Spying on an employee in France breaches his right to privacy, even where he is committing breaches of his employment contract

By Squire Patton Boggs on Posted in Dismissal, Privacy, Recent Cases

The French Supreme Court recently ruled that an employer could not rely on the report of a private detective it had hired to spy on one of its employees to obtain an injunction against him because this was a breach of the employee’s privacy and that could not be justified, however legitimate were its concerns.

Numerix Radiologie suspected Mr. X of unfair competition during his working time (he was working from home). It hired a detective for a week or so to follow the employee when he left his home.  This allowed it to confirm its suspicions. The employer then applied to the civil court for an Order against Mr. X to secure evidence in anticipation of future judicial proceedings against him, as allowed by the French civil procedure rules. To demonstrate its reason for seeking the Order to secure the evidence, Numerix Radiologie produced the report from the detective.

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New UK Financial Services whistleblowing rules come into force – same tune, higher pitch

By David Whincup on Posted in Regulation, Whistleblowing

Over the next week or so, HR Departments in financial services organisations across the country will be taking a last nervous look around their shops before the implementation on 7 September of new FCA/PRA regulations on whistleblowing in the workplace.

The new rules bring into full effect the preparatory steps mandated from March this year.  These include the development of policies and procedures aimed at removing every possible obstacle to employees’ disclosure of wrongdoing within financial services organisations, and at the same time every possible hiding place for the senior management of any financial services organisation which is the subject of repeated disclosures.  See our March blog for more details.

The highlights are re-summarised below.  The regulations certainly do pretty much all that can be done structurally to encourage disclosures.  Whether any rules can ever fully remove the inhibiting fear of insidious retaliation or damaged workforce relations which may accompany such disclosures is however a very separate question.  Can financial compensation ever really make up for the loss of a lucrative career and prospects in a relatively small and tight-knit industry?

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Recent redundancy exercises – learning points for HR, part 2

By Clare McNicholas on Posted in Appraisal, Dismissal, Redundancy

Ensure you have evidence to support an employee’s score

One thing we come across on a regular basis is managers who are unable to point to hard evidence, such as personnel records or appraisal forms, to support the scores allocated as part of the selection process. Not only does this leave scope for the employee to challenge the scoring process, but it also increases the risk of a Tribunal claim.  Procedural failures in redundancy dismissals are rarely worth pursuing by the employee because if the Tribunal concludes that the failure made no difference to the end result, the compensation awarded will be very limited.  A failure in selection, however, is a different thing – that might mean that the “wrong” person was dismissed and that could generate a substantial claim for loss of earnings.  Above and beyond demonstrating the existence of a redundancy situation in the first place, therefore, getting your selection processes right is key.

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2nd Circuit Sharpens Its Claws – Broadening Scope of Cat’s Paw Theory

By Squire Patton Boggs on Posted in Discrimination, Recent Cases, Retaliation, Termination

Earlier this week, the Second Circuit Court of Appeals revived plaintiff Andrea Vasquez’s wrongful termination and retaliation lawsuit against her former employer, holding that under the “cat’s paw” theory, the retaliatory intent of any company employee – not just supervisory personnel – can be imputed to the company.

The “cat’s paw” theory traces its roots back to Shager v. Upjohn Co., a 1990 Seventh Circuit decision.  As the 10th Circuit recently explained, the “cat’s paw” theory is based on “a fable… in which a monkey convinces an unwitting cat to pull chestnuts from a hot fire.  As the cat scoops the chestnuts from the fire one by one, burning his paw in the process, the monkey eagerly gobbles them up, leaving none left for the cat.”  Translated to legalese, the theory imputes liability to an employer when a biased employee persuades the employer to fire another employee for discriminatory or retaliatory reasons.

