By Kyla Miller, Megan P. Toth, and Erin Dougherty Foley

Seyfarth Synopsis: Gone are the days where sexual harassment training will be enough. It’s time to shift the workplace focus from just ticking a box (i.e., training complete) to creating a culture where harassment (or discrimination) of any kind is truly not tolerated.  Promptly and effectively responding to such allegations is one step in the right direction.  This is the second article in a three-part series addressing sexual harassment in the workplace, which looks closely at corporate culture and provides tips on how companies might avoid being the next sexual harassment headline.

#MeToo In the Workplace and How to Address It

It’s been more than 30 years since the Supreme Court ruled that sexual harassment is a form of sex discrimination under Title VII, and it’s been nearly 20 years since it mandated that complaints of sexual harassment (and discrimination) be investigated. Yet, in reality, as made clear in recent media reports, most violations go unreported and uninvestigated. The EEOC estimates that, of the 30,000 harassment complaints they receive each year, only 6% to 13% of individuals who experience harassment actually file a formal complaint with the EEOC.  However, the #MeToo campaign may be on its way to changing that statistic.

One key to preventing #MeToo in the workplace is fostering a corporate culture that not only says behavior matters, but also shows behavior matters.  But how do employers both walk the walk and talk the talk?  The following are some helpful tips:

  1. Understand what sexual harassment is … the obvious and the not-so-obvious.

The #MeToo campaign has revealed that the vast majority of people have questions or doubts about whether conduct really is sexual harassment.  Let’s take a little quiz:

Could the following acts be considered sexual harassment? Answer Yes or No.

Requests for sexual favors?

Physical Touching?

Comments relating to a person’s sex generally?

A woman asking out another woman?

A man favoring another man (over a woman)?

A co-worker repeatedly teasing another co-worker about sex?

A client or customer sending gifts to an employee?

Could you definitively answer yes or no to each of these examples?  Or did you need more context?  Your answer should be the latter, because yes, each of those examples could be sexual harassment, but each of them could also NOT be sexual harassment.  It depends on the nature, severity and pervasiveness of the conduct.  Whether or not conduct legally rises to the level of actionable “sexual harassment” cannot be analyzed in a vacuum.

Confused?  Here’s why: The question is (legally) whether the conduct at issue was “severe or pervasive,” such that it affected the terms and conditions of the employee’s workplace, objectively and subjectively.

The point –– Not all physical touching, bawdy conversations or allegations of sexual harassment are legally actionable — even if the person reporting it was offended.  Each inquiry is unique and must be investigated thoroughly to determine if sexual harassment actually occurred and what corrective action, if any, should be taken.

  1. Foster an inclusive culture through training and positive reinforcement by managers.

Companies that continue to tolerate bad behavior are placing themselves at risk.  Even conduct that does not cross the line but is disrespectful or rude takes a toll on employee morale.  Attitudes and culture can change.  Employers can provide training to set behavior expectations, and lead by example to create a culture that does not encourage or tolerate such conduct.  However, training simply to prevent legal liability (i.e., because it is required by law) will fall short.  Companies must work from the top down to incite change, which may include a whole-company approach to create and maintain a culture of tolerance, compliance and respect.  In thinking about how to deploy that type of training, keep in mind that training should be:

  1. Tailored. Mirror training to realistic situations that are specific to your work environment.
  2. Frequent. Once a year or more. Anything less is not enough to highlight it as a high priority.
  3. Interesting. Vary the dynamic, style, form and content each time it is presented. (Keep it fresh!)

To create a systemic culture of inclusion, one place to start is with your Human Resources department.  Your HR department should be diverse and accurately reflect your workforce so that they are able understand and respond to its unique demands.  In addition to HR, the actions and integrity of your corporate leaders are crucial. Your company’s leaders must demonstrate a sense of urgency and commitment to your employees, and particularly to preventing discrimination and harassment. How, you ask? Commit the time and resources towards mindful training and continued support to top-level managers to ensure those who have the power and authority to effect change have the support and resources to do it.  It bears repeating: a culture of tolerance and inclusion starts from the top down.

  1. Allow multiple avenues for reporting harassment.

Most employers have an anti-harassment policy. But simply stating that it is not tolerated is not enough. Make it clear that there are multiple avenues for reporting misconduct. For example, allow employees to notify human resources, contact a higher level executive, or call a third-party hotline.  Giving employees multiple ways of getting the complaints heard further encourages such reporting.

  1. Identify situational risk factors.

Being proactive and identifying risks before they turn into problems (or even worse, lawsuits) is half the battle. One place to start is identifying and addressing circumstances, unique to your company, that may increase the risk for sexual harassment claims. For example, the following situations may increase the risk of sexual harassment claims:

  • Workforces with significant cultural and language differences in the workplace;
  • Workforces with significant age or gender imbalances;
  • Workplaces that value customer satisfaction over employee well-being;
  • Isolated workspaces;
  • Workplace cultures that tolerate or encourage alcohol consumption.
  1. Understand the corporate role.

