The Securities and Exchange Commission (SEC or Commission) Office of Compliance Inspections and Examination (OCIE) issued a Risk Alert on October 24, 2016, titled “Examining Whistleblower Rule Compliance.” This recent Risk Alert continues the SEC’s aggressive efforts to compel Rule 21F-17 compliance and puts the investment management and broker-dealer industries on formal notice that OCIE intends to scrutinize registrants’ compliance with the whistleblower provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank). By way of background, Dodd–Frank established a whistleblower protection program to encourage individuals to report possible violations of securities laws. Importantly, in addition to providing whistleblowers with financial incentives, Rule 21F-17 provides that no person may take action to impede a whistleblower from communicating directly with the SEC about potential securities law violations, including by enforcing or threatening to enforce a severance agreement or a confidentiality agreement related to such communications. As discussed in our prior publications, the SEC’s Division of Enforcement (Enforcement) has instituted several settled actions against public companies for violating the “chilling effect” provisions of Rule 21F-17. During the past two months, the SEC has filed two additional settled enforcement actions, as summarized below. Thus, as the SEC embarks on the start of its 2017 fiscal year (FY2017), Rule 21F-17 remains an agency-wide priority, and issuers, investment management firms, and broker-dealers—if they have not done so already—need to take heed and proactively remediate any vulnerabilities that they may have regarding their Rule 21F-17 compliance.
Category: Counseling & Compliance Training
Under New OSHA Rules, Employers May Not Conduct Post-Accident Drug Tests Simply as a Matter of Course
A mandatory drug and alcohol test after a workplace injury seems like a no brainer, right? Most companies believe so, which is why mandatory drug and alcohol testing after workplace injuries has become a common policy. However, new Occupational Health and Safety Administration (“OSHA”) regulations on electronic reporting of workplace injuries cast doubt on the continued legality of such policies. Specifically, OSHA’s new position is that mandatory post-injury testing deters the reporting of workplace safety incidents by employees and therefore employers who continue to operate under such policies will face penalties and enforcement scrutiny. In light of OSHA’s enforcement position, it is time for your company to review and revise its mandatory post-accident drug and alcohol testing policy.
Effective August 10, 2016,[1] OSHA’s final rules on electronic reporting of workplace injuries require employers to implement “a reasonable procedure” for employees to report workplace injuries, and that procedure cannot deter or discourage employees from reporting a workplace injury. The final rule, which amends OSHA’s regulation on Recording and Reporting Occupational Injuries and Illnesses (29 CFR 1904), requires employers to electronically submit injury and illness data to OSHA that they are already required to keep under OSHA regulations. Even though the content of these submissions depends on the size and industry of the employer, all employers are now required to: 1) inform employees of their right to report work-related injuries and illnesses free from retaliation; 2) clarify that an employer’s procedure for reporting work-related injuries and illnesses must be reasonable and not deter or discourage employees from reporting; and 3) incorporate the existing statutory prohibition on retaliating against employees for reporting work-related injuries or illnesses.
Antitrust Authorities Warn Human Resources Professionals about Illegal Agreements That Restrain Competition for Employees
On October 20, 2016, the United States Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued “Antitrust Guidance for Human Resource Professionals” regarding antitrust prohibitions of agreements that restrain competition for employees’ services. (Click the following links for a copy of this guidance, and the accompanying press release.) The guidance addresses business-to-business agreements regarding employee non-hiring and recruitment, and is intended to both remind HR professionals that these agencies have challenged such types of understandings over the past several years, and warn employers that the DOJ, in particular, intends to begin prosecuting at least some employers criminally in the months and years ahead.
The overall message is that employees are entitled to all of the benefits of competition for their services and that the FTC and DOJ are now increasing scrutiny of all practices that may impede those benefits. Some examples are formal or informal “wage-fixing,” “anti-poaching” and exchanges of compensation information generally. Over the course of the past several years, both agencies have challenged some of these practices in a variety of industries, particularly within the high-tech and healthcare sectors, as “per se” antitrust violations. These government actions have been followed by private class actions seeking treble damages, which in some cases, have resulted in judgments for hundreds of millions of dollars. As noted above, the DOJ now intends to treat at least some of these practices as felony criminal violations of the antitrust laws.