Different versions of the “cat’s paw” theory have been endorsed by the various Circuit Courts.  In 2011, the theory was tested before the Supreme Court, which determined an employer may be held liable if a biased supervisor recommends an adverse employment action and the company fails to independently investigate whether, and determine that, the action is warranted.  By contrast, if the employer’s independent investigation results in an adverse employment action for reasons unrelated to the supervisor’s original biased action or recommendation, and the employer reaches that conclusion without taking that recommendation into account, the employer will not be liable.  While the Supreme Court decision endorsed the “cat’s paw” theory with respect to biased supervisors, the Court did not specifically say whether the theory applied when an employer was influenced by a low-level employee.

Two years after the Supreme Court’s decision, Ms. Vasquez sued her former employer for wrongful termination and retaliation.  According to the Second Circuit, in the space of twenty-four hours, Ms. Vasquez was subjected to unwelcome sexual advances by a coworker, complained about that conduct to her employer, and thereafter lost her job.  A co-worker discovered Ms. Vasquez’s complaint and provided false documents to the employer purporting to show it was Ms. Vasquez who had behaved inappropriately, thereby resulting in Ms. Vasquez’s termination.  The U.S. District Court for the Southern District of New York dismissed Ms. Vasquez’s complaint, finding that the employer could not have engaged in retaliation because it could not be held responsible for the retaliatory animus of the co-worker, a low-level employee with no decision-making authority.

On appeal, the Second Circuit held that all employees’ retaliatory intent may be imputed to their employer where the employer’s own negligence gives effect to the employee’s retaliatory animus leading to the adverse employment decision:

“In sum, we hold that an employer may be held liable for an employee’s animus under a ‘cat’s paw’ theory, regardless of the employee’s role within the organization…”

However, the Second Circuit decision makes clear that the theory only applies when an employer acts negligently with respect to the information it was provided.  Thus, the decision stops short of the 2011 Supreme Court decision involving supervisory personnel which requires that no part of biased supervisor’s report be a factor in the employer’s decision making.  The Second Circuit remanded the matter, instructing the District Court to make findings of fact whether Ms. Vasquez’s employer was negligent in its investigation.

The Second Circuit decision is a reminder that employers should promptly, thoroughly, and independently investigate employee complaints involving multiple coworkers, without deferring unquestioningly to termination recommendations by coworkers or supervisors.  As the Tenth Circuit has explained, the policy behind the “cat’s paw” theory is to require employers to “hear both sides of the story before taking an adverse employment action against a member of a protected class.”

The Second Circuit case is Vasquez v. Empress Ambulance Service Inc. et al., case number 15-3239.

The 2011 Supreme Court case is Vincent E. Staub v. Proctor Hospital, 562 U.S. 411 (2011).

EEOC Issues Long-Awaited Retaliation Guidance

By Squire Patton Boggs on Posted in Age Discrimination, Disability Discrimination, EEOC, Gender Discrimination, Harassment, Race discrimination, Religious Discrimination, Retaliation, Sex Discrimination

On August 29, 2016, the Equal Employment Opportunity Commission (EEOC) issued its final “Enforcement Guidance on Retaliation and Related Issues,” which replaced the Agency’s nearly-20-year-old 1998 Compliance Manual, Section 8: Retaliation.  As the title clearly implies, the guidance primarily sets forth the Agency’s evolving interpretations of the law of retaliation.  It also focuses on the related “interference” provisions of the Americans with Disabilities Act (ADA), however, which comprise “coercion, threats, intimidation, or interference with respect to ADA rights.”

The EEOC chose to address these issues in the wake of numerous judicial opinions related to retaliation claims, including seven United States Supreme Court Cases[1], based largely on the fact that retaliation is asserted in nearly 45 percent of all charges received by the EEOC—by far the highest among EEOC claims.  Accordingly, the Agency’s stated goal of this guidance is “assisting all employers reduce the likelihood of retaliation.”  It attempts to do so by, among other things, outlining its analyses of the law and providing concrete examples of retaliatory situations.

