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February 12, 2010

Court of Appeals Grants Compensation Remedy for School Board’s Failure to Give Probationary Teacher Timely Written Notice of Termination

Under New York’s Education Law, probationary teachers must be given written notice at least 30 days prior to the effective date of termination (or at least 60 days prior to the expiration of the teacher’s probationary period). In Vetter v. Board of Education, decided February 11, 2010, the New York State Court of Appeals was asked to determine whether a monetary remedy was available for a terminated probationary teacher who was not given such notice. The Board admitted it failed to follow the law’s requirements, giving the petitioner only two days’ notice, but contended “that a compensation remedy is inappropriate because the 28 days fell during summer vacation, a period when petitioner would not have been paid any salary had he received timely notice.” The Court rejected the Board’s argument and concluded, relying on its 1993 ruling in Tucker v. Board of Education [82 N.Y.2d 274], that teachers are entitled to “one day’s pay for each day the notice was late.”

This post was authored by Seth Greenberg.

May 25, 2010

U.S. Supreme Court Unanimously Holds Plaintiff May Assert Disparate-Impact Claim Challenging Application of Practice Despite No Timely Challenge to Adoption of Practice

In Lewis v. City of Chicago (No. 08-974), decided May 24, 2010, the high court unanimously found that a plaintiff who does not file a timely charge challenging the adoption of a practice may assert a disparate-impact claim in a timely charge alleging the employer’s later application of that practice as long as he alleges each of the elements of a disparate-impact claim.

In 1995, the City of Chicago administered a civil service examination for firefighter positions. In January 1996, the City notified applicants of the test results, announcing it would draw candidates randomly from the pool of applicants scoring at least 89 out of 100 points (so called “well-qualified” candidates). Candidates scoring below 65 were notified they failed (“unqualified”). And those scoring between 65 and 88 were told that while “qualified” they were unlikely to be called but would be kept on the list as long as the list was still used. In March 1997, plaintiffs filed an EEOC charge claiming the test had a disparate impact on black applicants and was not a valid test.

The trial court found each hiring was a fresh violation of Title VII, thereby also concluding Plaintiffs’ suit was timely. The Seventh Circuit reversed, holding that the suit was untimely because the earliest EEOC charge was filed more than 300 days after the only discriminatory act - the sorting of scores into categories. The Seventh Circuit reasoned that later hiring was merely a consequence of the test scores but not a new discriminatory act.

The U.S. Supreme Court reversed. In writing for the Court, Justice Scalia explained:

Petitioners here challenge the City’s practice of picking only those who had scored 89 or above on the 1995 examination when it later chose applicants to advance. Setting aside the first round of selection in May 1996, which all agree is beyond the cut-off, no one disputes that the conduct petitioners challenge [latest hiring from the list] occurred within the charging period. The real question, then, is not whether an claim predicated on that conduct is timely, but whether the practice thus defined can be the basis for a disparate-impact claim at all. We conclude that it can.

* * * * *

Thus, a plaintiff, establishes a prima facie disparate-impact claim by showing that the employer 'uses a particular employment practice that causes a disparate impact' on one of the prohibited bases.

To read the 7th Circuit’s decision (June 4, 2008) please visit 7th Circuit Decision.
To read the U.S. Supreme Court’s decision (May 24, 2010) please visit Supreme Court Decision.

This post was authored by Seth Greenberg of Greenberg Burzichelli Greenberg P.C.

October 7, 2011

NLRB BEGINS TO DEFINE THE CONTOURS OF ITS SOCIAL MEDIA LAW IN ALJ DECISIONS CONCERNING NON-UNION EMPLOYERS

Social media is a developing, and in many ways still a murky area of the law, particularly in the employment context. Use of Facebook, Twitter, Google+ and the myriad other social media by employees both at and away from the workplace is rapidly increasing and also beginning to blur the line between personal and professional activities. Faced with potential liability under anti-harassment and discrimination laws as well as FTC guidelines on employee endorsements and testimonials, employers cannot completely ignore employee social media activity. Nonetheless, the line between private and professional social media activity is not always clearly defined in the law, forcing employers to make difficult disciplinary decisions concerning employee social media activity.

The National Labor Relations Board (the "Board") has recently begun to define the contours of permissible employer disciplinary action under the National Labor Relations Act (the "NLRA") for employee social media activity. The Board's Office of the General Counsel published a report on social media cases within the last year that provides insight on the Board's view on social media and the contexts in which issues can arise. Although none of the cases discussed in the report reached the Board level, two recent Administrative Law Judge rulings - Hispanics United of Buffalo, Inc. v. Carlos Ortiz, 3-CA-27872 and Karl Knauz Motors, Inc. v. Robert Becker, 13-CA-46452 - provide contrast between protected and unprotected employee speech via social media under the National Labor Relations Act ("NLRA"). An important fact in both decisions is that they concerned non-unionized workplaces, highlighting that the NLRA applies in both the union and non-union context.

Non-Union Employees' Criticisms of a Co-Worker Protected Concerted Activity Under the NLRA

In the first ruling of its kind, Administrative Law Judge ("ALJ") Arthur Amchan concluded in Hispanics United of Buffalo, Inc. ("HUB"), that HUB - a non-union employer - committed an unfair labor practice when it terminated five employees over postings they made on Facebook that were critical of a co-worker. The facts, as determined by ALJ Amchan, are as follows: The posts at issue began on Saturday, October 9 - not a workday for the employees - by Mariana Cole-Rivera on her Facebook account stating "Lydia Cruz, a coworker feels that we don't help our clients enough at HUB I about had it! My fellow coworkers how do u feel?" This post generated a fair amount of responding posts from HUB employees, which were read by Lydia Cruz-Moore (the subject of the posts). Cruz-Moore contacted HUB Executive Director, Lourdes Iglesias, and suggested that Iglesias should terminate, or at least discipline, the five employees. On Tuesday, October 12, 2010, Iglesias met with the five employees individually about the Facebook posts and fired each of them. Iglesias explained that the Facebook posts constituted bullying and harassment in violation of HUB's policy on harassment. Iglesias also stated that Cruz-Moore suffered a heart attack as a result of the postings and HUB would have to pay her compensation (though the ALJ noted there was no evidence in the record establishing a causal connection between Cruz-Moore's health and the posts). 
 
