2011 employment law update

Confidential For Discussion Purposes Only

December 15, 2011

Employment Law Update Key Developments from 2011 & What

to Expect in 2012


Reid Bowman, Esq.

• General Counsel of ELT.

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

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


Kate Wilson, Esq.

• Founding shareholder, Littler

Mendelson’s Chicago and

Minneapolis offices

• Co-chair of Littler’s Retail practice

group

• Member of Littler’s Steering

Committee on Women’s

Leadership Initiatives


Agenda

• EEO Trends

• Harassment prevention compliance requirements

• Whistleblowing

• Diversity & Inclusion

•Social Networking and the Workplace

•NLRA and Social Media, rulemaking implementing

so called “EFCA-lite”

• HR and Ethics Compliance

• Wage & Hour


EEO Trends


A Question For You

What best describes how

employee compliance training

is provided:

Mostly live using an outside

vendor

Mostly live using internal

resources

Mostly online using an outside

vendor

Mostly online using internal

resources


Charge Filings Continue at Record Highs

• Newly announced EEOC charge stats from

FY 2011: 99,947 charges, the most in the

EEOC’s History!

• Follows two prior years of record charges

(FY 2010: 99,922; FY 2009: 93,277.)

• EEOC recovered over $364M for victims of

discrimination in FY 2011, down a bit from

the $404M it recovered in FY 2010.

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

/www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm.)

http://www.eeoc.gov/eeoc/newsroom/release/11-15-11a.cfm





http://www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm


ADAAA/GINA/ADEA

• ADAAA: Final rules issued 3/35/2011

• Expanded definition of “disability” means that many more workers are

covered by the ADA

• GINA: Incentives for workplace wellness programs

• Opinion letter dated 6/24/2011 confirms EEOC position prohibiting

employers from offering financial inducements for employees to

provide genetic information as part of a wellness program

• ADEA: Reasonable Factor Other Than Age (RFOA)

Defense

• 11/16/2011 Commission approves final rule on RFOA defense by 3-2

party-line vote. Currently under review by OMB.

• Expected to track proposed rule which would make it more difficult for

employers to defend against disparate impact age discrimination

claims


2011: Retaliation Takes Center Stage

• Supreme Court made it easier for

employees to claim retaliation in January

2009 Crawford decision.

• January 2011: Supreme Court again

broadened coverage of retaliation claims

to now include claims based on someone

else’s protected activity (here, a fiancé.)

Thompson v. North American Stainless,

LP., 131 s. Ct. 863 (2011).

• Managers often don’t understand

retaliation!

See: http://www.elt-inc.com/blog/archive/2011/01/25/brand-new-us-supreme-court-retaliation-case-

third-party-claims


EEOC Enforcement Update: A “New Breed”

• More Aggressive Posture

• Mandatory public press

releases for settlements

• Refusal to allow early “no

fault” settlements in some

cases

• Requiring injunctive relief

with follow-up powers


A Question For You

My organization has

experienced an increase in the

number of employment law

claims the past 12 months:

Yes

No

I don’t know


So…. Discrimination

(EEO)

Workplace

Harassment Sexual

Harassment

Training on just Sex Harassment prevention

is NOT enough.

REMINDER: 2011 is a mandatory retrain year for most employers with

Supervisors in California.


Whistleblowing


Recent Whistleblower Legislative Expansion

• Dodd-Frank

• Sarbanes-Oxley

• Fraud Enforcement & Recovery Act

• Revised False Claims Act

• American Recovery & Reinvestment Act 2009

• Consumer Product Safety Act

• 20+ Federal Whistleblower

Protection Statutes

• Since 2006, 16 states have strengthened laws


Beefed Up Enforcement

• $400M budget dedicated

to whistleblower issues

• SEC rec’d 344

whistleblowing tips in 1st

7 weeks whistleblowing

regs became effective

• (if annualized, SEC

would get over 2550 tips

each year!)

