Eighteen months after it was first signed into law by President Bush, Title II of the Genetic Information Nondiscrimination Act of 2008, also known as GINA, will take effect this Saturday, November 21, 2009. Title II prohibits employment discrimination based on genetic information, and imposes confidentiality obligations on employers who obtain such information.  Title II's requirements are described below.

 

In enacting GINA, Congress lauded the many advances in genetic research in recent years that may spur major medical breakthroughs in the detection, treatment and prevention of illnesses and diseases. It also found, however, that with this progress came increasing concern about the possible misuse of genetic information to discriminate in employment and health insurance coverage. As an example, Congress cited to legislation passed by some state legislatures in the 1970s mandating sickle cell anemia screening as a covert means of screening African-American applicants out of the workplace.

Employees appear to share Congress’s concern. In one national survey, 63% of participants indicated they would not take genetic tests for disease if the results could be accessed by their employers or health insurers. Another recent poll found 93% of respondents opposed to the use of genetic information by health insurers and employers.

Enacted in response to these growing concerns, Title II prohibits employers from using genetic information in making any decisions about hiring, firing, promotions or any other term or condition of employment. It also forbids employers from intentionally acquiring genetic information, imposes strict confidentiality obligations on those who do come into possession of such information, and prohibits retaliation against individuals who challenge acts made illegal by GINA or who have filed a charge or otherwise participated in an investigation, proceeding or hearing under the law. Although New York’s Human Rights Law has prohibited discrimination on the basis of genetic characteristics since 1995, the new federal law imposes restrictions not found in the state statute.

Title II’s protections extend to applicants, employees and former employees, and its restrictions apply to private and state and local government employers with 15 or more employees, employment agencies, labor unions, joint labor-management training programs, Congress and federal executive branch agencies.

Genetic Information
What is considered “genetic information” under the new law? The term encompasses not only information about an employee’s own genetic tests, but also information about the tests of the employee’s family members and the manifestation of diseases or disorders in those family members (i.e., family medical history). Covered “family members” can be those as distant as 4th degree relatives, including great-great grandparents and first cousins once removed. The term genetic tests generally refers to analyses of human DNA, RNA, chromosomes, proteins or metabolites that detect genotypes, mutations or chromosomal changes. Thus, a test to determine the likelihood that an individual will develop Huntington’s Disease is a genetic test and the results would constitute “genetic information” for purposes of GINA. On the other hand, information about the sex or age of a person is expressly carved out as not constituting genetic information.

Acquisition of Genetic Information
The new law imposes strict limitations on the acquisition of genetic information by employers. More specifically, employers are prohibited from requesting, requiring or purchasing genetic information about an employee or the employee’s family member except in very limited circumstances. One such exception, the so-called “water cooler” exemption, excuses employers who inadvertently learn genetic information. Examples may include a supervisor who overhears one employee tell another that her father has Alzheimer’s Disease or a manager who learns genetic information in response to a general health inquiry such as “how are you?” Another exception shields employers that acquire genetic information through responses to lawful requests for medical certifications under the federal Family and Medical Leave Act (“FMLA”) or similar state leave laws. Additional exceptions cover genetic information acquired through employer-offered health and genetic services, such as “wellness” programs, as well as to information obtained through commercially and publicly available sources such as newspapers or magazines. This last exception, however, does not apply to genetic information contained in medical databases or court records.

Notwithstanding these exceptions, Title II imposes a significant new restriction on the permissible scope of post-offer medical examinations. Although the Americans with Disabilities Act has for years allowed employers to require that all persons offered a position in a particular job category undergo a medical examination, they will no longer be permitted to obtain family medical history information or require that the individual submit to genetic testing as part of that examination.

Most importantly, regardless of whether the genetic information has been lawfully acquired or not, employers are strictly prohibited from using that information in making any employment-related decisions such as hiring, promotions, or termination.

Confidentiality
On top of its strict limitations on the acquisition of genetic information, the statute also imposes significant confidentiality obligations on employers that possess such information. First, genetic information must be treated as a confidential medical record. If the information is in writing, it must be maintained in a medical file separate and apart from other personnel information. The information may be maintained in the same file as medical information subject to the ADA’s confidentiality requirements. Notably, genetic information obtained through commercially or publicly available sources – for example, information about the cause of death reported in a newspaper obituary – need not be maintained in the separate medical file.

Additionally, GINA prohibits the disclosure of genetic information unless such disclosure is: (i) to the employee (or family member, in limited circumstances) at his or her written request; (ii) to an occupational or other health researcher conducting research in compliance with specific federal regulations; (iii) in response to a court order so long as disclosure is limited only to genetic information expressly authorized by the order and the affected individual is notified of the order and the content of the disclosure; (iv) to government officials investigating compliance with GINA, provided the information is relevant to the investigation; (v) to comply with certification provisions of the FMLA and related state family and medical leave laws; or (vi) to public health agencies, limited to family medical history information related to a contagious disease that poses an imminent hazard of death or life-threatening illness and where notice is also given to the employee of the disclosure.

Remedies
Remedies available for violations of Title II are the same as those available under Title VII. Unlike Title VII, however, GINA does not currently provide a cause of action for “disparate impact.” A commission will, however, be established six years after Title II becomes effective to review genetic science developments and to make recommendations to Congress as to whether a “disparate impact” cause of action should be added to the statute.

