presents a catch 22: (a) do nothing and watch your investment sink or (b) get involved and risk WARN Act liability.

So what is a private equity firm, lender or majority investor to do?  Obviously, the best scenario is to build in the required 60-day notice period or, if applicable, utilize WARN Act exceptions, including the “faltering company” and “unforeseen business circumstances” exceptions.  Even where that’s not possible, private equity firms and other controlling investors need not take a completely hands off approach.  They would, however, be best-served (at least for WARN Act purposes) to do the following:

  • Provide only customary board-level oversight and allow the employer’s officers and management team to run the employer’s day-to-day operations
  • Although Board oversight and input can occur, continue to work through the management team on major decisions, including layoffs and potential facility closures
  • Avoid placing private equity firm or lender employees or representatives on the employer’s management team
  • Have the employer’s management team execute employment contracts with the employer, not the private equity firm or lender, and have the contracts, for the most part, create obligations only to the employer
  • Allow the employer to maintain its own personnel policies and practices, as well as HR oversight and function

What the courts are primarily concerned with in these cases are (a) a high degree of integration between the private equity firm or lender and the actual employer, particularly as to day-to-day operations, and (b) who the decision-maker was with regard to the employment practice giving rise to the litigation (typically the layoff or plant closure decision).  Private equity firms and lenders that have refrained from this level of integration have had, and should continue to have, success in avoiding WARN Act liability and returning the focus of the WARN Act discussion to the actual employer.

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Recent NLRB Memo Identifies “Hot Topic” Cases for 2012

Recently an article appeared in the National Law Review by Peter T. Tschanz of Barnes & Thornburg LLP regarding Hot Topic cases:

 

The NLRB recently circulated a memorandum asking all Regional Directors, Officers-in-Charge and Residential Officers to begin tracking what the Agency has defined as “Hot Topic” Cases.  The categories include:

– Cessation of Dues Check-Off;

– Information Requests for Financial Records;

– Post Arbitration Deferral;

– Social Media; and

– Use of Employer e-Mail.

The memorandum provides insight into the types of issues likely to grab the NLRB’s attention in 2012.  The memorandum can be accessed here.

Status Update: Fired – Social media is a great way to market a company. It is also a great way to get fired from one.

Recently featured in the National Law Review an article by Emily Holbrook of Risk Management Magazine about Social Media:

Time Line: Status Update — Fired Social media is a great way to market a

company. It is also a great way to get fired from one.

Facebook recently reached a milestone: 750 million active users worldwide. With people spending more than 700 billion minutes per month on the social network, it’s no wonder many users get themselves in trouble for what they post. For example, a juror in the UK was dismissed after she disclosed sensitive case information on her Facebook profile, asking her friends to participate in a poll to help her decide “which way to go” with the verdict. But repercussions from other comments on social media sites have been much worse.

Many employees have been terminated over certain comments or pictures, and the National Labor Relations Board says it has been receiving an increased number of social media cases as this new mode of communication continues to grow in popularity and users continue to post with reckless abandon.

June 2008

20-year-old James Brennan was fired from his job at a store in central London after posting a derogatory statement about his employers. He believed his comment was visible only to his friends, but a colleague printed off the remark and showed it to his boss. Brennan claimed that what he wrote was private and done on his own time. Nonetheless, he was fired on the spot.

November 2008

Virgin Atlantic canned 13 flight attendants after they criticized the airline’s flight safety standards and described passengers as “chavs” (a derogatory term used in the UK referring to aggressive, arrogant, lower-class young adults) on Facebook. Management at Virgin Atlantic fired the 13 individuals due to their “totally inappropriate behavior” that “brought the company into disrepute.”

April 2009

An unnamed employee of Nationale Suisse, an international insurance company, lost her job after supervisors realized she was using Facebook after calling in sick because she was suffering from a migraine and needed to lie in a dark, quiet room. The woman claimed she was not using her computer, but instead accessing the site from her iPhone. The company said it lost trust in the employee while the woman accused the company of setting up fictitious “friends” to spy on her account activity.

August 2009

Georgia public school teacher Ashley Payne was given a “resignation or suspension” ultimatum after her supervisors saw that her Facebook profile included a photo of her taken during her European vacation that showed her clutching a glass of wine in each hand. Along with the photo, one of her status updates contained an expletive (though she was merely referring to the official name given a local bingo night). Payne sued the school, making hers one of several lawsuits filed within the past few years involving teachers who feel they were unfairly dismissed because of the contents of their Facebook pages.

