It’s Election Time: Time Off to Vote, Political Activities, and Political Speech in the Workplace

With Election Day quickly approaching, it is the right time for employers to refresh themselves on the various protections that may exist for their employees when it comes to voting and other political activities. Below is an overview of employees’ rights related to voting and other political activities leave, as well as protections for political speech and activity both in and outside the workplace.

Voting Leave Laws

Approximately thirty states require that employers provide their employees with some form of time off to vote. Twenty-one of these states require that the leave be paid. The exact contours of these laws – such as the amount of leave, notice requirements, and whether there is an exception when the employee has sufficient time outside of working hours to vote – vary by state. For example:

  • In New York, employers must provide leave to employees who do not have sufficient time outside of working hours to vote. An employee is deemed to have sufficient time to vote if the polls are open for four consecutive hours before or after the employee’s shift. Employees who do not have such a four-hour window are eligible to take the amount of leave that will – when added to their voting time outside working hours – enable them to vote, up to two hours of which must be without loss of pay. Employees may take time off for voting only at the beginning or end of their shift, as designated by the employer, unless otherwise mutually agreed to between the employee and employer. Employees are required to notify their employer that working time off to vote is needed between two and ten working days before the election.
  • Similarly, in California, employees are entitled to sufficient time off to vote, up to two hours of which must be paid. Unless the employer and employee agree otherwise, the employee must take the leave at the beginning or end of the employee’s shift, whichever allows the most time to vote and the least time off from work. Employees are required to provide notice that time off to vote is needed at least two working days before the election.
  • In the Washington, D.C., employees are entitled to up to two hours of paid leave to vote in either an election held in D.C. if the employee is eligible to vote in D.C., or in an election held in the jurisdiction in which the employee is eligible to vote. Employees must submit requests for leave a reasonable time in advance of the election date. Employers may specify the hours during which employees may take leave to vote, including requiring employees to vote during the early voting period or vote at the beginning or end of their shift during early voting or election day.
  • In Illinois, employers must provide two hours of paid voting leave to employees whose shifts begin less than two hours after the opening of the polls and end less than two hours before the closing of the polls. Employees must provide notice of the need for leave before the day of the election.
  • In Maryland, employees are entitled to up to two hours of paid voting leave, unless the employee has at least two non-working hours to vote while the polls are open. Employees must furnish proof to their employers that they either voted or attempted to vote, which can be in the form of a receipt issued by the State Board of Elections.

Certain states, includingNew York, California, and Washington, D.C., require that employers post a notice of an employee’s right to take leave in a conspicuous location before the election. Sample notices have been published by the New York State Board of Elections, the California Secretary of State, and D.C. Board of Elections.

Other Political Leave Laws

Some states require that employers provide leave for political-related reasons beyond just voting. For example:

  • AlabamaDelawareIllinoisKentuckyNebraskaOhioVirginiaand Wisconsin require that certain employers provide unpaid leave for employees to serve as election judges or officials on Election Day. In Minnesota, employees are entitled to paid leave for this reason; however, employers may reduce an employee’s salary or wages by the amount the employee receives as compensation for their service as an election judge.
  • Minnesota and Texas require that certain employers provide employees with unpaid leave to attend party conventions and/or party committee meetings.
  • ConnecticutIowaMaineNevadaOregonSouth Dakotaand Vermont require that certain employers provide employees with an unpaid leave of absence to serve as elected members of state government. In Iowa, employees are also entitled to leave to serve in a municipal, county, or federal office.
  • In Vermont, employees may take unpaid leave to vote in annual town hall meetings.

Some of these laws only apply to larger employers. For example, in Nevada, employers with at least fifty employees are required to provide leave for employees to serve as members of the state legislature. State laws also vary with respect to the amount of notice that employees must provide to their employers in order to be eligible for leave.

Political Speech in the Workplace

In our current political climate, many employers are concerned with what steps they can take regarding political speech and activity in the workplace. When these discussions or activities occur during working hours, they have the potential to negatively impact performance, productivity, or even possibly cross the line into bullying or unlawful harassment.