Carlos Ortiz, one of the five terminated employees, filed an unfair labor practice charge with the Board, alleging that HUB violated Section 8(a)(1) of the NLRA, which makes it an unfair labor practice for an employer to interfere with employees' rights under Section 7 of the NLRA. Section 7 provides that "employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." 
 
HUB conceded that the five discriminatees were discharged solely because of the October 9th Facebook postings. Therefore, the ALJ's analysis focused on two main issues: First, whether the terminated employees' Facebook posts were protected concerted activities, and second, whether the posts constituted misconduct so egregious as to lose protection under the NLRA. 
 
ALJ Amchan held that the Facebook communications amongst the five employees were protected concerted activities. The ALJ first found that because the Facebook posts, initiated by Cole-Rivera, sought to enlist the support of fellow employees they were indeed concerted activities. Further, the ALJ noted that HUB "lumped the discriminatees together in terminating them, establish[ing] that [it] viewed the five as a group and that their activity was concerted." ALJ Amchan then went on to conclude that the concerted activities were indeed protected, even though they were not trying to change their working conditions, because the employees "were taking a first step towards taking group action to defend themselves against the accusations they could reasonably believe Cruz-Moore was going to make to management." The ALJ went on to explain that "[e]xplicit or implicit criticism by a co-worker of the manner in which [employees] are performing their jobs is a subject about which employee discussion is protected by Section 7. That is particularly true . . . where at least some of the [employees] had an expectation that Lydia Cruz-Moore might take her criticisms to management." 
 
Because HUB alleged that the employees' Facebook postings violated HUB's employee policy on harassment, the ALJ next considered whether the employees' actions became so opprobrious as to lose protection under the NLRA, based on the factors the Board set out in Atlantic Steel Co., 245 NLRB 814 (1979). ALJ Amchan explained that because (i) the Facebook posts were not made at work or during working hours, (ii) the subject matter concerned a protected communication, i.e., a co-worker's criticism of job performance, and (iii) the discriminatees did not engage in any type of outburst, the employees did not lose protection under the NLRA. Further, ALJ Amchan determined that nothing in the record suggested that the employees violated any company policy or procedure. 
 
Judge Amchan ordered HUB to offer the five discriminatees reinstatement to their former jobs, or a substantially equivalent position, and back pay with interest. Further, any reference to the unlawful discharges must be removed from the five employees' personnel files and the discharges may not be used against them in any way.

Non-Union Employee Lawfully Terminated For Facebook Post Unrelated to Terms and Conditions of Employment

In Knauz BMW, ALJ Joel P. Biblowitz concluded that non-union employer Knauz Motors, Inc. ("Knauz") lawfully terminated employee Robert Becker for a Facebook post about an accident that occurred at a company-owned dealership. At issue in this decision were two series of posts by Becker on his personal Facebook page. According to the decision, in the first series of postings, Becker posted pictures from a sales event hosted by the employer's BMW dealership at which Becker worked, which included comments by Becker that were critical of the food selection at a luxury car sales event. The second set of posts included pictures and commentary regarding an accident at a Land Rover dealership owned by the employer in which a customer's 13-year-old son was allowed to sit behind the wheel of a truck, while the customer was standing beside the truck and the salesperson was in the passenger seat with the door open. Ultimately, the son ran over the customer's foot, drove the truck into a pond, and the salesperson was thrown in the water. The pictures were captioned: "This is your car: This is your car on drugs." Becker then commented, "I love this one...The kid's pulling his hair out...Du, what did I do? Oh no, is Mom gonna give me a time out?" Becker was terminated shortly after the postings. Becker's managers stated the termination was solely based upon the Land Rover postings and that the luxury car sales event "really had no bearing whatever...."  
 
Becker filed an unfair labor practice charge, alleging that his termination violated Section 8(a)(1) of the NLRA because it interfered with his rights under Section 7. ALJ Biblowitz assessed both sets of Facebook postings and concluded that the first set, related to the luxury sales event, was protected concerted activity for several reasons. First, Becker and a fellow employee had vocalized their concerns about the food selection at a meeting with superiors prior to the postings, and the subject was further discussed by salespersons after the meeting. Additionally, because the food "inadequacies" could have potentially had an effect upon Becker's compensation should customers have been turned off by the food selection, the postings fell within the realm of protected concerted communications.
 
With little discussion, the ALJ found that Becker was terminated solely for the second set of postings related to the accident, which the ALJ concluded were far from protected concerted activity. According to ALJ Biblowitz, the pictures and comments about the accident were posted "...as a lark, without any discussion with any other employee of the Respondent [Knauz Motors, Inc.], and had no connection to any of the employees' terms and conditions of employment." Therefore, the ALJ concluded that Knauz did not wrongfully terminate Becker. 
 