The Equal Employment Opportunity Commission (“EEOC”) has been charged with enforcing Title II. To that end, the EEOC issued proposed regulations in March 2009, but has yet to issue the final regulations. It has, however, issued an updated “EEO is the Law” poster to reflect the changes implemented by the new law. Employers have the choice of either printing and posting the new updated poster, printing and posting a supplemental poster  alongside the EEOC’s 2002 “EEO is the Law” or the Office of Federal Contract Compliance Programs 2008 “EEO is the Law” posters, or ordering a new poster through the EEOC Clearinghouse.
 

A recent determination by the United States Supreme Court serves as a reminder that dealing with strikes is a particularly dangerous activity for employers and requires careful planning and counsel at every step. In the midst of an economic strike in 1999, a Connecticut nursing home/assisted living facility made the decision to hire permanent replacements. Ten years later, the unfair labor practice case generated by hiring the replacements has finally come to a close with the United States Supreme Court refusing to hear the case, and leaving the employer with a back pay liability that could reportedly exceed $3 million. The saga of the case provides lessons on both an employer’s use of permanent replacements, and on the potential economic consequences of fighting an unfair labor practice charge.

As noted, the case began in 1999, when the employer, Church Homes, Inc., began hiring permanent replacement employees a month into a strike. Under federal labor law, an employer is permitted to hire permanent replacements for strikers involved in an economic strike. The strike was an economic strike, so permanent replacements were permitted, but what made this case different was the fact that Church Homes actively concealed its hiring of the replacements, bringing them on board without notice to the union or the strikers. It was not until several weeks later, after approximately 100 replacements had been hired, that the company revealed this fact during a mediation session. The union subsequently made an unconditional offer to return to work, but only 79 of the approximately 185 strikers were returned by the company. The company relied on its hiring of permanent replacements, as it is typically permitted to do in an economic strike situation, to deny reinstatement to the other strikers.

The union filed unfair labor practice charges against the company claiming that the employer’s hiring of permanent replacement workers was not for legitimate business reasons but rather was to punish the strikers and break the union. An Administrative Law Judge initially found merit in the charges and ruled against the employer. Church Homes appealed to the National Labor Relations Board. In a 2-1 decision the Board found in favor of Church Homes. The Board recognized the long standing right of an employer to hire permanent replacements during an economic strike and further found that the employer had no obligation to advise the union that it was hiring replacements. As a result, it concluded that the NLRB’s General Counsel had failed to carry its burden of proving that the employer acted unlawfully.

The Board’s decision was appealed to the United States Court of Appeals for the Second Circuit which, in 2006, reversed the Board’s decision. While the Court agreed that permanent replacements were appropriate in an economic strike and that there was no absolute obligation for an employer to notify a union in advance of the hiring permanent replacements, it concluded that active concealment of the hiring of replacements can support an inference of improper motive, absent proof of an affirmative legitimate reason for the secrecy. The Court remanded the case to the Board for further consideration.

On remand, the Board changed course and ruled against the employer. Finding a lack of credible evidence to support a legitimate reason for the employer’s secrecy, the Board concluded that “it would appear that the [Second Circuit] placed on the [employer] the burden of establishing a lawful motive for maintaining secrecy in the hiring of replacements.” Because the employer did not meet this burden, its failure to return the strikers to work because of the hiring of the replacements was found to be unlawful.

This second Board decision was affirmed on appeal back to the Second Circuit, which reinforced its prior conclusion that “the logical inference to be drawn from [the employer’s] secrecy, absent evidence of a legitimate purpose or credible explanation for the secrecy, was that [it] intentionally concealed its hiring of permanent replacements to remove Union members from its workforce and thereby break up the Union.” The employer subsequently sought review by the Supreme Court. Just a few weeks ago, the Supreme Court announced that it would not hear the case, finally bringing this saga to a close after nearly 10 years.

There are two significant lessons to be learned from this tortuous history. While the good news is that neither the Second Circuit nor the Board found that hiring permanent replacements in secrecy automatically proves improper motive, these decisions make clear that an employer must be able to articulate and document a legitimate business reason for the secrecy as part of its decision making process. The Court and the Board noted that concern over violence could be a legitimate justification for secrecy, but there must be credible evidence that such a fear is warranted. Presumably there could be other reasons which would support secrecy. But without credible contemporaneous evidence that such concerns in fact motivated the employer to maintain secrecy, an employer who does not provide advance notice of the hiring of replacements does so at great risk.

The second lesson of the case relates to the inordinate amount of time it can take to fully litigate unfair labor practice cases under the current statutory scheme. This case, with an Administrative Law Judge decision, two NLRB proceedings and two trips to the Second Circuit before a final rejection by the Supreme Court, took nearly 10 years. Recent reports indicate that potential back pay could exceed $3 million. Significant time delays mean that employers must either be prepared to face potentially enormous back pay exposure in their efforts to vindicate their rights, or prematurely forfeit their position on the merits because that potential liability is simply too great.
 

It has been one full year since President Obama’s historic election and we can all breath a collective sigh of relief that nobody in Washington is even talking about the Employee Free Choice Act, right? In addressing this question, I will invoke what I consider to be the greatest movie title of all time – Clint Eastwood’s 1966 epic spaghetti western, “The Good, the Bad and the Ugly.”

It is, of course, good news that the dreaded EFCA has not become law. To recap, the percentage of workers who are represented by labor unions in the United States has been declining for more than six decades from a peak of 34% in 1954 to just 12.4% in 2008. When government workers are taken out of the equation, unions now represent a mere 7.4% of the nation’s private sector workforce.

EFCA was designed to dramatically reverse this trend and restore organized labor to its glory days by amending the National Labor Relations Act in three critical ways: (1) replace secret ballot elections in union representation cases with card-check recognition; (2) require rapid agreement on an initial labor contract following unionization and impose binding arbitration if not settled within 90 days; and (3) ratchet up penalties and expand the use of injunctive relief for employer unfair labor practices.

