NLRB Gives Employees the Right to Use Company Email for Protected Communications

Breaking new ground, the National Labor Relations Board ruled last week that employees have the right to use company email during non-working time to communicate about the terms and conditions of their employment. The Board’s decision in Purple Communications, Inc., 361 NLRB No. 126 (Dec. 11, 2014),  overturns its 2007 decision in Register Guard, which held that employees generally do not have a right to use company email for communications protected under Section 7 of the National Labor Relations Act. Our previous posts on the Purple Communications case are here and here.

At issue in Purple Communications was an electronic communications policy that prohibited employees from using their employer’s email system except for “business purposes.” The employees worked as interpreters at various call centers and used company-provided email accounts in the course of their work. The union representing the employees claimed that the business-only email policy was unlawful on its face because it interfered with the employees’ ability to engage in union organizing efforts.

Reversing its holding in Register Guard, the Board found that it had struck the wrong balance in that decision between the rights of employees to engage in Section 7 communications and the property rights of employers in their electronic communications systems. Striking a new balance, the Board held in Purple Communications that employees who have been given access to a company email system have a presumptive right to use the system to communicate about the terms and conditions of their employment during non-working time. According the Board, a company may rebut the presumption and justify a total ban on non-work email by showing that “special circumstances” make the ban necessary to maintain production or discipline. However, absent these special circumstances, employers may impose uniform controls over their systems only to the extent that the controls are needed to maintain production and discipline.

The Board’s decision in Purple Communications leaves a number of questions unanswered, including what showing will be required to demonstrate “special circumstances” justifying a total ban on non-work email use. In addition, because the decision is limited to employee use of company email systems, questions remain as to what restrictions may be permissible concerning the use of other electronic communications systems. What is clear, however, is that with the decision in Purple Communications, the Board is taking very seriously its responsibility to adapt the NLRA to what it has described as the “changing patterns of industrial life.”

Consent is Key for BYOD

With Black Friday behind us and holiday shopping still heating up, ‘tis the season when many of us will acquire new gadgets and technology to power our digitally-enhanced lives.  For businesses, this time of year also means thinking about how best to accommodate employees who want to use their personal smartphones, tablets, or other electronic devices to connect to company networks.

BYOD (“bring your own device”) programs offer benefits to both employers and employees.  Employers, for example, benefit from reduced IT costs associated with providing expensive technology to employees, while employees benefit from the freedom to choose their own devices for work and play.   Yet the ability to access both work and personal content on a single employee-owned device presents some challenges, particularly with respect to data security and privacy.  On occasion, an employer may need to access an employee’s personal device to protect company information, such as when the employee departs or the device is lost or stolen.  However, if the employer does not have explicit authorization from the employee to access the device, it may end up having not only a disgruntled employee, but potential liability as well.

As a case in point, last month a federal district court in Texas ruled on claims asserted by an employee that his former employer violated the federal Computer Fraud and Abuse Act (“CFAA”) and other federal and state laws when it remotely accessed his personal smartphone and deleted all data on the phone, including personal and professional data, without his consent.  The employee in the case, Rajaee v. Design Tech Homes, Ltd., claimed damages to the tune of $105,100 attributable to his lost passwords, contacts, and photographs.  In this case, the court found these damages were not compensable under the CFAA on the grounds that the act covers only losses associated with investigating or responding to a violation of the act.  Because Rajaee did not produce evidence of any costs incurred to investigate or respond to the deletion of his data, the court concluded he had no losses under the CFAA, and therefore no claim.  Of course, had Rajaee established that he did incur such costs, the result in this case may very well have been different.

So, what does this mean for employers implementing BYOD programs?  At a minimum, it means that employers providing BYOD access should have policies in place describing the circumstances under which it may be necessary to access personal content on an employee’s personal device.  To allay legitimate privacy concerns, the policy should provide specific examples of when such access may be necessary, including situations involving lost or stolen devices, or technical support.  With an effective BYOD policy in place, employers should then require employees to provide written consent to the policy.

Does a Request for Disability Benefits Qualify as a Request for an Accommodation of Leave Under the ADA?

Last month, the Sixth Circuit Court of Appeals answered this question in the negative and found that an employee’s request for long-term disability benefits did not amount to a request for a reasonable accommodation in the form of leave.  As a result, the Sixth Circuit held that the employee’s failure-to-accommodate claim under the ADA failed where he could not point to any other evidence showing that he actually requested leave as a reasonable accommodation.

The employee in this case, Judge v. Landscape Forms, Inc., injured his arm while working at home.  The injury required surgery and the employee, Judge, was told by his doctor that the recovery time would be approximately four to six months.  In May 2011, Judge requested and was approved for FMLA leave until early August 2011.   During his leave, he also applied and was approved for long-term disability benefits beginning in July 2011.

Shortly before he was due to return to work, Judge informed Landscape Forms that he could not yet use his arm and that he would need six weeks of therapy.  He provided Landscape Forms a set of work restrictions, but he did not follow up or return to work after Landscape Forms asked for more clarification regarding the restrictions.  In late September 2011, Landscape Forms contacted Judge seeking information on his work restrictions.  Judge responded by faxing a note from his doctor with new work restrictions, but the note did not include any information as to Judge’s estimated date of recovery.  After receiving the doctor’s note, Landscape Forms terminated Judge on the grounds that it needed to maintain staffing levels and could not leave his position open indefinitely.   Judge was subsequently cleared to return to work without restrictions in November 2011.

Judge claimed that Landscape Forms discriminated against him and failed to accommodate his disability by not granting him leave until mid-November 2011.  The key issue for the Sixth Circuit was whether Judge actually requested leave as an accommodation and, if he did, whether the request was reasonable.  The court acknowledged that there is no “bright-line” test to determine when an employee’s request is sufficiently clear to qualify as a request for an accommodation.  However, on the facts of this case, the court found there was no evidence that Judge had ever made any statement that could be construed as a request for leave until mid-November 2011.  Although Judge argued that his request for long-term disability benefits constituted a request for an accommodation of leave, the Sixth Circuit disagreed.  Because Judge’s disability claim was processed through a third-party, which did not provide any information to Landscape Forms about the claim other than its approval, the Sixth Circuit found the request was insufficient to put Landscape Forms on notice that he was requesting leave as a reasonable accommodation or that he was seeking leave until mid-November 2011.

Given its finding that Judge never actually asked for additional leave as an accommodation, the Sixth Circuit did not reach the issue of whether the request would have been reasonable if properly made.  Had it reached this issue, the court might have had an opportunity, like the Tenth Circuit’s recent decision in Hwang v. Kansas State University, to provide additional commentary on when a request for additional leave is reasonable under the ADA, and when it is not.  Obviously, this additional commentary will have to wait for another occasion.

Final Rules for Offering Limited-Scope Dental and Vision Benefits

Under the Affordable Care Act (ACA), group health plans are prohibited from establishing any annual dollar limit on the amount of benefits for any individual. Group health plans must also provide certain preventive care services without imposing any cost sharing requirements for those services. These requirements apply to all employee welfare benefit plans that provide medical care to employees and their dependents directly or through insurance, reimbursement or otherwise, unless they are “excepted benefits.”

Limited-scope dental and vision benefits are group health plans. However, under the old rules, they could qualify as excepted benefits if they were provided under a policy, certificate, or contract of insurance that was separate from and not otherwise an integral part of an employer’s group health plan, provided participants were required to pay an additional premium or contribution for their limited-scope vision or dental benefits.

