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The Labor & Employment Report

Compensatory Time for Employees?

By Elizabeth Torphy-Donzella on Posted in HR Compliance, Wage & Hour

If an employee asks for time off from work rather than pay for overtime hours worked, can a company grant this request?

It depends.  Generally, overtime is due whenever an employee who is not overtime exempt works more than 40 hours in a workweek.  (A few states require the payment of overtime if an employee works more than 8 hours in a workday).  Overtime is paid at one-and-one-half time the employee’s regular hourly rate (i.e., an hourly employee who is paid $10 per hour would be entitled to $15 for each hour worked in excess of 40).

Because Federal law and most states base the right to overtime pay on the workweek rather than the workday, an employer could give an employee time off during the same workweek (such as a late arrival or early departure) to ensure that the employee does not work more than 40 hours in the workweek.  This doesn’t apply, however, to those states requiring payment of overtime based on the workday.

But if the employee wants to take off time in a different workweek, the answer is “no.”  Private sector employers are not permitted to give employees compensatory or “comp time” in lieu of overtime pay.  (This is unlike in the government employment context where comp time is permitted under certain conditions.)

 

Another Appellate Court Finds President’s Recess Appointments to NLRB to be Invalid

By Elizabeth Torphy-Donzella on Posted in Labor Law & NLRB, Laws & Regulations

Yesterday, the U.S. Court of the Appeals for the Third Circuit held that the NLRB lacked jurisdiction to take action where it lacked three Board Members who had been properly appointed.  In NLRB v. New Vista Rehabilitation and Nursing, a majority of the panel held that President Obama’s appointment of Craig Becker to the Board during an “intra-session recess” (i.e., a break during a session of the Senate) violated the Constitution and thus, the Board lacked the necessary three-member panel to act. The Court construed the Recess Appointments Clause to the Constitution as permitting appointments by the President unilaterally only during recesses “between sessions” of the Senate (i.e., the formal break when a Session ends before another begins). 

Lawyers – particularly wonky Constitutional scholars – will in the coming months extensively analyze the majority and dissenting judge’s scholarly decisions.  But, I will give you the “bottom line” on this.  The majority’s holding is of great significance for three main reasons. 

·        First, the majority concluded that the long presumed power of the President to make recess appointments during an intra-session break of 10 or more days was not supported by the Constitution.  Thus, only appointments made when the Senate recesses between sessions are valid “recess appointments.”   This is consistent with the decision by the D.C. Circuit in Noel Canning (which was discussed in our January 2103 Eupdate).  As such, actions taken by this or any prior President that were taken by an improperly constituted agency could conceivably be challenged, although NLRB cases involve litigated matters rather than rulemaking so the time limits for challenges will limit the impact to current labor cases.  Notably, President Obama had made 26 recess appointments as of January 2013; George W. Bush made 141 in his eight years in office.

·        Second, in finding that the recess appointment of Craig Becker in March of 2010 to be invalid, the panel majority’s decision opens the door to challenges to far more decisions than did that of the D.C. Circuit. Noel Canning concerned only the appointments made by President Obama in January of 2011 during the weeks between Christmas and New Year’s when certain members of the Senate continued to hold pro forma sessions in order to avoid a recess.

·        Third, the conclusion that the improper appointments deprived the Board of jurisdiction to act means that any employer or union at any stage of a case – whether before the NLRB or on appeal — can now raise the defect as a reason to vacate Board action. Jurisdiction can be challenged at any stage without being raised earlier as it goes to the fundamental power of a tribunal to act. The D.C. Circuit did not analyze the issue as jurisdictional (the panel majority of the Third Circuit noted that its sister circuit had “conflated” the analysis; that is, missed this step.)

Finally, I will share a couple of observations that are less “practical” (I do get to be a little “wonky” now and then).  The majority’s decision focused on the principle that separation of powers was of paramount importance to the framers of the Constitution.  The NLRB’s extreme position – that the President had the power to make appointments without the advice and consent of the Senate during any break during a Senate session regardless of duration – would permit the exception (recess appointments without Senate approval) to swallow the rule (the President must obtain Senate approval for appointments).  The intermediate position – that breaks of a not-insignificant duration constitute “recesses” – was not in the text of the Constitution or supported by surrounding evidence from the time of its drafting. 