Even in the wake of heightened media on this issue, protecting your workforce and the company is not impossible.  Employers’ legal responsibilities are to: (1) take reasonable efforts to prevent sexual harassment and (2) to promptly and effectively investigate, respond to, and address complaints. By doing both of these things, employers lessen their chances of being found liable for their employees’ behavior in the wake of a lawsuit.

As recent headlines suggest, “good enough” is “not enough.”  Doing just the bare minimum will not suffice. Strive to do more. Over-train. Over-inform. Over-discuss. If employers can accomplish this, they are on the right path to preventing #MeToo in the workplace.

Next up – We will present insights from Seyfarth Shaw at Work’s Managing Director to share his insights from the front lines and provide his thoughts on how organizations can credibly and effectively combat workplace sexual harassment.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Workplace Policies and Handbooks Team or the Labor & Employment Team.

By Esther Slater McDonald, Seth J. Fortin, Wan Li, Rhea Yu, and Craig B. Simonsen

Seyfarth Synopsis:  The People’s Republic of China is making progress in implementing its mandatory “social credit system.”  Multinational businesses in China should be watchful of this system, and ready for it when it rolls out – if it hasn’t already.

In June 2014 China’s State Council issued a notice regarding the establishment of a “social credit system”–essentially, a national credit score for each citizen and business, but one reflecting more than just creditworthiness: the notice states that the goal of the system is to “[c]omprehensively move forward the construction of social sincerity” in order to “create harmonious and amicable interpersonal relationships” and “stimulate the progress of society and civilization.”  “State Council Notice concerning Issuance of the Planning Outline for the Construction of a Social Credit System (2014-2020),” GF No. (2014)21 (Jun. 14, 2014).

While the system is voluntary during an initial pilot stage, and run by nominally private entities like Alibaba, the Chinese government has indicated that by 2020 it will have “established fundamental laws, regulations and standard systems for social credit” and will “giv[e] complete rein to mechanisms to encourage keeping trust and punish breaking trust.”  Media sources have indicated that the government will at that point officially control the system, which will then be mandatory.  Local governments are also presently working to set up their own social credit systems.  Information collected in the systems of local governments, government agencies, and private entities will eventually be funneled into a national database.

According to a recent article in Wired, the score will ultimately be based on a multitude of factors, including the following:

  • Credit history — Does an individual or business pay its debts?
  • Personal habits — Does an individual engage in productive activity? Buying baby products reflects a sense of personal responsibility while playing video games reflects an idle nature.
  • Treatment of others — Does an individual respect others?
  • Civic obedience — Does an individual or business adhere to local and national laws?
  • Loyalty to party and country — Does an individual or business support the Communist Party and Chinese government? Does an individual or business purchase Chinese brands or partner with Chinese companies?
  • Network — With whom does an individual or business associate? Who are their partners, friends, and acquaintances, and what are their ratings?

Rachel Botsman, “Big Data Meets Big Brother as China Moves to Rate its Citizens,” Wired (Oct. 21, 2017).

A government official with the National Development and Reform Commission, which is charged with implementing the national system, noted that a “nation-wide information sharing platform” has been set up “to connect 37 government departments[,] and it has collected more than 640 million pieces of information on credit.”  Zhao Yusha, “4.9m People with Poor Credit Record Barred from Taking Planes,” Global Times (Nov. 2, 2016).  According to the Chinese government, the goal of this program is for “the whole society to pursue the common value[s] and code of conduct, and actively create a ‘trustworthy glor[ious], dishonesty shameful’ good social atmosphere.” “State Council General Office on Strengthening Guiding Opinions on Building a System of Personal Integrity” (Guidance Opinion), No. 98 (Dec. 30, 2016). Our translation.  Other observers have a different view, believing the system is more about social control than credit in the ordinary sense.  Asan Institute for Policy Studies, “Orwell’s Nightmare: China’s Social Credit System” (Feb. 28, 2017).

At the moment, pilot-stage credit systems like Alibaba’s Sesame Credit do not “directly penalise people for being ‘untrustworthy.’”  Botsman, supra.  But the system provides incentives to fall in line with the values the government seeks to inculcate:  A “good” score makes it easier to find a job, rent a car, check in at the airport, or obtain a travel visa; the corollary is that it is harder to do such things with a “bad” score.  Once the system is mandatory, though, those with low ratings may have “slower internet speeds; restricted access to restaurants, nightclubs or golf courses; and the removal of the right to travel freely abroad.”  Id.