When employees publicly attend political rallies or support causes on social media, they may also (intentionally or not) create an actual, or perceived, conflict of interest with their employer. The complicated question of what exactly employers can do around employee political speech and activity is governed by various sources of law, some of which is discussed below.

Additionally, for employers with designated tax statuses, certain political speech can give pose risk to an organization’s tax-exempt status. Many tax exempt-organizations are subject to significant restrictions on lobbying and political activities. For example, 501I(3) organizations risk losing their tax-exempt status if they engage in political campaign activities or if a substantial part of its activities involves lobbying. Speech by an employee that constitutes political campaign or lobbying activity risks being attributed to an organization if an employee’s speech is seen as representative of the organization and being ratified by the organization. For example, if an employee urges their social media followers to contact their state representative about proposed legislation, this risks carrying the inference that the employee was speaking on behalf of the organization.

Employee “Free Speech”

There is no general right to “free speech” in a private sector workplace. Because the U.S. Constitution is primarily concerned with state actors, the First Amendment does not prevent private employers from prohibiting or restricting political speech in the workplace. Therefore, subject to certain exceptions discussed below, private sector employers are generally able to enact prohibitions around discussing politics at work and discipline employees for violating such policies.

However, as noted, an employer’s ability to restrain political speech in the workplace comes with some restrictions. At the federal level, Section 7 of the National Labor Relations Act (“NLRA”), which applies to both unionized and non-union employees, protects certain “concerted activities” of employees for the purposes of “mutual aid or protection.” Political speech or activity that is unrelated to employment, such as an employee distributing pamphlets generally encouraging co-workers to vote for a candidate or support a political party, would not likely be covered or protected by the NLRA. The NLRA therefore does not universally prevent employers from prohibiting political discussions or activities in the workplace.

However, political speech may be protected by the NLRA when it relates to the terms or conditions of employment, such as communicating about wages, hours, workplace safety, company culture, leaves, and working conditions. Therefore, an employee encouraging co-workers to vote for a candidate because the candidate supports an increase in the minimum wage might claim to come under the protection of the NLRA.

State laws may also place certain limitations on employer attempts to restrict employee political speech. For example, Connecticut law prohibits employers from taking adverse action against employees for exercising their First Amendment rights, provided that such activity does not interfere with the employee’s job performance or the employment relationship.

Lawful Outside Activity/Off-Duty Conduct

Many states have laws that prohibit adverse action against employees based on lawful activities outside the workplace, which may include political activities. For example:

  • In approximately a dozen states, employers are prohibited from preventing employees from participating in politics or becoming candidates for public office. New York Labor Law § 201-d prohibits employers from discharging or otherwise discriminating against employees because of their “political activities outside of working hours, off of the employer’s premises and without use of the employer’s equipment or other property, if such activities are legal.” Political activities include (1) running for public office, (2) campaigning for a candidate for public office, or (3) participating in fund-raising activities for the benefit of a candidate, political party, or political advocacy group. Similar laws exist in CaliforniaLouisiana, and Minnesota, among other states.
  • Other states – including DelawareFloridaMassachusetts, and New Jersey– prohibit employers from attempting to influence an employee’s vote in an election. In Florida, “[i]t is unlawful for any person … to discharge or threaten to discharge any employee … for voting or not voting in any election, state, county, or municipal, for any candidate or measure submitted to a vote of the people.” A dozen or so states approach this issue in a more limited fashion by prohibiting employers from attaching political messages to pay envelopes.
  • At least two states, Illinois and Michigan, prohibit employers from keeping a record of employee’s associations, political activities, publications, or communications without written consent.
  • Washington, D.C. prohibits discrimination in employment on the basis of political affiliation. Despite its seemingly broad scope, this statute has been interpreted to only protect political party membership and not (1) membership in a political group, or (2) other political activities, such as signing a petition.

These laws vary considerably from state to state, so it is important for employers to consult the laws when considering policies or rules around employee political activity.

* * *

As the election approaches and early voting takes place, employers should review the applicable laws for each jurisdiction in which they operate and ensure that their policies and practices are compliant. Employers should also ensure that managers are well versed in the employer’s policies around voting and political speech and activities so that they can properly respond as situations arise.