April 2010

Tania Dickinson, a ministry employee in Auckland, New Zealand, was fired over a Facebook comment in which she described herself as a “very expensive paperweight” who is “highly competent in the art of time wastage, blame-shifting and stationary [sic] theft.” The Employment Relations Authority refused to uphold a complaint from Dickinson that she was unfairly dismissed.

June 2010

24-year-old Andrew Kurtz worked as a “Pittsburgh Pierogi” mascot for the Pittsburgh Pirates baseball franchise, a job that entailed racing around the field between innings and greeting fans. Kurtz was also a diehard Pirates fan and when he found out team president Frank Coonelly decided to keep general manager Neal Huntington and manager John Russell on for another season, he took to Facebook, stating “Coonelly extended the contracts of Russell and Huntington through the 2011 season. That means a 19-straight losing streak. Way to go Pirates.” He was immediately fired.

February 2011

Dawnmarie Souza, an employee of American Medical Response, a Connecticut ambulance service, took to Facebook to criticize her supervisor and other coworkers. Soon after, she was terminated from her position. The National Labor Relations Board (NLRB) promptly brought the wrongful termination complaint before an administrative court, arguing that the company’s social media policy was too broad and that Souza’s termination violated the National Labor Relations Act, which keeps employers from penalizing employees for talking about unionization or working conditions. A settlement was reached in which Souza did not return to work but the company changed its social media policy.

September 2011

In October 2010, five employees of the minority advocacy group Hispanics United of Buffalo were fired for complaining about working hours at their nonprofit employer. The five decided to fight back, taking their case to the NLRB. There, administrative law judge Arnold Amchan, in a first-of-its-kind decision, ruled that after-hours Facebook wall complaints about being over-worked constituted legitimate “concerted activity” within the meaning of Section 7 of the National Labor Relations Act. He ordered the organization to reinstate the five employees along with back pay.

Risk Management Magazine and Risk Management Monitor.

Copyright 2011 Risk and Insurance Management Society, Inc. All rights reserved.

Barnes & Thornburg Labor Relations’ Top Ten Traditional Labor Stories of 2011 (Part 1)

‘Tis the season for year-end recaps, and we here at BT Labor Relations couldn’t resist taking our own look back at the year in traditional labor. As we move into 2012, here’s our countdown of the top ten traditional labor issues that made the news this year. Numbers 10 through 6 are below; check back tomorrow for our top five.

10. The Board sues Arizona over secret ballot constitutional amendment

2011 started off with a bang in January when the Board’s Acting General Counsel Lafe Solomon threatened to sue four states (Arizona, South Carolina, South Dakota, and Utah) over their secret ballot union election constitutional amendments. All four states added provisions to their state constitutions mandating that union elections be held by secret ballot only, after constitutional amendments passed by public referendum at the November 2010 election. These constitutional amendments were in response to the Employee Free Choice Act (EFCA) proposed in Congress in 2009, which would have required an employer to recognize a union if a majority of employees signed cards stating their desire for representation. This “card check” method of recognition is currently allowed by the NLRA, but employers have the option of demanding that election of the union be confirmed by a secret ballot. EFCA would have taken this option away from employers (as well as enacting other pro-union changes to the NLRA).

EFCA never became law, but the constitutional amendments in these states passed anyway, purportedly preserving the right of a secret ballot election for employers in those states. The amendments as they currently stand do not conflict with the NLRA, but the NLRB nevertheless took exception to them, claiming that such state provisions are preempted by federal law. After a back and forth discussion with the states’ Attorneys General during the early part of 2011, the NLRB filed suit against Arizona in May, asking the court to declare that Arizona’s constitutional amendment was preempted by federal law and therefore unenforceable.

Although EFCA never became law, the NLRB has made attempts to individually implement many of the pro-union changes proposed in the bill, and Arizona has become the battleground for card checks. So far, the NLRB’s lawsuit appears to have some traction. The Arizona federal court hearing the case has deniedArizona’s motion to dismiss and litigation continues. Stay tuned in 2012 as this issue continues to develop …

See B&T’s previous coverage of this issue here.

