In two recent cases decided on July 2, the Second Circuit Court of Appeals held that in many instances, unpaid interns may not necessarily be employees covered by the Fair Labor Standards Act ("FLSA") and the New York Labor Law ("NYLL").  In both cases (Glatt v. Fox Searchlight Pictures and Wang v. The Hearst Corporation), plaintiffs who had obtained internships at major media companies argued that they were entitled to wage payments under the FLSA and NYLL; in addition, they sought to bring their claims as class and/or collective actions, which would drive up the costs of litigation and significantly increase the potential liability.  The Second Circuit adopted a standard that will likely make it more difficult for unpaid interns to establish employment status, and will likely make it more difficult for unpaid interns to litigate their FLSA and NYLL claims in a class or collective action. The Glatt and Wang decisions articulated two principles of great importance to employers considering internship programs.  First and foremost, the Second Circuit rejected a rigid six-point test promulgated by the United States Department of Labor to determine whether interns should be considered employees, and instead adopted a more nuanced test of employment status that examines whether the employer or the intern is the “primary beneficiary” of the relationship.  Second, the Court noted that because the circumstances of the internships at issue in the two cases were fact-specific, there is a high burden which plaintiffs must meet to show the requisite commonality to support a class or collective action. While these cases were pending in the Second Circuit, the college and university community was concerned that an important resource for experiential learning might be foreclosed if employers decided to discontinue their unpaid internship programs because of a concern about FLSA or NYLL liability.  Because of the potential impact on higher education, the American Council on Education (together with six other national consortia of colleges and universities) asked Bond attorneys Shelley Sanders Kehl and E. Katherine Hajjar to file an amicus brief arguing that the Court should consider the educational value of internships.  These arguments were adopted by the Court and featured prominently in its Glatt decision. The Court proposed the following seven (non-exhaustive) factors to be considered in determining who is the “primary beneficiary” in an internship placement, but also recognized that additional factors may be relevant:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation;
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions;
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit;
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;
6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and
7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The Court explained that these considerations require “weighing and balancing all of the circumstances” and that a single factor will not be dispositive for a court to find that an intern is entitled to minimum wage.  The Court went on to observe that its decision reflects the “modern internship,” and the importance of internships in an intern’s formal education.  While the Court recognized that some internships may not pass muster under the primary beneficiary test, it established a protocol for designing internship opportunities that will qualify. This is good news both for interns and for employers, who will likely find it less risky to offer unpaid internships, providing real world experience to complement the formal education of today’s young adults.

The U.S. Department of Labor released its highly anticipated proposed rule on the Fair Labor Standards Act white-collar overtime exemptions today, along with a fact sheet summarizing the proposed rule.  The proposed rule more than doubles the salary requirement to qualify for the executive, administrative, professional, and computer employee exemptions from the current level of $455 per week to an amount that is expected to be $970 per week by the first quarter of 2016, and significantly increases the salary threshold to qualify for the "highly compensated employee" exemption.  The proposed rule also includes a procedure to automatically raise the minimum salary levels to qualify for the white-collar exemptions from year to year without further rulemaking.  The USDOL estimates that nearly five million employees who are currently classified as exempt will immediately become eligible for overtime pay if the proposed rule is adopted as the final rule. The USDOL is proposing to set the salary requirement to qualify for the executive, administrative, professional, and computer employee exemptions at the salary level equal to the 40th percentile of earnings for full-time salaried workers, and the salary requirement to qualify for the highly compensated employee exemption at the salary level equal to the 90th percentile of earnings for full-time salaried workers.  The USDOL used data compiled by the Bureau of Labor Statistics from 2013 in drafting the proposed rule, which provides for a minimum salary level of $921 per week to qualify for the executive, administrative, professional, and computer employee exemptions, and a minimum salary level of $122,148 per year to qualify for the highly compensated employee exemption.  However, the USDOL stated in its Notice of Proposed Rulemaking that it will likely rely on data from the first quarter of 2016 if the proposed rule is adopted, which will result in a projected minimum salary level of $970 per week to qualify for the executive, administrative, professional, and computer employee exemptions. The proposed rule does not include any proposed revisions to the outside sales exemption.  In addition, although there was some speculation that the duties requirements would also be revised to make the exemptions more restrictive, the USDOL's proposed rule does not include any revisions to the duties requirements to qualify for any of the white-collar exemptions.  However, the USDOL stated in its Notice of Proposed Rulemaking that it is nevertheless seeking comments on whether the duties tests are working as intended to screen out employees who are not bona fide executive, administrative, or professional employees.  So, there is still a possibility that the duties requirements could be revised based on comments received by the USDOL about the proposed rule. Employers should immediately begin to assess which employees who are currently classified as exempt will become non-exempt if the proposed rule is adopted as the final rule.

