Employer Liability Archives - Page 11 of 12

Are You Ready For Your Company’s Holiday Party?

Many companies start planning their holiday party now. Employers need to know that an employer can be held liable for accidents and injuries caused by their employees who over indulge themselves with alcohol at the party, even if the employee initially made it home safely! You read that correctly. The California Court of Appeal, in Purton v. Marriott International, Inc., recently held that the company was potentially liable for a fatal motor vehicle accident caused by one of its employees who had attended the company’s hosted party. While the employee arrived home safely, the employee left about 20 minutes later to drive another co-worker home. The co-worker was also intoxicated. During this trip the employee struck another car, killing its driver. The trial court granted summary judgment for the employer on the ground that the employer’s potential liability under the doctrine of respondeat superior ended when the employee arrived home.

The court of appeal reversed and held that an employer may be found liable for its employee’s tortious conduct “as long as the proximate cause of the injury occurred within the scope of employment. It is irrelevant that foreseeable effects of the employee’s negligent conduct occurred at a time the employee was no longer acting within the scope of his or her employment.” The court explained that a jury could conclude that the proximate cause of the injury, i.e., the employee’s alcohol consumption, and the negligent conduct, i.e., the car accident, occurred within the scope of his employment. The court further found that the going and coming rule, which generally exempts an employer from liability for the torts of its employees committed while going to or coming home from their work, was an “analytical distraction” because the “thrust of [plaintiff’s] claim for vicarious liability was that [the employee] was an `instrumentality of danger’ because of what had happened to her at work.” As such, the court focused on the “act on which vicarious liability is based and not on when the act results in injury.” The court also stated that the record presented sufficient evidence for a finding that the employee in question breached a duty of due care he owed to the public once he became intoxicated and that the employer “created the risk of harm at its party by allowing an employee to consume alcohol to the point of intoxication.”

This case certainly gives the definition of “within the course and scope of employment” a broader meaning. That said, the moral of the story: (1) don’t drink and drive; (2) don’t let your employees do so either; and (3) limit your employees’ consumption of alcohol at company events.

New Jersey Safe Act Provides Unpaid Leave For Victims Of Domestic Violence

On July 13, 2013, Governor Chris Christie signed the New Jersey Security and Financial Empowerment Act (New Jersey SAFE Act) into law. Effective on October 1, 2013, the New Jersey SAFE Act, covering public and private employers with 25 or more employees, provides up to 20 days of unpaid leave in one 12-month period when an employee or their child, parent, spouse, domestic or civil union partner has been the victim of a domestic violence incident or a sexually violent offense and the employee has been employed by the employer for at least 12 months and 1,000 base hours during the 12-month period immediately preceding the leave.

Under the New Jersey SAFE Act, each incident of domestic violence or any sexually violent offense constitutes a separate offense for which the eligible employee may take leave, so long as the employee has not already exhausted the allotted 20 days for the 12-month period. The unpaid leave may be taken intermittently in intervals of no less than one day, as needed for the employee or the employee’s family or household member to handle issues arising from the incident such as:

Seeking medical attention for, or recovering from the injures caused by the domestic or sexual violence;

Obtaining services from a victim services organization;

Obtaining psychological or other counseling;

Participating in safety planning, relocation or other activities to increase the safety of the employee or the
employee’s family or household member and to ensure economic security;

Seeking legal assistance to ensure the health and safety of the employee or the employee’s family or household member; or

Attending, participating in, or preparing for a court proceeding related to the incident of which the employee or the
employee’s family or household member was the victim.

An eligible employee may elect, or the employer may require, the employee to use any or all accrued paid time off during any part of the 20-day leave provided under the New Jersey SAFE Act. If the employee’s request for leave under the New Jersey SAFE Act is also covered by the New Jersey Family Leave Act or the federal Family and Medical Leave Act, the leave must count simultaneously against the employee’s entitlement under each law.

Before taking leave under the New Jersey SAFE Act, the employee must give the employer written notice, if the necessity for the leave is foreseeable, as far in advance as reasonable and practical under the circumstances. An employer may also require the employee to substantiate the domestic violence or sexually violent offense which is the basis for the leave. If the employee provides one or more of the types of documentation listed in the Act such as a restraining order or a letter from the prosecutor, it will be deemed sufficient.

All documentation regarding the leave must be retained by the employer in strictest confidence unless the employee voluntarily authorizes disclosure or it is required by federal or State law, rule or regulation.

The employer must conspicuously display notice of employees’ rights and obligations under the New Jersey SAFE Act in a manner to be prescribed by the Commissioner of Labor and Workforce Development, and must use “other appropriate means to keep its employees so informed.” Neither the posting, nor guidance regarding what other appropriate means must be used has been issued.

