Two recent cases show that whether the NLRB will issue a complaint in a case involving discharge for misusing social media may depend on the content of the “post” or “tweet.” In a departure from recent aggressive enforcement activity in the realm of social media, the National Labor Relations Board’s Division of Advice recently concluded that an Arizona newspaper’s termination of a crime and public safety beat reporter for inappropriate and offensive “tweets” was not a violation of federal labor law. According to the Division of Advice’s April 21, 2011 Advice Memorandum, The Arizona Daily Star had encouraged its reporters to open Twitter accounts and “tweet” on newsworthy stories to reach a greater audience and improve traffic to the newspaper’s website. The reporter opened an account, identified himself as a Daily Star reporter, and began “tweeting” on various subjects and stories. After posting a sarcastic remark about his “witty and creative” editors, he was instructed by management not to air his grievances or comment about the newspaper in any public forum. Although he abided by that restriction, he went on to post several crass and controversial tweets about his public safety beat, including the following: (i) “You stay homicidal, Tucson. See Star Net for the bloody deets[;]” and (ii) “What?!?!? No overnight homicide? WTF? You’re slacking Tucson.” He also posted a derisive tweet about the “stupid people” at a local TV station, prompting a complaint from the station to the Daily Star.

The newspaper suspended and eventually terminated the reporter based on these tweets. The termination notice stated that he had repeatedly disregarded guidance “to refrain from using derogatory comments in any social media forums that may damage the goodwill of the company.” The reporter responded by filing a charge with the Board, alleging that his termination violated his right to engage in protected “concerted activity for the purpose of…mutual aid and protection” under Section 7 of the National Labor Relations Act, which can include speech about the terms and conditions of employment. The case was submitted to the General Counsel’s Division of Advice for an opinion as to whether the termination had violated the Act.

In its Advice Memorandum, the Division of Advice found no violation because the reporter was terminated “for writing inappropriate and offensive Twitter postings that did not involve protected concerted activity.” In finding the tweets to be neither protected nor concerted, the Division of Advice noted they neither dealt with the terms and conditions of employment nor attempted to involve others in any employment-related issues. Significantly, the Division of Advice acknowledged that several warnings by management to the reporter against making negative public comments about the newspaper could be interpreted as unlawfully restricting Section 7 rights. The statements did not rise to the level of “orally promulgated, overbroad rules”, however, because they were communicated solely to the complaining reporter in the context of discipline and in response to specific misconduct, and were not communicated to other employees or published as new rules.

In contrast, earlier this month, the Board’s Regional Director for Region 3 issued a complaint against a not-for-profit organization, Hispanics United of Buffalo, Inc., in a case where several workers were allegedly discharged for postings made on one of the worker’s Facebook pages. There, unlike the Arizona Daily Star case, the communication at issue apparently contained direct references to employee terms and conditions of employment. According to a public statement about the case issued by the Board, one employee posted on her Facebook page a co-worker’s comments which were critical of employee performance generally. Other employees then responded to that post with comments which complained about workload and staffing issues. The employer discharged those employees, contending their comments were harassment of the co-worker mentioned in the initial post. The complaint alleges that the postings were protected concerted activity under Section 7 of the NLRA because they involved communications between co-workers about their terms and conditions of employment, including job performance and staffing levels.

As these two cases show, the application of federal labor law to employer-promulgated social media policies and rules is a new and rapidly evolving area of law. In fact, the Board’s Acting General Counsel recently issued a memorandum instructing all Regional Directors to submit all cases involving employer social media policies to the Division before taking any action because of the absence of precedent in the area and the policy issues involved. Given the Board’s heightened interest in safeguarding employees’ Section 7 rights against overbroad social media policies and the relatively uncharted territory at play, employers should seek the assistance of counsel before implementing or disciplining employees under such policies.
 

More than two years ago, the ADA Amendments Act (the “ADAAA”) of 2008 went into effect. The statute was designed to broaden the coverage of the Americans with Disabilities Act. Earlier this year, the EEOC issued long-awaited and much-debated final regulations to implement the ADAAA. In conjunction with the release of the regulations, the EEOC also released an appendix to the regulations containing examples, a fact sheet on the regulations, a question and answer document and a small business question and answer document.   The regulations are effective on on May 24, 2011.

The final regulations eliminate or change many of the more controversial proposed regulations to which employer representatives objected during the notice and comment period. One item which continues to cause controversy, however, is EEOC’s list of so-called “per se disabilities,” impairments that have been characterized as automatically qualifying as covered disabilities. EEOC has created this list through a series of rules of construction used to analyze whether a particular impairment is a disability. The regulations explain that in using these rules of construction, some impairments, such as epilepsy, diabetes, cancer and bipolar disorder, to name a few, will virtually always constitute disabilities. However, the regulations do provide that an individualized assessment is still required in every case.
 