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


Dodd-Frank: New Whistleblower Provisions

• Section 922: 10-30% reward to whistleblowers (not

only employees) who alert SEC to violation of the

1934 Securities & Exchange Act (if > $1M):

• Dodd Frank prohibits adverse action taken “because

of” whistleblowing activity

• Determination will be made on case-by-case basis

• Employee can file claim directly in federal court

• Rules also provide SEC with power to enforce

• Most dramatic impact: Employees are NOT

required to first complain internally


Maintaining a Diverse and Inclusive

Workforce

Diversity &

Inclusion

17


Dodd-Frank: Diversity! § 342

• Office of Minority and Women Inclusion

• Each agency (the “Bureau”; Fed; SEC;

FDIC) must establish new office to:

• Develop standards for EEO and racial /

ethnic / gender diversity;

• Increase minority participation in agency programs /

contracts; and

• Assess diversity policies and practices of

entities regulated by the agency


Diversity (cont’d)

• All contracts of an agency: financial institutions,

accountants, and providers of legal services

• Certify their workforces reflect a “fair inclusion” of

women and minorities

• When awarding contracts, agency must, “to extent

consistent with applicable law,” consider provider’s

workforce diversity

• Mini-OFCCP’s

• What does “fair inclusion” mean?


Diversity, Policy, and Compliance

Intersections and Differences

Compliance: focus on

directing employees to follow

legal directives.

Policy: important business

practices that often go beyond

legal directives.

Organizational Culture: often

key driver behind diversity &

inclusion initiatives.

Organization

Culture

Policy

Directives

Legal

Directives


Recent SHRM Study: Key Reported

Outcomes of Diversity Initiatives

• 76% of Respondents Said the #1 Most

Important Outcome of Diversity Training

is…

• Improved public image

• The other top reported outcomes are:

• reduced costs associated with turnover,

absenteeism and low productivity

• improved financial bottom line (profits)

• increased organizational competitiveness,

• decrease in complaints and litigation, and

• retention of a diverse workforce

•Workplace Diversity Practices: How Has Diversity and Inclusion

Changed Over Time? SHRM October 12, 2010 ©

21


Key Metrics from SHRM Study

• 68% of organizations indicated that they

have practices in place that address

workplace diversity

• 48% of organizations provide Diversity

training

• But 71% of companies with diversity

practices in place offer diversity training;

• 84% of businesses believed their diversity

practices were either “very effective” or

“somewhat effective” in achieving their

organization’s desired outcome

•Workplace Diversity Practices: How Has Diversity and Inclusion Changed

Over Time? SHRM October 12, 2010 ©

22

Key Metrics from October 2010 SHRM Study


Social Networking,

and the Workplace


Social Media Dominance

• 22.7% - Percentage of online time spent by U.S. Internet

users on social networking sites

• Up 43% from 2009

• 8.3% - Percentage of online time spent by U.S. internet

users on e-mail

• Down 28% from 2009

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

under age 18

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


Social Media & The Workplace • Only 31% of respondents had a policy specifically

addressing off-duty social use

• 50% of respondents had no policy

• 47% of respondents permitted anyone to access LinkedIn

vs. 32% for Facebook and Twitter

• 35% permitted no one to access

• 42% of respondents had disciplined employees for social

media activity

• Up from 24% in 2008

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


Subtitle

Social Media in the News

“Nothing I have seen in my brief

existence has contradicted my

belief that people will do the

dumbest thing possible with any

technology available to them”

“But Twitter also magnifies our

most asinine urges by eliminating

the possibility for subtlety. It is

easy to be racist or sexist in 140

characters.”

Alexandra Petri, Washington Post, June 7, 2011


Practical Tips

• Update or Create Written policies:

• No “one size fits all”; need to consider

your culture and business.

• Decide which web 2.0 activities to

cover.

• Decide whether to cover both off and on

duty activities.

• Decide whether employees can use

company resources to access.

• Consider impact on other polices (e.g.,

Workplace Harassment; Code of

Conduct; Technology/Resource Use,

etc.)


NLRB meets

Facebook, and

the

Implementation

of “EFCA-Lite”


NLRA Meets Facebook

•On 10/27/10, the NLRB issued a complaint against

America Medical Response claiming that AMR

suspended then terminated the employee due to

negative remarks she posted about her supervisor on

her Facebook page from her home computer!

•AMR had a policy prohibiting employees from

making disparaging, discriminatory or defamatory

comments about the Company, its managers,

employees or clients.

•NLRB claimed this policy interferes with employee’s

right to engage in protected concerted activity.

•Case was settled, but since then, the NLRB has

been extremely active with cases like this


The 2011 Impact of AMR

•NLRB focuses substantial attention on social media:

• April 2011: Memo from NLRB Acting GC to all Regional

Directors

• May 2011: NLRB’s Acting GC adds social media to the list

of subject in which he is taking particular interest.

• By June 2011, NLRB reports at least 1 social media case

in every regional office.