9. The NLRB strikes a blow to mandatory arbitration policies in Supply Technologies

Companies love mandatory arbitration policies in contracts and in May, the U.S. Supreme Court issued a landmark decision in AT&T v. Concepcion upholding such policies in consumer contracts. Employers also see the appeal of mandatory arbitration clauses and many union contracts include such provisions. However, an NLRB Administrative Law Judge reminded employers of the limits of such policies in a decision in June, finding in Supply Technologies LLC that an employer’s arbitration policy violated the NLRA by unlawfully restricting employees’ rights by suggesting that an employee had to bring any unfair labor practice charge through the arbitration procedure, and thus could not make that charge with the Board. This decision served as a warning for employers hopeful after theConcepcion decision that arbitration provisions should be carefully reviewed before being included in collective bargaining agreements. Employers should know that just because SCOTUS approves, doesn’t mean the Board will.

See B&T’s previous coverage of this issue here.

8. Congress sits up and takes notice (although no new legislation is actually passed)

With a new majority in the House of Representatives after the 2010 elections, certain Republican members of Congress have made the NLRB their new target this year. Several hearings were held by Congressional Committees to discuss what many characterize as the pro-union, “activist agenda of the National Labor Relations Board.” The Board’s complaint against Boeing was a frequent target, as well as its decisions regarding posting requirements, “quickie” elections, and “micro” bargaining units.

Additionally, Republicans in both the House and the Senate have introduced bills to amend the NLRA to reverse these controversial actions taken by the NLRB in 2011. The Democrats weren’t able to get EFCA passed when they had a majority of both houses, so it is unlikely that any of this legislation will actually be passed by a divided Congress, but the NLRB’s continued perceived pro-union actions have made traditional labor a key issue as we move into the 2012 election season.

See B&T’s previous coverage of this issue here.

7. General Counsel memo regarding mandatory language in settlement agreements puts additional pressure on employers

This year, the Board has placed additional pressure on employers looking to settle NLRB proceedings with the issuance of a memo by General Counsel Solomon in January which requires mandatory language in settlement agreements whereby an employer in effect agrees in advance that if it is even accused of violating the agreement, all of the prior charges against it have merit. Although the Board characterized this language as necessary for effective enforcement of such agreements, this requirement likely has the effect of simply making employers less willing to settle a case. And it was another example of the Board’s aggressive efforts to secure rights for unions in 2011.

See B&T’s previous coverage of this issue here.

6. Specialty Healthcare decision opens the door for “micro” bargaining units

One of the Board’s more controversial decisions of 2011 was issued in August regarding appropriate bargaining units. In Specialty Healthcare (357 NLRB No. 83), the Board overturned 20 years of precedent regarding determination of an appropriate bargaining unit in non-acute health care facilities. The Board increased the burden on employers who wish to challenge a bargaining unit petitioned for by a union to include more employees. Under the new standard, employers have the burden to prove that the employees the employer believes also should be part of the unit share an “overwhelming community interest” with the petitioned for employees. The previous rule (as articulated by the Board inPark Manor Care Center, 305 NLRB 872 (1991)), applied a lower standard: whether the community of interest of the employees the employer sought to include was “sufficiently distinct from those of other employees” in order to justify their exclusion from the bargaining unit.

The upshot is that this decision allows unions to pursue so-called “micro” bargaining units, and it will be easier for unions to certify bargaining unit(s) piecemeal, even when a majority of employees in a facility do not desire union representation. This decision helps unions trying to “get a foot in the door” by allowing them to target vulnerable employer sub-groups.

This decision was targeted by legislation introduced in Congress to reverse it, but for now, it remains current Board law and sets up new challenges for employers seeking to avoid unionization.

See B&T’s previous coverage of this issue here.

Disagree with our picks? Let us know in the comments what traditional labor issues you think were most important in 2011. And don’t forget to check back tomorrow for our top five!

© 2011 BARNES & THORNBURG LLP

California Wage Theft Prevention Act Takes Effect January 1, 2012

Posted in the National Law Review on January 01, 2012 an article by the Labor & Employment Practice of Morgan, Lewis & Bockius LLP regarding The Wage Theft Prevention Act of 2011:

California Governor Jerry Brown recently signed into law Assembly Bill 469, also known as The Wage Theft Prevention Act of 2011 (the Act). The Act requires employers to provide all new nonexempt hires with written notice of specific wage information. It also increases the penalties for nonpayment of all wages due, including overtime premiums and minimum wage for all hours worked. The Act also mandates that the Labor Commissioner prepare a template of the written notice, which the Division of Labor Standards and Enforcement (DLSE) issued on December 28. A copy of the template is available online.

The Act is similar to wage theft statutes recently enacted in other states, including New York, New Mexico, Maryland, and Illinois. Below is a summary of the Act’s key provisions, which take effect on January 1, 2012.

