EEOC Issues Proposed Rules For Employer Wellness Programs

On April 20, 2015, the EEOC issued a notice of proposed revisions to its regulations under the Americans with Disabilities Act concerning employer wellness programs. The new regulations will not become effective until after the notice period ends on June 19, 2015, and a final rule is published. In the meantime, here’s what employers should know about the EEOC’s proposed rules for wellness programs:

  1. Wellness programs must be reasonably designed to promote health and prevent disease. The proposed regulations explained that a program satisfies this standard “if it has a reasonable chance of improving the health of, or preventing disease in, participating employees, and it is not overly burdensome, is not a subterfuge for violating the ADA or other laws prohibiting employment discrimination, and is not highly suspect in the method chosen to promote health or prevent disease.”
  2. Wellness programs must be voluntary. An employer may not require employees to participate in a wellness program, nor may an employer deny health insurance coverage or other benefits to employees for refusing to participate, except as part of an authorized, limited incentive that complies with the proposed regulations.
  3. Wellness incentives must be limited. The proposed regulations state that an incentive, whether in the form of a reward or a penalty, so long as the “maximum allowable incentive available under the program . . . does not exceed 30 percent of the total cost of employee-only coverage.” For example, if the total cost of coverage paid by both the employer and employee for self-only coverage is $5,000, the maximum incentive for an employee under that plan must be $1,500.
  4. Medical information must be kept confidential. Medical information obtained through a wellness program must be maintained as confidential, except as authorized by the ADA or as may be necessary to administer the health plan.
  5. Employers must offer reasonable accommodations for wellness programs. Absent undue hardship, employers are required to provide reasonable accommodations to enable disabled employees to enjoy equal benefits and privileges of employment, including participation in wellness programs. This includes reasonable accommodations that may be necessary to enable employees with disabilities to earn whatever financial incentive an employer wellness program offers.

Takeaway: Employers who offer wellness programs should review the EEOC’s notice of proposed rulemaking and provide comments on it before June 19, 2015, if they wish to do so. Because the proposed rules will likely be similar, if not identical, to the final rule that eventually will take effect, employers should also review their wellness programs to determine whether any changes may be necessary.

Is LinkedIn’s Reference Search Function Subject To The Fair Credit Reporting Act?

No – the U.S. District Court for the Northern District of California recently dismissed a complaint alleging Fair Credit Reporting Act (FCRA) violations based on LinkedIn’s Reference Search function. LinkedIn’s “Reference Search” function is available to premium account holders. It is designed to generate a list of individuals who previously worked with a job applicant and who may be able to provide feedback about the applicant’s previous job performance.

In Sweet et al. v. LinkedIn Corporation, a group of rejected job applicants sued LinkedIn and argued that the Reference Search function did not comply with the requirements of the FCRA. No. 5:14-cv-04531-PSG (N.D. Cal., Apr. 14, 2015). The FCRA is a federal statute that regulates “consumer reporting agencies,” which provide “consumer reports,” such as background checks, for employment purposes. See 15 U.S.C. § 1681 et seq. Among other things, the FCRA requires consumer reporting agencies to “adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy and proper utilization of such information.” 15 U.S.C. § 1681(b). The FCRA also imposes requirements for employers who utilize consumer reports provided by consumer reporting agencies to assess job applicants, including obtaining written authorization from the applicant and notifying the applicant if an adverse decision is based in part on information contained in the consumer report.

In Sweet, the court granted LinkedIn’s motion to dismiss based on its conclusion that the Reference Search function on LinkedIn was not a “consumer report” for purposes of the FCRA. The court explained that “Reference Searches are not consumer reports because the information contained in these histories came solely from LinkedIn’s transactions or experiences with these same consumers.” The FCRA defines “consumer report” to exclude a “report containing information solely as to transactions or experiences between the consumer and the person making the report.” 15 U.S.C. § 1681a(d)(2)(A)(i).

The court also held that LinkedIn was a not a “consumer reporting agency” under the FCRA. The FCRA defines “consumer reporting agency” as “any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties . . . .” 15 U.S.C. § 1681a(f). The court reasoned that because the complaint alleged that the plaintiffs voluntarily provided their names and employment histories to LinkedIn, the complaint supports the conclusion that LinkedIn gathered the information for the purpose of carrying out the plaintiff’s information-sharing objectives – not for the purpose of creating consumer reports.

