ILLINOIS AND MISSOURI INITIATIVES TO INCREASE THE MINIMUM WAGE

Yesterday Illinois’ Senate Executive Committee passed a measure to raise the state’s minimum wage from $8.25 to $8.75 plus inflation each year until it reaches $10.55, then to fluctuate with inflation. A similar initiative has been submitted to the Missouri Secretary of State’s Office to raise Missouri’s current minimum wage of $7.25 (matching the federal minimum wage) to $8.25 with an adjustment for inflation in subsequent years.

While many employers would no doubt like to pay their employees more, opponents include the Missouri Chamber of Commerce and small businesses who, in this already-struggling economy, fear that a mandatory minimum wage increase will discourage employers from hiring additional employees, result in layoffs or, worse yet, jeopardize companies’ ability to stay in business.

Stay tuned ... we will keep you posted as the initiatives develop.

IT’S ALL ABOUT THE NUMBERS

65,000. 20,000. 4/1. 10/1. If you employ H-1B workers or work in the field of immigration law, you are all too familiar with these numbers and the importance they represent. If you are not, you may want to keep reading and, if necessary, act quickly.

Under the current immigration laws, the numerical limit for H-1B visas for each government fiscal year is approximately 65,000 for the “regular” cap with an additional 20,000 H-1B visas available for foreign workers with a Master’s degree from a U.S. institution (the “Master’s cap”). While certain employers are exempt from “the cap,” most are not.

According to latest figures issued by the United States Citizenship and Immigration Services (USCIS), during the period from April 1, 2012 (the date that the H-1B filing season opened) to May 11, 2012, the USCIS receipted approximately 36,700 applications towards the “regular” (65,000) cap and approximately 14,800 applications towards the “Master’s” (20,000) cap. If this pace continues, the H-1B cap may fill much more quickly this year (possibly as early as June or July) than it has in the past two fiscal years. In fiscal years 2012 and 2011, the cap was not reached until November and January respectively.

As you can guess, the result of waiting too late to file an H-1B petition can have disastrous results, including missing out on the opportunity to employ a much needed resource. If you are an employer subject to the H-1B cap that is considering sponsoring an employee for an H-1B visa, the time to act is now.

The H-1B visa classification is commonly used by U.S. employers seeking to sponsor a foreign worker for employment in the U.S. in a “specialty occupation.” If you would like more information about the H-1B visa classification or other immigration needs, please contact Nalini Mahadevan or Diane Metzger.

AN EMBARRASING, PUBLIC REBUKE OF A BOARD CHAIRMAN’S “HEAD-IN-THE-SAND” APPROACH TO A REPORT OF WORKPLACE DISCRIMINATION

Approximately one month after its CEO resigned while under investigation for an inappropriate relationship with a female employee, Best Buy’s Board Chairman stepped down, after a report from the Board’s audit committee (a copy of which can be found here) found the Chairman failed to take appropriate action upon receiving a complaint about the CEO’s relationship with the female employee. Instead of reporting the matter to the Board of Director’s Audit Committee, which had investigative oversight responsibility for such matters, the Chairman independently confronted the CEO and provided him with a written statement another employee provided containing specific allegations about a possible inappropriate relationship between the CEO and the female employee. Though the CEO denied the allegations, the Chairman neglected to share the complaint, the CEO’s denial or any conversations relating to the matter with the Audit Committee, the Company’s general counsel, the HR Department or the Company’s Chief Ethics Officer. Instead, the matter drew the Board’s attention when the matter independently came to the attention of the HR department. Ultimately, the Company’s Audit Committee found that the Chairman’s actions in response to the complaint “exposed the [complaining] employees to potential retaliation and exposed the Company to potential liability for such retaliation” and correctly concluded the improper handling of employee allegations discourages employees from reporting potentially improper behavior to their supervisors, adversely affects the Company’s governance, and inhibits its ability to run an effective ethical compliance program.

Once again, the cover-up and not the crime proved most problematic. It goes without saying that brushing aside EEO complaints can only lead to bad things. In light of the strict ethics and institutional governance obligations held by board members of publicly traded companies, Company officers and directors who fail to recognize the hazards inherent to workplace discrimination and harassment allegations do so at their own peril. A prompt and thorough investigation by counsel, a third-party, or even internal HR, may have saved the Chairman his position on the Board.

WHAT WOULD YOU DO? EXAMPLES FOR I-9 EMPLOYERS

I recently attended a seminar presented by Ronald Lee, attorney from the Office of Special Counsel (OSC) in St. Louis, Missouri. I thought the examples provided were a useful tool to illustrate why an employer who employs only U.S. citizens should be wary of civil rights violations under Immigration and Nationality Act (INA), as amended by the Immigration Reform and Control Act of 1986 (IRCA).

Henry’s lettuce harvest is not as large as usual–he needs fewer workers this season, so he has to make a choice between Juan and Pedro. Juan is authorized to work and is a permanent resident, or a green card holder; Pedro is also work authorized, but is a refugee with a temporary work permit. Henry ultimately decides to keep Juan because he is a green card holder.

IRCA was the first federal law that made it illegal to “knowingly” employ workers who were not authorized to work in the U.S. After the enactment of IRCA, employers are required to confirm the identity and work eligibility of all employees, whether they were U.S. citizens or not, hired after November 1986, and not just workers who appear foreign or those who speak with an accent!

You might think that since your company only hires U.S. workers, your company does not violate I-9 regulations. Think again! You are the President of the company with a hiring policy of employing U.S. citizens and not employing anyone who looks foreign. As the President, you and the company are probably engaging in national origin and citizenship status discrimination by requiring all hires to be U.S. citizens. If you only hire U.S. citizens when there is an authorized worker with the same qualifications available for hire, that aggrieved party could file a complaint with the OSC. The complaint form is available in English, Spanish, Vietnamese and Chinese languages. Employers can also call anonymously to ask for guidance in their hiring practices at 1-800-255-8155.

Going back to our example–has Henry committed citizenship status discrimination? Pedro is a protected person under federal law. A protected person is a U.S. citizen, a green card holder, permanent resident, refugee or asylee. Henry’s hiring decision cannot be based on just Pedro’s legal “status” in the U.S., nor can Henry only hire U.S. citizens, because Henry and his company would then violate federal statutes.

Why should employers care? OSC imposes huge fines on employers, including training and reporting mandates that can last between 18 months and 3 years. These are costs an employer does not need in this, or any, economy.

For guidance on these and other I-9 issues, please call Nalini Mahadevan or Diane Metzger.

EMPLOYERS MUST BE CAREFUL WHEN WALKING THE SOCIAL MEDIA TIGHTROPE

If used appropriately, social media can greatly increase the online visibility and credibility of an organization. Employees can help promote the reputation of an organization’s product or service through Facebook, Twitter, LinkedIn, etc. As such, employers should be sure to have a social media policy in place. However, employers must also walk a fine line when developing a social media policy. And unfortunately, this line continues to move as the National Labor Relations Board (NLRB) and other federal agencies issue new decisions and guidance giving further clarification on what employers can and cannot do.

Due to the ever-increasing use of social media by both employees and employers, many organizations have already created social media policies for their employees. Most of these policies attempt to restrict employees’ ability to divulge work-related information on social media websites. However, such policies walk a fine line between protecting the organization’s legitimate interests and infringing on the employees’ rights to protected, concerted activity under the National Labor Relations Act (NLRA). As discussed in a few of our previous blog entries, the NLRB has found many employers’ (yes, even non-union employers) social media policies to constitute unfair labor practices.

Because May is Social Media Month at TLP, we thought it would be appropriate to answer the following client question regarding such social media policy restrictions.

Q: Can an employer make it a condition of employment or at least create a policy that states employees who have social media accounts and who choose to identify us as their employer (directly or indirectly) are required to post a disclaimer saying any opinions they express are theirs and not the opinion of the employer?

A: The short answer is “it depends.”

As summarized in our January 28, 2012 blog entry (below), the Acting General Counsel to the NLRB, Lafe E. Solomon, issued an Operations Management Memo earlier this year describing fourteen (14) social media cases recently reviewed by his office. Several of the charges alleged language in employers’ social media policies violated the NLRA. The guidance is particularly helpful to the question at hand because it provides insight regarding the NLRB’s views regarding possible NLRA violations in certain provisions that often appear in social media policies.

The NLRB frowns upon sweeping disclaimers.

In one case, the employer’s social media policy contained a provision requiring employees who had identified themselves as employees of the employer on social media sites to state that their comments are their personal opinions and do not necessarily reflect the employer’s opinions. The NLRB found this provision to be unlawful because “requiring employees to expressly state that their comments are their personal opinions and not those of the Employer every time that they post on social media would significantly burden the exercise of employees’ Section 7 rights to discuss working conditions and criticize the Employer’s labor policies, in violation of Section 8(a)(1).” (emphasis added).

In the context of another policy, however, the NLRB recognized that employers need to weigh the balance between allowing communications protected under the NLRA and restricting communications in violation of the Federal Trade Commission’s (FTC) Guides Concerning the Use of Endorsements and Testimonials. According to the FTC guidelines, individuals who have a “material connection” to a company, such as employees, must disclose that relationship when discussing the company's products or services or those of its competitors. Therefore, the NLRB found lawful a policy requiring employees to state that their views were their own and did not reflect those of their employer when they discussed “promotional content” on social media websites. The social media policy specifically defined "promotional content" as communications “designed to endorse, promote, sell, advertise or otherwise support the Employer and its products and services” and referred to FTC regulations. The policy was lawful because “employees could not reasonably construe the rule to apply to their communications regarding working conditions.”

Based on the foregoing, the NLRB will find an employer’s sweeping policy to be unlawful if it requires all employees who identify themselves as employees of the employer to post a disclaimer saying any opinions they express are their personal opinions and not the opinion of the employer every time they participate in social media. However, the NLRB guidance leaves room for interpretations, and employers may be able to implement more limited policies that specifically do not apply to employee communications regarding working conditions or other protected, concerted activity.

According to the NLRB, companies cannot alternatively prohibit employees from disclosing their employer on social media.

In the first case, the employer also attempted to restrict employees’ ability to identify the company as their employer. Specifically, the company’s social media policy contained a provision requiring employees to obtain approval to identify themselves as the employer’s employees on social media sites. The NLRB found this provision to be unlawfully overbroad because “personal profile pages serve an important function in enabling employees to use online social networks to find and communicate with their fellow employees at their own or other locations… [T]his policy, therefore, [is] particularly harmful to the Section 7 right to engage in concerted action for mutual aid or protection.”

Employers should be cautious when developing social media policies as such policies continue to receive considerable scrutiny from the NLRB. Policy provisions that may appear harmless on their face may violate the law. If you have any questions about social media and its impact on your organization, or if we can help you draft a social media policy, please contact any of the attorneys at The Lowenbaum Partnership.

MISSOURI JURY AWARDS MUSLIM WOMAN $5.1 MILLION VERDICT IN LAWSUIT ALLEGING RELIGIOUS DISCRIMINATION AND RETALIATION

A Jackson County, Missouri jury awarded a former Southwestern Bell employee $5.1 million dollars on her claim of religious-based discrimination, hostile work environment harassment and retaliation. The plaintiff, who converted to Islam in 2005, alleged a two (2) year pattern of abusive and discriminatory treatment by her two direct supervisors and several of her co-workers. The plaintiff alleged she was subjected to a variety of anti-Muslim slurs and teasing. Plaintiff also claimed that when her manager found out that her late return from her lunch brake on Fridays stemmed from her attendance of afternoon services at her mosque, he could not continue the practice, though employees often returned late from lunch for other reasons without peril. In addition, Plaintiff alleged that after learning of her EEOC charge against the company, her supervisor ripped the hajib off of her head.

