Federal Case: Cannot Tell Employees to “Keep it Confidential”

April 29, 2013

I have been continually advising employers (California) that under the California Labor Code it is illegal to tell employees to “keep it confidential” when investigating complaints of workplace harassment. Now the Feds have jumped on board.

The National Labor Relations Board (NLRB) decided in Banner Health System dba Banner Estrella Medical Center and James A. Navarro, Case No. 28-CA-023438, that an employer’s blanket rule requiring employees to maintain the confidentiality of pending internal company investigations violated the employees’ Section 7 right to discuss discipline or disciplinary investigations involving their fellow employees. Admittedly, employers will be concerned that the NLRB’s position complicates an employer’s ability to protect the integrity of an ongoing investigation. Nevertheless, I recommended that employers outside of California should treat each investigation on an individualized basis and that employers should document its specific business rationale for requesting employee confidentiality during an investigation. California in my opinion does not permit such a luxury.

The NLRB’s Division of Advice issued a Memorandum regarding this issue. In Verso Paper, NLRB Div. of Advice, No. 30-CA-89350, 1/29/13 [released 4/16/13] Associate General Counsel Barry J. Kearney advised that the employer maintained an overbroad rule requiring employee confidentiality to maintain the integrity of all internal investigations. The company’s Code of Conduct specifically provided:
Verso has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Reviewing this policy, Mr. Kearney reiterated the Board’s position from Banner Health that an employer must show more than a generalized concern with protecting the integrity of its investigations. “Rather, an employer must ‘determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, and there [was] a need to prevent a cover up.” Thus, according to Kearney, a blanket rule prohibiting employee discussions of ongoing investigations is unlawful because it does not require the employer first to demonstrate a particularized need for confidentiality in any given situation. He therefore advised the NLRB’s Region 30 Director to issue a complaint against the employer in the absence of settlement.
In a footnote to his Memorandum, Mr. Kearney provided employers with a safe harbor policy that would avoid the potential Section 7 pitfalls. Specifically, he noted that the first two sentences of the employer’s rule lawfully set forth a legitimate interest in protecting the integrity of its investigations and then recommended modifying the remainder of the rule to lawfully advise employees that:
Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Keeping all of the above in mind, in my opinion telling employees to keep it confidential within the context as noted above, is a slippery slope. Besides, we all know it really does not matter! Employees will talk so why put yourselves at risk.

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Federal Recordkeeping Regulations Regarding Employment Records

April 22, 2013

These recordkeeping regulations require covered entities to retain personnel and employment records that employers make or use in the course of their business. The specific requirements of these regulations are set forth below.

A. All Personnel and Employment Records made or used (including, but not limited to, requests for reasonable accommodation, application forms submitted by applicants, and records dealing with hiring, promotion, demotion, transfer, lay-off or termination, rates of pay, compensation, tenure, selection for training or apprenticeship, or other terms of employment) must be preserved for the following periods:

1. Private employers must retain such records for one year from the date of making the record or the personnel action involved, whichever occurs later, but in the case of involuntary termination of an employee, they must retain the terminated employee’s personnel or employment records for one year from the date of termination.

2. Educational Institutions and State and Local Governments must retain such records for two years from the date of the making of the record or the personnel action involved, whichever occurs later, but in the case of involuntary termination of an employee, they must retain the terminated employee’s personnel or employment records for two years from the date of termination.

B. Other Records must be retained for the following periods:

1. Labor Unions which are “referral unions” must retain all membership and referral records (including applications for same) for a period of one year from the date of making the record.

2. Apprenticeship Committees that control apprenticeship programs must retain all apprenticeship records, including, but not necessarily limited to, requests for reasonable accommodation, test papers completed by applicants, and records of interviews, for a period of two years from the date of making of the record.

C. Records Relating to a Charge of Discrimination

Where a charge of discrimination has been filed under Title VII, the ADA, or GINA, or where a civil action has been brought by the Commission or the Attorney General, the respondent private employer, state or local government employer, educational institution employer, labor union, or apprenticeship committee must retain all records related to the charge or action until final disposition of the charge or action. The date of final disposition means the date of expiration of the statutory period within which the aggrieved person may bring an action in a U.S. District Court or, where such an action has been brought, the date on which such litigation is terminated.

Note: This information came directly from the EEOC website.


Genetic Characteristics is an Emerging Minefield of Litigation

April 16, 2013

As many of you know, this is the required year to conduct the mandatory harassment seminar for all employers with 50 or more employees. During these seminars it has become clear that managers are not aware of the new protected class under the “Genetic Information Nondiscrimination Act” otherwise known as “GINA.” Genetic characteristics are now under a protected class.

Two years ago the EEOC published the regulations to the employment provisions of GINA, the Genetic Information Nondiscrimination Act. According to the EEOC, GINA has 4 stated purposes:
1. To prohibit the use of genetic information in employment decisions;
2. To restrict employers and others from requesting, requiring, or purchasing genetic information;
3. To require that employers maintain genetic information as a confidential medical record, with strict limits on disclosure; and
4. To provide remedies for individuals whose genetic information is acquired, used, or disclosed in violation of the Act.

1.
GINA does not just cover employees’ genetic information. It also covers the genetic information of relations as attenuated as great-great-grandparents, great-great-grandchildren, and first cousins once-removed (the children of first cousins).

2.
GINA is intended to be a broad anti-discrimination statute. It not only prohibits discrimination against employees on the basis of genetic information in hiring, firing, compensation, terms, conditions, or privileges of employment, but also harassment on the basis of genetic information, and retaliation where an individual opposes any act made unlawful by GINA, files a charge of discrimination or assists another in doing so, or gives testimony in connection with a charge.