In September 2014, final regulations were issued that changed the way that limited-scope vision or dental benefits could qualify as excepted benefits. Under the new rules, the requirement that participants pay an additional premium or contribution for limited-scope vision or dental benefits was eliminated. In addition, limited-scope vision or dental benefits do not have to be offered in connection with a separate offer of major medical or “primary” group health coverage. Finally, limited-scope vision or dental benefits will qualify as excepted benefit if participants can decline this limited benefit coverage or if the claims for these benefits are administered under a contract separate from claims administration for any other benefit plans.

Since these rules relax the requirements for establishing that limited-scope vision and dental benefits are excepted benefits, employers will be able to offer these benefits without the administrative costs and burdens associated with the prior rules.

The NLRB's Latest Digital Developments

Last May, we highlighted a pending National Labor Relations Board (NLRB) case where the Board requested comments on whether it should reconsider its view that employees do not have a statutory right to use employer-owned email systems for protected concerted activities. Based on its request in Purple Communications, Inc., the Board appeared to be setting the stage for a potential reversal of its position in Register Guard—as well as a significant re-evaluation of what restrictions an employer may, and may not, impose on the use of its electronic communications systems.

It appears now, however, that the Board is still rehearsing its script:  last month, the Board issued its decision in Purple Communications, 361 NLRB No. 43, (Sept. 24, 2014), and explained that it would “sever and hold for further consideration the question whether Purple’s electronic communications policy was unlawful.”  As a result, the Board’s decision did not reach the merits of whether Register Guard should be overturned.   This means that policies prohibiting any non-business use of an employer’s email system will most likely continue to be lawful—at least in the near term.

In another recent development, the Board held for the first time that merely “liking” a comment on a Facebook page may qualify as protected activity if it relates to comments that are otherwise protected under Section 7 of the NLRA.  Among the issues In Three D, LLC, 361 NLRB No. 31 (Aug. 22, 2014), was whether a bar unlawfully terminated several employees after discovering their discussions on Facebook.  The employees had learned that they owed additional taxes as a result of an accounting error by their employer and had taken to Facebook to vent their frustrations.  One of the employees did not offer any written comments, but did “like” another employee’s post.  The Board found that the comments—including the mere “liking” of another post—qualified as protected concerted activity because they concerned a group discussion of workplace complaints.  It was therefore unlawful for the bar to terminate the employees for their participation in the exchange.

The Board’s conclusion that “liking” a social media post may qualify as protected activity is not altogether surprising.  Other courts, for example, have found that “liking” a post qualifies as speech protected by the First Amendment, reasoning that “liking” a comment is just as much a substantive statement as the comment itself.  It is perhaps no surprise, then, that the Board’s decision appears to “like” the same logic.

What Employers Need to Know About Employer Payment Plans

Some employers may have offered employees pre-tax dollars to help purchase insurance. Such arrangements are called Employer Payment Plans.  Now, however, Employer Payment Plans are prohibited under the Affordable Care Act (ACA) because they are considered group health plans. Under the ACA, group health plans may not establish any annual limit on the dollar amount of benefits for any individual and must provide certain preventive care services without imposing any cost-sharing requirements for these services. Since Employer Payment Plans do not satisfy these requirements, any employer that maintains an Employer Payment Plan for its employees will be subject to a penalty of $100 per day per affected individual.

Nonetheless, an arrangement under which an employee may choose to either receive cash or have an after-tax amount applied toward health coverage is not considered an Employer Payment Plan.  Employers may therefore establish payroll practices by which they forward post-tax employee wages to a health insurance issuer at the direction of an employee without establishing a group health plan, if:

1. No contributions are made by the employer;
2. Participation in the program is completely voluntary for employees;
3. The employer does not endorse the program (although the employer may permit the insurer to publicize the program to its employees and the employer may collect premiums through payroll deductions or dues check offs and remit these funds to the insurer); and
4. The employer receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions.

Supreme Court Will Hear Three Employment Discrimination Cases

The United States Supreme Court held its traditional first of October meeting to determine which cases it will hear during the 2014-15 term.  The Court has accepted three employment discrimination cases.

Young v. United Parcel Service.  The question is whether the employer has to accommodate pregnant employees who are unable to handle some of the physical requirements of the job, i.e. UPS employees who have to carry heavy boxes.  The UPS employee has appealed to the Supreme Court claiming that her needs while pregnant were not accommodated by UPS’s “pregnancy-blind policy”; the policy limited accommodations to employees who were injured on the job, who were defined as “disabled” and who had lost their DOT certification.

Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc.  “Did Abercrombie and Fitch discriminate against a Muslim job applicant when she was rejected based on her desire to wear a head scarf at work?”  The significant question is whether the employer has to have “actual knowledge” that a practice is religious before it is required to accommodate the practice in the workplace.  Abercrombie claims that the job applicant did not explicitly indicate that her scarf had religious meaning.

Mach Mining, LLC v. EEOC.  This case involves the extent to which courts may enforce the EEOC’s duty to conciliate cases pre-litigation.  Mach moved for summary judgment alleging the EEOC had failed to fulfill its statutory duty to conciliate the case in good faith.  There is a split among the Appellate Circuits as to whether or not the EEOC’s duty to conciliate is reviewable by a court.

Inflexible Leave Policies and the EEOC

The last several years have seen the Equal Employment Opportunity Commission (“EEOC”) take an aggressive stance on inflexible leave policies.  According to the EEOC, these policies – which subject employees to termination after a maximum period of leave – are unlawful because they do not consider whether an additional period of leave might be a reasonable accommodation for individuals with a disability.  The EEOC has achieved considerable success pursuing class-action lawsuits against companies that maintain fixed leave policies, including lawsuits against Supervalu, Inc. and Sears, Roebuck & Co. that settled to the tune of $3.2 million and $6.2 million, respectively.
 
In May, however, the EEOC’s smooth sailing hit some headwinds when the Tenth Circuit Court of Appeals issued its decision in Hwang v. Kansas State University finding that a state university lawfully terminated a professor after she had exhausted her leave under a six-month maximum leave policy.  Although the court readily acknowledged that the professor was a capable teacher, it noted that the professor, by her own admission, had been unable to perform any duties of her position for six months.  Given the length of the absence, the court found it difficult to conceive how an absence so long “could be consistent with discharging the essential functions of most any job in the national economy today.”  And, even if it were, the court concluded that it was still “difficult to conceive when requiring so much latitude from an employer might qualify as a reasonable accommodation.”

In reaching its conclusion, the court briefly addressed the EEOC’s guidance that employers must modify a “no-fault” leave policy if an employee with a disability needs additional unpaid leave as a reasonable accommodation.  According to the court, the EEOC’s guidance did not address the preliminary question it was trying to tackle, which was:  when is a modification to an inflexible leave policy a reasonable accommodation?  Without giving a definitive answer to that question, the court found that, in this particular case, granting an additional period of unpaid leave beyond six months was simply not reasonable.

Although the Hwang decision has the potential to turn the tide on the EEOC, the agency has not sent out any signals that it sees muddy waters ahead.  Just one month after Hwang, the EEOC announced that it had reached another settlement with Princeton HealthCare Systems for $1.35 million, resolving claims concerning PHCS’s 12-week leave policy.  In its press release, the EEOC noted that “addressing emerging and developing issues under the ADA is one of six national priorities” identified in its Strategic Enforcement Plan.  Whether the EEOC chooses to clarify its position through additional guidance, or through further litigation, remains to be seen.