The New York State Department of Labor (“NYSDOL”) recently proposed new regulations governing the payment of employee wages via payroll debit cards – a growing practice among employers.  These draft regulations, which are not yet final or effective, also set forth new requirements governing the payment of wages by direct deposit. Regarding an employer’s use of these so-called “payroll cards,” NYSDOL has previously cautioned that paying employees in this manner raises a number of potential legal issues under the New York Labor Law.  Even so, NYSDOL concurrently opined that employees may be paid lawfully through such payroll cards, so long as certain requirements are met.  For example, according to NYSDOL, employers are required to first obtain written authorization from employees, and employees cannot be subjected to undue fees or encumbrances when accessing their wages through the payroll cards. The proposed regulations track this prior guidance and, if enacted, will codify the specific requirements that must be met in order for employers to lawfully use such payroll cards.  Among other things, employers will be required:  (1) to provide specific, advanced disclosures to employees about the payroll card program in question; (2) to obtain the prior “informed consent” of employees; and (3) to ensure the payroll card program includes a long list of other mandatory terms and conditions (e.g., employees must be provided with access to at least one ATM network offering withdrawals at no cost). With respect to direct deposit, the proposed regulations would require employers to maintain an employee's written consent to be paid through direct deposit during the entire duration of the employee's employment and for six years after the last deposit is made.  In addition, employers would be required to provide a copy of the written consent to the employee and to make the direct deposits at a financial institution selected by the employee. Notably, the proposed regulations would not apply to individuals working in executive, professional, or administrative positions who earn in excess of $900.00 per week. The proposed regulations are currently open for public comment.  We will continue to monitor this issue and report on any further developments. Editor's Note:  Our thanks to Stephanie Hoppe, one of Bond’s Summer Law Clerks, who helped prepare this article.

On June 10, 2015, the New York City Council passed the Fair Chance Act, which amends the New York City Human Rights Law to prohibit most employers in New York City from making any inquiries about an applicant's pending arrest or criminal conviction record until after a conditional offer of employment has been made.  The law is expected to be signed by Mayor Bill de Blasio, and will become effective 120 days after it is signed. The law applies to employers with four or more employees, with some exceptions.  For example, the law does not apply to actions taken by an employer pursuant to any state, federal, or local law that requires criminal background checks for employment purposes or bars employment based on criminal history.  The law also does not apply to actions taken by an employer with regard to an applicant for employment as a police officer or peace officer. The law prohibits covered employers from making an inquiry or statement regarding the pending arrest or criminal conviction record of an applicant until after the employer has extended a conditional offer of employment.  The term "inquiry" is defined to include not only questions communicated to an applicant in writing or otherwise, but also any searches of publicly available records or consumer reports that are conducted for the purpose of obtaining an applicant's criminal background information. After a conditional offer of employment has been made, an employer may inquire about the applicant's arrest or criminal conviction record, but may not take any adverse employment action based on the results of the inquiry unless the employer complies with the following requirements:

• The employer must provide a written copy of the inquiry to the applicant in a manner to be determined by the New York City Commission on Human Rights;
• The employer must analyze the various factors under New York Correction Law Article 23-A to determine whether the applicant should be disqualified from employment;
• The employer must provide a copy of the analysis and any documents in support of the determination to the applicant in a manner to be determined by the New York City Commission on Human Rights; and
• The employer must give the applicant at least three business days to respond and must hold the position open for the applicant during the response period.