At present, however, the social credit system cannot by itself inflict such penalties; rather, the judiciary can place companies or individuals who fail to meet their obligations on the official  “List of Dishonest Persons Subject to Enforcement”, published by the Supreme People’s Court.  “Several Provisions of the Supreme People’s Court on Announcement of the List of Dishonest Persons subject to Enforcement,” Interpretation No. 17 (2013).  Those on the list are subject to various restrictions, including limitations on travel, employment, financing and credit, market access, and government support.  Chinese news sources report that, by late 2016, nearly 5 million citizens were barred from air travel, and over a million were barred from train travel based on the information already in the system.  Zhao, supra.

And because the system looks at more than just debt payment history, one’s score can go down if one associates with the wrong people or, potentially, even just ends up in the wrong physical place.  As the country turns more toward app-based commerce, there will be a significant amount of data available on nearly every aspect of a citizen’s life. One locality included “not visiting your parents often” as a negative factor in computing credit scores.  Asan Institute, supra.  Even expressing the wrong thoughts could bring your score down; as a Chinese professor working with the government to develop the system explains: “The behaviour of the majority is determined by their world of thoughts. A person who believes in socialist core values is behaving more decently.”  Botsman, supra.

For businesses, the same system of rewards and punishments applies.  A corporation may be rewarded with a higher credit score for having reduced energy consumption, promoting local or national government projects, or partnering with Chinese businesses.  In contrast, a company that lacks a robust safety program, refuses to support a local government’s pet project, or balks at disclosing big data to the Chinese government may be downgraded.

The Mercator Institute for China Studies writes that, as to businesses, the system is designed “to constantly monitor and evaluate companies’ economic as well as non-economic behavior” and to create incentives for companies to comply “not just with laws and regulations but also with the industrial and technological policy targets laid down by the Chinese government.”  “MERICS China Monitor: China’s Social Credit System” (May 24, 2017).  Although the system will purportedly treat Chinese and foreign companies the same, there is a concern that foreign companies will be disadvantaged.

If all that sounds Orwellian, the flip side is that the new credit system might also make credit easier to obtain and business less costly in China.  Unlike the U.S., with its well-established credit bureau system, China has never had a comprehensive, national credit reporting scheme.  Moreover, the system goes beyond mere borrowing and lending and, according to the Chinese government, aims to promote a global concept of “trustworthiness.”  So, for example, one of the goals is to punish and isolate not only individuals and businesses who don’t pay their bills but also those who sell counterfeit or shoddy goods, breach contracts, or who otherwise fail to make good on their consumer or business obligations.

Making Chinese business trustworthy and attractive to foreign investment is an explicit goal of the credit system plan: as the State Council recognized in its “Planning Outline,” “[p]erfecting the social credit system is a necessary condition to deepen[ing] international cooperation and exchange, establishing international brands and reputations, reducing foreign-related transaction costs, and improving the country’s soft power and international influence . . . .”   Supra. However, investment freedom will be linked to businesses’ social credit scores; only companies with high credit scores will benefit from reduced regulation and greater investment opportunities.

What are the takeaways for multinationals in China?  At a minimum, companies will likely want to consider some of the following:

  • The BBC reports that “each citizen and Chinese organisation will be rated.” “China ‘Social Credit’: Beijing Sets Up Huge System” (Oct. 26, 2016).  This raises the question of whether the credit scoring system will also apply to foreign businesses operating in China.  To the extent that it does, will there be required disclosures or reporting that a business will need to make to the system?  Compliance may raise unique legal issues for foreign companies, and the cost of compliance may be prohibitive for some.
  • Will foreign companies or their affiliates operating in China have to disclose information about employees in China? If yes, will that include non-citizens working in China or only Chinese nationals?  What about non-citizens working temporarily in China (e.g., an foreign executive who regularly travels to China for extended business trips)?
  • If foreign employers have to disclose information about individuals working in China, does such conduct violate other law, such as federal or state privacy laws in the United States? Does furnishing information to or obtaining information from the Chinese social credit system expose foreign companies to liability in other jurisdictions?  For example, can companies participating in the social credit system be sued in the United States for violations of the Fair Credit Reporting Act?
  • Will foreign employers operating in China be required to obtain social credit scores on job applicants or current employees? Even if not required to do so, will it be to a company’s advantage to avoid hiring employees with low scores, not only because of whatever the scores actually reveal about the recruits’ trustworthiness and diligence, but also because an employee with a low score could bring the company’s own score down?
  • To the extent that the social credit system scrapes social media for data about people and companies, will that include social media worldwide? If so, do multinational companies have to worry about their political or other media positions in other countries affecting their social credit score in China?

Finally, companies should pay attention to the social credit system as a source of useful business information.  It remains to be seen whether the system will be reliable enough to provide useful information about potential employees or business partners (separate from the question of how any potential associations affect the company’s own score).  Will this system actually be helpful in sorting the wheat from the chaff–the diligent employees from the layabouts, the solid businesses from the scam artists?  That remains to be seen, but if American and other multinational companies can actually benefit from the transparency that the social credit system promises, it might remove some of the sting from the added level of regulatory hassle that it otherwise seems to portend.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the International Employment Law Team or the Background Screening Compliance & Litigation Team.