Human Rights Commission Looking for Early Information From Claimants

Representing defendants in claims before the Maine Human Rights Commission can be frustrating because the allegedly detailed statement of charge is often not very detailed. It can be difficult to respond to a claim when the defendant doesn’t fully understand the nature of the charges. Recently, I received a sexual harassment claim which, while detailed in many respects, was vague as to the specific acts of sexual harassment. Apparently, the Human Rights Commission felt the same way. They established a procedure which simultaneously sent the document request to the plaintiff and the respondent. In this case, the request to the complainant asked for very detailed information regarding the sexual harassment, including who committed it, what occurred, when it occurred, where it occurred, who was present, how complainant reacted to it, and how the complainant’s job was affected. Further, it asked whether complainant complained to anyone and to whom, whether an investigation was conducted, whether corrective action was taken, and the identity of any witnesses. This information can be very helpful to the Commission who investigates the claim, as well as the respondents, and can also facilitate the speed of the case.

Do You Know What Your Restrictive Covenant Restricts?

When preparing employment agreements, businesses often want to include provisions that restrict employees in their use of company information, contact with customers, or choice of next employer.  These restrictions, called restrictive covenants, serve very distinct purposes and it is important to keep the purpose of each in mind when preparing employment agreements.  For example, although a non-disclosure agreement might prevent an employee from disclosing confidential business information to a competitor, it would not necessarily preclude the employee from jumping ship to work for that same competitor.

As a case in point, the federal district court in Massachusetts recently granted a preliminary injunction to a large medical device manufacturer enforcing the terms of a non-disclosure agreement with a former employee, but denied the manufacturer’s request for an injunction barring the employee from working at a competing business.  Boston Scientific Corp. v. Lee (D. Ma. May 14, 2014).  The employee, Dr. Lee, had signed an employment agreement with Boston Scientific Corporation that prohibited Dr. Lee from disclosing Boston Scientific’s proprietary information.  The agreement also required Dr. Lee to return all documents containing Boston Scientific’s proprietary information upon the termination of his employment.  The parties, however, did not sign a non-competition agreement.  After Dr. Lee left Boston Scientific to join one of the company’s alleged competitors, Boston Scientific filed for a preliminary injunction enjoining Dr. Lee from (1) disclosing its proprietary information and (2) working at the competitor.

Although the court found Boston Scientific was entitled to an injunction enjoining Dr. Lee from disclosing any of its proprietary information, it held the non-disclosure and confidential information provisions of his employment agreement could not be transformed into covenants not to compete.  So, in the absence of a non-competition agreement, the court declined to grant an injunction restraining Dr. Lee’s employment.

Interestingly, this decision coincides with bills pending in the Massachusetts legislature that propose significant limitations on the use of non-competition agreements in the state.  Whether this legislation will become law, and what form it will take if it does, is still unclear.  A blog post on this topic will therefore have to wait for another day – so stay tuned.

Employer's Electronic Communication Policy Negates Expectation of Privacy in Employee's Work Computer

Adding its voice to the growing body of cases illustrating the importance of electronic communications policies, a federal court in Virginia ruled earlier this year that an employee had no reasonable expectation of privacy in personal files stored on his work computer where his employer maintained a policy that clearly informed him that he should have no such expectation.  Walsh v. Logothetis  (E.D. Va. Jan. 21, 2014).

The plaintiff in the case, Thomas Walsh, began working at Virginia Commonwealth University (VCU) in 2008 as a Chief Administrative Officer in the School of Medicine.  In the spring of 2011, Walsh’s supervisor, who was an Associate Dean in the School of Medicine, raised concerns about the financial management of Walsh’s department.  VCU conducted an audit as a result of the supervisor’s concerns.  In connection with the audit, VCU searched Walsh’s work computer and found copies of his personal 2007 and 2008 tax returns, which Walsh had stored on the computer.  The tax returns showed that Walsh had falsified his employment application to VCU by overstating the salary he had earned at his previous job.  The audit also showed that Walsh had failed to follow other financial procedures implemented by VCU.  Based on the results of the audit, VCU terminated Walsh’s employment.

Walsh later sued in federal court alleging a variety of constitutional and statutory violations.  Among his many claims, Walsh alleged that the search of his work computer was unlawful under the Fourth Amendment.  Specifically, Walsh alleged that several VCU policies permitted employees to store personal files on their work computers and that he therefore had a reasonable expectation of privacy with respect to the personal tax returns he had stored on his work computer.

The court acknowledged that public employees, such as Walsh, generally have a reasonable expectation of privacy in their workplace.  However, the court concluded that employees cannot have a legitimate expectation of privacy in electronic communications where a policy puts them on notice that their communications may be monitored.  VCU had such a policy, which provided:

No user shall have any expectation of privacy in any message, file, image or data created, sent, retrieved, received, or posted in the use of the Commonwealth’s equipment and/or access.  Agencies have a right to monitor any and all aspects of electronic communications and social media usage.  Such monitoring may occur at any time, without notice, and without the user’s permission.

Consequently, even though Walsh may have been permitted by VCU to store personal information on his work computer, he did not have any reasonable expectation that this information would remain private.

The result in Walsh v. Logothetis is relevant for private employers, even though the case involved a public employee and a claim under the Fourth Amendment.  This is because common law claims for invasion of privacy, like privacy claims under the Fourth Amendment, generally require a plaintiff to show that he or she had a reasonable expectation of privacy.  A clear policy stating that such an expectation does not exist in electronic communications stored or accessed on a work computer is therefore equally important for employers in both the public and private sectors.

Avoiding a Severance Agreement Trap

This is a true and cautionary tale and one that can be readily avoided.  You have finally completed negotiations with a problem employee you have wanted to get rid of and a severance agreement has been signed.  The terms are generous, with full salary for a number of months, plus health insurance benefits, but it was worth it to get that release signed.  No need to worry about unemployment, because surely the employee will find a new job sometime before a month’s of severance payments run out.

One small problem with the plan.  To get things over, you decided to pay the severance payment in one lump sum.  Much to your surprise, after receiving the severance payment, the employee files for unemployment.  Lo and behold it is granted for all but the week that the severance payment was made.  You say to yourself, “How can that be?”  The severance agreement explicitly states that he’s receiving x months of pay and benefits.  No matter, the Unemployment Insurance Division of the Department of Labor has a rule which states that severance payments are credited to the week that they are paid, only, no matter the amount or the period covered.  The law says that an employee should not receive unemployment for the period of time when he/she is receiving severance payments.  The State says that means only when that payment is paid, not the period of time that it covers, even if there is an explicit written agreement.

The solution is to pay the severance payments over time on the regular pay dates.  Unemployment will then be deferred until all payments have been made.  A difference that is hard to understand?  You bet.

NLRB Seeking Comments on Employee Email Use

In 2007, the National Labor Relations Board (NLRB) decided in a split decision that employees do not have a statutory right to use an employer’s email system to engage in activities protected under federal labor law.  Relying on this decision, known as Register Guard, many employers have since adopted policies limiting the extent to which employees may use employer-provided email and communications systems for protected concerted activities.

Now, in a case currently pending before the NLRB, the Board has signaled it is considering whether to revisit its holding in Register Guard.  At issue in the case is a decision by an administrative law judge to dismiss an allegation that the employer, Purple Communications, Inc., committed an unfair labor practice by maintaining a rule prohibiting employees from using company email for non-work-related purposes. Disappointed with the judge’s ruling, the NLRB General Counsel filed an exception and requested that the Board overrule the Register Guard decision.
 