The two decisions highlight that employers in both the union and non-union context need to consider protections afforded under the NLRA before taking action against employees for social media activity. Further, New York employers should also consider employee protections under Article 7, Section 201(D) of the New York Labor Laws, often referred to as the "Legal Activities" law, which prohibits employers from discriminating against employees or potential employees based upon protected activities that occur away from the employer's place of business and outside of work hours. These protected activities include: political activities, legal recreational activities, legal use of consumable products, and membership or participation in a union. It could be argued that employee social media activity would fall within the sphere of these protections. 
 
This post was authored by Matt Lampe, Joseph Bernasky, and Michele Bradley of Jones Day. The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

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November 30, 2011

Social Media in the Context of Discovery


Social media issues have begun to dominate the Employment Law landscape, as new claims and protections arise relating to the use or misuse of social media. So it should be no surprise that the issue is working its way into other aspects of the judicial system as well. In Russell Patterson v. Turner Construction Company, et. al. (App. Div. 1st Dep't., Oct. 27, 2011), the issue was whether Facebook posts made by a plaintiff were subject to discovery. While the action was a personal injury action, the First Department's holding seems applicable to a broader range of actions, including discrimination and other lawsuits related to the workplace. In Turner, the First Department addressed a lower court's determination compelling the plaintiff to produce all of his Facebook records compiled after the injury alleged in the Complaint, including deleted and archived materials. Although the panel reversed the lower court's order, it did not rule that discovery of social media postings were per se off limits. Instead, the panel, in a unanimous ruling, remanded with instructions to the lower court to provide "a more specific identification of plaintiff's Facebook information that is relevant, in that it contradicts or conflicts with plaintiff's...claims." Analogizing Facebook posts to a personal diary, the court added that "[t]he postings on plaintiff's online Facebook account, if relevant, are not shielded from discovery merely because plaintiff used the service's privacy settings to to restrict access." Thus, at least according to the First Department, social media posts are discoverable, "if relevant" to the claims asserted in the complaint.

January 3, 2012

Severing the Connection: Who Owns That LinkedIn Account?


An interesting decision from the Eastern District of Pennsylvania is worth noting in this Blog. While its focus is on Pennsylvania common law, the case addresses the novel issue of LinkedIn account ownership, an issue that is likely to arise in multiple jurisdictions throughout the country, including New York.

The case is Eagle v. Morgan, et al., Civil Action No. 11-4303 (E.D.Pa. December 22, 2011), and the general facts will be familiar to anyone with a passing interest in the legal posturing that occurs when a valued employee, particularly a former owner, leaves a long-time employer. Plaintiff Linda Eagle ("Eagle") founded and operated a financial services and training company for over twenty years. She and her partners sold the company, Edcomm, Inc., in October 2010, but remained on as employees until June 2011, when they were fired by the new owner, Sawabah Information Services Company. A lawsuit by the company against Eagle, for securities fraud and other claims relating to the sale of the business, followed a week later, but will not be addressed in this post.

The facts get more interesting when modern technology and new methods of doing business are introduced, in the form of a LinkedIn account. While she owned Edcomm, and later as its employee, Eagle had established a LinkedIn account, which she maintained with the help of her administrative assistant. When Eagle attempted to access her LinkedIn account later that day, access was denied (another founder who was also terminated had the foresight to change his password before the termination meeting). Edcomm had accessed the account with Eagle's password, changed the password and then changed Eagle's account profile to display the name and photo of one of the new owners of Edcomm. Thus, individuals searching for Eagle were routed to a LinkedIn page featuring the name and photo of the Defendant, Morgan, but which included Eagle's resume and CV, her honors and awards, and her connections. Several weeks later, however, Eagle was able to regain control of the account, though the decision does not explain how she did so.

Before regaining control of the account, Eagle brought an action against Edcomm and numerous individual defendants for alleged violations of federal statutes (the Computer Fraud and Abuse Act and the Lanham Act), and various common law torts. Edcomm responded with several counterclaims, including several directed at Eagle's alleged misappropriation of the LinkedIn account in her own name. Many of the claims related to a company-issued cell phone and cell phone number, and will not be addressed in this post, other than to note that most of these claims were dismissed. The more interesting allegations raised by the company relate to the LinkedIn account.

The counterclaim Complaint alleged that while Eagle managed Edcomm the company had required employees to create LinkedIn accounts utilizing their Edcomm email address, utilize a specific template created by the company, with specifically approved language regarding Edcomm's business, the employee's work history and professional activities, photos taken by a company-hired photographer, links to Edcomm's web-site, and a template for replying to inquiries from LinkedIn users. The counterclaim Complaint further alleged that several Edcomm employees were responsible for monitoring the LinkedIn accounts, correcting violations of company policy, and who maintained several accounts on behalf of Edcomm employees. All departing employees were required to return Edcomm-related connections and content from their LinkedIn account.

According to the Court, these factual allegations were sufficient to state a cause of action for Misappropriation of Ideas against Eagle, as well as Unfair Competition. The Misappropriation claim survived because Edcomm sufficiently alleged it had made a substantial investment of time, effort and money into developing Eagle's LinkedIn account, meaning that it was wrong or tortious for Eagle to then access and take the account away from the company after her termination. The tort of Misappropriation of Ideas also requires that the idea be "novel," but the Court did not address how a LinkedIn account could be considered "novel."

The Court rejected, however, the claim that Eagle's retention of the LinkedIn account constituted misappropriation of a "trade secret," because the account information on the LinkedIn account was generally known in the wider business community, or capable of being derived from public information.

Edcomm's unfair competition claim also survived the dismissal motion. Under the Restatement (Third) of Unfair Competition, an unfair competition claim can be made where "the means of competition are otherwise tortious with respect to the injured party." While the Court cautioned that this liberal standard should not act as a "catch-all" for any form of wrongful business conduct, Edcomm's unfair competition claim was viable at the pleading stage because Eagle may have unlawfully misappropriated the LinkedIn account.