• August 18, 2011 NLRB GC Memo on 14 cases decided

within the past year regarding employee use of social

media; Board’s focus is on the “protected, concerted”

nature of the speech.


Discipline Stemming From Employee Social

Media Activity An Unfair Labor Practice?

• Activity must be “concerted”

• Involve more than one

employee

• “Concerted activity” must be

“protected,” i.e., related to the

terms and conditions of

employment

• Existing union is not required

• With union, even more scrutiny


Add these Questions to your Checklists

• What is the subject matter of the post?

• Who is participating in the discussions?

• Is the employee expressing only an individual gripe?

• Are employees acting collectively?

• Are the social media posts a direct outgrowth of

some prior group discussions?

• And consider adding disclaimer to Social Media

policy saying it won’t be construed or applied to

interfere with Section 7 rights.


“EFCA Lite”

• Through rulemaking and its decisions, current

NLRB accomplishing many of the components

of EFCA => “EFCA Lite”:

• June 22, 2011: NLRB published Notice of

Proposed Rulemaking in effort to overhaul

union election procedures.

• November 30, 2011: after receiving ~65,000

comments, NLRB, by 2-1 vote, adopted

several measures to speed up union elections:

ex. tighter pre-election appeal rules; more

Hearing Officer discretion to limit pre-election

issues. Result: elections in ~28-35 days after

pet. filing!

Remember: Most of your managers have never dealt with a union organizing

drive, or managed in a unionized environment.


The Central Role of

HR and

Employment Law

Issues in Ethics

Compliance

Programs


The Central Role of HR / Employment Issues

• Largest impact on the largest number of

employees.

• Hotline statistics are telling:

• 61% of initial allegation reports were HR

related. (Global Compliance Services)

• 62% of complaints were comprised of:

harassment / discrimination, wage and

hour, workplace violence, workplace

policy violation, and workplace safety.

(EthicsPoint)

• 70% of hotline reports measured over a

one year period were employment law

related. (The Network)

(Open Compliance & Ethics Group – 2004)


Misconduct Most Commonly Observed By

Employees • Ethics Resource Center 2009 Survey

• 22% - Abusive or intimidating behavior toward employees.

• 19% - Lying to employees, customers, vendors, or the public.

• 18% - A situation that placed employee interests over organizational interests.

• 11% - Health or Safety regulation violations.

• 14% - Discrimination on the basis of race, color, gender, age, or other categories.

• 11% - Employee benefits violations.

• Majority are “classic” employment law issues!


The Laws that Mandate Ethics

Compliance & Training

key drivers: 1. The 2004 Federal Sentencing Guidelines

Amendments (FSGs), and new 2010

amendments.

2. The Sarbanes-Oxley Act of 2002 (SOX),

as amended by Dodd-Frank.

3. 2007 & 2008 amendments to the Federal

Acquisition Regulations

(FAR).

3


Wage & Hour


A Question For You

Do you consider wage and hour

issues to be the number one

employment law risk facing

your organization?

Yes

No


Class Action Employment Lawsuits

Are Increasing

3,541

4,152

4,722

3,000

3,500

4,000

4,500

5,000

2009 2010 2011

89%

Wage &

Hour

91% Wage

& Hour

92% Wage

& Hour

Total

Total

1st six months annualized


2009 Class and Collective Action Stats

• 208 final reported labor/employment class and collective action settlements.

• Settlement amounts were available for 185.

• Median: $1,550,000

• Average: $8,705,497

• The $13,200,474,783 settlement of UAW v. Ford Motor (E.D.

Mich.) was excluded from these calculations.

• Settlement amounts were available for 111 Wage and Hour settlements

• Median (W&H): $1,500,000

• Average (W&H): $6,784,532


2010 Class and Collective Action Stats

• 210 final reported labor/employment class and

collective action settlements.

• Settlement amounts were available for 178.

• Median: $2,875,000

• Average: $9,776,995

• Largest: $175 million, Velez v Novartis Pharm. Corp. (S.D.N.Y).

• Settlement amounts were available for 123 Wage and

Hour settlements.

• Median: $1,800,000

• Average: $5,521,853


January – June 2011 Class and Collective

Action Stats

• 51 final reported labor/employment class

and collective action settlements.

• Settlement amounts available for 46.

• Median: $1,950,000

• Average: $8,446,559

• Largest: $ 178,600,000, Merkner v AK Steel

Corp (S.D. Ohio).

• Settlement amounts were available for 32

Wage and Hour settlements.

