In a little-recognized effort to generate “mandate relief” associated with its recently-enacted “Tax Cap,” the New York Legislature amended General Municipal Law (“GML”) § 72-c to enable more municipalities to recover expenses related to the initial training of their police and peace officers in the event that such officers decide to transfer to another municipality within their first three years of service.

Historically, GML § 72-c permitted only municipalities with populations of “ten thousand or less” to seek reimbursement for expenses incurred in the training of members of its police force who commenced employment with another municipality’s police force within three years of graduating from the police training program.  Because police training is funded by municipal tax dollars, GML § 72-c originally served to protect small municipalities against the debilitating financial losses associated with the departure of their newly-hired and trained police officers for larger, more lucrative and/or more desirable jobs. Without the protections of GML § 72-c, these small municipalities would never see the benefit of the costly training they had provided to the departing officers.

In light of the ongoing financial hardships currently faced by all municipalities across New York, effective June 24, 2011, the Legislature eliminated the requirement from GML § 72-c that the municipality which provided the police training “hav[e] a population of ten thousand or less” to be eligible to seek reimbursement.  According to the legislation, if a police or peace officer commences employment with another police department within three years of graduating from police training, any municipality, regardless of size, can recover training expenses from the officer’s new employer.  The amount that a municipality may recover includes: “… salary, tuition, enrollment fees, books, and the cost of transportation to and from training school ….” The formula for calculating the recoverable amount reimburses the prior municipal employer on a pro rata basis. Simply put, the new municipal employer must pay the officer’s prior municipal employer the per diem cost of training expenses for each day from the officer’s last day of service with the original employer until he/she would have worked for three years.

GML § 72-c, as amended, will provide many municipalities – especially those with large police departments that have historically served as “feeder” organizations for other police departments around the State – with a new means of recovering some of the lost costs it once incurred. In these turbulent economic times, these recovered costs could help financially-strapped municipal budgets. Whether it actually provides significant “mandate relief” for municipalities, or it simply results in new forms of litigation, is yet to be determined.

Last week, the Second Circuit Court of Appeals affirmed a Southern District of New York decision denying IBM Corporation's application for a preliminary injunction to enforce a broad non-competition agreement and to prevent a former high-level executive from working for Hewlett-Packard.  The case illustrates the high standard under New York law to obtain preliminary injunctions to enforce non-competition agreements.

The case involved Giovanni Visentin, who worked for IBM in numerous roles during his 26 years of employment.  His most recent position was General Manager of IBM's Integrated Technology Services ("ITS") business.  In that position, he was responsible for the development and sale of ITS products and services throughout North America.  In January of 2011, Mr. Visentin submitted his resignation from IBM to accept a position with Hewlett-Packard in the position of Senior Vice President, General Manager, Americas for Hewlett-Packard Enterprise Services.

Mr. Visentin had signed a non-competition agreement during his employment with IBM, which, on its face, seemed to preclude Mr. Visentin from working in his new position at Hewlett-Packard.  The non-competition agreement provided that Mr. Visentin would not, during his employment and for a period of 12 months following the termination of his employment, become employed by any competitor of IBM in any geographic area in the world for which Mr. Visentin had job responsibilities during his last 12 months of employment with IBM.  Clearly, Hewlett-Packard is one of IBM's principal competitors.  However, the Southern District of New York held that the non-competition agreement was overly broad and refused to grant the preliminary injunction requested by IBM.

The Court reiterated the standard under New York law that "properly scoped non-competition agreements are enforceable to protect an employer's legitimate interests so long as they pose no undue hardship on the employee and do not militate against public policy."  The Court also recognized that the protection of confidential information and trade secrets are legitimate interests of an employer in enforcing a non-competition agreement.  The Court found, however, that the evidence did not support IBM's contention that any of its confidential information or trade secrets would be in jeopardy as a result of Mr. Visentin's employment with Hewlett-Packard.

