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Employer Liability for Mobile Devices and Continuous Connectivity

Avoiding Legal Pitfalls: Wage and Hour, Harassment and Personal Injury Claims

presents

Today's panel features:Alexander J. Passantino, Partner, Jackson Lewis, Reston, Va.

Daniel J. McCoy, Partner, Fenwick & West, Mountain View, Calif.Lee Schreter, Shareholder, Littler Mendelson, Atlanta

Tuesday, September 15, 2009

The conference begins at:1 pm Eastern12 pm Central

11 am Mountain10 am Pacific

The audio portion of this conference will be accessible by telephone only. Please refer to the dial in instructions emailed to registrants to access the audio portion of the conference.

A Live 90-Minute Audio Conference with Interactive Q&A

Employer Liability for Mobile Devices and Constant

Connectivity

Sponsored by the Legal Publishing Group of Strafford Publications

Sponsored by the Legal Publishing Group of Strafford Publications

September 15, 2009

Avoiding Legal Pitfalls: Wage and Hour, Harassment and Personal Injury Claims

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Speakers

Alexander J. Passantino, Esq.Jackson Lewis LLPWashington D.C. Region

passanta@jacksonlewis.comwww.jacksonlewis.com

Lisa A. Schreter, Esq.Littler Mendelson, P.C.

Atlanta, GAlschreter@littler.com

www.littler.com

Daniel J. McCoy, Esq.Fenwick & West LLP

Mountain View, CAdmccoy@fenwick.com

www.fenwick.com

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Overview

Wage and Hour/FLSA

Harassment/Inappropriate Use

Safety

Privacy/Security Concerns

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Wage and Hour Implications

Alex PassantinoJackson Lewis LLP

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Cases & Settlements

An assistant on Oprah claimed $32,000 of overtime in less than three months

A recently-filed lawsuit alleges that employees were issued smartphones and were required to review and respond to communications (telephone calls, conference calls, emails and text messages) from other employees at all hours. The total additional time employees spent working

was up to 15 hours

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Suffer or Permit

The FLSA requires employers to pay their non-exempt employees at least the minimum wage for all time spent working

The FLSA defines the term “employ” as to “suffer or permit to work.”

Suffer or permit to work means that if an employer requires or allows employees to work, they are employed and the time spent is likely to be hours worked

Time spent performing work not requested by the employer, but still allowed, is generally hours worked the employer knows or has reason to believe that the

employee is continuing to work and the employer is benefiting from the work being done.

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Management Control

In general, “it is the duty of the management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept the benefits without compensating for them. The mere promulgation of a rule against such work is not enough.”

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De Minimis Rule

In recording working time, insubstantial or insignificant periods of time outside the scheduled working hours that cannot practically be precisely recorded may be disregarded.

Courts have held that such periods of time are de minimis (minimal). The rule typically applies where a few seconds or minutes of work

are involved and where the failure to count such time is due to considerations justified by workplace realities.

An employer may not arbitrarily fail to count as hours worked any part, however small, of the employee’s fixed or regular working time. The DOL’s enforcement manual makes clear that, where an employer

fails to pay an employee for any part of the employee’s fixed or regular working time, however small, it would be considered a violation of the FLSA

What about cumulative effect of multiple de minimis periods of time?

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Portal-to-Portal Act/Principal Activity

Portal-to-Portal Act excludes from “hours worked” time spent traveling “to and from the actual place of performance of the principal activity or activities which such employee is employed to perform either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities.”

Employer is not liable to pay wages (overtime or otherwise) for “activities which are preliminary to or postliminary to said principal activity or activities”

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Continuous Workday

According to the Supreme Court, “during a continuous workday, any walking time that occurs after the beginning of the employee’s first principal activity and before the end of the employee’s last principal activity is excluded from the scope of the [Portal Act], and as a result is covered by the FLSA. ”

If a nonexempt employee starts her day at 6 a.m. by using her laptop and stops working at 9 p.m., the last time she uses her laptop, under the continuous workday rule she generally must be paid for the entire time, except for breaks that are at least 30 consecutive minutes

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Recordkeeping

Under the FLSA, employers are required to keep the following information: Employee's full name, social security number, address, birth date (if

younger than 19), and sex. Employee’s occupation. Time and day of week when employee's workweek begins. Hours worked each day and total hours worked each workweek. Basis on which employee's wages are paid (e.g., "$9 per hour", "$440

a week", "piecework") and the employee’s regular hourly pay rate. Total daily or weekly straight-time earnings and total overtime earnings

for the workweek. All additions to or deductions from the employee's wages and the total

wages paid each pay period. Date of payment and the pay period covered by the payment.