Takeaway: Because the Reference Search function is not a consumer report subject to the FCRA, employers who utilize the function are not required to comply with the FCRA requirements unless they conduct a separate background check that qualifies as a “consumer report.”

Notification Requirements For Unauthorized Disclosure of Employee Data

Most employers maintain records with sensitive information relating to their employees, such as social security numbers or similar information.  When a data breach occurs and this information is disclosed without authorization, employers may have legal obligations to notify employees affected by the breach.

For example, Minnesota law has a data breach notification requirement that would require an employer to notify employees “in the most expedient time possible and without unreasonable delay” of a suspected data breach.  The law provides that:

Any person or business that conducts business in this state, and that owns or licenses data that includes personal information, shall disclose any breach of the security of the system following discovery or notification of the breach in the security of the data to any resident of this state whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. The disclosure must be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, . . . or with any measures necessary to determine the scope of the breach, identify the individuals affected, and restore the reasonable integrity of the data system.

See Minn. Stat. § 325E.61.  For purposes of the statute, “personal information” is defined to include unencrypted data including an individual’s first name or first initial and last name in combination with any of the following: (i) a social security number; (ii) a driver’s license number or Minnesota identification card number; or (iii) account number or credit or debit card number, in combination with any required security code, access code, or password that would permit access to an individual’s financial account.

For a mass data breach affecting 500 or more individuals at a time, the employer would also need to provide notification within 48 hours to “all consumer reporting agencies that compile and maintain files on consumers on a nationwide basis . . . of the timing, distribution, and content of the notices.”

Takeaway:  When a data breach affecting employee data occurs, an employer may need to comply quickly with notification obligations under applicable state law.  In the event of a data breach, it is important for employers to check the notification requirements for each state where affected employees are located.

Sixth Circuit Holds That Telecommuting Is Not A Reasonable Accommodation After All

After previously holding last year that telecommuting may be required as a reasonable accommodation, the Sixth Circuit Court of Appeals issued an en banc order vacating that decision. This time, the court held that because regular and predictable on-site attendance was essential to the employee’s job, her request to telecommute as an accommodation was not required by the Americans with Disabilities Act (ADA).

In EEOC v. Ford Motor Co., the employee suffered from irritable bowel syndrome and fecal incontinence that was so bad that she said it could “start pouring out of her at work.” No. 12-2484 (6th Cir., Apr. 10, 2015). Ford allowed her to try telecommuting on a trial basis on three occasions, but determined that she was still unable to maintain consistent job hours and complete her core job functions. Later, the employee requested to work from home up to four days per week. Human Resources met with her to discuss how she would be able to complete her job duties with that arrangement. After determining that the request was unreasonable, Ford proposed alternative accommodations, including moving her closer to the restroom or helping her to look for jobs better suited for telecommuting. The employee turned down both accommodation proposals and filed a charge of discrimination with the EEOC.

The first time that the Sixth Circuit addressed the case it held that there was a genuine issue of fact regarding whether the employee’s request to telecommute was reasonable. The court explained that the employer failed to show that the employee’s constant physical presence at work was essential for her to perform her job duties, particularly in light of recent technological advancements that make telecommuting more feasible.

Reviewing the decision again en banc, the Sixth Circuit vacated its previous order. This time, the court held that the employee’s request to telecommute was not reasonable. The court explained that although the ADA requires reasonable accommodation of disabled employees, “it does not endow all disabled persons with a job—or job schedule—of their choosing.” The court concluded that the employee had a “highly interactive” job and that “regular and predictable on-site attendance” was an essential job requirement. Relying on the well established rule that providing a reasonable accommodation does not require an employer to remove an employee’s essential job functions, the court held that the employee’s request to telecommute was unreasonable and not required by the ADA.