The evidence indicated that Hewlett-Packard took steps to fence Mr. Visentin off from his former IBM clients and to avoid any overlap in responsibilities between his position with IBM and his new position with Hewlett-Packard.  The new position was structured so that it was different from his IBM position in terms of subject area, geographic scope, and level of responsibility.  For example, Hewlett-Packard narrowed Mr. Visentin's responsibilities during his first 12 months of employment (i.e., the length of the non-competition agreement) to include primarily segments of Hewlett-Packard's business for which he did not have responsibility during his employment at IBM.  In the few segments for which Mr. Visentin did have responsibility during his employment at IBM, Hewlett-Packard made sure that Mr. Visentin worked only with existing Hewlett-Packard clients.  In the geographic regions where Mr. Visentin had no responsibility during the last year of his employment with IBM, Mr. Visentin was responsible for Hewlett-Packard's full range of products and services for all existing and potential clients.

Based on all of these factors, the Court concluded that IBM had not satisfied its burden of demonstrating that any of its confidential information or trade secrets would be disclosed or relied upon by Mr. Visentin as a result of his new position at Hewlett-Packard, and refused to grant the application for a preliminary injunction.

For an employer seeking to hire a new employee who may have signed a non-competition agreement with a former employer, this case can serve as a blueprint of the steps that the employer can take to minimize the risk that the non-competition agreement will be enforced.

Over the past couple of decades, there has been much debate over whether arbitration agreements can be used to prevent employees from asserting discrimination and other employment-related claims in court. Lost in this debate, however, is a simpler and perhaps more reliable means of managing an employer’s risk: a jury waiver. A jury waiver is nothing more than a contractual provision in which an employee waives his or her right to a trial by jury in a legal proceeding brought against his or her employer. Such a provision is most commonly found in an employment agreement that is entered into when an employee is hired, but the agreement can be entered into at other times, such as when the employee obtains a raise or promotion.

Many employers assume that a jury waiver cannot be enforceable. We are, after all, trained from an early age to believe that we have a constitutional right to a trial by jury. In large part, that belief is accurate. The right to a jury trial is embodied in both the United States and New York Constitutions. And yet, the case law is generally clear that a jury waiver, if properly written and entered into, can have the effect of surrendering an employee’s right to a jury trial. 

The more pressing question, then, is not whether a jury waiver is valid, but whether employers should take advantage of this opportunity. Similarly, is a jury waiver preferable to arbitration? Both jury waivers and arbitration agreements help avoid the danger and unpredictability of a jury trial, but there are some distinct advantages to jury waivers. Maybe the most obvious advantage is that, by keeping the process in the judicial system, a jury waiver allows the employer to exercise all of its formal, procedural rights, including the right to conduct discovery; the right to file a motion asking for the dismissal of the case; and the right to pursue a meaningful appeal. Anyone who has been through litigation knows that these tools can be powerful weapons for a defendant.

Detractors of jury waivers may respond by arguing that arbitration is cheaper and less time-consuming. In many instances, they are correct. However, most lawyers would agree that arbitration has become more protracted and expensive in recent years. Although it may still be a cheaper alternative to judicial litigation, that advantage is not as clear-cut as it was in the past. This is in no small part due to the fact that arbitration agreements are often challenged in court. In fact, the litigation over the enforceability of an arbitration agreement can be so costly and time-consuming that it often defeats the purpose of arbitration altogether.

Regardless, those employers who are considering the use of jury waivers must be aware of the best manner in which to frame such a waiver in order to enhance its chances of being held enforceable. The courts have made it clear that a jury waiver must be “knowing and voluntary” in order to be enforceable. As such, a waiver is more likely to withstand challenge if it contains specific references to the statutes for which a jury demand is being waived (e.g., Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, etc.). On the other hand, if the waiver is buried in a lengthy, complex contract or is being forced upon an unsophisticated employee who is unlikely to appreciate the waiver’s implications, a court will be less inclined to find that the waiver is truly “knowing and voluntary.” An employer should therefore ensure that the agreement is carefully drafted to make clear the nature and scope of the jury waiver.

Ultimately, although often ignored as a possibility, jury waivers are a viable option for many employers. The state and federal courts have upheld their validity. Accordingly, despite all of the attention given to arbitration agreements, many employers would be well-advised to carefully consider the advantages of a jury waiver instead.