AI Regulation Continues to Grow as Illinois Amends its Human Rights Act

Following laws enacted in jurisdictions such as ColoradoNew York CityTennessee, and the state’s own Artificial Intelligence Video Interview Act, on August 9, 2024, Illinois’ Governor signed House Bill (HB) 3773, also known as the “Limit Predictive Analytics Use” bill. The bill amends the Illinois Human Rights Act (Act) by adding certain uses of artificial intelligence (AI), including generative AI, to the long list of actions by covered employers that could constitute civil rights violations.

The amendments made by HB3773 take effect January 1, 2026, and add two new definitions to the law.

“Artificial intelligence” – which according to the amendments means:

a machine-based system that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments.

The definition of AI includes “generative AI,” which has its own definition:

an automated computing system that, when prompted with human prompts, descriptions, or queries, can produce outputs that simulate human-produced content, including, but not limited to, the following: (1) textual outputs, such as short answers, essays, poetry, or longer compositions or answers; (2) image outputs, such as fine art, photographs, conceptual art, diagrams, and other images; (3) multimedia outputs, such as audio or video in the form of compositions, songs, or short-form or long-form audio or video; and (4) other content that would be otherwise produced by human means.

The plethora of AI tools available for use in the workplace continues unabated as HR professionals and managers vie to adopt effective and efficient solutions for finding the best candidates, assessing their performance, and otherwise improving decision making concerning human capital. In addition to understanding whether an organization is covered by a regulation of AI, such as HB3773, it also is important to determine whether the technology being deployed also falls within the law’s scope. Assuming the tool or application is not being developed inhouse, this analysis will require, among other things, working closely with the third-party vendor providing the tool or application to understand its capabilities and risks.

According to the amendments, covered employers can violate the Act in two ways. First, an employer that uses AI with respect to – recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment – and which has the effect of subjecting employees to discrimination on the basis of protected classes under the Act may constitute a violation. The same may be true for employers that use zip codes as a proxy for protected classes under the Act.

Second, a covered employer that fails to provide notice to an employee that the employer is using AI for the purposes described above may be found to have violated the Act.

Unlike the Colorado or New York City laws, the amendments to the Act do not require a impact assessment or bias audit. They also do not provide any specifics concerning the notice requirement. However, the amendments require the Illinois Department of Human Rights (IDHR) to adopt regulations necessary for implementation and enforcement. These regulations will include rules concerning the notice, such as the time period and means for providing same.

We are sure to see more regulation in this space. While it is expected that some common threads will exist among the various rules and regulations concerning AI and generative AI, organizations leveraging these technologies will need to be aware of the differences and assess what additional compliance steps may be needed.

The Privacy Patchwork: Beyond US State “Comprehensive” Laws

We’ve cautioned before about the danger of thinking only about US state “comprehensive” laws when looking to legal privacy and data security obligations in the United States. We’ve also mentioned that the US has a patchwork of privacy laws. That patchwork is found to a certain extent outside of the US as well. What laws exist in the patchwork that relate to a company’s activities?

There are laws that apply when companies host websites, including the most well-known, the California Privacy Protection Act (CalOPPA). It has been in effect since July 2004, thus predating COPPA by 14 years. Then there are laws the apply if a company is collecting and using biometric identifiers, like Illinois’ Biometric Information Privacy Act.

Companies are subject to specific laws both in the US and elsewhere when engaging in digital communications. These laws include the US federal laws TCPA and TCFAPA, as well as CAN-SPAM. Digital communication laws exist in countries as wide ranging as Australia, Canada, Morocco, and many others. Then we have laws that apply when collecting information during a credit card transaction, like the Song Beverly Credit Card Act (California).

Putting It Into Practice: When assessing your company’s obligations under privacy and data security laws, keep activity specific privacy laws in mind. Depending on what you are doing, and in what jurisdictions, you may have more obligations to address than simply those found in comprehensive privacy laws.

Whistleblower Tax Fraud Lawsuit Against Bitcoin Billionaire Settles for $40 Million

MicroStrategy’s founder is alleged to have falsified tax documents for ten years. The settlement resolves the first whistleblower lawsuit filed under 2021 amendments to the DC False Claims Act.