The Board appears to have taken the General Counsel’s request to heart and has invited the parties in Purple Communications, Inc., as well as other interested parties, to submit briefs on the issue.  Specifically, the Board has requested parties to address the following questions:

1. Should the Board reconsider its conclusion in Register Guard that employees do not have a statutory right to use their employer’s email system (or other electronic communications systems) for Section 7 purposes?
2. If the Board overrules Register Guard, what standard(s) of employee access to the employer’s electronic communications systems should be established?  What restrictions, if any, may an employer place on such access, and what factors are relevant to such restrictions?
3. In deciding the above questions, to what extent and how should the impact on the employer of employees’ use of an employer’s electronic communications technology affect the issue?
4. Do employee personal electronic devices (e.g., phones, tablets), social media accounts, and/or personal email accounts affect the proper balance to be struck between employers’ rights and employees’ Section 7 rights to communicate about work-related matters? If so, how?
5. Identify any other technological issues concerning email or other electronic communications systems that the Board should consider in answering the foregoing questions, including any relevant changes that may have occurred in electronic communications technology since Register Guard was decided. How should these affect the Board’s decision?

While the invitation for comments on the continuing viability of Register Guard is itself notable, it is also noteworthy that the NLRB has asked parties to comment on the decision in light of how technology, and the uses of that technology, has changed in the last seven years.

The deadline for submitting briefs is June 16, 2014.

Can HRAs Survive Healthcare Reform?

Health Reimbursement Arrangements (HRAs) are used to help employees pay for medical expenses incurred by the employee, his or her spouse, dependents, and any children who, at the end of the taxable year, have not attained age 27.  An HRA must be funded solely by the employer; employees cannot contribute to an HRA account.  HRA reimbursements are not included in the employee’s taxable income. Unused amounts can be rolled over for use in other plan years if the plan so provides. HRAs can also be offered only to those employees who enroll in group medical coverage sponsored by another employer.

HRAs are group health plans that are subject to Health Care Reform under the Affordable Care Act (ACA). Under the ACA, group health plans are barred from establishing an annual limit on the dollar amount of benefits for any individual (the Annual Dollar Limit Prohibition). In order to comply with this requirement, an HRA must be integrated with other group health coverage that itself complies with the Annual Dollar Limit Prohibition.  In other words, an HRA can be offered only if employer offers compliant primary group health coverage and the employee is actually covered under a group health plan that does not have an annual limit on the dollar amount of benefits.  Two important points to keep in mind:

• the employer-sponsored HRA cannot be integrated with individual market coverage or with individual policies, even if the employer pays the premium; and
  
• the primary group coverage in which the employee is actually enrolled does not have to be provided by the same employer that offers the HRA; for example, the linked coverage could be sponsored by the employer of the employee’s spouse. 

The ACA also requires that non-grandfathered group health plans must provide certain preventative services without imposing any cost sharing requirements for the service (the Preventive Services Requirements).  An HRA can satisfy this part of the ACA if the group health plan coverage with which it is integrated complies with the Preventive Service Requirements.

If the primary group health coverage that is linked to the HRA does not provide minimum value to the employee (that is, if the plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of the costs), the HRA can only be used to reimburse co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as for medical care expenses that do not constitute essential health benefits.

Finally, the ACA requires that at least annually, an HRA must permit participating employees (or former employees if they are allowed to participate in the HRA) to permanently opt out of and waive future reimbursements from the HRA. Upon termination of employment, either the remaining amounts in the HRA must be forfeited or the employee must be permitted to permanently opt out of and waive future reimbursements from the HRA.

These new HRA rules take effect for plan years that begin on or after January 1, 2014.  However, they do not apply to funds credited to the HRA before January 1, 2013, or to amounts credited in 2013 under the terms of an HRA in effect on January 1, 2013. These funds can be used after December 31, 2013, to reimburse medical expenses pursuant to the terms of that HRA.

At-Will Employment Clauses and the NLRB

The National Labor Relations Board (“NLRB”) has made headlines in the last few years with its close scrutiny of workplace social media policies.  However, making something of a quieter splash, the NLRB has also been scrutinizing another practice that, in its view, has the potential to “chill” employee rights in violation of the National Labor Relations Act (“NLRA”):  at-will employment clauses in employee handbooks.

The issue of at-will employment clauses came to the fore in 2012, when an administrative law judge found that the following language in an at-will provision in an employee handbook violated the NLRA:  “I further agree that the at-will employment relationship cannot be amended, modified or altered in any way.”  In the judge’s opinion, this acknowledgement, which followed a standard description of the at-will employment relationship, violated the NLRA because it required the employee to agree that the relationship could not be changed and amounted to a waiver of the employee’s right to advocate for a change in status.

More recently, however, in a case called Windsor Care Centers, the NLRB’s Office of General Counsel (“Office”) found that an at-will clause was not unlawful where it provided the following language at the end of the clause:

Only the Company President is authorized to modify the Company’s at-will employment policy or enter into any agreement contrary to this policy.  Any such modification must be in writing and signed by the employee and the President.

In Windsor, the Office explained that the NLRB applies a two-step inquiry to determine whether a work rule would reasonably tend to chill employees in exercising their rights.  First, a rule is unlawful if it explicitly prohibits employees from exercising their rights under the NLRA.  Second, a rule is unlawful even if it does not explicitly restrict protected activities if: (1) employees would reasonably construe the rule to prohibit protected activity; (2) the rule was created in response to union activity; or (3) the rule has been applied so as to restrict protected activity.

Applying this two-step inquiry, the Office found that the at-will clause in Windsor did not explicitly restrict protected activities and that the company had neither created the rule in response to union activity nor applied it in a discriminatory manner.  The Office therefore concluded that the clause would be unlawful only if employees would reasonably construe it to prohibit protected activity.  According to the Office, the clause could not reasonably be construed as restrictive, because the language “simply describes the method by which employees can, at present, create an enforceable employment contract with the employer modifying their at-will status.”  Because the language did not require employees to agree that their status could not be changed, the Office concluded the at-will clause was lawful and distinguishable from the clause at issue in the 2012 case, American Red Cross Arizona Blood Services.

In light of the NLRB’s recent activity, businesses should revisit the language in their employee handbooks and consider revising at-will provisions that do not allow for any modification of an employee’s at-will status.

Northwestern Scholarship Athletes Make It Into the Red Zone

This past Wednesday, Peter S. Ohr, the National Labor Relations Board (NLRB) Regional Director in Chicago, ruled that all scholarship football players at Northwestern University who have not exhausted their college eligibility are “employees” under the National Labor Relations Act (NLRA).  Based on that determination, he scheduled an election to allow 85 players to determine whether they want the College Athletes Players Association (CAPA) to serve as their exclusive bargaining agent.  We originally highlighted this story in a blog entry dated January 31, after the players, with the assistance of CAPA and the financial backing of the United Steelworkers, originally filed their petition with the NLRB.

