Kate Gold and Elena Min Author Daily Journal Article

Los Angeles Partner Kate Gold and associate Elena Min recently authored for The Daily Journal an article on changes to Section 218.5 of California’s Labor Code.  The change, enacted through Senate Bill 462, curbs an employer’s ability to recover prevailing party attorney fees and costs in a lawsuit seeking unpaid wages, fringe benefits, or health and welfare or pension fund contributions.

Scheduled to go into effect January 1, 2014, the amendment limits recovery of attorney fees and costs by a prevailing employer “only if the court finds that the employee brought the court action in bad faith.”

Kate and Elena said the amendment “strips employers of one possible weapon in their arsenal for deterring nonmeritorious wage and hour claims.”

“Attorneys for plaintiffs and defendants will likely disagree with the consequences of the amendment as well as its premise – that the two-way fee recovery of existing Section 218.5 has had a chilling effect on employees’ wage and hour claims under that section,” they wrote. “But the bottom line is that “bad faith” is a high standard to meet and the amendment makes fee recovery in Section 218.5 actions an uphill battle for employers.”

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.

Audiocast – Impact of DOMA and Proposition 8 on California Employers – September 9, 2013 at Noon Pacific

The recent Defense of Marriage Act “DOMA” ruling has caused some concerns for human resources professionals and in-house counsel of companies headquartered or doing business in California. Those concerns include: (i) how will DOMA impact their policies, (ii) how will it affect benefit plans and retirement plans, and (iii) what does the ruling mean for employers, in connection to Proposition 8?

Please join four of our California-based Drinker Biddle lawyers from our new cross-over group, “California HR,” as they present a one hour audiocast to discuss these issues and the impact of DOMA and Proposition 8 on California employers.

Presented by:
Kate Gold, Partner
Summer Conley, Counsel
Cheryl Orr, Partner
Heather Abrigo, Counsel

This complimentary presentation will address:

  • Possible changes California employers need to make to welfare benefit and retirement plans.
  • How beneficiaries are now determined.
  • What documentation employers can require in confirming a domestic partnership or same sex marriage?
  • The intersection between DOMA and FMLA.
  • Marital status discrimination issues and other issues of concern to California employers.

There will be an opportunity at the end of the program to ask questions. Alternatively, if you have questions to present to the speakers ahead of time, please send them to contact@dbr.com.

Participant Access Instructions:
Dial in 5 – 10 minutes prior to start time using the participant phone number and participant passcode.
Participant Code: 312703
International: 719-457-2626
United States/Canada: 866-431-5314

In the Second Circuit, Unpaid Overtime Claims Must Allege Specifics

Earlier this month, the United States Court of Appeals for the Second Circuit, in Dejesus v. HF Management Services, 2013 U.S.App.LEXIS 16105 (2d Cir. August 5, 2013), held that plaintiffs cannot rely solely on vague allegations in asserting claims for unpaid overtime.  In this case, the plaintiff alleged that her former employer had failed to pay her overtime, but her Complaint lacked details such as the amount of overtime she had allegedly worked.  Instead, it simply parroted the language of the Fair Labor Standards Act (“FLSA”).  Affirming dismissal of the Complaint, the Second Circuit agreed with the district court that the allegations failed to state a claim.  This decision makes it more difficult for plaintiffs who lack a basis for an unpaid overtime claim to file a lawsuit in the hope of finding one during discovery.

Ramona Dejesus (“Dejesus”) worked for HF Management Services, LLC (“Healthfirst”), a company providing administrative and support services to healthcare organizations.  Dejesus alleged that she had worked more than forty hours per week for “some or all weeks” of her employment, but that Healthfirst had failed to pay her time and a half for the hours she worked over forty.  The Complaint did not indicate the number of overtime hours Dejesus had worked, her rate of pay or an estimate of the unpaid wages.

Dejesus filed the lawsuit in the United States District Court for the Eastern District of New York, alleging violations of the FLSA and the New York Labor Law (“NYLL”).  Both the FLSA and NYLL require an employer to pay non-exempt employees at an hourly rate of at least one and a half times their regular rate for each hour that the employees work in excess of forty hours in a workweek.  Healthfirst filed a Motion to Dismiss the Complaint arguing, among other things, that the vague allegations in the Complaint failed to state a claim for unpaid overtime.  The district court granted the motion.  Dejesus appealed and the Second Circuit affirmed.