The verdict is one of the largest in the nation involving religious discrimination against Muslims and one of the largest workplace discrimination verdicts ever in the State of Missouri. The verdict underscores the importance of workplace harassment training initiatives to ensure managers and employees alike understand both the legal ramifications of their behaviors, the appropriate method for addressing concerns with management, and the proper course of conduct when a current employee pursues legal action against the company. This case should also serve as a cautionary tale of the legal ramifications of a rogue manager whose behavior goes unchecked.

EEOC ISSUES NEW ENFORCEMENT GUIDANCE THAT COULD ALTER HOW EMPLOYERS USE BACKGROUND CHECKS

Can an employer legally implement a policy that prohibits the employment of anyone who has been convicted of any crime related to theft or fraud in the past five years? Probably not, says the federal government in its new guidance aimed at leveling the playing field for job applicants with a criminal history.

The U.S. Equal Employment Opportunity Commission (“EEOC”) issued new enforcement guidelines on April 25th concerning the use of criminal background checks by employers when making hiring or other employment decisions. Although employers may legally consider criminal records in hiring new employees, the guidelines illustrate the EEOC’s growing concern over the use of background checks and its resulting disparate impact on minorities. According to the EEOC, about 1 in 17 white men are expected to serve time in prison during their lifetime, while the rate climbs to 1 in 6 for Hispanic men and 1 in 3 for African American men. Having a criminal record is not listed as a protected class under Title VI; however, these statistics show that an employer’s neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) may violate the law because it disproportionately impacts groups protected under Title VII – race and national origin.

Employers have increased access to criminal history information. As a result, employers are more apt to perform background checks to screen applicants or employees. The EEOC’s guidance states that 92% of employers subject all or some of their job candidates to criminal background checks. Many companies have implemented policies to exclude any applicant, no matter his or her protected status, if the applicant has been convicted of certain crimes. A policy excluding all applicants who have specific criminal convictions helps maintain a safe workplace and prevent negligent hiring claims, but the EEOC states it could have a disparate impact on minorities who have higher arrest and conviction rates than white individuals.

So what should an employer do when it learns that a prospective employee has a prior conviction? The EEOC has recommended in its “Employer Best Practices” that an employer conduct an individualized assessment, verify the information is correct and give the applicant a chance to explain the circumstances. Accordingly, the EEOC believes employers should eliminate policies or practices that exclude people from employment based on any criminal record. The EEOC also recommends employers narrowly tailor criminal history questions on job applications.

While the EEOC’s enforcement guidance does not have the force of regulations or statutes, it sets a higher standard and makes it more burdensome for companies to comply with the EEOC’s requirements.

If you have any questions about what you can do to avoid running afoul of the EEOC’s new guidance, please contact any of the attorneys at The Lowenbaum Partnership.

BEST PRACTICES FOR AN EMPLOYER WITH AN H1B EMPLOYEE

Offsite working is a common practice in the computer industry. Large U.S. companies in the business process consulting industry employ foreign nationals and place these H1B visa holders at customer work sites in order to design, build, and deliver business driven technology solutions that enable customers to get a competitive advantage in their marketplace. Due to the nature of the products and services offered by these U.S. companies to their clients, it is necessary for U.S. employers in this particular industry to provide their products and services directly at the customer’s location. End clients want to see physical bodies working at their site and are also sometimes unwilling to sign long term agreements with the Employer/vendor.

H1B employees who return to their home country need a visa stamp to re-enter the United States. At the U.S. consulate abroad, when consular officers see an employee on an H1B visa not working at the employer’s offices but at a third party location, the immediate reaction is to require the H1B applicant’s employer to provide documentation of the employee-employer relationship —- the right to control and actual control. The consular officer often requires both employer and employee to provide tax documentation, employee payroll, state tax payroll, contract letters, agreements with customers, and signed employee benefit manuals. It apparently does not matter that some or all of this information may be either confidential or proprietary to the U.S. employer and its customer. Employers are between a rock and a hard place; between disclosing too much private or proprietary information, and risking a denial or administrative processing of many months, if these documents are not provided. Worse, these delays affect Employer’s projects at the client site, loss of profits and leaves the Employer’s managers scrambling to fill the void left by the employee’s prolonged absence.

To counter these issues presented to and by consular officers, employers and employees should follow the following list of Best Management Practices while applying for H1B visas abroad.

As an employee, you should avoid traveling outside the U.S.; it could be detrimental to the status of your H1B visa. If you must travel, you should notify your employer and attorney and wait for consent, an application review and an update by your immigration attorney, before traveling abroad. Your DS-160 Form (filed at the U.S. Consulate abroad) should not say “unemployed” while you are not working for your employer. Obtain a vacation letter from your manager.

In terms of the application, the employee should be aware of what the Employer’s support letter says about him or her. The employee must have supporting evidence that proves he or she has the skills and expertise to do the job. The employee should also know the organizational framework of the company, and know how education and experience qualifications make him or her eligible for H1B. If the employee has been with the employer for over two years, it may be wise to begin the Labor certification and Green Card process with an I-140 Form filing with USCIS. Before submitting the H1B application, make a full copy of the petition with all the supporting documents and study the original H1B application. Be prepared to answer questions that are not within the scope of the application. Remember to dress business casual, and do not be modest about your educational and work accomplishments.

As an employer, the employer’s support letter should describe the company’s product, and the employer must ensure that the application meets the criteria of a U.S. company. The employer must identify job duties, qualifications and experience for employees; and that the employer is the source of tools and knowledge for the job. The employer must prove that he or she manages the employee, and has the authority to delegate supplementary tasks, hire and fire, review employee performance and furnish company benefits. Evidence should support the fact that the employer pays employees’ wages, and pays federal, state and local taxes on the employees' wages. The employer must show that he or she claims the employee as an employee on tax filings; provide employee records, corporate tax returns and payroll for employees. In addition, companies must ensure that any publicly available information about their business is accurate. Consular officers either check VIBE or perform a quick search online about the company.

Please feel free to call Nalini Mahadevan or Diane Metzger if you have any questions.

ILLINOIS HOUSE PASSES BILL THAT WOULD PROHIBIT EMPLOYERS FROM SEEKING APPLICANTS’ FACEBOOK PASSWORDS

Are you aware that some employers, predominantly public sector employers, ask applicants for social media login information in their employment applications, or even ask applicants for the information during employment interviews in order to login and peruse the site together with the interviewee? For example, the McLean County, Illinois Sheriff’s Office has reportedly asked applicants since 2006 to sign into social media sites for pre-hire screening.

Two Senators – Richard Blumenthal, D-Connecticut and Charles Schumer, D-New York – recently brought the issue to light when they wrote letters to Attorney General Eric Holder and the Equal Employment Opportunity Commission asking for an investigation into whether such practices federal law. They wrote, “We urge the [Department of Justice] to investigate whether this practice violates the Stored Communication Act or the Computer Fraud and Abuse Act. The SCA prohibits intentional access to electronic information without authorization or intentionally exceeding that authorization, 18 U.S.C. § 1030(a)(2)(C). Requiring applicants to provide login credentials to secure social media websites and then using those credentials to access private information stored on those sites may be unduly coercive and therefore constitute unauthorized access under both the SCA and the CFAA … Given Facebook terms of service and the civil case law, we strongly urge the Department to investigate and issue a legal opinion as to whether requesting and using prospective employees’ social network passwords violates current federal law.”

Some states, including Illinois, have taken notice and drafted legislation to prohibit such practices. Representative La Shawn K. Ford, D-Chicago, recently got Bill 3782 passed in the House, which would make it “unlawful for any employer to ask any prospective employee to provide any username, password, or other related account information in order to gain access to a social networking website where that prospective employee maintains an account or profile.” Maryland is working on similar legislation.

Certainly, there are the applicants’ privacy concerns at issue – no doubt many social media users set high security settings and have no expectation that the general public, and potential employers in particular, will gain access to the personal information and social media activity stored on such sites. But there are critical risks to employers as well. Access to applicants’ social media sites may well provide invaluable information about the applicant’s work ethic, attitudes, professionalism, etc. – legitimate and lawful reasons upon which an employer can base its employment decision. But the sites are also likely to provide information that the employer ought not consider– e.g., the person’s age, race, religion, etc. Once the employer has this information, of course, it becomes much more difficult to argue, in the event of a failure-to-hire discrimination lawsuit down the road, that such information did not weigh into its decision.

Of course, call any of the Lowenbaum Partnership attorneys if you have questions about your organization's use of social media in the hiring process.

EEOC RULING HOLDS THAT GENDER IDENTITY BASED EMPLOYMENT DISCRIMINATION IS UNLAWFUL UNDER TITLE VII

The case of Mia Macy v. Eric Holder arose when Macy, then a male, was working as a police detective in Phoenix, Arizona and applied for a job with the ATF in the Walnut Creek, California crime lab. After being interviewed, the Director advised Macy that he would be placed in the position as long as he passed all of the required background checks. After a few months, Macy advised Aspen of DC, the civilian contractor which would actually hire Macy and place him with the ATF, that he was in the process of transitioning from male to female. Shortly thereafter, Macy was informed that the position was no longer available and later found that the position had been given to someone else.

Macy filed a claim with the ATF’s internal office of Equal Opportunity alleging discrimination based on “gender identity” and “sex stereotyping.” The ATF claimed that the EEOC process was not available to Macy because the Agency did not consider Title VII to apply to transgender claims. The EEOC disagreed.

In the case of Mia Macy v. Eric Holder, the EEOC issued a decision finding that when an employer discriminates against someone who is transgender, the employer has engaged in disparate treatment because of the sex of the victim. Regardless of whether the employer discriminates because the individual has expressed his or her gender in a non-stereotypical fashion, or because the employer is uncomfortable with the fact that the person is transitioning or has transitioned from one gender to the other, or because the employer simply does not like that the person is “identifying” as a transgender person, the EEOC found the employer is making a gender-based evaluation, thus violating the Supreme Court’s admonition in Price Waterhouse v. Hopkins, 490 U.S. 228, 239 (1989), that an employer may not take gender into account in making an employment decision.

The EEOC reversed the Agency’s decision declining to process the complaint and remanded it to the Agency for processing. While it is possible the decision could be reversed, employers should take any issues arising in this area very seriously as it appears that, going forward, protection against employment discrimination under Title VII will be granted based on an applicant or employee’s transgender status.

Please feel free to call your Lowenbaum Partnership attorneys if you have any questions.

NEW FEE DISCLOSURE RULES FOR RETIREMENT PLANS

Companies such as Wal-Mart, Boeing, AOL Time Warner, and General Electric have experienced multi-million dollar lawsuits filed by their pension plan participants claiming that their employers paid "excessive fees" to plan service providers. These fees were for services such as recordkeeping fees, investment fees, and revenue sharing agreements.

Section 404 of ERISA imposes a duty on pension plan fiduciaries to defray reasonable expense and avoid paying excessive compensation to investment and service providers. Participants in these cases have argued that the plan fiduciaries breached their duties when they failed to negotiate lower service fees and when they failed to disclose revenue sharing agreements with service providers.

In response to these lawsuits, the U.S. Department of Labor has issued regulations which become effective in 2012 creating new reporting requirements for service providers and plan sponsors. The new rules under Section 408(b)(2) and 404(a)(5) of ERISA are designed to provide employees and plan sponsors with the administrative and investment fees for their retirement plans.

By July 1, 2012, service providers must furnish information that will allow plan fiduciaries to determine the reasonableness of fees paid to their service providers and whether there are any conflicts of interest that impact a service provider's provision of services.

By August 30, 2012, employers who sponsor ERISA plans must make the initial annual disclosure of "plan level" and "investment level" information to their participants. The first quarterly statement for fees incurred (July through September) must be furnished no later than November 14, 2012.

These new regulations do not apply to Individual Retirement Accounts, SIMPLE Retirement Accounts and certain 403(b) annuity contracts. The Department of Labor will publish proposed disclosure rates for welfare benefit plans at “a future date.”

