Get Ready: the Major Changes to Employment Law we are Likely to See Under the Trump Administration

After President-Elect Donald Trump’s inauguration on January 20, 2017, the world of human resources and employment law may see a major upheaval.  While it is impossible to predict exactly what may happen in the coming years, we anticipate that the following major changes may be on the horizon:

  • DOL’s Final Rule

As everyone in HR is aware, enforcement the DOL’s final rule regarding the white collar exemption was enjoined by a federal Court in Texas in November.  The injunction is being appealed.  However, due to the complicated and time-consuming process involved in litigation and agency rulemaking, the Obama administration did not resuscitate the final rule or win on appeal during President Obama’s term.  Under Andrew Puzder’s presumed leadership of the DOL, it is highly unlikely that we will see the agency make an effort to save the final rule.   Rather, we expect that the final rule will either (a) never be heard of again; or (b) come back (in a year or so) as a watered down version with – at the very least – a lower salary threshold.

  • Non-Compete Reform

President Obama’s “Call to Action” to states to reform their laws regarding non-compete, non-solicitation and other restrictive covenants will likely not continue under the President-elect.  While states are free to reform their own laws, we are probably not going to see any further encouragement from the Trump administration on this front.

  • EVERYTHING from the NLRB

The Trump administration will quickly have a majority at the NLRB, as it currently has two seats open and one existing Republican member.  All of the NLRB’s actions and initiatives over the past eight years will be in play – including graduate assistants’ ability to unionize, the persuader rule, and the quickie-election rules.  Changes in this area will likely be quite employer-friendly.  In addition, we can expect the NLRB to be much less activist in its rulings related to protected and concerted activity related to social media.

  • Litigation

The President holds the power to appoint judges to all of the federal Courts – ranging from District Courts to, obviously, the Supreme Court.  Accordingly, we are likely to see employer-friendly judges appointed to the benches at all levels and across the country.  These judges will likely have very different interpretations of the gamut of federal statutes touching upon the employment relationship, including the Age Discrimination in Employment Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act, the Fair Labor Standards Act, etc.  We can expect to see a rollback of some of the more fact-intensive aspects of the statutes – such as, probably, a lower threshold for whether an accommodation is reasonable and a higher threshold to prove causation in discrimination/retaliation cases.  However, the judges will be constrained by established, controlling precedent set by Obama appointees.

  • Family Leave

Not all of the changes will mean doom and gloom for employees.  In September, the President-elect called for six weeks of paid maternity leave.  Under the FMLA and the Massachusetts Parental Leave Act, workers are only entitled to unpaid leave for the birth and care of a newborn child or the placement of an adopted or foster child.  Although it is unclear as to whether President-elect Trump will follow through on this “campaign promise,” the fact that his daughter, Ivanka, is a strong supporter of the proposal should mean that it has a strong chance of becoming a Trump administration priority within his first year in office.

  • Obamacare

The President-elect talked a big game about repealing (and perhaps replacing) Obamacare.  If the Trump administration and Congress ultimately do so, employers will be significantly impacted, as the requirements regarding the healthcare coverage they must offer to employees will likely be reduced/eliminated.

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Know Your Employees – Or Else!

Recent Appeals Court Case Highlights An Employer’s Potential Liability For An Employee Outrageously Overstepping the Bounds

On a dark and stormy night, your employee abuses her access to your electronic data systems and snoops in an insurance database to dig for confidential information.  She succeeds and then turns that secret information over to her convict boyfriend.  The felon then uses it to physically intimidate a witness.  The boyfriend is caught.  Both the employee and her boyfriend confess to their wrongful and criminal actions.  Clearly, the employee was acting outside the scope of her employment and you as the employer cannot be held responsible by the intimidated witness?  Or can you?

The Massachusetts Appeals Court was recently asked this very question.  And just before the new year, it came up with a surprising answer.  That answer creates yet another “rock and a hard place” choice for employers.

The Information, the Intimidation and the Litigation. In the case, Mark Adams v. Congress Auto Insurance Agency, Inc., Bonnie had a long and successful career history with Acme Insurance Agency, most recently as a customer service manager.  In that role, she had access to the data systems of Good Hands.

Good Hands insured Bonnie’s private automobile.  Nine years after Bonnie was hired, she lent her car to her boyfriend, Clyde, who was on supervised release following a federal firearms conviction.  While driving Bonnie’s vehicle, Clyde led police on a high speed chase which resulted in a crash following which he abandoned the vehicle and fled the scene.  Bonnie’s vehicle was totaled and she reported it stolen to the police.  She also filed an insurance claim with Good Hands.

The owner of the vehicle struck by Clyde, Innocent Bystander, also filed a claim through his own insurer who, in turn, asserted a claim against Good Hands.  Somehow, Innocent Bystander was able to identify Clyde as the driver of Bonnie’s vehicle.