Most of the new regulations, however, simply implement the ADAAA’s requirements. For example, the regulations provide certain rules of construction used to determine whether an individual is substantially limited in performing a major life activity, and therefore disabled under the Act. Those rules of construction range from the very general (the term substantially limits should be construed broadly in favor of expansive coverage and requires a lower degree of functional limitation than previously required by the courts), to the more specific (an impairment in remission is a disability if it would substantially limit a major life activity when active).

Questions about whether and how a particular major life activity might be substantially limited, including the major life activity of working, are addressed not in the regulations themselves, but in an appendix to the regulations. The EEOC notes that given the significant changes in the definition of disability made by the ADAAA, it will rarely be necessary to determine whether an individual is substantially limited in the major life activity of working.

Consistent with the ADAAA, the new regulations expand coverage under the “regarded as” prong of the statute, focusing on the employer’s treatment of the individual, rather than whether the employer believed the individual had a substantially limiting disability. The question becomes whether the employer took a prohibited action because of an actual or perceived impairment that is neither transitory nor minor. As a result of this redefinition of the “regarded as” prong, the new regulations note that proceeding under this prong will be sufficient for most complainants, the most significant exception being cases where the employee claims he or she was denied a reasonable accommodation. In those cases, the employee will have to proceed under the actual disability or record of disability prongs.
 

The U.S. Supreme Court’s recent decision in Staub v. Proctor Hospital is a timely reminder of the importance of conducting thorough and objective workplace investigations. By holding that an employer may be liable based on the discriminatory animus of a supervisor who influenced, but did not ultimately make, an adverse employment decision, the case resolves a split in the various U.S. Circuit Courts of Appeals concerning the so-called “cat’s paw” theory of discrimination.

Staub, an Army Reservist, sued his former employer under the Uniformed Services Employment and Reemployment Rights Act (USERRA), arguing that his termination was caused by his supervisor’s obvious hostility to his military obligations. Although the ultimate decision maker was not similarly biased, the plaintiff argued that the employer was nevertheless liable under a “cat’s paw” theory: that the unbiased supervisor was the dupe or tool of the biased supervisor. The Seventh Circuit Court of Appeals rejected the plaintiff’s argument and dismissed the case on summary judgment. The Supreme Court reversed, ruling that an employer can be liable under a “cat’s paw” theory if it can be shown that the supervisor’s bias was a proximate cause of the challenged employment action. The case was remanded to the lower court for further consideration.
 

In its decision, the Supreme Court specifically considered the effect internal investigations may have on employer liability in “cat’s paw” cases. It noted that liability may be avoided in some instances if the employer can demonstrate that the adverse action followed an independent investigation that was not tainted by the biased supervisor’s recommendation. If, however, the investigation takes into account the biased supervisor’s recommendation without independently determining that the ultimate adverse action was justified, the biased supervisor’s recommendation remains a causal factor, opening the door to liability.

In light of the Staub decision, it is critical that employers review their workplace practices to ensure that internal investigation are conducted in a thorough and objective manner. Click here for a few tips on conducting effective investigations.

Diane M. Pietraszewski contributed to this post.
 

On Monday, the United States Department of Labor (DOL) released a smartphone App that is essentially a timesheet to help employees independently track the hours they work and determine the wages they are owed. The App is available here.

With this App (available in English and Spanish), employees can track regular work hours, break time and any overtime hours. As promoted by the DOL - "This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."
 

While this App is currently compatible with only the iPhone and iPod Touch, the DOL plans to explore updates that could enable similar versions for other smartphone platforms, such as Android and BlackBerry, and other pay features not currently provided for, such as tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials and pay for regular days of rest.

While this may seem inconsequential to some employers, bear in mind that in wage and hour audits/litigation, employees routinely seek to undermine the validity of employer time records by asserting that the employer's time records are inaccurate or that supervisors have instructed them to falsify their time records. Should the employee succeed in advancing such an allegation and make use of this new App, the DOL (in its current employee-focused mindset) would undoubtedly turn to the employee's time records and may rely on them to establish the actual hours worked by the employee.
 

Recently, the United States Department of Labor’s Wage and Hour Division (“DOL”) published final revisions to its Fair Labor Standards Act (“FLSA”) regulations. The long-awaited amendments, which became effective on May 5, 2011, are based on a proposed rule originally published in the Federal Register on July 28, 2008. For the most part, the final rule does not impose new requirements on employers, but instead clarifies existing rules and changes outdated information.