If you have any questions about what you should be doing in advance of the effective date of these new rules, please contact any of the attorneys at The Lowenbaum Partnership.

IS YOUR ORGANIZATION RELYING ON AN ARBITRATION CLAUSE IN AN EMPLOYMENT APPLICATION? - THINK AGAIN!

In an opinion handed down last week, the Court of Appeals for the Eastern District of Missouri found a trial court had it right when it struck down an arbitration clause contained in an employment application. In Marzette v. Anheuser-Busch, Inc., the employment application contained language that if the applicants were to be hired by Anheuser-Busch, Inc. (“A-B”), any claim arising out of that employment would be subject to final and binding arbitration. The plaintiffs were indeed hired, later sued for discrimination, A-B moved to compel arbitration pursuant to the clause in the employment application, and the trial court denied the motion. On appeal, the Eastern District agreed with the trial court, first noting that it is perfectly lawful for parties to enter into arbitration agreements. However, arbitration will only be compelled so long as the arbitration agreement satisfies all the usual elements of a valid contract: (1) an offer, (2) acceptance of the offer, and (3) bargained-for consideration. A-B tried various “consideration” arguments, but none persuaded the Court.

Employers beware: in Missouri, think twice before relying on an arbitration agreement in an application for employment!

TO VIBE OR NOT TO VIBE?…EMPLOYERS COULD AVOID RFEs, NOID, 221(g)

MJ went up to the window at the US Consulate. He was there for an H1B interview. The process normally takes about 5- 10 minutes at the window. Behind him were more nervous interviewees, waiting their turn.

The consular officer (CO) went through the application, “who is your employer?” he asked. MJ replied, “XYZ”. The CO checked his database, he did not find XYZ, so he ‘Googled’ the name; still no information. The CO believed the applicant was employed by the company, but since the new Neufeld Memo, issued last year, he had to make sure the applicant was actually ‘employed’ by XYZ and that XYZ really existed. He could find no corroboration; CO felt there was insufficient documentation in the application, so the CO issued a request under INA 221(g) to the applicant.

Applicant was required to produce more employer tax records, payroll records and other information that would corroborate the employer’s self attestations in the application. Until that time, the applicant was in administrative processing overseas, which could take up to 6 months. In the meanwhile, the company was out a valuable resource and was losing money on their project, because MJ was delayed overseas.

Continue reading here …

NLRB NOTICE ON HOLD, BUT ELECTION RULES SET FOR APRIL 30TH EFFECTIVE DATE

The NLRB decided to put their new Employee Notice on hold in light of the Court of Appeals for the D.C. Circuit’s order enjoining the notice, but the new election rules are still set to become effective on April 30th.

The new election rules will ensure greatly compressed timelines between when a petition for an election is filed and the actual election. The traditional 42-day period from petition to election will be cut at least in half in most cases. The new election rules essentially eviscerate the procedures that previously resulted in an automatic right to the 42-day period. This is clearly designed to increase the likelihood of union victories in NLRB elections, and employers wishing to provide information to their employees in advance of the election will have less time to do so.

 $36.9 MILLION IN DAMAGES AWARDED TO 401(K) PLANS

U.S. District Court Judge Nannette Laughrey recently ruled that ABB, Inc. and certain managers of its two 401(k) plans were liable for $35.2 million for breaches of their fiduciary duties. As part of the $35.2 million in damages, Judge Laughrey found ABB and some of its 401(k) plan managers were liable for $13.4 million for failing to control record-keeping fees and for not pursuing rebates on fees from Fidelity, the plan record-keeper. The remaining damages were awarded because ABB and its managers lost $21.8 million by approving the transfer of participant investments in a Vanguard Group fund to a lesser performing Fidelity Investments fund in the 401(k) plans.

The ABB plans included mutual funds offered by Fidelity Investments. Other Fidelity units served as the investment adviser to the Fidelity mutual funds and as the record-keeper for the plans. The court ruled that two Fidelity units were liable for $1.7 million in damages for its handling of "lost float" which was interest earned by Fidelity on its investment of employee contributions.

This class action lawsuit was filed in December of 2006 on behalf of 12,800 participants. It was tried before Judge Laughrey without a jury in January of 2010, and her 81-page ruling was issued on March 31, 2012. The damages will be paid to the plans.

Judge Laughrey ruled that, under ERISA, ABB violated its fiduciary duties to the Plans by selecting more expensive shares for the Plan's investments when less expensive shares were available and by removing the Vanguard Wellington Fund as a plan investment choice and replacing it with Fidelity's Freedom Funds. The Court found ABB failed to follow the plan’s investment policy and failed to engage in a “deliberative assessment” when it removed the Vanguard Wellington Fund as plan investment. The Court held that ABB and certain plan managers violated their fiduciary duties when they agreed to pay Fidelity more than market rates for plan services, such as recordkeeping, in order to subsidize the corporate services provided to ABB.

The Court also found that Fidelity breached its fiduciary duties when it used "float income" earned from plan assets to pay for its recordkeeping expenses and when it transferred float to the plan's investment options instead of disbursing the income solely to the plan participants.

What's the upshot?

ERISA imposes high standards of fiduciary duties upon those responsible for administering an ERISA plan and investing and disposing of assets. All fiduciaries must comply with ERISA's duties of loyalty and prudence.

As the Court said, "A fiduciary in this area must not only comply with the governing plan documents, but it must also have gone through a deliberative process for determining why such a choice is in the plan's and participant’s best interest." Tussey v. ABB, Inc., No. 2:06-cv-04305-NKL, 2012 U.S. Dist. Lexis 45240 (W.D. Mo. March 31, 2012).

AS THE NEW NLRB NOTICE POSTING DEADLINE APPROACHES, IS YOUR COMPANY READY?

Beginning April 30, 2012, private sector employers across the country will be required to post the NLRB’s “Notification of Employee Rights under the National Labor Relations Act” on already cluttered, poster laden bulletin boards and break room walls. But what should employers be doing to prepare for the questions, concerns and issues created by the Board’s new informational poster?

One would expect employees who are more aware of their rights under the NLRA to be more apt to exercise those rights. In light of the Board’s recent emphasis on enforcing the Act where its protections meet the new developments of the modern workplace, proactive employers would be wise to re-examine their employment policies and employee agreements to ensure they do not run afoul of the NLRA. For example, employers who have entered into binding arbitration agreements to avoid the uncertainties and costs associated with jury trials in employment discrimination claims, should review their agreements to ensure they do not run afoul of the Board’s recent holdings regarding the NLRA’s prohibition of mandatory class arbitration of employment disputes. Similarly, the Board’s recent focus on social media warrants a re-evaluation of policies covering the subject.

Most importantly, however, the Board’s new posting makes it all the more important for employers operating in a non-union environment to develop a cohesive and lawful communication plan to respond to questions regarding unions and the rights described in the Notice. Any such plan must address lawful messaging and the dissemination of information in response to employee inquiries, as well as in the context of potential union or other protected, concerted activity protected by the NLRA.

If you have questions about what your company should be doing in advance of the new posting’s effective date, please contact any of the attorneys at The Lowenbaum Partnership for assistance.

NLRB SEEKS RELEVANCE AMONG PRIMARILY NON-UNION WORKFORCE

Because Union membership has steadily declined from 30% of the private-sector workforce to less than 7%, the NLRB finds itself struggling for continued relevance. The shrinking of the Agency has recently manifested itself in the downgrading of NLRB Regional Offices in St. Louis and Winston-Salem. In an effort to regain its relevance, the NLRB is engaging in an aggressive outreach program to educate the 94% of employees without a Union about the protections the NLRB offers them. One part of this outreach is the Notice to Employees all employers must post by April 30th. This Notice informs employees, Union or not, of their right to discuss their wages, discipline and other terms and conditions of employment with each other. The Notice also explains how the NLRB will seek their reinstatement and backpay if terminated for discussing such working conditions. It was previously rare for non-Union employees to think of the NLRB as a place to file a Charge of Discrimination, but the NLRB is actively trying to change that. Employers should refresh themselves with the NLRB’s definition of protected-concerted activity to avoid running afoul of Section 8(a)(1) of the National Labor Relations Act.

UPDATE ON MISSOURI WORKERS' COMPENSATION LEGISLATION

As we previously reported, a Missouri Senate Bill which would have expanded the types of conditions that fall exclusively under the Missouri workers’ compensation law (SB 572) was vetoed by Governor Jay Nixon. Two recent developments have occurred in this area. First, the Missouri Senate voted to override the Governor’s veto of SB 572 on March 29, 2012. However, it is unlikely there will be enough votes in the House of Representatives to override the veto. Second, the House passed its own bill (HB 1403) on April 5, 2012 which is similar to SB 572.  The House Bill would narrow the types of claims that are run through the State’s second injury fund, covering only injuries that follow a previous military or work-related injury. It would also provide that occupational illnesses are covered by the workers’ compensation law, thus ending an employee’s right to sue his or her employer civilly for occupational diseases. It would also protect co-workers of employees who suffer work-related injuries by eliminating the injured employee’s right to sue a co-worker involved in the workplace accident that caused the injury, unless the co-worker “engaged in an affirmative negligent act that purposefully and dangerously caused or increased the risk of injury.” We will keep you posted as new developments in this area occur.

NEW SUMMARY OF BENEFITS AND COVERAGE INFORMATION

Due to the 2010 healthcare law, group health plans will soon have to provide a new Summary of Benefits and Coverage (SBC) to participants explaining the basic features of their health benefits.  

The U.S. Department of Labor has developed a standardized SBC form for employers to use. There is a sample completed SBC available here and a set of frequently asked questions and answers about the implementation of SBCs here.

For group health plans, a SBC must be provided to participants and beneficiaries who enroll or re-enroll during an annual open enrollment period beginning on the first day of the first open enrollment period beginning on or after September 23, 2012.This could be October 1, 2012 for many calendar year plans

For participants and beneficiaries who enroll in a health plan other than during an annual open enrollment period, the SBC must be given to participants and beneficiaries on the first day of the first plan year that begins on or after September 23, 2012. For calendar year plans this will be January 1, 2013. 

The best place to get a quick understanding of this new requirement is to review the completed sample SBC at the link provided above.

If you have any questions, please contact any of the attorneys at The Lowenbaum Partnership for assistance.

INTERNSHIPS & THE FLSA

Last Friday, the St. Louis Post Dispatch ran an article suggesting that St. Louis can hold on to its future best and brightest if local employers offer long-term internships. But employers must be thoughtful about their implementation of internship programs so as not to run afoul of state and federal wage and hour laws. Specifically, the Fair Labor Standards Act ("FLSA") provides that individuals who are "suffered or permitted" to work must be compensated for their services. Thus, internships must be paid unless certain criteria are met, i.e. the internship is an educational experience for the benefit of the intern, not the employer; it does not displace regular employees, etc. Moreover, employers must be mindful that interns are compensated with at least minimum wages and for overtime. Indeed, just this month the head accessories intern at fashion magazine Harper's Bazaar filed suit, alleging that she worked up to 55 hours a week without adequate compensation. "Unpaid interns," her complaint stated, "are becoming the modern-day equivalent of entry-level employees, except that employers are not paying them for the many hours they work." Wang v. Hearst Corp., No. 12-cv-0793, filed Feb. 1, 2012 (S.D. N.Y.). You can check out the Department of Labor's "Fact Sheet" about internships and the FLSA here or, better yet, give your labor and employment attorney a call.

EEOC STATISTICS FOR FISCAL YEAR 2011

The U.S. Equal Employment Opportunity Commission has released some statistics for its fiscal year 2011. It received 99, 947 charges and delivered $364.6 million in monetary relief to complainants - both records in the Commission's 46-year history. By the end of the fiscal year, moreover, which ended in September, the Commission's field units had filed 261 lawsuits including 23 for systemic allegations involving large numbers of people, 61 with multiple victims, and 177 individual lawsuits. In these difficult economic times, it is not surprising that the EEOC is seeing record numbers of charges being filed and record numbers of dollars changing hands. We remind employers that there is no time like the present to scrutinize their employment policies, train their staff, and ensure they are otherwise acting in accordance with the law.