Summary of Key New California Laws for 2017: What Employers Should Know
Governor Brown has this year signed several new laws impacting California employers, some of which have already gone into effect and others that will be effective or operative in 2017 or later. A summary of key new laws follows. The effective date of the particular new law is indicated in the heading of the Assembly Bill (AB) and/or Senate Bill (SB).[1] The list below is in numerical order by the AB or SB.
Continue reading “Summary of Key New California Laws for 2017: What Employers Should Know”
My House My Rules: California Reigns In Employers’ Use Of Forum-Selection and Choice-of-Law Clauses to Avoid California Law
Last week, California Governor Jerry Brown signed into law Senate Bill 1241 (“SB 1241”). The new law (available here), which takes effect on January 1, 2017, adds section 925 to the California Labor Code (“Section 925”). In general, Section 925 will prohibit employers from requiring California-based employees to enter into agreements requiring them to: (1) adjudicate claims arising in California in a non-California forum; or (2) litigate their claims under the law of another jurisdiction, unless the employee was represented by counsel. Section 925 represents a considerable limit on parties’ rights to contract and may be the end of forum-selection and choice of law provisions, currently common in employment agreements.
For years, employers based outside of California have incorporated forum-selection and/or choice-of-law provisions in agreements with their California employees. Some employers used these provisions to create company-wide uniformity among their workforce. Others used forum-selection and choice-of-law provisions to avoid some of California’s more rigid rules about restrictive covenants. Whatever the motivation, forum-selection and choice-of-law provisions have become commonplace in employment and arbitration agreements.
Illinois Employers Must Provide Qualifying Employees Two Weeks of Unpaid Child Bereavement Leave
Illinois is now the second state to require that employers provide unpaid bereavement leave to eligible employees under its Child Bereavement Leave Act. This Act provides that employers with at least 50 employees must provide two weeks (10 working days) of unpaid leave due to the loss of a child. In the event of death of more than one child in a 12-month period, an employee is eligible for up to six weeks of bereavement leave.
Coverage
The Act defines “employers” and “employees” in the same manner as they are defined under the Family Medical Leave Act (FMLA). Thus, an employee will be eligible for child bereavement leave under Illinois law if the employee has been employed by the employer for at least 12 months and has worked at least 1250 hours during the previous 12-month period. However, an employee who has exhausted his or her FMLA leave is not eligible for child bereavement leave under this Act.
While an employee’s eligibility for child bereavement leave is tied to the employee’s FMLA entitlement, the employee’s bereavement leave cannot be deducted from the employee’s available FMLA leave. In other words, an employee can take two weeks of bereavement leave and still be eligible for 12 weeks of FMLA leave for another qualifying event.
The Act defines “child” as “an employee’s son or daughter who is a biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis.”
Bereavement Leave
An employee may use bereavement leave to:
- Attend the funeral or alternative to a funeral of a child;
- Make arrangements necessitated by the death of the child; or
- Grieve the death of the child.
Employees must take such leave within 60 days after the date on which they receive notice of the death of the child. Employees who wish to take bereavement leave must provide 48 hours’ advance to their employer, unless providing such notice is not reasonable and practicable.
Employers may require that an employee provide reasonable documentation, such as a death certificate, a published obituary, or written verification of death, burial, or memorial services from a mortuary, funeral home, burial society, crematorium, religious institution, or government agency.
Substitution of Paid Leave
Under the Act, employees may elect to substitute paid leave, including family, medical, sick, annual, or personal leave, that is available pursuant to federal, state, or local law, a collective bargaining agreement, or employment policy. Unlike FMLA provisions, the right to substitute paid leave rests with the employee and the Act does not provide any right to the employer to require an employee to use available paid leave.
Retaliation and Enforcement
An employer may not retaliate or take any other adverse action against any employee who:
- Exercises rights or attempts to exercise rights under this Act;
- Opposes practices which such employee believes to be in violation of the Act; or
- Supports the exercise of rights of another under this Act.
If an employee feels that his or her rights have been violated under this Act, he or she may file a complaint with the Illinois Department of Labor or file a civil action in court within 60 days after the date of the violation.
An employer who violates this Act is subject to a civil penalty not to exceed $500 for the first offense and not to exceed $1,000 for the second offense.