The DOL confirms that it has its eye on unpaid internships

Two weeks ago I reported that the Department of Labor was going to start cracking down on for-profit employers that use the services of unpaid interns. The proof, as they say, is in the pudding, or in this case, on the DOL’s own website. Just moments ago the DOL released Fact Sheet #71, entitled, Internship Programs Under The Fair Labor Standards Act. In this fact sheet, the DOL affirms that internships in the “for-profit” private sector will most often be viewed as employment, which must be paid at least the minimum wage and overtime compensation for any hours in excess of 40 in a work week.

The six factors that comprise a lawful unpaid internship remain as they have been for years, and as I discussed a couple of weeks ago. Yet, the DOL went further, and explained how most internships are, in reality, paid employment in disguise as opposed to extensions of education or training:

[I]f the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work…. If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.

If I was an employer, I would be very careful in the use of unpaid interns. As the publication of Fact Sheet #71 points out, the DOL is watching.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

The Return of the Cat’s Paw

No, this is not a review of a 70’s B movie. The Supreme Court has agreed to review a case concerning the “cat’s paw” theory of discrimination liability. The case, Staub v. Proctor Hosp. (7th Cir. 3/25/09) [pdf], involves the termination of an army reservist who claims discrimination based on his association with the military under USERRA.

Here’s how the 7th Circuit eloquently described the origins of the “cat’s paw”:

One would guess that the chances are pretty slim that the work of a 17th century French poet would find its way into a Chicago courtroom in 2009. But that’s the situation in this case as we try to make sense out of what has been dubbed the “cat’s paw” theory. The term derives from the fable “The Monkey and the Cat” penned by Jean de La Fontaine (1621-1695). In the tale, a clever—and rather unscrupulous—monkey persuades an unsuspecting feline to snatch chestnuts from a fire. The cat burns her paw in the process while the monkey profits, gulping down the chestnuts one by one. As understood today, a cat’s paw is a “tool” or “one used by another to accomplish his purposes.” Webster’s Third New International Dictionary (1976).

In discrimination cases, the “cat’s paw” refers to a decision maker who lacks an unlawful bias, but who bases the adverse employment decision on the influence of another with such a bias. The Staub court described its interpretation of the “cat’s paw”:

[W]here an employee without formal authority to materially alter the terms and conditions of a plaintiff’s employment nonetheless uses her “singular influence” over an employee who does have such power to harm the plaintiff for racial reasons, the actions of the employee without formal authority are imputed to the employer….

[W]here a decision maker is not wholly dependent on a single source of information, but instead conducts its own investigation into the facts relevant to the decision, the employer is not liable for an employee’s submission of misinformation to the decision maker.

It is likely that the cat’s paw will survive the Supreme Court’s review in one form or another. It is unclear, though, whether the Court will sanction Staub’s employer-friendly “singular influence” standard as the standard-bearing definition of the cat’s paw.  

Nevertheless, as long as cat’s paw liability is a valid theory of discrimination, it is imperative that decision makers verify the information upon which they rely. Unless the decision maker has first-hand knowledge of the reasons justifying the action, he or she should undertake some investigation and independently verify that the decision is the result of a legitimate non-discriminatory reason and not an unlawful animus.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Announcing KJK’s next Breakfast Briefing: The Top 5 Issues Confronting Your Business’s HR Practices Today

Top 10 lists are so 2009. KJK’s employment lawyers will bring you the top 5 issues currently facing your business and its HR practices as we move through 2010.

1. Classifications of Employees: The Department of Labor is ramping up its resources and enforcement measures. Learn why you need to get a handle on who is exempt versus who is not exempt, and the difference between an employee and an independent contractor.

2. Health Care Reform: Be honest, you haven’t read all 2000+ pages of the landmark health care legislation. We have. Learn about the most important issues that face your business.

3. Technology: Learn when you can and cannot read employees’ emails, text messages, and other electronic communications, and why even the best drafted policy likely will not grant you access to personal, sensitive information.

4. Disability Discrimination: The ADA amendments have been in place for a little over a year and the EEOC is about to issue sea-changing regulations. This is not your father’s ADA. Learn what has changed, and what you can do to protect your organization from this new breed of discrimination.

5. Hiring: If 2008 and 2009 were all about layoffs and downsizing, we are hopeful that 2010 and beyond will be about hiring. Learn how to plan for the economic upswing and proactively protect yourself by implementing key policies and procedures for hiring new employees and rehiring old ones.

Date:	Wednesday, May 12, 2010
Time:	8:00-8:30 Continental Breakfast
	8:30-9:30 Presentation
	9:30-10:00 Q&As
Place:	The Club at Key Center, 127 Public Square, Cleveland (on-site parking is free)
Cost:	Free

If you are interested in attending this free seminar, or for more information, please contact Andrea Hill, (216) 736-7234 or ach@kjk.com, by May 7, 2010.