Seyfarth Synopsis:  Over the next few weeks, we’re going to weigh in on the growing national debate around the recent wave of sexual harassment allegations.  To date, no one seems immune from the allegations: celebrities, politicians, presidents. See for instance Time Magazine’s Person of the Year 2017 issue. We hope this dialogue will empower employees and employers, alike, to speak up before inappropriate, but previously unmentioned conduct, festers.  This conversation also creates an opportunity for a company to look hard at its corporate culture and how it can strive to make it welcoming and inclusive. Welcome to our three part series. 

The First in a Three Part Series Addressing Sexual Harassment in the Workplace.  (Part 1)

By Erin Dougherty Foley

A Blog in Three Parts:  Kicking off our three part series – this week’s installment will look at how to avoid some of the landmines that can accompany holiday parties; Part 2 will look at the role corporate culture plays in establishing that feeling of mutual respect and shared courtesy; and then in Part 3 we will invite Philippe Weiss, Esq., Managing Director of Seyfarth Shaw at Work, to share his insights from the front lines and his thoughts on how organizations can credibly and effectively combat workplace sexual harassment.

’Tis the Season: Perhaps more than any other time, lawyers and laypeople alike are talking about sexual harassment.  Indeed, the country is in the midst of an important national conversation about such abuses of power and is trying to come to terms with what the despicable “me too” allegations say about our workplaces and our values.  We hope this conversation, the national headlines, social media campaigns, and watercooler conversations, shine a light on genuine misconduct that should be addressed.  But with the holiday season — and the holiday party season — upon us, this adds an extra layer of anxiety to the already wide range of “what could possibly go wrong” scenarios.

We recognize that this year, perhaps more than others, people may be on heightened alert for misconduct or have a lower threshold for what may be considered inappropriate work place conduct.  But Holiday parties also provide an important opportunity to build comradery, give thanks, show appreciation for your employees’ hard work throughout the year, and recognize past achievements. We don’t think you should scuttle these good intentions, but we do think a little advance planning can ease the process.  So, this week, we’re decking the halls with some blogs from the Ghost of Holiday Party’s past (such as Don’t Let Too Much Eggnog Ruin Your Office Holiday Party: Tips to Limit Employer Liability at Company Parties and Don’t Be Scrooged: Wage & Hour Tips To Help Employers Avoid Holiday Party Humbug) , in which our colleagues have sagely opined on how to spread holiday cheer without getting run over by a reindeer (or a charge of harassment).

Party Planning Tips to Consider:

  • Prior to the party, circulate a memo (or an email to all employees) reiterating your company’s policy against sexual and other forms of harassment.
  • Remind employees in that communication that the policy applies to their conduct at company parties and other social events, and they should act in a professional manner at all times.
  • Make attendance at the holiday party entirely voluntary and convey that message to employees with unwavering clarity.
  • Set a tone of moderation by reminding employees of the company’s policy against the abuse of alcohol and zero tolerance with respect to the possession, use, or sale of illegal drugs.
  • Consider limiting the amount of alcohol served and/or stop serving well before the party ends (and have lots of non-alcoholic alternatives).-
  • Have plenty of food, (and curb the concern that someone may be drinking on an empty stomach).
  • No mistletoe, no scantily clad elves, and no “bad Santa” (for all the obvious reasons)!
  • Remind managers to set a professional example, and designate several managers to be on the lookout for anyone who appears to be impaired or intoxicated.
  • Anticipate the need for alternative transportation and don’t allow employees who have been drinking heavily to drive home.

Post-Party Wrap-Up: Of course, if post-party concerns are raised, they should be addressed promptly (investigated if necessary), and, where applicable, dealt with consistent with other incidents of inappropriate conduct.  Remember, just because something happened “off campus” does not make it “off limits” from the Company’s standpoint.  Ensuring that your employees know you are going to respond to any allegation of misconduct sends a powerful message.

Once you’ve gotten past the holidays, and as you face 2018 with a clear head and renewed hope for the new year, it’s a good time to start thinking about whether your company needs to change its ways (like Scrooge after meeting the Ghost of Christmas Future) or to improve its employee communications (like Walter the Dad in Elf) or to be more inclusive (like Santa stopping at the Island of MisFit Toys).  And while making such changes can be challenging, think of the good that can come from them.

Next week, we’ll look at the importance of corporate culture in these times of heightened awareness.  Stay tuned.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Workplace Policies and Handbooks Team or the Labor & Employment Team.

By James L. Curtis, Daniel Birnbaum, and Craig B. Simonsen

Seyfarth Synopsis: NIOSH reiterated last week that healthcare workers are exposed to a wide range of hazards on the job and healthcare employers may not be following best practices to protect against these hazards.

