New Jersey Employers Required to Post and Distribute Notice of Gender Pay Equality

By: Marion B. Cooper

On September 21, 2012, New Jersey’s Governor Chris Christie signed Assembly Bill No. 2647 (A-2647) into law, supplementing the New Jersey Equal Pay Act which will take effect on November 19, 2012, and applies to all New Jersey employers with 50 or more employees.  A-2647 imposes several new obligations on employers, who must conspicuously post the notification in an accessible and conspicuous place in English, Spanish and any other language spoken by  10% of the workforce within 30 days of the time the Commissioner first issues the form notice.

The notice must detail employees’ rights to be free of gender inequity or bias in pay, compensation, benefits or other terms and conditions of employment.  In addition, the notice must be given to new employees upon hire and to any employee upon request.  Employers must redistribute the notice annually and obtain a written acknowledgment that the employee has read and understood the notice.  Distribution of the notice may be made by paper or electronically via email or a website, “if the site is for the exclusive use of all workers, can be accessed by all workers, and the employer provides notice to the workers of its posting.”

However, the law does not require posting or distribution on the effective date, November 19, 2012, or even within 30 days of the effective date.  The posting and distribution requirements will not be triggered until the Commissioner of Labor and Workforce Development issues the notification by regulation, the notice has passed through the regulatory approval process and is published in the New Jersey Register.  This process will likely take several months.

Social Media’s Impact on the Workplace – How to Handle Issues from Employee Productivity to Trade Secret Protection

Mark Terman, partner in the Los Angeles office, authored an article for Inside Counsel, Social media’s impact on the workplace – How to handle issues from employee productivity to trade secret protection.  Mark’s article takes a look at several of the issues that face employers through their employees use of social media.  To read the complete article click here.

NLRB Signals Intent To Scrutinize Facially Neutral Handbook Policies

By: Jerrold J. Wohlgemuth

The Acting General Counsel of the NLRB is apparently rummaging through handbooks and policy statements to charge nonunion employers with unfair labor practices for enacting seemingly innocuous rules that could conceivably be read as interfering with the right of employees to engage in protected concerted activity.  And as can be seen from the Board’s recent opinion in Karl Knauz Motors, Inc., 358 NLRB No. 164 (2012), the current Board majority has apparently bought into that misguided theory.

Under existing Board law, employers violate Section 8(a)(1) of the Act by maintaining work rules or policies that “would reasonably” be construed by employees as prohibiting or chilling their right to discuss or object to the terms and conditions of their employment.  In this case, the car dealership had a seemingly innocuous and facially neutral “Courtesy” Rule in its employee handbook requiring employees to be “courteous” and “polite” to customers, suppliers and co-workers:

(b) Courtesy: Courtesy is the responsibility of every employee.  Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as their fellow employees.  No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The rule would reasonably appear to require employees to refrain from being disrespectful and from using language which would reflect poorly on the Dealership when interacting with customers and suppliers, or with one another in the presence of customers and suppliers.

Although the rule was not applied to discipline or discharge any employee, the Acting General Counsel nevertheless charged the employer with an unfair labor practice for maintaining the rule, and the Board majority agreed.  Citing its recent social media policy decision in Costco Wholesale Corp., the Board noted that there was no protected activity disclaimer in the handbook and held that the “Courtesy” Rule is unlawful based on the strained conclusion that the Dealership’s employees would reasonably assume that they had been disrespectful in violation of the rule if they objected to or criticized anything concerning their working conditions.  The reliance on Costco would appear to be misplaced, however, as that case involved a rule prohibiting employees from posting disparaging comments about the employer on the Internet.  In this case, the Board’s majority improperly reads the “Courtesy” Rule as if the sentence prohibiting disrespectful conduct and profanity was a stand-alone requirement as in Costco, ignoring completely the context in which that sentence is part of the overall expectation that employees be courteous to customers and one another in order to maintain the Dealership’s good reputation and image.  Context matters, however, and in this context it appears the Board will find rules to be unlawful if they “could conceivably” be read as chilling protected rights, as it strains credulity to think that employees “would reasonably” read a rule addressed to courteous behavior towards customers as interfering with their right to object to working conditions.  Because the Acting General Counsel will continue to prosecute nonunion employers for handbook policies that “could conceivably” be read as chilling protected activity, employers need to review and modify their policies to avoid facing unfair labor practice charges.