Do you know? Overtime for non-exempt commissioned employees

Only a small subset of commissioned employees are exempt from the Fair Labor Standards Act’s overtime provisions. For the majority of employees who are paid wholly or in part by commissions, the FLSA presents a complicated calculus of rules and regulations that employers must follow to properly account and pay overtime premiums for hours worked in excess of 40 in any workweek.

The key question for for commissioned employees is how one computes the “regular rate of pay” for purposes of calculating the proper overtime premium to apply to commissions paid.

If a commission is paid on a weekly basis, the calculation is fairly basic. The commission is added to any other earnings for that workweek. The total is then divided by the number of hours worked during that week to obtain the employee’s regular rate for that particular workweek. The employee must then be paid overtime compensation of one-half of that rate for each hour worked in excess of 40 for that week.

It gets more complicated, however, If the calculation and payment of the commission cannot be completed until sometime after the regular pay day for the workweek. In the case, the employer may disregard until later the commission in computing the regular hourly rate and pay overtime exclusive of the commission. However, when the commission is ultimately paid, the employer has to go back and recalculate the overtime premium for each workweek covered by the deferred or delayed commission payment. The employer must apportion the commission back over the workweeks of the period during which it was earned. The employee must then receive additional overtime compensation for each week during the period in which he worked in excess of 40 hours.

It gets even more complicated if it is not possible or practicable to allocate the
commission among the workweeks per the amount of commission actually earned or reasonably presumed. In this case, the Department of Labor permits employers to choose from one of two different methods fairly and equitably account for overtime premiums.

1. Allocation of equal amounts each week. Under this method, the employer will assume that the employee earned an equal amount of commission for each week of the period covered, and compute any additional overtime compensation based on that pro rata amount. For example:

• For a commission paid monthly, multiple the commission by 12 and divide by 52 to obtain the amount attributable for each week of that month.
• For a commission paid semi-monthly, multiply by 24 and divide by 52.
• For a commission that covers a specific number of workweeks, divide the total commission paid by the number of weeks it covers.

Once the pro rata weekly commissions is determined, simply divide that amount by the total number of hours worked to obtain the increase in the hourly rate. The employee is then owed one-half of that increase for each hour worked in excess of 40 for a given week.

2. Allocation of equal amounts to each hour worked. Sometimes,
there are facts which make it inappropriate to assume equal commission
earnings for each workweek (such as when the number of hours worked each
week varies widely). In such cases, the employer can assume that the employee earned the same amount of commission for each hour worked during the computation period. The total commission payment should be divided by the total number of hours to determine the amount of the increase in the regular rate. To determine the amount of additional overtime compensation owed for the period, multiply one-half of the figure by the total number of overtime hours worked by the employee for all workweeks during the covered period.

Clear enough for you? Is it any wonder that companies get themselves in trouble with wage and hour issues?

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

When should you get an attorney involved with a problem employee? As soon as possible.

A few weeks ago I wrote about what employers need to know about EEOC investigations. I suggested that employers get attorneys involved “as early as the first receipt of the charge of discrimination.” West v. Tyson Foods (6th Cir. 4/15/10) (unpublished) [pdf] provides a great example of the importance of the early involvement of counsel.

Amanda West quit her job at a Tyson chicken processing plant after being subjected to more than a month of fairly pervasive sexual harassment. During her exit interview with Tyson’s HR manager, West talked about all of the harassment to which she had been subjected and that her supervisors failed to respond to her complaints. She also identified the perpetrators by name. The HR manager, however, did not conduct any investigation into the allegations until after Tyson received West’s EEOC charge. At trial, the court admitted into evidence the HR manager’s notes from the exit interview, along with its EEOC statement of position. That position statement falsely claimed that Tyson launched an investigation following the exit interview. From this evidence—along with the evidence of the harassment and the supervisors lack of response—the jury awarded West $1,281,636.58—$131,636.58 in lost wages, $750,000 for mental distress, and $400,000 in punitive damages—which the 6th Circuit affirmed.

What is the lesson here? Having an attorney draft the position may not have saved the day, but it would have certainly lessened the impact of Tyson’s involvement in the harassment. The misstatements in the position statement make it look like Tyson was trying to cover up what happened. That perception of a cover-up likely led to the high compensatory and punitive awards.

WIRTW #123

It’s impossible to cover every labor & employment story that hits every week. The most interesting news of the week that I did not yet have a chance to cover is the revelation that Department of Labor enforcement data is now available online. Right now, your search capabilities are limited to division and state. Thanks to Dan Schwartz’s Connecticut Employment Law Blog and the Workplace Prof Blog for reporting on this issue.