Healthcare is the fastest-growing sector of the U.S. economy, employing over 18 million workers, 80% of which are women.  These healthcare workers face numerous hazards on the job, including sharps injuries, exposures to chemicals and hazardous drugs, musculoskeletal disorders (MSDs), latex allergy, violence, and stress.

Significantly, there are more cases of healthcare workers suffering nonfatal occupational injury and illnesses than any other industry sector.  In a recent healthcare study, NIOSH found that as to administering aerosolized pentamidine to patients “22% of respondents did not always wear protective gloves, 69% did not always wear protective gowns, and 49% did not always wear respiratory protection….”  NIOSH concluded that there was “a belief that employers do not fully appreciate the potential adverse health effects associated with exposure to these drugs and therefore do not prioritize adherence.”

As to high-level disinfectants, the survey findings showed that best practices to minimize exposure have not been universally implemented.  NIOSH’s survey found that “17% of respondents said they never received training and, of those who received training, 42% said that it was more than 12 months ago.  19% of respondents said that employer safe handling procedures were unavailable.”  “44% of respondents did not always wear a protective gown and 9% did not always wear protective gloves.”

Critically, NIOSH concluded that employers and employees did not always follow best practices.

For healthcare employers this conclusion should be a red-flag as to the overall quality of their safety and health policies.  Healthcare employers should consult with safety professionals who are well versed in the areas where the employers may be out of touch with best practices.  Such consultations can enhance employee safety and help avoid liabilities associated with OSHA violations.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team or the Workplace Counseling & Solutions Team.

By Andrew S. Boutros, John R. Schleppenbach, and Craig B. Simonsen

Seyfarth Synopsis:  U.S. Customs & Border Protection recently issued a Final Determination that the coffee roasting process “substantially transforms” raw coffee for purposes of country-of-origin determinations and U.S. Government “Buy American” regulations. This clear new guidance should help corporations and their executives avoid civil, administrative, and criminal legal exposure as President Trump fulfills a campaign promise to crack down on illegal trade.

In a significant ruling that sent a jolt of caffeine through the coffee industry, U.S. Customs and Border Protection (CBP), Department of Homeland Security, issued a Notice of Final Determination (HQ H291135), on November 15, 2017, holding that the country where raw green coffee beans are roasted is the country of origin of the roasted coffee for purposes of U.S. Government procurement regulations.  82 Fed. Reg. 55388 (November 21, 2017).

Specifically, CBP’s determination addressed the important question of whether raw green coffee beans are “substantially transformed” by the roasting process for purposes of United States Government procurement.  CBP issues country of origin advisory rulings and final determinations as to whether an article is or would be a product of a designated country or instrumentality for the purpose of granting waivers of certain “Buy American” requirements under U.S. law for products offered for sale to the United States Government.

In issuing its Determination, CBP relied on the rule of origin, at 19 U.S.C. § 2518(4)(B)(ii), which provides that in “the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.”  In addition, CBP also referred to 48 CFR § 25.003 of the Federal Acquisition Regulations, which defines “U.S.-made end product” as:

An article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed.

In addition, the Notice further observed that “for more than 30 years, CBP has recognized that roasting green coffee beans substantially transforms the beans into a new and different article of commerce.  See Headquarters Ruling Letter (HQ) 733563, dated June 24, 1991, citing HQ 070395, dated June 6, 1983; HQ 722980, dated October 17, 1983; HQ 722360, dated June 6, 1984; and, HQ 725641, dated July 25, 1984.”

The Notice resolved that “based upon the facts presented, CBP has concluded . . . that Canada or the United States, i.e., the country where the raw green coffee beans are roasted, is the country of origin of the roasted coffee for purposes of U.S. Government procurement.” (Emphasis added).

According to the Notice, any party-at-interest, as defined in 19 CFR § 177.22(d), may seek judicial review of the Final Determination before the Court of International Trade, by December 21, 2017.

As we have written earlier this year in both Bloomberg BNA’s White Collar Crime Report, 12 WCR 410 (May 2017) as well as a Firm Management Alert (April 2017), the current Administration has vowed to combat unfair trade practices.  Indeed, fulfilling early campaign promises, President Donald J. Trump issued two Executive Orders on March 31, 2017 on the subject, with one such Executive Order directing the Attorney General to “ensure that Federal prosecutors accord a high priority to prosecuting significant offenses related to violations of trade laws.” The same Executive Order also directs the Secretary of Homeland Security, through the Commissioner of CBP, to “develop and implement a strategy and plan for combating violations of United States trade and customs laws.”

With new clear guidance from CBP as to how coffee (and by implication, potentially other) country-of-origin determinations should be made both at the border and after entry into the United States, Notice of  Final Determination (HQ H291135) makes it less likely that employers and companies in the coffee or other related industries will violate federal law that makes it a crime for any person or company to receive, conceal, buy, sell, or in any manner facilitate the transportation, concealment, or sale of imported merchandise knowing the merchandise to have been imported into the United States contrary to law.

