March 2011 Archives

3d Cir. Affirms D. Del.: Delaware's Prevailing-Wage Law Is Unlawful

Posted by Sheldon N. SandlerOn March 24, 2011In: Cases of Note, Delaware Specific

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The Third Circuit has upheld a ruling in April 2010 by Judge Sue L. Robinson of the U.S. District Court for the District of Delaware that the state’s failure to recognize out-of-state registered apprentices under Delaware's Prevailing Wage Law violates the commerce clause of the U.S. Constitution. The court ruled that Delaware discriminated against out-of-state contractors by effectively forcing them to pay higher wages to apprentices than in-state competitors were required to pay.

The Third Circuit ruled that the lower court correctly found that Delaware's refusal to recognize out-of-state registered apprentices facially discriminated against out-of-state contractors without advancing a legitimate state interest. The case is Tri-M Group LLC v. Sharp.

Tri-M filed suit in September 2006 alleging the Delaware Department of Labor had put it at a competitive disadvantage for public works projects by allowing in-state contractors “to pay reduced wages to their apprentices while denying out-of-state contractors the same right.” Tri-M was registered with Pennsylvania’s federally approved apprenticeship council but was not eligible for Delaware’s program, which requires sponsors to maintain a permanent place of business in Delaware.

In the summer of 2006, while Tri-M was performing electrical work at a construction project in Milford, Del., officials with the Delaware Department of Labor found the company had violated labor laws by failing to pay its apprentices their full wages.

Tri-M made adjustments, and the DDOL determined it was in compliance. Soon after, the company launched a legal challenge to the measures.

On appeal, the DDOL argued unsuccessfully that the challenged procurement scheme — including the permanent place of business requirement — does not discriminate against interstate commerce, and that the contested apprentice program regulations were explicitly authorized by Congress and approved by the U.S. Department of Labor. The Third Circuit disagreed and affirmed the District Court’s decision.

Delaware Legislature Considers Same-Sex Civil Unions

Posted by Adria B. MartinelliOn March 23, 2011In: Delaware Specific, Legislative Update

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Delaware's General Assembly will consider a new bill that would permit civil unions for same-sex couples. The Civil Union and Equality Act of 2011 was introduced by Sen. Sokola & Sorenson and Reps. George & Schooley. 

A civil union would be parallel, but not equal to, marriage – which would remain reserved for heterosexual couples. Parties to a civil union will bear the same responsibilities and enjoy the same rights and protections, to the extent possible, as exist for married spouses.

The Act removes the criminal penalties under Delaware law for marrying a same-sex spouse in another jurisdiction, and recognizes those marriages as well as similar legal relationships entered into outside of Delaware as civil unions, not as marriages. For example, if a same-sex couple gets married in Vermont and moves to Delaware, their Vermont marriage would be recognized as a civil union in Delaware, not as a marriage

The Act cannot, and does not, alter federal non-recognition of civil unions.

If passed, what will this mean for Delaware employers?

First, employers generally will be required to make whatever employee benefits that are offered to a married spouse available to a spouse in a civil union.  The Act would not cover those currently not protected by Delaware’s discriminations laws: (a) employers with less than 4 employees, or (b) religious corporations with respect to discrimination based on sexual orientation.

Second, private employers offering health and retirement benefits that are subject to ERISA — a federal law — may not be required to offer such benefits to a spouse in a civil union.  This is because the federal Defense of Marriage Act (“DOMA”) defines “marriage” as only between a man and a woman, and a “spouse” as only a person of the opposite sex, for purposes of federal law, and ERISA preempts inconsistent state law. However, the present commitment to enforce DOMA remains an open question.

On February 23, 2011, Attorney General Eric Holder announced that the Justice Department would cease legal defense of the Act's Section 3 at the direction of President Barack Obama, who had reached a conclusion that Section 3 was unconstitutional. However, Congress may defend the law in court in place of the administration, and on March 4, 2011, Speaker of the House John Boehner announced he was taking steps to defend Section 3 in place of the Department of Justice. Given the uncertain state of current law, employers will need to stay tuned as to the current position of the administration if or when Delaware’s bill passes to best assess how to handle the conflicts between state and federal law on this issue.

Third, employers who currently offer benefits for same-sex partners will want to consider changing its policy so that benefits are only offered for same-sex partners who have entered into a civil union. This is because if you offer benefits only to homosexual partners who have not entered into a civil union, but do not offer those same benefits to unmarried heterosexual partners, you face potential exposure to a sexual orientation discrimination lawsuit under Delaware law.