On October 20, 2011, the Internal Revenue Service announced the dollar limitations for pension plans and other items beginning January 1, 2012. Some of the limits, which had been largely unchanged since 2009, are listed below.

Limitation		2011 Amount	2012 Amount
Maximum Annual Compensation taken into account for determining benefits or contributions to a qualified plan		$245,000	$250,000
Basic Elective Deferral Limitation for 401(k), 403(b) and 457(b) Plans		$16,500	$17,000
Catch-up Contribution Limit for Persons Age 50 and older in 401(k), 403(b) or SARSEP Plans		$5,500	$5,500
Limitation on Annual Additions to a Defined Contribution Plan		$49,000	$50,000
Limitation on Annual Benefits from a  Defined Benefit Plan		$195,000	$200,000
Highly Compensated Employee Compensation Threshold		$110,000	$115,000
SEP Compensation Threshold		$550	$550
Social Security Taxable Wage Base for Social Security Tax (6.2%)  For Medicare Tax (1.45%)		$106,800 No Limit	$110,100 No Limit
Health Savings Accounts:
Individual Contribution Limit Family Contribution Limit Catch-Up Contributions		$3,050 $6,150 $1,000	$3,100 $6,250 $1,000

 

At one point in the Hitchhiker’s Guide to the Galaxy series by British author Douglas Adams, Arthur Dent finds himself confronted by a door that will not open unless he can demonstrate a high degree of intelligence. When Dent somehow manages to possess both tea and no tea at the same time, the door opens, noting that Dent must be quite a philosopher to overcome the inherent contradiction of holding and not holding an item at once.

A recent decision by the Second Circuit is reminiscent of Dent’s feat. In Shahriar v. Smith & Wollensky, the Second Circuit Court of Appeals was confronted with the question of whether plaintiffs could simultaneously maintain a collective action under the Fair Labor Standards Act, as well as a class action based on state-law claims under Rule 23 of the Federal Rules of Civil Procedure. If you are wondering why that poses an issue, in a collective action potential plaintiff class members are not in unless they affirmatively opt in, whereas the plaintiffs in Rule 23 class actions are in unless they affirmatively opt out. As a result, the same person could be both a plaintiff and not a plaintiff in the same action; out of the collective action because she did not opt in, but in the class action because she did not opt out.
 

Despite the many potential consequences of permitting both participation and non-participation by the same person in a single action, the Second Circuit found that there is no inherent conflict in a federal court allowing both a collective FLSA action and a Rule 23 class action asserting parallel state law claims. The defendant argued that permitting a state law opt-out class action to proceed concurrently with the FLSA opt-in collective action would be inconsistent with the opt-in scheme created by Congress. The Second Circuit rejected that argument and found no inconsistency, concluding that nothing in the language of the FLSA or its legislative history indicated a Congressional intent to preclude concurrent class actions on state law claims, and that other circuits had reached the same conclusion. Another factor may have also influenced the Court’s decision. Earlier in the opinion, the Court stated that the potential FLSA plaintiffs may decide not to take the step of affirmatively opting into the collective action out of fear of retaliation, but that the same risk is not posed by participation in an opt-out class action.

We all anticipated that the Americans with Disabilities Amendments Act (ADAAA) would make it easier for certain medical conditions to qualify as protected disabilities. That was, after all, the point of the Act. Earlier this year, the EEOC provided us with an example of how the ADAAA may do so when it issued an informal discussion letter noting that it will now be easier for individuals with paruresis – commonly known as “shy bladder syndrome” – to meet the statutorily revised definition of a disability. This informal discussion letter is a clear reminder that employers should not make assumptions about whether a particular condition qualifies as a disability.

Paruresis is the inability to urinate in public restrooms or in close proximity to other people, or the fear of being unable to do so. The condition is typically considered to be an anxiety disorder, but it can also consist of chronic pelvic floor dysfunction. To determine if paruresis qualifies as a “disability” under the ADAAA, the EEOC letter opinion reminds employers to conduct an individualized analysis to determine if one of the statutory definitions has been satisfied:

1. a physical or mental impairment that substantially limits a major life activity;
2. a record of a physical or mental impairment that substantially limits a major life activity; or
3. an adverse employment action taken because of an actual or perceived impairment that is not both transitory (i.e., expected to last for 6 months or less) and minor.
 