The guidance addresses retaliation under statutes enforced by EEOC, including Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), Title V of the Americans with Disabilities Act (ADA), Section 501 of the Rehabilitation Act (Rehabilitation Act), the Equal Pay Act (EPA) and Title II of the Genetic Information Nondiscrimination Act (GINA).  More specifically, the topics addressed include:

  • Elements of a retaliation claim and the scope of employee activity protected by the law;
  • Legal analysis to be used to determine if evidence supports a claim of retaliation;
  • Remedies available for retaliation;
  • Rules against interference with the exercise of rights under the ADA;
  • Detailed examples of employer actions that may constitute retaliation; and
  • “Promising Practices” by employers, including written EEO policies and procedures.

This extensive guidance is intended for use by both employers and the Agency, including EEOC investigators, litigators, and adjudicators.  Employers are thus highly recommended to familiarize themselves with this guidance and to contact Labor & Employment Counsel should they have any questions regarding these new procedures.

For further guidance materials from the EEOC related to this topic, see EEOC Retaliation Q&A and EEOC Small Business Retaliation Fact Sheet.

[1] Supreme Court decisions handed down after issuance of the EEOC’s 1998 Compliance Manual that concern retaliation under EEOC-enforced laws include: University of Texas Southwestern Medical Center v. Nassar, 133 S. Ct. 2517 (2013); Kasten v. Saint-Gobain Performance Plastics Corp., 563 U.S. 1 (2011); Thompson v. North American Stainless, LP, 562 U.S. 170 (2011); Crawford v. Metropolitan Government of Nashville & Davidson County, 555 U.S. 271 (2009); Gomez-Perez v. Potter, 553 U.S. 474 (2008); Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006); and Clark County School District v. Breeden, 532 U.S. 268 (2001).

Agencies Publish Final Fair Pay and Safe Workplaces Rule and Guidance – Contractors Should Be Prepared

By Squire Patton Boggs on Posted in Department of Labor, Executive Order, Federal Contractors

On October 25, 2016, the final rule implementing President Obama’s “Fair Pay and Safe Workplaces” Executive Order (E.O. 13676) will go into effect. The final rule was released by the FAR Council on August 24, 2016. Final guidance addressing key provisions of the final rule was simultaneously released by the U.S. Department of Labor.  The final rule and guidance remain largely unchanged from the proposed rule and guidance and are expected to be a substantial burden for covered employers.

The Executive Order, often called the “Blacklisting” or “Bad Actors” Executive Order, requires federal agencies’ contracting officers to consider an employer’s record of workplace law violations when deciding whether to award the employer contracts or subcontracts. More specifically, the final rule requires prospective and existing covered federal contractors to disclose administrative determinations, arbitral awards, and civil judgements based on violations of 14 enumerated federal labor laws and their state law equivalents, including federal and state wage and hour laws, safety and health, collective bargaining, family and medical leave, and civil rights protections. Because the final rule is not retroactive, initially the requirements will apply only to solicitations for new contracts (and will not apply to existing federal contracts).

Phased-In Implementation

The final regulations establish a phased-in implementation.

  • For the first year, only prime contractors must make the required disclosures of labor law violations. Subcontractors will not be required to start making disclosures until October 25, 2017.
  • For the first six months, only contractors with solicitations valued at $50 million or more are subject to the disclosure requirements. Starting April 25, 2017, disclosure requirements will be included in solicitations valued at $500,000 or more.
  • Initially, labor law violations must be disclosed for a period of one year and will gradually increase to a three-year period by October 25, 2018.
  • The requirement that contractors and subcontractors disclose violations of state laws that are equivalent to the 14 enumerated federal labor laws will be phased in at a later date, after an additional notice and comment period.
  • The rule’s paycheck transparency requirements will become effective January 1, 2017.