On to the rest of the week’s stories:

Wage & Hour

• The IRS and HR: Who is an Employee? – from Michael Haberman’s HR Observations

• PDA Use Creates Wage and Hour Issues – from Jennifer Hays at the Warren & Hays Employment Law Blog

Discrimination & Harassment

• Arroyo v. Accenture, LLP: The Potential Pitfalls of Criminal Background Checks – from Natalie Klyashtorny’s A Case of the Mondays

• Workplace Rules And Job Requirements Justify Employers’ Termination Decision In Face Of ADA Claims Based On Alcoholism – from Hunton Employment & Labor Law Perspectives™

• Credit Reports and the Hiring Process: The Value (and Risk) to HR Professionals – from Nick Fishman at the employeescreenIQ Blog

• More Men File Sex Harassment Charges: Man Gene Waning? – from The Word on Employment Law with John Phillips

• The role mistaken beliefs play in retaliation and hostile environment claims – from Work Matters

• Maternity Leave Policy – from Colorado Employment Law Blog

• Email Harassment - Jesse James Edition – from Philip Miles’s Lawffice Space

• Harassment Reporting: Who’s Your Weakest Link? – from Mindy Chapman’s Case In Point

Labor Relations

• The Supporter Side Politics of EFCA – from Michael Fox’s Jottings By An Employer’s Lawyer

• Another Attempt at EFCA Before Year’s End? – from LaborUnionReport.com

• Breaking News: Reports Say SEIU’s Andy Stern To Resign – from Labor Relations Today

Competition & Trade Secrets

• Customer Lists as Trade Secrets? Not A Per Se Rule – from Trade Secrets Blog

• How to enforce a non-compete without a non-compete – from Rob Radcliff’s Smooth Transitions

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Pets in the workplace: assessing the risks and drafting a policy

Sarah’s Needleman’s Small-Business Boss column in today’s Wall Street Journal discusses pet-friendly workplaces. I spoke with Sarah earlier this week. Here’s what I had to say:

“You want to set expectations,” says Jon Hyman, a partner in the labor and employment group at Kohrman Jackson & Krantz PLL, a law firm in Cleveland. For example, he suggests that owners determine if employees can leave a pet at work while they go off-campus to a meeting and where the animal should stay during their absence.

Business owners should also consider how they would help employees who are allergic to animals avoid flare-ups if they allow pets in their workplaces. Mr. Hyman says that while rare, workers have successfully sued business owners for violating the American Disabilities Act by not taking such steps.

“If you have an employee that just cannot be in the same facility, you would have to accommodate that person,” he says. “You have to run your business first, and the core of your business is still your people.”

Are you thinking about opening up your business to employees’ pets? You will find very few resources on the Internet to help. And, you will need a written policy before you allow pets in. Here’s some considerations.

1. People come first. Despite your desire to allow pets—whether as a perk, a recruitment tool, or both—your employees still make up the core of your enterprise. If you have to choose between an employee or a pet, you should always choose the employee.

2. One of the biggest legal risk is the Americans with Disabilities Act. If an employee is allergic to animals, pet owners must understand that they may have to leave their animals at home as a reasonable accommodation. Other possible accommodations include creating sufficient separation between the allergic employee and the pet, segregating the pet to a specific part of the facility, or improving ventilation. Ignoring the pleas of an allergic employee, though, will open you up to potential ADA liability.

3. Animals must of “office broken.” Animals with any bite history should not be permitted. Moreover, any aggressive behavior, such as growling, barking, chasing, or biting, should result in the animal’s expulsion on the first complaint. Animals should also be house broken, friendly towards people and other animals, and not protective of their owners or their owners’ spaces. Finally, you should define when animals must be leashed or caged, and what is expected of employees when they have to leave the workplace during the work day.

4. Respect for property. Designate a specific area outside for animals to go to the bathroom (preferably away from the entrances), and make sure pet owners understand that it is their responsibility to clean up messes outside and accidents inside.

5. Licenses and vaccinations. Before being permitted to bring animals to work, owners should verify that vaccinations are up to date, and that the animal licensed and free of parasites and insects. 

6. Liability. Employees should verify, in writing, that they have sufficient home owners’ or renters’ insurance to cover any damage to person or property caused by the animal. You should also consider indemnification in case your business gets sued, and a paycheck deduction authorization for any damage caused.

If you are considering having a pet-friendly workplace, I recommend contacting qualified employment counsel to walk you through the risks and assist in drafting an appropriate policy.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Reasonable accommodations for an employee’s inability to commute to work

Consider the following story. An employee with a history of eye problems (glaucoma and partial blindness) presents a doctor’s note recommending that she not drive at night. That note presents a scheduling problem, since she works third shift, public transportation is not available, and she has no other way to consistently get to work. Do you have a responsibility to accommodate this employee by transferring her to a day shift so that she can commute? Here’s the answer, at least according to the 3rd Circuit in Colwell v. Rite Aid Corp. (4/8/10) [pdf]:

Rite Aid argues that it had no duty to even consider changing Colwell’s shift because Colwell’s difficulties amounted to a commuting problem unrelated to the workplace, and the ADA does not obligate employers to address such difficulties…. Instead, we hold as a matter of law that changing Colwell’s working schedule to day shifts in order to alleviate her disability-related difficulties in getting to work is a type of accommodation that the ADA contemplates … [and] that under certain circumstances the ADA can obligate an employer to accommodate an employee’s disability-related difficulties in getting to work, if reasonable…. In sum, we hold that the ADA contemplates that employers may need to make reasonable shift changes in order to accommodate a disabled employee’s disability-related difficulties in getting to work.