An individual with paruresis has a disability under the ADAAA if his or her condition “substantially limits” one or more “major life activities.” The list of major life activities, though not intended to be exhaustive, has always included caring for oneself. Under the ADAAA and the corresponding regulations published by the EEOC in March 2011, this list now also encompasses bladder and brain functions, as well as operations of the neurological and genitourinary systems. This makes it easier for paruresis to meet the standard.

The term “substantially limits” is broadly construed in favor of expansive coverage. An impairment no longer has to prevent or severely or significantly restrict a major life activity to be substantially limiting. Additionally, the determination of whether an impairment substantially limits a major life activity must be made without regard to mitigating measures such as medication or cognitive-behavioral therapy. All of these changes also make it easier for someone with paruresis to meet the statutory standard, but an individualized assessment is still required.

An individual with paruresis also has a disability if the employer “regards” that individual as being disabled. To regard an employee as disabled, the employer must take an adverse action against the employee because of an actual or perceived impairment (unless the impairment is transitory and minor). The EEOC opined that paruresis does not appear to be a transitory impairment. Accordingly, if an employer terminates, fails to hire or takes another similar adverse action against an individual because of paruresis, whether the condition is real or perceived, it is probable that the individual will be “regarded as” having a disability. It should be noted, however, that employees who are merely “regarded as” disabled are not entitled to reasonable accommodations.

In light of this EEOC informal discussion letter and the broad definition of disability under the ADAAA, employers who require applicants and/or employees to undergo drug testing are advised to use caution before subjecting individuals with paruresis to adverse employment actions because they are unable to take a drug test through urinalysis. Employers faced with this situation should conduct an individualized assessment to determine whether the individual, in fact, qualifies as an individual with a disability under the ADAAA. If the individual qualifies (which is likely), one potential alternative for employers to consider would be to allow the person to take an alternative drug test which does not involve urination (i.e., a hair, saliva or patch test).
 

If enacted, President Obama’s proposed American Jobs Act would ban employers with 15 or more employees from discriminating against the unemployed by making it illegal to categorically exclude applicants who are out of work. The impetus for this provision appears to be an increase in job advertisements that explicitly exclude the jobless, using statements such as “must be currently employed.” The bill would not only ban these types of advertisements, but also enable applicants who believe they were not hired because they are unemployed to sue the prospective employer.

The proposed legislation has caused debate over whether it makes sense to exclude an applicant solely because he or she is unemployed given the current economic environment. When U.S. unemployment rates were low, particularly in the late 1990’s, an applicant’s long stint of unemployment was usually a red flag. The assumption was that an individual who could not find and maintain employment when employment was plentiful must have undesirable qualities. In current economic conditions that assumption may be invalid because many qualified applicants are out of work for extended periods through no fault of their own.

Earlier this year, the Equal Employment Opportunity Commission weighed in on the issue, which it described as an “emerging practice,” by holding public hearings on the practice of employers excluding unemployed applicants. At the hearings, employee advocates contended the practice could be illegal already under existing anti-discrimination laws because it could have a disparate impact on minority groups, whose unemployment rate is significantly higher than whites, on older Americans, who have remained out of work longer than young employees in the current recession, as well as on women and the disabled, who also tend to have higher rates of unemployment.
 

Yesterday, the NLRB announced that it is postponing the implementation date of the workplace notice rule that was issued on August 30, 2011. As we previously reported, that rule requires private sector employers to post a notice advising employees of their right to join a union and of their other rights under the National Labor Relations Act. Employers subject to the rule were required to post the notice by November 14, 2011. The implementation date has now been moved back more than two months. Employers are not required to post the notice until January 31, 2012.  The NLRB’s stated reason for the extension is to “allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses.”

Late last year, we posted on the passage of New York’s Wage Theft Prevention Act (WTPA), noting that the Act changed the penalties for violating the New York Labor Law’s prohibition on failure to pay wages. Specifically, the Act increased the liquidated damages penalty for failure to pay wages from 25% of the wages found to be due, to 100% of the wages found to be due. In addition, the WTPA requires an award of those liquidated damages, unless the employer proves it had a good faith basis to believe the underpayment of wages complied with the law, making an award of liquidated damages more likely.