Indeed, although we have been predicting that criminal and other enforcement actions involving trade, customs, antidumping duties, and countervailing duties practices will likely be on the rise over the next several years, Notice of Final Determination (HQ H291135) draws a bright line that should help companies and employers to steer clear of false or fraudulent actions that could give rise to liability, whether civil, administrative, or even criminal.

Those with questions about any of these issues or topics are encouraged to reach out to the authors, your Seyfarth attorney, or any member of the Seyfarth Shaw’s White Collar, Internal Investigations, and False Claims Team or International Employment Law Team.

 

By Paul Galligan, Gena B. Usenheimer, and Meredith-Anne Berger

Seyfarth Synopsis: Three Republicans from the House of Representatives hailing from states with paid family and sick leave laws have sponsored the Workflex in the 21st Century Act, signaling increasing frustration with the complexities of multi-state compliance. Representatives Mimi Walters of California, Elise Stefanik of New York, and Cathy McMorris Rodgers of Washington have pitched a bill that would exempt employers who offer certain amounts of paid time off from complying with state paid leave laws. In its current form, the bill would serve to drastically reduce employee access to paid leave, but would also grant employees alternative work arrangements, known as “workflex” options.

The Workflex in the 21st Century Act, H.R. 4219, was proposed on October 26, 2017 as an amendment to the Employee Retirement Income Security Act (ERISA) to “include a voluntary option for qualified flexible workplace arrangements.” Under the law, employers would be exempt from state paid leave law requirements, but since the bill only reaches employees eligible for employer-provided benefits, employers would still have to comply with state and local leave laws for employees ineligible for the company’s benefits.

Employers with a unionized workforce must incorporate the rights of employees to compensable leave and workflex options pursuant to applicable collective bargaining agreements into the plan. The bill provides that plans which meet all of these requirements will also satisfy the requirements of Executive Order 13706, or Paid Sick Leave for federal contractors. However, this law does not, on its face, amend or limit employees’ ability to use unpaid leave in accordance with the Family and Medical Leave Act.

Minimum Amount of Leave

Employers wishing to take advantage of the bill’s preemptive effects must provide a minimum amount of “compensable leave” for employees based on their years of service. Compensable leave includes any leave permitted to be used for paid time off, sick leave, personal leave, or vacation. Employers are permitted to include up to six paid holidays towards meeting the minimum amounts reflected below.

Number of Employees Employees with 5 or more years of service as of the beginning of the plan year Employees with fewer than 5 years of service with the employer as of the beginning of the plan year
1000 or more 20 days 16 days
250 to 999 18 days 14 days
50 to 249 15 days 13 days
Less than 50 14 days 12 days

The bill makes clear that employers who wish to allow employees to take leave exceeding these minimum amounts are free to do so under the law. In that vein, employers who provide unlimited compensable leave, as defined above, are deemed to comply with the minimum amount of leave requirement.

Accrual and Carryover of Leave

Employers may frontload the employee’s compensable leave at the beginning of the plan year, or allow the employee to accrue compensable leave proportionally as the calendar year progresses, and is available for the employee to use as the compensable leave accrues. It is unclear whether the employer can impose a waiting period to use compensable leave, or if there are further limits on accrual of leave based on the wording of the bill. Further, the employer has the option to offer both carryover and cash out of unused leave.

Calculation of Number of Employees

The number of employees is determined by calculating the total number of monthly employees for each month of the preceding plan year and dividing by 12. To be counted, an employee must be considered an employee for first and last day of the month. “Full-time” must be “reasonably” defined, but the bill does not give further guidelines regarding the definition. All other employees are considered “part-time,” but the method of determining how part-time employees may accrue compensable leave is not clear based on the bill.

Use of Leave

An employer may restrict the use of leave during the first 90 days of employment with the employer, and may also limit the use of leave to times when it does not “unduly disrupt the operations of the employer,” and whether to use the leave in full-day or partial-day increments.

Workflex Options

In addition to paid leave, the bill provides that an employer must offer each employee in the plan, so long as the employee meets eligibility requirements, at least one of the following “workflex” options, which are not limited in time according to the bill as written:

Biweekly work schedule: A non-exempt employee may work up to 80 hours in a two-week period. In any one week, the employee may work between 40-60 hours. Employees must be compensated at their regular rate, and may only earn overtime for any time worked over the agreed-upon biweekly work schedule, or over 80 hours in the two-week period. It is unclear how this arrangement will interact with the Fair Labor Standards Act (FLSA) or state wage and hour laws.

Compressed schedule work program: An non-exempt employee may work his or her regular weekly hours spread among fewer days, i.e., a 40-hour week over four days. Employees who choose this option earn overtime in accordance with the FLSA. Moreover, state wage and hour requirements (such as spread of hours) would also apply.

Job sharing program: An arrangement where the employer approves two or more employees to share one employment position.