This decision potentially opens a can of worms for employers. How far do you have to go to accommodate an employee’s disability-related commuting difficulties? Under this case, a shift-change is one possible accommodation. What about arranging for rides by co-workers? Paying for taxis or other transportation? Exceptions to attendance policies and rules? What is reasonable will change from employee to employee and workplace to workplace. What never changes, however, is your responsibility to explore these options through the interactive process required by the ADA.

Employees with medical conditions that impede their ability to do their jobs raise a huge red flag. Before summarily denying a reasonable accommodation, you should be consulting with counsel to make sure that you are not stepping into a lawsuit.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? Using criminal histories and conviction records in hiring

A rejected applicant has filed a class action lawsuit against management consulting firm Accenture, claiming that it discriminates against minorities through a policy of rejecting qualified individuals with criminal histories. Judy Greenwald at Business Insurance provides the details:

According to Roberto J. Arroyo vs. Accenture L.L.P., filed … in federal district court in New York, Mr. Arroyo spent two and one-half years in prison in a 10-year-old conviction for vehicular homicide in a car accident in which he had been driving while intoxicated.

Mr. Arroyo worked for Chicago-based Accenture as a contract employee in its Murray Hill, N.J., office from November 2005 to April 2007. In April 2007, the firm offered Mr. Arroyo permanent employment subject only to the results of a background check, but withdrew the job offer and terminated his employment as a contract worker based on his conviction, according to the lawsuit.

This lawsuit illustrates an important issue—that the EEOC targets blanket policies that bar the employment of any applicant because of an arrest or conviction. According to a December 14, 2004, informal EEOC opinion letter:

Although Title VII does not, on its face, prohibit discrimination on the basis of conviction records, the EEOC and courts have concluded that a policy or practice of excluding individuals from employment on the basis of their conviction records may have an adverse impact on certain minority groups in light of statistics showing that they are convicted at a rate disproportionate to their representation in the population.

Just because a company cannot per se disqualify individuals because of criminal histories does not mean that they can never be used a factor. What are the rules for the proper use of arrest and conviction records as employment criteria?

1. If an employer collects arrest or conviction information, it must do so consistently. It is unlawful under Title VII to obtain criminal records in an inconsistent manner—based on the race, color, religion, national origin, or sex of the applicant. For example, it would be facially unlawful for an employer only to require background investigations of applicants who were born in the Middle East or are Muslims.

2. An Employers should assure applicants and employees that honestly providing criminal histories will not result in an automatic disqualification from consideration.

3. If a policy concerning arrest or conviction records disproportionately affects minorities, an employer may nevertheless maintain the policy if it can prove a business need. According to the EEOC, an employer must consider whether a particular applicant should be excluded from a particular job based on:

• The nature and gravity of the offense;
• The time since the conviction and/or completion of the sentence; and
• The nature of the job held or sought.

In other words, employers must undertake a job-by-job, employee-by-employee, check-by-check analysis of the relationship between the conviction and the ability to perform the job.

If you have a question about the use of criminal backgrounds in hiring and other employment decisions, you should contact employment counsel to guide you through this thorny issue.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

This is not a late April Fools’ joke: Employees strike over right to drink beer at work

Oh to have the labor problems in this country that they have elsewhere around the world. For example, take Denmark beer company Carlsberg. More than a thousand brewery workers walked off the job after the company restricted their ability to drink beer during the work day. The New York Times has the details. Until recently warehouse workers were able to drink as much beer as they wanted to during the day – provided they did not get drunk. Under the new policy, however, beer consumption is limited to lunch breaks only. Here’s the best part. Although truck drivers are not covered by the new policy, they joined the strike in sympathy. The truck drivers already have their own limits – 3 beers per work day outside of lunch.

So as you bemoan a liberalized NLRB and Department of Labor, an amended ADA that makes almost anyone with a medical condition “disabled,” mandatory lactation breaks, and a Congress that may look to expand employment protections before the November elections, at least be thankful that you don’t have employees walking off the job over the right to drink beer.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #122

May 4 is primary election day in Ohio. In Cuyahoga County, there are 5 contested Democratic judicial primaries – 2 in common pleas court, and 1 each in the court of appeals, domestic relations court, and juvenile court. Judge4Yourself.com is an online repository of 4 local bar associations’ independent and impartial ratings of the candidates. Do you need a reason why it is important to educate yourself? Of the 21 candidates running in contested elections, the Cleveland Metropolitan Bar Association rates only 6 as “Excellent,” while another third are “Not Recommended.” If you plan to vote in the primary, please click over to Judge4Yourself.com’s ratings. You will appreciate the time spent reading if you or someone you know if ever a litigant in Cuyahoga County.

Here’s the rest of what I read this week.