In addition to prohibiting pre-offer inquiries about an applicant's arrest or criminal conviction record, the Fair Chance Act prohibits employers from publishing any job advertisements or solicitations stating either implicitly or explicitly that an applicant's arrest or criminal conviction record will limit the applicant's opportunity to be considered for the job. In preparation for this new law, covered employers in New York City should take the following steps:  (1) review their employment applications and remove any inquiries about an applicant's arrest or conviction record; (2) review their procedures for conducting background checks to ensure that any criminal background checks are not conducted until after a conditional offer of employment has been made; and (3) make sure that all managers and supervisors who conduct interviews or who are otherwise involved in the hiring process are well-trained to avoid asking questions or making statements about an applicant's arrest or criminal conviction record. Editor's Note:  Our thanks to John Boyd, one of Bond's Summer Law Clerks, who helped prepare this article.

On June 1, 2015, the United States Occupational Safety and Health Administration (“OSHA”) published A Guide to Restroom Access for Transgender Workers.  OSHA stated that the “core principle” of the Guide is as follows:  “All employees, including transgender employees, should have access to restrooms that correspond to their gender identity.”  The Guide serves as an extension to OSHA’s longstanding rule that, as a matter of health and safety, all employees must be provided a sanitary toilet facility in order to avoid “the adverse health effects that can result if toilets are not available when employees need them.” According to the Guide, there are approximately 700,000 adults in the United States who are transgender -- meaning that their internal gender identity is different from the sex they were assigned at birth.  OSHA explained that restricting employees to using “only restrooms that are not consistent with their gender identity or segregating them from other workers by requiring them to use gender-neutral or other specific restrooms, singles those employees out and may make them fear for their physical safety.”  This could potentially lead to an unsafe situation where transgender employees avoid using restrooms entirely while at work.  Therefore, the Guide’s “Model Practices” explain that an employee who identifies as a man should be permitted to use men’s restrooms, and an employee who identifies as a woman should be permitted to use women’s restrooms, and that the decision of which restroom to use should be made solely by the employee.  Notably, employees are not required to submit medical or legal documentation of their gender identity in order to have access to the restroom of their choosing. This Guide does not come as a surprise given the actions taken recently by the Office of Federal Contract Compliance Programs, Equal Employment Opportunity Commission, and United States Department of Labor in acknowledging the rights of transgender employees to use the restroom that is consistent with their gender identity. Unfortunately, OSHA did not provide much guidance for employers, stating simply that “employers need to find solutions that are safe and convenient and respect transgender employees.”  OSHA also did not provide any guidance indicating how employers should address situations where employees raise concerns about a transgender employee using their restroom. Nevertheless, employers must be conscious of and follow OSHA’s guidance, regardless of whether adherence makes other employees uncomfortable, or else they will potentially invite legal action, including the filing of OSHA complaints or EEOC charges.  Employers should also review their policies (if any) to ensure that they cannot be construed as prohibiting transgender employees from using the restroom that is consistent with their gender identity.

