GT L&E Blog

Global Developments In Labor & Employment Law

GT Alert — Student-Athletes or Statutory Employees?

Posted in Employee Policies, State Law, Unions

In a closely-watched decision, a Regional Director for the National Labor Relations Board ruled on March 26, 2014 that football players receiving scholarships at Northwestern University are “employees” and eligible to unionize. This landmark decision marks a potential change in Board law that could possibly alter the landscape of union organizing; at least regarding private colleges and universities. Higher Education institutions should be proactive and at least begin thinking about the many and varied issues presented by the Northwestern case as it percolates through the NLRB and court system.

To view the GT Alert on www.gtlaw.com, please click here.

To view the GT Alert as a PDF, please click here.

GT Alert — Join the Party. Another California-based Former Employee Challenges Out-of-State Company’s Non-Compete Provisions as Unfair Business Practice

Posted in Employee Policies, State Law

If your client has California operations and isn’t aware, it could end up like the employer did in Shomit James v. Globus Medical, Inc. James demonstrates that the competition in California for talent remains high, that competitors are increasingly aggressive about hiring employees your client may think are “locked up,” and will offensively challenge standard non-compete, no-hire and non-solicitation provisions with declaratory relief actions.  James serves as a valuable reminder of what is becoming an established practice in California — former employees (often bankrolled by their new employer) sue to invalidate these provisions as void and unenforceable under California law.  To make matters worse they often allege that, in seeking to enforce such restrictions, your client committed unfair business practices.

To view the GT Alert on www.gtlaw.com, please click here.

To view the GT Alert as a PDF, please click here.

Administration Sets Stage to Increase Number of Workers Eligible for Overtime Pay

Posted in Wage & Hour

On March 13, 2014, the President signed a Presidential Memorandum directing the Department of Labor (DOL) to “propose revisions to modernize and streamline … existing overtime regulations.” Although not mentioned directly in the Memorandum, the purpose behind the directive is to increase the number of workers eligible for overtime pay by making it more difficult for workers to qualify for exemptions from the FLSA’s overtime protections.

In a brief speech before signing the Memorandum, the President opined that “millions of Americans aren’t getting the extra pay they deserve … because an exception that was originally meant for high-paid, white-collar employees now covers workers earning as little as $23,660 a year.” The President further noted that for those workers who fall under this exception, “[i]t doesn’t matter if what you do is mostly physical work like stocking shelves … your employer doesn’t have to pay you a single extra dime.”

Currently, at this early stage, the extent to which the DOL will propose revisions to overtime regulations remains unclear. However, it is expected that the DOL’s proposed revisions will include, at a minimum, a proposed increase to the $455 per week salary threshold necessary to qualify for several “white collar” exemptions (although it is unclear just how high a number the DOL will propose) and a proposed revamping of the executive exemption’s duties test so that workers must devote a fixed percentage of their time to managerial tasks in order to qualify for that exemption. Both revisions would move federal law closer to California’s employee-friendly wage laws that include an elevated $640 per week salary threshold for certain “white collar” exemptions, and require workers to spend at least 50% of their time performing managerial tasks to qualify for the executive exemption.

The directive has initiated what could prove to be the most substantial changes to federal wage-and-hour law in over a decade. The Administration has promised that the DOL will consult with both workers and businesses in drafting the proposed revisions, but employers can certainly expect that the revamped rules will be designed to increase the number of overtime-eligible employees. Currently, there is no timeline for when we can expect to see the initial proposed revisions, and it is likely to be a long process that should include significant public comment. We will continue to keep you apprised of any developments on this issue as they arise.

Will Your Company Be Wearing New SOX? – Supreme Court Expands Sarbanes-Oxley Whistleblower Protection to Employees of Privately-Held Companies

Posted in Whistleblower

In a highly-anticipated decision having far-ranging impact for privately owned employers, the U.S. Supreme Court held that the whistleblower protections under § 1514A of the Sarbanes-Oxley Act of 2002 (“SOX”) extend not only to employees of publicly-held companies, but also to the employees of the privately-held “contractors” who provide services to public companies.  Lawson v. FMR LLC, No. 12-3 (March 4, 2014).  This means that privately owned companies face lawsuits from employees asserting claims of retaliation for having reported fraud or other wrongful conduct prohibited by SOX.

Plaintiffs in Lawson were employees of privately-held investment advisory and management firms that provided services to the Fidelity family of mutual funds, publicly-traded companies which themselves had no employees.  Plaintiff Jackie Lawson, a Senior Director of Finance, alleged that she was retaliated against for questioning whether certain cost accounting methodologies overstated expenses; plaintiff Jonathan Zang, a portfolio manager, alleged that he was terminated for questioning the accuracy of a draft SEC filing.  Plaintiffs sued their former employer under SOX, and defendant moved to dismiss, arguing that SOX protects only employees of publicly-traded companies.