Backed by tens of millions of dollars in political campaign contributions, endorsements and armies of volunteer workers from organized labor, President Obama was elected on a promise to sign EFCA into law upon passage by the Democratic controlled Congress. EFCA was expected to be a top priority for the new administration during its first year in office, and union-free employers began to brace themselves for the prospect of rapidly expanding unionization beginning as early as the summer of 2009. As we all know now, the Stimulus Bill, Health Care Reform, the war in Afghanistan, and the upcoming Cap and Trade debate have all taken precedence, pushing EFCA to the back burner. Moreover, the most controversial aspect of EFCA – card check – has reportedly been dropped because it lacks support from the 60 Senators needed to stop a Republican filibuster.

Now for the bad news, obvious though it may be. President Obama is not going anywhere for at least another 3 years. The one-party government in Washington will remain firmly in place at least through all of 2010 and most likely beyond. Organized labor has unprecedented influence in this White House and more clout in Congress than it has had in decades. President Obama’s appointees to fill the NLRB’s three vacant seats will undoubtedly be confirmed by the Senate in the upcoming year and begin to reverse a series of decisions under the Bush administration that were favorable to employers. The new Obama Board will lead an agency that is already filled with like-minded career bureaucrats.

Today’s top labor leaders know how to use the political process and they know how to run campaigns. They are ideologically committed and aggressive. Frustration over labor’s downward spiral has been building ever since President Reagan’s decision to fire striking air traffic controllers back in 1980. The new President of the AFL-CIO, Richard Trumpka, and key leaders within the rival labor coalition Change To Win (CTW), most notably SEIU’s Andy Stern, are powerful advocates for a resurgent labor movement.

And now for the ugly news. 2010 will be a watershed year for organized labor. Even without card check, the playing field will almost certainly be tilted dramatically in favor of union organizers. Under longstanding NLRB guidelines, when a labor organization files a petition to represent a group of non-union employees, an election must normally be held within 42 days. This is barely enough time to run an effective information campaign countering the union’s message which can be very attractive to the uneducated employee. When the EFCA debate does inevitably reach the front burner in the months ahead, at a minimum unions can expect to win stiffer penalties for employer unfair labor practices and fast-track elections, perhaps within 20 days, in lieu of card check. As a practical matter, such fast-track elections will be nearly as powerful a tool for union organizers as card check would be. Unless the employer was aware of the organizing activity well before the petition was filed and already had its counter campaign well underway, there will simply not be enough time to convince a majority of employees that unionization will not be in their best interests. Instead of winning slightly more than half of all representation elections, union win rates will likely surge to 70-80% or higher. Along with all the other cards that will soon be stacked in their favor, this will drive the national unionization rate substantially higher in the years ahead.
 

Our August 11, 2009, posting explained New York’s new law requiring employers to formally notify new hires of their rate of pay, overtime rate (when applicable), and regular pay date, and to obtain a written acknowledgment from the employee that such information was provided. The law applies to employees hired on or after October 26, 2009. As we noted in the August 11, posting, the amendment to Section 195 of the Labor Law provides that the acknowledgement must conform to any requirements set by the Commissioner of Labor. The Commissioner has now provided those requirements by way of an informational fact sheet for employers and employees, and through a standard acknowledgement form. According to the fact sheet, use of the new form is mandatory. The form requires the individual providing the information to certify that it is accurate, and warns that a knowingly false statement is punishable as a misdemeanor.

Employers should begin using the new form immediately. While the new form will no doubt be adequate for most new hires, it may be difficult to use for new employees who have more than one position and pay rate, who receive incentive compensation in addition to their hourly rate, or whose pay rate can vary (for example based on shift differential). In particular, it may be difficult to use the new form accurately for new employees who work under collective bargaining agreements, which can contain a variety of different pay rates and overtime rates. Employers who have questions about accurately conveying information when using the new form should consult with counsel.
 

On October 22, 2009, New York State Commissioner of Health Richard F. Daines, M.D., suspended the mandatory influenza immunization requirement for New York State health care workers due to a shortage of available vaccines. In a letter dated October 23, 2009, the Commissioner wrote that the current emergency regulations requiring vaccination would expire on November 11, 2009, and that no new emergency regulations would be promulgated. Rather, the Department will propose a permanent regulation requiring vaccination of health care personnel in the facilities covered by the emergency regulation and post the draft for a period of public comment. The Department of Health now stresses that the limited vaccine supply should be prioritized for patients and those most at risk (pregnant women, and children and young people between the ages of 6 months and 24 years).

The emergency regulations went into effect on August 13, 2009, and required all covered health care facilities in New York State to ensure that health care personnel having direct patient contact were immunized against both seasonal influenza as well as the H1N1 virus. The mandate applied to personnel in hospitals, diagnostic and treatment centers, home care services agencies, certified home health agencies, licensed home care services agencies, long term home health programs, and hospice programs. The regulations required that personnel commencing employment on or after November 30, 2009, be immunized and that existing personnel receive annual vaccinations before November 30 of each year. The only health care personnel exempt from the vaccination requirement were those who provided documentation from a licensed physician or certified nurse practitioner certifying that vaccination would be detrimental to the health of the individual.

