Counseling & Compliance Training - Page 90 of 91

New York High Court: No At-Will Exception For Complaining Hedge Fund Executive

The New York State Court of Appeals declined this week to recognize an exception to the at-will employment doctrine for a hedge fund’s Chief Compliance Officer who alleged that he was fired for objecting to his employer’s unlawful trading practices. In Sullivan v. Harnisch, Plaintiff Joseph Sullivan was an employee and minority owner of Defendants Peconic Partners LLC and Peconic Asset Managers LLC (collectively, “Peconic”), holding various titles including Chief Compliance Officer. Defendant William Harnisch was the majority owner, President and Chief Executive Officer. Sullivan filed a lawsuit for wrongful discharge, alleging that Peconic fired him for objecting, in his capacity as Chief Compliance Officer, to Harnisch’s “manipulative and deceptive trading practices.” The trial court denied Defendants’ motion for summary judgment seeking to dismiss the claim. The Appellate Division, First Department, reversed and Sullivan appealed.

According to the Court of Appeals, the “gist of Sullivan’s claim is that the legal and ethical duties of a securities firm and its compliance officer justify recognizing a cause of action for damages when the compliance officer is fired for objecting to misconduct.” The Court reiterated the at-will employment doctrine, explaining that, “absent violation of a constitutional requirement, statute or contract,” an employer has the right to terminate employment at will. The Court indicated that it has “recognized an exception” to this doctrine “only once.”

That exception arose in Wieder v. Skala, in which a law firm had allegedly fired a lawyer for insisting that it comply with the profession’s ethical obligations. According to the Court, that decision “stressed both the ethical obligations of members of the bar and the importance of those obligations to the employment relationship between a lawyer and a law firm.” Moreover, the decision focused on the legal profession’s “unique function of self-regulation.”

In Sullivan, the Court emphasized the narrow scope of the Wieder decision. Although the Court left open the possibility that “there are some employment relationships, other than those between a lawyer and a law firm, that might fit within the Wieder exception,” the Court concluded that “the relationship in this case is not one of them.” Distinguishing Wieder, the Court explained that Sullivan’s regulatory and ethical obligations were not inextricably tied to his duties as an employee. Indeed, the Court observed, Sullivan “was not even a full-time compliance officer.” The Court also stated that regulatory compliance was not at the “very core” and the “only purpose” of Sullivan’s employment.

The Court affirmed the Appellate Division’s decision. In a strongly-worded dissent, Chief Judge Lippman charged that the “majority’s conclusion that an investment adviser like defendant Peconic has every right to fire its compliance officer, simply for doing his job, flies in the face of what we have learned from the Madoff debacle, runs counter to the letter and spirit of this Court’s precedent, and facilitates the perpetration of frauds on the public.”

Notwithstanding the dissent’s alarm that New York employers are now free to fire employees who allege wrongdoing, prudent employers – particularly in highly regulated fields like the securities industry – take such allegations seriously and investigate them, and are careful to avoid allegations of retaliation.

New Jersey Appellate Division Re-affirms Employers Are Not Required To Provide Indefinite Leaves Of Absence Under the New Jersey Law Against Discrimination

The New Jersey Appellate Division recently re-affirmed that an employer is not required to provide an indefinite leave of absence in order to meet its obligation under the New Jersey Law Against Discrimination (“LAD”) to reasonably accommodate the disabilities of its employees. In Lozo-Weber v. New Jersey Department of Human Services, Plaintiff, who suffered from lupus, requested a medical leave of absence and submitted a doctor’s note indicating that she would be unable to work for at least one year. The employer placed Plaintiff on leave pursuant to the Family and Medical Leave Act (“FMLA”). Once she exhausted her FMLA time, the employer agreed to an accommodation of an additional six months of unpaid leave, advising her in writing that it could not continue the leave longer than that due to operational needs. When the extended leave was about to expire, Plaintiff requested additional leave as an accommodation, but did not provide a date certain by which she would be able to return to work. Instead, the doctor’s note stated only that she would need to be out of work for “approximately” six more weeks. At the expiration of the approved six months leave, the employer terminated Plaintiff’s employment.

