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HR Legal Updates

Special thanks this month to Audrey E. Mross, Labor and Employment Attorney for Munck Carter, LLP, for this month's legal update. Mross provides free legal updates to her email group. To be added, contact her at amross@munckcarter.com.

College Coach Slam Dunked by Own Resume

First, learn to coach as an assistant under Rick Pitino at the U of Louisville.  Second, land your first head coaching gig at Manhattan College and work your way into the national scene as a young coach with much promise.  Third, lose to the defending NCAA champ in the opening round of the 2014 NCAA tourney but smile while your adversary and former mentor, Coach Pitino, tells the world that you have been hired as head basketball coach at the U of South FL.  Fourth, tuck your tail and run as USF’s rescinds their job offer and Manhattan College puts you on leave because USF’s background check reveals that your alleged degree from the U of KY does not exist.  Lesson to employment prospects... don’t puff, exaggerate or flat-out lie on your resume.  Lesson to employers... don’t assume, trust or blindly accept what’s in a resume.

A Taxing Situation

The Supreme Court overturned the 6th Circuit opinion that found severance payments were not taxable wages, instead unanimously ruling that such payments are taxable wages  under the Federal Insurance Contributions Act (FICA).  U.S. v. Quality Stores, Inc. (U.S. 3-14). The defendant employer tried to argue that the severance payments were excluded from FICA taxes as a type of supplemental employment benefit (SUB), but the Court was not buying it.  Before you try that path, check out 29 USC section  3121(a) for an explanation of what type of payment can qualify as a SUB.

It Pays to be Prompt and Effective

A lower court awarded more than $400,000 in damages arising from a race-based hostile environment claim under Title VII, where a black Assistant DA alleged that a white co-worker directed racial comments at her.  The employer appealed the decision by arguing [1] the evidence was not sufficient to show that a hostile environment existed; and [2] even if the evidence was sufficient, the employer was insulated from liability due to its prompt and effective remedial response.  The 5th Circuit chose to skip past the first question and found in favor of the employer on the second one.  Williams-Boldware v. Denton County (5th Cir. 1-14).  Here is the Court’s road map to what employers should do, when faced with a claim of co-worker harassment:

  1. The supervisor who received the complaint promptly reported it to HR;
  2. The employer immediately has a meeting with the complainant to learn what had happened;
  3. The employee asked to confront her harasser and the employer arranged for that to happen;
  4. The employer asked the employee for her input on what the employer’s response should be;
  5. The employer verbally reprimanded the harasser;
  6. The employer required the harasser to take diversity training;
  7. The employer transferred the employee so that she could avoid contact with the harasser; and
  8. The company made sure that the harassing conduct ceased

I’m Not Kidding

Employers should brief their IT departments on a Texas statute which took effect 9-1-13 that requires computer technicians who, in the course and scope of their employment or business, view an image on a computer that is or appears to be child pornography to report the image to a local or state law enforcement agency.  The report may also be made to the Cyber Tipline at the National Center for Missing and Exploited Children.  The definitions are broad .  . .  a “computer technician” is an individual who in the course and scope of employment or business installs, repairs or otherwise services a computer for a fee.  And “child pornography” is an image of a child engaging in sexual conduct or sexual performance. A “child” is an individual under the age of 18, and it is a defense to a failure to report that the child in the image appeared to be at least 18.   The failure to report is a Class B misdemeanor. See Texas Business and Commerce Code Chapter 109.

Let It Go

You may want to play your youngster’s favorite tune from “Frozen” while you read this item so that the lesson is forever stuck in your mind.  OSHA ordered an employer to pay $257,000 ($157K in backpay and $100K in compensatory damages) plus attorneys’ fees to a former employee while enforcing section 806 of SOX, which prohibits whistleblower retaliation.  The short story is that a marketing employee reported financial irregularities to his boss and his employment ended not long afterward.  The employee later learned that his former employer was [1] giving a negative job reference on him; [2] refusing to do business with the employee’s next employer; and [3] refusing to do business with a satellite channel that the former employee was now representing.  The employee alleged that he was being blacklisted in violation of section 806, and won.  This is a great reminder that certain employee claims can be triggered even after the employee leaves.  If you are really ticked off and thinking of ways to get even, let it go.  The press release is at osha.gov.

Wait For It

Wage and hour claims are growing like kudzu in the deep South. They are attractive to plaintiffs’ counsel since a single error (e.g., misclassification, failure to pay overtime) can grow exponentially into a costly one where the mistake occurred regularly and involved a group of workers over an extended period of time.  An issue that has caught the attention of the U.S. Supreme Court is whether employees who  spend time at the beginning and end of the day waiting to go through security checks (e.g., going through metal detectors, having one’s backpack/purse checked) should be paid for that waiting time.  So far, the 9th Circuit says “yes” while the 2nd and 11th Circuits say “no” and additional suits are teed up in WA, KY and TN.  The Supreme Court issued cert, so they will decide what the rule will be, for all.

Noncompete Nuked

Prospective employee (we’ll call him Newbie) lives in AL and receives an offer from a MD-based employer to work remotely.  The employment agreement, containing an noncompete, says MD law will apply and is signed by Newbie a few days before employment will begin.  A few years later, Newbie resigns and tells employer he’s going to work for an employer they consider to be a competitor.  Newbie’s employer tells him he can’t work the competitor because of the noncompete.  Newbie files a declaratory action in AL state court, asking the court to declare the noncompete void.  The employer takes counter measures and files for an injunction, to stop Newbie from going to work.  Newbie wins at the injunction hearing because the judge rules that under AL law, a noncompete is only valid if signed by an employee and Newbie was not yet an employee when he signed.  Prospective employment is not sufficient.  This is a good reminder that each state has its own idea, whether by statute or common law, of what it takes to have an enforceable noncompete and the employer’s choice of law provision will not always prevail, especially where the law in the state of the employee’s residence is more favorable to the employee.  Dawson v. Ameritox, Ltd. (S.D. Ala. 1-14).

Not Persuaded

Add a posse of 14 state Attorneys General to the growing list of organizations firmly against the NLRB’s so-called “persuader rule” and it’s nebulous advice exemption. The AG’s sent a collective letter to the U.S. Secretary of Labor, raising concerns similar to those voiced by the American Bar Association about the effect the rule has on attorney-client privilege.  The rule requires reporting  to the U.S. DOL any agreement or arrangement with a labor relations consultant (read: attorney) or other independent contractor or organization under which the person is going to persuade employees to exercise or not exercise their right to organize and bargain collectively via reps of their own choosing.  The rule was slated to take effect in March 2014 but remains in a holding pattern.

Background Checks

The EEOC and the Federal Trade Commission (FTC) jointly released guidance aimed at employers background_checks_employers and prospective employees  background_checks_employees.  The guidance for employers summarizes obligations under the Fair Credit Reporting Act (FCRA) and non-discrimination laws, including rules relating to record-keeping and proper disposal of documents containing personal information.  The guidance for job prospects explains their rights, including the ADA and GINA limits on asking for medical information and the documents they must be provided if an employer offer is rescinded based on what was in the background check under the FCRA.

EEOC on Religious Garb and Grooming

There is a fact sheet at fs_religious_garb_grooming and a Q&A at qa_religious_garb_grooming.  This material is good fodder for discussion during manager/supervisor training, as the position the EEOC takes may not be consistent with what your leaders assume is an acceptable response to applicant and employee requests to deviate from current policy or practice relating to dress and grooming.  This is guidance, which lacks the force of law, but shows the direction the EEOC is headed when addressing religious discrimination and religious accommodation under Title VII.  Your HR or Legal team’s input will be important.