You can see the EEOC's Performance and Accountability Report for yourself here.

Authored by Toby Asel ∙ January 25, 2012

DOES THE NATIONAL LABOR RELATIONS ACT ALLOW EMPLOYEES TO RIDICULE THEIR EMPLOYERS THROUGH SOCIAL MEDIA AND KEEP THEIR JOBS?

Forms of social media, such as Facebook and Twitter, are quickly replacing water coolers as the new breeding ground for workplace gossip. Unlike water cooler gossip, however, social media postings are easily communicated to the masses and, as such, have the ability to significantly impact upon the reputation of an employer and/or a manager or supervisor.

Over the past year, the National Labor Relations Board has handed down a number of decisions which address the issue of whether certain social media communications constitute protected concerted activity under the National Labor Relations Act ("NLRA"). Click here for a detailed summary of these decisions. These decisions are very significant for employers desiring to discipline employees for social media postings that are critical of the employer, the employer's practices and/or the employer's management personnel. If a posting constitutes protected concerted activity, the NLRA prohibits an employer from disciplining the employee. Negative postings which do not constitute protected concerted activity, however, may result in discipline to the employee without violating the NLRA.

In essence, the National Labor Relations Board's stance is that an employee's social media postings are protected so long as they touch on a term or condition of employment and involve discussions between employees. Exceptions, however, can be made under circumstances where the communication constitutes a physical threat. In other words, offensive, inappropriate and sometimes vulgar statements about an employer will often times be protected by the NLRA so long as they do not include a physical threat.

Recommendation: In the event your company does not already have one, a social media policy is strongly recommended.

Authored by Bill Lawson ∙ January 20, 2012

MISSOURI BECOMING MORE UNFRIENDLY FOR EMPLOYERS IN LATE 2011

Missouri courts issued some key decisions in the later part of 2011 that may be troublesome for Missouri employers in the future.

As discussed in our November 3, 2011 post ("The Erosion of Workers' Compensation as the 'Exclusive Remedy,'" see below), on September 13, 2011, the Missouri Court of Appeals for the Western District issued a decision in State ex rel. KCP&L Greater Missouri Operations Co. v. Cook, 2011 Mo. App. LEXIS 1161 (Mo. App. W.D. 2011), finding that the Workers' Compensation Act's exclusivity provision does not apply to occupational injuries based on the language changes in the 2005 amendments.

On October 18, 2011, the Missouri Court of Appeals for the Western District issued a decision in Eileen Carter v. Division of Employment Security, 350 S.W.3d 482 (Mo. App. W.D. 2011), finding that a military spouse who resigned her employment in Missouri when her husband was transferred to another state did not "voluntarily" leave her job without good cause attributable to her work or her employer, and was, therefore, entitled to unemployment compensation. While the court, in a footnote, stated the ruling of the case was applicable only to relocations brought about by mandatory orders of the United States Military, the court's discussion of the recent cases addressing "voluntariness" under the Employment Security Act illustrated an appreciable move to more broadly interpret the word "voluntary" in favor of the employee filing for compensation.

On November 15, 2011, the Missouri Court of Appeals for the Western District issued a decision in Richardson v. Division of Employment Security, 2011 Mo. App. LEXIS 1518 (Mo. App. W.D. 2011), reversing a finding of the Labor and Industrial Relations Commission that disqualified from unemployment compensation an employee found sleeping on the job twice during one shift. Rejecting a per se rule enunciated one month earlier by the Missouri Court of Appeals for the Eastern District in Nickless v. St. Gobain Containers, Inc., 350 S.W.3d 871 (Mo. App. E.D. 2011), the Western District determined that an analysis of the facts and circumstances was necessary to determine if sleeping on the job was "misconduct" under the Employment Security law. The Western District remanded the case to the Labor and Industrial Relations Commission leaving a split among the circuits in Missouri as to whether sleeping on the job is automatically deemed misconduct or if certain facts excuse an employee who falls asleep on the job.

On December 13, 2011, the Missouri Court of Appeals for the Eastern District in Cooper v. Chrysler Group, LLC, 2011 Mo. App. LEXIS 1657 (Mo. App. E.D. 2011), reversed a lower court's entry of summary judgment for the employer, Chrysler, and allowed a civil action against the employer to remain viable pending a decision by the Labor and Industrial Relations Commission on whether the employee's accident at work was encompassed under the narrower definition of "injury" found in the 2005 amendments to the Workers' Compensation Act. Ironically, the legislature narrowed the definition of "accidental injury" for the purpose of making Missouri a more business friendly state; however, the result has been the filing of concurrent civil cases and worker's compensations claims regarding the same set of operative facts related to the workplace accident/injury. The result inevitably will be increased litigation expenses for employers and actively pursued civil suits against employers when an injury at work does not meet the 2005 definition of "accidental injury."

Authored by Julie Bregande ∙ January 18, 2012

WAGE AND HOUR MEETS ... LADY GAGA???

The pop star known as much for her outrageous outfits as for her hits has been sued by her former personal assistant, Jennifer O'Neill, for unpaid overtime. O'Neill's Complaint, filed in the United States District Court for the Southern District of New York in mid-December, alleges that, on a $75,000 annual salary, O'Neill attended to GaGa's needs "from city to city throughout the world, at locales including stadiums, private jets, fine hotel suites, yachts, ferries, trains and tour buses." O'Neill's primary job duties, so says the Complaint, included "ordering meals and ensuring they were correctly prepared and served at specific times; ... ensuring the availability of chosen outfits; [and] ensuring the promptness of a towel following a shower," among other things. O'Neill claims she basically worked 24/7 for the year-plus she worked for GaGa, "with no entitlement to breaks, for meals or otherwise, or at times, even sleep," and that she was responsible for "being responsive to the slightest need throughout the day, and for addressing spontaneous, random matters in the middle of the night." O'Neill claims, under federal and New York state law, 7,168 unpaid overtime hours and almost $380,000 in overtime wages plus liquidated damages, attorney's fees, costs and pre-judgment interest.

Authored by Toby Asel ∙ January 11, 2012

"TOO MUCH OF A GOOD THING" WHEN IT COMES TO I-9 COMPLIANCE

One might think that an employer who goes "above and beyond" the call of duty to confirm the identity and employment authorization of its employees would be doing "a good thing." However, it may come as a surprise to some that in the eyes of the Department of Justice's Civil Rights Division, going "above and beyond" what is minimally required for I-9 compliance can actually be "too much of a good thing" - and it can land you in hot water with the Office of Special Counsel for Immigration-Related Unfair Employment Practices.

With the passage of the Immigration Reform and Control Act of 1986, all employers must complete a Form I-9 for each new employee hired after November 6, 1986. In completing the Form I-9, each newly hired employee is required to submit documentation establishing his or her identity and authorization to work legally in the U.S. In order to comply with the anti-discrimination provisions of the Immigration and Nationality Act ("INA"), when hiring employees and completing the Form I-9, employers must treat all employees equally and cannot discriminate against an individual who is legally authorized to work in the U.S. due to his or her immigration status or national origin.

During the past year we witnessed a number of cases where an employer's "above and beyond" efforts in completing the Form I-9 and verifying an employee's work authorization caused the employer to run afoul of the anti-discrimination provisions of the INA. In many instances the violations occurred because the employer either told the employee which documents to provide, would accept only certain employment authorization documents such as a "green card," or asked the employee to provide more documents than required for the completion of the Form I-9.

For many, the watershed case of the year was the Department of Justice's lawsuit against Kansas City-based Farmland Foods, Inc. After an investigation revealed that Farmland Foods required non-U.S. citizen employees at its Monmouth, Illinois plant to meet unnecessary and additional document requirements when completing the Form I-9, (a clear violation of the INA's anti-discrimination provision), Farmland Foods agreed to pay more than $290,000 in civil penalties for its actions.

More recently, in the last week of 2011, the Department of Justice announced that it had reached settlements with Virginia-based BAE Systems Ship Repair Inc. and Georgia-based Garland Sales Inc., a rug manufacturer, after investigations revealed that both companies had engaged in similar employment practices in violation of the INA. For its actions BAE agreed to pay civil fines of $53,900, while Garland Sales agreed to pay $10,000 in back pay and civil penalties.

As we begin this New Year and reflect on the lessons learned in 2011, companies would be well-served to review their internal I-9 compliance policies to ensure that adequate procedures are in place so that all Form I-9's are completed properly and in accordance with the law.

For additional information and resources on how employers can avoid violations of the INA, visit the Civil Rights Division Office of Special Counsel Outreach Page by clicking here.

Authored by Diane Metzger ∙ January 8, 2012

ATTENTION EMPLOYERS: IS REQUIRING A HIGH SCHOOL DIPLOMA OPENING YOU UP TO A LAWSUIT?

Potentially, yes. On Sunday, the Washington Times rang in the new year with a noteworthy article about an informal discussion letter recently issued by the EEOC in which the EEOC stated that an employer's requirement of a high school diploma must be job-related for the position in question and consistent with business necessity. While the discussion letter "does not carry the force of law," it could certainly have far-reaching consequences for employers, and maybe the country. Once a common criterion for screening candidates for employment, employers who require a high school diploma could now find themselves in murky legal waters if the requirement unnecessarily screens out individuals who could otherwise perform the essential functions of the job but were unable to complete high school because of a learning disability covered by the Americans with Disabilities Act. The article also ponders whether the EEOC's position could quell secondary education, to the extent that employers will no longer be able to require high school diplomas of its work force. Check out the article here.

Authored by Toby Asel ∙ January 4, 2012

HAPPY HOLIDAYS AND YEAR-END REVIEW from THE LOWENBAUM PARTNERSHIP

Consistent with our thirteen-year tradition, it is my practice to reflect on each year at TLP as it draws to a close. I believe that 2011 was our best year ever as a Firm and a better year for the bulk of our clients.

Our clients continue to challenge us by allowing us to handle a large volume of their very important and interesting matters. This year our lawyers were specifically challenged by some complicated and important wage and hour matters and difficult litigation assignments. In addition to the high volume of industrial labor work we performed in over twenty states, we were called on by our clients to perform a record number of immigration matters as well as affirmative action plan implementation and design. Our healthcare lawyers, among other things, closed a very important complex transactional matter for our largest healthcare client. It was very gratifying when our client expressed their appreciation for our efforts on their behalf in an unprecedented manner. In addition, in 2011, our employment, labor and employee benefits attorneys represented employers in a wide array of areas including: class actions; employee benefits; employment law; ERISA litigation; labor law; noncompetition agreement litigations; and OSHA and workplace safety. As I look over the list of our lawyers' accomplishments this year, I continue to be impressed by the quality of the legal talent in our Firm.

Those who know me know that, while the legal accomplishments of our lawyers are extremely important, it is truly the dedication and loyalty of our clients to our Firm that makes me the most proud. In addition to our fantastic long term clients who have been with us since 1998, this year we were able to attract some of the best and significant St. Louis businesses as TLP clients. This is truly a tribute to every member of our staff, from top to bottom. The most exciting aspect for me is the growth and development of our younger lawyers. 2011 was a phenomenal year for our lawyers with less than five years of experience, as each of them demonstrated remarkable growth at various times and in difficult ways during the year. We are all excited by the addition of Nate Harris last August and are equally thrilled that Julia Hodges will be joining our Firm this coming summer. I believe it is the nucleus of young hardworking professionals that will make our Firm even stronger next year and for years to come.

At the close of 2011, I could not be more excited to see what lies ahead in 2012. We are totally reengineering our technology with a completely new computer system, which we hope will be fully operational in the second quarter of 2012. All of our educational activities - Lowenbaum University, our annual seminars, E-Alerts, Lunch with Lowenbaum, and even these blogs - are getting a makeover and will be infused with even more energy in the coming year.