Flexible scheduling: An agreement under which the employee’s regular work schedule is “altered.” This term is not further defined in the bill.

Predictable scheduling: A system whereby the employer provides a schedule to an employee with reasonable advanced notice and with as few alterations as possible.

Telework program: An arrangement where the employee is permitted to perform the duties and responsibilities of his or her position from a worksite other than where the employee would otherwise work (e., from home).

Options offered may differ depending on the particular position. Employees eligible for “workflex” options must be employed for at least 12 months for at least 1,000 hours of service during the 12-month period. An employer may estimate the number of hours worked by the employee. However, the employer may not force an employee to use workflex options. If an employee elects to use a workflex option offered by the employer, a written agreement signed prior to starting the arrangement must set forth the employee’s work schedule with a description of the workflex option.

Right to Reinstatement

Employees who elect to use a workflex option or compensable leave under the bill must be reinstated to their same or equivalent position, unless the employee has used more than 12 weeks of compensable leave in a 12-month period, or is a key employee as defined under the Family and Medical Leave Act. The bill also notes it is not intended to relieve an employer’s obligations under the Americans with Disabilities Act.

This bill, should it pass, would offer attractive alternatives to employers who find complying with various state and local paid leave regulations challenging. It would also offer flexible work arrangements to employees that could save employers money and reduce turnover of employees who would otherwise leave a job for family or personal reasons. It would ostensibly preempt paid leave laws that are popping up all over the country, including most recently paid family leave in New York and paid sick leave in various municipalities, including Cook County, Illinois, and the state of Washington. However, its overlap with various laws, including ERISA, the FMLA, and the FLSA may necessitate complex legal solutions in order to implement it. We will continue to track this bill as it moves through the legislative process.

Seyfarth Synopsis: Wishing you a wonderful holiday season. 

As we begin the traditional start of the holiday season and before the crush of the end of the year is upon us, we wanted to take a moment to thank you – the readers of the Employment Law Lookout Blog – for your loyal readership and feedback.  We strive to make our reports entertaining and helpful and hope that you find them so.

We are also pleased to announce that the Firm’s Social Media Privacy Legislation Desktop Reference has been updated and is now available for your review and use.  Please see below for how to register to receive both an on-line as well as hard copy of this publication.

On behalf of the entire Seyfarth blog team, thank you.  Have a safe, happy and peaceful Holiday Weekend.

Now Available! Seyfarth Shaw’s 2017-2018 Edition  of the Social Media Privacy Legislation Desktop Reference

There is no denying that social media continues to transform the way companies conduct business. In light of the rapid evolution of social media, companies today face significant legal challenges on a variety of issues ranging from employee privacy and protected activity to data practices, identity theft, cybersecurity, and protection of intellectual property.

Seyfarth Shaw is pleased to provide you with the 2017–2018 edition of our easy-to-use guide to social media privacy legislation and what employers need to know. The Social Media Privacy Legislation Desktop Reference:

  • Describes the content and purpose of the various states’ new social media privacy laws.
  • Delivers a detailed state-by-state description of each law, listing a general overview, what is prohibited, what is allowed, the remedies for violations, and special notes for each statute.
  • Provides an easy-to-use chart listing on one axis the states that have enacted social media privacy legislation, and on the other, whether each state’s law contains one or more key features.
  • Offers our thoughts on the implications of this legislation in other areas, including trade secret misappropriation, bring your own device issues and concerns, social media discovery and evidence considerations, and use of social media in internal investigations.
  • Concludes with some best practices to assist companies in navigating this challenging area.

How To Get Your Desktop Reference

To request the 2017–2018 Edition of the Social Media Privacy Legislation Desktop Reference as a pdf or hard copy, please click here.

 

 

By David J. Rowland and Megan P. Toth

Seyfarth Synopsis:  The Eleventh Circuit is the next to find a long-term leave of absence is not a reasonable accommodation under the ADA.

Just a few months after a recent and definitive decision by the Seventh Circuit that multi-month leaves of absence, even those that are definite in term and sought in advance, are not required by the Americans with Disabilities Act (ADA), the Eleventh Circuit has issued a similar opinion. This decision may signal a growing trend that courts are attempting to curb the abuse of long-term leaves of absence under the ADA that has been rampant and debilitating to employers for many years.

In the recent Eleventh Circuit case, Billups v. Emerald Coast Utilities Authority, the plaintiff injured his shoulder at work and took Family and Medical Leave Act (FMLA) leave.  He was not able to have corrective surgery during this time, so under the employers medical leave policy, he was granted another three-month medical leave.  However, at the end of this period — a total of six months of leave — the employee was still not medically able to return to work. He told the employer that he had a doctors appoint in a month and would likely be released to work in six weeks, but it was unclear whether he would have any restrictions at that time. Thus, the employer terminated the plaintiff’s employment and he sued, alleging failure by the employer to provide additional leave as an ADA reasonable accommodation.

