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EMPLOYEE BENEFITS BLOG
Insights on Employee Benefits and Executive Compensation
EMPLOYEE BENEFITS BLOG
Insights on Employee Benefits and Executive Compensation
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Administrative Law Judge Finds Employer Unlawfully Discharged Employees Based on Facebook Posts

by | Sep 22, 2011 | ,

by Stephen D. Erf, Heather Egan Sussman and Sabrina E. Dunlap

In a first of its kind ruling, a National Labor Relations Board (NLRB) Administrative Law Judge (ALJ) found that an employer unlawfully terminated five employees because they posted comments on Facebook related to working conditions.  This is a landmark decision because, up to this point, employers have only been able to rely on the prosecution trends of the General Counsel’s office, including a recently issued report on the topic, and not actual decisions by the adjudicative body of the NLRB.

This landmark case involved an employee of Hispanics United of Buffalo (HUB) (a nonunionized organization), who posted a message on Facebook sharing critical comments made by a coworker concerning employees’ poor job performance and asking for the employees’ reactions.  Five employees commented on the post, defending their job performance and criticizing the critical employee and their working conditions, including work load and staffing problems.  HUB later discharged the Facebook poster and the employees who responded to the post, stating that their comments constituted harassment of the critical coworker.

Based on an unfair labor practice charge filed by one of the employees, the NLRB’s Buffalo Regional Director issued a complaint in May 2011. The ALJ heard the case in July and, on September 2, issued a written decision finding that the employees’ Facebook posts were protected concerted activity under Section 7 of the National Labor Relations Act (NLRA) because they concerned a conversation among coworkers about the terms and conditions of employment and the employees’ conduct was not sufficiently inappropriate as to lose the protection of the NLRA.  The ALJ awarded the employees back pay and ordered HUB to reinstate the five employees.  The ALJ also ordered HUB to post a notice at its Buffalo facility explaining to employees their rights under the NLRA and committing not to violate those rights in the future.

While NLRB complaints related to social media have been on the rise, this is the first ALJ decision specifically addressing employees’ use of Facebook.  As a result, employers are wise to consider the ALJ’s decision when disciplining employees based on social media activity.



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NLRB Releases Report on Social Media Decisions

by | Sep 20, 2011 | ,

by Sabrina E. Dunlap, Stephen D. Erf and Heather Egan Sussman

In April 2011, we issued a blog post outlining some of the National Labor Relations Board’s (NLRB) decisions regarding employee use of social media (the post can be accessed here). In an effort to provide guidance on the issue, the Acting General Counsel of the NLRB (General Counsel) recently issued a report (found here) addressing cases from the past year arising in the context of social media use. The report uses 14 cases to illustrate how the General Counsel’s office determines that use of social media qualifies as protected concerted activity, and when the mere contents of an employer’s social media policy can give rise to liability under the National Labor Relations Act (NLRA), even when an employer’s employees are not represented by a union.

While the distinction between protected and unprotected activity on social media sites is not always obvious, several trends emerge from the illustrative cases, providing guidance on when the General Counsel’s office (the prosecution arm of the NLRB) will conclude that activity is protected. For example, in cases where the employee discussed his or her social media posts with other employees, or had discussions with coworkers and subsequently drafted a post based on such discussions, the General Counsel’s office tended to deem this “protected concerted activity” such that an employee could not be disciplined for the conduct. By contrast, when employees did not discuss posts with coworkers, or where an employee’s posts were merely “individual gripes” containing no language suggesting an attempt to engage other employees into group action, the General Counsel’s office generally concluded there was not protected activity, and the resulting disciplinary action did not violate the law. One case involving inappropriate and offensive “tweets” by an employee about his employer did not involve protected concerted activity because the tweets did not relate to the terms and conditions of employment, and again, did not seek to involve other coworkers in issues related to employment. 

As for the content of workplace social media policies, the key takeaway from the report is that employers should avoid using overbroad terms that could be construed to prohibit protected concerted activity. For example, the General Counsel’s office has taken issue with policies barring comments compromising the “privacy or confidentiality” of a coworker or that could “damage the reputation” of the employer, or that could “put your job in jeopardy,” because the terms were not defined in the policies. As a result, the General Counsel’s office concluded that the undefined terms could “reasonably be interpreted as prohibiting protected employee discussion” of the terms and conditions of employment, which would be unlawful.