Some of the more noteworthy amendments relate to “tipped” employees. Specifically, the final rule clarifies that: (1) tips are the property of the employee, whether or not the employer has taken a tip-credit; (2) the employer is prohibited from using an employee’s tips for any reason other than a tip-credit or a valid tip pool; and (3) prior to utilizing the tip-credit, the employer must inform its tipped employees of the tip-credit requirements contained in section 3(m) of the FLSA. The final rule also clarifies that a valid tip pooling arrangement may only include those employees who customarily and regularly receive tips, even if the employer takes no tip-credit and instead pays the tipped employee the full minimum wage. The amendments further state that while the FLSA does not impose a maximum contribution percentage on mandatory tip pools, an employer must notify its employees of any required tip pool contribution amount and may only take the tip-credit for the amount of tips each employee ultimately receives.
 

The final rule also revises the overtime regulations to exclude stock options from the computation of the regular rate of pay. This change reflects the amendments to the FLSA made by the Worker Economic Opportunity Act of 2000. The regulations also reflect provisions of the Small Business Job Protection Act of 1996, by permitting employers to pay an hourly “youth opportunity” wage of $4.25 per hour to employees under the age of 20 during the first 90 consecutive calendar days of their employment. The revised regulation, like the statutory language on which it is based, explicitly prohibits employers from displacing employees or reducing hours in order to hire workers at the youth opportunity wage rate.

The regulatory package is also noteworthy for the proposals rejected by the DOL, including a proposed change which would have made the fluctuating workweek method of calculating overtime compatible with the payment of bonuses and premiums; a proposal allowing employers to apply a meal credit toward an employee’s minimum wage, even where the meal was not actually accepted; and a provision clarifying whether and how service advisers working for dealerships can qualify for an exemption under the FLSA. The DOL also declined to include specific examples clarifying an employer’s obligation to compensate employees for time spent commuting to and from work in an employer-supplied vehicle.
 

Does this sound familiar? An employee fired for cause, who is either unable or unwilling to accept responsibility for his/her own poor performance, commences litigation claiming unlawful discrimination. The pending litigation forces the employer into a Morton’s Fork dilemma of either: (1) paying an in terrorem settlement to avoid the exorbitant costs of discovery, subsequent motion practice and potential trial; or (2) incurring the exorbitant costs of discovery, subsequent motion practice and potential trial to hopefully win the case several years down the road.

Unfortunately, this scenario has become all too familiar to employers. Until recently, the predicament facing employers has largely been a function of the ease with which a would-be plaintiff employee may patch together a complaint and survive a motion to dismiss. Indeed, forcing an employer into time consuming and expensive litigation has been merely a matter of asserting the following conclusory, false syllogism: (1) I am a member of a protected class (as is literally everyone); (2) I was terminated from my job; (3) therefore, I was terminated from my job because I am a member of a protected class.

Fortunately, however, two recent cases from federal courts in New York may evidence an emerging trend of taking a more favorable view of motions to dismiss in employment discrimination cases, a trend that may help employers avoid the difficult choice between settling early or enduring the expense of prolonged litigation 

In Zucker v. Five Towns College, the plaintiff was a 69 year old college admissions recruiter. After being terminated by the College, Mr. Zucker sued alleging unlawful age discrimination. While the College sought dismissal of Mr. Zucker’s claims by filing a pre-answer motion to dismiss, Mr. Zucker tried to avoid dismissal by arguing that the mere fact his replacement was younger than him was sufficient to entitle him to discovery. Citing the College’s arguments, United States District Judge Joanna Seybert rejected Mr. Zucker’s argument. Judge Seybert held that in order to survive a motion to dismiss, a plaintiff is required to plead concrete facts demonstrating that the employment decision was motivated by discriminatory animus as opposed to what could be a whole array of legitimate considerations. Judge Seybert also held that being replaced by someone outside of the plaintiff’s protected class does not, standing alone, salvage a claim:

[I]f such barebones allegations sufficed to state a claim, then any time an ADEA-covered employer terminated an employee over age forty, the employer would be unable to replace that employee with someone younger without exposing itself to potential liability for age discrimination. And Defendants similarly argue, correctly noting that every employee is a member of multiple protected classes. Thus, unless a terminated employee is being replaced by a virtual clone, his/her replacement will almost certainly be outside of one of the Plaintiff’s protected classes (e.g., could be younger and/or a different gender, race, religion, national origin). The Court agrees with this reasoning. And the Court has no desire to abrogate [Federal Rule of Civil Procedure] 8’s gate-keeping function in employment discrimination cases, enabling nearly every fired employee to subject his employer to burdensome, expensive discovery.