To all of our supporters, thank you for your continued support. We hope that your 2011 was as interesting as ours and that 2012 will be your best year ever.

Authored by R. Michael Lowenbaum ∙ December 26, 2011

COMMERCIAL DRIVERS - STAY OFF THE PHONE

Effective January 3, 2012, all commercial motor vehicle drivers are prohibited from using cell phones while driving, unless the call is to report an emergency situation to police or rescue workers. The only exception is that a driver can only use hands-free phones and headsets if the phone is in their reach while being restrained by a seat belt in the driver's seat and, dialing a hands-free phone while in motion is allowed only if it can be done by striking a single button. Read more about this new restriction here.

Authored by Karen Milner ∙ December 21, 2011

NLRB DROPS CASE AGAINST BOEING

Following the approval of a new labor contract with Boeing Boeing Co. Latest from The Business Journals Boeing workers push to deliver new DreamlinerNo Christmas break for some Boeing 787 workersTexas Business Journals Roundup 12-16 Follow this company by members of the International Association of Machinists and Aerospace Workers, the National Labor Relations Board dropped its unfair labor practice case against Boeing. As discussed in previous TLP blog posts (see below), the case stemmed from a complaint regarding Boeing's decision to build a 787 Dreamliner plant in South Carolina (a "right to work" state where workers cannot be forced to join or support a union). The NLRB had charged that Boeing decided to open the non-union plant in order to punish the union for past strikes that shut down the aircraft maker's production lines.

The NLRB's acting general counsel, Lafe Solomon, said the labor board had decided to end the case after the machinists' union - which originally filed the charge - had urged the Board on December 8 to withdraw it.

Click here to read Solomon's full announcement regarding the closure of the Boeing case.

Authored by Nathan Harris ∙ December 19, 2011

"OFF-THE-BOOKS" IS AS BAD AS IT SOUNDS...

Federal and state labor authorities are cracking down on companies who misclassify employees as independent contractors or pay workers "off-the-books." While the thought of reducing expenses by avoiding workers' compensation insurance, wage and hour obligations and unemployment taxes may seem appealing, employers are increasingly being caught and punished when the worker's classification does not match the operational realities of the relationship. In addition to cutting off the misclassified employee's access to employee benefits, protection and rights, misclassification carries serious penalties including fines up to $1,000 per day per misclassified worker, 6 months in jail per violation, and/or additional penalties for fraud, unemployment taxes and workers' compensation .

However, now is a good time to reevaluate the classification of your workers. Recently, the Internal Revenue Service (IRS) developed the Voluntary Classification Settlement Program (VCSP) to permit taxpayers to voluntarily reclassify workers as employees for federal employment tax purposes with limited federal employment tax liability for the past nonemployee treatment. For more information of the VCSP, click here.

Assuming you want to avoid worker misclassification while maximizing opportunities to legally contract with workers, The Lowenbaum Partnership recommends you contact your labor and employment attorney to help evaluate the standards applicable to your situation and properly classify employees and independent contractors.

For more information on worker classification compliance from the Missouri Department of Labor, click here.

To contact a labor and employment attorney at The Lowenbaum Partnership, click here.

Authored by Josh Gilson ∙ December 4, 2011

TIME ON THE iPHONE IS COMPENSABLE TIME

In the past few years, smart phones and PDAs have become increasingly mainstream. Thanks, in part, to the release of the iPhone and the host of competitors it spawned, what were once the high tech gadgets of executives and professionals are now equally accessible to employees of all levels and incomes. As a result, it is easier than ever for co-workers to communicate with each other outside of work. For example, an executive can easily send her administrative assistant a text message or e-mail late at night with an item to add to the next day's to-do list. Managers working towards a deadline can reach out to off-duty employees by sending a quick e-mail, to which they will likely receive a quick response. However, this increased efficiency and convenience does not come without a price. To the surprise of some employers, the time a non-exempt employee spends performing work functions (such as reading and replying to e-mails) is time for which the employee must be compensated under the Fair Labor Standards Act (FLSA). Accordingly, employers who allow non-exempt employees to use smart phones and/or access their work e-mail from their home computers may be unknowingly violating the overtime provisions of the FLSA.

Currently pending in the United States District Court for the Northern District of Illinois is an FLSA class action brought by Chicago police officers who allege they were required to monitor their PDAs "24/7" but were not compensated in accordance with the FLSA's overtime provisions. The Court has denied the City of Chicago's Motion to Dismiss, and while the resolution of this matter has yet to be determined, the City of Chicago will undoubtedly be engaged in lengthy and costly litigation for the foreseeable future.

Employers who wish to avoid finding themselves in a position similar to that of the Chicago Police Department should take a proactive approach by determining their organization's existing risk and formulating an appropriate policy going forward.

Authored by Whitney Cooney ∙ November 8, 2011

THE EROSION OF WORKERS' COMPENSATION AS THE "EXCLUSIVE REMEDY"

Missouri workers' compensation laws were initially drafted to be the exclusive remedy for employees injured on the job. Specifically, every employee who is injured or happens to fall ill due to his/her employment is entitled to benefits under the workers' compensation system, but he/she cannot sue the employer for damages in civil court. Two recent far-reaching Missouri Court of Appeals' decisions have drastically narrowed the scope of the workers' compensation exclusivity provision's bar against employee civil suits.

(1) Robinson v. Hooker, 323 S.W.3d 418 (Mo. App. W.D. 2010)

In August 2010, the Missouri Court of Appeals held that co-employees are no longer immune from liability in civil claims arising from workplace injuries. The case involved two employees who worked for the City of Kansas City. The plaintiff employee sustained an injury when the defendant co-employee lost her grip on a high pressure hose that struck the plaintiff and caused blindness in his right eye. The plaintiff filed suit against the co-employee after he settled his workers' compensation claim with the City. The Court of Appeals overturned years of Missouri precedent, holding that the plaintiff's claim was not barred by the exclusive remedy provision of the workers' compensation statute.

In light of the strict construction requirement of the 2005 amendments to Mo. Rev. Stat. s. 287.800, the Court of Appeals eroded the exclusivity provision of Mo. Rev. Stat. s. 287.120 and limited civil tort immunity to only employers, not co-employees. Therefore, injured employees now retain a common law right of actions against co-employees who do not fall within the definition of "employer."

The Robinson decision also appears to open the door to employee civil suits against supervisors for their negligence. Though the Robinson decision did not specifically hold that supervisors are no longer entitled to immunity under the exclusive remedy provision of the Act, Missouri courts have previously considered negligence of a supervisor/manager as being equivalent to co-employee negligence under the more liberal standard. Thus, we can presume that Robinson likewise negates the exclusivity bar with respect to supervisors and managers.

(2) State ex rel. KCP&L Greater Mo. Operations Co. v. Cook, --- S.W.3d --- (Mo. App. W.D. 2011)

In September 2011, the Missouri Court of Appeals held that the long-standing workers' compensation exclusivity provision no longer applies to occupational injuries. This case reaffirms the Missouri Court of Appeals' willingness to use the 2005 amendments to significantly alter years of well-settled precedent interpreting the workers' compensation laws.

The Cook case involved a personal injury claim filed by an employee against his employer, KCP&L, alleging that his exposure to asbestos while working for KCP&L caused him to develop mesothelioma. The Court of Appeals in Cook held that the plaintiff's claims were not subject to the Act's exclusivity provisions because they did not arise out of an "accident" as defined in Mo. Rev. Stat. s. 287.020.2 of the workers' compensation statute. Thus, although occupational diseases, such as mesothelioma, are not covered by the Act's exclusivity provision, they remain compensable injuries. Therefore, Cook now gives employees with occupational diseases two potential avenues to obtaining compensation - employees may recover under the workers' compensation laws or through a civil action in court.

These Appellate Court cases dramatically impact the Missouri workers' compensation system. It is expected that the cases will further impact and change the roles played by workers' compensation and civil courts in Missouri, opening the door to more avenues for employees to bypass the protections of the workers' compensation system. Missouri employers (and employees) who wish to protect their assets from potential liability arising from civil suits involving employee workplace injuries should check their general liability insurance policies to make certain they are covered.

Authored by Bob Stewart ∙ November 3, 2011

THE NLRB'S "END-RUN" OF EFCA

Over the last few years, Congress, unions, employers, and special interest groups have debated the merits and demerits of the Employer Free Choice Act (EFCA). While Congressional passage and enactment of the EFCA do not appear to be on the immediate horizon, this has not neutralized the Obama National Labor Relations Board (NLRB) or the Obama Department of Labor (DOL). To the contrary, the Obama NLRB and Obama DOL have been energized in utilizing their rule-making and decisional-making authorities to internally mandate alterations to the application of the National Labor Relations Act (NLRA).

These changes are designed to shift the balance in favor of unions, to the detriment of employees' rights to fairly determine whether they do or do not desire union representation, and simultaneously "silence" employers who seek to exercise their statutory free speech rights. A sampling of the Obama NLRB and Obama DOL initiatives are set forth below:

1. NLRB Rule-Making - Notification of Employee Rights Under the NLRA.

As detailed by our recent E-Alert, the NLRB has issued a final rule requiring private-sector employers, effective January 31, 2011, to post a notice advising employees of their rights under the NLRA. At least one (1) goal of the mandated posting is to generate additional union organizing.

The posting is available from the NLRB and outlines employee rights under the NLRA; provides examples of unlawful employer conduct; provides examples of unlawful union conduct; and, further, describes the manner in which an employee can vindicate his/her rights.

Failure by an employer to comply with the Notice Posting requirement may constitute an independent unfair labor practice charge. Non-compliance with the posting requirement may also constitute evidence of unlawful "motive" or "animus." Finally, non-compliance with the posting requirement may act to "toll" the running of the applicable six (6) month statute of limitations.

2. NLRB Rule-Making - Representation Proceedings - Case Procedures.

Not satisfied with enhancing employee knowledge of existing rights under the NLRA, the NLRB also issued a notice of proposed rulemaking to amend its rules and regulations governing the filing and processing of representation petitions. Our June 2011 E-Alert enumerates some of the changes, but impact of the rule is simple -- the current representation case procedures would be amended to eliminate pre-election litigation of critical unit determination issues; to expedite the election process; and to expedite employer presentation of and expand the content of the voter eligibility list. In short, the revised procedures would improve the prospect for unions prevailing in NLRB conducted elections.

3. DOL Rule-Making Authority - Limitation of the "Advice" Exemption.

The DOL enforces the Labor Management Report and Disclosure Act (LMRDA) passed by Congress in 1959. The LMRDA imposes financial reporting disclosure obligations on both unions and employers. The LMRDA contains an "advice" exemption which, until recently, has created a significant "carve out" to the reporting requirements. Per the DOL's "reinterpretation" of the advice exemption, however, the obligation of both employers and those attorneys who represent employers in labor-related matters to report their financial affairs would be greatly enhanced. Many observers have characterized this "reinterpretation" as an attempt to silence employers in union election campaigns.

4. Recent NLRB Decisions.

Recent decisions of the NLRB have also sought to enhance union organizing and simultaneously quell the ability of employees to fully exercise their ability to determine whether they wish to be represented by a union. For instance, in Specialty Healthcare and Rehabilitation Center, 357 NLRB No. 83 (08/26/11), the NLRB overruled twenty (20) years of precedent and concluded that, so long as a petitioned-for unit contains employees "readily identified as a group who have a community of interest," the employer challenging the exclusion of additional employees must present evidence of an "overwhelming" community of interest between the included and excluded employees. The Board's decision provided little, if any, guidance on what constitutes evidence of an "overwhelming" community of interest; will encourage the proliferation of units in a single employment setting; and will grant unions precisely what the NLRA prohibits: the ability to organize based on the "extent of organization."

