Employment Law Update Final

Employment Law Update
Key Developments from 2011 & What
to Expect in 2012

December 15, 2011

Confidential For Discussion Purposes Only

Reid Bowman, Esq.

• General Counsel of ELT.

• Over 25 years of HR and
labor & employment law
experience, primarily working
with multi-state employers.

• Designs strategic
ethics, wage &
hour, discrimination
prevention, and employment
law compliance programs.


Kate Wilson, Esq.

• Founding shareholder, Littler
Mendelson’s Chicago and
Minneapolis offices
• Co-chair of Littler’s Retail practice
group
• Member of Littler’s Steering
Committee on Women’s
Leadership Initiatives


Agenda
• EEO Trends

• Harassment prevention compliance requirements

• Whistleblowing

• Diversity & Inclusion

•Social Networking and the Workplace

•NLRA and Social Media, rulemaking implementing
so called “EFCA-lite”

• HR and Ethics Compliance

• Wage & Hour


EEO Trends


A Question For You

What best describes how
employee compliance training
is provided:

 Mostly live using an outside
vendor

 Mostly live using internal
resources

 Mostly online using and outside
vendor

 Mostly online using internal
resources


Charge Filings Continue at Record Highs
• Newly announced EEOC charge stats from
FY 2011: 99,947 charges, the most in the
EEOC’s History!
• Follows two prior years of record charges
(FY 2010: 99,922; FY 2009: 93,277.)
• EEOC recovered over $364M for victims of
discrimination in FY 2011, down a bit from
the $404M it recovered in FY 2010.

(Sources: http://www.eeoc.gov/eeoc/newsroom/release/11-15-11a.cfm;
/www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm.)


ADAAA/GINA/ADEA
• ADAAA: Final rules issued 3/35/2011
• Expanded definition of “disability” means that many more workers are
covered by the ADA

• GINA: Incentives for workplace wellness programs
• Opinion letter dated 6/24/2011 confirms EEOC position prohibiting
employers from offering financial inducements for employees to
provide genetic information as part of a wellness program

• ADEA: Reasonable Factor Other Than Age (RFOA)
Defense
• 11/16/2011 Commission approves final rule on RFOA defense by 3-2
party-line vote. Currently under review by OMB.
• Expected to track proposed rule which would make it more difficult for
employers to defend against disparate impact age discrimination
claims


2011: Retaliation Takes Center Stage
• Supreme Court made it easier for
employees to claim retaliation in January
2009 Crawford decision.

• January 2011: Supreme Court again
broadened coverage of retaliation claims
to now include claims based on someone
else’s protected activity (here, a fiancé.)
Thompson v. North American
Stainless, LP., 131 s. Ct. 863 (2011).

• Managers often don’t understand
retaliation!
See: http://www.elt-inc.com/blog/archive/2011/01/25/brand-new-us-supreme-court-retaliation-case-
third-party-claims

EEOC Enforcement Update: A “New Breed”

• More Aggressive Posture
• Mandatory public press
releases for settlements
• Refusal to allow early “no
fault” settlements in some
cases
• Requiring injunctive relief
with follow-up powers


A Question For You

My organization has
experienced an increase in the
number of employment law
claims the past 12 months:

 Yes
 No
 I don’t know


Training on just Sex Harassment prevention
is NOT enough.

So….
Sexual Workplace
Discrimination
Harassment Harassment
(EEO)

REMINDER: 2011 is a mandatory retrain year for most employers with
Supervisors in California.


Whistleblowing


Whistleblowing
• DOJ collected $3 billion during FY 2010 in
FCA settlements and judgments


Recent Whistleblower Legislative Expansion

• Dodd-Frank
• Sarbanes-Oxley
• Fraud Enforcement & Recovery Act
• Revised False Claims Act
• American Recovery & Reinvestment Act 2009
• Consumer Product Safety Act
• 20+ Federal Whistleblower
Protection Statutes
• Since 2006, 16 states have strengthened laws


Beefed Up Enforcement

• $400M budget dedicated
to whistleblower issues

• SEC rec’d 344
whistleblowing tips in 1st
7 weeks whistleblowing
regs became effective

• (if annualized, SEC
would get over 2550 tips
each year!)