The Commissioner’s most recent action was permitted by the emergency regulations, which state that if “the commissioner determines the vaccine supplies are not adequate given the numbers of personnel to be vaccinated or vaccine(s) are not reasonably available, the commissioner may suspend the requirements(s) to vaccinate and/or change the annual deadline for such vaccinations.” This past summer, both the federal government and the Centers for Disease Control and Prevention (CDC) estimated that upwards of 120 to 200 million doses of H1N1 vaccine would be available nationwide by the end of November. After receiving reports from the CDC that New York would in fact only receive 23 percent of its anticipated H1N1 vaccine supply, and that the amount of seasonal flu vaccine available to the State would also fall short of the increased demand, the Commissioner of Health suspended the mandate.

The suspension comes just six days after three nurses filed suit in Albany County Supreme Court alleging that the mandatory vaccination requirement violates the civil rights of health care workers. After consolidating the nurses’ suit with two other lawsuits, the Court issued a temporary restraining order on the mandate and scheduled further hearings to take place on October 30.

Nicholas Fusco assisted in the preparation of this post.

 

As Henry J. Kaiser once said, “Problems are only opportunities in work clothes.” So it is with annual performance evaluations -- supervisors should see them as an opportunity to improve employee performance, or, if that does not work, as a valuable tool in defending against employment litigation claims. Instead, most supervisors dread them and, as a result, put them off as long as possible. Lawyers for ex-employees love them because, as a general rule, the evaluations: (i) are not brutally honest about poor performance because the supervisor is still “working” with the employee; (ii) conflict with later positions taken by the employer in litigation; and (iii) lack specific examples and often closely resemble the evaluation of employees given dissimilar raises or who are still employed. In my litigation travels, I have been both greatly helped and hurt by evaluations. I have also learned many lessons, some the hard way. Here are a few performance evaluation do’s and don’ts for supervisors:

1. Planning.  Start to think about the evaluation at the beginning of the evaluation period, not the end. Keep track of good and bad performance examples throughout the year. If you evaluate all of your employees at the last minute because you are up a against a submission deadline, you may rush them and tend to generalize. This, in turn, creates a risk that the evaluations of your employees will tend to resemble each other.

2. The Good, the Bad and the Ugly.  You should note good and bad behaviors, even if the overall evaluation is poor, unsatisfactory or fails to meet expectations. Such an evaluation appears much more balanced, fair and unbiased, even if it is overwhelmingly negative as a whole.

3. Support Your Conclusions.  Nothing makes an evaluation more powerful than specific and concrete examples (date, time, place, deadlines met or missed, attendance, employee response after counseling or discipline, etc.). Keeping a folder or a log during the year will greatly assist you in recounting specifics in the evaluation. Assumptions and conclusions not supported by specifics are as unpersuasive in this context as any other.

4. Document Carefully.  If you keep a folder or log during the year, keep in mind it is discoverable by the ex-employee’s lawyer in litigation. So make sure there is nothing inappropriate written (just the facts). We often see reviews that speculate about the causes for the performance issue through comments which attribute the poor performance to family problems, medical problems, stress, etc. Avoid this speculation and stick to the facts. In addition, make certain you can demonstrate that you keep similar logs or folders for all your employees. The employer must avoid any appearance that it “built a file” to justify an adverse employment decision. Also, supervisors should inform themselves about company policy on the required time period for retaining such a file after completion of the evaluation.

5. If You See Something, Say Something.  If you notice trends or repeat behavior, don't igore them.  Note them in the review, particularly if the behavior has continued despite intervening counseling or discipline. This is a very powerful “specific.” (Note -- supervisors get extra credit for using the log to correct behavior or improve performance by communicating with the employee at the time the behavior or performance deficiency occurs, rather than waiting to write about it in the evaluation.)

6. Watch Your Language.  Too often, our first meeting with a supervisor to review an evaluation relevant to a litigation begins with the dreaded words, “I probably should have chosen a different word, but what I meant was… .” Obviously, supervisors must guard against any stereotyping and against mentioning factors that tend to indicate a retaliatory or discriminatory motive. Have Human Resources or another manager review your comments. Consider drafting the evaluation well before it is due. Then put it aside and pick it up again after a few days. Doing so provides an opportunity to examine it with fresh eyes and to make needed changes.

7. Get Help If You Need It.  Supervisors and managers are required every day to do more with less in order to accomplish the mission of their organizational units. Owners and Human Resource Professionals owe it to those supervisors to provide training and assistance in completing evaluations. This means doing more than just establishing a system, a form, and a deadline for completion. If your organization has not offered you that kind of training and assistance, don’t be afraid to ask. You and your organization will be better off in the long run.
 

On September 29, 2009, Acting Assistant Secretary for Occupational Safety and Health Jordan Barab announced the agency’s proposal to align OSHA’s current Hazard Communication (“HazCom”) Standard with the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (“GHS”).  The proposed rule  was published in the Federal Register on September 30, 2009 and – if implemented without change – will significantly alter the labels and material safety data sheets that currently appear and accompany hazardous chemicals in the workplace.   Significant aspects of the proposed rule are described below.

 

 

Under OSHA’s current HazCom Standard (which was originally promulgated in 1983), chemical manufacturers and importers must evaluate the chemicals they produce or import and provide hazard information to downstream employers and workers by preparing labels and safety data sheets. Employers must have a hazard communication program for exposed workers, including hazard identification, container labels, safety data sheets and employee training. The HazCom Standard remains a priority for OSHA as 2007 Bureau of Labor Statistics data revealed that more than 50,000 workers became ill in 2007 because of chemical exposure.