On June 1, the Supreme Court issued an 8-1 decision in EEOC v. Abercrombie & Fitch Stores, Inc., holding that Title VII of the Civil Rights Act prohibits a prospective employer from refusing to hire an applicant in order to avoid accommodating a religious practice that it could accommodate without undue hardship, even if the applicant has not actually informed the prospective employer of the need for a religious accommodation.  The Supreme Court reversed the decision of the Tenth Circuit Court of Appeals granting summary judgment in favor of Abercrombie, and remanded the case back to the Tenth Circuit for further consideration. The Facts In reviewing the Tenth Circuit's decision granting summary judgment to Abercrombie, the Supreme Court considered the facts in the light most favorable to the EEOC.  The Supreme Court summarized those facts as follows. At the time this case arose in 2008, Abercrombie had a Look Policy that governed its employees' clothing and appearance while at work.  The Look Policy prohibited employees from wearing "caps," but did not define the term "caps." An applicant named Samantha Elauf applied for a position in an Abercrombie store, and wore a headscarf to her interview with the store's assistant manager.  During the interview, Elauf did not comment on (and the assistant manager did not ask any questions about) the headscarf or the reasons why she wore the headscarf.  The assistant manager gave Elauf a rating after the interview that qualified her to be hired, but the assistant manager was concerned that Elauf's headscarf would conflict with the store's Look Policy. The assistant manager sought clarification from the district manager regarding whether the headscarf would be considered a "cap" that was prohibited by the Look Policy.  In making the inquiry to the district manager, the assistant manager stated that she believed Elauf wore the headscarf for religious reasons.  The district manager told the assistant manager that the headscarf would violate the Look Policy and directed the assistant manager not to hire Elauf. Although Abercrombie did not know this for sure at the time it made the decision, Elauf was a practicing Muslim who wore the headscarf for religious reasons.  Elauf filed a discrimination charge with the EEOC, and the EEOC filed a lawsuit against Abercrombie on Elauf's behalf, alleging that Abercrombie's decision not to hire Elauf violated Title VII. The Lower Court Decisions The District Court granted summary judgment to the EEOC on the issue of liability, and awarded $20,000 to Elauf after a trial on damages. On appeal, the Tenth Circuit reversed the District Court and granted summary judgment to Abercrombie.  The Tenth Circuit reasoned that Abercrombie could not be liable under Title VII for failing to accommodate Elauf's religious practice unless Elauf provided Abercrombie with actual knowledge of her need for a religious accommodation.  Because it was undisputed that Elauf did not make any request for a religious accommodation, the Tenth Circuit found that Abercrombie did not violate Title VII. The Supreme Court's Decision The Supreme Court disagreed with the Tenth Circuit's holding that an employer must have actual knowledge of an applicant's need for a religious accommodation in order to establish that the employer violated Title VII by refusing to hire an applicant in order to avoid making a religious accommodation.  The Supreme Court held that an applicant need only demonstrate that his or her need for a religious accommodation was a motivating factor in the employer's decision. The Supreme Court explained the difference between motive and knowledge as follows:  "An employer who has actual knowledge of the need for an accommodation does not violate Title VII by refusing to hire an applicant if avoiding that accommodation is not his motive.  Conversely, an employer who acts with the motive of avoiding accommodation may violate Title VII even if he has no more than an unsubstantiated suspicion that accommodation would be needed." Considering the facts in the light most favorable to the EEOC and Elauf, the Supreme Court concluded that the Tenth Circuit's decision should be reversed because Abercrombie's assistant manager at least suspected that Elauf wore the headscarf for religious reasons, and Abercrombie's district manager directed that Elauf not be hired because the headscarf violated the Look Policy.  On remand, the lower courts will need to determine whether there are genuine disputes regarding these material facts and whether a trial will be necessary on these issues. What Can Employers Do to Minimize the Risk of Religious Discrimination Claims in the Hiring Process? Many employers delegate responsibility for hiring new employees to managers without providing adequate guidance or training regarding how to carry out that important responsibility.  All personnel who have responsibility for interviewing and making hiring decisions should be trained regularly regarding compliance with anti-discrimination laws and employer policies.  The training should include, at a minimum, a review of lawful vs. unlawful pre-employment inquiries, a review of what information may and may not be considered as part of the hiring process, and the employer's obligations to make accommodations for religious observances or practices if the accommodations can be provided without undue hardship. If the hiring manager believes that an applicant's clothing or appearance during the interview might conflict with the employer's dress code, the hiring manager should still refrain from making any inquiries about whether the applicant's clothing or appearance is for religious reasons.  If the hiring manager feels that the applicant is a good candidate for the position in all other respects and is seriously considering extending an offer to the applicant, one way to address the potential dress code concern would be to show the applicant a copy of the employer's dress code and ask the applicant whether he or she can comply with the dress code, either with or without an accommodation.  If the applicant states that an accommodation would be needed, the employer can begin the process of determining whether the requested accommodation can be provided without undue hardship.  However, if the hiring manager has other legitimate, non-discriminatory reasons for rejecting an applicant that have nothing to do with concerns about the applicant's ability to comply with the employer's dress code or potential religious accommodations, the hiring manager should not make any inquiries during the interview regarding the applicant's ability to comply with the dress code. Finally, as in all other aspects of employment law, documentation is critical.  All hiring managers should be directed to take and maintain detailed notes of their interviews with job applicants and to document the legitimate, non-discriminatory reasons for hiring one candidate over another.  If a religious accommodation is requested by an applicant, the employer should keep documentation of the request, any information provided by the applicant regarding the religious practice for which an accommodation is requested, and the decision regarding whether or not the requested accommodation can be provided without undue hardship.