In addition, the Court –quite properly in my view – rejected the position taken by the Board and its supporting “friends of the court” briefs that the issue was “nonjusticiable,” meaning that only the President could decide what the power entailed and that the judiciary’s respect for the Executive Branch required it to stay out of the matter.  The notion that one branch of government (here the Executive) should have unreviewable discretion to decide the scope of its power simply is not tenable.  As the majority stated, “Defining ‘recess’ in the Recess Appointments Clause does not express a lack of respect for coordinate branches of government because defining the word is merely an exercise of our judicial authority  ―to say what the law is, which sometimes requires an evaluation of whether one branch is aggrandizing its power at another’s expense.”

 

Ex-Employees Accessing the Company’s Computer System

By Elizabeth Torphy-Donzella on Posted in HR Compliance, Laws & Regulations

A departing employee accesses the company’s computer system on his way out without authorization and takes data.  What remedies can the company pursue?

The company can contact law enforcement officials, as that conduct likely constitutes a crime.  In addition, the company can file a civil complaint in court against the ex-employee, asserting claims such as trespass, conversion, or even a breach of the duty of loyalty.

The company can also take advantage of the civil remedies available under the Computer Fraud and Abuse Act.  This law has been found to apply where an employee continues to access a company’s computer system without authorization or for an illicit purpose after the employee accepts a job with another employer. For example, where an employee sends confidential information to his new employer before leaving the current position, the employer can bring an action in federal court against the disloyal employee and the new employer for losses caused by the unauthorized access, as well as consequential damages that include costs associated with security updates or enhancements to the company’s computer systems.  Because companies that knowingly receive another firm’s data may be held liable under this law, new hires should be instructed not to take any information from their former employers without express written permission from that employer.

Electronically Monitoring Employees?

By Elizabeth Torphy-Donzella on Posted in HR Compliance, Laws & Regulations, Social Media, Workplace Trends

What should a company consider in deciding whether to engage in electronic workplace monitoring of employees?

Companies, concerned with the abuse of workplace technologies, are increasingly considering electronic monitoring programs.  Motivating considerations include the prospect of liability for sexual harassment lawsuits arising from inappropriate emails or web site usage, concerns about employee transfers of proprietary company data to unauthorized recipients, or the loss of productivity from employee web usage.

Before deciding to engage in monitoring, companies should consider whether the cure might be worse than the problem.  For example, undertaking monitoring as a means for avoiding harassment claims may have the opposite effect if an employer becomes aware of a potential problem and fails to act.  The specter of monitoring can also have a negative impact on employee morale.

If an employer decides to proceed with monitoring, it should provide employees with notice that monitoring will take place prior to initiating monitoring.  This is required by law in some states, such as Connecticut, and is a good practice even if not required by law.  Notice should be through a written policy or computer sign-on notification, to avoid legal claims.  Finally, monitoring should not be undertaken without consulting legal counsel.

IRS Health Care Regulations Released

By Bryan M. O'Keefe on Posted in Employee Benefits, HR Compliance, Laws & Regulations, Workplace Trends

The IRS has released final regulations on how the new health care law defines “affordable” coverage.    Generally speaking, workers must have access to affordable health care from their employers, or the employer faces a penalty.   The IRS regulations now make clear that the government will deem a plan affordable so long as the individual worker’s premium is not more than 9.5% of the worker’s household income.    The government will not measure affordability against family coverage.

This is an important clarification and gives employers a powerful incentive to make individual coverage very inexpensive, and shifts costs to family coverage.   Of course, as some health care advocates have noted, this defeats the entire purpose of the health care law because these same families cannot afford costly health insurance from their employers and will be ineligible for tax credits and other subsidies to help off-set premiums since those benefits are only available to workers whose employer provided insurance is not “affordable.”  The IRS listened to those concerns through the rule-making process, but still decided that “affordability” would be based on individual coverage.  (For a good background piece on this issue, check out this NY Times story from last August).

As for how an employer should determine “household income,” the IRS has adopted a safe harbor that allows an employer to look at the employee’s W-2 wages and compare 9.5% of the W-2 amount to the employee’s contribution to health care for that year.   This safe harbor will be available through 2014.

The new health care law forces many employers to make practical decisions about what type of coverage, if any, to offer employees (because, for some employers, dropping coverage entirely and paying the associated penalty of $3,000 might make more financial sense).   The new IRS regulations confirm that in designing benefits packages, employers should focus on making individual coverage inexpensive, not necessarily family coverage.