Background

A UCLA study released in 2010 suggested that wage theft was costing low-wage California workers $26.2 million per week. Further, the DLSE, the state enforcement agency, was reporting more penalties assessed than actually collected. These statistics influenced the legislature to create the newer, heightened incentives for wage and hour compliance that are contained in the Act.

Labor Code § 2810.5: New Written Notice Requirements for New Employees

Under the Act, at “the time of hire” of any nonexempt employee, an employer will need to provide to the employee a written notice containing all of the following information:

  • The employee’s rate or rates of pay (including overtime rates), and whether the employee is paid hourly, by the shift, by the day, by the week, by salary, by piece, by commission, or otherwise.
  • Any allowances claimed as part of the minimum wage (i.e., allowances for meals or lodging).
  • The regular payday.
  • The name of the employer, including any D/B/A names the employer uses.
  • The physical address of the employer’s main office or principal place of business, and a mailing address if it is different.
  • The employer’s telephone number.
  • The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.
  • Any other information that the Labor Commissioner deems necessary.

Employers need to provide the notice in the language that the employer normally uses for communicating employment-related information to employees. Employees must be notified of any changes to the information provided in the initial notice within seven calendar days after these changes are made. This notice of changes may take the form of an entirely new notice containing all of the information required by Section 2810.5, a notice of only the changed information, or a timely wage statement that reflects the changes.

Recordkeeping

The Act significantly increases employers’ recordkeeping obligations. Specifically, Labor Code § 226 requires that employers keep a copy of both an employee’s wage statement and a record of deductions, rather than just one or the other, for at least three years. The Act also amends Labor Code § 1174, requiring employers to keep payroll records for each employee for at least three years, instead of two years as previously required.

Increased Penalties and Damages and More Time for the Labor Commissioner to Seek Them

The Act contains numerous provisions that subject employers to significantly increased penalties and damages for noncompliance with various Labor Code provisions, including the following:

  • Labor Code § 98: The Labor Commissioner is now authorized to collect liquidated damages, in addition to wages and penalties, for failure to pay the minimum wage. Previously, liquidated damages were only available in civil court.
  • Labor Code § 240: The time period for which the Labor Commissioner can require that employers post bonds in order to incentivize compliance and ensure the employer can pay any future awards during that period has been increased from six months to two years. If the employer does not post the bond and does not appeal the order requiring a bond, the Labor Commissioner may order an accounting of the employer’s assets and subject the employer to an additional civil penalty of up to $10,000.
  • Labor Code § 243: An employer that has been convicted of violating wage laws for the second time within 10 years or has failed to satisfy a judgment for nonpayment of wages could be issued an immediate restraining order from conducting business within the state for 30 days unless the employer posts a bond conditioned on making correct wage payments or satisfying any judgment for nonpayment of wages.
  • Labor Code § 200.5: The DLSE now has three years-rather than one year, as previously-from the date a penalty or fee becomes final to collect it.
  • Labor Code § 1197.2: An employer may be criminally liable for a misdemeanor for the willful refusal to pay a final court judgment or final order for wages by the Labor Commissioner within 90 days. Each offense carries a minimum $1,000 fine or minimum six months of imprisonment. If the total wages due are more than $1,000, the minimum fine per offense is $10,000 and an employer may be subject to both the fine and imprisonment.

Conclusion

Under California’s new Wage Theft Prevention Act, employers have additional Labor Code compliance obligations, including the new written notice requirements in Section 2810.5. The Act also significantly increases the damages and penalties available for violations of the Labor Code. Thus, it is important that employers become familiar with the new requirements and take steps now to bring their policies and procedures into immediate compliance.

Copyright © 2011 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

Health Care Entities Using Social Media: Guidance from the Division of Quality Assurance

Recently posted in the National Law Review an article by Diane M. Welsh and Linda C. Emery of von Briesen & Roper, S.C. regarding  the use of social media and web-based email services:

Many articles have been written about the legal and business risks associated with the use of social media and web-based email services. However, the risk of using social media is heightened in the health care industry in light of a health care entity’s legal and regulatory obligations to protect the privacy and security of health care information. Health care entities need to be particularly familiar with the risks of using social media in the health care industry and methods for reducing those risks.