Police Departments Revise Their Social-Media Policies

Posted by Molly DiBiancaOn March 21, 2011In: Social Media in the Workplace

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Government employers have different considerations when drafting a social-media policy than do employers in the private sector. The First Amendment, for example, restricts the limits public-sector employers can place on employees who discuss matters of public concern. At the same time, though, some government employers—particularly those in law enforcement and education—face different, and, often, more significant, risks when their employees post online.

For example, a post about a pending investigation may compromise the investigation if confidential information is disclosed to the public. Or a police officer’s credibility may be called into question during trial based on inappropriate comments he made on his Facebook page. And, you can imagine, an officer’s conduct—good or bad—is likely to be imputed to the entire police department, thereby potentially undermining the department’s reputation in the community. So, although law-enforcement agencies may not prohibit their employers from speaking at all in an online forum, the law does recognize that there are important public interests at issue that may require these employees to be subject to some limits when it comes to online speech.

The Albuquerque Police Department recently revised its social-media policy (video), following a Facebook posting by an officer, who described his job as “human waste disposal.” The policy applies only to employees who identify themselves as APD employees. It also prohibits employees from posting any photographs of themselves in uniform and from discussing any ongoing investigation. The union is not thrilled with the new restrictions, according to this news report, available on YouTube.

Tweet a Little, Dance a Little, Tweet a Little, Dance a Little

Posted by Molly DiBiancaOn March 21, 2011In: Social Media in the Workplace

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Employee participation in social media continues to raise the blood pressure of employers across the country. In just the last several weeks, there have been several stories involving employees whose online commentary has their employers up in arms.

One story comes from the New York City Ballet. The WSJ reports that the Ballet will be one of the country’s first major performing arts companies to regulate its employee’s social-media activities. As you may have guessed, the decision to institute a social-media policy did not come from out of the blue. It was, instead, prompted by the comments of an employee.

That employee, Devin Alberda, is a member of the company’s corps de ballet. Alberda is a Twitter fan and has been tweeting snarky comments about the company’s performances, making thinly veiled references to his boss, and posting what many feel should be kept behind the velvet curtain.

According to MyFoxNY.com, the ballet is said to be negotiating a social-media policy with the dancers’ union, the American Guild of Musical Artists. Complicating the negotiations is the fact that the ballet is a public trust, which increases the likelihood that an employee’s comments about it will constitute speech on a matter of public concern.

According to the WSJ, the policy would warn employees that the company may monitor public comments made online. The policy is also said to require employees to include a disclaimer to make clear that their comments are not employer-sanctioned. The proposed policy also would prohibit a dancer from sharing information about another dancer’s injury or illness. Finally, the policy is said to prohibit employees from posting photographs of company events. All three of these provisions are excellent ideas that employers should consider when drafting a social-media policy.

Three YCST Attorneys Selected to Participate in Federal Trial Practice Seminar

Posted by Molly DiBiancaOn March 21, 2011In: YCST

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A quick note of congratulations to three of our colleagues, who were selected to participate in the Federal Trial Practice seminar.  The program, which is hosted by the U.S. District Court in the District of Delaware, is in its second year and is designed to provide hands-on experience and valuable courtroom training.  Congratulations to Michele Sherretta Budicak and Jeffrey T. Castellano, of Young Conaway's Intellectual Property Litigation Section, and Erika R. Caesar, of the Commercial Litigation Section.  For more about the program, see an earlier post by the Delaware IP Law Blog.

Congratulations Michele, Jeff, and Erika!

Social Media Dos and Don'ts for Employers

Posted by Molly DiBiancaOn March 17, 2011In: Social Media in the Workplace

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I was interviewed by Boston Public Radio's Here and Now about the wild world of social media in the workplace--you can listen to the interview here.  In the course of the discussion, several important points came up about the "dos and don'ts" for employers when dealing with the variety of issues resulting from social media use by employees.  Here are a few of them.

Do Have a Well-Written Policy

A social-media policy that is carefully drafted can be the most effective tool that an employer can hope to have. Although policies can vary greatly depending on the culture and needs of the organization, there are a few essentials that all policies should include.

First, be sure to identify a specific contact person (with contact information) who will be the point person for employees' questions about the policy and make it clear that employees are to ask before acting any time they have any doubts about whether their intended action may violate the policy.