Required Disclosures

When bidding on covered federal contracts, contractors will be required to disclose any violations of the 14 enumerated labor laws (and eventually, the equivalent state laws). Contractors must disclose violations of these laws that resulted in any “administrative merits determinations, civil judgments, or arbitral awards or decisions” within the previous three years.  The definition of “administrative merit determinations” remains broad in the final rule.   Contractors will be required to report the findings of enforcement agencies, including findings that are not final or that are subject to further review or appeal. For example, a contractor would be required to disclose a reasonable cause finding from the EEOC, a complaint issued by a Regional Director of the NLRB, and a show cause notice from the OFCCP.

In addition to the pre-award disclosures, once a contractor enters into a new covered federal contract after the rule takes effect on October 25, 2016, covered contractors are required to update their disclosures of labor law violations every six months for the life of the contract.

Paycheck Transparency and Arbitration Agreements

The Executive Order also addresses paycheck transparency and pre-dispute arbitration agreements for covered contractors and subcontractors. As of January 1, 2017, the paycheck transparency requirements take effect and will require covered contractors and subcontractors to provide wage statements to covered workers and provide covered workers information regarding their hours worked, overtime hours, pay, and any additions or deductions to their pay. Covered contractors and subcontractors must also notify their workers in writing if they are exempt from overtime pay. They must also notify independent contractors in writing of their independent contractor status.

In addition, pre-dispute arbitration agreements to resolve claims arising under Title VII of the Civil Rights Act, or related tort claims are prohibited for contracts of goods or services of $1,000,000 or more. This arbitration prohibition provision takes effect on the same date as the final rule – October 25, 2016. Contractors can, however, arbitrate such claims if the employee voluntarily agrees to arbitration after the dispute arose. Contractors also are not prohibited from pre-dispute arbitration agreements when there is a collective bargaining agreement in place or where a valid contract between the employer and employees or independent contractors requiring arbitration is in place prior to the contractor bidding on a contract.

What It Means for Employers

The tracking and reporting burdens on employers with covered contractors, or who solicit covered contracts, will be substantial. Employers will have to keep track of every labor law “violation” and submit updated information every 6 months.

There is also significant concern that the requirements will be used as leverage to force employers into settlements.  An early settlement could avoid a finding that the employer would be required to report.

Because the final rule goes into effect in less than two months, covered federal contractors should take the following steps:

  • Review internal compliance and reporting procedures – including systems or processes for tracking, storing and reporting the required information.
  • Determine who, within the organization, will be responsible for fulfilling the reporting and disclosure requirements.
  • Training: training on the final rule and guidance should be provided to the person who is required to coordinate the reporting and disclosures as well as for other key employees across the company who will need to supply required information regarding labor law violations to the coordinator. The contractor must further ensure that the person tasked with reporting violations has complete information.

For detailed analysis and recommendations about the new obligations, we recommend employers contact their counsel for assistance.

NLRB Exercises Jurisdiction Over Charter Schools

By Lew Clark and Daniel Pasternak on Posted in Collective Bargaining, NLRB, Recent Cases, Unions

It’s been a busy summer for the National Labor Relations Board.  After issuing important decisions expanding the reach of the National Labor Relations Act to allow university graduate assistants and  temporary workers to seek to join unions, as well as decisions expanding back pay awards and limiting employers’ ability to replace striking staff, on August 25, the Board issued two decisions relating to charter schools.

Under the National Labor Relations Act, the Board possesses jurisdiction over employers that are sufficiently engaged in interstate commerce (which almost all employers are under the Board’s liberal test), but specifically excluded from its jurisdiction is any state or political subdivision, which typically includes public schools and school districts.  Consistent with its recent run of decisions seeking to extend the reach of the Act through expansive interpretations of the statute and prior precedent, the Board’s Democrat-appointed majority recently held that it has jurisdiction over charter schools in New York and Pennsylvania because they are not political subdivisions of their respective states and therefore are not exempt from the coverage of the Act. The Board’s decision came despite opposition from the union representing the New York school’s teachers, the Pennsylvania charter school, and the lone Republican Board Member, Philip Miscimarra, all of whom argued the Board’s exercise of jurisdiction over charter school employees creates a lack of uniformity among charter schools whose employees may seek to organize under either the National Labor Relations Act or alternatively under state law in the context of states’ public employment relations boards.