However, the General Counsel’s office declined to prosecute an employer based on its policy that prohibited employees from “pressuring” coworkers  to connect or communicate via social media, finding that this restriction could not be reasonably read to restrict protected activity.  Similarly, the General Counsel’s office concluded that policies limiting employee contact with the media in an effort to ensure a [...]

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IRS Guidance Provides Employer-Provided Cell Phones May Generally be Treated as Nontaxable Fringe

by | Sep 16, 2011 | ,

by Ralph DeJong, Ira Mirsky and Michael Fine

On Wednesday, September 14, 2011, the IRS issued Notice 2011-72, which provides long-awaited relief concerning the tax treatment for the employee use of employer-provided cellular telephones or other similar telecommunications equipment (e.g., PDAs and Blackberries):

  1. The IRS will generally treat an employee’s business use of an employer-provided cell phone as a nontaxable working condition fringe benefit, without the need to meet onerous substantiation requirements.
  2. The IRS will generally treat the value of any personal use of an employer-provided cell phone as a nontaxable de minimis fringe benefit.

The IRS guidance specifies that the business and personal use of an employer-provided cell phone provided by the employer will generally be treated as nontaxable to the employee, if the employer has provided the cell phone primarily for noncompensatory business reasons.  Because it applies for taxable years beginning after December 31, 2009, the tax relief provided under the IRS Notice takes effect immediately.

To read the full article, click here.



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NLRB Releases Poster For Posting By November 14, 2011

by | Sep 15, 2011 | ,

by Heather Egan Sussman, Sabrina E. Dunlap and Stephen D. Erf

As an update to our previous blog entry, the National Labor Relations Board (NLRB) has released the private employer notice of rights under the National Labor Relations Act (NLRA).  As of November 14, 2011, covered employers must post the 11-by-17-inch notice in a conspicuous place, where other notifications of workplace rights and employer rules and policies are posted.  The NLRB states that employers also should publish the notice on an internal or external website if other personnel policies or workplace notices are posted there.

The NLRB has also posted Frequently Asked Questions on the posting requirement, which covers topics such as when employers are covered by the NLRA, and what to do if a substantial share of the workplace speaks a language other than English.



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NLRB Issues Final Rule on Notification of Employee Rights

by | Aug 30, 2011 | ,

by Stephen Erf and Heather Egan Sussman

The National Labor Relations Board (NLRB) issued a final rule requiring private sector employers to notify employees of their rights under the National Labor Relations Act.  The Rule requires private sector employers who fall under the National Labor Relations Act to post the employee rights notice in conspicuous places at where other workplace rights notices are usually posted. The new notice states that employees have the right to act together to improve working conditions and wages, to form, join and assist unions, to collective bargaining, or to refrain from any of these activities. The notice also provides examples of illegal conduct and tells employees how to contact the NLRB with questions or complaints.

NLRB regional offices will provide the notice of rights at no charge, or the notice can be downloaded from the Board website and printed in color or black and white.  Translated versions, which will also be available, must be posted at workplaces where at least 20 percent of employees are not proficient in English.  Employers must also post the notice on intranet or an internet sites if other rules and policies are typically posted there.

Failure to post the notice will be treated as an unfair labor practice and, if an unfair labor practice charge is filed by a person or union, will trigger an investigation and adjudication by the National Labor Relations Board that could lead to the investigation of other issues, as well.  Additionally, the failure to post the notice may have the effect of extending the time for the filing of an unfair labor practice charge on unrelated issues (i.e. permit the prosecution of an otherwise time-barred unfair labor practice charge) and permit the NLRB to infer that a knowing and willful refusal to post the notice is evidence of an unlawful motive in cases in which motive is an issue.

The Rule is scheduled to be posted in the Federal Register by August 30, 2011, and will take effect 75 days after that, on November 14, 2011.



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McDermott Releases An Employer’s Guide To Implementing EU-Compliant Whistleblowing Hotlines

by | Aug 25, 2011 | ,

by Heather Egan Sussman and Alison Wetherfield

Companies listed on U.S. stock exchanges are required under the Sarbanes-Oxley Act to establish a system for employees to internally report concerns over questionable auditing or accounting matters. These systems are often referred to as “whistleblowing hotlines”. When setting up hotlines around the globe, however, employers must be mindful of the European Union (EU) privacy regime. Previously, some EU regulatory authorities intimated that such hotlines could never be acceptable in their jurisdictions. Public company employers were left, therefore, with the unfortunate choice of foregoing the hotline and potentially violating Sarbanes-Oxley, or implementing the hotline and potentially violating EU privacy laws.  