The Eleventh Circuit affirmed dismissal of the plaintiff’s claim on summary judgment. The plaintiff acknowledged that case precedent says that employers are not required to provide indefinite leaves. However, he argued that these prior decisions involved situations where employees suffered from chronic medical conditions that could continue indefinitely. In this case, the plaintiff contended that an unspecified leave was reasonable because there was a projected end date and once concluded, his medical condition would be resolved without the potential need for additional leave.

The Eleventh Circuit rejected this argument finding that even though the plaintiff would eventually recover, his request was essentially an “open-ended request” for leave of a sufficient time to recover, which is not reasonable under the ADA.  The Court also noted that the employer did not violate the ADA because it already provided six months of leave and the plaintiff inarguably could not perform the essential functions of his job at the time of his termination, with or without a reasonable accommodation and therefore he was not a qualified individual.  Thus, the court found that regardless of the nature of his underlying medical condition and his projected but uncertain recovery, the employer was not required to provide continued long-term leave.

It appears that the Seventh Circuit is not the lone-ranger in its attempt to invalidate the EEOC’s historic and strongly advocated position that long-term leaves are required “reasonable accommodations” under the ADA.  If other circuits continue to follow suit, employers may no longer have a legal obligation to provide lengthy post-FMLA leaves of absence, without the need to justify the denial based on specific business needs.  This case also demonstrates the importance of requesting updated medical information from employees nearing the end of FMLA or other medical leave periods.

If an employee cannot medically substantiate that they can return to work close to the expiration of their FMLA leave, employers may have greater legal flexibility in determining whether or not to accommodate the request. While employers should be aware of this apparently growing trend and may choose to adjust their leave and accommodation approaches accordingly, they still must approach long-term and indefinite leave requests very carefully as there are conflicting decisions from other circuits and the EEOC’s position will remain unchanged unless the U.S. Supreme Court ultimately sides with the Seventh and Eleventh Circuits.

If you have any questions regarding this area or need assistance evaluating whether to grant or deny long-term or indefinite leave requests, please contact the authors, your Seyfarth Attorney or a member of the Firm’s Absence Management and Accommodations Team.

By Erin Dougherty Foley and Karla Grossenbacher

Seyfarth Synopsis: In this hot topic webinar, on Thursday, November 16, 2017, we will discuss how to avoid becoming the next target in a lawsuit concerning the collection and retention of biometric data. There is no cost to attend this program, but registration is required.

In the past two months, at least 32 class action lawsuits have been filed relating to biometric privacy. These suits target a number of industries – everything from companies in the restaurant and hospitality businesses to nursing homes and major social media giants. If you use biometric technology in your company, you need to make sure you are not the next to make the headlines.

Recently, and particularly in the state of Illinois, there has been an uptick in litigation related to the collection and retention of biometric information by businesses, If your company uses any form of biometric technology, such as a biometric timeclock, biometric package tracking or any kind of employee or customer facing biometric technology, you need to make sure you are in compliance with applicable law. This webinar will discuss each of the state laws governing the collection and storage of biometric information, the requirements for businesses, best practices for compliance.

Be sure to register if you wish to attend this webinar. If you have any questions, please contact events@seyfarth.com.

By Rachel Bernasconi and Amanda Cavanough

LinkedIn is the biggest online network of professionals in the world.  Many employers encourage staff to use LinkedIn to promote their organisation.

While employees may share content relating to their organisation, they tend to think of their profile as personal to them, like a resume, which is available to recruiters, colleagues and clients.

Yes, the LinkedIn account belongs to the individual, but that doesn’t mean that ‘anything goes’.

On signing up, you agree with LinkedIn to provide truthful information and to not misrepresent your current or previous positions or qualifications.  Even so, we have all noticed information on LinkedIn that isn’t 100% accurate.

You may have had a similar experience where you look up a contact on LinkedIn, and their profile shows them at a job they left months ago.

Perhaps they are on gardening leave, or they have been exited against their will and don’t want to say they are unemployed.  There is the potential that their account was connected to a work email address that they can no longer access, and signing back in has become too problematic.

But in more concerning circumstances, some people use their LinkedIn profile to paper over gaps in a resume – this is an age-old issue, but with LinkedIn and online platforms, it is increasingly visible.

Other than getting frustrated, what can employers do when an employee fails to update their LinkedIn profile?

There are options to manage this risk as an employer:

  • Writing to the employee and asking them to correct the details
  • Using the LinkedIn feature to ‘disconnect’ that contact from your organisation, removing them from search results and the list of employees
  • Reminding departing employees of expectations in exit interviews
  • Including a term of a release agreement or deed which can be specifically enforced if necessary.

Is it worth the trouble from a commercial perspective?  The answer may well depend on the individual involved. It is always a balancing act, but when rights and obligations are clearly defined, resources like LinkedIn are proven to work in everyone’s interest.