Like university graduate assistants and temporary workers, the Board’s decisions in these cases helps pave the way for charter school employees to attempt union organizing under the National Labor Relations Act utilizing the Board’s recently-adopted “ambush election” rules.

Recent redundancy exercises – learning points for HR, Part 1

By Clare McNicholas on Posted in Dismissal, Redundancy, Termination

Large-scale redundancies may not be happening (fortunately) to the same extent as in the aftermath of the financial crash of 2008 (and it’s too early to talk meaningfully about the possible implications of Brexit), but we are still often asked to advise clients in connection with smaller-scale redundancy exercises, often arising as a result of a business restructure.

In this blog post and six more to follow it, we share learning points for HR from recent redundancy exercises we have advised on.

Ensure selection criteria are clear and address the challenges faced by the business

We all know that you need to use selection criteria that are so far as practicable objective and job-related. This can sometimes be more easily said than done.  Ideally the managers running the business should be involved in selecting the criteria to ensure you retain those employees with the skills and experience you require in the business going forward.

Think also about the weighting of your criteria – is a 3 in “time-keeping” really as valuable as a 3 in “business development skills”? If certain attributes are more important to the company’s future than others, then reflect this in the weightings or you will find your selection decisions hobbled by good scores in unimportant respects.

On a related point, keep your scoring simple, 1 to 5 at most. Bear in mind that someone who is put at risk after a scoring exercise may have only a point or two off safety, so the ability to defend and justify that gap will be paramount.  If you score out of 10, therefore, you will need to be able to explain what separates a 6 from a 7 or an 8 from a 9 in each criterion, which will be substantially impossible in most cases since the gradations are too fine.

When choosing your criteria, remember also: (i) that if you are looking at 20 or more redundancies within 90 days you will need to consult about the criteria with elected staff representatives (and that “consult” means that you have not definitively already chosen them); and (ii) that internal email discussion of proposed criteria will all be disclosable in Tribunal, so do avoid any reference to ensuring that your criteria will allow you to retain Mr X and weed out Ms Y, etc.

Check that your scorers understand what you mean by the chosen criteria. In a recent exercise the employer had chosen “skills and experience” and “performance” as separate selection criteria.  Whilst these were intended by HR to mean different things (“skills and experience” referred to qualifications and past experience and “performance” referred to an employee’s performance in his current role) the managers carrying out the exercise were unclear how they differed, which made it very difficult for them to carry out an effective selection exercise. As a result they struggled to deal with questions from employees when challenged about them and could have come badly unstuck under cross-examination in Tribunal.  Make sure also that they understand any relevant scoring “rules” (e.g. any sort of forced ranking) and that giving everyone an “average” score to avoid later grievances is totally self-defeating.

Last, it is worth HR going through the provisional list of “at risk” employees to identify any who are (or have been) on maternity leave or long-term sick leave in order to ensure their selection has not inadvertently been influenced by discriminatory factors.

Arizona Attorney General Intervenes in Serial Arizonans with Disabilities Act Cases

By Laura Lawless on Posted in Accommodation, Disability Discrimination, Litigation, Recent Cases, Settlement

Arizona is just one of many states in which business owners – many of them, small business owners – are being inundated with lawsuits filed by disabled individuals or disability advocacy organizations alleging inaccessible public accommodations.  These serial litigants allege that the defendants have failed to comply with the Americans with Disabilities Act (“ADA”) or its various state analogs – in Arizona, the Arizonans with Disabilities Act (“AzDA”) – by failing to remove barriers to access, rendering the places of public accommodation they own or operate inaccessible to the disabled community.