See: http://www.sec.gov/about/offices/owb/whistleblower-annual-report-2011.pdf


Dodd-Frank: New Whistleblower Provisions

• Section 922: 10-30% reward to whistleblowers (not
only employees) who alert SEC to violation of the
1934 Securities & Exchange Act (if > $1M):
• Dodd Frank prohibits adverse action taken “because
of” whistleblowing activity
• Determination will be made on case-by-case basis
• Employee can file claim directly in federal court
• Rules also provide SEC with power to enforce
• Most dramatic impact: Employees are NOT
required to first complain internally


Maintaining a Diverse and Inclusive
Workforce

Diversity &
Inclusion

18

Dodd-Frank: Diversity! § 342

• Office of Minority and Women Inclusion
• Each agency (the “Bureau”; Fed; SEC;
FDIC) must establish new office to:
• Develop standards for EEO and racial /
ethnic / gender diversity;
• Increase minority participation in agency programs /
contracts; and
• Assess diversity policies and practices of
entities regulated by the agency


Diversity (cont’d)
• All contracts of an agency: financial
institutions, accountants, and providers of legal
services
• Certify their workforces reflect a “fair inclusion” of
women and minorities
• When awarding contracts, agency must, “to extent
consistent with applicable law,” consider provider’s
workforce diversity
• Mini-OFCCP’s
• What does “fair inclusion” mean?


Diversity, Policy, and Compliance
Intersections and Differences

Compliance: focus on
directing employees to follow
legal directives.
Legal
Directives
Policy: important business
Policy practices that often go beyond
Directives legal directives.

Organization
Organizational Culture: often
Culture
key driver behind diversity &
inclusion initiatives.


Recent SHRM Study: Key Reported
Outcomes of Diversity Initiatives
• 76% of Respondents Said the #1 Most
Important Outcome of Diversity Training
is…
• Improved public image
• The other top reported outcomes are:
• reduced costs associated with
turnover, absenteeism and low productivity
• improved financial bottom line (profits)
• increased organizational competitiveness,
• decrease in complaints and litigation, and
• retention of a diverse workforce
•Workplace Diversity Practices: How Has Diversity and Inclusion
Changed Over Time? SHRM October 12, 2010 ©

22

Key Metrics from SHRM Study
Key Metrics from October 2010 SHRM Study
• 68% of organizations indicated that they
have practices in place that address
workplace diversity
• 48% of organizations provide Diversity
training
• But 71% of companies with diversity
practices in place offer diversity training;
• 84% of businesses believed their diversity
practices were either “very effective” or
“somewhat effective” in achieving their
organization’s desired outcome

•Workplace Diversity Practices: How Has Diversity and Inclusion Changed
Over Time? SHRM October 12, 2010 ©

23

Social
Networking, and the
Workplace


Social Media Dominance
• 22.7% - Percentage of online time spent by U.S. Internet
users on social networking sites
• Up 43% from 2009

• 8.3% - Percentage of online time spent by U.S. internet
users on e-mail
• Down 28% from 2009

• Twice as many users over age 50 as compared to users
under age 18

• 85% of U.S.–based social networking on Facebook
Nielsen, “What Americans Do Online” (Aug. 1, 2010)


Social Media & The Workplace
• Only 31% of respondents had a policy specifically
addressing off-duty social use
• 50% of respondents had no policy

• 47% of respondents permitted anyone to access LinkedIn
vs. 32% for Facebook and Twitter
• 35% permitted no one to access

• 42% of respondents had disciplined employees for social
media activity
• Up from 24% in 2008

Society of Corporate Compliance and Ethics (Feb./Mar. 2011)

Social Media in the News
“Nothing I have seen in my brief
existence has contradicted my
belief that people will do the
dumbest thing possible with any
technology available to them”
Subtitle

“But Twitter also magnifies our
most asinine urges by eliminating
the possibility for subtlety. It is
easy to be racist or sexist in 140
characters.”
Alexandra Petri, Washington Post, June 7, 2011


Practical Tips
• Update or Create Written policies:
• No “one size fits all”; need to consider
your culture and business.
• Decide which web 2.0 activities to
cover.
• Decide whether to cover both off and on
duty activities.
• Decide whether employees can use
company resources to access.
• Consider impact on other polices
(e.g., Workplace Harassment; Code of
Conduct; Technology/Resource
Use, etc.)


NLRB meets
Facebook, and
the
Implementation
of “EFCA-Lite”


NLRA Meets Facebook
•On 10/27/10, the NLRB issued a complaint against
America Medical Response claiming that AMR
suspended then terminated the employee due to
negative remarks she posted about her supervisor on
her Facebook page from her home computer!

•AMR had a policy prohibiting employees from
making disparaging, discriminatory or defamatory
comments about the Company, its
managers, employees or clients.