Bonnie was not aware of the identity of that claimant.  Using (or abusing) her access to Good Hands’ data systems, Bonnie was able to see the notes in Good Hands’ file and learn Innocent Bystander’s identity and his contact information, including his cell phone number and home address.  Bonnie then turned that information over to Clyde.

The erstwhile Clyde then telephoned Innocent Bystander claiming to be a Massachusetts State Police officer.  He informed Innocent Bystander that the driver of the other car was a “very, very dangerous man with very dangerous friends.”  He also warned Innocent Bystander to do himself a favor and shut up or “you will have issues.”  Clyde’s “friendly advice” was punctuated with choice profanity.

Innocent Bystander immediately reported the threat to the police.  The police visited Acme in an effort to speak with Bonnie, who refused.  Sometime later, Acme terminated the employment of Bonnie for “serious misuse of access to confidential information.”  Bonnie and Clyde were criminally charged and pled guilty to witness intimidation and conspiracy.

Innocent Bystander sued for emotional distress damages, claiming that Clyde’s threat caused him repeated nightmares about the phone call, high anxiety, intrusive thoughts, racing hot flashes, and feelings of detachment.  No doubt expecting to recover nothing from the real culprits, Innocent Bystander named Acme as a defendant on a theory that it had been negligent in allowing and continuing to permit Bonnie access to confidential information as part of her job.

Not surprisingly, Acme argued that it could not have foreseen that Bonnie had an unsavory boyfriend, that she would lend him her car, that the boyfriend would be involved in a high speed crash following a police chase, that Innocent Bystander’s car would be involved in that crash, that Innocent Bystander would make a claim, that Bonnie would misuse her access to confidential information of Good Hands to find out the name and contact information of the Innocent Bystander, that Bonnie would pass that confidential information along to her boyfriend, that her boyfriend would then use that confidential information to pose as a police officer and make threats against Innocent Bystander, and that Innocent Bystander would then suffer emotional distress from that threat.  The lower court agreed that all of this was simply not foreseeable and dismissed the claims against Acme.

What You Don’t Know May Hurt You. Not so fast, the Appeals Court ruled.  There were things that Acme knew about Bonnie prior to the crash that could have put them on notice that she would go bad and precipitate the chain of events leading to Innocent Bystander’s emotional distress.  Two years before the crash, Bonnie (and Clyde) had been arrested in Iowa for possession of illegal firearms.  Bonnie, who admitted the firearms were hers at the time apparently to protect Clyde, was released on bail and returned to work at Acme back in Massachusetts.

More than a year and a half before the crash, the United States Marshals Service arrested Bonnie at Acme apparently for jumping bail.  She returned to work four days later and explained away the arrest as a misunderstanding and that the ongoing proceedings were “not going to affect her ability to work.”  Acme allowed her to return to work without investigating what had happened with respect to the arrest because it did not think at the time that it was germane to her employment.  No doubt part of the rationale was the employer’s respect for the privacy of one of its employees.

In fact, following her bail-jumping arrest, Bonnie had acknowledged responsibility, successfully completed a pre-trial diversion program and had secured dismissal of the indictment against her as a result.  It was not until seven weeks after the criminal proceedings had been dismissed that Clyde went on his fateful joy ride.

Reversing the lower court’s dismissal of Innocent Bystander’s claims, the Appeals Court held that a jury should be given the opportunity to decide whether Acme had breached its duty to Innocent Bystander.  Despite the outrageous behavior by Bonnie and Clyde, it is a question for a jury to decide whether Acme (a) acted as a reasonable employer would have or (b) should have done more to investigate Bonnie (and arguably her relationship with Clyde) and conclude that her access to the Good Hands’ database and confidential information should have been cut off.

Between the Proverbial Rock and a Hard Place – What Is an Employer to Do? This case presents a dilemma for employers. On the one hand, employers are encouraged to respect their employee’s privacy and give those who have had trouble with the law a second chance.  On the other hand, this case stands for the proposition that an employer who does just that can find themselves in trouble.  How can those two principles co-exist?  More importantly, is there any real world advice that can help an employer negotiate this mine field?

The root of the holding in this case was that the employee’s job put her in a position to cause harm to the public because of her access to confidential information that she could misuse.  The Court likened it to putting the keys to residential apartments in the hands of a property manager who had a history of violence.  If the employer has some inkling of that past history, it cannot turn a blind eye to the potential harm that could result.  In this case, the Court took that concept of physical threat and expanded it to the realm of harm caused by misuse of information.  Where an employer is a gatekeeper of such information, it must be vigilant in knowing who it employs to keep that gate.