The GHS was developed -- after what Assistant Secretary Barab termed “decades of international negotiations” -- by a number of countries and international organizations to address inconsistencies in hazard classification and communication. The GHS is intended as a single, harmonized system for classifying chemicals and preparing labels and safety data sheets. Under the GHS, labels will identify chemical hazards through standardized format, signal words, pictograms, and hazard statements for each hazard class and category. Safety data sheets will be presented in a designated order with a specified sixteen-section format. The new standard requires workers to be trained within two (2) years of publication of the final rule to facilitate recognition and understanding of the new labels and safety data sheets.

The design/intent of OSHA’s proposal rule is to:  increase the quality and consistency of information provided to workers and employers; enhance worker comprehension; ensure the appropriate handling of chemicals; and reduce chemically-related fatalities, injuries and illnesses. OSHA speculates that the change will also make it easier for employers to train workers on how to safely handle chemicals shipped from various manufacturers and importers. Additionally, the new standard is supposed to decrease the cost of providing hazard information and facilitate international trade by eliminating the need for multiple labels and safety data sheets when shipping a product to several different countries.

OSHA expects that affected employers will incur one-time transition costs as a result of the proposed revisions, but that the ongoing annual compliance costs will be the same or lower than under the existing standard. OSHA will have a 90-day comment period on the proposed rulemaking, ending December 29, 2009. Comments should be submitted to OSHA electronically at http://www.regulations.gov/ (http://www.regulations.gov/search/Regs/home.html#home); by fax to the OSHA Docket Office at (202) 693-1648; or by mail to the OSHA Docket Office, Docket No. OSHA-H022k-2006-0062, U.S. Department of Labor, Room N-2625, 200 Constitution Ave., NW, Washington, D.C., 20210. 

This blog post was prepared with the assistance of Katherine A. Ritts, Esq.

According to a recent decision by the United States Court of Appeals for the Second Circuit, an employer is not necessarily insulated from liability for the discriminatory acts of its independent contractors. Halpert v. Manhattan Apartments, Inc., Slip Op. No. 07-4074-cv (September 10, 2009). The case arose when the plaintiff, Michael Halpert, interviewed for a position as a “Shower,” a person who shows apartments to potential buyers. The person who interviewed Halpert for the position was an independent contractor of the defendant Manhattan Apartments. He allegedly told Halpert that “they were looking for someone younger.” Halpert sued contending that he was not hired for the position because of his age in violation of the Age Discrimination in Employment Act (“ADEA”). Manhattan Apartments contended that it could not be held liable for any alleged discrimination because the person who made the decision was an independent contractor who was making the hiring decision for himself, rather than for Manhattan Apartments. Relying on the Second Circuit’s decision in Robinson v. Overseas Military Sales Corp., 21 F.3d 502 (2d Cir. 1994), the United States District Court for the Southern District of New York agreed, and granted summary judgment dismissing the complaint.

The Second Circuit reversed in an unsigned per curiam opinion. First, the Court held that the issue in the case was not controlled by its decision in Robinson, because Robinson only held that an independent contractor cannot bring a claim under the ADEA. The Court stated that the issue before it was a different one: whether an employer can be held liable for the alleged discriminatory acts of its independent contractor. In holding that an employer can be held liable, the Court stated that general principles of agency law applied to the question. Thus, an employer can be held liable for the discriminatory acts of its agents whether those agents are employees or independent contractors. An individual is an agent where he has been given actual authority to hire on behalf of the employer, or where the employer through its words and conduct has created an apparent authority to hire in the eyes of the job applicant.

What types of evidence are sufficient to render an independent contractor an agent of the employer? There is no one set of facts that is sufficient. In this case, the key facts on agency were disputed, causing the Court to hold that summary judgment on the issue was inappropriate. But this also means that Halpert had enough evidence to go before a jury on the question. According to the Court, Halpert had evidence that: Manhattan Apartments sponsored a training program from which “Showers” would be selected; that individuals chosen from the training program would receive commissions from Manhattan Apartments; and that Manhattan Apartments enlisted the independent contractors to interview candidates for the training program. In addition, Halpert apparently presented evidence that he was interviewed at Manhattan Apartments’ offices. Although Manhattan Apartments contended that the interviewer was doing the hiring for himself and would be paying the commissions, Halpert presented evidence to counter that contention. He alleged that the person who interviewed him stated that “they” were looking for someone younger, implying that the independent contractor was not hiring for himself. In addition, the independent contractor’s agreement with Manhattan Apartments did not address in any way the independent contractor’s purported responsibility for paying commissions to “Showers.”
 

In our August 18, 2009 blog, we provided best practice recommendations for conducting workplace investigations generally. This post follows up on the earlier post by focusing in greater detail on best practices for questioning the employee accused of misconduct.

An internal investigation of employee misconduct serves multiple functions. It fosters compliance with corporate policies by ensuring that alleged instances of misconduct are not ignored. It promotes fairness by ensuring that any disciplinary action is based on fact rather than rumor. And it enhances morale by communicating to the workforce that the employer enforces its policies but takes disciplinary action only after giving the accused employee an opportunity to be heard. Proper questioning of the accused employee is essential to achieving all these purposes. Some best practice suggestions for conducting that questioning are provided below.
 

The Setting

The questioning should take place in a private location, such a windowless conference room. Discretion is fair to the accused, and minimizes the spread of distracting rumors.

Except in the most informal and straightforward investigations, a management-friendly observer should be present in addition to the investigator. This helps avoid disputes about what the accused admitted and how fairly the investigation was conducted. The observer can also take notes, enabling the investigator to focus on the questioning.

If the accused is represented by a union, the accused has the right to request that a union representative be present.  The union representative should be permitted to observe the questioning, but not to interfere with it.