Thus, it seems that under the right circumstances, a LinkedIn account may not actually belong to the individual whose name appears on the account's home page, and whose professional history and accomplishments are detailed in the account's profile. This is an interesting development, but one that may not withstand further scrutiny, given the Court's acceptance, without much discussion, of the notion that a LinkedIn account is a "novel" idea worthy of protection. The viability of this decision may also be impacted by the LinkedIn user agreement, which states that the "user" is the owner of the account. The Court did not address this fact in its decision, and in this case, if the company's allegations prove to be true, the company may well be deemed to be the account "user."

As it currently stands, the decision may impact how employers do business. In the typical non-compete case, especially in the sales arena, the legal battle often focuses on the former employee's "contacts." This decision may embolden employers to take a more active role in the initiation, development and/or maintenance of LinkedIn accounts by and for their employees, in order to prevent employees from keeping those contacts that are stored on LinkedIn, and strengthen post-departure claims of misappropriation and unfair competition.

January 12, 2012

Spotlight On Legal Complexities Of Telecommuting After Second Circuits Calls It Potential Reasonable Accommodation

            The Second Circuit Court of Appeals recently ruled that telecommuting is a potential reasonable accommodation under the Americans with Disabilities Act ("ADA") and the Rehabilitation Act.  Although new technologies have made telecommuting more commonplace, not all employers have embraced the work-from-home concept.  The Second Circuit's recent opinion, as well as recently proposed and enacted telework legislation, highlight that employers cannot ignore telecommuting, and should consider the myriad legal issues that telecommuting presents, including wage-and-hour liability, privacy and data protection concerns, workplace safety, and other obligations. 

 

The Second Circuit's Opinion on Telecommuting as a Reasonable Accommodation

 

            In Nixon-Tinkelman v. N.Y. City Dep't of Health & Mental Hygiene, No. 10-3317-cv, 2011 WL 3489001 (2d Cir. Aug. 10, 2011), the plaintiff suffered from several physical ailments including cancer, heart problems, hearing impairment, and asthma.  The plaintiff had worked at the New York City Department of Health and Mental Hygiene ("DOHMH" or the "Department") since 1984 and had worked out of DOHMH's Queens office for 21 years as a Regional Director.  In January 2006, she was transferred to the Department's Manhattan location.  The transfer resulted in a longer and more difficult commute for Ms. Nixon-Tinkelman.  As a result, she requested, as an accommodation for her disability, to be reassigned to a "work location closer to home in order to reduce the stress and anxiety associated with the hour and a half commute each way every day."  Representatives from the Department met with Ms. Nixon-Tinkelman to discuss possible alternative assignments.  DOHMH concluded that one of the assignments in which Plaintiff expressed an interest was "inappropriate" because the job required extensive travel and therefore would not resolve Ms. Nixon-Tinkelman's commuting issue.  DOHMH further concluded that Ms. Nixon-Tinkelman's suggestion of a transfer to the Department's Pest Control Office in Queens was not a "viable" option.  Because the Department believed that there was no suitable reassignment that could be made within the organization to accommodate Ms. Nixon-Tinkelman, they denied her request.  Ms. Nixon-Tinkelman filed suit under the ADA and sections 501 and 504 of the Rehabilitation Act, alleging that the Department failed to make a reasonable accommodation.

 

            Under the ADA and Rehabilitation Act, an employer has an affirmative duty to provide a reasonable accommodation when it is aware that an employee has a qualifying disability that prevents the employee from performing essential job functions, so long as the accommodation does not unduly burden the employer.  Granting summary judgment for the defendant, the Southern District of New York ruled that commuting was beyond the scope of the plaintiff's job, and "not within the province of an employer's obligations under the ADA and the Rehabilitation Act."  The Second Circuit reversed, relying on two prior cases in which the Second Circuit ruled that an employer might have an obligation to assist with an employer's commute:  Lyons v. Legal Aid Soc'y, 68 F.3d 1512 (2d Cir. 1995); and DeRosa v. Natl's Envelope Corp, 595 F.3d 99 (2d Cir. 2010). 

 

            In Lyons, the Second Circuit reversed the dismissal of an ADA claim alleging that Plaintiff's employer failed to accommodate her request for a parking space near her office.  The district court dismissed the case on the ground that the accommodation requested by Lyons was unreasonable as a matter of law; however, on appeal, the Second Circuit ruled that the complaint stated a claim on which relief could be granted, holding that "there is nothing inherently unreasonable . . . in requiring an employer to furnish an otherwise qualified disabled employee with assistance related to her ability to get to work."  In DeRosa, the Second Circuit suggested that permitting a disabled employee to work from home was a reasonable accommodation.  The DeRosa court vacated an award of summary judgment for the employer, in which the district court ruled that the plaintiff was judicially estopped from bringing an ADA claim.  In so doing, the Second Circuit did not question the reasonable accommodation--working from home--that the Plaintiff sought.  The Nixon-Tinkelman court's reliance on DeRosa implies that the Second Circuit interprets the decision as standing for the proposition that working from home can be a reasonable accommodation.

 

            In Nixon-Tinkelman, the Court of Appeals explained that the determination of whether an accommodation is "reasonable" must be made on a case-by-case basis and remanded the case back to the trial court to conduct the required "fact-specific inquiry."  The Second Circuit made clear that employers cannot categorically deny requests for an accommodation to work from home or to receive other commuting accommodations.  Rather, employers must assess the circumstances of such requests on an individualized basis as they would with any other request for an accommodation.  The Second Circuit suggested a non-exhaustive list of factors for the trial court to use in evaluating the reasonableness of a potential accommodation, such as:

 

·        The number of individuals employed by the employer;

·        The number and location of the employer's offices;

·        Whether other available positions existed for which the employee was qualified;

·        Whether the employee could have shifted to a more convenient office without unduly burdening the employer's operations; and

·        The reasonableness of allowing the employee to work from home without on-site supervision.