Who Owns a Social Media Account? Court Rules that Employer Did Not Violate the Computer Fraud and Abuse Act (CFAA) by Taking Over a LinkedIn Account

By: Lawrence J. Del Rossi

A recent summary judgment ruling issued out of the Eastern District of Pennsylvania, Eagle v. Morgan, et al., CIV-No. 11-4303, 2012 U.S. Dist. LEXIS 143614 (E.D. Pa. Oct. 4, 2012), highlights the need for employers to have clear policies regarding social media accounts established and used on the employer’s behalf.  While plaintiff Dr. Eagle was president of defendant Edcomm, a banking education company, she created a LinkedIn account and used that account to promote Edcomm’s banking education services, foster her reputation as a businesswoman, reconnect with family, friends, and colleagues, and build social and professional relationships.  Edcomm contended that it had an unwritten informal policy of “owning” the LinkedIn accounts of its former employees after they left the company.  Dr. Eagle was terminated and subsequently denied access to her LinkedIn account by Edcomm, which had accessed her account, changed her password and altered her LinkedIn profile to display the company’s new president’s name and photograph while retaining some elements of Dr. Eagle’s profile.  Dr. Eagle ultimately regained control of her LinkedIn account but nonetheless sued Edcomm and its employees, alleging, among other things, violations of the Computer Fraud and Abuse Act and the Lanham Act, and invasion of privacy by misappropriation of her identity.

On October 4, 2012, the district court granted Edcomm’s motion for summary judgment to dismiss Dr. Eagle’s federal claims.  Holding that a reasonable jury could not find that Dr. Eagle had suffered a “legally cognizable loss or damage in the brief period in which her LinkedIn Account was accessed and controlled by Edcomm,” the district dismissed her CFAA claim.  The district court concluded that Dr. Eagle’s claim of lost business opportunities and damage to her reputation were “speculative” at best and “not compensable under the CFAA,” and that even if types of damages were recoverable, she failed to present any evidence to quantify these damages.  The district court also dismissed Dr. Eagle’s claims under the Lanham Act, finding that she had failed to produce any evidence of a likelihood of confusion to the public by switching her name and photo with that of her successor. However, the district court retained jurisdiction over Dr. Eagle’s remaining state law claims as well as Edcomm’s counterclaims (a conversion claim over a laptop and a misappropriation claim that asserts that Edcomm was the rightful owner of the LinkedIn account).

Given the rapidly evolving standards regarding employee/employer use of social media websites for marketing and business development (both for the employer’s business and the employee’s reputation), employers should take a proactive role in developing clear guidelines regarding the creation, control and ownership of business-related social media accounts.  Policies stating, for example, that the company owns the social media site can help employers avoid disputes with departing employees.  In addition, during exit interviews with departing employees, employers should consider inquiring generally about the employee’s social networking activities as they relate to his or her employment.  Ask employees whether any client or customer information exists on their social networking accounts.  If it does, request that this information be removed immediately.  If an employer learns of an employee’s social networking activity that it believes violates a non-solicitation or other restrictive covenant, consider sending a cease and desist notice, including a specific request for the removal of any and all offending information.  Finally, be prepared to adapt to changing norms, laws, rules and regulations affecting or regulating the use of social media sites.

Former Employee Fails To Convince Court Of Underpayment In First And Last Weeks Of Employment

By: Gregory W. Homer and Marion B. Cooper

Methodically navigating the arcane maze of regulations surrounding the Fair Labor Standards Act (“FLSA”), the Court in Kirchoff v. Wipro, Inc., W.D. Wash., No. 2:11-cv-00568, 10/2/12, held that a technology consulting company (“Wipro”) did not violate the FLSA or Washington law by using the “Pay Period” – rather than the “Work Week” – method to calculate a fired senior manager’s salary for the first and last weeks of his employment.

Wipro provides consulting services to technology companies such as Microsoft Corp., Cisco Systems, Inc. and AT&T, Inc.  Wipro employed Kirchoff as a Senior Manager at an annual salary of $140,000 from July 26, 2010 to January 27, 2011, when Wipro terminated his employment.  Kirchoff then sued Wipro, claiming that he and other employees had been underpaid because Wipro used the “Pay Period” method to determine their pay for the first and last weeks of their employment.

An employer must generally pay an exempt employee his or her full salary for any workweek in which the employee works at all, regardless of the number of hours.  However, Department of Labor (“DOL”) regulations provide that “[a]n employer is not required to pay the full salary in the initial or terminal week of employment.  Rather an employer may pay a proportionate part of an employee’s full salary for the time actually worked in the first and last week of employment.  In such weeks, the payment of an hourly or daily equivalent of the employee’s full salary for the time actually worked will meet the requirement.”  29 C.F.R. §541.602(b)(6).  Additionally, “[w]hen calculating the amount of a deduction from pay allowed under paragraph (b) of this section, the employer may use the hourly or daily equivalent of the employee’s full weekly salary or any other amount proportional to the time actually missed by the employee.”  29 C.F.R. §541.602(c).

Under the “Pay Period” method of calculating an exempt employee’s pay for a partial first or last week of employment, the employer divides the employee’s annual salary into twenty-four semi-monthly pay periods to obtain a semi-monthly rate, which the employer then divides by the number of working days in the semi-monthly pay period to yield a daily rate for the pay period.  The employer then multiplies the daily rate by the number of days actually worked by the employee to determine the final compensation for the first and last weeks of employment.