Second, specifically reference other company policies, such as an anti-harassment and -discrimination policy, conflicts-of-interest policy, and confidentiality policy, and make it clear that they apply equally to conduct in the online world just as they do in the "real" workplace.

Third, require all employees to report online conduct that violates any of these policies as soon as they become aware of it--without this provision, you may find that the only people who don't know about policy violations are those that are charged with its enforcement.

Do educate employees

The goal of a social-media policy is not to "trick" employees into violating it. Instead, the objective is to prevent employees from acting in a way that hurts the organization or themselves. With that in mind, employers are well advised to offer ongoing education to employees. Topics can include proper online etiquette, good online citizenship, as well as more hands-on subjects, such as how to adjust the privacy settings in a social-networking profile.

And don't rule out the value of learning by example. A discussion of headlines involving employees who are terminated or disciplined for online conduct is an excellent training tool and offers employers valuable insight about what conduct their employees find most (and least) egregious.

Don't take it personally

When an employee makes negative comments about her job, her employer, or her supervisor, employers often overreact. They tend to take the comments personally and respond with emotion instead of logic. If you discover an online post about your organization written by an employee, it's best to take a step back before you respond.

Ask yourself whether the post really impacts the organization in a negative way or whether it's more akin to traditional water-cooler gossip. Unless you can identify some kind of actual harm to the organization, you may want to consider whether disciplinary action is appropriate at all.

Don't be sneaky

"Sneaky" conduct frequently gets employers into trouble. Don't, for example, ever ask (or require) an employee or applicant to give you his password to an online account or profile. Similarly, don't have another employee give you access to her account so you can surreptitiously snoop on her coworker. Don't have someone send a friend request so you can gain access to an employee or applicant's profile without disclosing the real reason for the request. The bottom line here is, if it sounds sneaky, looks sneaky, or smells sneaky, then a jury will hold you accountable for such unpalatable behavior.

ADA and Drug Addiction: The Ninth Circuit Provides Guidance

Posted by Lauren Moak RussellOn March 15, 2011In: Disabilities (ADA), Discrimination

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A recent opinion from the U.S. Circuit Court of Appeals for the Ninth Circuit has clarified employer liability under the Americans with Disabilities Act, where the employer requires drug testing as a prerequisite to employment. In Lopez v. Pacific Maritime Associates, the plaintiff challenged a union's one-strike rule, which provided that one positive drug or enchained by the lawalcohol test during pre-employment testing permanently prohibited hiring of the applicant.

In this case, the plaintiff applied for work as a longshoreman in 1997, but was rejected after he tested positive for marijuana. After seeking treatment for his drug addition, the plaintiff again applied in 2004, but was denied under the union's one-strike rule.

In response, the plaintiff sued under the ADA, alleging that he had suffered discrimination on the basis of a disability--his previous drug addiction. The plaintiff alleged both disparate treatment and disparate impact. In reviewing the appeal, the Ninth Circuit rejected the plaintiff's disparate treatment assertions on several fronts. First, the Court held that because the on-strike rule denied employment to both addicts and recreational drug users, it did not discriminate on the basis of addiction. In reaching its holding, the Court emphasized that "the ADA prohibits employment decisions made because of a person's qualifying disability, not decisions made because of factors merely related to a person's disability."

Second, the Court concluded that there was no evidence to indicate that the union imposed the one-strike rule with the intention of excluding recovering addicts from the workforce. Instead, the Court found that the one-strike rule was tied to a history of injuries and fatalities in the longshore industry, resulting from the use of drugs and alcohol in the workplace.

Finally, the Court found it significant that the union did not learn of the plaintiff's addiction until after it had again denied him employment in 2004. In the absence of knowledge about his disability, its decision could not have been based on discriminatory animus.

With regard to his disparate impact claim, the Court rejected the plaintiff's argument that the one-strike rule disproportionately impacted recovering drug addicts, because plaintiff did not provide any relevant statistical evidence in support of his allegations.

The Ninth Circuit's opinion should reassure those employers who engage in non-discriminatory drug testing. As we already know, if your drug testing policy applies to all employees meeting certain neutral criteria (e.g. all job applicants, or all employees involved in workplace accidents) your conduct is lawful under the ADA. While the one-strike rule addressed by the Ninth Circuit is severe, the Court's opinion is in keeping with previous ADA jurisprudence protecting employers who drug test job applicants and employees under facially-neutral circumstances.

