Lynne Anne Anderson, Author at Laborsphere

Three Steps to Prepare for the Labor Department’s Proposed Rule on Paid Sick Leave

The U.S. Department of Labor (DOL) released a proposed rule that requires federal contractors and subcontractors to provide workers with seven days of paid sick leave on an annual basis. The proposed rule, released on Feb. 25, was created in response to President Barack Obama’s Executive Order 13706, which directed the DOL to issue and finalize regulations this year.

The proposed rule is projected to extend paid sick leave to more than 800,000 employees, 400,000 of which don’t currently receive any paid sick leave, within a five-year period, according to DOL estimates.

Although the DOL has extended the comments period on the proposed rule through April 12, employers and human resources professionals should start preparing for implementation. Here are three things companies can do to prepare:

1. Review and revise policies

HR professionals should compare their employer’s existing policies with the proposed rule to see where revisions are needed. Employers may find that the changes are not as drastic as expected, and they can plan for changes in existing policies to comply with the proposed rule.

For example, the proposed federal rule explains that existing sick leave policies can be used to satisfy the new requirements if they provide at least as much paid time off (i.e., 56 hours a year), and allow the employee to use the existing time off for the reasons covered by the new rule. Many employers likely already have similar policies in place, especially if they have employees in states and municipalities that currently require paid time off for attending to family illnesses, or if the employee has been a victim of domestic violence, including California, Connecticut, Philadelphia, New York City and Seattle, among others.

2. Track and evaluate employee reasons

Employers should also confirm that they are tracking the reasons why employees are taking time off from work. This is already important in terms of compliance with the Family and Medical Leave Act (FMLA) and corresponding state laws, and will make it easier to comply with the record keeping obligations under the new law. We often find that records may inaccurately report that the employee took vacation when the time was actually taken due to an employee’s illness or to care for a sick family member.

3. Document and verify

The proposed rule allows employers to require certification from an employee’s health care provider attesting to the need for leave if the employee is/was absent for three or more consecutive full work days, as is done in the context of FMLA leave or when providing time off as a reasonable accommodation under disability laws. That will help to prevent any possible misuse of the benefit.

Existing leave laws and the proposed rule also require employees to give as much advance notice as practicable regarding the need for paid time off. Employers should require compliance with reasonable “call-out” policies to minimize the disruption caused by absences covered by applicable leave laws.

The future of paid sick leave

While it is possible that this proposed rule may not come to fruition following the presidential election in November, it is indicative of a larger national push for paid sick leave. We are seeing a trend towards allowing employees to use sick time for reasons covered by this proposed new rule, such as care of family members. We are also seeing a trend in employers adopting general ‘PTO’ or paid time off policies that combine days off for personal time, such as attending a child’s school function or a routine doctor appointment, with vacation time and sick time.

With many state and local governments already leaning towards adding paid sick leave benefits, it would be wise for federal contractors and subcontractors to review their policies and make sure they are in compliance with this proposed rule.

New Jersey Supreme Court Holds That Economic Loss is Not Needed To Recoup a Former Employee’s Salary for Breach of the Duty of Loyalty

On September 22, the New Jersey Supreme Court unanimously gave the green light to awards of the remedy of equitable disgorgement, even in the absence of economic loss, as a fair and practical response to an employee’s disloyal conduct. The Court also noted that the fear of disgorgement should serve to as a deterrent to employee misconduct. Bruce Kaye v. Alan P. Rosefielde (A-93-13) (073353), New Jersey Supreme Court.

The Facts of the Case

Bruce Kaye hired attorney Alan Rosefielde as a full-time, salaried employee after using him as outside counsel. Rosefielde served as Chief Operating Officer and General Counsel for some of Kaye’s timeshare businesses. Kaye terminated Rosefielde’s employment based on discovery of unauthorized self-dealing and other actions by Rosefielde that exposed Kaye’s companies to potential liability, and as result of dissatisfaction with Rosefielde’s job performance. Kaye sued Rosefielde for breach of fiduciary duty, fraud, legal malpractice, unlicensed practice of law and breach of the duty of loyalty. After a lengthy bench trial, Rosefielde’s egregious conduct was found to breach his duty of loyalty, among other claims. The trial court awarded compensatory and punitive damages, as well as legal fees. However, the court did not order disgorgement of Rosefielde’s salary as an equitable remedy because the breach of loyalty did not result in any actual damage to the employer’s companies. The Appellate Division affirmed.

Upon review of the limited question of whether a court may award the remedy of disgorgement of a disloyal employee’s salary to an employer who has sustained no economic damage, the New Jersey Supreme Court recognized that the remedy of equitable disgorgement has only rarely been discussed in appellate decisions. Writing for the unanimous court, Justice Anne Patterson stated that:

“[t]he disgorgement remedy is consonant with the purpose of a breach of the duty of loyalty claim: to secure the loyalty that the employer is entitled to expect when he or she hires and compensates an employee.…[w]hen an employee abuses his or her position and breaches the duty of loyalty, he or she fails to meet the employer’s expectation of loyalty in the performance of the job duties for which he or she is paid….[r]equiring an employer to demonstrate a that it has sustained economic loss ‘is inconsistent with a basic premise of remedies available for breach of fiduciary duty’”. (Opinion, Page 24/25).