Key Takeaways
On June 3, the District of Columbia Office of the Attorney General announced the $40 million settlement with Michael Saylor
It is the largest income tax recovery in D.C. history
The settlement, which resolves a qui tam lawsuit filed under the DC False Claims Act, underscores the power of whistleblowers in combatting tax fraud
On June 3, the District of Columbia Office of the Attorney General (OAG) made a landmark announcement. The billionaire founder of MicroStrategy Incorporated, Michael Saylor, settled a tax fraud lawsuit for a staggering $40 million. This case, stemming from a qui tam whistleblower suit filed under the District’s False Claims Act, marks a significant milestone in the fight against tax fraud. The OAG declared this as the largest income tax recovery in D.C. history, underscoring the importance of this case.

The DC False Claims Act
This settlement is not just a victory for the District but also a testament to the power of whistleblowers. Under the 2021 extension of the D.C. False Claims Act, individuals have the power to file qui tam suits against large companies and suspected tax evaders. The 2021 amendments even offer monetary awards to those who report tax cheats. This settlement, the first settlement under these amendments, serves to put would-be tax cheats on notice.

As the District of Columbia expands its arsenal against tax fraud, other states should take note. The DC False Claims Act, now covering tax fraud, has become a powerful tool in the fight against financial misconduct. With the District joining the ranks of Delaware, Florida, Illinois, Indiana, Nevada, New York, and Rhode Island as states where false claims suits may be brought based on tax fraud claims, the fight against tax cheats looks promising.

The Case Against Saylor
In 2021, unnamed whistleblowers filed a lawsuit against Saylor, alleging that he had defrauded the District and failed to pay income taxes from 2014 to 2020. The OAG independently investigated these claims and filed a separate complaint against Saylor. The District’s lawsuit alleged that Saylor claimed to be a resident of Florida and Virginia to avoid paying over $25 million in income taxes. Another suit was filed against MicroStrategy, claiming it falsified records and statements that facilitated Saylor’s tax avoidance scheme.

The District’s allegations against Saylor paint a picture of a lavish lifestyle. Saylor is accused of unlawfully withholding tens of millions in tax revenue by claiming to live in a lower tax jurisdiction to avoid paying D.C. income taxes. The OAG’s investigation revealed that Saylor owned a 7,000-square-foot luxury penthouse overlooking the Potomac Waterfront and docked multiple yachts in the Washington Harbor. He purchased three luxury condominium units at 3030 K Street NW to combine into his current residence and a penthouse unit at the Eden Condominiums, 2360 Champlain St. NW. The Attorney General compiled several posts from Saylor’s Facebook, in which he boasted about the view from his D.C. residence.

Whistleblower Tax Fraud Lawsuit Against Bitcoin Billionaire Settles For $40 Million

Furthermore, the OAG found evidence that Saylor purchased a house in Miami Beach, obtained a Florida driver’s license, registered to vote in Florida, and falsely listed his residence on MicroStrategy W-2 forms. Attorney General Brian L. Schwalb stated, “Saylor openly bragged about his tax-evasion scheme, encouraging his friends to follow his example and contending that anyone who paid taxes to the District was stupid.”

The lawsuits allege that records from Saylor’s security detail provide Saylor’s physical location and travel from 2015 to 2020 and show that across six years, Saylor spent 449 days in Florida and 1,397 days in the District. Saylor allegedly directed MicroStrategy employees to aid his scheme to avoid paying District income taxes. The District claims that for the last ten years, MicroStrategy has falsely reported its income tax exemption on Saylor’s wages, claiming he was tax-exempt due to his residential status.

Saylor agreed to pay the District $40 million to resolve the allegations against him and MicroStrategy.

A copy of the settlement can be found here.

Copyright Kohn, Kohn & Colapinto, LLP 2024. All Rights Reserved.

by: Whistleblower Law at Kohn Kohn Colapinto of Kohn, Kohn & Colapinto

For more on Whistleblowers, visit the NLR Criminal Law / Business Crimes section.