Wage & Hour

• Will “We Can Help” Really Help, or Hurt? from Darcy Dees at Compensation Cafe

• Five Steps to Diminish Wage & Hour Problems from Michael Haberman’s HR Observations

• Federal Court Rules Plaintiffs Seeking Class Certification May Not Rely on Employers’ Job Descriptions and Uniform Exemption Policies to Satisfy Predominance of Issues from Wage & Hour Counsel

Discrimination

• Simple strategies for avoiding employment claims from Jennifer Hays at Warren & Hays Employment Law Blog

• EEOC Warns Employment Credit Reports Could Pose Bias Risk from Nick Fishman at employeescreenIQ Blog

• Desperate Housewife Sues Abusive Boss For Hostile Work Environment from UndercoverLawyer

• Are Tea & Coffee Parties Happening in Your Office? from Brian Molinari at Prima Facie Law Blog

• Is the EEOC Getting Interested in Disparate Impact Claims? from Texas Employment Law Update

• San Francisco Chronicle Op-Ed: Data Espionage A Major Issue Facing U.S. from Trade Secrets Blog

• Downsizing & Data Loss - The Alarming Connection from Hunton Employment & Labor Law Perspectives™

• Credit, Education and EEOC — Tip of the Week from The Word on Employment Law with John Phillips

• Medical intern unable to perform the essential functions of a first-year resident could not support ADA claim from Employment Law Matters

Social Media

• Repository of Model Jury Instructions re: Social Media from Molly DiBianca’s Going Paperless

• You Really Need A Social Media Policy For Your Workplace! from Minnesota Labor & Employment Law Blog

• A caution about recruiting through social media from HR Cafe

• Employers Incur Risk if they Pursue Action Against an Employee for Off-Duty Web Comments from Tom Crane’s San Antonio Employment Law Blog

Litigation

• Finesse the Impasse by Changing the Deal: Advice from a Former Disney GC from Victoria Pynchon’s Settle It Now Negotiation Blog

• How to Keep People Like Me Out of Your Workplace, Part 1 and Part 2 from HR Daily Advisor

Labor Law

• Union Salts vs. Union Moles: IBEW Updates Members on ‘Union Salting Possibilities’ from LaborUnionReport.com

• With a new NLRB, wholesale reversals? from PointOfLaw Forum

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Department of Labor targets enforcement of rules against unpaid internships

More than a year ago, I cautioned employers about the legal risks of unpaid internships. At the time, I wrote that the Department of Labor uses a six-factor test to determine whether an intern is an employee in disguise, who must be paid. All six of the following factors must be met before an employer can legally refuse pay to an intern:

1. Is the training similar to what would be given in a vocational school or academic educational instruction?
   
2. Is the training for the benefit of the trainees or students?
   
3. Do the trainees or students work under their close observation of regular employees without displacing them?
   
4. Does the employer derive no immediate advantage from the activities of the trainees or students, and on occasion are the employer’s operations actually impeded?
   
5. Are the trainees or students not necessarily entitled to a job at the conclusion of the training period?
   
6. Do the employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training?
   

Last week, Steven Greenhouse wrote in the New York Times that state and federal agencies are beginning to use these factors to crack down on for-profit businesses that use the services of unpaid interns:

The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships. 

“If you’re a for-profit employer or you want to pursue an internship with a for-profit employer, there aren’t going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law,” said Nancy J. Leppink, the acting director of the department’s wage and hour division.

Employers that use unpaid interns should pay careful attention to this issue. Better to scrutinize your interns under these six factors before the Department of Labor swoops in and does it for you. Even better to formalize the relationship in a written Internship Agreement that formally spells out how each of these six questions are answered in your favor.

I also recommend you have a look at what others have said on this important wage and hour compliance issue: Overlawyered, ABA Journal Daily News, Lawffice Space, The Word on Employment Law with John Phillips, Manpower Employment Blawg, The HR Capitalist, Abovethelaw.com, Warren & Hays Employment Law Blog, Workplace Prof Blog, Minding the Workplace, and The Business of Management.

Illustrating the duty of loyalty

About a month ago I wrote about the an employee’s duty of loyalty to his or her employer. Here’s some of what I said:

Just because an employee is not subject to a noncompetition agreement does not mean that he or she cannot be liable for mistakes made on the way out the door. In fact, each and every employee owes his or employer a duty of loyalty up to the moment he or she ceases employment.

Two recent stories illustrate how this duty of loyalty works in the real world:

• This morning, The Word on Employment Law with John Phillips commented on a New York Times report that MSNBC indefinitely suspended one of its most prominent anchor David Shuster. His transgression – testing a new show for CNN.

• Molly DiBianca at the Delaware Employment Law Blog and Rob Radcliff’s Smooth Transitions both provide their takes on a recently filed non-competition lawsuit in which the chief evidence of the breach comes from the defendants’ LinkedIn accounts.