More recently, and relying on Judge Seybert’s decision in Zucker, Judge Colleen McMahon in the Southern District of New York granted a motion to dismiss a race discrimination claim in Ochei v. Mary Manning Walsh Nursing Home Co. Judge McMahon specifically rejected the “false syllogism” that a decision to terminate someone’s employment necessarily flows from his/her protected class. Rather, according to Judge McMahon, the complaint must plead specific facts demonstrating the causal connection between the adverse action and the protected class:

Where there is no reason to suspect that an employer’s actions had anything to do with membership in a protected class, other than plaintiff’s bald assertion that she was a member of such a class, and the people who made decisions about her employment were not, no claim is stated. 
                                                                              ***
To protect employers from precisely this sort of untenable situation, naked assertions by plaintiff that some protected demographic factor motivated an employment decision, without a fact-specific allegation of a causal link between defendant’s conduct and the plaintiff’s membership in a protected class, are simply too conclusory to withstand a motion to dismiss.

The decisions in Zucker and Ochei should give employers pause before quickly settling cases or plowing straight into expensive discovery. While a pre-discovery motion to dismiss may not always be available, such a motion should be given careful consideration.

Jessica Satriano contributed to the writing of this post.
 

The Departments of Health and Human Services (“HHS”), Labor (“DOL”), and Treasury (“IRS”) recently issued additional guidance regarding the implementation of certain Patient Protection and Affordable Care Act of 2010 (“PPACA”) requirements, including: the rapidly approaching deadline for employers planning to apply for early-retiree funding from HHS; additional details on implementing the grandfathered plan rules; and the procedures for reporting the cost of employer-provided health coverage to employees. The DOL has also provided updated information on the status of the automatic enrollment requirement for large employers.

Deadline For Early-Retiree Health Insurance Funding
Pursuant to the PPACA, $5 billion was appropriated to establish a temporary program for partial reimbursement of the cost of providing health coverage to early retirees (including the spouses, dependents, and surviving spouses of early retirees). The program, which was implemented on June 1, 2010, began accepting applications on June 29, 2010. On March 31, 2011, HHS announced that it will stop accepting applications as of May 5, 2011, based on the amount of remaining program funds and the rate at which the funding is being disbursed. A copy of the application and instructions can be found at http://www.errp.gov. All applications must be physically received by HHS (i.e., not postmarked) on or before May 5, 2011.
 

Additional Guidance For Grandfathered Health Plans
On April 1, 2011, the Departments issued a sixth set of FAQs regarding the implementation of the PPACA .

Form W-2 Cost Of Coverage Reporting
On March 29, 2011, the IRS issued interim guidance (Notice 2011-28) regarding the PPACA requirement that employers report the “aggregate cost of applicable employer-sponsored coverage” to employees on IRS Form W-2. Included in the interim guidance is a set of Q&As that addresses, among other things: (1) which employers are subject to the reporting requirement; (2) methods of cost-reporting in specific circumstances (e.g., termination from employment, successor employers, retirees, etc.); (3) how to determine the aggregate cost of applicable employer-sponsored coverage; (4) the coverage required to be reported; and (5) calculating the dollar amount of reportable coverage costs. The IRS emphasizes that cost of coverage reporting to employees is for informational purposes only, and will not cause otherwise excludable employer-provided health benefits to become taxable income.

Although voluntary for the 2010 and 2011 tax years (Notice 2010-69), most employers that provide health coverage to their employees are required to report cost information beginning with the 2012 tax year. (Note, employers that choose to report the cost of coverage for 2010 and/or 2011 may rely on Notice 2011-28.) Transitional relief may be available, however, for: (1) small employers (i.e., employers that file less than 250 Forms W-2 for the 2011 tax year); (2) terminated employees to whom Forms W-2 are provided before the end of the year; (3) multiemployer plans; (4) health reimbursement arrangements; (5) stand-alone dental and vision plans; and (6) self-insured plans not subject to COBRA continuation coverage or other federal law requirements (e.g., church plans).

Automatic Enrollment Requirement For Large Employers
The PPACA requires large employers (those with more than 200 full-time employees) that are subject to the Fair Labor Standards Act to automatically enroll new full-time employees (or continue enrollment for current employees) in one of the employer’s health benefit plans. Employers are not required to comply with the automatic enrollment provisions until regulations are issued and effective, which the DOL intends to complete by 2014. To assist in the development of proposed regulatory guidance, the DOL hosted a public forum (held April 8, 2011) for individual and organizational stakeholders to exchange information and ideas regarding the automatic enrollment requirements. Forum topics included the definition of “full-time employee,” selecting the appropriate plan/benefit package (for employers that maintain multiple health plans or benefit packages) and type of coverage (e.g., single or family) in which employees would be automatically enrolled, and notice requirements for employees who wish to opt out of coverage. A transcript of the forum will be available on the DOL’s website at www.dol.gov/ebsa/healthreform.
 