Sexual Harassment Prevention Training Deadline Approaches for Chicago Employers

As a reminder to employers in Chicago, anti-sexual harassment training is required by Chicago’s Human Rights Ordinance and must be completed by July 1, 2023.  This requirement applies to all Chicago employers, regardless of size or industry.

The training consists of one (1) hour of anti-sexual harassment training for all non-supervisory employees and two (2) hours of anti-sexual harassment training for supervisory employees.  Regardless of supervisory status, all employees must also undergo one (1) hour of bystander training.  Employers must provide training on an annual basis.  Additional information about training requirements can be found here. Employers who fail to comply may be subject to penalties.

© 2023 Vedder Price

Ethylene Oxide Verdict First of Its Kind, and It’s Eye Opening!

Our prior reports discussed when an ethylene oxide case would go to verdict, and what the ensuing result would look like.  We no longer need to speculate.  On September 19, 2022, a Cook County (Illinois) jury awarded $363 million to a plaintiff who alleged that she developed breast cancer as a result of ethylene oxide emissions from the Sterigenics Willowbrook plant.  This was the first ethylene oxide personal injury case to go to trial, but there are hundreds of cases behind it waiting their turn.

Trial

After a five week trial in the Circuit Court of Cook County, Illinois, Law Division (Sue Kamuda v. Sterigenics et al, case number 2018-L-010475), the jury returned a verdict in the amount of $363 million.  Plaintiff had requested $21 million in compensatory damages and $325 million in punitive damages.

Plaintiff Kamuda argued that the ethylene oxide utilized at the Willowbrook plant, opened in 1984 and used primarily to sterilize medical equipment, caused serious cancer and reproductive health risks. Kamuda alleged that the company failed to analyze how long the chemical would stay in the air in the Willowbrook community or the distance it would travel. Further, Kamuda argued that Sterigenics recklessly failed to install emission controls decades earlier to reduce releases of the chemical.

For its part, Sterigenics argued that plaintiff Kamuda’s reliance on risk assessment and regulatory studies inaccurately led to her assertion that her breast cancer resulted in part from the plant’s ethylene oxide emissions.

Notably, the facility was closed a few years ago after the state of Illinois issued a seal order in February 2019 directing that ethylene oxide emissions had to be reduced significantly. Ultimately, the company decided to keep the facility closed.

Analysis

With this very large jury verdict, plaintiff firms will surely be pushing to get their ethylene oxide cases to trial, or, at a minimum, leverage steep pre-trial settlements.  Further, plaintiff firms will surely recruit new plaintiffs who allege some type of cancer as a result of residing in the vicinity of an ethylene oxide plant.

The next ethylene oxide case to go trial is scheduled for two weeks from now in the same court, though with different plaintiff counsel and judge, as well as a different alleged disease (leukemia).

We note that it remains to be seen whether the Kamuda verdict will be appealed. It also remains to be seen whether this verdict is aberrational or is a bellwether for future trials. Will juries return verdicts based on one type of cancer but not for another?  We will continue to report as these ethylene oxide trials go to verdict and analyze the ramifications.

©2022 CMBG3 Law, LLC. All rights reserved.

Illinois Department of Labor Publishes Guidance for Employers Seeking Equal Pay Registration Certificate

Effective March 24, 2022, the Illinois Equal Pay Act (IEPA) was amended to require private businesses with more than 100 employees in Illinois to obtain an Equal Pay Registration Certificate (EPRC) by March 23, 2024, and every two years thereafter.

To apply for the EPRC, businesses must submit the following to the Illinois Department of Labor (IDOL): (1) a filing fee; (2) an equal pay compliance statement; (3) a copy of the employer’s most recently filed EEO-1 report; and (4) a list of employees separated by gender and the race and ethnicity categories as reported in the employer’s most recently filed EEO-1 report, and the total wages paid to each employee during the past calendar year.