On April 20, 2015, the Acting Director of the Occupational Safety and Health Administration (“OSHA”) Whistleblower Protection Programs issued a memorandum to all Regional Administrators clarifying the standard which should be applied to whistleblower claims at the agency investigatory stage.  The guidance was issued because there was some concern that the standards contained in OSHA’s Whistleblower Investigations Manual were “ambiguous.”  The clarified standard is that “after evaluating all of the evidence provided by the employer and the claimant, OSHA must believe that a reasonable judge could rule in favor of the complainant.” A few points about the clarification are noteworthy.  First, the agency made it clear that “the evidence does not need to establish conclusively that a violation did occur.”  Second, “a reasonable cause finding does not necessarily require as much evidence as would be required at trial.”  Finally, the memorandum does note that “although OSHA will need to make some credibility determinations to evaluate whether a reasonable judge could find in the complainant’s favor, OSHA does not necessarily need to resolve all possible conflicts in the evidence or make conclusive credibility determinations.” While it is too early to tell whether the newly clarified standard will result in more (or less) reasonable cause determinations, employers need to take the guidance into consideration when they are involved in any future whistleblower investigation.

On April 20, 2015, the Equal Employment Opportunity Commission (“EEOC”) issued a proposed rule to amend the regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act (“ADA”) as it relates to employer wellness programs.  The EEOC also issued a Fact Sheet for Small Business and a Q&A regarding the proposed rule. By way of background, Title I of the ADA prohibits employment discrimination on the basis of disability.  This non-discrimination provision applies to compensation and other terms, conditions, and privileges of employment, including fringe benefits, whether or not administered by the employer.  It also limits the medical information that employers may obtain from employees and applicants.  The ADA, however, does permit employers to conduct medical examinations and inquiries, including voluntary medical histories, when it is part of a voluntary employee health program.  The EEOC’s proposed rule is intended to provide guidance to employers on the extent to which the ADA permits employers to offer incentives to employees to promote participation in wellness programs that are employee health programs. What is a wellness program and when would it be considered  an employee health program? A wellness program is a program or activity that is typically offered through employer-provided health plans to help employees improve their health with the goal of lowering health care costs.  Wellness programs often encourage employees to become more active, quit smoking, eat better, etc., by offering monetary or other rewards or incentives for doing so.  Some wellness programs obtain medical information from employees by asking them to complete health risk assessments or undergo biometric screenings. According to the proposed rule, a wellness program could be considered an employee health program if it is reasonably designed to promote health or prevent disease.  In other words, it must:  (1) have a reasonable chance of preventing disease and improving the health of participating employees; (2) not be overly burdensome; (3) not be a subterfuge for violating the ADA or other employment discrimination laws; and (4) not be highly suspect in the method chosen to promote health and prevent disease. When would participation in a wellness program be considered voluntary? A wellness program that includes disability-related inquiries or medical examinations would be considered voluntary as long as the employer:  (1) does not require employees to participate; (2) does not deny access to health coverage or limit the extent of benefits for employees who do not participate; (3) does not take adverse action, retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate in the program or who do not achieve certain outcomes; and (4) provides written notice to employees (when the wellness program is part of a group health plan) that describes the medical information that will be obtained, the purposes for which it will be used, who will receive it, and how it will be safeguarded. Does the use of incentives to encourage employees to participate in a wellness program render it involuntary? No.  The EEOC takes the position in its proposed rule that the use of incentives, whether in the form of reward or penalty, will not render the program involuntary as long as the maximum allowable incentive available under the program does not exceed 30 percent of the total cost of employee-only coverage.  For example, if the total cost of employee-only coverage is $5,000, the maximum incentive for an employee under the plan cannot exceed $1,500.  This is consistent with the maximum allowable incentive amount under the Health Insurance Portability and Accountability Act (“HIPAA”) and the Affordable Care Act health-contingent wellness programs. Will medical information gathered as part of an employee’s participation in wellness programs be kept confidential? Yes.  The EEOC proposes adding a new subsection to its regulations relating to confidentiality to ensure that medical information collected through participation in employee health programs will only be provided to employers in aggregate terms and will not disclose (or be reasonably likely to disclose) the identity of any specific employee. While we await issuance of a final rule, here are a few steps that employers can take to ensure that their wellness programs comply with the ADA:

• Confirm that wellness programs are reasonably designed to promote health or prevent disease.
• Audit the incentives offered under wellness programs to ensure that they do not exceed 30 percent of the total cost of employee-only coverage.
• Ensure that employee participation in wellness programs is voluntary.
• Provide reasonable accommodations to enable employees with disabilities to participate in wellness programs and earn whatever incentives are offered.
• Ensure that medical information is maintained in a confidential manner, which includes training employees on handling confidential medical information, encryption of electronic medical information, and prompt reporting of breaches.
• Establish a written notice to employees regarding the collection of medical information.
• Do not deny health insurance or limit the extent of benefits to employees who choose not to participate in wellness programs.
• Do not take adverse action, retaliate against, interfere with, coerce, intimidate, or threaten employees who do not participate in wellness programs or who do not achieve certain outcomes.

In follow-up to our April 21 post, New York City Mayor Bill de Blasio signed into law an amendment to the New York City Human Rights Law on May 6, prohibiting employment discrimination on the basis of “consumer credit history.”  The amendment makes it an “unlawful discriminatory practice” for an employer to use an applicant's or employee’s consumer credit history when making hiring and other employment decisions, and to otherwise discriminate against an applicant or employee on the basis of his or her consumer credit history.  The law goes into effect on September 3, 2015, and applies to most private sector employers in New York City. Under this new amendment, most private New York City employers may only consider an applicant's or employee’s consumer credit history for the following types of positions:

• Positions that are non-clerical and have regular access to trade secrets;
• Positions with “signatory authority over third party funds or assets valued at $10,000 or more”;
• Positions that “involve a fiduciary responsibility to the employer with the authority to enter financial agreements valued at $10,000 or more on behalf of the employer”;
• Positions where job duties regularly include the modification of digital security systems designed to protect the employer’s or client’s networks or databases;
• Positions with access to information relating to criminal investigations or national security; and
• Positions legally required to be bonded.

There are also exceptions for positions in public agencies, and for employers who are legally required to obtain an applicant's or employee’s consumer credit information. “Consumer credit history” is broadly defined as information relating to an individual’s “credit worthiness, credit standing, credit capacity, or payment history,” including information obtained from credit reporting agencies, as well as information gathered directly by the employer from the applicant or employee, such as whether the individual has items in collections, or has filed for bankruptcy. The enforcement and remedy provisions of this new amendment are the same as for other types of discrimination under the New York City Human Rights Law, meaning aggrieved applicants or employees may file a lawsuit for damages in court, or file a complaint directly with the New York City Commission on Human Rights. Private New York City employers who gather and use an individual’s consumer credit history during hiring or when making other employment decisions should revise such policies.  Such information may only be considered when the position held by an employee or sought by an applicant fits into one of the exceptions listed above.