NLRB Finds Employee Handbook Provision Illegal

By Bryan M. O'Keefe on Posted in Labor Law & NLRB, Laws & Regulations

The NLRB has issued a series of decisions in recent months finding various employee handbook provisions unlawful.   The Labor Board’s scrutiny of handbooks continued recently in another case, Direct TV.

In that case, the employer promulgated the following rule:

 If law enforcement wants to interview or obtain information regarding a Direct TV employee, whether in person or by telephone/email, the employee should contact the security department in El Segundo, Calif., who will handle contact with law enforcement agencies and any needed coordination with DIRECTV departments.

This rule probably looks familiar to many of you.  Most employers maintain such a rule for a good reason – if law enforcement is contacting employees about company matters, the employer usually wants to find out what is happening and provide the employee with legal counsel, if appropriate.

The NLRB, however, held that the rule was unlawful.   According to the Labor Board, the rule could be read by reasonable employees as interfering with a NLRB investigation since NLRB Board agents function as “law enforcement.”   Interfering with such an investigation is a violation of Section 8(a)(4) of the NLRA.

I’d imagine that few, if any, employers wrote such a rule with the NLRB in mind – when one says “law enforcement,” they usually mean federal, state, or local police, not the NLRB.   Yet, this case again demonstrates how broadly the NLRB now reads work rules as implicating labor law.

As a reminder, the NLRB is bringing many of these employee handbook cases under the theory that the overly broad handbook language unlawfully infringes on an employees’ right to engage in protected concerted activity or, as in Direct TV, that the rule interferes with an NLRB investigation. The right to engage in protected concerted activity and the NLRB’s right to investigate unfair labor practices extends to non-union workplaces.  Rules that could be “reasonably construed” as prohibiting protected concerted activity or interfering with a Board investigation are unlawful under Section 8(a)(1).

Labor Union Membership Declines Sharply for Younger Workers

By Bryan M. O'Keefe on Posted in Labor Law & NLRB, Unions, Workplace Trends

The Bureau of Labor Statistics released its annual report on union membership last week.   Like most of these reports in recent years, it was bleak and gloomy news for organized labor.   Private sector union membership continued its downward plummet and now stands at a paltry 6.6%.   This is down from 6.9% last year.   Perhaps, even more troubling for labor unions was the decline in the public sector, normally an area of growth for unions.   There, labor union membership dropped from 37% to 35.9%.   One possible reason for that drop is that the cash-strapped federal, state, and local governments have slashed government jobs under tight budget crunches.

Many reasons have been postulated as to why labor unions keep losing their share of the private workforce.   Unions, of course, point to an “assault” on organized labor by a combination of business groups, Republican politicians, and, even us management-side labor attorneys.   Those groups respond that the reason is labor union’s failure to adapt their messages and ideology to a changing workforce.  Many employers also argue that unions are simply a function of a bygone era.

Either way, this much is clear from the data: organized labor continues to lose its market share.   The most troubling statistics buried in the BLS data is not necessarily the “6.6%” number, as alarming as that is.   Rather, it is the demographic challenge that labor faces with younger workers.   Amongst workers 16 to 24 years old, the unionization rates stands at an abysmally low 4.2%.   For workers 25 to 34, the number is only 9.5%.   Contrast this with workers in the 55 to 64 age bracket, where the number is 14.9%.   If the unionization rate was 14.9% across the board, unions would feel much better about their positions.

In my mind, the lack of an appeal to younger workers is what’s driving labor’s decline.  And should we be surprised?  Think about the typical 25 year old worker now.  This worker is likely very mobile and will switch jobs many times throughout his career.   The worker is also very individualistic.  If he or she is unhappy with their job, they expect to be able to march right into the boss’s office and talk about it.   If he or she discovered that everyone was compensated in the same way, no matter their work performance, they would probably be offended.   What does a labor union, as currently constituted, really have to offer to this person?

Of course, it’s not that younger workers all love their jobs.   In fact talk to most generation Y workers and you are likely to hear them complain and complain about their jobs – usually quite passionately (and in a way that tends to offend their older co-workers).   The problem is that labor unions are not finding attractive solutions to address these complaints.   What if, instead of bargaining over outdated seniority rules that nobody cares about, a labor union fought hard to have employers help their younger workers with student loan payments?   Who knows if it would really work, but it’s obvious what isn’t working – the current union strategy.