 

The Second Circuit further provided illustrative examples of commuting accommodations that the district court should consider, including whether DOHMH could: (1) transfer Ms. Nixon-Tinkelman back to Queens, (2) permit her to work from home, or (3) provide her a car or parking permit to minimize the burden of her commute and make it easier for her to travel to and from her doctor's appointments.

 

Recent Legislative Initiatives to Increase the Availability of Telecommuting

 

            The Second Circuit's decision is in line with a recent trend favoring telecommuting.  On December 9, 2010, President Obama signed into law the Telework Enhancement Act, which gave federal agencies a six-month window of time to establish a telework policy and notify employees of their eligibility under the policy.  The new law requires each agency to implement a telework policy, designate a telework managing officer to oversee the agency's telework program, and ensure continuity-of-operations planning, particularly when employees' commutes are affected by inclement weather.  Several states, including Connecticut, Florida and Virginia, have also recently implemented or proposed legislation regarding telecommuting.  For example, New Jersey has proposed legislation that provides private sector tax incentives for certain business telecommuting program development and implementation costs and a separate bill that requires state agencies to adopt telecommuting programs.  In June 2010, Connecticut enacted a law to develop and implement telecommuting guidelines for state employees with the goal of having a positive effect on worker efficiency, the environment, and traffic congestion.  In New York, legislation has been proposed to require public employers to establish policies and programs allowing public employees to perform all or a portion of their duties remotely (see, e.g., A00206 / S 1381) as well as establishing tax credits for employers who enact policies to encourage teleworking (see S 2065).  This wave of legislative activity, along with the Second Circuit's recent opinion, provide a good opportunity for employers to consider the legal, operational, and administrative issues related to telecommuting.

 

Wage-and-Hour Concerns Arising from Telecommuting

 

            The Nixon-Tinkelman decision acknowledges that lack of supervision may pose difficultly in allowing an employee to work from home.  This may be particularly true for non-exempt employees.  Aside from the more obvious concern of some employers about a loss of productivity absent on-site supervision, there is also a converse risk that overzealous non-exempt employees would work "off-the-clock," i.e., engage in work without reporting their time, absent on-site supervision.  In the work-from-home context, where the ability of employers to monitor an employee's activity is limited, allegations of violations of federal and state wage and hour laws for such off-the-clock work may prove more difficult to refute than those brought by employees who work at an employer site under direct supervision.  Given this reality, it is important for employers to have specific, well enforced wage and hour policies governing work-from-home employees. 

 

Privacy and Data Security Concerns Arising from Telecommuting

 

            In addition, employees who do work from home are most likely able to do so via remote electronic access to the employer's network, which can raise  a whole host of concerns over the privacy and security of personal information and confidential company information that the employee may be able to access remotely: 

 

·        Whether the remote access to the employer's network will be made via secure connection, which decreases the risk of a security breach while information is in transit, and whether employees will be able to download files directly to their personal computer, reducing the employer's ability to protect the security of those files. 

·        Whether the employee will be using a company-issued computer or a personal computer.  Employee-owned computers increase security risks because the employer has limited ability to monitor the software on the computer and restrict user access.  For example, a personal computer might contain third-party data sharing software that could access company information that has been downloaded to the computer.  Moreover, employers have limited ability to ensure that other home users of an employee-owned computer would not be able to access company files if, for example, the remote connection is left open.  Either situation could trigger notice obligations under state data breach notification statutes if covered personal information is accessed or acquired by an unauthorized person.

·        Whether necessary files and data can be transferred only via a secure network or whether portable media, such as thumb drives, will also be permitted for file and data transfers, and if so, what level of security, such as encryption and password protection, will be required.  The shrinking size of portable media provide greater freedom, flexibility, and mobility, but also pose greater risk of loss or theft due to their diminutive size.

·        How to ensure the security of a work-from-home employee's workstation.  For example, will the screen be visible to others and how will the remote employee secure paper files? 

 

Employers will need to develop and implement both administrative mechanisms, such as clear policies that put employees on notice of their rights and responsibilities, and operational mechanisms, such as implementing encryption and monitoring technology and other electronic security measures, that balance the need to preserve confidentiality and maintain security while allowing for the flexibility and mobility the employer's off-site employees' need.

 

Workplace Safety Issues and Liabilities Arising from Telecommuting

 

            Further, although telecommuters are not at the workplace, employers must still be concerned with workplace safety issues.  Workers compensation laws, OSHA and other workplace safety regulations can still apply to remote employees, so employers must develop ways to ensure that work-from-home employees comply with relevant safety protocols even in their home offices.  Although OSHA has announced that it will not conduct inspections of employees' home offices, and does not expect employers to conduct inspections, the agency will hold employers responsible for injuries or hazards at remote locations, including home offices, if they are caused or created by materials, equipment, or work processes that the employer provides or requires the employee to use at the remote location.  As well, OSHA will conduct inspections of home-based work sites when it receives a complaint or referral that indicates a violation of a safety or health standard that threatens physical harm.   Most state workers' compensation laws, including New York, are not limited to work related injuries that occur at the employer's fixed physical location, and therefore can apply to work-related injuries occurring at a home office or other work location.  The employee will still have to establish that the injury arose out of and in the course of employment, and not during a break or other non-work related activity. 