As one example, the New Jersey Supreme Court cited to the determination that Rosefielde had engaged in multiple inappropriate sexual advances towards toward co-workers as a basis for disgorgement of Rosefielde’s salary – without requiring the employer to demonstrate that litigation resulted from the misconduct, or that any other economic loss resulted from the inappropriate behavior.

What type of conduct may justify an award of disgorgement of salary? Examples of the misconduct constituting breach of duty of loyalty in the Kaye case included: unauthorized business transactions that provided a personal financial benefit to the employee; billing the employer for non-business expenses during a Las Vegas trip (a hotel suite shared with three adult film stars); sexual advances towards female co-workers; a fraudulent application to a health insurer to obtain employee coverage for independent contractors; and retaliation against another employee who refused to participated in a self-dealing scheme.

In terms of application of the Kaye decision to unfair competition claims, employers will presumably no longer need to demonstrate economic loss to recoup salary for employee misconduct such as theft of confidential information or customers, use of employer time and resources to set up a competitive activity, misdirecting business opportunities to a potential new employer or failing to fully perform duties or responsibilities while anticipating a jump to a new employer.

How much salary can be recouped?

The New Jersey Supreme Court remanded for a determination on disgorgement, and instructed the trial court to apportion the employee’s compensation by focusing on time periods during which the employee committed acts of disloyalty, and to consider the following factors: the employee’s degree of responsibility and level of compensation; the number of acts of disloyalty; the extent to which those acts placed the employer’s business in jeopardy; the degree of planning to undermine the employer that is undertaken by an employee; and other factors that may guide a court in the exercise of its discretion to impose an equitable remedy.

The Court also directed that the trial court should order disgorgement for monthly pay periods in which the Rosefielde committed acts of disloyalty because he was paid his salary on a monthly basis.

While the Court did caution that the trial court should not order a wholesale disgorgement before conducting the analysis cited above, it did include a footnote in the Kaye decision allowing for disgorgement of the employee’s entire salary if there is a determination that the employee was disloyal during all pay periods. (Opinion, fn.8).

The Takeaway

Employers should include breach of duty of loyalty claims when suing for “on the job” misconduct, especially for highly paid employees. Such claims may very well have the deterrent effect intended by the New Jersey Supreme Court by allowing employers to recoup salaries without having to show economic loss. Deterrence may be especially relevant with regard to claims of unfair competition, as subsequent employers will likely not able to offer enforceable indemnification guaranties for disgorgement awards.

Bad News for Whistleblowers: New Jersey Supreme Court Rules Theft of Confidential Documents for Self-Help in Employment Lawsuit Can Result in Jail Time

Does an employee have an unfettered right to take confidential documents from her employer to use in her discrimination and retaliation lawsuit against the employer? Not in New Jersey. The New Jersey Supreme Court recently ruled in State v. Ivonne Saavedra that the theft of a company’s confidential documents for self-help in an employment lawsuit can result in jail time.

Florham Park partner Lynne Anderson recently published an article in Law360 discussing the decision and its ramifications for employers and would-be whistleblowers.

Read “Woe To The NJ Whistleblower Who Whisks Away Documents” here.

Whistleblower and Retaliation Claims Compliance, Risk and Prevention

Whistleblower and Retaliation claims continue to rise and general counsel of companies large and small are increasingly budgeting for the prevention and defense of these claims. The multitude of regulations governing industries including pharma, life sciences healthcare, insurance and financial services, present employees with numerous opportunities, sometimes even incentives, to threaten and file whistleblower and retaliation claims. Launch the brief video below to hear how Labor and Employment Group partners Tom Barton and Lynne Anderson are helping employers achieve a culture of compliance to minimize risk, as well as the Labor & Employment group’s proven track record of success in helping employers handle and defend against these claims.

Lynne Anderson Quoted in Miami Herald Story on Miami Dolphins Bullying Incidents

Lynne Anderson, partner in the firm’s Florham Park office, was quoted in a story that appeared in the Miami Herald regarding the recent incidents of bullying on the Miami Dolphins football team and the potential for the victim of the bullying, Jonathan Martin, to bring legal action against the team and its coaching staff.

Lynne addressed the possiblity of Martin bringing a suit against the team based on Martin belonging to a protected class. “If Martin can prove he was harassed because of his race – and Incognito’s vile voice messages might be the proof he needs…” But, being a member of a protected class is only the first step for bringing a claim against the team as Lynne added, “he also has to show that it [the bullying] was unwelcome behavior”.

Lynne also addressed the chance that even if the team was not aware of the bullying that legal action could be brought against the team’s coaching staff itself. “If the coaches were aware that this kind of conduct was going on among the team, that by itself would be enough to give rise to a complaint.” Lynne went on to further explain, “The law does not recognize a stick-your-head-in-the-sand defense for unlawful harassment”.