Answers to the following questions may help employers navigate these choppy waters:

  1. What is the job? Does the job put the employee in a position where he could pose a threat to the public if he proves to be a ne’er-do-well?
  2.  What does an employer know? If the position is one where there is a risk to the public, has anything come to the attention of the employer that suggests that the employee should not be trusted to keep the gate honestly? If so, how can the employer determine whether the employee’s history suggests such a risk?
  3.  What can an employer do? If the history does suggest that heightened risk, are there intermediary measures that can be taken to reduce or eliminate that risk? Can access be curtailed or limited? Can the employee be more closely monitored? Is termination warranted if there is no other way to manage the risk?

In an area fraught with danger, this step-by-step approach is the best prescription to try to minimize the risk to the public and, in turn, the employer. It also provides the best defense to a claim that the employer failed to act reasonably under the specific circumstances.

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Breaking News: DOL’s Final Rule Increasing Salary Threshold for White Collar Exempt Employees Enjoined and Will Not Take Effect on December 1

Just as commentators, political pundits and Vegas odds makers were surprised by the recent Presidential election results, the legal world was surprised late yesterday by Federal Court Judge Amos L. Mazzant’s decision blocking the Department of Labor’s Final Rule related to the salary test for white collar exempt employees from taking effect, as planned, on December 1st (the “Final Rule”).  As we previously reported in our November 18th “Off the Clock” blog post, twenty-one states, as well as the U.S. Chamber of Commerce and other business groups, had filed an emergency action in federal court seeking to enjoin the Final Rule.

In his decision, Judge Mazzant ruled that the Department of Labor exceeded its authority and ignored Congressional intent when it published its Final Rule raising the minimum salary level from $23,660 annually to $47,476 annually.  In addition, the Court ruled that the Department of Labor lacked authority to impose the automatic salary increase provision found in the Final Rule, which would first take effect in January 2020.  The practical import of the Judge’s decision is that the Final Rule is currently frozen and, therefore, will not be enforced by the Department of Labor.  Thus, the current salary threshold of $455 per week or $23,660 annually remains in effect for white collar exempt employees under the Fair Labor Standards Act (“FLSA”).

Procedurally, issuance of an injunction does not end the case that was filed by the states and business groups.  The Department of Labor could continue to pursue the case to seek a final ruling.  The likelihood of the Department of Labor, however, securing a reversal of the decision in the Federal District Court that preliminarily enjoins the Final Rule, before appellate review, is virtually non-existent.

Notably, although the action was filed by only 21 of the 50 states, the Judge’s injunction shall have nationwide effect and applies to both private and public-sector employers alike.

As has already been widely reported in the press, certain major employers within the United States had already implemented salary increases in anticipation of the December 1st effective date.  Those employers are now faced with the business decision as to whether to honor those increases or roll back the salary increases in light of the change in the law.  Any such roll back would clearly negatively impact employee morale.

To be sure, Judge Mazzant’s decision will not be the last chapter written with respect to whether the salary threshold should be increased for white collar exempt employees under the FLSA.  The Court’s decision makes clear that such an increase is the province of Congress, however.  As such, there will almost certainly be legislation filed in the coming months aimed at accomplishing what the Final Rule had intended to accomplish.  In addition, once President-elect Trump assumes office, his administration’s priorities will shape future rulemaking efforts within the Department of Labor.  For now, however, employers can be certain that the current salary threshold for white collar exemption remains unchanged, and no action is required to attempt to comply with the now-enjoined Final Rule.

We will continue to monitor developments under the Fair Labor Standards Act and will provide timely updates.  If you have any questions concerning this issue or any other employment-related matter, please contact one of our Labor, Employment and Employee Benefits attorneys.

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USCIS Issues Updated Form I-9

On November 14, 2016, the United States Citizenship and Immigration Services (USCIS) issued a revised version of the Form I-9 (Employment Eligibility Verification).

Employers must begin using the updated Form I-9, which is dated “11/14/2016,” by January 22, 2017.  In the interim, employers may continue to use either the prior version dated “03/08/2013” or the newly released version.

The updated Form I-9 features a number of changes, including but not limited to:

  • Adding online prompts in each of the various fields to assist with completion of the Form;
  • Asking for “other last names used” in Section 1 instead of “other names used;”
  • A streamlined certification for certain foreign nationals; and
  • A new area in Section 2 for including “additional information” so employers do not have to cram such information in the margins.

Although the Form I-9 has been significantly updated to be more intuitive and user friendly, particularly when completed electronically through Adobe Reader, it bears noting that the Form I-9 must still be printed, signed and dated by both the employee and the employer representative in a timely manner and retained by the employer. 

