The New Normal

Emerging Legal Trends Affecting the Workplace

Mark Bakker

Wyche, P.A. November 12, 2013

www.wyche.com

The New Normal:

Increased Regulatory Scrutiny

Federal Agencies:

• DOL

• EEOC

• NLRB

The DOL New Normal:

Scrutiny of Independent

Contractor Classification

• Benefits of IC relationship

– Reduced payroll taxes and no benefits

– No Workers’ Compensation liability

– No overtime liability or other related claims

– Potential for reduced working space/other

overhead

– Hedge against future uncertainty

Misclassification of

Independent Contractors

• Crackdown on IC

misclassification

• Enforcement Priority

• DOL Secretary:

“workplace fraud”

• Motivations

– Protection of workers

– Response to claims of

unfair competition

– Tax recovery

IC Classification

Economic Realities Test (FLSA)

(1) Degree of control

(2) Investment in facilities/equipment

(3) Opportunity for profit and loss

(4) Permanency of the relationship

(5) Required skill

IC Misclassification

Red Flags

• Relying solely on consultant label

• Integrated workforce (“side-by-side”)

• Integrated compensation systems

• Long-term or exclusive relationship

• Headcount/cost-saving motivation

Consequences of

Misclassification

• DOL and IRS (state and federal)

• Tax penalties

• Overtime liability

• Unemployment Assessment – SCDEW

• Penalties/liquidated damages

• Attorneys’ fees and costs

• Benefits (e.g., retirement benefits)

• Potential for class/collective action litigation

Practical Steps

• Written Agreements

– Limit exclusivity

– Encourage economic independence

– Enhance flexibility

– Establish conclusion of the work

– Disavow employment relationship and benefits

• Require worker to set up LLC/corporation

• Periodically audit and evaluate

• Consider alternative (temp staffing)

The New Normal:

EEOC & Background Checks

Enforcement Guidance (2012)

Consideration of Arrest and Conviction

Records in Employment Decisions

Under Title VII of the Civil Rights Act

• “New normal” or “clarity” of existing reg’s?

EEOC Enforcement Guidance

• Race and national origin discrimination

• Arrest v. conviction records

• Disparate treatment v. disparate impact

– Reliance on national data

– Targeting general, blanket anti-hire exclusions

“Even when employers apply criminal record exclusions

uniformly, the exclusions may still operate to

disproportionately and unjustifiably exclude persons of a

particular race or national origin.”

Liability for Negligent Hire

Claim for negligent hiring and negligent

entrustment:

a) The company is on notice of an issue that

requires it to reasonably inquire into the

fitness of a particular employee for a

particular position

b) The company fails to inquire

c) That failure to inquire causes legal

damage

Best Practices

• Eliminate “blanket” policies or practices

• Develop narrowly tailored written policy:

– Considers job requirements/contexts

– Specify offenses that demonstrate unfitness

– Limits duration of exclusions

– Conduct individualized assessment

• Limit inquiries to “job related” & “consistent

with business necessity”

• Establish appropriate confidentiality

National Labor Relations Board

• Signs of Aggressive activity

– Boeing

– New NLRB Notice

NLRB

• Why?

National Labor Relations Act

• NLRB counsel: not “new normal” but “catch up”

• Covers most private-sector employees

• “Section 7” rights

– guarantees employees the right to “engage in”

“concerted” and “protected” activities with

other employees

– Protected activities include:

• Discussing wages, discipline, unions

• Complaining about policies, supervisors

• Complaining about terms/conditions of employment

Handbook Clauses that May

Implicate Section 7 Rights

• Bans on Disclosing Wages

• Social Media

• Bans on Use of Company Name*

• “Employment-at-will” disclaimers*

• Confidentiality*

– General/investigations

• Off-duty conduct

• Access Provisions

• Solicitation and distribution

• Harassment*

• Dispute Resolution Procedures

Social Networking Policies

(NLRB)

• Activity may be protected if

– Done on employee’s time and equipment

– Related to terms/conditions of employment or

exercise of NLRA rights

– Involves “concerted” activity

• Swearing/name calling may not justify

termination

• Overbroad policies will be scrutinized

Social Media and NLRB

• Examples of policies that were overbroad: general

prohibitions against

– Self-identifying as employee

– Using company logo

– Posting Facebook comments about work

– Disparaging company products on-line

– Harming the image and integrity of the company

– Inaccurate or misleading or offensive remarks

• Others that NLRB deemed problematic:

– Encouraging employees to solve work problems in the

workplace rather than post online

– Discouraging the “friending” of co-workers

Butler Medical (Sept. 2013)

• E’ee A: terminated & complained on FB – Allegedly told patient about poor condition of vehicles

• E’ee B responded: “Sorry to hear that but if you want you may think about

getting a lawyer and taking them to court.”

• E’ee C: “Hey everybody!!!!! Im [f—— ing] broke down in the

same [s—— ] I was broke in last week because they

don’t wanna buy new [s—— ]!!!! Cha-Chinnngggggg

chinnng—at Sheetz Convenience Store.”