Introductory Statement

The investigator should begin by introducing herself and the observer, and explaining the general purpose of the interview. Unless the accused already knows the subject of the investigation, no details should be provided at the outset. If the allegations are disclosed prematurely, the accused will be better able to invent a false story, limit a confession, and deduce the identity of the accuser(s).

The investigator should assure the accused of the following:
 

• The investigation will be conducted fairly.
• No firm conclusions have yet been reached.
• If the accused cooperates and answers the questions truthfully, that will be considered in his favor when determining any penalties.
• The investigation will be kept confidential. Managers and employees will be told about the matter only on a need-to-know basis.

The interview should not be electronically recorded, but you may later ask the accused to sign a written statement confirming what he has said. Open electronic recording hinders candid conversation. Secret electronic recording is likely to be perceived as unfair if it later comes to light, and may violate state law . Handwritten notes are the least distracting way to keep a record of the interview.

Questioning Techniques

If the accused does not already know who has made the accusation against him, it is often helpful to begin the questioning by asking him whether he can think of anyone who has any reason to make up a lie about him. If the answer is no, this makes it more difficult for the accused to claim later that the accusation is the product of an unfair vendetta. If the answer is yes, and the accused presents a motive for the accuser to lie, then the accused’s credibility will be enhanced.

Start with general and open-ended questions. Leading questions tip the accused off as to the nature of the allegations, and help him to craft a false “story.” The following are examples of good ways to start the questioning:

• Did anything unusual happen at the sales conference last week?
• Are you aware of any violations of the Company’s policy on XYZ?
• Where were you last Friday?

If the accused denies knowledge of any unusual events, ask gradually more narrow questions. When the accused starts talking about the incident you are investigating, follow up with open-ended questions starting with the 5 W’s (who, what, when, where, why):

• Who else was there?
• What happened next?
• When did that happen?
• Where did that happen? 
• Why did you do that?

Gradually narrow the scope of your questions to fill in the details.

Don’t be adversarial or judgmental. Make it easy for the accused to give you relevant information. Ask questions like:

• Is there anything you might have said that may have led someone to falsely conclude that XYZ occurred?
• Can you think of any way that someone may have gotten the false impression that you did XYZ?

You can gain more information by being deferential than by being self-righteous. Don’t be Perry Mason; be Columbo. In lawyer’s terms, an investigation should be more like a deposition than a cross-examination.  Your purpose is to find out what the accused has to say, not to embarrass or demean him. After all, the accused may be innocent. Even if he is guilty of misconduct, the accused may still be a valuable employee, and may provide you with more useful information if he feels he is being treated with courtesy and respect.

If a claim is likely to be disputed, ask who else witnessed the disputed events, so you can interview them later. You should also ask if there are any documents, emails, or other evidence that will support the accused’s version of events.

One of the biggest mistakes that investigators make is to follow a script rather than listening to what the accused says and adjusting accordingly. It is helpful to have an outline of the points you want to cover, but it is important to be flexible. Listen to the answers to your questions. Ask follow-up questions. Make sure you fully understand the accused’s story, and make sure you have all the details you need to confirm whether that story is true.

Insist on facts, not conclusions. If the accused says, “So and so was flirting with me,” ask: “What did she say?” “What did she do that makes you say that?”

Make sure you distinguish between what the accused knows from first-hand observation and what he thinks he knows from hearsay. Ask: “How do you know that?” “Did you ever see that happen?”

Make sure you are eliciting everything relevant that the accused has to say, not just narrow answers to particular questions. After the accused answers a question, make sure the question has been answered in full before you move on. This will not only increase the amount of information you obtain; it will also make it difficult for the accused to change his story or add more details later:

•  Were there any other times when that happened?
• Is there anything else I should know about that?
• Did anything else happen that day?

Use silence to your advantage. You will be astonished how much information you can obtain by simply looking at someone after he answers a question, or by sitting quietly, catching up with your note-taking.

Be open to the accused’s version of the events. Do not jump to conclusions. The accusation may be incorrect, and the accused may be innocent. Suspend judgment until you have given the accused an opportunity to tell his side of the story.

If you have questions that may embarrass or antagonize the accused, save them for the end of the interview. Such questions may stifle cooperation, and diminish the amount of information you obtain.

After the Questioning

At the end of the interview, ask the accused if there is any reason why he was not able to fully answer all your questions. This avoids later false challenges to the fairness or reliability of the investigation. It is also helpful to ask the accused if there is anything else he would like to add, or that he thinks you should know.

The investigator should also direct the accused not to retaliate against any other employee for making an accusation against him or cooperating with the investigation.

If the allegation is serious enough, and if there is likely to be a dispute about the facts, consider writing up your notes in the form of a written statement for the accused to sign. This avoids claims that you have mischaracterized the accused’s version of events. If you plan to do this, you should inform the accused in advance, so he does not feel sandbagged. Writing the statement yourself is preferable to asking the accused to write it, so that the statement can be written in a clear manner, without hedging or evasion. However, you should make it clear that you do not want the accused to sign the statement unless and until he has read it carefully, corrected any errors, and feels fully comfortable with its contents. These instructions should be in writing, on the same document as the statement itself.

The questioning of the accused is just one part of a workplace investigation. If there are disputes about relevant facts, you will want to interview other witnesses, examine documents or other evidence, and perhaps even question the accused a second or third time. If the initial questioning of the accused is done using best practices, your investigation will be off to a good start. The company will be more certain that it is taking the proper steps, and everyone involved will be satisfied that the process has been fair.
 