Until labor unions figure out a way to solve this deep and systemic problem with younger workers, the 6.6% number is only headed in one direction.

NLRB Recess Appointments Ruled Unconstitutional

By Bryan M. O'Keefe on Posted in Labor Law & NLRB, Laws & Regulations, Litigation

On January 25, 2013, the United States Court of Appeals for the D.C. Circuit held that President Obama’s recess appointments to the NLRB over the past two years are unconstitutional because the appointments did not occur while the Senate was in a formal recess (Republican members of the Senate, during the period that normally would have been a recess, briefly went on the record every few days).   The D.C. Circuit voided the Board’s order in the case before it.   In light of this ruling, parties that have lost NLRB cases after January 4, 2012 (the date of the invalid recess appointments) are likely to obtain relief from these rulings in the D.C. Circuit on this constitutional basis.   We will provide a more in depth analysis of this ruling and its impact on employers in the near future.

NLRB Announces New Rule on Witness Statements

By Bryan M. O'Keefe on Posted in Labor Law & NLRB, Laws & Regulations, Unions, Workplace Trends

With the New Year, we see many lists offering “predictions” about what will happen in 2013 – one of my favorites is the location of the upcoming nuptials between Brad Pitt and Angelina Jolie (an estate in France or a tent in Namibia appear to be the likely contenders).

How about one for labor and employment law?  In 2013 investigations of employee misconduct in unionized workplaces will be less thorough and there will be less of a paper trail documenting the misbehavior of employees who engage in such misconduct.   What a bad way to start the New Year!   This prediction is based on the NLRB’s last major decision in 2012, American Baptist Homes.

Generally speaking, unions have the right to request relevant information about employee disciplinary matters and employers must provide such information.   One bright-line exception was “witness statements.”   In Anheuser-Busch, 237 NLRB 982 (1978), the Labor Board held that when an employer obtains a witness statement as part of an investigation and assures the employee that the statement will remain confidential, the statement need not be turned over to the Union as part of an information request.   The reasoning was that giving the union this information would open the door to harassment, intimidation, and coercion of employees.

In American Baptist Homes, the Labor Board overturned Anheuser-Busch.   American Baptist Homes involved two charge nurses and one CNA who observed a union employee sleeping on the job.   All three were asked to provide written witness statements as part of the investigation.   After reviewing the witness statements, the employer terminated the sleepy employee.   The Union grieved the termination and asked for the witness statements in an information request.   The employer refused, relying on Anheuser-Busch.

The Labor Board decided that Anheuser-Busch was no longer good law and announced a new rule:  witness statements, like other information, must be released to the Union, unless the employer asserts a “legitimate and substantial confidentiality interest.”  This interest must “outweigh the requesting party’s need for the information.”   The burden is on the party asserting confidentiality to establish that interest,   Furthermore, the party asserting such an interest still has a duty to seek an accommodation.  Examples of possible “legitimate and substantial confidentiality interests” with witness statements include “the risk that employees or unions will intimidate or harass those who have given statements, or that witnesses will be reluctant to give statements for fear of disclosure.”

In a fiery dissent, Board Member Brian Hayes argued that employer investigation will be harmed by the Labor Board’s new rule.  Member Hayes said that “full and candid participation” in employer investigations is now,

“more than ever essential to employers challenged with increasing concerns about protecting employees and avoiding liability if they fail to maintain workplace safety or to identify and address workplace violence, bullying, sexual and other types of harassment. If employee witnesses cannot be assured that their statements will remain confidential, they will be reluctant to come forward with information that may be detrimental to their coworkers and avoid participating in the investigation.”

On top of that concern, Hayes rightly points out that the Labor Board’s decision is a classic example of the “right hand not knowing what the left hand is doing.”   After all, EEOC Guidance on employee investigations states that:

  • “An anti-harassment policy and complaint procedure should contain, at a minimum, the following elements . . . Assurance that the employer will protect confidentiality of harassment complaints.”
  • “An employer should make clear to employees that it will protect the confidentiality of harassment allegations to the extent possible.”