In revising the Form I-9, USCIS also did away with the various instructions, which had previously been included in the form. The instructions are now maintained separately from the Form I-9 (like other USCIS forms). Although separate from the Form I-9, employers must ensure that all pages of the instructions and Lists of Acceptable Documents are available to all employees who complete the form, either in hard copy or electronically.

You can access the updated Form I-9 here. The Instructions for the Form I-9 may be accessed here.

If you have any questions about the updated Form I-9, please feel free to contact a member of our Labor, Employment, and Employee Benefits Group.

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MBA’s 14th Annual In-House Counsel Conference, “What Keeps Counsel Up At Night”

On Thursday, December 1, Bob Kilroy will be speaking as part of a panel the Massachusetts Bar Association’s 14th Annual In-House Counsel Conference, entitled “What Keeps Counsel Up At Night.”   The program will provide information on topics and trends of significant concern to in-house practitioners, including:  the newly enacted Pay Equity Act and steps that can be taken now to mitigate the risk and liability associated with pay equity claims, transgender rights in the workplace, including complaints raised by co-workers related to choice of restroom facilities, the Department of Labor’s Final Rule related to white collar exemptions under the FLSA, and what employers need to know in light of the ballot initiative for recreational marijuana use.

 If you like to attend, please sign up here.  We hope to see you there!

 

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Department of Labor’s Overtime Rule Scheduled to Take Effect on December 1, 2016 Remains Subject to Challenge in Federal Court

As employers throughout the nation prepare for the Department of Labor’s Overtime Rule to take effect on December 1st, a legal challenge by the U.S. Chamber of Commerce and other business groups, as well as 21 states, continues to wind its way through a Federal District Court in Texas.  Yesterday, Judge Mazzant of the Eastern District of Texas adjourned a motion hearing without ruling on the business groups’ motion to enjoin the new rule, but, in so doing, the Judge stated that he expected to issue his ruling on November 22d.  If Judge Mazzant issues the requested injunction in such a manner as to have nationwide effect, then the Overtime Rule that increases the salary threshold for white collar exemptions to $47,476 annually will not go into effect on December 1st.  Thus, the current salary threshold of $23,660 would remain in effect.  If, instead, the motion is denied, another hearing is expected to occur on November 28th in response to the plaintiffs’ motion for summary judgment – again seeking to strike down the Overtime Rule.  Judge Mazzant’s aggressive questioning of both sides during the November 16th motion hearing has not provided any real clue as to how he is apt to rule.

 We will continue to monitor developments on this issue and provide updates following substantive rulings by the Judge.  In the meantime, it is wise to continue to prepare as if the Overtime Rule will, in fact, go into effect on December 1st as planned.

 

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What Massachusetts Employers Should Know About Recreational Marijuana

On November 8, 2016, Massachusetts voters approved a ballot question legalizing marijuana for recreational and commercial use. The Regulation and Taxation of Marijuana Act (the “Act”) provides that – as of December 15, 2016 – persons at least 21 years of age may possess, use, purchase, process, and/or manufacture 1 ounce or less of marijuana outside their residence and up to 10 ounces of marijuana within their residence.

As relevant to employers, the Act provides that property owners may prohibit or otherwise regulate the consumption, display, production, processing, manufacturing or sale of marijuana and marijuana accessories on or in their property.  Importantly, the Act further provides that it does not require employers to permit or otherwise accommodate conduct allowed by the Act in the workplace and does not affect the authority of employers to enact and enforce workplace policies restricting the consumption of marijuana by employees.

Employers should act fast to ensure that their drug use, drug testing, and any related policies are updated in light of the new law and clearly reflect the organization’s position and expectations of its employees.

Employers subject to certain government and customer requirements with safety, health, and liability concerns are free to adopt zero-tolerance policies. Such policies should be clearly articulated to explicitly include marijuana.  Otherwise, the term “illegal drug” could cause confusion – since marijuana is illegal under federal law but legal under state law.

With respect to testing, the legal risk of testing applicants for employment is low because the applicant may avoid any potential invasion of privacy simply by choosing to withdraw from the application process.  Under the current law, employers are free to withdraw offers to applicants who test positive for marijuana, if the application and job advertisements provide notice.

Once an employee is hired, employers should only test employees in safety sensitive positions for marijuana, and only on a random basis or when they have reasonable suspicion that the employee is under the influence.  Employers are cautioned to not test employees in non-safety sensitive positions, as such tests could invite invasion of privacy claims.  Employers are free, however, to impose discipline based on observation of workplace impairment for employees occupying non-safety sensitive positions.  Unionized employers must also ensure compliance with applicable provisions set forth in collective bargaining agreements related to drug testing, as well as compliance with the need to establish just cause when imposing discipline.

If you need guidance in crafting a policy that fits your workplace, or would like your drug use and off-duty conduct policies reviewed, we would be happy to assist you.

 

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