In determining that Northwestern's grant-in-aid scholarship players met the statutory definition for "employees," Ohr's 24-page decision concentrated on the pervasive 24/7 control that the team's coaching staff has over players' lives.  He outlined a detailed description of practice schedules, workout requirements and coaches' supervision, concluding:

[T]he coaches have control over nearly every aspect of the players’ private lives by virtue of the fact that there are many rules that they must follow under threat of discipline and/or the loss of a scholarship. The players have restrictions placed on them and/or have to obtain permission from the coaches before they can: (1) make their living arrangements; (2) apply for outside employment; (3) drive personal vehicles; (4) travel off campus; (5) post items on the Internet; (6) speak to the media; (7) use alcohol and drugs; and (8) engage in gambling.  The fact that some of these rules are put in place to protect the players and the Employer from running afoul of NCAA rules does not detract from the amount of control the coaches exert over the players’ daily lives.

In Ohr's view, this level of control far exceeds the kind of control a school customarily has over a student. As part of his analysis, he distinguished the circumstances involving Northwestern's scholarship athletes from a set of graduate students at Brown University whose efforts at unionization were rebuffed by the NLRB in 2004.   In Brown University, 342 NLRB 483 (2004), the NLRB determined that graduate assistants were not “employees” after considering: (1) the status of graduate assistants as students; (2) the role of the graduate student assistantships in graduate education; (3) the graduate student assistants’ relationship with the faculty; and (4) the financial support they received to attend Brown.  Although Ohr found that statutory test to be inapplicable in connection with Northwestern's scholarship athletes -- because the players’ football-related duties were unrelated to their academic studies -- he reasoned that the outcome would not change even after applying Brown University's four factors.  Ultimately, in Ohr's view, “[I]t cannot be said the Employer’s scholarship players are ‘primarily students.’"

Although the NCAA was not a party to the proceeding, its chief legal officer responded to Ohr's decision as follows:

[T]he NCAA is disappointed that the NLRB Region 13 determined the Northwestern football team may vote to be considered university employees. We strongly disagree with the notion that student-athletes are employees.

We frequently hear from student-athletes, across all sports, that they participate to enhance their overall college experience and for the love of their sport, not to be paid.

Over the last three years, our member colleges and universities have worked to re-evaluate the current rules. While improvements need to be made, we do not need to completely throw away a system that has helped literally millions of students over the past decade alone attend college. We want student-athletes – 99 percent of whom will never make it to the professional leagues – focused on what matters most – finding success in the classroom, on the field and in life.

Ohr took great pains, in drafting his decision, to anticipate how his reasoning might be subject to attack on appeal and to preemptively address those issues.  If his decision is upheld, it could radically reshape the face of big-time college athletics -- at least at private universities.  The NLRB's ruling does not apply to public universities.  Scholarship athletes at those institutions are governed by state law and 24 states, many of them located in the South, have right-to-work legislation.
 
Ohr's decision will certainly be subject to an appeal to the NLRB in Washington, D.C. Northwestern University has until April 9, 2014 to request a review.  Additionally, the University said "it will continue to explore all of its legal options in regard to this issue."  Although the NCAA and Northwestern contend that unionization and collective bargaining are not the appropriate methods to address the concerns raised by student athletes, if I were the President of Duke, Notre Dame or Stanford, I might begin to gameplan what the future might look like across the bargaining table from my star quarterback and his offensive linemen. Seventeen private universities at the Division I level field college football programs like Northwestern University.

Can FSAs Survive Healthcare Reform?

Flexible Spending Accounts (FSAs) or Health FSAs have for years enabled employers to offer employees the opportunity to spend non-taxable compensation on eligible medical expenses.  FSAs could not only be used to pay for routine deductibles and co-insurance, but they also could buffer against unexpected health care costs. Now, Health Care Reform under the Affordable Care Act (ACA) has changed the way in which FSAs can be offered to employees.

First, for plan years beginning in 2013, the amount an employee can contribute to an FSA through salary reductions is capped at $2,500. Next, for plan years beginning in 2014, Health FSAs can only be offered through Section 125 Cafeteria Plans. Otherwise, the FSA would not be exempt from the ACA requirement that group health plans may not establish any annual limit on the dollar amount of benefits for any individual. Finally, the FSA itself must be structured to qualify as something called an “excepted benefit.” If the employer provides a Health FSA that does not qualify as an excepted benefit, the Health FSA is subject to the ACA’s market reform rules, including the requirement that non-grandfathered group health plans provide certain preventive care services without imposing any cost-sharing requirements for these services. Health HSA’s are considered group health plans under the ACA.

Excepted benefits include, among other things, accident-only coverage, disability income, certain limited scope dental and vision benefits, and certain long-term care benefits.  In order to qualify an FSA as an excepted benefit, an employer must make available group health plan coverage that is not limited to excepted benefits.  In other words, if it offers its employees the opportunity to elect group health coverage, an employer will have satisfied this part of the test.

In addition to the availability of group health coverage, the FSA must be structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the Health FSA for the year, or if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election.  Thus, for example, if an employee elects a Health FSA salary reduction of $2,500, the employer can match the employee’s contribution dollar for dollar up to a maximum of $2,500. If this were to happen, the employee would have $5,000 available in her or his FSA account for the plan year.

Health Care Reform has not eliminated the Health FSA. If an employer modifies plan documents as necessary and follows the rules summarized above, Health FSAs can continue to provide tax-free compensation to employees to pay for medical care expenses that are not covered by group health insurance.

Employer Ownership of Social Media Accounts

If you have a business with a social media footprint (and what business doesn’t, these days), ask yourself this question: "How confident are you that you own the social networking accounts through which you are building your customer base and brand recognition?"  If your answer is “confident,” you may want to think again.  A recent decision from a federal district court in Illinois shows that norms around ownership of business-related social media accounts are still evolving and remain murky at best.

In this case, Maremont v. Susan Fredman Design Group, Ltd., Jill Maremont was the director of marketing for a design firm, SFDG.  Maremont worked on social media campaigns for SFDG and established a blog that was hosted on SFDG’s website.  Maremont also created Twitter and Facebook accounts for herself, which she used for SFDG’s social media campaigns as well as for personal purposes. Often, Maremont would use her Twitter and Facebook accounts to post links to SFDG’s website and blog. At SFDG’s request, Maremont also created a Facebook page for the company, which Maremont accessed and administered through her own Facebook page.  Maremont kept all the log-in information for these social media accounts on a spreadsheet that she created on an SFDG-owned computer and saved on an SFDG-owned server.

Maremont was involved in a car accident that left her hospitalized.  While Maremont was on leave, employees at SFDG used the log-in information from her spreadsheet to access the social media accounts and continue SFDG’s social media campaigns.  SFDG was transparent about Maremont’s absence and even used Twitter to broadcast a blog entry explaining that a guest blogger would be filling in until her return.

Chagrined that SFDG was using her “personal” Twitter and Facebook accounts without her permission, Maremont filed suit against SFDG claiming violations of the Stored Communications Act (SCA).  The SCA is a federal law that prohibits unauthorized access to sites (like Facebook and Twitter) where electronic communications are stored.  SFDG argued that it had the right to access Maremont’s accounts and that it properly acquired and used the log-in information from Maremont’s spreadsheet.  However, the court found there were factual issues as to whether SFDG did, in fact, have sufficient authority to access the accounts and so ruled against SFDG on its motion for summary judgment.
 
Given the Maremont case and others like it, businesses should take affirmative steps to protect their rights with respect to business-related social media accounts.  Although companies with effective social media policies and proprietary information agreements with employees may still run into ownership issues around social media, they can likely be more “confident” of their ability to prevail should a dispute arise.