Conducting workplace investigations is one of the most challenging and most important duties that Human Resource professionals must take on.  With the slew of existing laws, how Human Resource professionals respond to complaints about harassment or other misconduct can have huge legal and practical implications for the employer.  Unfortunately, Einstein’s definition of insanity -- doing things the same way and expecting a different result -- all too often is at play when it comes to conducting effective investigations.  Unfortunately, employers make the same mistakes time and again, exposing themselves to potential legal liability.  These common mistakes often result in lawsuits being filed by the complaining employee or by the employee who is fired or disciplined.  Here is a list of 10 common mistakes Human Resource professionals should avoid to minimize unnecessary legal exposure. 1.  Failing to Investigate or Ignoring Complaints Failing to take action when a complaint is made is one of the biggest mistakes employers can make.  Choosing not to conduct an investigation after acquiring knowledge of the alleged inappropriate conduct will result most likely in the company being legally responsible for harm caused to any employee, client, and others due to the inappropriate conduct.  Regardless of how frivolous or unfounded the complaint appears, or who made the complaint, an investigation should be conducted.  Even allegations made by employees who have a history of making complaints or are regarded as “troublemakers” at work should not be ignored.  Equally important, the mere fact that the complaint may be anonymous does not excuse the failure to investigate.  Obviously, the task is more difficult but the investigation nonetheless should be conducted. 2.  Not Creating an Investigation Plan Failing to create a preliminary plan for the investigation creates serious issues because it often results in the purpose of the investigation being misunderstood or forgotten.  Before diving into the investigation, make sure you’ve thought about the five W’s:  (1) Why are you investigating?; (2) Who will conduct the investigation?; (3) Who are the witnesses that need to be interviewed?; (4) What evidence needs to be collected?; and (5) What is your investigation timeline? 3.  Taking Too Long to Investigate Delaying the initiation of the investigatory process after being notified of an issue may lead to employer liability.  Particularly in harassment and discrimination cases, an employer’s decision to delay an investigation may be viewed as subjecting the employee to additional unlawful behavior.  Nonetheless, making sure an investigative plan is properly prepared remains important.  Therefore, Human Resource professionals must strike a balance between adequately preparing for the investigation and avoiding unreasonably long delays. 4.  Not Having Trained and Ready Investigators or Selecting the Wrong Investigator A failure to have trained investigators prepared to promptly respond to complaints can result in an ineffective and drawn out investigation.  Employers should have a few employees trained to conduct an impartial, professional, and credible investigation.  Another option is to hire a trusted Human Resources colleague or use in-house or outside counsel to conduct the investigation.  No matter who you choose as the investigator, making sure that the investigator is trained and able to begin the investigation promptly is key. Depending on the nature of the allegations, you also need to be sure you have selected the right person for the job.  For example, having a former senior law enforcement official interview relatively young employees regarding highly sensitive allegations of a sexual nature may not be the most effective way to get the truth! 5.  Not Doing a Thorough Investigation Conducting a sloppy investigation by failing to interview necessary witnesses, failing to review relevant documents, and ignoring potential issues that come up during the investigation can create just as much legal exposure as not doing an investigation at all.  You should make sure that every investigation is thorough, not only to ensure that the alleged misconduct is properly dealt with, but also to counteract any accusations by an employee that the investigation was ineffective. 6.  Conducting Unlawful Searches Searching an employee’s personal belongings or monitoring certain communications without consent can result in the employer breaking several federal and state laws.  To avoid liability, it is good practice for employers to make employees aware of its surveillance policies and obtain consent from employees to monitor and access communications and information contained on any electronic devices employees are given access to at work. 7.  Using Aggressive or Unwelcoming Interview Styles An employer may become the target of a lawsuit if its investigators are overly aggressive when interviewing employees about alleged misconduct.  Aggressive tactics may result in legal claims such as false imprisonment and coerced confessions, just to name a few.  More practically, the employer risks not getting the whole story, dissuading employees from cooperating in the investigation, and not reaching the correct conclusion in the matter.  To avoid aggressive interviewing, you should consider appropriate locations to conduct the interviews, outline questions in advance, and use open-ended questions when able, to get the entire story.  As noted above, the “right” investigator can and often does make a big difference in making witnesses feel comfortable so that they will be cooperative instead of obstructing the investigation. 8.  Making Confidentiality Promises Although it is reasonable for an employer to encourage everyone involved in the investigation to keep the matter private, an employer should never promise an employee that his or her complaint will remain confidential.  There will always be certain information that must be disclosed in order for a thorough investigation to be completed.  Moreover, depending again on the nature of the allegations, employers run the risk of a possible violation of federal labor law (considering the NLRB's Banner Health decision) if they demand absolute confidentiality by the witnesses. 9.  Failing to Create a Report Don’t underestimate the value of documenting investigations and credibility determinations to help support the company’s action or inaction regarding the allegations.  Not appropriately documenting necessary evidence, information provided during interviews, and any other relevant findings is just as bad as failing to conduct an investigation.  “The dog ate my homework” does not work very well in the legal arena.  When there is no record of the information obtained to support your determination, there is no way to show that a proper investigation was done and that an appropriate determination was reached.  An investigatory report should be prepared for every single investigation and should include a summary of the matter, the identity of the complainant, the accused, and all witnesses, a description of the relevant documents, findings, credibility determinations, and the recommended action. 10.  Failing to Make a Determination Failing to reach a conclusion and take the necessary steps to stop misconduct and prevent it from occurring in the future will ultimately result in the employer once again exposing itself to legal liability.  Once the report has been completed, a determination should be made regarding whether the misconduct occurred and what appropriate actions should be taken.  Make sure, especially in cases of harassment, that the complainant does not suffer any adverse employment actions resulting from the determination unless you can prove that the allegations were made in bad faith.  When a determination is made, you should consider not only if the chosen action appropriately corrects the problem, but whether it also sends a message to coworkers of what the consequences are for harassing behavior or misconduct. Following these basic common sense steps should go a long way in helping you ensure your employer avoids unnecessary liability.