Schadenfreude—Employment-Law Style

Posted by Lauren Moak RussellOn March 11, 2011In: Just for Fun

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In today's litigious society, it's always nice to take a step back and appreciate the problems we don't have--even if that means indulging in a little schadenfreude. In that spirit, I give you the story of Jill McGlone, a civil servant in Norfolk Virginia. calendar and clock

Ms. McGlone has sued her former employer for wrongful termination. Generally an employee's allegations of wrongful termination don't raise eyebrows,  but this case presents unique circumstances. Ms. McGlone was terminated in 2010, after a 12-year paid suspension, during which time she allegedly received approximately $320,000 in compensation. It is also alleged that during her suspension, McGlone continued to receive benefits and annual raises.

It's still unclear how Ms. McGlone's situation was allowed to continue for 12 years. It appears that after she was suspended in 1998 for alleged workplace misconduct, her supervisor never resolved her employment status. The issue was not reviewed again until 2010, when a new director was appointed to oversee the agency for which Ms. McGlone "worked." Since Ms. McGlone's situation came to light, five other individuals have been terminated for allowing her suspension to continue unresolved. Possible civil and criminal charges are still being considered.

The moral of the story: don't suspend your employees with pay for 12 years, and be glad you're not being threatened with litigation for correcting the situation!

Whac-A-Mole Maker Gets Whacked By Employee Sabotage

Posted by Molly DiBiancaOn March 10, 2011In: Non-Compete Agreements

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Employee sabotage can take many forms. Employees can take documents with them when they leave to work for a competitor, for example. More insidious examples can involve employee destruction of files, causing enormous harm to the employer. Here's one unfortunate story involving both kinds of sabotage committed by an employee of Bob's Space Racers, the manufacturer of the classic arcade game, Whac-A-Mole. Errors

Police arrested Marvin Wimberly, Jr., 61, last month, charging him with the unusual crime of  offenses against intellectual property--a felony. According to the Orlando Sentinel, Wimberly programmed a virus into nearly 450 computer modules. The virus caused the game to fail after exactly 511 starts. He is alleged to have begun his criminal mission in August 2008, the same year his employer converted him from a contractor to a full-time employee.

Once the virus hit, the computers were inoperable--unless, that is, Wimberly was sent to perform maintenance. Seven months after the viruses began, Wimberly raised his programming price from $60 to $150 per computer chip. He later told a coworker that he'd programmed another game to fail after 48 or 49 power cycles because he hadn't been paid.

One of the most disturbing parts of this story is the allegation that Wimberly had planned to sell working modules to his employer's customers when their games failed--the failure, of course, was a direct result of Wimberly's programming. He'd even reserved a website, www.BobsUpgrades.com, for his new endeavor. And, all the while, he had been making extra money fixing infected computers. Oh, the web we weave.

Ensuring Your Wellness Programs Do Not Violate GINA

Posted by Adria B. MartinelliOn March 8, 2011In: Genetic Information (GINA)

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It has come to our attention recently that many wellness programs are not in compliance with the Genetic Information Nondiscrimination Act (GINA) regulations, which went into effect in January of this year. Group insurers and employers must construct such programs carefully to ensure that they don't run afoul of GINA's prohibitions.

GINA prohibits the request of genetic information (which includes family medical history) by classified employers or group health insurers, but includes an exception for voluntary wellness programs under certain conditions. Health risk assessment (HRA) questionnaires are often included as part of a wellness program solicit genetic information, and often seek information that would be considered genetic information under GINA, e.g., "Does your family have any history of cancer, heart disease, or other illness?" Following passage of the law, it was not entirely clear what constituted "voluntary" versus "involuntary" wellness programs, and whether or not monetary incentives offered for participation rendered the program involuntary. The regulations issued in late November 2010 and now in effect addressed this question specifically.

Employers and insurers will not be in violation of GINA if they are not required to provide genetic information nor penalized for refusing to do so. For example, if employees are offered $100 to complete a health risk assessment with questions about genetic information, employees should be told that answering the genetic questions is voluntary, and that the $100 will be paid whether or not these questions are answered. The same goes if completion of the HRA makes the employee eligible for a raffle with prizes.

If, for example, a workplace wellness program requires employees to fill out HRAs, and the HRA contains common questions requesting family medical information, or even broad questions such as "Are there any other health matters that you would like to discuss?" the insurer and the employer could, under certain circumstances, be in violation of GINA.

Employers and insurers can work around these GINA prohibitions to create an effective wellness program. The most straightforward approach is to have no rewards offered in connection with completion of the HRA (assuming the HRA contains genetics or family-history related questions).