The New Jersey SAFE Act prohibits discrimination, harassment and retaliation against employees who have exercised their rights under the Act. Aggrieved individuals have a private right of action within one year of the alleged violation to bring suit in Superior Court for recovery of the fully array of damages available to a prevailing plaintiff in common law tort actions, including reinstatement, compensation for lost wages and benefits, an injunction to restrain continued violations and reasonable attorneys’ fees and costs. In addition, the employer may be assessed a civil fine of $1,000 or up to $2,000 for a first violation, and up to $5,000 for any subsequent violations.

Updates regarding employers’ notice requirements and means to keep employees informed will follow when issued.

Unpaid Internships – Opportunity or Liability?

Unpaid internships have long been viewed by students, recent graduates and industry newcomers as a chance to gain experience that might help them select or launch a career, and to some, a chance to eventually land a paying job. Employers can capitalize on this to teach their trade or profession and find new talent; but, they should not use interns just to cut labor costs.

The United States Department of Labor and many states use six criteria to determine whether internships in for-profit company operations can lawfully be unpaid: 1) the internship must be similar to training given in an educational institution; 2) regular paid workers are not displaced; 3) the intern works under close observation; 4) the employer derives no immediate advantage from intern activities; 5) there is no guaranty of employment upon internship completion; and 6) it is clear up front that there is no expectation of payment. The overarching theme is that unpaid internships must be educational and predominantly for the benefit of the intern, not the employer.

Some employers have no idea the criteria exist and unwittingly expose themselves to expensive single-plaintiff, class action and regulator’s claims to reclassify interns as employees and to recover unpaid minimum wages, overtime pay, interest, multiple penalties and attorneys fees. [For more on this see our post on Unpaid Interns Deemed Employees Under the FLSA]. Add to that, there are potential employer and decision maker risks for failure to withhold income and employment taxes.

“Warning bell” examples of internship programs that may be subject to reclassification include, use of unpaid internships to simply minimize labor costs or merely as an extended job interview to see if interns can make the cut later for a paid job; no real, supervised education and training, beyond what the intern might happen to observe; and a predominance of work assigned to interns that paid employees would normally do to generate or support the business. Likewise, interns whose work is primarily running errands, answering phones, filing, organizing documents, data entry, scanning or coping images, or cleaning – even though they arguably have good exposure to work going on around them – tend to look like they are merely doing what paid support staff employees ought to be doing.

By contrast, if the intern is closely supervised and taught learning objectives that can be applied to multiple different employers, with occasional support staff type work incidental to the learning, with no guaranty of employment, and a writing that specifies a limited duration of an internship without pay, odds are better that intern can lawfully be unpaid. As a practical matter, if a school or college will give the intern course credit, the odds of legal compliance increase.

A safe path to avoid classification risks is to pay interns at least minimum wage and for any overtime worked, afford meal and rest breaks, and manage their work assignments to reduce overtime needed. Depending on employer policies and applicable laws, an intern who is part-time or a short-term temporary employee may not be eligible for certain employee benefits.

NLRB Issues Guidance on Lawful Confidentiality Language

On July 30, 2012, the NLRB (“Board”) issued a decision in Banner Health System dba Estrella Medical Center, 358 NLRB No. 93 holding, among other things, that the employer violated Section 8(a)(1) (which prohibits employers from interfering, restraining or coercing employees in the exercise of their rights), by restricting employees from discussing any complaint that was then the subject of an ongoing internal investigation.

To minimize the impact of such a confidentiality mandate on employees’ Section 7 rights, the Board found that an employer must make an individualized determination in each case that its “legitimate business justification” outweighed the employee’s rights to protected concerted activity in discussing workplace issues. In Banner Health, the employer did not carry its burden to show a legitimate business justification because it failed to make a particularized showing that:

Witnesses were in need of protection;
Evidence was in danger of being destroyed;
Testimony was in danger of being fabricated; or
A cover-up must be prevented.

The Board concluded that the employer’s one-size-fits-all rule, prohibiting employees from engaging in any discussion of ongoing internal investigations, clearly failed to meet these requirements.

More recently, the NLRB’s Office of the General Counsel clarified the limits of how such policies could be drafted without running afoul of Section 7 in an advice memorandum released on April 24, 2013 (dated January 29, 2013). The Region had submitted Verso Paper, Case 30-CA-089350 (January 29, 2013) to the Office of the General Counsel for advice regarding the confidentiality rule at issue and whether it unlawfully interfered with employees’ Section 7 rights. Specifically, the Verso Code of Conduct contained this provision prohibiting employees from discussing ongoing internal investigations:

Verso has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Reiterating that employees have a Section 7 right to discuss disciplinary investigations of their co-workers, the General Counsel’s Office found that the Verso Paper provision did not allow for a case-by-case analysis of whether or not the employer’s business justification for the restriction outweighed the employees’ Section 7 rights as required by Banner Health. According to the General Counsel’s Office, the employer may establish this by presenting facts specific to a given investigation that give rise to a legitimate and substantial business justification for imposing confidentiality restrictions.