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Wage and Hour Best Practices

Lisa A. SchreterLittler Mendelson, P.C.

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Wallow in the Stages of Grief?

Denial Anger Bargaining Depression Acceptance

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Developing a Wage-Hour Compliance Program Prevents compliance issues Uncovers compliance issues before litigation

and retain maximum flexibility to fix issues consistent with business operations

Develops evidentiary record to establish good faith defenses

Ensures that employees are paid correctly

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FLSA Good Faith Defenses

Portal-to-Portal Act Section 10: Complete bar to monetary liability Employer acted in good faith in reliance on a written regulation,

order, ruling, approval or interpretation of the Wage & Hour Administrator

Portal-to-Portal Act Section 11: Defense to liquidated damages Employer acted in good faith and had reasonable grounds

for believing that it was not in violation

Third year of back wages for willful violations

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Components of a Wage-Hour Compliance Program

1. Assessment2. Policies & Procedures3. Implementing Change4. Complaint Process5. Training6. Technology7. Maintaining Compliance

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Component #1:

Assessment

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Assess Wage-Hour Practices

Time & Attendance System Supervisory edits Automatic meal period deductions Rounding

Payroll Programming Overtime calculation formulas Compensation included in in regular rate Deductions from wages (state law, salary basis) Paychecks below minimum wage

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Assess Wage-Hour Practices

Classifications Review documents and interview employees Update job descriptions Prepare legal opinion memoranda

Other State Law Issues Meal and rest breaks Day of rest, holidays Reporting pay, split-shift pay Paycheck issues: method, frequency, disclosures Final wages

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The Assessment Process

Identify internal and external resources Consider strategic issues

Attorney involvement Public disclosure obligations (SOX) Back wages and other remedial measures

Plan/design the assessment Identify topics for review Develop assessment protocols

Conduct and document Implement remedial measures

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Component #2:

Policies & Procedures

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Benefits of Written Policies and Procedures Creates culture of compliance Consistent standards Eliminates workplace myths

and misunderstandings Provides basis for discipline

and termination of employees

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Key Wage-Hour Policies

Work Time Policy Training/meeting time Travel time On-call time Volunteer activities

Payroll Integrity Overtime Meals and Rest Periods Vacation

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Written Procedures

Time adjustments Paycheck method, frequency,

disclosures Earnings and deduction codes

Designate earnings included in regular rate

Prohibit deductions from exempt wages that violate salary basis

Classification of employees Payment of final wages

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Component #3:

Implementing Change

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Resolving Compliance Issues

An employer has three options to resolve an uncovered compliance issue: Focus on compliance going forward Future compliance and payment of back wages Future compliance and payment of back wages

in cooperation with federal and state DOLs

The employer should consider its preferred approach before beginning a wage-hour assessment

Doing nothing is not an option

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Future Compliance

Reclassification Job restructuring Correcting regular rate issues Payroll system reprogramming Changes to policies and procedures

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Component #4:

Complaint Process

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Effective Complaint Process

Allows employer to uncover and correct issues before litigation Also required for safe harbor provision of FLSA salary basis test

Treat wage-hour complaints like other workplace complaints Use existing complaint processes and mechanisms, including

ethics or compliance hotline (1-800 #)

Apply same standards Well publicized, with multiple avenues for complaints

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Investigation & Resolution

Follow through on complaints Written investigation procedures Assign accountability so complaints do not fall through the

cracks

Ensure confidentiality to extent possible Investigate promptly and thoroughly Fix problems promptly, and provide closure to

complaining employee Failure to resolve complaints could lead to “willful”

violations

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Component #5:

Training

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Is Training Worth the Cost?