• Median: $1,387,500

• Average: $3,076,272


Heightened Enforcement by the DOL: FY 2012

Budget Request

• DOL seeking $240.9M and

1,677 FTEs for the Wage &

Hour Division

• An increase of $13.3 M and

95 investigators over 2010

and 2011 levels

• Compared to FY 2008: An

increase of $65.2M and 469

FTEs


But Finally, Some Good News…

• Class Action Waivers: AT&T Mobility L.L.C. v. Concepcion,

179 L. Ed 2d 742 (2011).

• Employers should consider whether arbitration is right for their

workplace:

• Benefits: ideally, faster, less expensive dispute resolution; no class,

collective or representative actions; more confidential.

• Drawbacks: Cost of enforcing the agreement; cost of arbitrator; rights

to appeal.

• Tougher Time Certifying Class Actions: Wal-Mart v. Dukes,

131 S.Ct. 2541 (2011)

• Already being applied to Wage & Hour cases (e.g., MacGregor v.

Farmers Insurance Exchange, No. CV-03088, 2011 U.S. Dist. LEXIS

80361 (D.S.C. July 22, 2011)


A Question For You

In the past 12 months, has your

organization been faced with a

wage & hour claim from current

or former employees?

Yes

No

I don’t know


Key Wage & Hour

Risk Areas


Employee Classification

• Employee vs. Independent

contractors?

• Paid employee vs. unpaid

interns?

• See DOL’s guidelines on interns:

http://www.dol.gov/whd/regs/comp

liance/whdfs71.pdf

• Exempt vs. Non-Exempt (from

overtime pay requirements).

http://www.dol.gov/whd/regs/compliance/whdfs71.pdf

http://www.dol.gov/whd/regs/compliance/whdfs71.pdf


Top Five Potential Problems with Non-Exempt

Pay Practices

1. Auto Deductions for

Meal Periods.

2. Rounding.

3. Remote Work.

4. Off-the-Clock Work.

5. Regular Rate Issues.


Combating Off-the-Clock Work Claims

• State of the art wage and hour policies.

• Working time defined.

• Off-the-clock work prohibited.

• Meal and rest periods.

• Payroll integration.

• Robust Complaint Mechanism.

• Investigate and resolve using Title VII lessons.

• Time Entry Certification.

• Audit time records:

• Compare time records to other records.

• Monitor rounding practices.

• Monitor missed punches and supervisory edits.


A Question For You

Regarding compliance training,

in the next 12 months, my

organization is:

Already conducting training

Planning to implement training

Considering training

I don’t know


Combating Off-the-Clock Work Claims

• “Faragher Defense” to off-the-clock work.

• In certain areas of the law, courts have recognized something

called the “doctrine of avoidable consequences,” which

prevents a party from recovering damages where the injured

party could have avoided harm through reasonable efforts.

• Cornerstone of the defense is employee and supervisory

training on wage and hour topics.

• Most employees and managers don’t know the basic rules or don’t understand them.

• The best policies are useless if employees don’t understand them.

• Training gives your employees the tools they need to become compliance allies.


Training Solutions

• Live training:

• Instructor led and tailored to audience (i.e., senior leaders).

• When highly customized materials req’d.

• E-learning: 40%+ (and growing) of employers today chose e-learning solutions.

• Interactive and engaging – hands on experience.

• Creates electronic records and employee acknowledgments.

• Significant cost savings

• Easy to reach bulk of managers and employees – repeatedly.

• Ensures exposure to policies


Online Training Advantage

• Online training is consistent and

repeatable.

• As a result, can be presented to a

jury or mediator exactly the way

learner saw it.

• Clearly demonstrates that if after

training employee violated

policies, it was NOT because of

lack of understanding, but

deliberate attempt to circumvent

employer’s pay rules.


Training ROI

• Prevent inadvertent federal and state law violations.

• Prevent claims:

• Policies are clear and irrefutable.

• Plaintiff credibility?

• More difficult to certify a class.

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

• Build a culture of compliance.


Focused Solutions

Addressing Your Most Critical Compliance Goals


A Question for You…

If your organization may be interested

in purchasing ELT’s online training

solutions, and you would like an ELT

Sales Executive to follow up with you,

type "YES" in the box below.


Interested in our solutions?

[email protected]

www.elt.com │ 877.358.4621

Additional substantive questions?

[email protected]

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Subtitle

2011 employment law update

Education

discussion purposes

laws confidential

dodd frank

eeoc enforcement update

false claims

eeoc position

employers withsupervisors

securities exchange