 

            Another recent area of liability, brought about by the technologies that have helped expand the mobile workforce, stems from injuries and damages caused by employees texting and talking while driving.  For example, in Bustos v. Dyke Industries Inc., Miami Dade Case No. 01-13370 (2001), an employer settled for over $16 million, after a jury initially awarded over $21 million in damages to an elderly woman who was hit and severely disabled by a salesman who was making a work related call on his cell phone while driving, resulting in the accident.  Again, due to the lack of on-site supervision, employers should, at minimum, enact clear policies on workplace safety issues that consider the particular circumstances of remote employees.    

 

            There may certainly be other concerns associated with remote employees in particular industries, and the issues noted above are but a sample of the concerns that telecommuting can raise.  Given the recent trend towards telecommuting, and the Second Circuit's decision clarifying that, in certain circumstances, it can be required as a reasonable accommodation, employers should take the opportunity to review their own telecommuting policies and procedures and consider the various issues that may arise when their own employees work from home or other remote locations. 

 

            This post was authored by Matt Lampe, Joseph Bernasky, David Krieger, and Mariya Nazginova of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.


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August 17, 2012

Employer Lawsuits Against Employees Under the Computer Fraud and Abuse Act

The Computer Fraud and Abuse Act, 18 U.S.C. 1030 (the "CFAA"), prohibits the fraudulent access of computer data by individuals "without authorized access" or who "exceed[] authorized access" of a "protected computer," which is defined by the CFAA as either a government computer or one used in or affecting interstate commerce.  The CFAA provided only for criminal penalties until amendments in 1994 added civil remedies, prompting employers to file actions under the CFAA against current and former employees who misappropriate or misuse confidential computer data.  On August 2, 2012, the Department of Justice announced that it would not seek Supreme Court review of a closely watched decision, U.S. v. Nosal,  in which the Ninth Circuit ruled on the application of the CFAA in the employment context.  The Ninth Circuit's decision in U.S. v. Nosal departed from the interpretations of other Circuits, and the federal courts, including the Second Circuit district courts, are split on whether and to what extent an employer can bring an action against an employee under the CFAA.

 

The Ninth Circuit Narrowly Interprets CFAA

In U.S. v. Nosal, the Ninth Circuit considered whether defendant David Nosal violated CFAA by enlisting his former colleagues at Korn/Ferry to download lists, names, and information from a confidential database on his former employer's computer.  676 F.3d 854, 856 (9th Cir. 2012).  The Ninth Circuit upheld the district court's dismissal of the employer's cause of action under CFAA, interpreting the phrases "without authorized access" and "exceeds authorized access" in the CFAA as prohibiting violations of access but not use restrictions.  Id. at *863-864.  The Ninth Circuit pointed out that the CFAA criminalizes improper "access" of protected computers but fails to speak directly about the "misuse" or "misappropriation" of the data found on such computers.  Applying what it deemed to be a "narrower interpretation" of this language, the court reasoned that the statute's phrase "without authorized access" contemplates the "outside hacker," or an individual without any authorization to access the protected computer in the first instance, and the phrase "exceeds authorized access" contemplates the "insider hacker," or one who has limited or restricted access to the protected computer but accesses information not within the scope of his or her authorized access.  Id. at *858.  According to the Ninth Circuit, the CFAA did not cover the situation before the court in which Nosal's colleagues had permission to access their employer's database and the information within that database, by way of a protected computer that they were also authorized to access, but used the information contained therein in an unauthorized manner. The Ninth Circuit expressed concern that reading the CFAA to prohibit unauthorized use of protected computers (as opposed to unauthorized access in the first instance) could effectively criminalize a wide range of common "minor dalliances" by employees, such as shopping on the internet or chatting with friends on a computer that they are authorized to access but are not authorized to use for such purposes.   

 

The Second Circuit District Court Split

The Second Circuit has not yet addressed this issue and the district courts in the Second Circuit are split on whether an employer has a cause of action against an employee under the CFAA for violating his or her use rights under employer policy.  Like the Ninth Circuit, some district courts have rejected claims under the CFAA where an employee has permission or authority to retrieve the confidential information at issue, regardless of whether the employee subsequently misuses the information.  See, e.g. University Sports Publications Co. v. Playmakers Media Co., 725 F. Supp. 2d 378, 385-387 (S.D.N.Y. 2010); Westbrook Techs., Inc. v. Wesler, 2010 WL 2826280 (D.Conn. July 15, 2010).  Further, in one decision, the Southern District of New York observed that the Second Circuit's interpretation of damages under the CFAA in Nexans Wires S.A. v. Sark-USA, Inc., 166 Fed.Appx. 559 (2d Cir. 2006), was consistent with a narrower interpretation of the statute's application.  See Orbit One Comm'ns, Inc. v. Numerex Corp., 692 F.Supp.2d 373, 386-87 (S.D.N.Y. 2010).  In Nexans, the Second Circuit upheld damages under the CFAA for losses in connection with hacking computer information but denied recovery under the CFAA for the misuse of computer information.  Id. 

 

By contrast, in an action against former employees accused of transferring trade secrets to their new employer, the court found that the defendant-former employee exceeded his authorized access of the company computer when he violated the broad confidentiality section of his employment agreement, and in doing so violated the CFAA.  Marketing Tech. Solutions, Inc. v. Medizine LLC, 2010 WL 2034404, at *7 (S.D.N.Y. May 18, 2010).  In another case in which an employee copied and e-mailed proprietary company information (which he was otherwise authorized to access) in violation of his company e-mail policy, the court defined "exceeds authorized access" to include actions whereby an employee has "reason to know" that his access of documents is in "contravention of the wishes and interests of his employer."  Calyon v. Mizuho Securities U.S.A., Inc., 2007 WL 2618658, at *1 (S.D.N.Y. Sept. 5, 2007). 