New Employer Rules Soften Start of Healthcare Reform

It is a work in progress.  There are so many moving parts to Healthcare Reform that implementing the Affordance Care Act (ACA) requires adjustments as theory meets reality.  In July 2013, the deadline for large employers to provide Minimum Essential Coverage (MEC) at affordable rates was pushed forward one year to 2015.  In February 2014, new rules gave mid-sized employers another year ― to 2016 ― to do so.  Recent guidance explains some of the ways these two types of employer can transition into compliance.

Large Employers

Large employers with at least 100 full-time employees (including full-time equivalents) still must offer affordable MEC in 2015.  However, plan years that begin in 2014 (with start dates that haven’t recently been changed) won’t have to comply until the plan year beginning in 2015. Thus, if a plan year begins in October, compliance is not required until the October 2015 plan year.  Also, the requirement that large employers offer minimum affordable coverage to all but 5%, or if greater 5, of their full-time employees (those who work at least 30 hours per week or the equivalent) has been changed. Now, for each calendar month in 2015 and any calendar month during the 2015 plan year that falls in 2016, the minimum participation rate has been reduced to 70%.  The transition rules even give additional time to employers to ensure that their plans provide dependent coverage provided they take steps to satisfy this coverage requirement during the 2015 plan year.

Mid-Sized Employers

Mid-sized employers ― that is, those with 50-99 full-time employees (including full-time equivalents) ― are still large employers who must provide affordable MEC to their full time employees. However, because mid-sized employers may find it more difficult to comply with the ACA, the new rules delay until 2016 the date on which they must offer minimum essential affordable coverage to their full-time employees.  Not so coincidentally, beginning in 2016 mid-sized employers will be eligible to obtain the coverage through the federal government’s online SHOP healthcare exchange, which was originally established to help small employers (fewer than 50 full time employees) find coverage.  The SHOP exchange is currently online at https://www.healthcare.gov/what-is-the-shop-marketplace/.

In order to qualify for this deferred start date, an employer must certify that (a) it employed on average between 50 and fewer than 100 full time employees (including full time equivalents) during 2014, (b) there were no reductions in the size of its workforce or the overall hours of service of its employees during the period February 9, 2014, to December 31, 2014 (except for bona fide business reasons),  and (c) the health coverage  it offered as of February 9, 2014, was not eliminated or materially reduced (certain limited exceptions also apply). If these conditions are met, compliance is not required until the 2016 plan year.

While these and other changes will allow them to ease into compliance, both large and mid-size employers should not become complacent. These relaxations of the ACA’s implementation schedule do not change the underlying requirements that could subject them to significant penalties for failure to comply.

Update on Social Media Legislation in Maine

Updating my previous post on this topic, the Judiciary Committee today reported L.D. 1194, An Act to Protect Social Media Privacy in School and the Workplace out of Committee with a recommendation that the bill be passed as amended.  The Judiciary Committee’s amendment replaces the bill with a resolve, under which the Judiciary Committee will continue to study issues regarding social media and personal e-mail privacy in the workplace and in schools. The resolve identifies several particular areas of study, including among others:

• Concerns of employees and applicants for employment about privacy rights associated with social media and personal e-mail accounts;
• Concerns of employers, both public and private, about social media and personal e-mail accounts of employees and applicants for employment with regard to workplace needs, protection of proprietary information, proposed heightened requirements associated with specific types of employment and compliance with state and federal laws concerning workplace safety and regulation of business-related representations;
• Laws and experiences in other states concerning social media and personal e-mail privacy; and
• The application of federal law and regulations concerning social media and personal e-mail privacy.

The resolve also directs the Judiciary Committee to meet up to four times for its study and to submit a report to the Legislature with findings and recommendations, including suggested legislation, no later than November 5, 2014.

Interpreting The Scope of Protected Activity: New Guidance From the Law Court

Controlling precedent interpreting Maine's Whistleblower Protection Act tends to be infrequent, so the Law Court's decision in Hickson v. Vescom Corporation, 2014 ME 27, Docket No. WAS-13-214, issued Tuesday, makes for interesting and instructive reading.

Richard Hickson was a shift supervisor employed by Vescom Corporation, a contractor that provided private security services at the Woodland paper mill in rural Baileyville.  Hickson's termination by Vescom followed a series of events that occurred after a visit to the mill by former Maine Governor John Baldacci, State Representative Anne Perry and a party of staffers.
 
Domtar, which owned the mill at that time, enforced specific safety policies pertaining to all employees and visitors.  Hickson alleged that he was terminated after reporting violations of those policies by the visiting group and for sending an email to Governor Baldacci expressing his concerns about the safety violations he observed during the visit.  Vescom claimed that his termination was driven by a couple of non-retaliatory factors, including Hickson's failure to follow Vescom's chain of command before he sent the email, as well as two previous instances of misconduct.

Vescom appealed a Washington County Superior Court jury’s decision in Hickson’s favor, which included a substantial punitives damages component.  The central issue on appeal involved portions of a jury instruction that treated the doctrine of protected activity and the lower court's ruling on a post-verdict motion for judgment as a matter of law.  At trial, Vescom argued that Hickson's report involved no violation of law or unsafe work condition or practice that implicated them.  Vescom unsuccessfully sought to obtain an instruction that would have defined protected activity in a limited fashion, that is, under circumstances in which Hickson reported what he reasonably believed to be a violation, condition or practice created by Vescom rather than by Domtar or the visitors themselves.
 
In an opinion authored by Chief Justice Leigh Saufley, the Law Court rejected Vescom's arguments with respect to the jury instruction and affirmed the lower court's denial of Vescom's motion following the jury's verdict, which was intended to set aside the verdict based upon an interpretation of whether Hickson's conduct met the statutory standard for "protected activity."
 
Elaborating upon its holding in a prior whistleblower decision, the Law Court clarified that "neither our [earlier] opinion nor the statute limits a whistleblower claim to those reports that are exclusively related to an affirmative action of the employer."  The Court's reasoning makes clear that a plaintiff-employee's report need only involve conduct that "bears a relationship to his employment," such that it "must be connected to the employer in such a way that the employer could take corrective action to effectuate a relevant change" in the conduct.  Among the evidence introduced at trial was the fact that Vescom had adopted Domtar's safety polices at the mill verbatim, and Vescom's employees, including Hickson, were required to enforce them.

One takeaway from the Hickson decision is that recent interpretations of "protected activity" are trending in favor of a broader rather than narrower scope.  Not only is this trend appearing in connection with Maine's statute, but several federal courts have also recently interpreted the doctrine broadly in the context of whistleblower claims brought pursuant to the Sarbanes-Oxley Act of 2002.  Another takeaway, of a more general nature, is that defending adverse employment actions involving whistleblowers is usually fraught with peril. The fact that an employee need only act "in good faith" in connection with the exercise of protected activity, with a "reasonable belief" concerning the subject of his or her complaint or report, often renders it difficult to challenge an employee's status as a whistleblower through pre-trial motion practice.  Once a dispute reaches a jury, legal arguments fall by the wayside and jurors rely more and more on what they already know and how they feel to evaluate gray areas presented in the testimony and in applying the court's instructions during their deliberations.

The complete decision in Hickson v. Vescom Corporation can be read here.