Even without non-competition agreement, an employee cannot serve two masters at the same time. While in your employ, an employee has an absolute duty to act in your best interest, and not to act in the interest of anyone else that is contrary to yours. For example, an employee cannot solicit customers or employees for a competing venture while still working for you. If you find out that a current employee might be competing, your best course of action:

1. Call your attorney.
2. At a minimum, suspend the employee pending an investigation, which should also include suspension of all computer and network access.
3. Upon confirmation of the competition, convert the suspension to a termination.
4. Consider legal action depending upon the scope of the competition and the harm caused.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? What employers need to know about EEOC investigations

You’ve just received notice from the EEOC (or its state equivalent, the OCRC, for example) that an employee has filed a charge of discrimination against you. What happens next is often confusing to businesses, and mistakes can have serious consequences in later lawsuits.

Let’s start with the basics – what happens when a charge has been filed against you?

1. The EEOC will notify you that a charge of discrimination has been filed against you. The charge packet will include the name and contact information of the investigator assigned to your case.

2. The charge will likely include a offer to submit the case to voluntary mediation. Mediation can be useful for two purposes – to see if you can resolve the charge early and cost-effectively, or to obtain early informal discovery from the charging party.

3. Absent mediation, the case will proceed to an investigation. During the investigation, you will be required to submit a written statement of position. This document is your chance to tell your side of the story. It is the most critical piece of the agency investigation. More on this in a bit.

4. The investigation will may also include a request for information (documents), a request for an on-site visit, or contact information for witness interviews of management and non-management personnel. Do not assume, however, that you have to turn documents over, open up your business, or make people available simply because the agency is asking. The requests still must comply with basic notions of relevancy and discoverability.

5. Once the investigator has completed the investigation, the EEOC will make a determination on the merits. If EEOC determines that there is no reasonable cause to believe that discrimination occurred, the charging party will be issued a letter called a Dismissal and Notice of Rights that tells the charging party of the right to file a lawsuit in federal court within 90 days from the date of receipt of the letter, with a copy to the employer.

6. If EEOC determines there is reasonable cause to believe discrimination has occurred, both parties will be issued a Letter of Determination stating that there is reason to believe that discrimination occurred and inviting the parties to resolve the charge through an informal conciliation process. If conciliation fails, the EEOC has the authority to file a lawsuit in federal court or issue the same Notice of Right to Sue, releasing the employee to file his or her own lawsuit within 90 days. The process is differently with the OCRC, which ends with a formal administrative hearing and a right to appeal to common pleas court. Also, under Ohio’s civil rights laws the employee always has the right to bypass the agency and proceed directly into court.

There is an inclination within companies to go it alone in EEOC and other agency proceedings, believing that the expense of hiring an attorney is not justified at this early junction. I cannot more strongly caution against this urge.

As I said above, the statement of position is the critical piece of the agency investigation. It not only tells your story, but it locks in your story because it is discoverable by the employee in a later lawsuit. One of the easiest ways to create a jury question on the issue of pretext and lose a summary judgment motion is to give a reason for termination different than that set out in your EEOC position statement.

You should assume that every charge – no matter the merit – will turn into a lawsuit. Employment litigators can interview witnesses, review policies and personnel files, and make decisions as to your best defense. Not involving an attorney as early as your first receipt of the charge of discrimination can cost valuable insight into your best effort to win the case.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Update your Technology Policy to account for personal, web-based email

Last week I discussed Stengart v. Loving Care Agency, which held that employees had a reasonable expectation of privacy in the personal, password-protected, web-based email account accessed on the company-owned computer. Stengart may not be an Ohio case, but it teaches some important lessons that all employers should take to heart when putting in place a technology or e-communications policy. In light of this case, the following is an update to my prior post, 10 tips for drafting a workplace technology policy, with five more things to consider for your policy:

1. Warn all employees that the use of all electronic resources is monitored, and that employees have no expectation of privacy in communications transmitted using company-owned resources or over the company network.

2. Explain to employees that copies of messages sent and received through a personal, web-based email account on a company-owned computer could be stored on that computer.

3. Inform employees that the has the discretion to review all communications sent or received via company-owned equipment, regardless whether a personal account is used, but subject to laws regarding attorney-client and other privileged communications.

4. Restrict employees from using of any company technology to communicate with a personal attorney.

5. Disclose that violations of the policy – including the prohibition on communications with a personal attorney – will be punished by discipline up to and including termination.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

WIRTW #121

This week’s summary follows-up on two important stories I wrote about this week – mandatory lactation breaks, and Craig Becker’s recess appointment to the NLRB, plus some other stuff.