The IDOL recently updated its Frequently Asked Questions (FAQs) for the EPRC, addressing, among other things, the application and submission processes, fee requirements, recertification, publicly available data, and penalties for employer noncompliance.  Here are key takeaways:

  • All employees based in Illinois, including those working remotely, should be included in the total employee count for reporting purposes. An employer’s total employee count includes the total number of people employed who worked in or were based out of Illinois on December 31 of the 12-month calendar year immediately prior the year the employer is required to submit an EPRC application.
  • For reporting purposes, “wages” means any compensation paid to an employee by an employer pursuant to an employment contract or agreement between the two parties, including wages, salaries, earned commissions, earned bonuses, stocks and ownership shares. This does not include retirement health insurance benefits, or other fringe benefits.
  • If an employer’s submitted wage data in its EPRC application shows that the employer is paying unequal wages to male and female employees or to African-American and non-African American employees, the IDOL may initiate its own investigation pursuant to Sections 10(a) and 15(c) of the IEPA and Section 320.200 of the IEPA regulations.
  • Before any fines may be imposed for a violation of the IEPA, the IDOL will provide notice to an employer that violates the IEPA and inadvertently fails to file an initial EPRC application or recertification that they have 30 calendar days to submit the application or recertification. If the employer fails to do so, it shall be fined up to $10,000.
  • An employer that falsifies or misrepresents data on an EPRC application faces suspension or revocation of the EPRC and civil penalties up to $10,000.
  • Current employees subject to the IEPA may request anonymized data from the IDOL regarding their job classification or title and the pay for that classification.

Illinois employers should audit their pay practices to ensure that any differences in wages amongst employees of similar job classifications are justified by legitimate, non-discriminatory reasons.

© 2022 Proskauer Rose LLP.
For more articles covering labor law updates, visit the NLR Labor & Employment section.

FTC Imposes Record-Setting $10M Fine Against Multistate Auto Dealer, Settling Charges of Racial Discrimination and Unauthorized Charges

On March 31, the FTC and Illinois State Attorney General announced a settlement of charges against a large, multistate auto dealer that allegedly discriminated against black consumers and included illegal junk fees for unwanted “add-ons” in customers’ bills.

Citing violations under the FTC Act, TILA, ECOA, and comparable Illinois laws, the complaint alleged that eight of the dealerships and two general managers of Illinois dealerships tacked on illegal fees for unwanted products to customers’ bills, often at the end of hours-long negotiations. These add-ons were allegedly buried in the consumers’ purchase contracts, which were sometimes upwards of 60-pages long, and sometimes added despite consumers specifically declining the products.

In addition, employees of the auto dealership also allegedly discriminated against black consumers during the process of financing vehicle purchases.  On average, black customers at the dealerships were charged $190 more in interest and paid $99 more for similar add-ons than comparable non-Latino white customers.

The multistate dealer will have to pay $10 million to settle the lawsuit per the stipulated order, the largest monetary judgment ever required in an FTC auto lending case.

Putting it into Practice:  From FTC Chair Lina Khan and Commissioner Rebecca Slaughter, the FTC appears poised to allege violations of the FTC Act’s prohibition on unfair acts or practices in light of discrimination found to be based on disparate treatment or having a disparate impact.  Their statement discusses how discriminatory practices can be evaluated under the FTC’s three-part unfairness test and concludes that such conduct fits squarely into the kind of conduct that can be addressed by the FTC’s unfairness prong.  This joint statement echoes similar announcements by CFPB Director Chopra about the use of unfairness to combat discrimination more broadly (we discussed Director Chopra’s statement and updates to the CFPB’s exam procedures in a recent Consumer Finance and FinTech blog post here).

The size of the financial judgment in this case underscores the seriousness with which the FTC takes discriminatory practices in consumer credit transactions entered into by entities over which they have authority, which includes auto dealerships.  As the FTC becomes increasingly focused on enforcement of key laws to protect consumers against discriminatory conduct, companies should use these latest agency pronouncements as a reason to be on high alert for potential discriminatory outcomes in their business activities, even if unintentional.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.

BREAKING: Seventh Circuit Certifies BIPA Accrual Question to Illinois Supreme Court in White Castle

Yesterday the Seventh Circuit issued a much awaited ruling in the Cothron v. White Castle litigation, punting to the Illinois Supreme Court on the pivotal question of when a claim under the Illinois Biometric Privacy Act (“BIPA”) accrues.  No. 20-3202 (7th Cir.).  Read on to learn more and what it may mean for other biometric and data privacy litigations.