 

The Federal Circuit Split

Since the Ninth Circuit's ruling in U.S. v. Nosal, the Fourth Circuit has also applied "a narrow reading" of the terms "without authorization" and "exceeds authorized access" in the CFAA, rejecting a cause of action against employees accused of misappropriating computer information, where the employees had permission to access the information at issue.  WEC Carolina Energy Solutions, LLC, 2012 WL 3039213, at *6 (4th Cir. July 26, 2012).  Observing that the CFAA was "meant to cover hackers," the Fourth Circuit declined to apply the statute to employees who "access computers or information in bad faith or [] disregard a use policy."  Id. at *7. 

 

Other Circuit Courts of Appeal, including the Fifth and Seventh Circuits, have applied broader interpretations of the CFAA.  For instance, the Fifth Circuit allowed a cause of action under the CFAA to proceed against an employee who retrieved confidential customer account information, which she was authorized to access, and subsequently transferred to her half-brother for the purpose of committing a fraud.  U.S. v. John, 597 F.3d 263, 272 (5th Cir. 2010).  Interpreting the CFAA clause "exceeds authorized access," the Fifth Circuit found that an employee exceeds authorized access when he or she has reason to know that he or she is not authorized to access such information in furtherance of a criminal scheme.  Id. at 273.   In Int'l Airport Centers, LLC. v. Citrin, the Seventh Circuit upheld the district court's finding that an employee violated the CFAA when, prior to leaving the company to start his own business, he deleted confidential company information on his assigned company computer that he knew the company would have wanted. 440 F.3d 418, 419-20 (7th Cir. 2006).  Although during the course of his employment the employee was authorized to access the company information on his work computer, the Seventh Circuit reasoned that the difference between the CFAA phrases "without authorized access" and "exceeds authorized access" is "paper thin," and concluded that any authority to access the confidential computer information terminated when the employee breached his duty of loyalty to the employer, thereby falling within the scope of the CFAA.  Id. at 420.

 

Practical Implications

Storing company confidential information, customer and employee personal information, and other business records electronically has become the norm.  By extension, maintaining the security of such electronic data has become increasingly important and mandatory in some jurisdictions if such data includes employee or customer personal information.  Effectively maintaining the security of company electronic data of course starts with effective internal policies and procedures; however, legal recourse, such as an action under the CFAA, also presents an effective deterrent for potential violations of company security policies.  As a result of the decision by the Department of Justice not to pursue Supreme Court review of the Ninth Circuit decision in U.S. v. Nosal, the circuit split is sure to remain for the foreseeable future and the application of the CFAA to the employment context will be unresolved.  Although the Ninth and Fourth Circuits' recent decisions applied a "narrower interpretation" of the CFAA than opinions in other Circuits, hinging on the distinction between unauthorized access and unauthorized use, these decisions still leave open the possibility of employer causes of action under the CFAA against employees who breach access restrictions.  Unfortunately, these decisions do not answer what level of access restrictions would be required in order to trigger the protections of the CFAA:  Would an employer policy on access rights alone be sufficient?  Or are technical access restrictions, such as password protection, required?  In this regard, until these questions are answered by the courts, employers should consider access restrictions imposed by company policy and whether technical access restrictions would be beneficial for certain types of sensitive company data. 

 

This post was authored by Matt Lampe, Joseph Bernasky, and Karen Rosenfield of Jones Day.  The views and opinions expressed herein are those of the authors and do not necessarily reflect the views of Jones Day or the New York State Bar Association.

 

May 20, 2013

District Court Denies Motion To Dismiss Employer's Action To Enforce Restrictive Covenant

In Locke v. Tom James Co., 2013 WL 1340841 (S.D.N.Y. March 25, 2013), the Court declined to dismiss claims by an employer seeking to enforce a two-year, 50-mile restrictive covenant. Judge Daniels denied summary judgment to the former employee, who was seeking dismissal of claims that he had breached the restrictive covenant and misappropriated trade secrets. The former employee worked as a clothier and salesman for a high-end custom clothing company.

The Court found that the customer list at issue was not publicly ascertainable, and noted that protecting customer relationships is especially important when employees work closely with customers over a long period of time, especially when the employee's services to the customers are significant. (Here, the former employee visited customers at their offices or homes.) The Court also concluded that a two-year duration and 50-mile radius were reasonable, and that the agreement was not obtained under duress.

(Thanks to WRR Committee member Steven T. Sledzik of Jones Morrison, LLP for this contribution!)

August 29, 2013

Third Circuit: Existence of Collective Bargaining Agreements Did Not Bar Plaintiffs From Pursuing FLSA Claims

The Third Circuit in Bell v. Southeastern Pennsylvania Transportation Authority, No. 12-4031 (3rd Cir. August 19, 2013), reversed the district court's dismissal of plaintiffs' claims under the Fair Labor Standards Act (FLSA). Plaintiffs, former and current bus drivers and trolley operators, brought an FLSA collective action to recover unpaid wages and overtime compensation relative to the pre-trip inspections to which they were subject prior to the start of their daily runs. In granting SEPTA's motion to dismiss, the district court concluded that the FLSA claims required interpretation of provisions of three collective bargaining agreements (CBA's) between SEPTA and the unions representing the plaintiffs, and, therefore, were subject to the grievance and arbitration provisions of those agreements.