Now, a New York trial court has determined that this liquidated damages provision applies retroactively to claims arising before the Act’s April 9, 2011 effective date. The case involves, among other claims, an alleged failure to pay overtime. The plaintiffs moved to amend their complaint to add the remedies created by the WTPA. In its decision granting the motion, the Court noted that under New York law a remedial statute is applied retroactively unless it impairs vested rights or creates new rights. The parties agreed the WTPA is a remedial statute, and the court concluded that it does not impair vested rights or create new rights. It just changes the penalty imposed with respect to a violation of rights already existing in the Labor Law. As a result of the decision, claims for failure to pay wages which go back several years (the statute of limitations on unpaid wage claims is six years) will be subject to the heightened WTPA penalties.
 

In an important victory for defendants, U.S. District Judge Lawrence McKenna of the Southern District of New York recently issued a decision limiting the attorneys' fees awarded to prevailing plaintiffs to the percentage of the recovery stated in the plaintiffs' retainer agreements with their lawyers, Vysovsky v. Glassman. Ordinarily, when a plaintiff wins a case under a statute that permits an award of attorneys' fees, the court will determine the amount of the fee by multiplying the hourly rate charged by lawyers of similar experience in that field (the “lodestar” rate) by the number of hours proven to have been devoted to the successful claims in the case. The result is a "presumptively reasonable" fee. In Vysovsky, the plaintiffs' lawyers submitted affidavits showing that by this method the defendants would owe them $366,716 - a sum far in excess of the $143,203 awarded by the jury to the eight successful plaintiffs in the case.

Judge McKenna refused to use this method. He granted the defendants' demand that the plaintiffs produce copies of their retainer agreements, and agreed with the defendants that the plaintiffs' lawyers should be limited to the percentage fee in those agreements. This resulted in a total attorneys' fee award of $55,885. Instead of the $350 per hour they requested, the plaintiffs' lawyers ended up with approximately $53 per hour.
 

It seems like common sense that an attorneys' fee award should be limited by the amount set in the attorney’s retainer agreement with the client. However, it is rare to find reported cases decided that way, because defendants rarely demand copies of retainer agreements in discovery, and because judges are so accustomed to using the "lodestar" method they are reluctant to award attorneys' fees in any other way.

The result in Vysovsky, though unusual, is in perfect accord with the policies underlying the "lodestar" method. The statutes that permit attorneys' fees awards provide that the plaintiff should be reimbursed for "reasonable" fees. If a lawyer writes a fee into his own retainer agreement, it should be considered presumptively reasonable. The "lodestar" method is intended to replicate the rate that the free market would award, but there is no better measure of the free market rate than the retainer agreement that was freely negotiated in that very market.

When a court awards attorneys' fees higher than those provided for in the retainer agreement, the plaintiff's lawyers end up with a premium for taking the case to trial instead of settling. This disincentive to settle increases the cost of justice for everyone -- except for the lucky plaintiffs' lawyers. By holding plaintiffs' lawyers to the fees in their retainer agreements, the courts can insure that no lawyer will have an incentive to turn down a reasonable settlement and instead go to trial in the hope of earning an inflated fee.
 

On September 9, 2011, OSHA announced that it has begun its 2011 Site-Specific Targeting (“SST”) Program, a targeted enforcement effort under which it will conduct comprehensive inspections of worksites across the country. OSHA will select worksites for inspection based on injury and illness data for 2009 collected by OSHA in 2010.

In April 2011, OSHA selected about 14,600 worksites that may receive SST inspections based upon their injury rates, and sent each of these worksites a letter informing them of a possible future inspection.  From that initial list, OSHA designated approximately 3,700 worksites as “primary” inspection targets, and directed OSHA Area Offices to inspect those sites first. Although the list of approximately 3,700 worksites has not been published by OSHA, it is possible for an employer to determine whether it is on the list by following these steps:
 

1.     Calculate your DART and DAFWII rates.

Days Away, Restricted, or Transferred (DART) rate:
The DART rate accounts for injury and illness cases involving days away from work, restricted work activity, or transfers to another position (the total of columns H and I on the OSHA-300 log).
DART rate = 200,000 * (# of DART injuries) / (Total # of hours worked by all employees for calendar year).