However, in footnote 7 of its advice, the General Counsel’s Office, after noting that the first two sentences of the Verso Paper rule lawfully set forth the employer’s interest in protecting the integrity of its investigations, surprisingly put forward a modified version of the remainder of the Verso Paper provision that it said would pass muster under Banner Health:

Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Although this guidance is not binding, combining this language above with the first two sentences of the Verso Paper provision could certainly strengthen an employer’s argument that its intent was not to violate an employee’s Section 7 rights, but rather, to lawfully put employees on notice that if the employer “reasonably” imposes a confidentiality requirement, they must abide by it or face discipline. However, employers must remain mindful that using a provision like this suggested does not obviate the need for the employer to engage in the particularized case-by-case determination of its substantial and legitimate business need that would permit it to impose confidentiality restrictions on the investigation.

Beware of ICE!

The Department of Homeland Security has issued new and revised I-9 Forms that employers must begin using on May 7 for all new hires. Failure to properly complete and retain the new forms can result in substantial fines and penalties. With immigration being a hot issue in Washington, we should expect that Immigration and Customs Enforcement (“ICE”) will be vigilant in conducting audits to enforce the I-9 requirements. Beware of ICE!

ICE will continue to focus its resources on the criminal prosecution of employers that knowingly hire illegal workers. Audits of employers for compliance with I-9 requirements is the principal tool for ICE to identify and prosecute violators. Unfortunately, those audits often result not in prosecution for hiring illegals, but in the imposition of substantial fines for paperwork and retention mistakes even where such mistakes have nothing to do with the employment of illegal aliens. Under the matrix used for calculating fines, ICE punishes employers based on the percentage of Forms handled improperly, which means that an employer could be fined more than $1,000 per Form if it makes the same mistake in completing or maintaining the Forms for each new hire, even if there are no illegal employees and the mistakes are merely inadvertent or negligent errors.

Employers need to become familiar with the new two-page Form and its accompanying Instructions. As a general rule, each new hire must fill out and sign Page 1, Section 1 of the Form no later than the first day of employment, but in no event prior to the employee’s acceptance of a job offer. Section 1 includes a new request for the employee’s telephone number and email address, but employers should know, if asked, that the Instructions indicate that providing such information is optional (although it does not say so on the Form). After completing Section 1, the employee will have three days to provide the employer with the required documents (Passport, Driver’s License, Social Security Card, Alien Registration, etc.) to prove identity and authorization to work in the U.S. Employers may not demand or request that the employee produce a specific form of documentation from the List of Acceptable Documents included with the I-9 Form. Once the proper documents have been produced, the employer must review them to determine that they are current, original and reasonably authentic, and carefully fill out, sign and certify Section 2 of the Form confirming that it has in fact reviewed the documents provided. The Certification in Section 2 is critical, as it is not sufficient for the employer to simply attach copies of the documents to the Form.

While employers are not required to retain a copy of the documents, keeping a copy with the completed Form is recommended for all new hires, not just for foreign born employees, because it is illegal to discriminate based on an individual’s place of birth. The I-9 Forms must be retained for the longer of three years from the date of hire or one year following termination, and should be kept in a folder separate from the employee’s personal file, which can easily be produced in the event of an audit. Employers are subject to substantial fines if the Forms are not properly completed, signed and retained in conformance with the rules.

We recommend that employers audit their I-9 procedures to verify they are currently in compliance with Immigration requirements and to ensure that their HR staff is familiar with the new Form. We also suggest that employers review their existing policies, or create an I-9 Compliance Policy, to ensure that the proper procedure is followed for each new hire. Beware of ICE!

Bill Horwitz Article Published in New York Law Journal

An article by Florham Park counsel Bill Horwitz titled, “Second Circuit Adopts New Standard Involving Harassment by Non-Employees,” was published in the New York Law Journal.

Bill discussed the case of Summa v. Hofstra University, in which the U.S. Court of Appeals for the Second Circuit addressed the question of whether an employer is liable when non-employees harass its personnel and adopted a standard for answering it.

The case involved claims of sexual harassment and retaliation by a former part-time manager of Hofstra University’s football team, a graduate student named Lauren Summa. Bill says the decision, however, has implications “beyond the world of college sports and applies to harassing conduct by vendors, customers and other third parties.”

The Second Circuit held that Summa could not pursue her sexual harassment claims against the university because it promptly responded to her complaints about football players’ conduct and took appropriate remedial action. The court, however, allowed her retaliation claim to continue because Summa provided sufficient proof that her complaints about the football team influenced the university’s decision to ultimately terminate her employment.

Bill says the decision “serves as a reminder to employers that: (1) ensuring that employees do not engage in inappropriate conduct will not necessarily shield an employer from civil liability for harassment; and (2) preventing retaliation against an employee who complains about harassment may be as important as preventing harassment in the first place.”