Another method of getting around the prohibition on pre-enrollment HRAs with genetic or family history questions--and one suggested by the regulations--is to create a two-part HRA. The first part would be stripped of any questions related to the person's genetics or family history, and given out before health plan enrollment and may have a reward attached. There would be no reward conditioned on completion of the second part of the HRA, which may contain questions about family medical history.

In order to truly strip the HRA of questions relating to genetics, vague questions such as "Is there anything else relevant to your health that you would like us to know or discuss with you?" should be followed up with these instructions, provided in the regulations:

In answering this question, you should not include any genetic information. That is, please do not include any family medical history or any information related to genetic testing, genetic services, genetic counseling, or genetic diseases for which you believe you may be at risk.

NLRB v. Social-Media Policies, Round II

Posted by Molly DiBiancaOn March 6, 2011In: Social Media in the Workplace, Union and Labor Issues

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First, the NLRB filed a complaint against CT employer American Medical Response (AMR), alleging that, by disciplining an employee for violating its social-media policy, AMR had violated the National Labor Relations Act. The AMR complaint was settled and no decision was issued.

But it appears that unions will continue to prosecute employers whose social-media policies they believe are too broad. The second charge of this type was filed on February 4, 2011, against Student Transportation America, Inc., another CT employer. In this charge, filed by the Connecticut State Employees Association/SEIU, the employer is not alleged to have wrongfully disciplined an employee for violating its social-media policy. Instead, the union takes issue with the policy itself, which bans "the use of electronic communication and/or social media in a manner that may target, offend, disparage or harm customers, passengers or employees."

Employer Liability for Accessing Employee’s E-Mails

Posted by Molly DiBiancaOn March 2, 2011In: Electronic Monitoring, Privacy In the Workplace

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When a former employee sues his former employer, an immediate issue of concern is how to preserve all electronically stored information (ESI) that may be relevant to the claim. Failure to do so may result in a claim of spoliation, sanctions against the employer and its legal counsel, or even an adverse ruling. Good employment counsel understands these consequences and how to avoid them in the first instance.

One of the most common steps is to have the employee’s computer forensically imaged by an expert. The expert will also preserve the employee’s company e-mail account. But this does not address the possibility that the employee may have sent e-mails from his work computer via a web-based e-mail service, such as Yahoo or G-mail. The law is not clear on this point and the defensibility of this practice can vary depending on the content of the e-mails—which, of course, the employer will not know until it looks.

There are several laws that employers risk violating by accessing an employee’s “personal” or web-based e-mail account. The federal Stored Communications Act is one such law and is the one that seems to result in more liability than others. A decision from late last year provides a recent example.

In Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, two employees prepared to open a competing fitness center with their then-employer. One of the employees quit and the other was fired. After the second employee was terminated, the employer accessed and printed emails from his web-based e-mail accounts. Although it was a disputed issue, the employer claimed that the employee had saved his username and password to the employer’s computer system.

The employer filed suit in New York state court to enforce a non-compete agreement and prevent the employees from opening their competing business. The court denied the request for an injunction and the employees removed the case to federal court, where they brought a counter-claim against the employer based on the allegedly improper access of the e-mails. At the request of the employees, the court ordered the employer to return all e-mails and prohibited their use in the case.

The court’s decision was based on its finding that the employer’s access of the employee’s emails violated the Stored Communications Act (SCA), which prohibits unauthorized access of e-mail correspondence that has been saved or stored once sent (among other things). The employees were awarded damages in the relatively small amount of $4,000 but I’m sure this felt like anything but a victory for the employer. The employer contended that it had done nothing wrong even if it had accessed the e-mails—they were, after all, stored on the employer’s computers, along with the username and password to access them. Worse yet, the e-mails supported the employer’s claim that the employees had been preparing to compete during their employment and had gone on to open a competing business.

The lesson from this case and the others like it is to be extremely cautious when deciding whether you may lawfully access an employee’s personal e-mails. Additionally, employers should revisit their computer-usage policies to make sure that the language is crystal clear that employees should not expect that their use of company computers will be considered private—including all Internet activity and, specifically, web-based e-mail accounts to the extent they are accessed via the employer’s computer.

Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, No. No. 08 Civ. 4810 (THK) (S.D.N.Y. Dec. 22, 2010).

[Thanks to Venkat and his post on the Technology and Marketing Law Blog for bringing this case to my attention.]