New Jersey Federal Court Finds that the Stored Communications Act Protects Employee’s Non-Public Facebook Wall Posts – But Also Provides Guidance on Whether An Employer Can Take Action Based on The Unsolicited Receipt of An Offensive Post

Facebook continues to be the new “water-cooler” as co-workers regularly “friend” each other and allow access to their “wall” posts. New Jersey’s Federal District Court recently addressed the issue of whether a Hospital’s decision to suspend a nurse based on a post on her Facebook wall – which it received unsolicited from a co-worker who was a Facebook friend of the nurse – violated the Federal Stored Communications Act (“SCA”), 18 U.S.C. § 2701-11. The Court also addressed the nurse’s related invasion of privacy claim. Ehling v. Monmouth-Ocean Hospital Service Corp., 2013 U.S. Dist. LEXIS 117689 (8/20/13). [Opinion]

The nurse was a Hospital employee who maintained a personal Facebook account. She chose privacy settings that limited access to her “wall” to her Facebook ‘friends,” including one of her co-workers. Following the 2009 shooting at the Holocaust museum, the nurse posted the following to her wall:

An 88 yr old sociopath white supremacist opened fire in the Wash D.C. Holocaust Museum this morning and killed an innocent guard (leaving children). Other guards opened fire. The 88 yr old was shot. He survived. I blame the DC paramedics. I want to say 2 things to the DC medics. 1. WHAT WERE YOU THINKING and 2. This was your opportunity to really make a difference! WTF!!!! And to the other guards….go to target practice.”

Her co-worker took a screen shot of the post, and then showed the post to the nurse’s supervisor. As a result, the Hospital temporarily suspended the nurse, with pay, due to the concern that her comment reflected a “deliberate disregard for patient safety.”

The nurse sued claiming that the Hospital’s reliance on her Facebook post violated the Federal Stored Communications Act – and was an invasion of privacy. The Court first addressed the issue of whether the SCA applied to Facebook wall posts since the SCA was enacted in 1986, before the WorldWideWeb was developed in 1990 and web browsers were introduced in 1999.

The Court did determine that the SCA applied to Facebook posts based on the following analysis: (1) Facebook wall posts are electronic communications as defined by the SCA; (2) Facebook is an electronic communication service provider as defined within the SCA; (3) Facebook wall posts satisfy the “in electronic storage” requirement as they are not held in temporary, intermediate storage before delivery to the website, and are in accessible storage for back-up purposes; and (4) given that the touchstone of the SCA is to protect information that the communicator took steps to keep private, if a Facebook user chose privacy settings that limited access to her “friends,” the post at issue was covered by the SCA. The Court relied on California precedent in reaching this determination. Interestingly, the Court also found that the privacy protection provided by the SCA is not dependent on the number of Facebook friends to whom the user provides access.

However, the Court still granted summary judgment to the Hospital because it determined that the “authorized user” exception applied because the nurse granted her co-worker access to the post by “friending” her and thereby “intending” that her co-worker would view her posts. The Court also rejected the claim that the “authorization was coerced because the supervisor had never asked the co-worker for any information about the nurse, or the nurse’s Facebook activity. The Court also noted that the nurse’s supervisor was not in a position to offer the co-worker any benefit in exchange for the unsolicited presentation of the Facebook post since supervisor worked in a different division and had no control over the co-worker’s compensation.

The Court also dismissed the nurse’s common law invasion of privacy finding that:

“The evidence does not show that Defendants obtained access to Plaintiff’s Facebook page by, say, logging into her account, logging into another employee’s account, or asking another employee to log into Facebook. Instead, the evidence shows that Defendants were the passive recipients of information that they did not seek out or ask for. Plaintiff voluntarily gave information to her Facebook friend, and her Facebook friend voluntarily gave that information to someone else.”

Notably, the nurse also filed a complaint with the NLRB, however the NLRB determined that the Hospital did not violate the NLRA, and that there was no privacy violation because the post was sent, unsolicited, to Hospital management.

What is the take-away from this decision? First, employers have been waiting since the 2009 jury verdict in Pietrylo v. Hillstone Restaurant Group for guidance about what circumstances would qualify as “authorization” under the federal and NJ stored communications statutes. Second, employers should continue to use extreme caution taking adverse action based on employees’ social media activities. This decision, as well as recently enacted state legislation, clearly prohibits employers from directly – or indirectly – demanding access to employees’ social media accounts. As of July, 2013, legislation has been proposed in over 30 states to prevent employers from requesting passwords, and a number of states have enacted such legislation, including California, Illinois, Maryland and Michigan. Facebook has also condemned the practice and has updated its Statement of Rights and Responsibilities to address this issue.

In addition to potential liability under the SCA, the NLRB has been very active with regards to finding that Facebook rants about bosses, work conditions or compensation fall within the realm of protected “concerted activity” under the NLRA. However, even the NLRB has recognized that employers have a legitimate basis to take action in response to negative postings about their customers/clientele. The Office of the General Counsel found no violation for Facebook firings of a bartender who labeled customers as “rednecks” and hoped that they choked on glass, and of an employee of a residential facility for homeless people with significant mental health issues who joked about the condition of the facilities’ clients.