3.
GINA’s prohibition against the request of genetic information about an employee or family member includes Internet searches in a way that is likely to result in obtaining genetic information, even if the information is publicly available. However, if an employer “inadvertently learns genetic information from a social media platform which he or she was given permission to access by the creator of the profile at issue” (such as an employee who posts family medical history on his Facebook wall, and his supervisor, with whom he is a Facebook friend, sees it), GINA has not been violated. Employers are similarly protected for genetic information employees inadvertently disclose during casual “water cooler” conversations.

4.
GINA permits employers to obtain genetic information as part of employer-provided health or genetic services, such as voluntary wellness programs. While the regulation do not define “voluntary,” they do provide that employers can offer certain financial incentives to employees without stripping the wellness program of its voluntariness.

5.
GINA requires that employers keep all genetic information confidential, stored in separately maintained confidential medical files, consistent with the medical information storage obligations of the ADA. There is, however, a grandfather provision for genetic information obtained before November 21, 2009. Employers need not strip that information from non-confidential files.

Take heed! With the rising cost of healthcare, employers seeking to avoid such costs are trying to get “creative.” This area is an emerging minefield of deception that could be costly.


New FMLA Rules, Posters, and Forms

April 8, 2013

The DOL recently issued its final regulations regarding expansion of military caregiver and qualifying exigency leave and regulations affecting flight crews. These new rules take effect this Friday, March 8. We covered these rules when they were initially proposed by the DOL.

The updated forms are available at http://www.dol.gov/whd/fmla/2013rule/militaryForms.htm, and the updated poster is available at http://www.dol.gov/whd/regs/compliance/posters/fmlaen.pdf.

What are the changes?

Most employers will need to be concerned only with the changes to leave available for military family members, and should review their FMLA policies and practices to ensure compliance with these new rules. Employees may take leave to care for the injuries of veterans who have left service within the past five years. Leave is also available for injuries that preexisted military service but were aggravated in the line of duty. (Before, employees could only take leave for current service members whose injury occurred in the line of duty in the first instance.) Qualifying exigency leave has also been expanded, allowing leave for employees whose qualifying family members serve in the regular Armed Forces as well as the National Guard and Reserves, requiring in both cases a foreign deployment. Qualifying exigency leave is also expanded to 15 days for qualifying family members of service members on rest and recuperation leave.

The DOL’s rules also incorporate new eligibility and recordkeeping requirements for airline flight crew members, which should be closely reviewed by affected employers.

What do employers need to know about the FMLA forms and poster?

As part of its final rule issuance, the DOL also updated its FMLA model forms regarding military family leave and required poster to be used starting March 8, 2013. Although employers are not required to use the DOL’s forms, many employers do. (However, if you use the DOL’s forms, we recommend you add GINA “safe harbor” language.) All FMLA-covered employers must post the DOL’s FMLA poster in a conspicuous place. Covered employers who also have FMLA-eligible employees must also provide a copy of the FMLA poster to employees as part of the employee handbook or in a handout provided to employees upon hire.


Legal Challenges to Paying Flag Hours and Commissions

April 1, 2013

Industrial Welfare Commission Order 7-2001 applicable to the Mercantile Industry states plainly that an employer must pay the applicable minimum wage for “all hours worked in the payroll period”. In 2012, the California Supreme Court made clear statements about the IWC orders in Brinker Restaurants, the case which addresses an employer’s meal period obligations: “The text of the wage order is dispositive. . .The best indicator of the [Industrial Welfare Commission’s] intent is the language of the [wage order] provision itself. . .The IWC’s wage orders are to be accorded the same dignity as statutes.” “. . .the IWC’s wage orders are entitled to ‘extraordinary deference, both in upholding their validity and in enforcing their specific terms.’” Isn’t this perfectly clear?

Ignoring the “extraordinary deference” to which the IWC’s orders are entitled, a California appellate court has now adopted a portion of a manual prepared by the Division of Labor Standards Enforcement (DLSE) which states that “all” hours” worked means the minimum wage must be paid for “each and every” hour worked, and applied it to service technicians at an auto dealership. The decision applies this pay obligation only when the flat rate earned by a technician exceeds pay at two times minimum wage: when two times minimum is paid because “flag hour” pay is lower, the decision is inapplicable. Why? Because, in the court’s view, when a technician has gaps in time – “down time” — between flag hour work, he isn’t’ being paid at all. The court’s ruling is based on an opinion in another court of appeal decision involving hourly paid employees, where an employer paid for some hours worked during the payroll period, but not others. When flag hour pay falls below the minimum wage and the employer pays minimum for all hours worked, there is no “down time” that is unpaid.

If applied broadly, the decision could impact not only all piece-rate employees in California, but inside sales persons who are paid commissions.
Dealers are rightfully up in arms. They have for years faithfully relied on the IWC Order and the DLSE’s Keyes Motors formula for calculating the regular rate of pay, which allows spreading piece-rate pay over all hours worked by the employee and applying that regular rate to the number of premium hours to compute overtime pay. The DLSE has long approved this formula and expected dealers to apply it in computing overtime.

The defendant in the pending case has asked the court for reconsideration and, if it is denied, will likely file a petition asking the California Supreme Court to overturn this unwarranted decision. If the decision is not reversed, this and other decisions will eliminate the right to pay piece rate, flag hour and commission pay.

We have assisted numerous employers, including dealerships, in defending and resolving complex wage matters. We are now preparing legal papers to immediately seek a stay of any complaint filed against an employer which challenges the employer’s piece rate, flat rate or commission compensation plan on the grounds stated above. Let us know immediately if a complaint is filed against you and we can assist you.

Arthur Silbergeld in association with Jim Potts