In reaching its decision, the Sixth Circuit suggested that regular attendance is an essential function for “most jobs.” The court wrote that:

That general rule—that regularly attending work on-site is essential to most jobs, especially the interactive ones—aligns with the text of the ADA. Essential functions generally are those that the employer’s “judgment” and “written [job] description” prior to litigation deem essential. See 42 U.S.C. § 12111(8). And in most jobs, especially those involving teamwork and a high level of interaction, the employer will require regular and predictable on-site attendance from all employees (as evidenced by its words, policies, and practices).

The court explained that the “sometimes-forgotten guide” of common sense also supports this conclusion.

Takeaway: The Sixth Circuit’s en banc decision in EEOC v. Ford Motor Co. is good for employers because it reinforces the common sense rule that regular and consistent attendance is an essential function of “most jobs.” This rule will not apply to all jobs, however, so employers should continue to engage in the interactive process when accommodations are requested. In addition, it is possible that the EEOC may seek to appeal the decision to the U.S. Supreme Court, so this may not be the final word in the case.

NLRB Holds That An Employee’s Ridiculously Profane Facebook Post Is Protected, Concerted Activity Under the NLRA

On March 31, 2015, the NLRB published a decision holding that an employee’s Facebook post calling his boss a “nasty motherf***er” and making other profane comments was protected, concerted activity under the National Labor Relations Act (NLRA).

In Pier Sixty, LLC, the employee of a catering service voiced his frustrations with his supervisor on Facebook. 362 NLRB No. 59 (NLRB, Mar. 31, 2015). At the time, a union campaign was underway at the employer, and an election to certify the union was scheduled. Two days before the election, a server was upset that his supervisor spoke to employees in a loud, harsh tone. During a break, the server posted the following message to his Facebook account:

Bob is such a NASTY MOTHER F***ER don’t know how to talk to people!!!!!! F*** his mother and his entire f***ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!

Later, the employer’s Human Resources found out about the post and terminated the employee. An unfair labor practice charge followed.

At the hearing, the administrative law judge (ALJ) determined that the workplace was rife with foul language and that comments such as “mother***er,” “a**hole,” and “eat sh**” were commonplace. The ALJ concluded that the server’s Facebook post was consistent with language that was a “daily occurrence” in the workplace and which typically did not result in any disciplinary response. Because the post related to the employee’s working conditions and the pending union campaign, the ALJ determined that the Facebook post was protected, concerted activity and that the employee’s termination violated the NLRA.

On appeal, the NLRB agreed with the ALJ. The NLRB explained that the “Facebook comments were part of a sequence of events involving the employees’ attempts to protest and ameliorate what they saw as rude and demeaning treatment on the part of Respondent’s managers . . . .” The NLRB also held that the Facebook post was not so egregious so as to lose the protections of the NLRA. The NLRB noted that the language was not qualitatively different from the obscene language normally tolerated by the employer and that no other employee had ever been discharged from similar language.

Takeaway: The Pier Sixty case is another example of how obscene language may qualify as protected, concerted activity under the NLRA – although that is not always the case. In Pier Sixty, the fact that the employer regularly tolerated similar language in the workplace was particularly harmful to the employer’s defense.

May 5, 2015 Presentation – Safeguarding Employers In 2015

On Tuesday, May 5, 2015, attorneys from Briggs and Morgan, P.A. will present “Safeguarding Employers in 2015 – Changes in Employment, Benefits, and Labor Law.” The seminar will occur from 8:00 a.m. to 11:45 a.m. at Windows on Minnesota on the 50th floor of the IDS Center in downtown Minneapolis. Continental breakfast and lunch will be provided. CLE and HRCI credits will be applied for. There is no charge to attend.

The agenda for the presentation will be as follows:

7:30 a.m. to 8:00 a.m. – Registration and Continental Breakfast

8:00 a.m. to 8:10 a.m. – Welcome

8:10 a.m. to 8:40 a.m. – Legislative and Case Update: This session provides an update on legislative activity and court cases that impact the employer-employee relationship. It will cover developments ranging from the passage of the Minnesota Women’s Economic Security Act to employment discrimination cases pending before the U.S. Supreme Court. Pending Minnesota legislation will also be discussed. Presenters: Michael Miller, Danielle Fitzsimmons, and Emily Peterson.