Similarly, in Lamons Gasket Co., 357 NLRB No. 72 (08/26/11), the NLRB overruled the NLRB's 2007 decision in Dana Corp. In so doing, the NLRB concluded that a "card check" agreement between an employer and a union was binding on employees and eliminates the ability of employees to challenge, via a secret ballot election, whether they want union representation.

In sum, as the above illustrates, the Obama NLRB and Obama DOL, even without passage of the EFCA, have utilized their rule-making and decisional authority to improve the prospect of successful union organizing. Only time will tell whether employers will develop strategies to counter these actions.

Authored by Dan Begian ∙ October 6, 2011

THIS CALL MAY BE MONITORED OR RECORDED -- SO YOU DON'T SUE US

We've all had the experience of calling a company's customer service number, only to be greeted by the somber admonition that "this call may be monitored or recorded for quality assurance or training purposes." Or something to that effect.

While it may feel like customer service is playing Big Brother, such notices actually serve a crucial function in preventing lawsuits by customers based on a web of federal and state communication privacy laws. To make matters worse, these laws often provide for harsh civil, and even criminal, penalties for violators.

At the federal level, the Electronic Communications Privacy Act ("ECPA") prohibits the intentional interception and disclosure of wire, oral and electronic communications, including telephone calls. Practically speaking, it's relatively easy to comply with the ECPA because it contains a "one-party consent" exception. So long as one party to the conversation consents to its recording or monitoring, there is no violation of the ECPA, even if the other party does not realize that the monitoring or recording is taking place. In most cases of telephone conversation recording, the person doing the recording knows that it is taking place, and implicitly consents. However, employers should be careful when monitoring or recording employee phone calls, because employees might not realize they are being monitored or recorded, or may not consent to it. Accordingly, in telephone-intensive industries, we recommend that employers obtain the consent of their employees to the recording or monitoring of their phone calls. This can be done by stating the recording policy in the employee handbook and having the employee sign a written acknowledgement of having received it.

At the state level, compliance gets a lot trickier. Most states have enacted their own laws governing telephone recording, and many states impose penalties that include imprisonment for up to ten years and fines of up to $20,000 per violation. Many states' laws are modeled after the ECPA, and only require the consent of one party to a conversation. However, some states require all parties to a conversation to consent to its recording or monitoring.

To make matters even worse, it's not always clear which state's laws will apply to a particular telephone call - the state where the call originated, the state where the call was answered, or other states through which the call passed. As a result, we recommend compliance with the most restrictive type of recording laws - all party consent - for interstate telephone calls.

In order to comply with these laws, some companies have decided to use pre-recorded notices, played at the very beginning of the call, to let all parties know that the call may be monitored or recorded. If the party on the other end continues the conversation in the face of this notice, the recording or monitoring party can make a strong argument that the other party implicitly consented to the monitoring or recording. Whether the recording disclosure is pre-recorded or not, make sure that it is included in any recording of the call as proof that it was given. Also note that, when calling third party cellular phones, other federal laws may prohibit the use of a pre-recorded message. In such cases, the speaker should disclose the recording or monitoring at the outset of the call.

While there is no requirement that a company disclose why it is recording the call, references to quality assurance or training may help to dampen a customer's uneasy feeling about why the conversation is being recorded or monitored. Such statements are acceptable, so long as they are not misleading as to the true reason for the recording.

That said, there are a variety of other reasons why a company might decide to create a record of an employee's calls to a third parties, such as to defend against possible litigation based on what the employee says, or to create a record of what a customer agreed to.

Regardless of the reason for the recording, however, companies should be careful not to buy themselves a lawsuit by running afoul of federal and state communications privacy laws. To stay on the right side of the law, ensure that employees and outsiders are told of any telephone call recording or monitoring right away, and obtain their consent to it, either in writing (for employees) or by implication (for third parties).

Authored by Matt Aplington ∙ September 28, 2011

"UGLY? YOU MAY HAVE A CASE"

We've all heard about these studies -- that there are latent and insidious prejudices against the "ugly" -- that "attractive" people enjoy all kinds of benefits ranging from better treatment by retailers, better rates by lending institutions, better likability among children, and...better chances at professional success including opportunities for employment and promotion.

A recent New York Times article posits an interesting question: "why not offer legal protections to the ugly, as we do with racial, ethnic and religious minorities, women and handicapped individuals?"

Indeed, the article suggests that some jurisdictions already do prohibit discrimination on the basis of looks, and that the Americans with Disabilities Act could easily be extended to do the same. On the other hand, with increasingly-limited government resources and already-backlogged EEOC and affiliated state offices, expanding rights to yet another class of individuals - the "ugly" - could be considerably burdensome.

What do you think? Is this idea "attractive" to you?

Authored by Toby Asel ∙ September 7, 2011

CAN EMPLOYERS BE LIABLE FOR DISCRIMINATION FOR REQUESTING JOB APPLICATIONS ONLY FROM INDIVIDUALS WHO ARE CURRENTLY EMPLOYED?

Currently, no. Yesterday, the Today show on NBC aired a segment (watch it here) about employers whose job postings request applications only from individuals who are "currently employed." Anti-discrimination laws currently prohibit employers from discriminating against job applicants on the basis of the applicant's race, age, gender, etc., but "unemployment status" is not a protected characteristic under the law. However, this could change. There is a movement in Congress to amend Title VII to include "status as unemployed" as a protected characteristic. Last month, Reps. Rosa DeLauro (D-CT) and Henry Johnson (D-GA) introduced a bill called the Fair Employment Opportunity Act of 2011 (H.R. 2501) which would prevent employers and employment agencies from refusing to consider or offer a job to an unemployed individual, prohibit the publication in any medium of an advertisement or job announcement for a job that includes language indicating the unemployed need not apply, and entitle those discriminated against to bring a civil action against the employer or employment agency for actual, compensatory and punitive damages. "Status as unemployed" is defined broadly as "an individual's present or past unemployment regardless of the length of time such individual was unemployed." Sen. Richard Blumenthal (D-CT) recently introduced a companion bill (S.1471) in the Senate as well. Stay tuned...

Authored by Toby Asel ∙ August 19, 2011

EMPLOYEE BENEFIT SERVICE PROVIDER CONTRACTS

You are awash in a sea of HR "relationships" that you must manage - third party administrators for health, dental, vision and flexible spending account plans, health plan network providers, employee assistance providers, employee benefit and human resource consultants, actuaries, underwriters, accountants, employee leasing agencies, insurance brokers and HIPAA Business Associates. As our needs become more specialized, the list grows and, each brings a service contract - or at least it should.

Over the years, many of our clients have asked us to review service contracts and, unfortunately, many have not, to their loss. Let's offer some quick thoughts to guide you through this troubled sea...

First, have a contract. How can you identify, much less measure, performance without a clear statement of "the what's, how's, when's and how much" of the relationship. Too often we have been asked to help with a dispute or failure of performance only to learn that no contract exists. How do you hold a provider accountable when no standard exists?

Second, ask for service guarantees and indemnities for error/mistake/malfeasance. Top tier service providers operate under a simple mantra - "If we break it or we mess it up, we pay for it." Beware of those who will not provide indemnity for their errors.

Third, provide for recovery of attorneys fees to enforce agreements. You might think "this is dangerous because it cuts both ways." But, think of how you might be sued, as opposed to the service provider? Your likely exposure is nonpayment of fees; but, what is the risk of that? The party likely to have a problem is the service provider, not you.

Finally, fee disputes. Service contracts provide for a fee and serious interest for delinquencies. But, what if a genuine dispute exists? The answer too often is "pay and then..." Better answer - provide a mechanism by which you must timely pay "undisputed amounts," but do not pay fees subject to a bona fide dispute until the dispute is solved.

This is not a complete list but provides some simple help for approaching your service agreements.

Authored by Stan Schroeder ∙ August 19, 2011

EMPLOYEE PERFORMANCE REVIEWS -- BEAUTY OR BEAST?

Obviously, the best evidence in any sort of employment litigation is that which you create yourself, and the employee performance review falls precisely within that category. When defending employment litigation, a series of reviews candidly outlining the person's deficiencies and identifying the necessary corrective action can be extremely influential in convincing a jury of the objective, fact-based basis of a Company's employment decision. Conversely, the review that rates a poor performer as "outstanding" or "meets requirements" can be a stab in the corporate heart if you have terminated the person, litigation ensues and the reviews are put before a jury.

Two examples I have encountered illustrate the point. In one, an engineer, non-degreed, had failed to stay abreast of new technologies and methodologies. Over several years the Company on the review identified the shortcomings, told the person where to get the necessary training and advised what would happen if the skills were not developed -- all leading to dynamic evidence before the jury in subsequent litigation. Compare that with the executive fired for "poor performance" but when I looked at the performance reviews over the prior several years, they were "outstanding," and just before the termination the person received a "merit" increase! You can imagine what those did to a defense -- all because the reviewer did not confront the employee in a candid and straightforward manner.

How can you prevent such a calamity? While there are no guarantees, several things can help. One -- make sure that the quality of reviews is an item on which each reviewer is evaluated so the person knows that producing frank, accurate and candid reviews are a part of his or her job. Secondly -- have every review evaluated by the reviewer's reviewer before the document is presented to the reviewed employee to help ensure accuracy. Third -- before any disciplinary action is approved, conduct an internal evaluation of these documents to ensure they are supportive of, and not inconsistent with, the personnel action you contemplate.

These simple steps can be invaluable. What you need is a series of documents which will clearly support the Company's position and not internal documents wholly inconsistent with it.

Authored by D. Michael Linihan ∙ August 2, 2011

EMPLOYMENT NEWS IN THE UNITED KINGDOM

As the phone hacking scandal in England intensified over the past few weeks, insiders began to reveal the salacious details about working for Rebekah Brooks at some of England's top tabloids. Brooks resigned as chief executive of News International, publisher of The Sun and News of the World, just days before being arrested and questioned by police. One former employee said that, under Brooks, The Sun's newsroom was marked by "ruthlessness and misogyny," that the most successful reporters were those willing to subject themselves and others to the most ridicule, and that employees were commonly expected to participate in overnight stakeouts and other covert operations to get their stories. Women were viewed derogatorily and referred to as "tarts," "slappers," or "hookers" - not an altogether surprising fact in light of The Sun's notoriously topless "page 3 models." News of the World, for its part, employed Mazhar Mahmood, the famous Middle Eastern "Fake Sheik" who tricked dozens of prominent figures into embarrassing indiscretions - on a hidden videotape for the world to see, of course. Brooks was editor of the paper in 2001, moreover, when a correspondent began wearing a Harry Potter costume to work and even officially changed his name to Harry Potter - and when he was chewed out for not wearing his costume on September 12th, a day after airplanes crashed into the twin towers in New York City. In sum, Brooks is in the running for the Bad Boss Of The Year Award.

A Scotland-based law firm has launched a free iPhone application, called "HR Adviser," giving employers quick access to useful information about U.K. employment law. The app includes information about unfair dismissal, redundancy, maternity and paternity leave, equal pay and discrimination, and it provides access to various government links such as the Equal Opportunities Commission. HR Adviser automatically updates current statutory rates such as the minimum wage, and it has interactive capabilities including an unfair dismissal compensation calculator and an interactive redundancy calculator. For example, to calculate the estimated statutory redundancy payment, the user can input the employee's age, length of service, and salary. A brilliant idea - iWant One!

Authored by Toby Asel ∙ July 28, 2011

EIGHTH CIRCUIT KEEPS SUMMARY JUDGMENT STANDARD IN EMPLOYMENT DISCRIMINATION CASES ON EQUAL FOOTING WITH OTHER CASES

In Diehl v. O'Malley, 95 S.W.3d 82 (Mo. 2003), the Missouri Supreme Court overruled a line of cases which held jury trials were not available under the Missouri Human Rights Act ("MHRA"). The Missouri Supreme Court specifically held MHRA cases were constitutionally triable by jury since money damages were sought. Following the Diehl decision, plaintiffs have flocked to Missouri state courts to file their employment discrimination claims as the jury pool is generally viewed as more employee friendly in most Circuit Courts.