Most employees don’t know the basic rules or understand them

Just 20 minutes of training could prevent unintentional wage-hour violations

If you want your employees to do the right thing, you must train them – and not just managers

Training gives your employees the tools they need to become compliance allies

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When to Train

Employee orientation New manager training When there are new legal developments

or policy changes At least every 2 years, but more often

for highly specialized compensation jobs

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Component #6:

Technology

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Leveraging Technology

Future wage-hour exposure can be minimized through leveraging technological innovation

Three key uses for technologyAutomated time, task and payroll systemsAuditsWeb-based training

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Time, Task and Payroll Systems

Automated and integrated time, attendance and payroll systems can reduce wage-hour compliance issues More accurate time records More likely that employees will record all hours worked More difficult for managers to shave hours

Example: Electronic badge scanned upon entering and exiting

link to time clock to confirm that employee clocks in and out in timely manner generate email to confirm no work done during gap if necessary, escalate to supervisor

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Web-Based Training

Reach large, geographically-dispersed workforces

Customizable Uniformity among employees Proof training was completed Content of training can be duplicated

for evidentiary purposes

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Component #7:

Maintaining Compliance

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Maintaining Compliance

Perhaps the most important component of a comprehensive wage-hour compliance program

Efforts to achieve initial compliance wasted without mechanism to maintain compliance in the future

Employers should use:Employee acknowledgmentsEmployer audits

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Safety Issues

Alex PassantinoJackson Lewis LLP

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Legal Risks

Vicarious Liability Employee acting within scope of employment Employee using device for benefit of employerGenerally, employer responsible for foreseeable harm

Workers’ Compensation Blackberry Thumb Cellphone Elbow Blackberry Addiction

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Cases and Settlements

$500,000 settlement when employee killed motorcyclist while employee distracted on cellphone

$21 million verdict in Miami when employee caused accident while on cellphone

$5.2 million for accident caused by employee making work-related call

Northern Virginia case suggested employers can be liable even if phone calling not within scope of employment

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Establishing and Implementing Policies Know and consider the requirements of your business Set a clear policy against talking (with or without a hands-free

device) or texting while driving require phones to be turned off while driving remind employees that they are not expected to make calls while

driving. some employers have gone so far as to ban cellphones from

work If talking ban is not possible, may consider more specific

guidelines, such as: Pulling over when making a call Dialing when the car is not moving Using a hands-free device

Require an employee to sign the policy

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Additional Issues

Educate managers and supervisors on the policy and ensure that they are not causingviolations of the policy

Ensure that employee policies or practices do not require employees to immediately answer phones, e-mails, or text messages

Enforce violations of company policy

45

Privacy and Security

Dan McCoyFenwick & West LLP

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Protecting Confidential Information

Establish, and adhere to, clear policies regarding protection and permissible use of company – issued confidential data

Encryption protocols should extend to company-issued mobile devices and personal devices/systems that are used for work

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Best Practices Upon Separation

Retrieve company-issued devices immediately

If suspicious of foul play, image hard drives before re-circulation and retain email

Examine server/database logs for suspicious access/downloads/data queries/copying

Have employee certify in writing the return of all equipment and data (incl. from home systems)

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Protecting Private Personnel Information Mobile devices inherently increase the risk of loss or

theft of private personnel data When loss or theft occurs, Step 1- use common sense:

Notify employees promptly Take proactive measures to head off identity theft (e.g. offer to

pay for credit reports)

Step 2 – evaluate state and/or federal reporting obligations Particularly important where employee health/medical

information is lost or stolen.

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Monitoring of Electronic Data

Why Do It? The reasons include the need for employer to learn about and stop/mitigate: Misuse of confidential information

Disloyalty

Other employee misconduct (e.g. harassment, child porn)

Productivity loss based on excessive personal use during work

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Monitoring of Electronic Data

Primary Legal Risks of Monitoring: Constitutional and/or Common Law Invasion of Privacy Electronic Communications Privacy Act (ECPA) Violations

Generally, employers can avoid liability with clear written policies that: Cover all company devices (incl. PDAs, memory sticks) Convey that employees have no expectation of privacy and give notice

that employer may review/monitor without notice

Practices should conform to and be consistent with policies Avoid what occurred in Quon v. Arch Wireless (9th Cir, 2008) (summary

attached)

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Monitoring of Electronic Data

Right to monitor personal email and social networking pages accessed through company devices is less clear: See Van Alstyne v. Electronic Scriptorium, Ltd., (9th

Circuit 2009) See also Pietrylo v. Hillstone Restaurant Group (NJ

Fed. Dist. Ct. 2009) (summary attached) Evolving nature of the case law on this issue amplifies

need for clear policies re: monitoring and review.

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Q & A