Under the “Work Week” method, the employer divides the employee’s annual salary by fifty-two to calculate the weekly rate and then divides that rate by five, the number of working days in a week, to determine the daily rate.  The employer then determines the employee’s final pay by multiplying the daily rate by the number of days that the employee actually worked.

Kirchoff argued that 29 C.F.R. §778.113(b) requires employers to use the “Work Week” method.  While acknowledging that the approach specified in this regulation “matches” the “Work Week” method, the Court rejected Kirchoff’s argument.  According to the Court, Part 778, of which this regulation is a subpart, deals with Overtime Compensation, and Kirchoff’s dispute did not involve overtime, nor does the applicable regulation, 29 C.F.R. §541.602, incorporate or reference the overtime regulation.  The Court further noted that Section 541.602(c) permits the employer to use “any amount proportional to the time actually missed by the employee.”  The Court explained that Kirchoff’s interpretation that only the “Work Week” method is permitted would render the remaining language of the regulation meaningless, which runs counter to basic rules of statutory construction that presume that every word has some effect.

Focusing on Section 541.602(c), the Court found that Wipro’s method based on the percentage of days worked in the pay period was mathematically correct as a “proportionate part” of Kirchoff’s full salary.  The Court granted summary judgment to Wipro on Kirchoff’s FLSA and state law claims.

Employers must be careful when addressing application of FLSA regulations and be aware that the FLSA provides employers with multiple options for calculating employees’ pay for the first and last weeks of work.

Seventh Circuit: ADA Gives Disabled Employees Priority For Vacant Positions

By: William R. Horwitz

A recent Seventh Circuit decision may require employers to select minimally qualified employees over far more qualified employees when filling vacant positions.  In EEOC v. United Airlines, Inc., 2012 WL 3871503 (7th Cir. 2012), the Court held last month that, absent undue hardship, the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (“ADA”), requires an employer to transfer a disabled employee to a vacant position ahead of more qualified non-disabled employees.

This case involved guidelines that United Airlines issued in 2003 for accommodating “employees who, because of disability, can no longer do the essential functions of their current jobs even with reasonable accommodation.”  Under the guidelines, these disabled employees were eligible for placement in a vacant position and even received priority over otherwise equally qualified co-workers, but did not receive an open position over a genuinely superior candidate.  The Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against United Airlines, which filed a Motion to Dismiss.  The district court granted the motion, holding that a “competitive transfer policy does not violate the ADA.”

The EEOC appealed and the Seventh Circuit reversed.  The Seventh Circuit acknowledged that, according to its own precedent, employers were not required “to reassign a disabled employee to a job for which there is a better applicant, provided it’s the employer’s consistent and honest policy to hire the best applicant for the particular job in question.”  The Court concluded, however, that this precedent conflicted with the Supreme Court’s more recent decision in U.S. Airways, Inc. v. Barnett, 535 U.S. 391 (2002).

In Barnett, the Supreme Court considered whether a disabled cargo handler who could no longer perform his job was entitled to a mailroom position ahead of a more senior employee who was otherwise entitled to the job pursuant to a seniority system.  The Barnett Court noted that “preferences will sometimes prove necessary to achieve the [ADA’s] basic equal opportunity goal” and articulated a “two-step, case-specific” analysis.  First, the plaintiff/employee must show that an accommodation “seems reasonable on its face, i.e., ordinarily or in the run of cases.”  After the plaintiff/employee satisfies the first step, the burden shifts to the defendant/employer to “show special (typically case-specific) circumstances that demonstrate undue hardship in the particular circumstances.”  The Barnett Court concluded that, although a transfer to the mailroom may have constituted a reasonable accommodation, violating the seniority system was unreasonable.  According to the Seventh Circuit, however, the Barnett Court “was not creating a per se exception for seniority systems.”

Relying on Barnett, the Seventh Circuit remanded the United Airlines case and directed the district court to apply the Supreme Court’s analysis.  The Seventh Circuit observed that the Tenth and the District of Columbia Circuits have previously reached similar results.  The Court gave little weight to a contrary Eighth Circuit decision that relied on the Seventh Circuit’s now-overruled precedent.

Practical Advice for Employers

Employers should have policies and procedures in place to address transfer requests by employees whose disabilities prevent them from performing their jobs.  Within the Seventh Circuit (Wisconsin, Illinois and Indiana), employers should plan to give these employees priority for open positions and must understand that the Seventh Circuit will rarely accept an “undue hardship” excuse for denying the transfer.

Even outside of the Seventh Circuit, employers should be mindful of the United Airlines decision.  Not only have the Tenth and District of Columbia Circuits reached similar rulings, but the Seventh Circuit’s interpretation of the Supreme Court’s Barnett decision will likely influence the decisions of courts that have not yet addressed this issue.  Moreover, the EEOC clearly takes the position that anything less than mandatory reassignment violates the ADA.