Designated Freedom of Information Law ("FOIL") officers in governmental agencies, such as school districts and municipalities, often have extensive experience responding to FOIL requests. Knowing that FOIL strongly favors the disclosure of agency records, they may overlook statutory exemptions to disclosure. But, a recent case decided by the New York State Court of Appeals, NYSUT v. Brighter Choice Charter School, shows that the exemptions are alive and well -- particularly when a union seeks personal information about unrepresented employees.

FOIL (Public Officers Law §87 et seq.) was created to ensure the public's right to agency records and imposes a broad standard of open disclosure. FOIL's goal is to help the public make informed choices with respect to the direction and scope of governmental activities. It is this purpose that guides the general rule that all records of an agency are presumptively available for public inspection and copying. Nonetheless, several statutory exemptions are set forth in Public Officers Law §87(2) that permit a responding agency to withhold requested records. To ensure the public has maximum access to government records, these statutory exemptions are narrowly interpreted and the agency invoking the exemption bears the burden of demonstrating that requested material fits squarely within the ambit of the exemption.

In NYSUT v. Brighter Choice, a group of charter schools objected to disclosure of certain information about their employees requested by New York State United Teachers ("NYSUT"). In 2007, NYSUT submitted FOIL requests to Brighter Choice and five other Charter Schools in the Albany area. The request sought extensive information about the teachers and instructors, including their names and home addresses. The Charter Schools provided title and salary information, but objected to the request for the names and home addresses of its employees. NYSUT eventually dropped its request for home addresses. This left only the Charter School's denial of the union's request for the full names of the employees in dispute.
 

The Charter Schools objected to disclosing employees' names on the ground that the record, if disclosed, would constitute an unwarranted invasion of personal privacy. See Public Officers Law §87(2)(b). FOIL provides a list of eight (8) categories of exemptions that are per se unwarranted invasions of personal privacy. One disclosure that constitutes a per se unwarranted invasion of personal privacy is a list of names and addresses, if the list would be used for solicitation or fund-raising purposes.

Attorneys for the Charter Schools argued that this exemption to disclosure had been properly invoked, and that it permitted the Charter Schools to consider NYSUT's organizational purpose and the nature and format of the information NYSUT sought. The Charter Schools argued they could reasonably infer that NYSUT sought the names of employees for the purpose of soliciting new members and increasing the size of its organization.

In a 4-3 decision, the Court of Appeals agreed, holding: “It appears ... that NYSUT seeks the teachers' names as a convenient mechanism for contacting prospective members. Although NYSUT certainly possesses a right to seek dues-paying members, it may not rely on FOIL to achieve that end.”

In upholding the application of the exemption, the Court of Appeals stressed that its decision did little to undercut the purposes of FOIL. The Court found that disclosure of employees' names to NYSUT: “would do nothing to further the policies of FOIL, which are to assist the public in formulating intelligent, informed choices with respect to both the direction and scope of governmental activities. If anything, it is precisely because no governmental purpose is served by public disclosure of this information that section 87(2)(b)'s privacy exemption falls squarely within FOIL's statutory scheme.”

Moving Forward

If a school district or municipality receives a FOIL request seeking a list of the names or home addresses of its employees, the solicitation or fund-raising purposes exemption should be considered. If the FOIL officer can infer from the organizational purpose of the requesting party that the information is being sought to solicit the employees, the names and home addresses may be withheld. Not all requests from the same entity must be treated similarly. For example, disclosure of names and addresses should be made to a newspaper editorial department that submits a FOIL request in preparation for an opinion piece. In contrast, an agency may withhold a list of names and addresses from a newspaper circulation department that submits a FOIL request, as such could be reasonably inferred to have been made for solicitation purposes. The NYSUT v. Brighter Choice decision establishes that an agency that is aware that a FOIL request has been submitted for solicitation or fund-raising purposes is on firm ground should it choose to withhold a list of names or home addresses.
 

The Occupational Safety and Health Administration (OSHA) has been making significant efforts to educate the Latino workforce regarding safe work practices, OSHA’s safety and health regulations, and workers’ rights. This initiative began in force in April of 2010, when OSHA held the first National Action Summit for Latino Worker Health and Safety in Houston, Texas. Over 1,000 people attended the summit, the stated goal of which was “[r]educing injuries and illnesses among Latino workers by enhancing knowledge of their workplace rights and improving their ability to exercise those rights.” Workshops included topics such as “Innovative Partnerships and Effective Education for Latino Workers: Focus on Latino Construction Workers,” and “Workers’ Rights Under OSHA and DOL: Focus on Construction Hazards.”