On April 16, 2015, the New York City Council overwhelmingly passed an amendment to the New York City Human Rights Law that would bar most city employers from using credit checks as part of their hiring process.  Supporters of the bill argue that in most cases, an applicant’s consumer credit history has no direct correlation to their job performance, and an employer’s use of credit checks in hiring could have an adverse impact on minority job applicants, who are more likely to have poor credit histories. Similar to Article 23-A of the New York Correction Law, however, the bill does include exemptions for certain professions where there is, in fact, a direct relationship between a person’s credit history and his/her fitness or ability to perform the job.  Exempted professions include high-level executives who have financial authority over company or third-party funds or assets worth more than $10,000, elected officials, police officers, and workers who are required to have security clearance under federal or state law, such as those having access to intelligence, national security information, or trade secrets.  By focusing employer exemptions on particular job duties as opposed to excluding entire industries, such as banks, this bill has broader coverage than similar laws in other jurisdictions. If the amendment is signed into law by Mayor de Blasio, New York City would join 10 states and Chicago in barring employer credit checks in hiring.

On March 27, 2015, the U.S. District Court for the Southern District of New York granted the plaintiffs’ motion to compel disclosure of a report prepared by a Human Resources (“HR”) consultant in class action litigation under the Fair Labor Standards Act (“FLSA”) and state wage and hour laws. In Scott v. Chipotle Mexican Grill, Inc., Chipotle claimed that a number of documents sought by the plaintiffs during discovery were privileged communications that were protected from disclosure.  One such document was a report from an HR consultant examining the activities of four employees holding Chipotle’s apprentice position.  Chipotle claimed that the report was subject to the attorney-client privilege because one of its attorneys retained the HR consultant to help him assess whether the apprentice position should be classified as an exempt or non-exempt position.  The Court disagreed with Chipotle and ordered that the report be turned over to the plaintiffs. In general, the attorney-client privilege -- upon which Chipotle was relying -- applies to communications between an attorney and his/her client that were intended to be, and were in fact, kept confidential, and were made for the purpose of obtaining or providing legal advice.  In certain limited situations, however, communications can fall within this privilege even if not made between an attorney and a client.  The so-called “agent of attorney” doctrine acts to extend the attorney-client privilege to shield communications that are not between an attorney and client when the purpose of the communication is to assist the attorney in rendering legal advice to the client.  Such communication must be “necessary” or “highly useful” for effective consultation between the client and attorney.  This exception has been applied sparingly, in very limited circumstances. Here, the Court held that Chipotle failed to establish that the HR consultant did anything more than factual research to assist Chipotle in making a business decision, rather than to assist an attorney in rendering legal advice to Chipotle.  The Court explained that the report did not provide any specialized knowledge that the attorneys could not have acquired or understood on their own or directly through Chipotle (their client).  There was also no indication that the consultant was taking information that was incomprehensible to Chipotle’s attorneys and putting it into a “usable form,” rather than merely consolidating employee interviews and delivering a factual analysis.  The Court rejected Chipotle’s argument that the report should be considered privileged because the consultant was hired by a law firm and the report was specifically drafted for an attorney, because the agent-of-attorney doctrine does not consider form over substance.  The final nail in Chipotle’s coffin was the fact that no legal advice was actually provided by its attorneys following receipt of the HR consultant’s report, which indicated that the report was not created for the purpose of assisting the attorneys in providing legal advice. The Chipotle decision emphasizes the need for employers to exercise the utmost care when deciding whether to utilize the services of an HR consultant.  Although the Court ruled upon a situation where an attorney was involved, at least tangentially, with the HR consultant, employers must recognize that when an HR consultant is simply providing advice to an employer and there is no attorney involvement at all, such communications or resulting reports would undoubtedly not be privileged.  Even if an attorney is involved, however, the privilege still will not apply if the consultant’s investigation is merely factual, does not assist the employer’s attorney in rendering legal advice, and does not provide information outside of the attorney’s general expertise that is essential to effective consultation between the attorney and client.  In such situations, there is a risk that the employer will be required to disclose any communications and reports from the consultant during future litigation, which potentially could be devastating depending upon the content of those communications and reports.