Days Away From Work Injury and Illness (DAFWII) rate:
The DAFWII rate accounts for injury and illness cases involving only days away from work (column H on the OSHA-300 log).
DAFWII rate = 200,000 * (# of DAFWII injuries) / (Total # of hours worked by all employees for calendar year).

2.     Compare your DART rate AND your DAFWII rates to the criteria below to determine if your site is a primary inspection site.

Manufacturing establishments with a DART rate greater than or equal to 7.0, or a DAFWII rate greater than or equal to 5.0, are primary inspection sites. There are approximately 3,000 manufacturing primary inspection sites.

Non-manufacturing establishments (except for Nursing and Personal Care Facilities) with a DART rate greater than or equal to 15.0, or a DAFWII rate greater than or equal to 14.0, are primary inspection sites. There are approximately 400 non-manufacturing primary inspection sites.

Nursing and personal care facilities with a DART rate greater than or equal to 16.0, or a DAFWII case rate greater than or equal to 13.0, are primary inspection sites. There are approximately 300 nursing and personal care facility primary inspection sites.

Even if your site is not one of the 3,700 primary inspection sites, you may still be selected for an SST inspection if your facility is on the list of 14,600. Once all primary inspection sites in an area have been inspected, OSHA will inspect secondary inspection sites as follows:

Manufacturing establishments with a DART rate of 5.0 or more but less than 7.0, or a DAFWII case rate of 4.0 or more but less than 5.0, are secondary inspection sites.

Non-manufacturing establishments with a DART rate of 5.0 or more but less than 15.0, or a DAFWII case rate of 4.0 or more but less than 14.0, are secondary inspection sites. (Note that this is more inclusive than last year’s list, which would inspect facilities with DART rates of 7-15, and DAFWII rates of 5-14).

Nursing and personal care establishments with a DART rate of 13.0 or more but less than 16.0, or a DAFWII case rate of 11.0 or more but less than 13.0, are secondary inspection sites. 
 

In its third significant case in a matter of days, the National Labor Relations Board overruled longstanding precedent and changed the standard for determining what constitutes an appropriate unit for bargaining in non-acute health care facilities. The Board’s decision in Specialty Healthcare and Rehabilitation Center of Mobile, overrules Park Manor Care Center, a decision which stood for 20 years. In Park Manor, the NLRB applied a “pragmatic or empirical community-of-interest” standard for non-acute health care facilities, including nursing homes and rehabilitation centers, which encouraged larger bargaining units to avoid burdening health care facilities with many smaller units which could be represented by multiple unions. Larger units are also generally more difficult for unions to organize.

In Specialty Healthcare, the union petitioned to be certified as the bargaining agent for 53 CNAs. The employer argued that the group of CNAs was not an appropriate unit by themselves, and under Park Manor, the only appropriate unit was one which included all nonprofessional service and maintenance employees. The Board rejected the employer’s argument, finding that the pragmatic community-of-interest approach announced in Park Manor was obsolete, and that the traditional “community-of-interest” unit determination standard must be applied to non-acute health care facilities. Under the traditional community-of-interest standard, the Board considers whether the relevant groups of employees: 

1. are organized into separate departments; 
2. have distinct skills and training; 
3. have distinct job functions and perform distinct work; 
4. are functionally integrated; 
5. have frequent contact with each other;
6. are interchanged with each other; 
7.  have distinct terms and conditions of employment; and 
8. are separately supervised.

The Board went on to hold that if an employer asserts that a group of employees must be included in the petitioned-for a unit, the employer has the burden to show that there is an overwhelming community-of-interest that would justify enlarging the petitioned-for unit.

The implications of the decision are significant because unions will now be able to isolate particular job classifications and organize facilities on a piecemeal basis, increasing the likelihood of a successful organizing campaign and reducing the amount of resources necessary to successfully organize. The case also increases the probability that multiple units with different unions will be certified in a single facility.