8:40 a.m. to 9:20 a.m. – Labor Law and Why it Matters to Both Union and Non-Union Companies: This session covers new union election procedures, continued attacks on employer handbooks and policies, new case law requiring an employer to allow employees to use employer e-mail for union organizing purposes and a whole host of other issues from the NLRB that continue to make life increasingly difficult for employers. We will also review recent labor law developments that apply to both union and non-union employers and offer practical tips to stay out of hot water with the NLRB. Presenters: Michael Moberg and Michael Wilhelm.

9:20 a.m. to 10:00 a.m. – Security Issues for Employers: Do You Know Where Your Data Is? This session focuses on understanding the risks involved in data breach of various kinds of data and methods to minimize that risk as well as some tips for approaching the matter when data has been lost or misappropriated. Presenters: Heidi Fessler and Daniel Supalla.

10:00 a.m. to 10:15 a.m. – Break

10:15 a.m. to 11:00 a.m. – The Eight Steps of Highly Effective Workplace Investigations: This session is an overview of the key steps in conducting a workplace investigation: deciding whether to investigate, planning the investigation, implementing the plan, evaluating the information, presenting the findings, making recommendations, closing the loop and documenting the process. Presenters: Ellen Brinkman, Ann Huntrods, and Sally Scoggin.

11:00 a.m. to 11:45 a.m. – Challenges and Opportunities in Rapid Demographic Change: This session highlights the unprecedented global demographic changes that are occurring and affect business everywhere. While most attention focuses on aging and its impact on government programs, the more immediate and direct impact of aging and other demographic changes is in the labor market. Former Minnesota State Demographer Tom Gillaspy will focus on the key local, national, and global demographic trends that affect the labor market and their economic implications for Minnesota employers. Presenter: Tom Gillaspy, Former Minnesota State Demographer.

11:45 a.m. to 12:30 p.m. – Lunch

Please RSVP: Space for the seminar is limited. If you plan to attend, please RSVP soon by clicking here.

New NLRB Guidance Challenges Reasonable Handbook Policies

On March 18, 2015, the Office of the General Counsel for the National Labor Relations Board (NLRB) released a memorandum regarding employer policies that are allegedly overbroad and unlawful under the National Labor Relations Act (NLRA). Many of the challenged policies are commonplace and not intuitively questionable from a legal perspective. The NLRB has challenged similar policies before, including a seemingly innocuous “be nice” policy.

The memorandum covers a number of different types of policies, such as confidentiality, employee conduct, communications with third parties, use of employer logos or trademarks, and conflicts of interest. Some of the policies identified as allegedly overbroad and illegal under the NLRA include the following:

  • “If something is not public information, you must not share it.”
  • “Be respectful of others and the Company.”
  • “Do not make fun of, denigrate, of defame your co-workers, customers, franchisees, suppliers, the Company, or our competitors.”
  • “Don’t pick fights online.”
  • “Do not make insulting, embarrassing, hurtful or abusive comments about other company employees online, and avoid the use of offensive, derogatory, or prejudicial comments.”

The NLRB general counsel argues that these policies may chill employees in the exercise of their right under Section 7 of the NLRA to engage in concerted activities for mutual aid and protection, like union organizing. See 29 U.S.C. § 157. For example, the memorandum warns that employees may interpret overbroad confidentiality policies to include information about employee wages and benefits and other terms and conditions of employment. The memorandum also explains that because “protected concerted activity is often contentious and controversial, employees would reasonably read a rule that bans ‘offensive,’ ‘derogatory,’ ‘insulting,’ or ‘embarrassing’ comments as limiting their ability to honestly discuss such subjects.”

One of the positive aspects of the memorandum is that it provides examples of some employer policies that the NLRB considers to be lawful. For example, a rule prohibiting disclosure of “business secrets or other confidential information” would likely be acceptable, as would a rule prohibiting “rudeness or unprofessional behavior toward a customer, or anyone in contact with the company.” For employers looking for NLRB-approved sample policy language, the memorandum is a good resource.

Takeaway: Employers with employee handbooks should review their policies in light of the new NLRB general counsel memorandum. It is not clear whether courts will agree with all of the positions stated in the memorandum, but following the guidance should reduce the risk of unfair labor practice charges.