Over the past few years, however, a framework has developed, at both the EU level and among the member states, that provides guidance on how employers may lawfully implement such a hotline throughout most of the European continent. McDermott just released an article outlining a checklist of basic principles for public company employers to follow so they can stay within this framework. As explained in more detail in the article found here, these principles include: 

1.       Encourage “confidential” rather than “anonymous” reporting

2.       Set up a filtration system

3.       Ensure confidentiality and data security

4.       Limit the nature and scope of the processed data

5.       Ensure compliant transfers of data outside of the EEA

6.       Retain and destroy data according to local requirements

7.       Give employees the right of correction

8.       Inform employees about the program  

9.       Follow authorization procedures

By observing these basic principles when setting up a whistleblowing hotline in the EU, and by following the other best practices detailed in the full article, public companies can best position themselves to mitigate the risk of an enforcement action on both sides of the pond. 



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New Connecticut Law Limits Employer Access to Employee Credit Data

by | Aug 8, 2011 | ,

by Heather Egan Sussman, Stephen D. Erf and Sabrina E. Dunlap

Adding to the growing number of states limiting employers’ use of credit reports, including Hawaii, Washington, Oregon, Illinois, and Maryland), Connecticut recently passed Public Act No. 11-223 restricting employer use of credit reports and credit history for employees or job applicants.  The Connecticut law goes into effect October 1, 2011, and prohibits employers from requiring an employee or job applicant to consent to a request for a credit report “as a condition of employment.”  This includes reports that contain information about credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers.

The law has four exceptions.  Paraphrasing from the law, employers may request credit data if:

  1. The employer is a financial institution;
  2. A report is required by law;
  3. The employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to employment; or
  4. Either (a) a report is substantially related to the job or (b) the employer requests the credit report for a bona fide purpose that is “substantially job-related” and discloses this purpose in writing to the employee or applicant.

Regarding the last exception, the law broadly defines “substantially related to the job” to mean that the information contained in the credit report is related to the following: a managerial position that involves setting direction and control of the business; a position that involves access to customers, employees or the employer’s personal or financial information (other than retail transaction information); involves a fiduciary responsibility to the employer; provides an expense account or corporate debit or credit card; provides access to confidential or proprietary business information; or involves access to the employer’s nonfinancial assets valued at $2,005 or more, including but not limited to, museum and library collections and to prescription drugs and other pharmaceuticals.

Job applicants and employees may lodge complaints alleging violations of the law with the Connecticut Labor Department.  Employers will be liable to the Labor Department for a civil penalty of $300 for each improper request for a credit check.  The Connecticut Attorney General can bring civil actions to recover penalties brought by the Labor Department. 

 

As a result of these new restrictions, Connecticut employers should review hiring policies, and other policies that require employee credit information, and prepare to comply with the law by October 1, 2011.



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Same-Sex Marriage Legalized in New York: Implications for Employee Benefit Plans

by | Jul 14, 2011 | ,

by Joseph S. Adams, Todd A. Solomon and Brian J. Tiemann

Now that same-sex marriage has been legalized in the state of New York, employers should expect to begin seeing an increase in requests for spousal benefit coverage from employees who have legally married their same-sex partners.  The new law takes effect on July 24, 2011.

To read the full article, click here.



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French Supreme Court Rule For Change Of Control Clause In Management Employment Contracts

by | Jul 8, 2011 |

by Jilali Maazouz and Sébastien Le Coeur

As of 26 January 2011, the French Supreme Court ruled that the change of control clauses in French executive-level employment contracts are valid, a consideration which international companies contemplating the acquisition of a company in the country need to consider.  The control clause is also valid for both public and private companies.

In July 2005, further to the termination of several of Havas’s officers, one of the top managers decided to leave the company by claiming constructive dismissal under her change of control clause.  A McDermott employment lawyer in Paris advised on the drafting of this landmark control clause upheld by the French Supreme Court.

This change of control clause within the Havas executive’s contract was as follows:

  • The identities of the top managers were key reasons as to why the employee entered into her/his employment contract.
  • Should one or several of these top managers be terminated by the company, the employee would be entitled to claim constructive dismissal, within a certain period of time.
  • The claim for constructive dismissal would trigger the payment of a golden parachute.
  • The French Supreme Court upheld the clause and justified this decision by the seniority of the employee’s position.

As a result of this landmark Supreme Court decision, companies in France can now apply the change of control clause as a deterrent to hostile takeovers through the entrenchment of its top management executives.



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