•NLRB claimed this policy interferes with employee’s
right to engage in protected concerted activity.
•Case was settled, but since then, the NLRB has
been extremely active with cases like this


The 2011 Impact of AMR
•NLRB focuses substantial attention on social media:
• April 2011: Memo from NLRB Acting GC to all Regional
Directors
• May 2011: NLRB’s Acting GC adds social media to the list
of subject in which he is taking particular interest.
• By June 2011, NLRB reports at least 1 social media case
in every regional office.
• August 18, 2011 NLRB GC Memo on 14 cases decided
within the past year regarding employee use of social
media; Board’s focus is on the “protected, concerted”
nature of the speech.


Discipline Stemming From Employee Social
Media Activity An Unfair Labor Practice?
• Activity must be “concerted”
• Involve more than one
employee
• “Concerted activity” must be
“protected,” i.e., related to the
terms and conditions of
employment
• Existing union is not required
• With union, even more scrutiny


Add these Questions to your Checklists
• What is the subject matter of the post?
• Who is participating in the discussions?
• Is the employee expressing only an individual gripe?
• Are employees acting collectively?
• Are the social media posts a direct outgrowth of
some prior group discussions?
• And consider adding disclaimer to Social Media
policy saying it won’t be construed or applied to
interfere with Section 7 rights.


“EFCA Lite”
• Through rulemaking and its decisions, current
NLRB accomplishing many of the components
of EFCA => “EFCA Lite”:
• June 22, 2011: NLRB published Notice of
Proposed Rulemaking in effort to overhaul
union election procedures.
• November 30, 2011: after receiving ~65,000
comments, NLRB, by 2-1 vote, adopted
several measures to speed up union elections:
ex. tighter pre-election appeal rules; more
Hearing Officer discretion to limit pre-election
issues. Result: elections in ~28-35 days after
pet. filing!
Remember: Most of your managers have never dealt with a union organizing
drive, or managed in a unionized environment.

The Central Role of
HR and
Employment Law
Issues in Ethics
Compliance
Programs


The Central Role of HR / Employment Issues
• Largest impact on the largest number of
employees.
• Hotline statistics are telling:
• 61% of initial allegation reports were HR
related. (Global Compliance Services)
• 62% of complaints were comprised of:
harassment / discrimination, wage and
hour, workplace violence, workplace
policy violation, and workplace safety.
(EthicsPoint)
• 70% of hotline reports measured over a
one year period were employment law
related. (The Network)
(Open Compliance & Ethics Group – 2004)


Misconduct Most Commonly Observed By
Employees
• Ethics Resource Center 2009 Survey

• 22% - Abusive or intimidating behavior
toward employees.
• 19% - Lying to
employees, customers, vendors, or the
public.
• 18% - A situation that placed employee
interests over organizational interests.
• 11% - Health or Safety regulation
violations.
• 14% - Discrimination on the basis of
race, color, gender, age, or other
categories.
• 11% - Employee benefits violations.
• Majority are “classic” employment law
issues!

The Laws that Mandate Ethics
Compliance & Training
3 key drivers:
1. The 2004 Federal Sentencing Guidelines
Amendments (FSGs), and new 2010
amendments.

2. The Sarbanes-Oxley Act of 2002
(SOX), as amended by Dodd-Frank.

3. 2007 & 2008 amendments to the Federal
Acquisition Regulations
(FAR).


Wage & Hour


A Question For You

Do you consider wage and hour
issues to be the number one
employment law risk facing
your organization?

 Yes
 No


Class Action Employment Lawsuits
Are Increasing
5,000
1st six months annualized
4,722

4,500
Total
4,152
92% Wage
4,000
& Hour
Total
3,541
3,500 91% Wage
89% & Hour
Wage &
Hour
3,000
2009 2010 2011


2009 Class and Collective Action Stats
• 208 final reported labor/employment class and collective action settlements.
• Settlement amounts were available for 185.
• Median: $1,550,000
• Average: $8,705,497
• The $13,200,474,783 settlement of UAW v. Ford Motor (E.D.
Mich.) was excluded from these calculations.
• Settlement amounts were available for 111 Wage and Hour settlements
• Median (W&H): $1,500,000
• Average (W&H): $6,784,532


2010 Class and Collective Action Stats
• 210 final reported labor/employment class and
collective action settlements.
• Settlement amounts were available for 178.
• Median: $2,875,000
• Average: $9,776,995
• Largest: $175 million, Velez v Novartis Pharm. Corp. (S.D.N.Y).

• Settlement amounts were available for 123 Wage and
Hour settlements.
• Median: $1,800,000
• Average: $5,521,853


January – June 2011 Class and Collective
Action Stats
• 51 final reported labor/employment class
and collective action settlements.
• Settlement amounts available for 46.
• Median: $1,950,000
• Average: $8,446,559
• Largest: $ 178,600,000, Merkner v AK Steel
Corp (S.D. Ohio).