Since the Diehl decision, Missouri courts have created various distinctions between Missouri employment discrimination law and federal employment discrimination law. Most of the time, the distinctions are made in favor of the employee. For instance, Missouri state courts are more hostile to employers' summary judgment motions than federal courts. In Daugherty v. City of Maryland Heights, 231 S.W.3d 814 (Mo. 2007), the Missouri Supreme Court specifically stated "summary judgment should seldom be used in employment discrimination cases, because such cases are inherently fact-based and often depend on inferences rather than on direct evidence." This holding by the Missouri Supreme Court has placed a higher standard upon employers filing summary judgment in employment discrimination cases than other types of cases before the Missouri courts.

Generally speaking, the odds of an employer obtaining summary judgment in an employment discrimination case have been greater in federal courts. Recently, in Torgerson et al. v. City of Rochester, Case No. 09-1131 (8th Cir. June 1, 2011), the Eighth Circuit kept the summary judgment standard in employment discrimination cases on equal footing with all other types of cases. In Torgerson, the plaintiff argued summary judgment in employment discrimination should "seldom" or "sparingly" be granted, not be granted in "very close" cases, or should be granted only after being "particularly differential" to the non-movant. The Eighth Circuit rejected plaintiffs' argument and held "[t]here is no 'discrimination case exception' to the application of summary judgment, which is a useful pretrial tool to determine whether any case, including one alleging discrimination merits a trial." In doing so, the Eighth Circuit noted that the United States Supreme Court has reiterated that District Courts should not "treat discrimination differently from other ultimate questions of fact." With its holding in Torgerson, the Eighth Circuit has clearly reaffirmed that summary judgment motions in employment discrimination cases must not be treated differently than summary judgment motions in all other cases. Accordingly, if your Company is sued for employment discrimination in federal court, you can be assured that any potential summary judgment motion will be treated no differently than summary judgment motions in other types of cases, i.e. your Company will not be discriminated against based on the type of litigation brought against you.

Authored by Chris Sanders ∙ July 22, 2011

ARE YOU SURE YOU KNOW WHO WILL RECEIVE YOUR LIFE INSURANCE BENEFITS?

Your soon to be ex-husband has just waived his rights to your employer-provided life insurance benefits by signing a waiver in a divorce settlement agreement. Will your life insurance benefits be paid out correctly if you should die without doing anything else? No. A 2011 U.S. Court of Appeals case, Boyd v. Met Life Insurance Company, No. 10-1702 (4th Cir. 2011) proves that you need to be certain that you also change the beneficiary form with the Plan Administrator to remove your ex-husband as your life insurance beneficiary.

Emma Boyd, who was married to Robert Alsager, worked for Delta Airlines and participated in the Delta Airlines' ERISA qualified life insurance plan administered by Metropolitan Life Insurance Company ("Met Life"). Alsager was designated as Emma's primary life insurance beneficiary and Mary Boyd, Emma's mother, was the contingent beneficiary. In April 2008, a South Carolina court approved Emma and Robert's divorce and property settlement agreement. Emma and Robert agreed to waive any rights to the other's rights, including specific rights to any life insurance benefits. However, Ms. Boyd did not notify the insurance company to remove Alsager as her beneficiary. In November, 2008, Emma died. Mary Boyd filed a claim with Met Life for Emma's life insurance benefits because Robert had waived the insurance benefits in the divorce settlement agreement. However, Robert also filed a claim with Met Life for Emma's life insurance benefits. Based on the plan documents, Met Life decided Robert was entitled to Emma's life insurance benefits and paid him the benefits.

Mary Boyd and Emma's son, W.P. Boyd, filed suit claiming they were eligible for the insurance benefits because Alsager had relinquished his rights to receive the benefits in the divorce settlement agreement.

The U.S. District Court dismissed the Boyds' suit ruling that Met Life had a statutory duty under ERISA to pay Alsager the benefits because he was the designated beneficiary in the documents Emma had filed with the plan, specifically the beneficiary form.

On appeal, the 4th Circuit upheld the District Court's decision relying on the U.S. Supreme Court's decision in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 129 S. Ct. 865 (2009).

Based on Kennedy, the 4th Circuit applied ERISA's "plan document rule" that a plan administrator must look solely at the directives of the plan documents in paying out plan benefits. As in the Supreme Court case in Kennedy, in Boyd, the plan documents listed Robert Alsager as the prime beneficiary of the life insurance because Emma Boyd never changed the beneficiary after Alsager had waived his rights in the divorce agreement.

The 4th Circuit held that, under ERISA, Congress identified the need for plan administrators to follow plan documents as a core principle. Nothing in Kennedy authorized a plan administrator to disregard a clear beneficiary designation form where the beneficiary made no effort to disclaim her rights to the plan benefits.

The plan documents, not the divorce decree, are controlling for plan administrators to use in deciding how to distribute ERISA plan benefits despite the existence of a divorce settlement agreement. After a divorce settlement, make sure you contact the Plan Administrator to change any beneficiaries to be sure that benefits go to the intended beneficiaries.

Authored by Jim McNichols ∙ July 7, 2011

EMPLOYERS BEWARE: IS AN NLRB ELECTION WITHIN 10 DAYS OF THE FILING OF A PETITION IN YOUR FUTURE?

Today The Lowenbaum Partnership, L.L.C. issued an E-Alert summarizing proposed rules recently published by the NLRB which, as Member Hayes wrote in his dissent, would serve to "minimize, or rather, to effectively eviscerate an employer's legitimate opportunity to express its views about collective bargaining." We urge employers to read the E-Alert here and to weigh in with the NLRB.

Authored by Toby Asel on behalf of The Lowenbaum Partnership, L.L.C. ∙ June 28, 2011

HAVE YOU CHECKED YOUR "EVERGREENS" LATELY?

It's already June and now is as good of time as any to review your key vendor, supplier and customer contracts to determine if the duration or term of the contract will automatically renew at the end of the year (or the applicable contract year). All too often we get a phone call from a client that wants to terminate a contractual relationship only to discover that the contract has automatically renewed (or will automatically renew in the near future), and the client has failed to give the proper notice of its intent not to renew. Absent a breach by the other party to the contract, there may be no ability to terminate the contract prior to the expiration of the renewal term. This may be especially troublesome if the contract renewed for an extended term and the pricing or other terms of the contract are no longer favorable or acceptable.

What to do:

1. Confirm if the contract has an automatic renewal provision, and if so, determine how much notice is required to terminate the contract at the end of its then current term. For example, some contracts may require 30 or fewer days notice, but it is common for real estate leases to require at least 180 days notice of non-renewal. Given the current real estate market, having the ability to terminate a lease may provide valuable leverage when negotiating rental rates or other lease concessions.

2. Carefully review the "Notice" provision of the contract to determine how the notice of non-renewal must be provided. Typically this notice must be given in writing and delivered by overnight mail, facsimile or certified mail to the person or address identified in the "Notice" provision. Verbally informing a vendor/supplier contact or property manager will likely not satisfy the termination notice requirements.

3. Once you have identified your evergreen contracts, make a list and mark your calendar well in advance of the required notice period.

Remember, always check the "Evergreens."

Authored by Tim Gorman ∙ June 21, 2011

AN EXPENSIVE REMINDER ABOUT THE IMPORTANCE OF EMPLOYEE HANDBOOKS AND SEXUAL HARASSMENT TRAINING

A Jackson County Circuit Court recently affirmed a jury award of $420,000 in damages and approved another $193,853 in attorney's fees and court costs in a sexual harassment case against the Missouri Department of Mental Health ("the Department"). In Brenda Kisner v. Missouri Department of Mental Health, the plaintiff alleged that her immediate supervisor commented that the plaintiff was probably not naive about sex, inquired into her sex life, talked about the lack of sex in his own life, commented on the plaintiff's buttocks and, in one instance, forcibly grabbed the plaintiff by her hair and pulling her toward him. The plaintiff complained to Human Resources on May 1, 2008. The offending supervisor was informed of the complaint a week later but was not placed on leave and continued to work with the plaintiff until another report was made on May 22nd and it was confirmed that he had sexually harassed two other women in addition to the plaintiff. The Department then placed the supervisor on two weeks' paid leave to be followed by termination, but the supervisor resigned in the meantime. The plaintiff subsequently resigned as well, upon finally learning the result of the investigation after numerous inquiries. The plaintiff refuted the Department's contention that she had failed to utilize its administrative remedies for workplace complaints because she had never received a handbook or otherwise been trained in how to do so. Likewise, the supervisor had never received a handbook, and a training video purportedly shown by the Department dated back to 1992. The supervisor was dismissed as a party to the suit before trial.

Authored by Toby Asel ∙ June 16, 2011

THE NLRB - FACEBOOK FRIEND TO ORGANIZED LABOR

For the second time this year, the National Labor Relations Board has issued a complaint regarding alleged violations of the National Labor Relations Act arising from employee social media activity. In a complaint issued against a Chicago-area BMW dealership, the NLRB alleged the dealership unlawfully terminated a salesman for posting photos and commentary on his Facebook page that disparaged his employer. In particular, the salesman's Facebook postings complained that the dealership's purportedly sub-standard promotional efforts would result in diminished commissions for the dealership's sales staff. Since the salesman was "Facebook friends" with several other members of the dealership's sales staff, meaning the salesman's co-workers had access to his comments, the NLRB determined that the postings constituted protected concerted activity within the meaning of Section 7 of the Act; namely, a discussion among employees about the terms and conditions of their employment.

This most recent complaint exemplifies the Board's assessment of social media's impact on protected concerted activity. Employers would be well advised to consider employee social media postings as the equivalent to group discussions when assessing the content of such postings and whether a disciplinary response is warranted. Employers considering the termination and/or discipline of an employee who addresses his or her wages, hours or working conditions on a social media site should assume such actions by the employee implicate protected activity under the National Labor Relations Act.

Read more about it here.

Authored by Corey Franklin ∙ May 25, 2011

MORE ON THE BOEING COMPANY AND THE MIGRATION FROM UNION-SHOP TO RIGHT-TO-WORK STATES

The Wall Street Journal ran a great article last Friday on the heels of the NLRB's complaint to move production of Boeing's 787 Dreamliner from a new assembly plant in South Carolina (a "right to work" state where workers cannot be required to a union) back to its plant in Washington, a union-shop state. The article discusses the flight of companies to right-to-work states and touts that "right-to-work" states have grown faster over the past decade than their union-shop counterparts in nearly every respect (gross state product, personal income, population and payrolls). The authors pose an interesting question: "If forced unionism is better for the economy of a state, why would the NLRB need to intervene to keep Boeing from leaving Washington?" You can read this informative article here.

Authored by Toby Asel ∙ May 18, 2011

CONSTRUCTION COMPANIES' PARTICULAR VULNERABILITY TO IMMIGRATION COMPLIANCE LAWS

Attorneys Susan Cho Figenshau and Diane Metzger authored an article, "Staying off thin ICE," in last month's edition of Construction Today magazine. Ms. Cho Figenshau and Ms. Metzger discuss the U.S. Immigration and Custom Enforcement ("ICE") bureau's Strategic Plan of June 2010, and specifically its implications for construction companies. As ICE ramps up its enforcement measures, it puts the onus on employers (vis-a-vis audits) to prove the employment authorization of its work force, instead of targeting individual undocumented workers (vis-a-vis raids). The attorneys point out that an audit can entirely exhaust a company's operational resources for days or even weeks while the required documentation is gathered and organized - there is thus no better time than now for employers to "establish and review immigration compliance as a core component of strategic planning and management." Cho Figenshau and Metzger also provide helpful tips on how employers can avoid liability due to a subcontractor's failure to comply with immigration compliance law.

You can access the full article here.