What Employers Need To Know About the Supreme Court’s Pregnancy Accommodation Decision

The U.S. Supreme Court recently released a decision holding that a plaintiff may prevail on a pregnancy discrimination claim using a failure-to-accommodate theory. Here’s what employers need to know about the case:

In Young v. United Parcel Service, Inc., the plaintiff was a delivery driver who was required to lift up to 70 pounds for her job. No. 12-1226 (Mar. 25, 2015). After she became pregnant, the employee’s doctor advised that she should not lift more than 20 pounds, and she requested an accommodation from UPS. Although UPS had policies that offered similar accommodations to employees who were injured on the job, had disabilities covered by the Americans with Disabilities Act, or who had lost their Department of Transportation certifications, UPS denied the request because the employee did not fall under any of those policies. When the employee sued, both the district court and the court of appeals rejected the plaintiff’s pregnancy discrimination claim on the grounds that the plaintiff was not similarly situated to the other employees to whom she compared herself.

The Supreme Court reversed the lower court rulings and endorsed the plaintiff’s failure-to-accommodate theory of liability. Although the Supreme Court recognized that the Pregnancy Discrimination Act does not give pregnant workers “most-favored nation” status, the Court explained that a pregnant employee can make a prima facie case of discrimination by showing that: (i) she belongs to the protected class; (ii) she sought accommodation; (iii) the employer did not accommodate her; and (iv) the employer did accommodate others “similar in their ability or inability to work.”

If the employee establishes a prima facie case, the employer may justify its refusal to accommodate with a legitimate, nondiscriminatory reason for its actions. But the Court cautioned that the employer’s justification “normally cannot consist simply of a claim that it is more expensive or less convenient to add pregnant women to the category of those (‘similar in their ability or inability to work’) whom the employer accommodates.”

If the employer presents a legitimate, nondiscriminatory reason for its denial of the requested accommodation, the employee must then present evidence that the asserted reason is a pretext for pregnancy discrimination. The Court explained that a plaintiff can satisfy this burden by “providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s ‘legitimate, nondiscriminatory’ reasons are not sufficiently strong to justify the burden, but rather—when considered along with the burden imposed—give rise to an inference of intentional discrimination.” Alternatively, a plaintiff can create an issue of material fact by “providing evidence that the employer accommodates a large percentage of nonpregnant workers while failing to accommodate a large percentage of pregnant workers.”

Takeaway: The failure-to-accommodate theory of liability endorsed by the U.S. Supreme Court in Young is a new theory of liability for pregnancy discrimination claims. Employers should review their policies and practices to ensure compliance. The decision will likely not have a significant impact for employers in Minnesota, however, because Minnesota state law already requires most employers to accommodate pregnant workers.

When Are Federal Contractors Required To Maintain Affirmative Action Plans?

Federal law requires certain employers who perform work on contracts and subcontracts with the United States government to maintain affirmative action plans. The rules for when affirmative action programs are required are different for construction and non-construction contractors. Here’s what employers need to know about when federal affirmative action requirements apply:

Construction Contractors: A construction contractor or subcontractor is required to maintain an affirmative action program if it holds any “Federal or federally assisted construction contract in excess of $10,000.” 41 C.F.R. § 60.4-1(a).

Non-construction Contractors: A non-construction contractor or subcontractor must an maintain affirmative action program if: (1) it has 50 or more employees; and (2) either (i) has a contract or subcontract with the government of $50,000 or more; (ii) has government bills of lading which in any 12-month period total or can reasonably be expected to total $50,000 or more; (iii) serves as a depository of government funds in any amount; or (iv) is a financial institution which is an issuing and paying agent for U.S. savings bonds and savings notes in any amount. 41 C.F.R. § 60-2.1(a).

Takeaway: Employers who do business with the federal government may be required to maintain affirmative action programs depending on the type of work they do and how much revenue is generated by the work performed. State laws may also impose similar requirements.

When Is Advice of Counsel A Valid Defense To A Claim For Tortious Interference?