• Settlement amounts were available for 32
Wage and Hour settlements.
• Median: $1,387,500
• Average: $3,076,272


Heightened Enforcement by the DOL: FY 2012
Budget Request

• DOL seeking $240.9M and
1,677 FTEs for the Wage &
Hour Division

• An increase of $13.3 M and
95 investigators over 2010
and 2011 levels

• Compared to FY 2008: An
increase of $65.2M and 469
FTEs

But Finally, Some Good News…
• Class Action Waivers: AT&T Mobility L.L.C. v.
Concepcion, 179 L. Ed 2d 742 (2011).
• Employers should consider whether arbitration is right for their
workplace:
• Benefits: ideally, faster, less expensive dispute resolution; no
class, collective or representative actions; more confidential.
• Drawbacks: Cost of enforcing the agreement; cost of arbitrator; rights
to appeal.
• Tougher Time Certifying Class Actions: Wal-Mart v.
Dukes, 131 S.Ct. 2541 (2011)
• Already being applied to Wage & Hour cases (e.g., MacGregor v.
Farmers Insurance Exchange, No. CV-03088, 2011 U.S. Dist. LEXIS
80361 (D.S.C. July 22, 2011)


A Question For You

In the past 12 months, has your
organization been faced with a
wage & hour claim from current
or former employees?

 Yes
 No
 I don’t know


Key Wage & Hour
Risk Areas


Employee Classification

• Employee vs. Independent
contractors?

• Paid employee vs. unpaid
interns?
• See DOL’s guidelines on interns:
http://www.dol.gov/whd/regs/comp
liance/whdfs71.pdf

• Exempt vs. Non-Exempt (from
overtime pay requirements).


Top Five Potential Problems with Non-Exempt
Pay Practices

1. Auto Deductions for
Meal Periods.

2. Rounding.

3. Remote Work.

4. Off-the-Clock Work.

5. Regular Rate Issues.


Combating Off-the-Clock Work Claims
• State of the art wage and hour policies.
• Working time defined.
• Off-the-clock work prohibited.
• Meal and rest periods.
• Payroll integration.

• Robust Complaint Mechanism.
• Investigate and resolve using Title VII lessons.
• Time Entry Certification.
• Audit time records:
• Compare time records to other records.
• Monitor rounding practices.
• Monitor missed punches and supervisory edits.


A Question For You

Regarding compliance
training, in the next 12
months, my organization is:

 Already conducting training

 Planning to implement training

 Considering training

 I don’t know


Combating Off-the-Clock Work Claims
• “Faragher Defense” to off-the-clock work.
• In certain areas of the law, courts have recognized something
called the “doctrine of avoidable consequences,” which
prevents a party from recovering damages where the injured
party could have avoided harm through reasonable efforts.
• Cornerstone of the defense is employee and supervisory
training on wage and hour topics.
• Most employees and managers don’t know the basic
rules or don’t understand them.
• The best policies are useless if employees don’t
understand them.
• Training gives your employees the tools they need to
become compliance allies.


Training Solutions
• Live training:
• Instructor led and tailored to audience
(i.e., senior leaders).
• When highly customized materials req’d.
• E-learning: 40%+ (and growing) of employers
today chose e-learning solutions.
• Interactive and engaging – hands on
experience.
• Creates electronic records and employee
acknowledgments.
• Significant cost savings
• Easy to reach bulk of managers and
employees – repeatedly.
• Ensures exposure to policies

Online Training Advantage

• Online training is consistent and
repeatable.
• As a result, can be presented to a
jury or mediator exactly the way
learner saw it.
• Clearly demonstrates that if after
training employee violated
policies, it was NOT because of
lack of understanding, but
deliberate attempt to circumvent
employer’s pay rules.


Training ROI
• Prevent inadvertent federal and state
law violations.

• Prevent claims:
• Policies are clear and irrefutable.
• Plaintiff credibility?
• More difficult to certify a class.

• Reduce damage awards and
potentially build a good faith defense.

• Build a culture of compliance.


Focused Solutions

Addressing Your Most Critical Compliance Goals


A Question for You…

If your organization may be interested
in purchasing ELT’s online training
solutions, and you would like an ELT
Sales Executive to follow up with you,
type "YES" in the box below.


Interested in our solutions?
info@elt-inc.com
www.elt.com │ 877.358.4621

Additional substantive questions?
kwilson@littler.com
rbowman@elt-inc.com


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