Authored by Toby Asel on behalf of The Lowenbaum Partnership, L.L.C. ∙ May 10, 2011

TELLING THE TRUTH AND GOOD BUSINESS SENSE CAN GET EMPLOYERS IN TROUBLE

Imagine your Company was embarking on a promising new product line that already had advance orders and high demand. This is a good problem to have! Your company has two plants it can choose from to build its new product. The first has good workers who regularly come to work, produce good products and have never once caused any disruptions to your operations. The second plant also has good workers who produce good products but have repeatedly caused significant delays and disruptions in your operations by walking off the job because they didn't get what they wanted. Your customers have told you that if the new products aren't delivered on time they won't pay. Which plant would you select to build this new product?

Most employers would pick the first plant that has proven to be more reliable than the second one with the multiple disruptions. The Boeing Company did just that when deciding where to have its Dreamliner planes built. The problem for Boeing is that the National Labor Relations Board is suing the Company over its decision based on charges filed by the International Association of Machinists. The National Labor Relations Act protects the right of employees (whether unionized or not) to strike and Boeing officials stated in press interviews that its decision was based on the fact it couldn't risk a strike every three years. Specifically, they were quoted as saying, "The overriding factor (in transferring the line) was not the business climate. And it was not the wages we're paying today. It was that we cannot afford to have a work stoppage, you know, every three years."

The Boeing official was being honest and the logic makes sense. When given a choice between a facility that has never shut down and one that has repeatedly, the choice seems clear. In this case, however, the NLRB has taken the position that the company's honesty and decision violated the law as forms of retaliation against employees that exercised their federally protected right to strike.

To read the NLRB's summary click here.

Authored by J.P. Hasman ∙ May 7, 2011

SOCIAL MEDIA IN EMPLOYMENT

Social media and employment decisions are moving to the forefront in internal investigations. In late 2010, the Supreme Court decided City of Ontario, CA v. Quon. That case arose out of an internal audit of the use of cell phones paid by the local community. Employees were disciplined for the excessive use of the phones, which after investigation were shown to be used during working hours excessively for personal reasons, including inappropriate sexual exchanges. The employees argued unsuccessfully that the search of their cell phone records violated the 4th Amendment protection against unreasonable search and seizure. Missouri has its first case, Manasco et al. v. Bd. of Police Commissioners et al., which arose out the St. Louis police department's internal investigation because employees used their cells to transmit crime scene photos. U.S. District Judge Nanette Laughrey, citing Quon, determined that the City's requirement for employees to give up their phones in the internal investigation was a proper search because it was limited in duration and in scope of content sought. While Quon and the St. Louis case relate to public employees who have 4th amendment protections, it is now clear that employers can order employees to give up their cell phones when the matter under investigation relates to concerns of the employer's work place and which is reasonable in time and scope. Employers have a newly protected investigative tool when used carefully.

Authored by Ivan Schraeder ∙ April 20, 2011

CORPORATE CHANGES MAY RAISE IMMIGRATION ISSUES

With the US government - particularly the Department of Homeland Security and the Department of Labor - deploying increased administrative tools, such as audits, site visits, and sanctions, Employers should heighten immigration compliance efforts.

Immigration compliance initiatives are particularly necessary during corporate structural changes. Due Diligence relative to acquisitions, mergers, IPOs, spin-offs, corporate name changes and the like often trigger immigration issues.

The greatest risk of noncompliance is among Employers who believe they have no risk, these being primarily Employers who believe they employ no foreign nationals. One of the immigration lawyer's most common emergencies arises when an HR Director learns one of the employees of a recently-acquired company is actually a foreign national whose employment eligibility had expired at the time the recently-acquired company was dissolved.

The nature of corporate change determines immigration consequences. Acquisitions involve the purchase of assets or stock. In an asset acquisition, the purchaser may not accept the liabilities of the seller. Mergers involve two or more legal entities combining assets in what is called the "surviving entity." The former separate entities, which are called the "merged entities," cease to exist, and the surviving entity assumes all liabilities. Consolidations involve two or more legal entities combining assets to form a new entity. The new entity assumes liabilities of the predecessor entities, which cease to exist. An IPO changes the ownership structure of a corporation, similar to an acquisition. A spin-off involves the creation of a new company from a divestiture of shares or assets of an existing company. The nature of the change drives immigration-related needs, if any. No single immigration compliance plan works for all situations.

To ensure compliance, Employers are wise to review the I-9 compliance of the company that is the subject of the Due Diligence. For I-9 forms and e-Verify filings, management must consider whether the documentation of the post-transaction entities will survive and, if so, whether the convenience of relying on such documentation outweighs the risk of assuming liabilities associated with the old employer's prior filings. Due Diligence will cover the visa history of employees potentially affected by the change.

The review should also consider the nature of the corporate change, timing issues, cost, whether an acquired entity will continue to exist, etc.

In addition, the review should analyze whether the company relies on some of its employees to make regular international business trips. While US companies have long enjoyed the luxury of hosting international business travelers, and its employees in turn being welcome to depart and re-enter the USA, customs/immigration officials in the USA and other countries are increasing border security. This triggers the need to set the immigration framework for international business travel.

As always, proper Due Diligence and planning is an essential part of business strategy and growth. It also protects against liability and troubleshoots against emergencies.

Please do not hesitate to contact me (314-746-4831) or Diane Metzger (314-746-3718) for assistance with any immigration-related concerns that may arise at your organization.

Authored by Susan Cho Figenshau ∙ April 14, 2011

PRE-EMPTIVE STRIKE THEORY OF EMPLOYER LIABILITY UNDER THE NLRA

The NLRB recently handed down an "unprecedented" decision in which it held that an employer violated Section 8(a)(1) of the Act by terminating an employee in order to prevent the employee from engaging in protected activity. In Parexel International, LLC, 356 NLRB No. 82 (Jan. 28, 2011), a nurse suspected that a South African supervisor was giving preferential treatment to South African employees. The nurse asked a recently-hired South African employee whether she and her husband had received raises to entice them to come back to work. The South African employee responded erroneously that they had. A few days later, the nurse voiced concern to her immediate supervisor that the South African supervisor who she thought was responsible for approving the supposed raise was favoring South African employees. The nurse told her supervisor that the whole unit should quit and come back with a raise. A human resources representative and a manager subsequently questioned the nurse as to her conversation with the South African employee and as to whether or not she had discussed the matter with anyone else (she said she had not). She was terminated about a week later.

The Board majority (Chairman Lieb and Member Becker) agreed that neither the nurse's conversation with the South African employee nor the conversation with her supervisor constituted "concerted activity" under the Act. There was no evidence that she had engaged in the conversations on behalf of fellow employees or to induce group action. Nonetheless, the Board found that the employer terminated the nurse for fear that she would, in the future, engage in concerted activity by discussing with other employees her concerns about management's favoritism toward South Africans. The Board characterized the termination as "a preemptive strike to prevent [the nurse] from engaging in activity protected by the Act," and stated that "if an employer acts to prevent concerted protected activity-to 'nip it in the bud'-that action interferes with and restrains the exercise of section 7 rights and is unlawful without more."

The Board's ruling suggests that it will find a violation even where no protected activity exists, if the termination decision is aimed at preventing a future violation. We urge employers to consult counsel before implementing termination decisions.

Authored by Toby Asel ∙ April 14, 2011

GOOD TIME FOR A RESTRICTIVE COVENANT CHECK UP

It was announced yesterday by ADP Employer Services that U.S. companies added 201,000 jobs in March (the government's monthly jobs report is due out on April 1). As you contemplate adding employees to your work force, it is a good time to review all your employment hiring practices. In particular, it is a good time to assess whether your employees should be signing restrictive covenant agreements.

To protect the employers interests, it may be appropriate for employees to sign noncompetition agreements, nonsolicitation agreements and/or confidentiality agreements. Experience has shown that it is much easier to get these types of agreements executed at the beginning of an employment relationship than later down the road.

Each of these types of agreements serves a unique purpose. Noncompetition agreements typically restrict the ability of employees (during employment and for a set time after employment) to own or be employed by a business that competes with the employer (the scope and duration of these restrictions should be carefully drafted). Nonsolicitation agreements typically restrict the ability of an employee to solicit customers and near term prospects after the employee leaves employment (the ability to solicit other employees to leave employment may also be restricted). A confidentiality agreement prevents employees from disclosing employer information that is confidential, proprietary or a trade secret.

Laws governing these types of agreements vary from state to state and, to be enforceable, an employer must be vigilant (enforce agreements uniformly, treat information you want to protect as confidential, etc.). However, as employers bring on new employees, these types of agreements should be utilized to protect the employer's interests.

Authored by Tim Elliott ∙ March 31, 2011

NON-UNION EMPLOYEES CAN STRIKE, TOO!

A recent ruling by the NLRB provided a reminder that non-union employees also have the right to engage in strikes and work stoppages.

In Atlantic Scaffolding Company, 356 NLRB No. 13, the NLRB ruled that employees were protected by the National Labor Relations Act when they walked off the job in protest of the Employer's decision to make an upcoming raise into an incentive bonus based on performance and safety. The Employer was prohibited by law from terminating them for job abandonment or interfering with the Employer's property right.

While employers with collective bargaining relationships know all too well that their union-represented employees have the right to strike, it should not be forgotten by employers without unions that their employees have a federally protected right to strike as well.

Authored by J.P. Hasman ∙ March 24, 2011

EMPLOYERS BEWARE THE BROAD REACH OF THE CAT'S PAW

Recently, the U.S. Supreme Court, in its 8-0 decision in Staub v. Proctor Hospital, recognized the cat's paw theory of liability giving employees a new avenue to prove discrimination. The theory's name is derived from a 1679 fable penned by French poet Jean de la Fontaine. In The Monkey and the Cat, a monkey persuades an unsuspecting cat to extract some chestnuts from a fire. As the cat scoops the chestnuts from the fire one by one, burning his paw in the process, the monkey eagerly gobbles them up, leaving the cat with nothing but a burnt paw.

So, what does this fable have to do with employment law? After the Court's decision, the answer is: a lot. Under the so-called cat's paw theory of liability, an employee may establish unlawful employment discrimination when a biased non-decisionmaker (a "supervisor") persuades an unbiased "decisionmaker" into taking an adverse employment action that the latter would not otherwise have taken. Although the cat's paw theory has been recognized by the lower courts in various forms (and with a wide array of standards of proof), the Court has finally weighed in. And, in doing so, the Court rejected the Seventh Circuit's more limited form of liability requiring that the biased supervisor must have "singular influence" over the ultimate decisionmaker for an employer to be liable. Instead, the Court extended the reach of the cat's paw, holding that if a supervisor performs an act motivated by discriminatory animus that is intended by the supervisor to cause an adverse employment action, and that act is a proximate cause of the ultimate employment action, then the employer is liable. This is so because, as explained by the Court, "[s]ince a supervisor is an agent of the employer, when he causes an adverse employment action the employer causes it; and when discrimination is a motivating factor in his doing so, it is a 'motivating factor in the employer's action.'"

In light of the Court's opinion, employers must take heed. Employers should train all employees, and particularly supervisors, on the scope of its antidiscrimination policies to ensure that each employee knows what is prohibited. Likewise, employers should establish clear procedures for reporting and investigating complaints of discrimination. Finally, employers must apply all rules consistently. According to the Court, an employer must be able to show that its decision was "entirely justified." An employer's ability to demonstrate consistent and fair application of its rules should not only be able to refute a traditional disparate treatment claim but also one premised upon a cat's paw theory of liability.

Authored by David Frenzia ∙ March 15, 2011

Thanks to everyone who attended our Open House last night, and to Kim Tucci and The Pasta House Co. for the fabulous food! We enjoyed sharing our newly renovated office space and seeing all of you!

Authored by Toby Asel on behalf of The Lowenbaum Partnership, L.L.C. ∙ March 10, 2011