Lactation Breaks

• FLSA Amended to Require Breaks for Mothers to Express Breast Milk – from Washington D.C. Employment Law Update

• Health Care Bill Easter Eggs – from Lawffice Space

• Who knew the health reform legislation amended the Fair Labor Standards Act? – from Wage & Hour Defense Blog

• New federal law requires unpaid breaks for nursing mothers – from Kiernan’s Corner: Preventive Law for Employers

• Secrets of Health Care Reform – from The Word on Employment Law with John Phillips

• Texas Employers Must Provide Breaks for Breastfeeding Mothers – from Texas Employment Law Update

• New Health Care Bill Adds Federal Rights Regarding Lactation / Breast Pumping in Workplace; Conn. Law Unchanged – from Connecticut Employment Law Blog

• Exposing Breasts in the Workplace: Part of Healthcare! – from HR Observations

• FLSA Now Requires Breastfeeding Breaks and a Place to Take Them – from Delaware Employment Law Blog

• Lactation / Breast Pumping Rights At Work Contained in the Patient Protection and Affordable Care Act – from Fitzpatrick on Employment Law

Labor Law

• Why the NLRB Recess Appointments Can Be Good For Employers – from Dan Schwartz’s Connecticut Employment Law Blog

• The NLRB in Transition - Whither Board Law? – from EFCA & Labor Law Reform Blog

• Becker Hysteria and Union Avoidance – from The Word on Employment Law with John Phillips

• Strategy Alert: Too Few Workers and Union Activity – from Michael Haberman’s HR Observations

Social Networking & Technology

• Sure, You Can Use Facebook at Work …  We’ll Just Monitor What You Post – from Molly DiBianca’s Delaware Employment Law Blog

• Employment Law Considerations: Employee Use of Geolocation Services – from Social Networking Law Blog

• Work Email belongs to the Employer – from San Antonio Employment Law Blog

• CNN: Facebook and Job Seekers – from employeescreenIQ Blog

FMLA

• Workplace Flexibility – from Workplace Prof Blog

• Ninth Circuit: Judges Must Decide Front Pay Awards In FMLA Cases – from Hunton Employment & Labor Law Perspectives™

• How to handle those rare employees who abuse FMLA – from HR Cafe

• History of permitting FMLA leave grounds airline's defense to ADA claim – from Work Matters

Wages & Benefits

• How Does the Heath Care Reform Package Impact Employers? – from World of Work

• Officers Not Entitled to Pay For Donning And Doffing Uniforms, Ninth Circuit Rules – from Wage & Hour Counsel

• Proper Arbitration Agreements May Prevent FLSA Class Action Suits – from Overtime Advisor

Trade Secrets & Competition

• Just the Stats Please! New Study Provides Statistical Snapshot of Federal Court Trade Secret Litigation – from Trade Secrets and Noncompete Blog

• Caught Red Handed with LinkedIn – from Rob Radcliffs’ Smooth Transitions

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

DOL: “We can help.” Employers: “Don’t do us any favors.”

I just received the following email from the Department of Labor:

Today, the Secretary of Labor and the Deputy Administrator of the Wage and Hour Division officially launched a national public awareness campaign called “We Can Help.” This public awareness effort is intended to provide workers with information about their rights in the workplace and to educate them on how to seek the assistance of the Wage and Hour Division when they believe that they have been the subject of a violation.

The campaign includes a launch of a new Web site at http://www.dol.gov/wecanhelp.

It is telling that the most prominent part of this website is a section entitled, “How to File a Complaint.” While it has now been fixed, the website initially identified itself as the “Wage and Hour Devision.” We litigators call that an admission against interest.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

NJ Supreme Court hampers corporate email surveillance

Employers generally think that they own and control all data that passes through their computer networks, whether work-related or personal to an employee. Earlier this week, in Stengart v. Loving Care Agency [pdf], the New Jersey Supreme Court issued a landmark decision that should concern all businesses, and could greatly inhibit employers’ ability to monitor how employees use workplace technology for personal reasons.

Consider the following facts. You issue a manager a company-owned laptop. The employee – who is not technologically savvy – does not realize that the Internet browser automatically saves on the hard drive a copy of each web page viewed. During her employment, the employee uses the computer to contact her attorney using her personal, web-based, password protected Yahoo email account. She did not save her private login or password on the computer. After she quit and returned the laptop, she sues for discrimination. You are able to extract, via a computer forensic expert, the emails she sent to her attorney. When you turn over in discovery copies of those emails, it hits the fan.

You rely on the following Electronic Communication Policy for your belief that the employee had relinquished any expectation of privacy over the personal emails stored on the company-owned computer:

The company reserves and will exercise the right to review, audit, intercept, access, and disclose all matters on the company’s media systems and services at any time, with or without notice.…

Email and voice mail messages, internet use and communication and computer files are considered part of the company’s business and client records. Such communications are not to be considered private or personal to any individual employee.

The principal purpose of electronic mail (email) is for company business communications. Occasional personal use is permitted; however, the system should not be used to solicit for outside business ventures, charitable organizations, or for any political or religious purpose, unless authorized by the Director of Human Resources.

The Policy also specifically prohibits “certain uses of the email system” including sending inappropriate sexual, discriminatory, or harassing messages, chain letters, “[m]essages in violation of government laws,” or messages relating to job searches, business activities unrelated to the employment, or political activities. The Policy concludes with the following warning: “Abuse of the electronic communications system may result in disciplinary action up to and including separation of employment.”