The DQA October 24, 2011 Memorandum

On October 24, 2011, the Wisconsin Division of Quality Assurance (“DQA”) issued numbered memorandum 11-026 entitled, “Using Social Media Platforms, such as Twitter, Facebook, MySpace and LinkedIn”. The Memo is available at www.dhs.wisconsin.gov/rl_DSL/Publications/11-026.htm.

The DQA definition of “Social Media” includes what one would normally consider social media, as well as “free and unencrypted web-based email services” such as Yahoo and Gmail, and web-based calendars. The purpose of the Memo is to “provide guidance to providers on the fast-changing landscape of the internet and the impact of using social networking and social media as a communications tool”.

DQA released the Memo to address concerns raised about (1) health care entities and their staff using web-based email accounts (e.g., Gmail) or web-based calendars (e.g., Yahoo Calendars) to convey patient or resident care information; and (2) health care entity staff members sharing protected health information on FaceBook.

The DQA notes that inappropriate use of Social Media or use of Social Media without adequate security protections may violate a patient’s or resident’s privacy rights. Moreover, DQA emphasizes that Social Media sites are now major targets of the hacker underground, creating further risk of a network security breach. DQA also warns health care entities of the potential for criminal and civil risks of using Social Media, (including criminal prosecution or civil actions under HIPAA) because it is the United States Department of Health and Human Services Office of Civil Rights—and not the Division of Quality Assurance—which has jurisdiction over such violations.

Risk Management Considerations With Regard to Entity Use of Social Media

DQA includes a number of recommendations for reducing the risks associated with the use of social media by health care entities.

First, the DQA recommends that each health care entity conduct a risk assessment to determine whether the entity or its staff members are utilizing Social Media in a manner that may violate patient or resident rights.

DQA also recommends that providers and staff members should be fully aware of the broad definition of “protected health information.” If a health care entity chooses to utilize a Social Media tool, it should insure that the information it discloses is “de-identified under HIPAA.” DQA points out that no health care provider should ever post any protected health information on-line without the appropriate written patient authorization. Merely omitting a patient’s name from a post does not make it a permissible disclosure. Posts that discuss the patient’s condition—even without disclosing the patient’s name—contain protected health information.

DQA emphasizes that “a covered entity should consider the need for a business associate agreement with a social media site, if the entity is uploading protected health information to the site. HIPAA makes it mandatory for all covered entities along with their business associates to ensure complete protection of patient health information, which they store, process and exchange between themselves.”

Finally, DQA recommends that health care entities should develop a social media policy that guides employees on the appropriate use of social media, and includes specific guidance (e.g., “Refrain from discussing patients, even in general terms.”). The organization should also provide staff with ongoing training on resident rights, privacy and security.

Marketing Uses of Social Media

DQA does not directly address the use by healthcare entities of social networking sites like FaceBook, Twitter or YouTube, or even the providers’ own websites, to promote their services or discuss advances they have made in healthcare. Many health care entities use videos, photos, and patient interviews to promote their services. If a health care entity posts a video, photograph, or patient interview of actual patients, that provider would be disclosing protected health information.

Any health care provider using protected health information in this manner should only do so with the express written authorization of the patient. Even with such authorization, the provider must be sure that the patient understands that when posting information online, the provider and the patient lose much control of the information. Although the provider could remove the materials if a patient withdraws authorization, the patient and the provider cannot get back any material that may have been downloaded by others.

Although not referenced in the Memo, health care providers should institute a social media policy which identifies who is permitted to use social media for the business purposes of the organization and what information may be posted on the company’s website or a social media web page.

Considerations for Staff Member’s Personal Use

One of the greatest risks of social media sites is that a health entity staff member may post protected information on the staff member’s social media page. The internet is filled with stories of hospital employees being fired for providing their opinions about a patient on a Facebook account, albeit without identifying the patient’s name. Given that any information disclosed about a patient or resident would likely constitute a breach of protected health information, it is imperative that providers inform staff that they are not to share any confidential information whether at work, or outside of work—including on their FaceBook pages or through Twitter (or in actual conversation with their family or friends). Staff should understand that they are not to share any patient information online—even if they are not naming the individual patient.

Additional Resources

Additional information on this issue is available through the HIPAA Collaborative of Wisconsin website, at www.hipaacow.org.