The Supreme Court disagreed, resting its decision principally on the text of § 1514A and what the Court called “the mischief to which Congress was responding” in passing it – the collapse of Enron Corporation.  Writing for a 6-3 majority, Justice Ginsburg observed that “boiling [§ 1514A] down to its relevant syntactic elements, it provides that ‘no … contractor … may discharge … an employee’” for whistleblowing activity.  And noting that SOX entitles a successful plaintiff to reinstatement and back pay, the Court reasoned that “it is difficult, if not impossible, to see how a [private] contractor or subcontractor could provide those remedies to an employee of a public company.”  In sum, the majority held that “the most sensible reading of § 1514A’s numerous references to an employer-employee relationship between the respondent and the claimant is that the provision’s protections run between contractors and their own employees.”

Turning to the “mischief” Congress sought to correct, the Court focused acutely on the specifics of the Enron scandal.  The Court stressed Congressional perception that “outside professionals” such as accountants and attorneys “were complicit in, if not integral to” their client’s misconduct.  The Court further observed “that Congress was as focused on the role of Enron’s outside contractors in facilitating the fraud as it was on the actions of Enron’s own officers.”  Pointing to this history, the Court reasoned that “if the whistle is to be blown,” it must frequently be blown by someone other than the employee of a public company.

Lawson is a shot across the bow for privately-held employers nationwide.  SOX provides very robust remedies for whistleblowers and allows administrative complaints to be filed with the Department of Labor as well as private lawsuits in federal court.  Even if the whistleblower’s underlying allegation of fraudulent conduct has no merit whatsoever, the whistleblower can sue for retaliation if later terminated or otherwise adversely affected.  Plaintiffs’ lawyers are aggressively pursuing these claims.

This much is clear: no longer is SOX a concern only for publicly-traded companies.  Less clear is the precise breadth of Lawson’s impact on whistleblower litigation under SOX.  In particular, the majority’s decision does not clarify what sorts of companies will qualify as “contractors” and thus fall within the statute’s ambit.  The dissenting justices in Lawson expressed fear that liability could run as far as babysitters for executives at public companies.  The Court suggested that “various limiting principles” might preclude expanding the definition of a “contractor” to “every fleeting business relationship.”  But as to where precisely the line will be drawn? – the Court did not say.

Action ItemsThere are a number of specific steps which private employers that provide any services to public companies need to take in response to Lawson.  First, they should review their existing anti-retaliation policies and internal complaint procedures to make sure they address conduct regulated by SOX.  Second, they should train managers and HR professionals to identify SOX complaints and refer them to responsible company officials for investigation.  Third, they should ensure that individuals who are empowered to discipline and discharge employees are sensitive to SOX issues and do not unwittingly create liability when dealing with troublesome employees.

The Greenberg Traurig Global Labor & Employment Practice Group has a dedicated group of attorneys who have experience litigating SOX claims and who are available to assist clients in preventing and defending whistleblower claims.

Philadelphia Law Creates New Employee Rights, Employer Obligations Concerning Pregnancy and Related Medical Conditions

Posted in State Law

On January 20, 2014, the Philadelphia Mayor enacted an amendment to the City Code that requires the city employers “to provide reasonable accommodations to an employee for needs related to pregnancy, childbirth, or a related medical condition.”  The provisions of the new City amendment are triggered if the employee requests such accommodations, and if it would not cause an undue hardship to the employer to provide them.  § 9-1128(1).

Reasonable accommodations under the new law “include, but are not limited to restroom breaks, periodic rest for those who stand for long periods of time, assistance with manual labor, leave for a period of disability arising from childbirth, reassignment to a vacant position, and job restructuring.”  § 9-1128(1)(a). Employers must provide written notice of the new law “to all new and existing employees within 90 days of the effective date.”  § 9-1128(4).  The form and manner of the notice will be determined by the Pennsylvania Human Rights Commission.  Id. 

The law amends §§ 9-1101 through 9-1103 and §§ 9-1128 through 9-1129 of the Fair Practices Ordinance of the Philadelphia Code and goes into effect immediately.  The amendments were created to “fill a gap” in related federal antidiscrimination law that prohibits discrimination based on pregnancy, but only requires accommodation for woman suffering from pregnancy-related medical conditions that rise to the level of a disability.  The new law provides protection to a pregnant woman who, although experiencing a healthy pregnancy, may still require some form of accommodation at work.