In a final rule published today in the Federal Register, the Department of Homeland Security (“DHS”), has rescinded its controversial “no-match” letter regulation promulgated during the Bush administration. The action has been anticipated ever since it was initially announced in July, and completes a process which commenced with the publication of a proposed rule on August 19, 2009. The Bush era regulation never went into effect because its enforcement was preliminarily enjoined by a federal district court.  The significance of the rescission is explained below.

A no-match letter can be generated by the Social Security Administration (“SSA”) when a combination of employee name and Social Security Number (“SSN”) on a W-2 form does not match SSA records. This can occur for a variety of entirely innocent reasons, but can also occur when someone not authorized to work in the U.S. uses a false SSN or someone else’s SSN. The Bush era regulation would have required employers receiving such letters to take particular actions to resolve the discrepancy and verify the individual’s employment eligibility or face potential liability for employing an unauthorized alien.

Rescission of the regulation does not mean that SSA will stop issuing no-match letters. Moreover, in the text addressing public comments on the rescission, DHS has made it clear that receipt of a no-match letter will continue to count in a totality of the circumstances determination of whether an employer knowingly hired or continued to employ an unauthorized alien. As a result, employers that receive such letters should continue to investigate them with the employees to whom they apply. DHS states that the prudent employer will: check its own records for errors; ask the employee to review the information; and allow the employee a reasonable amount of time to resolve the no-match with SSA.

In order to avoid potential liability under the anti-discrimination provisions of 8 U.S.C.§ 1324b, employers who receive a no-match letter should also refrain from taking precipitous action against the affected employee. DHS states unequivocally that employers should not use a no-match letter alone as a basis for firing an employee. The Justice Department’s Civil Rights Division provides guidance to employers on how to respond to a no-match letter without engaging in prohibited discrimination.
 

Among other things, the Health Insurance Portability and Accountability Act (“HIPAA”) requires heath care plans, third party health plan administrators, pharmacy benefit managers, health care providers, and other so-called “covered entities” and “business associates” to maintain the confidentiality and security of an individual’s “protected health information” or “PHI.” The Health Information Technology for Economic and Clinical Health Act (the “Act”), passed earlier this year as part of the economic stimulus package, introduced substantial changes to the HIPAA privacy and security rules, including the addition of new notification requirements that may apply in the event that the privacy or security of PHI is compromised.

Under the Act, if the confidentiality or security of PHI is compromised by a “covered entity,” notification of the “breach” may have to be provided to (i) affected individuals, (ii) the United States Department of Health and Human Services (“HHS”), and (iii) in certain cases, the media. If a “business associate” compromises the confidentiality or security of PHI, the business associate may be required to notify the covered entity of the breach.

On August 24, 2009, HHS issued interim final rules (“Final Rules”) that clarify the breach notification requirements. Although the Final Rules are effective September 23, 2009, and although HHS expects covered entities to comply as of that date, sanctions will not be imposed for noncompliance that occurs prior to February 23, 2010. Until then, HHS has indicated that it will take appropriate corrective action to help covered entities achieve compliance. Covered entities and business associates should not delay implementing appropriate measures to comply with the requirements of the Final Rules, despite the delayed enforcement date. The most significant aspects of the Final Rules are discussed below.

 

Covered Entities, Business Associates and PHI Defined

For purposes of the Final Rules, a “covered entity” is defined as a health plan, health plan clearinghouse, or health care provider that transmits any health information electronically in connection with a covered transaction (such as submitting health care claims to a health plan). A “business associate” is defined as a person who performs functions on behalf of, or certain services for, a covered entity that involve the use or disclosure of individually identifiable health information (e.g., third party administrators or pharmacy benefit managers for health plans). PHI is defined as individually identifiable health information held or transmitted by HIPAA covered entities and business associates, subject to certain limited exceptions.

 

When Does a Breach Occur?

The Final Rules define a breach to mean the unauthorized acquisition, access, use, or disclosure of unsecured PHI which compromises the security or privacy of such information. The security or privacy of PHI is considered to be “compromised” under the Final Rules if its disclosure poses a significant risk of financial, reputational, or other harm to the affected individual.

HHS previously issued guidance regarding when PHI is considered “secure,” and therefore not subject to the breach notification requirements. Generally, the guidance stated PHI is not considered secure unless it is either destroyed or encrypted in accordance with National Institute of Standards and Technology guidelines.

Under the Final Rules, a breach does not include certain unintended and inadvertent disclosures of unsecured PHI, nor disclosures where the recipient would not have been able to retain the disclosed information (e.g., instances where unsecured PHI is mailed to the wrong individual and the envelope is returned unopened).

 

What are the Notification Requirements With Respect to Individuals?

• General Requirement: After the discovery of a breach of unsecured PHI, the Final Rules require covered entities to notify each individual whose unsecured PHI has been, or is reasonably believed by the covered entity to have been, accessed, acquired, used or disclosed as a result of such breach. Breaches are treated as discovered as of the first day that the covered entity knows, or reasonably should have known, of the breach.
   
• Timing of Notice: The notification must be provided without “unreasonable delay” (i.e., as soon as reasonably possible) and in no event later than 60 calendar days after the breach is first discovered by the covered entity.
   
• Content of Notice: The notification must include, to the extent possible:

1. A brief description of the breach, including the date of the breach and the date of the discovery of the breach;

2. A description of the types of unsecured PHI involved in the breach;

3. Steps individuals should take to protect themselves from potential harm resulting from the breach;

4. A brief description of the actions taken by the covered entity to investigate the breach, to mitigate potential harm, and to protect against further breaches; and

5. Steps that can be taken to obtain additional information.
 

• Method of Notice: The notice must be provided by first-class mail to the individual at his or her last known address, or by electronic mail, if such method was previously agreed to by the individual. If the covered entity knows that the individual is deceased, written notice may be provided to the address of the next of kin or the individual’s personal representative.
   