Since that initial national summit, OSHA has held several regional summits, including one in northern New Jersey in July, 2010, and another in New York City in November. The latter summit featured a 15-minute skit entitled “How to File an OSHA Complaint.” In February, 2011, OSHA held a summit in Oakland, California, that was featured on the evening Telemundo and Univision newscasts throughout the entire San Francisco Bay Area. Future OSHA summits are scheduled for southern New Jersey and Philadelphia in April. The April 10, New Jersey summit is entitled “Making a Difference: Learn about Your Worker Rights and How to Voice Concerns When Those Rights are Violated.”
 

Clearly, OSHA is encouraging the Latino workforce to look for, and report, any suspected health or safety violations. As Dr. David Michaels, the head of OSHA said in a recent speech, OSHA is trying to “inoculate” the Latino workforce “against rogue employers who seek to exploit them.” With that in mind, how might this initiative affect your workplace, and what actions should you be taking?

• Ensure that all of your employees—both those for whom English is their primary language and those for whom it is not—fully understand your company’s safety and health policies and procedures. It is the employer’s obligation to ensure employees are not exposed to hazards, and thus the employer’s obligation to ensure that non-English speaking employees understand the safety requirements of a particular practice. OSHA provides a list of resources for employers with Latino employees, including a website, and its 800 number with Spanish-speaking operators, 1-800-321-OSHA.
• Make sure that all of your employees, regardless of their primary language, know your company’s procedure for reporting any workplace injuries or illnesses, and that they can report any workplace injury or illness without fear of reprisal.
• Remember the Occupational Safety and Health Act explicitly prohibits retaliatory or discriminatory action against an employee who has raised an OSHA violation. For example, OSHA recently settled a whistleblower case against two construction companies, where an employee was allegedly fired for complaining about an unsafe crane lift. The companies paid $17,500 in back wages.

Workplace safety is a universal issue that must span any language barriers. By ensuring that your non-English speaking employees are fully cognizant of your workplace’s safe work practices and policies, you can minimize workplace hazards and reduce the possibility of a complaint-based inspection.
 

Eight days before the Wage Theft Prevention Act goes into effect, the New York State Department of Labor finally released the notification templates and related information which will assist New York employers in complying with the Act. The documents were posted on the Department’s website Friday.

The Department issued notification templates for the following groups of employees: (a) Hourly Rate Employees; (b) Multiple Hourly Rate Employees; (c) Employees Paid a Weekly Rate or a Salary for a Fixed Number of Hours (40 or Fewer in a Week); (d) Employees Paid a Salary for Varying Hours, Day Rate, Piece Rate, Flat Rate, or Other Non-Hourly Basis; (e) Prevailing Rate and Other Jobs; and (f) Exempt Employees. The templates are available here.

The Department also issued Guidelines for Written Notice of Rates of Pay and Regular Payday, as well as instructions related to the templates. While the Guidelines state that dual language templates are available in Chinese, Haitian-Creole, Korean, Polish, Russian, and Spanish, as of this writing, only the Chinese, Korean and Spanish templates are available.

Finally, the Department also issued a document titled, “Frequently Asked Questions About the Wage Theft Prevention Act,” which provides answers to many of the most common questions employers have about the Act.
 

The information issued by the Department contains few real surprises. Some points of interest:

General

• Though the legislature authorized the Commissioner to expand the required contents of the Section 195 notices to contain "other information" she "deems material and necessary," the notice templates essentially track the requirements set forth in the statute.

Notices

• Employers are NOT required to use the DOL-issued templates and can develop their own, as long as the employer-prepared notices contain all the required information. Notably, the Department expressly states that it "reserves the right to require use of DOL forms in the future, if employer notices do not meet the requirements."
• While the Department states that the New Hire Notice may be "included in" letters and/or employment agreements provided to new hires, it states the notice itself must "be on its own form." This is a significant requirement as many employers had previously satisfied Section 195's requirements by including the necessary information in new hire letters or employment agreements and did not use a separate form.
• Interestingly, the Department backed off its prior position that notices issued to exempt employees must specify the exemption that applies to the employee. The Department now states that employers "may state the specific exemption that applies," but are not required to.
• Annual notices must be provided between January 1 and February 1 with the first notice required before February 1, 2012. The annual notice requirement CANNOT be satisfied by giving notice at some other point in the year (e.g., when annual increases are implemented). Many employers had hoped the Department might recognize that many employers implement annual rate changes in months other than January and allow employers to issue the annual notices when those rate changes occur, rather than in January of each year. Unfortunately, the Department is requiring all employers to issue annual notices in January.
• Employers must issue annual notices even if there have been no changes.
• If employees are paid at multiple hourly or piece rates, the notice should disclose the all the rates that may apply (either on the notice itself or on an attached sheet).
• Notices may be given electronically but there must be a system for the employee to acknowledge receipt of the notice and print out a copy of the notice.
• If an employee refuses to sign the acknowledgment, the Department advises that "the employer should still give the notice and note the worker's refusal on its copy of the notice."