The Fair Practices Ordinance defines employers as persons with “one or more” employees or persons who “do business in the City of Philadelphia.”  § 9-1102(h).  Violations of the employment provisions set forth in the Fair Practices Ordinance may lead to orders from the Philadelphia Commission on Human Relations (“PCHR”), including orders directing offending employers to stop unlawful conduct; directing the hiring, reinstatement or upgrading of employees, with or without back pay; demanding payment of compensatory damages; demanding payment of punitive damages not to exceed $2,000 per violation; and demanding payment of reasonable attorneys’ fees and costs.  § 9-1105.  The violation of these kinds of orders from the PCHR can expose violators to additional liability, including fines and imprisonment in the case of repeat violations.  § 9-1121.

Finally, the Fair Practices Ordinance creates a private right of action.  After administrative exhaustion, a “complainant may bring an action in the Court of Common Pleas of Philadelphia County based on the right to freedom from discrimination granted by this Chapter.”  § 9-1122.  This private right of action must be brought within two years of the PCHR’s notifying the claimant that his or her administrative case has been closed.

This legislation parallels similar laws recently enacted in New York and New Jersey, which were previously reported on our blog.

Office Romances: 3-Part Series on How to Shield Your Company from Liability Part 3

Posted in Employee Policies

According to a recent CareerBuilder survey, four in ten people admitted to dating a co-worker, and one-third eventually married that person.  Whether a relationship between peers, relationships between supervisors/subordinates, flings, long-term relationships, or extramarital affairs, office romances can lead to unwelcome complaints and expensive lawsuits.

Part 1 of this three-part series addressed the potential risks that office romances pose to companies, and Part 2 covered the importance of adopting and enforcing a company policy addressing fraternization.  This final installment offers recommended steps you should take now to defend potential claims of discrimination and harassment.

Tips for Employers

Employers should prepare and implement a clear policy regarding office relationships or update an existing one, and be sure to disseminate it and obtain employees’ acknowledgements.   The policy should address to extent to which office relationships are permissible, and, if appropriate, require employees to promptly disclose the existence (or termination) of a romantic or sexual relationship to a designated member of Human Resources or management. When the employees involved are in a supervisor/subordinate relationship, disclosure is especially critical so that the employer may effectively address the impact of the relationship (e.g., evaluating if it is necessary to change job duties or reassign the employee(s)).

If harassment occurs despite an employer’s best efforts to prevent and stop it, you will have a strong defense if you can demonstrate that you have done the following:

  • Implement and enforce a sexual harassment and office romance policy that provides a clear reporting channel and prohibits retaliation for good faith complaints.
  • Respect employees’ reasonable expectations of privacy regarding their relationship in line with the company policies.
  • Train new and existing employees on the sexual harassment policy and document the training.
  • Train managers on what constitutes sexual harassment and how to handle complaints.
  • Train employees to report inappropriate behavior.
  • If a relationship develops between a manager and his/her subordinate, transfer one of them if possible to eliminate a direct reporting relationship.
  • Promptly and thoroughly investigate complaints.
  • Take appropriate corrective action to address prior incidents of sexual harassment.

Regardless of the type of policy your company adopts, be sure to customize it to the needs and actual practices of your business.  Train employees and managers on expectations governing office romances.  A well-drafted and uniformly enforced fraternization (or non-fraternization) policy will not prevent workplace relationships altogether, but it can protect you if you encounter office romances.

Office Romances: 3-Part Series on How to Shield Your Company from Liability Part 2

Posted in Employee Policies

More than ever, employers are facing serious claims arising from office romances.  Part 1 of this three-piece series covered the potential claims, charges and lawsuits that may arise from workplace relationships.  In this installment, learn why it is imperative to adopt a company policy addressing fraternization.  Part 3 will address tips for employers to mitigate potential liability.

What Does Company Policy Say?

With Valentine’s Day around the corner, now is a good time for employers to update or create a policy governing dating among workers.  While some policies prohibit romantic relationships altogether, many employers recognize that employees will date each other regardless of policy.  In fact, they might “sneak around” to avoid violating the policy, which could create even more tension if the relationship is discovered or known only to a select few.  Moreover, strict no-dating policies may be difficult to implement and enforce, as they may not clearly define the conduct that is forbidden (e.g., does the policy prohibit socializing, dating, romantic relationships, or something else?).

Some policies interdict dating among management and staff, while others specify that there is to be no fraternization with outside third parties to avoid conflicts of interest or the appearance of impropriety.  Still, other organizations mandate that employees who date one another voluntarily inform the company about their relationship.

In such cases, the notification policies direct employees to report their dating relationships to Human Resources, the EEOC officer, or a member of management, and they ask employees to sign a written consent regarding the romantic relationship.  While this type of policy may seem intrusive, these documents are drafted to protect employers from unwanted complaints of future sexual harassment or retaliation.