In rejecting the district court's conclusion, Judge Barry explained that the plaintiffs do not contend that SEPTA violated any term of the CBA's, although each contained a provision addressing compensation for time worked prior to the start of the morning shift. Instead, plaintiffs assert that their FLSA claims exist independently of any rights they have under the applicable CBA's. As such, Judge Barry highlighted, resolution of these claims (i.e., failure to compensate for all time worked in performing pre-trip inspections; and exclusion of pre-trip responsibilities from calculation of overtime) do not require an interpretation of the CBA's. Rather, they require "a factual determination of the amount of time [plaintiffs] are required to work prior to their scheduled start and a legal determination regarding whether this time is (1) compensable and (2) subject to the overtime provisions of the FLSA."

Judge Barry distinguished the court's earlier ruling in Valdino v. A. Valey Engineers, 903 F.2d 253 (3rd Cir. 1990), on which the district court relied. In Valdino, the plaintiff, claiming he should have been compensated at the "journeyman" rate and not the "normal" rate under the CBA, alleged that the employer violated the FLSA by failing to pay his hours worked in excess forty per week at one and one-half times the journeyman rate. For this reason, Judge Barry noted that in contrast to the claims in this case, Valdino's FLSA claim was "tethered to the threshold question of whether or not he was entitled to the journeyman wages or normal wages under the governing CBA." In sum, the claim was derivative of his breach of contract claim and necessarily dependent on an interpretation of the CBA.


www2.ca3.uscourts.gov/opinarch/124031p.pdf

August 30, 2013

Second Circuit Holds Class Action Waiver in Arbitration Agreement Enforceable Against Plaintiff's FLSA Claims

The Second Circuit in Sutherland v. Ernst & Young, No. 12-304-cv (2nd Cir. August 9, 2013), concluded that as consequence of the Supreme Court's decision this term in American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013), its so-called "effective vindication doctrine" as applied in In re American Express Merchant's Litigation, 554 F.3d 300 (2nd Cir. 2009) ("Amex"), is "no longer good law." Specifically, a showing that plaintiff has no economic incentive to pursue his/her statutory claims individually no longer provides a basis for invalidating a class-action waiver in an arbitration agreement. Instead, interpreting Italian Colors, the court instructed, arbitration agreements should be enforced according to their terms, including class-action waivers, absent a "contrary congressional command" in the statute governing the claim being brought. Finding no "contrary congressional command" in the Fair Labor Standards Act barring waiver of class arbitration, the court held that Sutherland must arbitrate her FLSA claims individually even though the ratio of her costs to potential recovery was approximately 100:1.

Quoting Italian Colors, the court noted that the "effective vindication doctrine" remains available to invalidate "'a provision in an arbitration agreement forbidding the assertion of certain statutory rights . . . . [and] would perhaps cover filing and administrative fees attached to arbitration that are so high as to make access to the forum impractical.'"


www.google.com/search?client=safari&rls=en&q=www.courthousenews.com/home/OpenAppellateOpinion.aspx%3F...79423%E2%80%8E&ie=UTF-8&oe=UTF-8

Sixth Circuit: Arbitration Agreement's Six-Month Limit on Claims Constitutes Invalid Waiver Under FLSA & Equal Pay Act

The Sixth Circuit, in Boaz v. FedEx Customer Information Services, Inc., No. 12-5319 (6th Cir. August 6, 2013), found unenforceable an arbitration agreement provision setting a six-month limitations period as applied to plaintiff's claims under the Fair Labor Standards Act (FLSA) and the Equal Pay Act (EPA). The court reasoned that the limitations provision was effectively an unsupervised waiver of plaintiff's statutory rights, which is barred under both the FLSA and EPA. See Jewell Ridge Coal Corp. v. Local No. 617, UMWA, 325 U.S. 161 (1945).

The court distinguished those cases cited by FedEx enforcing a shortened limitation period for clams arising under other statutes, such as Title VII. It explained that the policy considerations cited by the Supreme Court in prohibiting waivers under the FLSA, and by extension the EPA, are not applicable to clams under Title VII or any of the other referenced statutes. Id. at 167.

www.ca6.uscourts.gov/opinions.pdf/13a0209p-06.pdf

October 30, 2013

Jersey City Enacts Ordinance Requiring Paid Sick Leave


Under a recently enacted ordinance, businesses in Jersey City, New Jersey with ten or more employees will be required to provide paid sick leave effective January 24, 2014. Under the ordinance, private-sector employees will earn one hour of paid sick time for every thirty hours worked, up to forty hours per year. Sick leave accrual will begin on an employee's first day of work, but will not be available for use until the employee has completed ninety days of employment. Unused paid sick leave will be carried over from year to year. An employer, however, may cap the carry-over at forty hours and limit the usage of paid sick leave to forty hours per calendar year.

Paid leave offered under an employer's existing policy will be counted towards satisfying the requirements of this ordinance provided such paid leave may be used for the same purposes and under the same conditions as paid sick leave under the ordinance. Employees, under the ordinance, may use paid sick leave for their own health needs or those of a family member (i.e., spouse, civil union partner, domestic partner, child, parent, sibling, or grandparent). Paid sick leave may be used in the smaller of hourly increments or the smallest increment used by the employer's payroll system to account for absences or use of other time. Employees may not be compelled to find a replacement to cover their hours as a condition of taking paid sick leave. An employer may require medical verification for an absence of more than three days.

Employees of businesses with less than ten employees will accrue unpaid sick leave at the same rate and subject to the same terms as conditions of usage as applicable to the accrual of paid sick leave by employees at covered businesses.

http://www.cityofjerseycity.com/uploadedFiles/Public_Notices/Agenda/City_Council_Agenda/2013/2013_Ordinance_2nd_Reading/Agenda%20Document(14).pdf

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