Maine Legislature Considering Privacy in Social Media

Joining a growing trend nationally, the Maine Legislature is considering a bill that would prohibit employers from requiring employees to disclose their log-in information for social media and personal e-mail accounts. The bill, L.D. 1194, An Act to Protect Social Media Privacy in School and the Workplace, is currently being considered by the Judiciary Committee and has been the subject of several work sessions since the beginning of the year.  In a recent work session, the Committee recommended that the Legislature create a commission to study privacy issues further, rather than enact the bill as drafted.  The exact fate of the bill, however, remains to be seen.

Ten states have already passed legislation similar to Maine’s L.D. 1194, including Arkansas, Colorado, Illinois, Nevada, New Jersey, New Mexico, Oregon, Utah, Vermont and Washington.  Meanwhile, in 2014, similar legislation is currently pending in twenty-five other states, including California, Florida, Massachusetts, New Hampshire, New York and Rhode Island.  This flurry of legislation at the state level follows failed efforts at the federal level, where several social media privacy bills have been introduced but not passed.

Employers should we aware, however, that even if requesting password information from employees is not strictly prohibited, making these kinds of requests can still be risky.  By gaining access to places where employees reveal personal information about themselves, employers may stumble upon information that is protected by other laws, including state and federal anti-discrimination laws.  Employers should therefore proceed with caution in this area.

Maine Human Rights Commission Changes Process to Weed Out Weak Cases

In response to significant concerns about the timeliness of handling claims and the often unnecessary drain of going through the full process of responding to meritless Human Rights Commission claims, the Commission has become more aggressive about administratively dismissing cases.  Typically, the Human Rights Commission process has been routine.  A charge comes in and it takes up to two months for that charge to be sent to the Respondent while the Commission initially processes it and drafts a document and information request to the employer.  That causes a lot of work for the employer.  In cases that appear to be particularly without merit, the Commission has concluded it simply is not fair to require that work from the employer.  As a result, we have started to see cases where rather than drafting the document or information request to the employer, the employer is receiving a copy of the complaint and a copy of a request for more information to the employee.  If the employee is unable to provide additional information to support the claim, the claim will be administratively dismissed without the employer ever doing anything.  This is a significant potential upgrade to the process, and hopefully, it will be used extensively by the Commission.

In my recent discussions with the Chief Investigator, it is clear that this is being done because of the recognition that the vast majority of cases are not meritorious and the Commission needs to focus its limited resources on cases which truly need to be investigated.

Small Employer Coverage Under the Affordable Care Act

The Affordable Care Act (ACA) does not require small employers to offer health coverage to their employees.  If coverage is offered, however, the coverage must meet ACA requirements.  The only exception is for grandfathered plans. Grandfathered plans are those health plans that were in effect when the ACA was enacted on March 23, 2010 and have not been changed.

A small employer plan must provide the following Essential Health Benefits. If it does not, the plan must be changed unless it is a grandfathered plan.

• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventive and wellness services and chronic disease management
• Pediatric services, including oral and vision care

Small employer plan deductibles are limited to $2,000 for individuals and $4,000 for families. Out-of-pocket expenses are limited to $6,250 for singles and $12,500 for families.   If these limits are exceeded, the plan, unless exempt, must be changed.

The Small Business Health Options Program (“SHOP”) gives small employers the opportunity to go online (https://www.healthcare.gov/small-businesses/) and choose a health plan from among several coverage options and contribution levels.  If an employer selects a SHOP plan, the coverage must be offered to all of its full-time employees (those working 30 or more hours per week on average).  Generally, at least 70% of full-time employees must enroll. The minimum percentage may vary by state; for example, the New Hampshire minimum is 75%. The minimum enrollment requirement does not apply if SHOP coverage is selected during the open enrollment period that runs each year from November 15 to December 15.

A small business that buys SHOP coverage may also be eligible for a health care tax credit.  In order to qualify, the employer must have fewer than 25 full-time equivalent employees making an average annual salary of $50,000 or less. The employer must pay at least half of the insurance premium.  The tax credit is worth up to 50% of the employer’s contribution toward employee premium costs. The tax credit is highest for companies with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.

NH Court Provides Guidance on Title VII Third-Party Retaliation Claims

The U.S. Supreme Court has made clear that a third party may bring a retaliation claim against an employer under Title VII, broadly interpreting the law’s prohibition of any employer conduct that might dissuade a reasonable worker from making or supporting a charge of discrimination.  It can be difficult for an employer to anticipate when disciplinary or other adverse action against a third party may lead to a retaliation claim, because the Court could not draw a line demarking who is in and out of this protected group.  The Court has provided some guidance, offering that termination of a close family member will almost always meet the standard while a lesser action against a mere acquaintance will almost never suffice, which leaves a wide swath in the middle.   A recent decision of the District of New Hampshire illustrates the difficulty of knowing when a third party is permitted to bring a retaliation claim.

In EEOC v. Fuller Oil (2014 DNH 20, decided 1/31/14), the Court permitted a retaliation claim to go forward where the terminated employee was within “the gray area between a close friend and a casual acquaintance.”  The employee was terminated within a few weeks after her co-worker served notice on the company of an intent to file a sexual harassment claim, which the employee claimed was retaliatory.  The two women had worked together at another company, the co-worker helped the terminated employee get her job at Fuller Oil, they exchanged cards on special occasions, socialized together outside of work, displayed photos of them together outside work, and were viewed by the employer as being friends.  As a result, the Court declined to dismiss the case at an early stage in the proceedings.

When taking adverse action against an employee who is connected to someone involved in a discrimination claim, employers must be mindful of the potential retaliation claim.  As it depends on the circumstances, employers must carefully examine the nature of the relationship between the two employees and consider whether the adverse action could be viewed as dissuading a reasonable worker from making or supporting a charge of discrimination.  If it could, extra care must be taken to ensure the legitimacy of the adverse action.

Union Representation: Coming to a Football Stadium Near You?

As everyone readies themselves for this weekend's Super Bowl, where one of the principal storylines has been the potential for snowy conditions, a much more serious storm emerged this week within the world of college football.

On January 28, a group of football players from Northwestern University filed a petition with the Chicago office of the National Labor Relations Board (NLRB) seeking union representation.  They have formally requested that the College Athlete Players Association (CAPA) be recognized as their exclusive bargaining agent.  CAPA's election petition represents the first step in the union certification  process.  If the NLRB determines that the players have the right to unionize, a sea of change in the relationship between universities, student-athletes and the NCAA will follow.

To have the NLRB consider a petition to be unionized, at least 30 percent of the members of a potential bargaining unit must sign and submit union cards.  By filing signed cards with the NLRB on behalf of the Northwestern players, CAPA triggered a process that will commence at the regional level of the NLRB and almost certainly wind up in federal court.  Initially, one of the pivotal legal issues will involve whether scholarship athletes can be classified as "employees" under the National Labor Relations Act, a definition that has evolved over time through the holdings set forth in many court decisions.

For its part, Northwestern's administration draws a sharp distinction between a wage-earning employee and a student-athlete responsible for paying tuition for his or her education.  A series of court decisions analyzing whether student athletes were employees entitled to medical benefits lends credence to the University's position.  Not surprisingly, the NCAA's legal team has also argued that the matter is cut and dried:

• This union-backed attempt to turn student-athletes into employees undermines the purpose of college: an education. Student-athletes are not employees, and their participation in college sports is voluntary. We stand for all student-athletes, not just those the unions want to professionalize.
• Many student athletes are provided scholarships and many other benefits for their participation. There is no employment relationship between the NCAA, its affiliated institutions or student-athletes.
• Student-athletes are not employees within any definition of the National Labor Relations Act or the Fair Labor Standards Act. We are confident the National Labor Relations Board will find in our favor, as there is no right to organize student-athletes.