When asking employees to sign consents, you should again advise them about the company’s sexual harassment policy and remind them about ramifications of policy violations.  Document that the employees entered into the relationship voluntarily, were counseled and – if/when the relationship ends – include a memo in their respective personnel records that the relationship ended, and the employees were reminded about the company’s sexual harassment policy.  You should require the dating parties to make certain written representations to shield the company from future claims:

  • The individuals have entered the relationship voluntarily and the relationship is consensual.
  • The employees will not engage in any conduct that makes others uncomfortable, intimidated, or creates a hostile work environment for other employees, guests, or third parties.
  • The employees do not and will not make any decisions that could impact each other’s terms and conditions of employment.
  • The employees will act professionally toward each other at all times, even after the relationship has ended.
  • The relationship will not cause unnecessary workplace disruptions or distractions or otherwise adversely impact productivity.
  • The employees will not retaliate against each other if/when the relationship ends.

Stay tuned for Part 3 for steps to take now to defend potential claims of discrimination and harassment.

Office Romances: 3-Part Series on How to Shield Your Company from Liability Part 1

Posted in Employee Policies

Love is in the air – which could bring claims of sexual harassment and discrimination.  As Valentine’s Day approaches, employers should be mindful of office romances:

  • Statistics show that more than 20% of married couples met at work, yet nearly half of those employees reported that they did not know if their company had a policy on office romances.
  • According to a recent survey by Monster Worldwide, 59% of employees admitted that they have been involved in an office romance.
  • An additional 64% answered that they would be willing to do so if the opportunity arose.
  • Yet, 75% of employers do not have a policy regarding workplace relationships.
  • AshleyMadison.com (a dating site for married people looking to cheat – yikes!) reports that 46% percent of men and 37% percent of women have had an affair with a co-worker. Among these cheaters, 72% percent of women and 59% percent of men say that they had their first encounter with the affair partner at a company holiday party … which means now is the time for employers to pay attention!

In this three-part series, learn (1) the potential risks to employers from workplace relationships, (2) how to draft an office romance policy, and (3) what steps to take to head off potential litigation.  Part I addresses the negative consequences that office romances can pose to unprepared employers.

What’s the Harm?

While consensual office relationships are more commonplace than in the past, they can trigger business and legal headaches for employers when the relationship fizzles or is no longer consensual.  Moreover, fellow employees may feel resentful, jealous, uncomfortable, or intimidated (especially in relationships between a supervisor and a subordinate), leading to complaints of sexual harassment, discrimination, or retaliation.

Importantly, claims may be brought not only by the individuals in the relationship, but even by third parties.  Complaints of “paramour favoritism” are on the rise and are being filed by employees who allege they are overlooked due to preferential treatment towards a co-worker who is engaged in a romantic relationship with the boss.  While courts differ on whether such claims are meritorious, turning a blind eye to such relationships may result in business interruption and liability.

In 2011, for example, the EEOC reported that 11,364 charges of sexual harassment were filed, and 16.3% of those were filed by men.  These charges are quite costly to employers – the EEOC recovered over $52 million in damages for sexual harassment claims in 2011.  Employers might not be able to prevent love in the office, but you can take action to mitigate potential liability.  An important initial measure is to draft a good policy depending on your company’s size, structure, business goals, and culture.  Make sure that, if you implement an office dating policy, you  enforce it uniformly and take appropriate and equal action for violations of the policy.

Watch for installments 2 and 3 to learn the dos and don’ts when drafting an office romance policy and tips for employers to avoid liability.

GT Alert — New Pregnancy Laws Deliver Additional Protections for Women

Posted in Discrimination

New Jersey lawmakers recently amended the New Jersey Law Against Discrimination (NJLAD) to provide additional protections for women in the workplace.

Employers are now required to provide reasonable accommodations to allow women who are pregnant, have given birth, or are suffering related medical complications to continue working. This Alert discusses the amendment and what it requires of New Jersey employers.

To view the GT Alert on www.gtlaw.com, please click here.

To view the GT Alert as a PDF, please click here.

UK Government to Crack Down on Miserly Employers

Posted in Wage & Hour

The UK Government has announced plans this month to bring in new legislation increasing the maximum financial penalty for rogue employers who fail to pay their employees the National Minimum Wage (“NMW”).

At present, employers who flout their NMW obligations must make good on arrears, as well as incurring a financial penalty of 50% of the total underpayment to all workers to the Secretary of State, to a maximum of £5,000.

The draft National Minimum Wage (Variation of Financial Penalty) Regulations 2014, expected to come into force in February 2014, will increase the financial penalty to 100% of the total underpayment, to a maximum of £20,000.

The Government has further plans to ramp up the pressure, proposing that the maximum penalty of £20,000 should be levied in respect of each underpaid worker, rather than all workers.

Link to press release: https://www.gov.uk/government/news/national-minimum-wage-penalties-increased-on-rogue-employers