Notice of Changes

• Except for hospitality industry employers, a separate notice is not required when there is an increase in an employee's pay rate, if the increase is reflected on the corresponding wage statement.
• For any reduction in pay rate, the employer must notify the employee in writing before the reduction is implemented.

Wage Statements

• If a retroactive wage increase is implemented, the amount of the retroactive increase must be separately noted on the wage statement in the period in which it is paid.
• Wage statements may be provided electronically, if employees can access and print their statements on a computer provided by the employer.
• The Department will prepare a sample wage statement showing the types of entries which may be necessary, but has not said when it will do so.

 Retaliation

• Employees are protected from retaliation if they complain to their employer, the Department, or the Attorney General about a possible labor law violation.
• If employees believe in good faith that "there is a problem in the workplace, their activities are protected," even if the employer has not actually violated the labor law.
• Even threatening an employee can be considered retaliation. This makes it essential that employers educate supervisors about the Act, and the retaliation provisions in particular.

Remember - the Wage Theft Prevention Act is effective this Saturday, April 9.
 

The U.S. Department of Labor ("DOL") has proposed regulations that more broadly define the circumstances under which a person or entity will be considered to be a plan "fiduciary" by reason of giving investment advice to an employee benefit plan or to a plan's participants or beneficiaries. If the proposed regulations are made final in their current form, the number of plan service providers that will be considered plan "fiduciaries" will increase significantly. Plan sponsors need not take any current action with respect to the proposed regulations, but should be aware that agreements with service providers may need to be reviewed and modified to conform to the regulations.

Background

Under the Employee Retirement Income Security Act ("ERISA"), a person is a fiduciary with respect to an employee benefit plan to the extent that the person: (i) exercises any discretionary authority or discretionary control respecting the management or disposition of the plan's assets; (ii) renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the plan, or has any authority or responsibility to do so; or (iii) has any discretionary authority or discretionary responsibility in the administration of the plan.
Individuals and entities, including plan service providers, who are considered plan "fiduciaries" are subject to a number of strict duties and responsibilities and are prohibited from engaging in a number of specific acts with respect to the applicable plan. Among other consequences, fiduciaries who fail to satisfy their plan-related duties, or who engage in plan-related prohibited transactions, can be subject to personal liability for losses suffered by the plan.
 

The Proposed Regulations

The DOL's proposed regulation addresses the circumstances under which a person or entity is considered to be a plan "fiduciary" by reason of (ii) above; that is, by giving investment advice for a fee or other compensation to an ERISA-covered plan, to a plan fiduciary, or to the plan's participants or beneficiaries. Two of the key elements of the proposed regulations are the scope of the terms "investment advice" and "fee or other compensation".

"Investment Advice"

The proposed regulations generally provide that a person renders "investment advice" if the person:

• Provides advice, or an appraisal or fairness opinion, concerning the value of securities or other property;
• Makes recommendations as to the advisability of investing in, purchasing, holding, or selling securities or other property; or
• Provides advice or makes recommendations as to the management of securities or other property.

In addition to one or more of the activities noted above, a person renders "investment advice" only if the person also: 

• Represents or acknowledges fiduciary status within the meaning of ERISA with respect to giving advice or making recommendations;
• Has or exercises discretionary authority or control with respect to the purchase or sale of investments for a plan, with respect to management of the plan, or with respect to the administration of the plan;
• Is an "investment adviser" under the Investment Advisers Act of 1940 (which generally includes any person who, for compensation, engages in the business of advising others as to the value of securities or the advisability of investing in, purchasing, or selling securities, or who promulgates analyses or reports concerning securities); or
• Provides advice pursuant to an agreement, arrangement or understanding, oral or written, between such person(s) and the plan, a plan fiduciary, or a plan participant or beneficiary, that such advice may be considered in connection with making investment or management decisions with respect to plan assets, and will be individualized to the needs of the plan, a plan fiduciary, or a participant or beneficiary.