The Minnesota Supreme Court recently published a decision that clarifies when advice of counsel can provide a defense to a claim for tortious interference with contract.

In Sysdyne Corp. v. Rousslang et al., Sysdyne sued a company named Xigent Solutions, LLC for hiring a former employee who was subject to a noncompete agreement. No. A13-0898 (Minn., Mar. 4, 2015). Although Sysdyne prevailed on its claim for breach of contract against the former employee, the trial court held that Xigent was not liable for tortious interference because its actions were justified based on its reliance on advice of legal counsel. Sysdyne appealed and argued that the justification defense cannot be satisfied by a defendant’s honest but erroneous belief, based on the advice of counsel, that a contract is unenforceable.

The Minnesota Supreme Court affirmed the lower court’s decision that Xigent was not liable for tortious interference. The Court emphasized that any reliance on advice of counsel with respect to a noncompete agreement must be reasonable under the circumstances to provide a defense. The Court affirmed the trial court’s decision that Xigent’s actions were reasonable because Xigent provided its attorney with the noncompete agreement and the employee’s original offer letter from Sysdyne, informed its attorney that the employee would be doing the same work for Xigent, and consulted with the attorney regarding the enforceability of the noncompete.

The Court explained that the focus of the analysis is on whether the defendant’s consultation with legal counsel is reasonable, not whether the attorney’s legal analysis was reasonable. The Court also held that the attorney’s advice may be verbal and does not necessarily need to be written.

Takeaway: Reasonable reliance on advice of counsel may provide a defense to claims of tortious interference with contract based on hiring a competitor’s employee who is subject to a noncompete. Although written advice is not absolutely necessary, it may be helpful from an evidentiary standpoint in proving the defense. It is also important to remember that relying on advice of counsel may waive attorney-client privilege with respect to the advice in question and will not necessarily protect the employee from liability for breach of contract.

What Employers Need To Know About Works Made For Hire

In many cases, employee work product – such as reports, drawings, designs, or other written content – is subject to United States copyright law, and the default rule is that the work product belongs to the employer. This is known as the “works made for hire” doctrine.

In most circumstances, the copyright over a creative work initially vests in the “author” of the work. In the case of works made for hire, however, the law provides that:

[T]he employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.

17 U.S.C. § 201.

The works made for hire doctrine is somewhat different from the rules that apply to inventions, which are subject to U.S. patent laws. In many states, there are laws that impose certain requirements when an employer requires an employee to assign ownership of inventions to the employer.

Takeaway: When U.S. copyright laws apply, employee work product that qualifies as “works made for hire” presumptively belongs to an employer, unless there is an express written agreement to the contrary.

Legislation Introduced To Preempt Municipal Minimum Wage Increases

Legislators at the Minnesota House of Representatives recently introduced a bill that would prevent cities and counties from establishing new minimum wage rates or other employer benefit mandates that are inconsistent with state law. See H.F. 1241. The bill is designed to ensure the uniformity of minimum wage and other employment benefits across the state and to prevent local variations that will create added complexity for employers. The bill will not prevent cities and counties from establishing the wages and benefits for their own employees or for employees who perform work pursuant to municipal contracts.

Recently, there has been talk of the City of Minneapolis establishing its own municipal minimum wage. One group called 15 Now is seeking to establish a $15 per hour minimum wage in Minneapolis. Other cities have passed similar ordinances recently, including San Francisco, Chicago, and Seattle. If this new bill passes, however, the bill would prevent any minimum wage ordinance passed by Minneapolis or any other local government in Minnesota from taking effect.

One notable opponent of a municipal minimum wage in Minneapolis is the Mayor of Minneapolis, Betsy Hodges. Although Mayer Hodges supports a higher minimum wage, she believes that it should be addressed on a broader level than city-by-city. According to the Star Tribune, Mayor Hodges has expressed concern that Minneapolis could lose jobs to other cities if it establishes its own minimum wage, and she believes that there are other ways that cities can ensure that residents benefit from economic activity.

Takeaway: If passed, this new legislation would ensure that minimum wage and employment benefit requirements are uniform throughout the state of Minnesota. If you feel strongly about the legislation – one way or the other – contact your state representatives.