©2011 von Briesen & Roper, s.c

IRS Extends Transition Relief for Puerto Rico Qualified Plans to Participate in U.S. Group Trusts and Deadline to Transfer Assets

Posted in the National Law Review an article by attorney Nancy S. Gerrie and Jeffrey M. Holdvogt of McDermott Will & Emery regarding  U.S. employers with qualified employee retirement plans that cover Puerto Rico:

On December 21, 2011, the U.S. Internal Revenue Service (IRS) issued Notice 2012-6, which provides welcome relief for U.S. employers with qualified employee retirement plans that cover Puerto Rico employees.  Notice 2012-6 provides that the IRS will extend the deadline for employers sponsoring plans that are tax-qualified only in Puerto Rico (ERISA Section 1022(i)(1) Plans) to continue to pool assets with U.S.-qualified plans in group and master trusts described in Revenue Ruling 81-100 (81-100 group trusts) until further notice, provided the plan was participating in the trust as of January 10, 2011, or holds assets that had been held by a qualified plan immediately prior to the transfer of those assets to an ERISA Section 1022(i)(1) Plan pursuant to a spin-off from a U.S.-qualified plan under Revenue Ruling 2008-40.

Notice 2012-6 also extends the deadline for sponsors of retirement plans qualified in both the United States and Puerto Rico (dual-qualified plans) to spin off and transfer assets attributable to Puerto Rico employees to ERISA Section 1022(i)(1) Plans, with the resulting plan assets considered Puerto Rico-source income and not subject to U.S. tax.

There are now two separate deadlines:

    • First, in recognition of the fact that Puerto Rico adopted a new tax code in 2011 with significant changes to the requirements for qualified retirement plans, the IRS has extended the general deadline to December 31, 2012, for dual-qualified plans to make transfers to Puerto Rico-only plans, in order to give plan sponsors time to consider the effect of the changes made by the new tax code.
    • Second, in recognition of the fact that the IRS has not yet issued definitive guidance on the ability of an ERISA Section 1022(i)(1) Plan to participate in 81-100 group trusts, the IRS has extended the deadline for dual-qualified plans that participate in an 81-100 group trust to some future deadline, presumably after the IRS reaches a conclusion on the ability of a dual-qualified plan to participate in an 81-100 group trust, as described in Revenue Ruling 2011-1.

For more information on the issues related to participation of ERISA Section 1022(i)(1) Plans in 80-100 group trusts, see “IRS Permits Puerto Rico-Qualified Plans to Participate in U.S. Group and Master Trusts for Transition Period, Extends Deadline for Puerto Rico Spin-Offs.”

For more information on the issues plan sponsors should consider with respect to a dual-qualified plan spin-off and transfer of assets attributable to Puerto Rico employees to ERISA section 1022(i)(1) plans, see “IRS Sets Deadline for Transfers from Dual-Qualified to Puerto Rico-Only Qualified Plans.”

© 2011 McDermott Will & Emery

New Facebook Cases – No Protected Concerted Activity, But Is It Surveillance??

Posted in the National Law Review an article by Adam L. Bartrom and Gerald F. Lutkus of Barnes & Thornburg LLP regarding Facebook cases continue to be examined by the NLRB

Facebook cases continue to be examined by the NLRB as a new technology cloaked in traditional case law.  The NLRB’s General Counsel has recently decided to dismiss three complaints brought by terminated employees who were fired for their Facebook posts.  In all three cases, the GC found the conduct not to be protected concerted activity under Section 7 of the NLRA.  That approach is consistent with the GC’s memo earlier this year which emphasized that content and context were key in analyzing whether disciplinary action brought as a result of social media chatter violated the NLRA.  A recent blog post on the topic appears here. To access the GC’s office memoranda on these cases, click here.  All three continue to show the NLRB’s focus on whether the Facebook chatter is merely an expression of individual gripes or is the chatter an effort to initiate group dialogue or group action.  Employers must continue to evaluate decisions to discipline for social media postings within that context.

 However, buried in one of the opinions, Intermountain Specialized Abuse Treatment Center, is a provocative and concerning analysis by the GC’s office regarding union surveillance.  The Advice Memorandum concludes that it agrees with the Regional Director that the Employer did not unlawfully create the impression that it was engaged in surveillance of protected union activity by having knowledge of the Facebook post.  What??  The memorandum states that employer surveillance or creation of an impression of surveillance constitutes unlawful interference with Section 7 rights.  Here, there was no such impression of surveillance because the employer received the Facebook information from another employee and the conduct at issue turned out not to be protected activity.  However, the memorandum certainly raises the question of whether an employer practice to examine Facebook posts on a regular or even on an as needed basis would violate Section 7 rights.  The jury is still out on that issue.  Stay tuned.

© 2011 BARNES & THORNBURG LLP