• Substitute Notice: If the covered entity has insufficient or out-of date contact information with respect to the covered individual, the covered entity must provide notice through alternative means. If insufficient or out-of-date information is available for fewer than 10 individuals, substitute notice may be provided by an alternative form of written notice, telephone, or other means. If insufficient or out-of-date information is available for 10 or more individuals, the covered entity must either post a conspicuous notice of the breach on the web site of the covered entity involved, or provide conspicuous notice in local major print or broadcast media. Such notice must include a toll-free telephone number where an individual can learn whether the individual’s unsecured PHI was included in the breach (the number must remain active for at least 90 days).

 

When is Media Notification Required?

In the case of breaches involving more than 500 residents of a State or jurisdiction, the covered entity must notify “prominent media outlets” of the State or jurisdiction. Such notice must be provided without unreasonable delay, and no later than 60 calendar days of the discovery of the breach, and must include the same content as described above with respect to the notification of individuals.

 

When is Notice Required to be Provided to HHS?

Breaches Involving 500 or more Individuals: For breaches involving 500 or more individuals, a covered entity must notify HHS of the breach at the same time notice is provided to the affected individuals as described above, and in the manner specified on the HHS web site (www.hhs.gov).

Breaches Involving Less than 500 Individuals. For breaches involving less than 500 individuals, a covered entity is required to maintain a log of such breaches and submit it to HHS on an annual basis. The log must be filed with HHS within 60 days after the end of the calendar year, and in the manner specified on the HHS web site (www.hhs.gov).

 

What Notification Requirements Apply to Business Associates?

Upon discovery of a breach, business associates are required to notify the covered entity of the breach without unreasonable delay, and no later than 60 calendar days after discovery of the breach. Such notice must include, to the extent possible, the identification of each affected individual as well as any other information that the covered entity is required to provide to the individual pursuant to the covered entity’s notice obligations.

As an exception to the notification requirements described above, the Final Rules allow covered entities to delay the notification of a breach if requested by a law enforcement official.

 

Recommended Action

The Final Rules require covered entities and business associates to take immediate steps to ensure compliance. Such steps include, among other things:

1. Establishing internal procedures to determine when breaches of unsecured PHI have occurred and ensure compliance with the notification requirements;
2. Creating and maintaining a breach log to track any breaches so that they are properly reported to HHS;
3. Training appropriate personnel on the notification requirements;
4. Revising business associate agreements to account for the new requirements; and
5. Modifying existing HIPAA policies and procedures and the notices of privacy practices to comply with the new notification requirements.

Since the Supreme Court’s decision in IBP, Inc. v. Alvarez , 546 U.S. 21 (2005), “donning and doffing” claims have been filed with increased frequency against employers in many industries. In some instances, these claims take the form of a collective and or class action. Recently, the United States District Court for the Western District of New York granted summary judgment dismissing wage and hour claims brought under the Fair Labor Standards Act (“FLSA”) and the New York Labor Law in a case defended by Bond, Schoeneck & King, PLLC (“BS&K”). Albrecht v. The Wackenhut Corp., slip op. no. 07-CV-6162 (W.D.N.Y. Sept. 24, 2009). The court’s holdings are discussed below.

 

The action was commenced on behalf of current and former security guards at the Ginna Nuclear Power Plant in Ontario, New York. The plaintiffs sought additional compensation for donning and doffing activities that allegedly occurred before and after their scheduled workdays; specifically, the time spent “arming up and clearing through security and arming down.” In ruling for the employer, the court acknowledged that under the Portal-to-Portal Act (an amendment to the FLSA), employers need not compensate employees for activities that are “preliminary to or postliminary to" their “principal” work activities. In Alvarez, the Supreme Court held that such activities are only compensable if they are “an integral and indispensable part of the principal activities.” In finding that the activities involved in the case before it were not “integral” to the performance of the guards’ principal activities, the Albrecht court analogized the tasks at issue to those found to be non-compensable by the Second Circuit in Gorman v. Consolidated Edison Corp., 488 F.3d 586 (2d Cir. 2007) and Reich v. New York City Transit Auth., 45 F.3d 646 (2d Cir. 1995). The court in Albrecht further ruled that the time spent arming up and arming down involved non-compensable preliminary or postliminary activities because the tasks could be accomplished with minimal effort and were not difficult or time consuming.

In addition, the court supported its ruling on an alternative ground. It held that to the extent the donning and doffing activities might otherwise be compensable, they were nevertheless de minimis in nature. Relying on the Second Circuit’s decision in Singh v. City of New York, 524 F.3d 361 (2d Cir. 2008), the court noted that the “continuous workday rule,” which generally requires inclusion of all time after the start of an employee’s workday, is not triggered when an employee engages in principal activities that are de minimis. The court observed that while there is no “bright line” test for determining how much time is de minimis, several courts have found time periods of fifteen minutes or less to be de minimis. The court then found that even if all of the pre- and post- shift activities alleged were considered, the time period at issue was de minimis under that standard.

The defendant in Albrecht was represented by Robert A. LaBerge and Christa R. Cook of BS&K. This is the second donning and doffing case in the past year in which BS&K has successfully represented the employer. In Delitta v. City of Mount Vernon, current and former police officers brought a similar suit which was withdrawn after limited discovery. Equally significant, the resolution did not require the City to pay any monies to the plaintiffs. BS&K attorneys Terrence M. O’Neil and John S. Ho represented the City in that case.