This part of the proposed regulations modifies current law in a number of ways, including the addition of appraisals and fairness opinions in the definition of advice. The DOL believes this change will align the duties of those who provide these opinions with those of plan fiduciaries who rely on them. Among other things, this brings valuations of closely held employer securities for purchase by an employee stock ownership plan, and appraisals of real property considered for purchase by a plan, into the realm of "investment advice." The proposal also specifically includes advice and recommendations as to the management of securities or other property. This could include, for example, advice in connection with the exercise of stock rights (e.g., voting proxies), and advice in the selection of plan investment managers. Another significant change from current law would be that the "advice" need not be provided on a "regular basis."

Limitations

Even if the person's activities with respect to a plan may suggest that the person is a fiduciary, a person will not be considered a fiduciary under the following circumstances:

• Where it can be demonstrated that the recipient of the advice knows, or reasonably should know, that person is, or represents, a person whose interests are adverse to the interests of the plan or its participants or beneficiaries, and that the person is not undertaking to provide impartial investment advice;
• The person provides only investment education information and materials, pursuant to other DOL regulations;
• The person provides general financial information and data to assist a plan fiduciary in the selection or monitoring of securities or other property as plan investment alternatives, if the provider discloses in writing to the plan fiduciary that the person is not undertaking to provide impartial investment advice; and
• The person prepares a general report or statement that merely reflects the value of an investment of a plan, unless such report involves assets for which there is not a generally recognized market and serves as a basis on which a plan may make distributions to plan participants and beneficiaries.

Fee Requirement

In order to be a fiduciary, the provider must provide investment advice "for a fee or other compensation, direct or indirect." The proposal defines this fee requirement to include fees or compensation for advice received by the person from any source and any fee or compensation incident to the transaction in which the investment advice has been, or will be, rendered.

Effective Date and What's Next?

The proposal will be effective 180 days after publication of the final regulations in the Federal Register. Thus, the expansion of the fiduciary definition will not apply for some time. The DOL has reportedly received many comments, some favorable, some not; these rules may change prior to being finalized. Stay tuned.
 

After more than five years of litigation, a defendant school board member was recently awarded over $136,500 in attorneys’ fees and costs from the plaintiff’s counsel in an employment discrimination case. An employer’s recovery of its attorney’s fees in an employment discrimination case is a fairly rare event. Under the federal anti-discrimination laws, when an employee sues his/her employer for discrimination and wins, the employee is considered to be the “prevailing party” and is therefore entitled to recover the reasonable amount of attorneys’ fees incurred in proving that he/she was unlawfully discriminated against. When the sued employer wins, the employer is likewise the prevailing party. However, the employer is generally not able to recoup the attorneys’ fees that were incurred in defending the claims. The policy behind this rule is a belief that an individual who has meritorious discrimination claims may nonetheless chose not to sue to enforce his or her rights out of fear that the individual may lose and have to pay the former employer’s attorneys’ fees. For that reason, the law builds in extra hurdles which victorious employers must overcome. For a prevailing defendant employer to be awarded fees, the employer must typically show that the claim was frivolous and should never have been brought in the first place. In other words, it must show that the employee’s claim had no foundation in either law or fact.

In Capone v. Patchogue-Medford Union Free School District, one of the defendants made that showing. The case arose when an employee terminated by a school district for misconduct sued the district and individual Board of Education members claiming that his termination violated the anti-discrimination laws. One of the Board members sued was Tina Marie Weeks, who had actually voted against terminating the employee. Throughout the litigation, Ms. Weeks argued that the discrimination claims brought against her were frivolous. Ms. Weeks’ attorneys repeatedly put the plaintiff’s attorney on notice of that position, citing binding caselaw, and further advised the attorney that if the frivolous claims were not withdrawn, Ms. Weeks would seek a full fee shift against the plaintiff and his counsel. The frivolous claims were not withdrawn and Ms. Weeks moved for an award of the full amount of attorneys’ fees incurred by her during the litigation. The District Court granted the motion, and ordered plaintiff’s counsel to pay Ms. Weeks over $116,000 in attorneys’ fees and $20,500 in litigation costs.

Hopefully, the Capone decision will serve as a deterrent to future frivolous litigation. When defendant employers are faced with frivolous claims, plaintiff’s counsel should be put on notice, in writing, early on in the litigation and frequently thereafter that their case is frivolous in fact and law. Plaintiffs’ counsel should further be advised that both counsel and the client may be subject to a full fee shift if the frivolous case is not withdrawn. If they do so, defendant employers may be spared the cost of litigating claims which should never have been brought.