Initially, the unionization push was the brainchild of Northwestern quarterback Kain Colter, who reached out to the organization National College Players Association (NCPA) for help.  Colter became a leading voice in regular NCPA-organized discussions among college players from around the country.  Interestingly enough, Colter went public with his concerns in Northwestern's game last season against the University of Maine Black Bears.  That weekend, he raised awareness for what was called the "All Players United" movement by joining with teammates and athletes from other schools who wore wristbands and towels that read "APU."

Developments in this high profile dispute will certainly be worth following.  If the players are able to establish that the tremendous degree of control exercised over their athletic lives by their colleges renders them akin to employees, the color commentary we hear on game day may eventually encompass discussions about collective bargaining, player grievances and wage scales.

Are Employment Contracts Always Terminable At the Will of Either Party?

In states where employment is generally considered “at-will,” many employers take it as a foregone conclusion that employment contracts are terminable at the will of either party.  But is this conclusion always correct?  The answer is no – sometimes, an employer can unwittingly defeat the presumption of “at-will” employment by incorporating language into its employment policies and manuals that restrict the ability to discharge an employee.

A recent case from the Federal District Court in Massachusetts highlights this issue and provides helpful guidance to employers on drafting effective personnel manuals.  In Ray v. Ropes & Gray, LLP, an associate at a law firm argued that a personnel manual created an implied employment contract and rebutted the presumption that his employment was at-will.  In assessing the associate’s claim, the court noted that, under Massachusetts law, a personnel manual may create an implied employment contract.  However, the court explained that a personnel manual does not create an implied contract where:

1. The employer retains the right to unilaterally modify the manual’s terms;
2. The terms of the manual are not negotiated;
3. The manual states that it provides only guidance regarding policies;
4. The manual does not specify a term of employment; and
5. The employee does not sign the manual to “manifest assent.”

In this case, the court found that the personnel manual contained nothing more than the “customary blandishments about fair treatment and equal opportunity.”  The manual did not specify a term of employment and included a disclaimer that it did not amount to a contract.  In addition, the manual explained that its terms were non-negotiable and that the law firm retained the right to modify or withdraw its policies at any time.  Given these disclaimers, the court concluded there was no reasonable basis to regard the manual as an enforceable contract.

For employers, the Ray decision serves as a good reminder to review all existing personnel policies and manuals to make sure they are consistent with the expectation – and presumption – that employment is at-will.

Maine Legislature to Consider Employer Drug Policies

Over the next few months, the Maine Legislature will be considering substance abuse policy regulation. Senator Andre Cushing has introduced a bill, LD 1669, An Act To Standardize and Simplify the Process for Employers To Provide a Drug-free Workplace that would change the way the state regulates workplace polices on this issue.

Current law requires employers that want to provide a drug-free workplace by testing applicants or employees for substance abuse to develop and file a policy with the Department of Labor. The Bureau of Labor Standards reviews the policies to ensure compliance with state laws and rules.

This bill provides employers with a single, consistent model policy. The model policy, which must be established by the Commissioner of Labor and managed by the department, is intended to encourage greater participation by employers to reduce substance abuse in the workplace. The bill requires an employer to adopt the model policy before establishing a substance abuse testing program.

It removes the requirements that employers provide an employee assistance program and pay for half of rehabilitation beyond services provided through health care benefits. Employers may offer an employee assistance program if they choose. The bill also amends the definition of "probable cause" to provide that a single work-related accident is probable cause to suspect an employee is under the influence of a substance of abuse. The bill requires the Department of Health and Human Services and the Department of Labor to work together to adopt rules to establish the model policy by July 1, 2015.

LD 1669 will be considered at a public hearing before the Labor, Commerce, Research and Economic Development Committee scheduled for January 28th at 2 pm.

Authored by Stephen E.F. Langsdorf.  For more information on employment related issues, contact Attorney Langsdorf at 207.623.5300 or slangsdorf@preti.com.

Who Is a Full-Time Employee Under the Affordable Care Act?

Beginning January 1, 2015, the large employer mandate of the Affordable Care Act (ACA) requires that all full-time employees be offered minimum essential, affordable coverage.  Penalties will be assessed for each month that a large employer fails to offer minimum affordable coverage to its full-time employees.

Under the ACA, a full-time employee has at least an average of 30 hours of service per week, or at least 130 hours of service per month.  Hourly employees can be tracked on an actual hours basis. Other rules apply to salaried and other non-hourly employees. Full-time status is determined each month.

In order to reduce the administrative burden of tracking monthly employee hours, the IRS has issuance alternative guidance for determining full-time employee status.  Under these safe harbor rules, a large employer can choose a “measurement period” of between 3 to 12 months during which it determines which employees meet the hours of service threshold for full-time status.  The employer than establishes a follow-on “stability period” that is at least six months long and no shorter than the measurement period. For those employees who are determined to be full-time during the measurement period, the employer must treat them as full-time employees during the entire stability period, even if they cease to qualify as a full-time employee during the stability period.  For those employees who are not determined to be full-time during the measurement period, the follow-on stability period can be no longer than the measurement period.  Other rules apply for new and variable hour employees.

Needless to say, the alternative safe harbor options have their own administrative challenges. However, they may be easier to address than the month by month calculations that might otherwise be required.  If so, large employers must start planning well in advance of the January 1, 2015 implementation date for the new coverage mandates.  Waiting until the proverbial last minute may eliminate these safe harbor options.

First Circuit Finds No Whistleblowing Where Employee's Report was Part of the Job

Here’s a zen koan for today:  “What is the sound of a whistleblower whose job it is to blow the whistle?”  According to the First Circuit U.S. Court of Appeals, which recently meditated on this question, the sound is kind of like one hand clapping.  In Winslow v. Aroostook County, the Court explained that an employee’s report is not whistleblowing if making the report is part of his or her job duties.

The plaintiff in this case, Winslow, was the executive director of a federally-funded state workforce investment board (WIB).  Aroostook County was the grant sub-recipient for the WIB and acted as the fiscal agent for the grant.  As fiscal agent, the County hired Winslow and paid her salary, and Winslow reported to the County.  However, there was no explicit fiscal agent agreement between the WIB and the County.

In November 2009, federal monitors from the Department of Labor undertook a compliance review of its grants in Maine, including the WIB, and determined that it was improper for Winslow to report to the County rather than to the WIB in the absence of an express agreement.  Winslow participated in the compliance review and was directed by her supervisor at the County to prepare a report on the federal monitors’ findings.  Winslow prepared the report and then, at the direction of her supervisor, sent it to members of the WIB.  As a result of the compliance review, the WIB entered into an agreement with a new fiscal agent.  The County then terminated Winslow’s employment, as the County was no longer involved in the administration of the grant.  Although Winslow applied for the position of executive director with the new fiscal agent, she did not get the job.

Winslow then sued the County and claimed that she was terminated in retaliation for blowing the whistle on the absence of a formal fiscal agent agreement.  The First Circuit disagreed and found that Winslow made the report regarding the federal monitors’ findings as part of her job duties and at the request of her supervisor.  Noting that the usual rule in Maine is that “a plaintiff’s reports are not whistleblowing if it is part of his or her job responsibilities to make such reports, particularly when instructed to do so by a superior,” the Court concluded that Winslow had not blown the proverbial whistle.