In affirming summary judgment for the employer on the claim of failure to accommodate under the LAD, the Appellate Division observed that the employer had provided Plaintiff with a reasonable accommodation by extending the FMLA leave by an additional six months. The court further held that an indefinite leave of absence was not a reasonable accommodation where the Plaintiff admittedly could not say when she would be able to return to work. While courts recognize that “reasonable accommodation” includes medical leaves of absence for reasonable periods of time, employers in New Jersey should look carefully at the notes submitted by doctors in support of requests for continued medical leaves, as there is no requirement to provide indefinite leave to employees who are physically unable to work and who cannot specify how long they will need to be out of work.

How the “Ambush” Election Process Will Work: NLRB’s Acting General Counsel Issues Guidance on New Procedures

The talk of the employer community lately has been the National Labor Relations Board’s highly controversial final rule that severely and substantially modifies certain procedures in representation cases. The Board claimed that the final rule, approved December 22, 2011, was designed to reduce unnecessary litigation in representation cases and thereby enable the Board to better fulfill its duty to expeditiously resolve questions concerning representation.

EEOC Issues New Guidance on Use of Arrest and Conviction Records Under Title VII

On April 25, 2012, the EEOC issued its first update in 20 years of its position on employers’ use of arrest and convictions records in making employment decisions.

The EEOC’s Guidance discusses employers’ use of arrest and conviction records in the context of Title VII of the Civil Rights Act’s prohibition on race and national origin discrimination. It first makes clear what most employers already know – employers cannot require or apply criminal background checks differently for one group of employees than another protected class of employees. The focusof the EEOC’s new Guidance, however, is that reliance on criminal records can have a disparate impact on certain protected groups and, therefore, violate Title VII.

9th Circuit Follows 4th, 6th, 7th, 8th, 11th, DC and Federal Circuits in Finding the Relaxation of an Attendance Policy is Not Always a Reasonable Accommodation

In Samper v. Providence St Vincent Medical Ctr 2012 DJDAR 4559 (9th Cir. 04/11/2012), the plaintiff, a part-time neonatal intensive care unit (“NICU”) nurse sought an accommodation from her employer, Providence St. Vincent Medical Center, that would allow her to opt out of its attendance policy which permitted five unplanned absences in a rolling twelve month period, in addition to other scheduled absences. When Providence refused the request, Samper sued for failure to accommodate her disability (fibromyalgia) in the federal district court for the District of Oregon, which granted summary judgment for the employer. The 9th Circuit affirmed, citing to its many sister courts, finding that “[t]he commonsense notion that onsite regular attendance is an essential job function could hardly be more illustrative than in the context of a neonatal nurse.” The 9th Circuit provided some guidance and reassurance to employers in distinguishing as “an unusual case” Humphrey v. Memorial Hosps. Ass’n., in which the court stated, “regular and predictable attendance is not per se an essential function of all jobs.”

The Samper court does not, however, grant employers carte blanche to refuse similar accommodations in all situations, making clear that the inquiry remains highly fact-specific. Employers should note the court’s favorable discussion of Providence’s long history of accommodations and interactive processes with the plaintiff prior to her termination.

How ICE Can Freeze Your Business Operations!

ICE, the U.S. Immigration and Customs Enforcement, was formed in 2003 “as part of the federal government’s response to the 9/11 attacks and its mission is to protect the security of the American people and homeland by vigilantly enforcing the nation’s immigration and customs laws.” With an annual budget of more than $5 billion and more than 19,000 employees in over 400 offices in the U.S. and around the world, ICE is the largest investigative agency in the United States Department of Homeland Security. ICE may conduct raids or sweeps at a particular place of business. ICE can also send Notices of Inspections to employers to alert them that it will be inspecting their I-9s and hiring records to determine whether or not they are complying with employment eligibility verification laws and regulations. ICE’s increased focus is on holding employers accountable for their hiring practices and their efforts to ensure a legal workforce. ICE also seeks to ensure that employers are compliant with I-9 forms and hiring records.

In the event of audits or raids, employers’ non-compliance may result in civil penalties and lay the groundwork for criminal prosecution of employers who have knowingly violated the law. According to ICE’s Assistant Secretary John Morton, “ICE is focused on finding and penalizing employers who believe they can unfairly get ahead by cultivating illegal workplaces.” He added that ICE is “increasing criminal and civil enforcement of immigration-related employment laws and imposing smart, tough employer sanctions to even the playing field for employers who play by the rules.”

While the presence of illegal aliens at a business does not necessarily mean the employer is responsible, consulting with legal counsel is paramount to limiting your potential exposure in your hiring practices.