In reaching its decision, the Second Circuit quoted the U.S. Supreme Court, which stated in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), that, in order to state a claim, a Complaint must contain more than “‘[t]hreadbare recitals of the elements of a cause of action … supported by mere conclusory statements.’”  According to the Second Circuit, a plaintiff asserting an overtime claim must allege that he or she worked more than forty hours in a week without receiving the required compensation.  The Court indicated that “an approximation of overtime hours” is helpful, but not necessarily required in every case.  The Court further indicated that courts should consider the allegations in context and on a case by case basis to determine if they are sufficient.

The Second Circuit concluded that the allegations in Dejesus’ Complaint “did not plausibly allege that she worked overtime without proper compensation.”  The Court observed that Dejesus “did not estimate her hours in any or all weeks or provide any other factual context or content.”  The Court further observed that her Complaint “was devoid of any numbers to consider beyond those plucked from the [FLSA].”  According to the Court, Dejesus “was required to do more than repeat the language of the statute.”  The Court explained that the Complaint “tracked the statutory language of the FLSA, lifting its numbers and rehashing its formulation, but alleging no particular facts sufficient to raise a plausible inference of an FLSA overtime violation.”

The Court emphasized that plaintiffs are not required to “keep careful records and plead their hours with mathematical precision.”  However, the Court explained, plaintiffs must “draw on” their “memories and experience” in order to provide “complaints with sufficiently developed factual allegations.”  The Court affirmed the dismissal of Dejesus’ Complaint.

In recent years, employers have faced a wave of wage and hour lawsuits.  In many instances, it seems that plaintiffs pursue these actions – particularly class or collective actions – without any real knowledge of wage and hour violations but in the hope of finding them during the litigation.  The Dejesus decision is a welcome development for employers in the Second Circuit, because it requires plaintiffs, before filing a lawsuit, to at least come up with factual allegations supporting their claims.

FMLA Protected Leave Now Available To Same-Sex Spouses

United States Secretary of Labor, Thomas Perez, recently issued an internal memorandum to department staff outlining the Department of Labor’s plan to issue guidance documents which will, among other things,  make protected leave available to same-sex couples under Family and Medical Leave Act (“FMLA”).  This action comes as the Department prepares to implement the Supreme Court’s recent decision in U.S. v. Windsor, which struck down the provisions of the Defense of Marriage Act (“DOMA”) that denied federal benefits to legally married same-sex spouses.  Calling it a “historic step toward equality for all American families,” Secretary Perez noted that the Department of Labor will coordinate with other federal agencies to make these changes “as swiftly and smoothly as possible.”

Secretary Perez stated that guidance documents would be updated to remove references to DOMA and to “affirm the availability of spousal leave based on same-sex marriages under the FMLA.  This change is of great consequence to same-sex spouses who previously were unable to access the job-protected leave provided under the FMLA.  Now, eligible same-sex spouses will be able to take FMLA leave for certain specified family and medical reasons, including caring for a spouse with a serious health condition, and generally will be returned to their original position or another position with equivalent pay, benefits and status.  The new interpretation reflected in the Department’s updated guidance documents will be effective immediately.

In the Department’s official blog, Modern Families and Worker Protections, Laura Fortman, the principal deputy administrator of the Wage and Hour Division, announced on August 13, 2013 that revisions had already been made to various FMLA guidance documents to reflect the changes necessitated by U.S. v. Windsor.  Fortman clarified that the “changes are not regulatory, and they do not fundamentally change the FMLA.”  They merely expand the universe of employees who are eligible for FMLA benefits by including legally married same- sex couples.  The updated documents can be viewed at these links:

Although Secretary Perez did not specifically address the question, the updated guidance documents indicate that the Department only intends to expand FMLA benefits to same-sex spouses in the 13 states and the District of Columbia that have recognized same-sex marriage.  As an example, Fact Sheet#28F, Qualifying Reasons for Leave Under the Family and Medical Leave Act, defines “spouse” for purposes of FMLA leave as  “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including “common law” marriage and same-sex marriage.”   In contrast, the Office of Personnel Management announced on its website that benefits will be extended to Federal employees and annuitants who have “legally married a spouse of the same sex, regardless of the employee’s or annuitant’s state of residency.”

As initial steps to implementing these changes, employers should inform or train human resources personnel regarding the availability of FMLA leave to eligible employees under the specified definition of spouse; review internal procedures and leave documentation to ensure compliance, and finally, review employee handbooks and policies to include provisions for same-sex couples where appropriate.

Sixth Circuit Approves NLRB Micro-Bargaining Units

On August 15, 2013, the Sixth Circuit Court of Appeals affirmed the National Labor Relations Board’s (NLRB or the Board) controversial ruling in Specialty Healthcare, 357 NLRB No. 83 (2011), which has allowed the proliferation of what some term “micro-bargaining units.”  This decision makes it easier for unions to organize employees from all industries into smaller units than in the past and makes it challenging for employers to successfully challenge smaller bargaining units.