Under the ADA, a party may seek injunctive relief to force non-compliant places of public accommodation to remediate barriers to access, and recover attorneys’ fees and costs if successful.  The AzDA largely mirrors the federal statute, but, unlike the ADA, plaintiffs in AzDA actions can recover compensatory damages up to $5,000, though the state statutory scheme encourages “alternative means of dispute resolution,” such as settlement, conciliation, and mediation.

Although the ADA has been litigated since it was enacted in 1991, in the past year, an entity called the Advocates for Individuals with Disabilities LLC (“AID”) has filed more than 2,000 nearly identical lawsuits in Arizona – sometimes dozens of lawsuits filed per day – alleging technical violations of the ADA design accessibility guidelines, such as insufficient parking spaces for disabled patrons.  As reported by the local news, AID makes limited pre-filing inquiries of business owners before suing for injunctive and monetary relief, plus attorneys’ fees.  The lawsuits generally do not allege that any specific disabled individual encountered any of the alleged barriers to access, just that the mere alleged existence of a barrier to access deters the disabled from visiting the place of public accommodation.

AID’s attorney, Peter Strojnik, admitted in the news media’s investigation that AID tenders a standard opening settlement demand of $7,500 in exchange for settlement and dismissal of his client’s lawsuit. Weighing the costs of defense, many targeted business elect to settle rather than incur attorneys’ fees defending the action, which are rarely recoverable. According to AID, its average monetary settlement in the hundreds of cases it has resolved so far has been $3,900 per case, not including the costs of remediation, which must also be borne by the defendant.  Although AID defends its unorthodox litigation approach as an attempt to achieve accessibility for the disabled, critics disagree, alleging the scheme exploits the laudable goals of the ADA and AzDA.

Siding with the scheme’s critics, this week, the Arizona Attorney General (“AzAG”) filed a motion to intervene in one of the thousands of AID-filed lawsuits, citing the State’s interest in seeing that AzDA’s alternative dispute resolution procedures are implemented and to prevent, according to the AzAG’s motion, “a concerted effort to improperly use the judicial system for [AID’s] own enrichment.”  The AzAG promises it will seek to consolidate, and then move to dismiss, the hundreds of nearly identical cases AID has filed.

Although AID is one of the most prolific ADA serial litigants, this is not a phenomenon occurring only in Arizona.  Its lawyer, Mr. Strojnik, has not only filed thousands of cases in Arizona’s state court, but hundreds of cases in federal court as well.  Other so-called disability advocacy organizations like AID, such as the National Alliance for Accessibility, Inc., have filed hundreds of such cases against businesses nationwide.  Businesses served with lawsuits alleging ADA or state law accessibility violations are encouraged to seek counsel early to evaluate whether to take a more aggressive approach than acquiescing to the litigants’ settlement demands.  More aggressive litigation tactics may help to slow the rising tide of serial disability litigation. And while the AzAG’s intervention in this spate of Arizona cases is encouraging, the most effective long-term solution to the rise of serial ADA litigants would be a statutory amendment to require a pre-filing notice-and-cure period and the adoption of alternative dispute resolution measures like those adopted by the Arizona legislature that the AzAG is attempting to enforce.

Not all fun and games – new guidance on reporting executive remuneration

By David Whincup on Posted in Compensation, Guidance, Remuneration

Some legal blogs stretch their analogies too far. This one doesn’t.  Whether or not you actually care about who won the synchronised swimming, what happens to unsuccessful North Koreans or why you would invent a mugging while trashing a toilet, do take a look at this clever piece on executive remuneration as an Olympic sport.  Sarah Nicholson from our Corporate team in Birmingham gives you the lowdown on what you can do with your directors’ pay to get you gold, leave you disqualified or fail the dope test.

You can find the piece on our Comp and Bens blog here http://www.globalcompensationinsights.com/

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