According to the NLRB, “assuring confidentiality of harassment allegations to the extent possible” now means – your statement is confidential only to the extent the Union wants it (which it almost always will), only to the extent your employer wants to put up a fight and claim confidentiality (sometimes), and only to the extent the Labor Board decides it must be turned over if the Union decides that it disagrees with the employer’s  confidentiality (given the current Labor Board, the smart money is on always).   If employees know that the statement will not remain confidential, how many of them will really want to aid in an employer investigation and sign their name to a written statement?   That means that employers will probably have fewer witness statements, which is also a bad outcome – having extensive documentation of employee misconduct is one way to avoid allegations that discipline was motivated by a discriminatory or otherwise illegal reason.

The only positive to come out of this case for employers is that because Anheuser-Busch was a long-standing decision and many employers relied on it, the NLRB decided not to apply its new rule retroactively.   As a result, where the employer’s refusal to provide witness statements occurred before December 15, 2012 (the date of the decision), the Labor Board will continue to apply the Anheuser-Busch rule.   If the refusal occurred after that date, the new American Baptist Homes rule will govern.  Of course, given the other implications of the new rule, this is a small consolation.

NLRB Releases Second Facebook Case

By Bryan M. O'Keefe on Posted in Labor Law & NLRB, Laws & Regulations, Social Media, Unions, Workplace Trends

The Labor Board has released its long-awaited second “Facebook case.”  To nobody’s surprise, the NLRB has largely adopted the ALJ decision that the Facebook postings in question constitute protected concerted activity under Section 7.

In Hispanics United of Buffalo, an employee threatened to report several of her co-workers to management who she felt did not provide timely and adequate assistance to the organization’s clients.   One “criticized” employee learned of this and took to Facebook, where other co-workers chimed in, posting the allegation from the co-worker, criticizing her, defending their job performance, and complaining about working conditions, such as work load and staffing issues.

Most of the Facebook posts were “unprofessional” to say the least – at least one used the F-word, and others insulted the organization’s low-income clients.   The criticized employee who started the conversation, however, never informed the other employees that the original co-worker was going to voice the complaint to management.   After being made aware of the Facebook posts, the employer terminated the “criticized employees,” believing that their Facebook comments constituted harassment of the original co-worker.

The ALJ and NLRB sided with the “criticized employees,” finding that their discussion was protected concerted activity.   The activity was protected because the “employees were directly responding to allegations they were providing substandard service to the Respondent’s clients” and such “criticism” could “negatively impact . . . their employment.”   The postings were concerted because the employees were joining a “common cause” and “taking a first step towards taking group action to defend themselves against the accusation they could reasonably believe . . . was going to [be made] to management.”

In dissent, Board Member Brian Hayes – in one of his last decisions before his term expired on December 16, 2012 – made some compelling points – including that the actions were not concerted because the employee who started the discussion on Facebook failed to tell her co-workers that the original employee was going to complain to management.   Board Member Hayes said that there is a difference between “sharing a common viewpoint and joining in a common cause” and that the employees in question were only “venting to one another in reaction to . . . complaints.   This does not constitute concerted activity under the precedent.”   The majority rejected this view, instead finding that the employee who started the Facebook conversation had the “object of preparing her coworkers for group action.”

Protected concerted activity and social media cases are a major enforcement priority for the Labor Board.   As a reminder, two or more employees have the right to voice complaints about terms or conditions of employment – even on Facebook, with a global audience.   A single employee is also protected if the employee acts on the authority of other employees, seeks to initiate or induce group action, or expresses a concern which is a “logical outgrowth” of other concerns expressed by a group.  The protections afforded by this doctrine apply to both non-union as well as union employees.

Many employers are frustrated by these Labor Board cases involving Facebook, believing that employees now have free reign to criticize them in a way that can impact their reputation.   In the “old days,” protected concerted activity rarely left the shop floor.   To the extent that the employee’s claims were misleading or exaggerations, few people ever knew it.   Of course, Facebook changes all of that and now these same misleading or exaggerated claims can go viral in a matter of hours.

Unfortunately, it appears that the NLRB has little sympathy for this concern.   While the General Counsel, in its Second Report on Social Media, said that it would consider the extent to which the Facebook posts “disparage the employer’s products and services,” before bringing a complaint,  the employees in Hispanics United of Buffalo did not cross the line in the Board’s view – even though many employers would disagree with that position.   For now, employers must take a very cautious approach to issuing employee discipline for Facebook postings, or face the wrath of the NLRB and possible reinstatement and back-pay for any such discipline.