First, a brief recap of the facts of the dispute.  After Plaintiff started working at a White Castle in Illinois in 2004, White Castle began using an optional, consent-based finger-scan system for employees to sign documents and access their paystubs and computers.  Plaintiff consented in 2007 to the collection of her biometric data and then 11 years later—in 2018—filed suit against White Castle for purported violation of BIPA.

Plaintiff alleged that White Castle did not obtain consent to collect or disclose her fingerprints at the first instance the collection occurred under BIPA because BIPA did not exist in 2007.  Plaintiff asserted that she was “required” to scan her finger each time she accessed her work computer and weekly paystubs with White Castle and that her prior consent to the collection of biometric data did not satisfy BIPA’s requirements.  According to Plaintiff, White Castle violated BIPA Sections 15(b) and 15(d) by collecting, then “systematically and automatically” disclosing her biometric information without adhering to BIPA’s requirements (she claimed she did not consent under BIPA to the collection of her information until 2018). She sought statutory damages for “each” violation on behalf of herself and a putative class.

White Castle before the district court had moved to dismiss the Complaint and for judgment on the pleadings—both of which motions were denied.  The district court sided with Plaintiff, holding that “[o]n the facts set forth in the pleadings, White Castle violated Section 15(b) when it first scanned [Plaintiff’s] fingerprint and violated Section 15(d) when it first disclosed her biometric information to a third party.”  The district court also held that under Section 20 of BIPA, Plaintiff could recover for “each violation.”  The court rejected White Castle’s argument that this was an absurd interpretation of the statute not in keeping with legislative intent, commenting that “[i]f the Illinois legislature agrees that this reading of BIPA is absurd, it is of course free to modify the statue” but “it is not the role of a court—particularly a federal court—to rewrite a state statute to avoid a construction that may penalize violations severely.”

White Castle filed an appeal of the district court’s ruling with the Seventh Circuit.  As presented by White Castle, the issue before the Seventh Circuit was “[w]hether, when conduct that allegedly violates BIPA is repeated, that conduct gives rise to a single claim under Sections 15(b) and 15(d) of BIPA, or multiple claims.”

In ruling yesterday this issue was appropriate for the Illinois Supreme Court, the Seventh Circuit held that “[w]hether a claim accrues only once or repeatedly is an important and recurring question of Illinois law implicating state accrual principles as applied to this novel state statute.  It requires authoritative guidance that only the state’s highest court can provide.”  Here, the accrual issue is dispositive for purposes of Plaintiffs’ BIPA claim.  As the Seventh Circuit recognized, “[t]he timeliness of the suit depends on whether a claim under the Act accrued each time [Plaintiff] scanned her fingerprint to access a work computer or just the first time.”

Interestingly, the Seventh Circuit drew a comparison to data privacy litigations outside the context of BIPA, stating that the parties’ “disagreement, framed differently, is whether the Act should be treated like a junk-fax statute for which a claim accrues for each unsolicited fax, [], or instead like certain privacy and reputational torts that accrue only at the initial publication of defamatory material.”

Several BIPA litigations have been stayed pending a ruling from the Seventh Circuit in White Castle and these cases will remain on pause going into 2022 pending a ruling from the Illinois Supreme Court.  While some had hoped for clarity on this area of BIPA jurisprudence by the end of the year, the Seventh Circuit’s ruling means that this litigation will remain a must-watch privacy case going forward.

Article By Kristin L. Bryan of Squire Patton Boggs (US) LLP

For more data privacy and cybersecurity legal news, click here to visit the National Law Review.

© Copyright 2021 Squire Patton Boggs (US) LLP

Excessive Spending During Divorce

Once a divorce is looming, some people change their spending habits.  Some start excessive spending expending money on purchases that they never did before, while others start taking trips or signing up for classes. Is any of this spending appropriate during the time you are going through your divorce?

I often run into clients who have been counseled to spend a lot more, apparently to show what that person’s needs are and to validate the request for more money.  I think it is fair to say that this is an emotional time for everyone, and some people are not acting in the right way.  You shouldn’t be spending any differently during a divorce then you would typically  The law in Illinois-domestic relations division, wants everyone to maintain the status quo.  If you always spent $400 a month getting your hair done, then it is not a problem.  But if you never used to go and now you start, the court is going to look at the reasonableness of what the person is doing.