Butler : B&C terminated--posts violated company policy

Drafting Your Social Media

Policy

CLARITY

• You CAN prohibit social media postings that:

– Make comments about coworkers or supervisors or the

employer that are vulgar, obscene, threatening,

intimidating, or harassing

– That constitutes illegal discrimination or harassment

– Carry out illegal conduct

– Are maliciously untrue

• Specific examples are key

• Disclaim that not interfering with NLRA rights

Access Provisions

• Employers may prohibit:

– Non-employees from entering premises

– Off-duty employees from entering internal

premises

• Employers may not prohibit:

– Non-employees from public property

– Off-duty employees from external premises

Non-Discriminatory enforcement!

Solicitation and Distribution

Provisions

• Employers may prohibit

– Non-employees from soliciting and distributing

– Employees from soliciting and distributing

during “work time” and in “work areas”

• Employers may not prohibit:

– All employee solicitation and distribution

– Employees from “talking” about a union or

terms and conditions of employment

Non-discriminatory enforcement!

Arbitration Agreements

• DR Horton Case (2012)

– Agreement requiring employee to arbitrate

claims violates Section 7 rights

• Interferes with access to NLRB

• Must expressly carve out right to bring NLRB

charges

– Class action waivers violate Section 7 rights

The New Normal:

Managing Other Social Media Issues

• Some old boundaries and axioms no longer

relevant (business/personal)

• “Frontier law” but apply familiar frameworks

Social Media – Hiring

• Appeal of SM in Hiring

• Risks

– False identity

– Inaccurate information

– Impermissible subject matter

• E.g., UK professor/religious discrimination

• Limit Risks

– Third party vendors

– Separate cybervetters from decision makers

Social Media – Access to Passwords

Accessing passwords – with permission

Banned in 12 states

Not recommended

Accessing passwords – no authorization

Trapp v. DHS

resorting to self-help could expose

an employer to civil and possible

criminal liability

Fair Game: unsecured, publicly

available social media

• Benefits

– Employees carry single device

– Convenience/practical response to technology

– Reduce costs of devices to employer

• Risks

– Security concerns

– Potentially higher IT costs

– Disaster for discovery in litigation

– Erosion of personal/business spheres

Bring Your Own Device Policy (BYOD)

Other BYOD Employment Law

Issues

• Personal Privacy protections – Computer Fraud and Abuse Act

– Stored Communications Act

• Wage & Hour considerations

• Harassment/hostile work environment

• Security of confidential information

BYOD Policy

• Broad Authorization to:

– Monitor use and content

– Wipe data upon termination/lost device

– Turn over devices for investigations

• Diminished expectation of privacy

• Obligation to notify if lost/stolen

• Require data encryption/password

protection

Social Media – Ownership

Who gets the friends

when the employment

relationship breaks up?

Best Company Practices to Protect

Social Media

• Company establishes Account (name and content)

• Structural protection – Adopt uniform branding, content and style guides

– Assign employees to administer SM accounts

• Anticipate separation of employment – Reference SM in restrictive covenants

– Have manager also keep account/password information

– Take quick action upon separation of employment

Best Practices, ctd.

• Written agreement/policy that clarifies rights and duties

– Blogs, accounts are company property

– Employee must transfer all account information upon termination

– Administering SM is part of employee’s job

Remember NLRB admonitions: Write policies in pencil rather than in pen

Impact of Supreme Court Decision

on Same Sex Marriage on

Employment Law

• Defense of Marriage Act enacted 1996

– Definition of “marriage” and “spouse”

– Affected numerous tax/estate/employee

benefit laws

• U.S. v. Windsor decided 2013

– Unconstitutional to limit “marriage” and

“spouse” to opposite-sex couples

Primary Employer-Related Laws

Affected

• Federal Tax

• ERISA

• COBRA

• HIPAA

• FMLA

IRS/ERISA determination: “place of celebration”

FMLA determination: “place of residence”

Next Steps

• Best practice: obtain same-sex marriage information

• Review employment policies, handbooks, benefit

plans, SPDs and summaries and insurance policies

• Make legally necessary changes and any changes

desired in accordance with corporate HR strategy

Stay Tuned: More guidance expected

And while we are on the subject of Sexual

Orientation and Emerging Trends

• Increased jurisdictional protection in

states/cities

• Employment Non-Discrimination Act

(ENDA)

Bullying, Hazing, and Healthy

Workplace Initiatives

Legal aspects of bullying

• No current anti-bullying laws

– “Healthy Workplace Act”

• Laws/causes of action

– Federal and state anti-discrimination laws

– Harassment

– Intentional Infliction of Emotional Distress

– OSHA General Duty Clause

– ADA accommodation

Next Major Arena for Employment Claims?

The New Normal

Emerging Legal Trends Affecting the Workplace

Mark Bakker

Wyche, P.A. November 12, 2013

www.wyche.com