The court in Stengart held that the employee had a reasonable expectation of privacy in the personal, password-protected, web-based email account accessed on the company-owned computer.

• The employee subjectively expected the emails to be private because she used a personal, password-protected email account instead of her company email address, and did not store the account’s password on the computer.

• The expectation of privacy was also objectively reasonable, because the Policy does not address the use of personal, web-based email accounts, and does not warn employees that the contents of emails sent via personal accounts can be forensically retrieved and read by the company. Moreover, by permitting occasional personal use, the Policy created doubt over who owns the emails.

The following language – which suggests that regardless of the policy language used, the ability of employers to peer into employees’ private, web-based email is severely restricted – is probably the most important part of the opinion for employers.

The Policy did not give Stengart, or a reasonable person in her position, cause to anticipate that Loving Care would be peering over her shoulder as she opened emails from her lawyer on her personal, password-protected Yahoo account….

[This] does not mean that employers cannot monitor or regulate the use of workplace computers. Companies can adopt lawful policies relating to computer use to protect the assets, reputation, and productivity of a business and to ensure compliance with legitimate corporate policies. And employers can enforce such policies. They may discipline employees and, when appropriate, terminate them, for violating proper workplace rules that are not inconsistent with a clear mandate of public policy…. For example, an employee who spends long stretches of the workday getting personal, confidential legal advice from a private lawyer may be disciplined for violating a policy permitting only occasional personal use of the Internet. But employers have no need or basis to read the specific contents of personal, privileged, attorney-client communications in order to enforce corporate policy. Because of the important public policy concerns underlying the attorney-client privilege, even a more clearly written company manual – that is, a policy that banned all personal computer use and provided unambiguous notice that an employer could retrieve and read an employee’s attorney client communications, if accessed on a personal, password protected email account using the company’s computer system – would not be enforceable.

On Monday, I’ll be back with my thoughts on the lessons of this case and how to incorporate them into your Electronic Communications Policy.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Department of Labor issues game-changing guidance on the administrative exemption and loan officers

In February, I discussed the application of the Fair Labor Standards Act’s administrative exemption, and made the point that whether an administrative employee is administratively exempt is determined on an employee-by-employee basis. Despite this fact-specific analysis, mortgage loan officers comprised one category of administrative professionals that the Department of Labor has historically found to be covered by the administrative exemption. Last week, however, the DOL issued a game-changing opinion (Administrator’s Interpretation No. 2010-1), in which it concluded that “employees who perform the typical job duties of a mortgage loan officer do not qualify” as exempt administrative employees:

A careful examination of the law as applied to the mortgage loan officers’ duties demonstrates that their primary duty is making sales and, therefore, mortgage loan officers perform the production work [as opposed to administrative work] of their employers.

This pronouncement important for three reasons:

1. This Interpretation is a stark departure from conventional wisdom, and will likely cause an upheaval in how lenders pay their loan officers.

2. The DOL has discontinued issuing detailed Opinion Letters in response to specific inquiries from the public. Instead, the Administrator of the Wage & Hour Division will issue formal Administrator Interpretations that are intended to give across-the-board interpretations of general wage and hour issues. If this first Interpretation is any indication, the Administrator will focus on areas of the law that are the most confusing or frequently litigated. These Administrator Interpretations, though, should carry the same import as the former Opinion Letters.

3. The Department of Labor has swung with the political winds. Even before January 20, 2009, wage and hour was a minefield for employers, but at least you could usually see where the mines were. Now, they are all hidden, waiting for even the most diligent of employers to detonate one. 

Many of my blogging compatriots have shared their own thoughts on this issue:

• Wage & Hour Defense Blog
• Wage & Hour Counsel
• Washington D.C. Employment Law Update
• The Word on Employment Law with John Phillips
• Connecticut Employment Law Blog
• Employer Law Report
• Fair Labor Standards Act Law
• Smart HR Manager News
• California Labor and Employment Defense Blog
• Fitzpatrick on Employment Law
• Wage & Hour Counsel
• Texas Employment Law Update

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Do you know? Healthcare bill requires lactation breaks

This morning I’m updating and synergizing two of last week’s posts: Do we really need to pump up workplace lactation rights? and House passes Health Care Bill – What does this mean for employers?

Section 4207 [pdf] (on page 1217) adds a new provision to the Fair Labor Standards Act, which will require employers to provide reasonable unpaid breaks for nursing mothers. Specifically:

• Unpaid breaks must be provided each time a lactating employee needs to express breast milk for up to 1 year after the child’s birth.

• The employer must provide the employee with a place that is shielded from view and free from intrusion from coworkers and the public other than a bathroom.

• These requirements are mandatory for employers with 50 or more employees.

• Employers with less than 50 employees are exempt upon a showing that the requirements impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.

Because federal law now requires most employers to provide lactation breaks, it’s clear that we do not need a state law raising lactation to a protected class.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.