Spending in Ways Not Beneficial to Your Marriage?

If you believe that the excessive spending your spouse is doing is not beneficial to your marriage, you might have a claim for dissipation.  When the court divides the marital property in your divorce case, dissipation is something that is considered by the court.  What exactly is dissipation?

Is it the Dissipation of Marital Assets?

Dissipation is the spending of marital monies for the benefit of one spouse for purposes unrelated to the marriage while the marriage is undergoing an irreconcilable breakdown. The party alleging dissipation must first demonstrate that dissipation has occurred, and once that hurdle is met, the burden shifts to the other party to prove the money was used for a legitimate purpose.

Illinois law requires that you file a document, called a Notice of Intent to Claim Dissipation.  That document must be filed 30 days after discovery closes and no later than 60 days before the trial.  The notice has to tell the court when the breakdown in your marriage occurred.  This is an important element that many people overlook.  People are allowed to spend money however they like, and just because you did not like it that your spouse spent $45,000 on a race car, does not necessarily mean it is dissipation.

Is the Marriage Irretrievably Broken?

The first question you need to ask is whether your marriage has irretrievably broken down. Although you might not have been happy with the expenditure for the car, were you still a couple?  Were you still going out with friends or going out to dinner together?  I have had a couple of divorce trials that had to examine the sexual nature of the relationship.  Are you still engaging in marital relations?  Share the same bedroom?  These all need to be examined if your spouse indicates that you were still a couple and there was not a breakdown.  Without a break down in the marriage, an irretrievable breakdown, you cannot allege dissipation.

But let us say you can prove that your marriage underwent an irretrievable breakdown.  You can prove that your spouse has been living in the basement for a year, you never go out together, you take separate vacations and you have different friends.  Then you have made it through the first hurdle and an examination of the spouse’s expenses needs to be looked at.

One thing the court always asks is “how long has this been going on?”  I once had a case in trial where the wife claimed that the husband’s weekly bowling was dissipation.  My client testified that he had been bowling weekly for over ten years.  The continuation of his bowling habit continued while they were married and after they separated.  The judge did not find dissipation.

Spouse Commits a Criminal Act?

What about when a person has a spouse who commits a criminal act?  The spouse is arrested and spends money on a lawyer?  Loses his job?  The money the spouse spent on a lawyer could be considered dissipation.

Is There an Extramarital Affiar?

What about a claim for dissipation filed by the wife when she found out her husband had had an affair and was paying child support to the other woman?  Or if the wife found out that her husband had been cheating on her for the past 5 years?  If the family continued to go on vacation and act like a couple, and their marriage had not broken down, then no dissipation.

I remember when golf pro Tiger Woods was going through a divorce and his wife found out about his extramarital affairs and the money spent on them.  There could not be a claim for dissipation because her marriage had not broken down, but you have to wonder if it would have broken down a lot earlier if she knew.  We can speculate as to the answer and it seems unfair that if your spouse hides something from you, that it cannot be dissipation.  If you had known, you would likely have broken up.  But that is not the way our law works — you have to be irretrievably broken in order to claim dissipation.

I have had trials where the parties had been separated for 20 years, but neither had gotten around to filing for divorce. Each side made claims of dissipation going back 10 years or more.  These types of cases resulted in a change to our statute and now you have a time limit on the claim for dissipation.  No dissipation shall be deemed to have occurred prior to 3 years after the party claiming dissipation knew or should have known of the dissipation, but in no event prior to 5 years before the filing of the petition for dissolution of marriage.

Watch Your Marital Finances for Excessive Spending

Marriages require some trust between the two, so it is hard when your spouse ruins the trust you placed in them.  But if you do not pay attention to your finances, or what is on the credit card statements, you could be in a position where dissipation cannot be claimed by you for the excessive spending in the event of a divorce.

If you decide to go to trial on the issue, then you will need to establish which expenditures are dissipation.  Is paying the mortgage from the spouse’s retirement account dissipation?  Typically, you would not think so. But each case is fact-specific.

 


 

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