The Board’s Specialty Healthcare decision overruled its decision in Park Manor Care Center, 305 NLRB 135 (1991), which set forth the Board’s previous test for determining the appropriateness of a bargaining unit in non-acute healthcare facilities.  Park Manor Care established a “pragmatic and empirical community of interest” approach that considered traditional community-of-interest factors, as well as evidence considered relevant by the Board during rulemaking concerning acute-care hospitals and the Board’s prior experience involving the types of facilities in dispute or units sought.  In Specialty Healthcare, the Board ruled that an employer claiming that the proposed bargaining unit should include additional employees must be able to show that the excluded employees share an “overwhelming community of interest” with the employees in the proposed bargaining unit.  Under Specialty Healthcare, numerous decisions have found small units appropriate that would not have been approved under previous Board law.

In Kindred Nursing Ctrs. E., LLC v. NLRB, Case No. 12-1027 (6th Cir. Aug. 15, 2013), the successor in interest to Specialty Healthcare’s facility in Mobile, Alabama challenged the Board’s ruling that a bargaining unit of Certified Nursing Assistants “constituted an appropriate unit.”  Pursuant to Specialty Healthcare, the Board had found a unit of fifty-three CNAs to be an appropriate bargaining unit, while Kindred Nursing argued that the bargaining units should have included an “additional eighty-six non-supervisory, non-professional service and maintenance employees.”  In its attack on the Specialty Healthcare decision, Kindred Nursing argued that the Board had abused its discretion because it

“adopt[ed] a new approach and [did] not return to applying the traditional community-of-interest approach; (2) [did] not ‘reiterate and clarify’ the law by adopting the overwhelming-community-of-interest test, but inappropriately imports this test from another area of labor law; (3) violat[ed] section 9(c)(5) of the National Labor Relations Act in its application of the traditional community of interest test and adoption of the overwhelming-community-of-interest test; and (4) [made] all of these changes through adjudication instead of rulemaking.”

In rejecting Kindred Nursing’s arguments, the Sixth Circuit first stated that it must uphold both the Board’s bargaining unit determination and its interpretation of the National Labor Relations Act (“NLRA”) unless the Board had abused its discretion.  The Court noted that in exercising its discretion, the “Board must cogently explain why it has exercised its discretion in a given manner.”  Citing oft-quoted precedent that the Board must select an appropriate unit and is not required to select the most appropriate unit, as well as the principle that the Board has the discretion to develop standards for determining the appropriateness of a bargaining unit, the Sixth Circuit found that it was in the Board’s discretion to overrule its own precedent and adopt a test based on prior Board precedent – even if it represented a material change in the law.  Furthermore, the Court found that the Board had not departed substantially from prior law as it had previously relied upon the overwhelming-community-of-interest test in prior cases, and that it had explained its reasons for adopting its new standard.  The Court noted that the Board’s new test had been approved by the District of Columbia Circuit prior to the Board’s holding in Specialty Heatlhcare.  See Blue Man Vegas, LLC v. NLRB, 529 F.3d 417 (D.C. Cir. 2008).

The Court also rejected Kindred Nursing’s arguments that the Board improperly changed its bargaining unit standards by adjudication rather than by rulemaking, and that Specialty Healthcare violated Section 9(c)(5) of the NLRA.  The Court first noted that the Supreme Court had specifically held in NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974), that the Board is not precluded from choosing adjudication as a method of developing new standards.  As for Kindred Nursing’s Section 9(c)(5) argument, the Court held the Board’s decision did not violate this Section 9(c)(5) because it does not assume that a requested bargaining unit is per se appropriate; rather, Specialty Healthcare requires an employer to make the showing of an overwhelming community of interest only after the proposed bargaining unit is deemed appropriate.[1]

In light of the approval of the District of Columbia and Sixth Circuits, it is likely that Specialty Healthcare’s “overwhelming-community-of-interest” test will be the rule unless or until the make-up of the Board changes sufficiently, which is unlikely during the remainder of President Obama’s second term, or it is reversed by the U.S. Supreme Court.  Moreover, it has been applied in industries beyond non-acute healthcare facilities.  With the increased risk of targeted organizing campaigns aimed at small units of sympathetic employees, the need for employers in all industries to proactively consider union avoidance strategies has never been more important.

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[1] The Supreme Court has interpreted section 9(c)(5) to prohibit the Board from approving bargaining units “based solely upon the extent of organization.”  NLRB v. Metro. Life Ins. Co., 380 U.S. 438, 441-442 (1965).

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