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Sharing Economy Workers want court action

FROM THE WASHINGTON POST, SEPTEMBER 25, 2015

A whole new branch of the sharing economy is coming under fire from disgruntled workers who argue that they’re being treated like employees but are getting none of the workplace benefits.

Food-delivery services including GrubHub, Caviar and DoorDash were all sued Wednesday by drivers in San Francisco, who allege that the companies have “misclassified” them as independent contractors rather than formal employees.

The drivers argue in a class-action suit against GrubHub, for example, that the company didn’t pay them overtime or minimum wage, or cover their fuel expenses as it should have if they were classified correctly. GrubHub spokeswoman Meghan Gage declined to comment on pending litigation.

Caviar and DoorDash did not immediately respond to a request for comment.

The suits against the on-demand food delivery services mark the next chapter in an ongoing battle between sharing-economy companies and some of the people who act as their laborers. Last month, a federal judge allowed a similar class-action lawsuit against Uber to move forward.

Whether companies like these have to meet employer obligations isn’t just an ethical question — it could redefine the future of the industry. Reimbursing drivers for gas, mileage and tolls, a requirement for companies based in California, could cost Uber billions of dollars. And that doesn’t even get into other benefits like retirement plans, disability insurance and the provision of other benefits.

But despite those costs, critics of the sharing economy say there should be a safety net for all workers in America, particularly as an uncertain job market drives people into freelance and part-time labor. How to regulate the sharing economy has even become a theme on the presidential campaign trail, where companies such as Uber and GrubHub are having an impact on a broader debate over the future of work.

Seven Days Paid Vacation for Federal

 (From the Washington Post, September 7, 2015)

President Obama rallied union workers here Monday, unveiling a new executive order that will require federal contractors to offer employees up to seven days of paid sick leave, a move he sought to contrast with Republican economic policies.

Obama announced the new directive, which the White House said could benefit more than 300,000 workers, during a Labor Day speech in Boston. It was the latest in the White House’s year-long effort to pressure Congress to approve legislation that would provide similar benefits for millions of private-sector workers.

“Right now, you have parents who have to choose between losing income or staying home with a sick child,” Obama told a crowd of 765 supporters, including many labor officials, during the annual Greater Boston Labor Council breakfast, sponsored by the AFL-CIO.

Under the executive order, workers on federal contracts would be eligible for paid leave if they are sick or caring for a sick relative. They will earn one hour of leave for every 30 hours worked, with a maximum of seven days a year, officials said. The new order won’t take effect until after Obama leaves office in early 2017.

With the campaign for his successor underway, the president drew a sharp contrast between his administration’s policies and those of Republicans. The GOP believes the best way to stimulate the economy is to cut taxes and loosen regulation, Obama said.

Republicans think “just wait, look up in sky, and see prosperity come raining down on us on top of whatever high-rise is in New York City,” he said. “That’s not how the economy works.”

In particular, Obama mocked Wisconsin Gov. Scott Walker (R), a presidential hopeful whose support for anti-union laws in his state made him popular within the national GOP but angered labor leaders. Without mentioning him by name, the president ridiculed Walker for suggesting, in February, that “busting unions prepared him to fight ISIL” — a reference to the Islamic State militant group.

During a campaign appearance at a diner in Rochester, N.H., Walker responded by saying that while Obama “stands with the big government union bosses, we stand with hard-working people.”

Walker added that “the president and his allies fear us more than anybody else in the race because they know we don’t just talk about it, we get it done. We fight, we win, we actually get results and we’ve done it without compromising our conservative principles.”

The president’s Boston trip was intended to serve as a rallying point with organized labor heading into the 2016 elections. Obama and labor leaders butted heads this spring over the president’s successful push to win additional authority from Congress to complete international trade deals.

But big labor has been buoyed by the White House and congressional Democrats’ commitment to championing parental leave and sick leave laws, as popular support has grown for such measures in many parts of the country. An estimated 44 million private-sector workers — about 40 percent of the workforce — do not have access to paid sick leave, according to the White House.

Labor Secretary Thomas Perez and a host of labor leaders joined Obama on Air Force One for the quick trip to Boston. Sen. Elizabeth Warren (D-Mass.), who attended the speech, was among those who traveled home on the presidential jet.

Before heading home to Washington, Obama made an unannounced lunchtime stop at Union Oyster House, a historical landmark established in 1716, where he surprised patrons by ordering 10 clam chowders to go.

“We’ll eat them on Air Force One,” he told the bartender.

Obama signed a presidential memorandum in January directing agencies to allow federal workers to take six weeks of advanced paid sick leave to care for a new child or ill family members.

Despite a heavy push by the Obama administration, however, proposals for paid sick leave have languished in the GOP-controlled Congress, much like efforts to increase the minimum wage.

The United States is one of just a handful of countries that do not offer paid leave; congressional Republicans have introduced measures offering workplace flexibility and tax credits in some instances, but they have opposed mandating paid leave.

The push for paid leave has gained momentum across the country, although it tends to be in Democratic-leaning states and cities. The president highlighted a Massachusetts law, approved by voters in November, that provides employees with up to 40 hours of sick leave per year. That law went into effect in July.

During his remarks at the breakfast, Obama playfully noted that New England Patriots quarterback Tom Brady, whose four-game suspension by the National Football League was overturned last week by a federal judge, had the strong backing of the players association.

“Even Brady’s happy he’s got a union,” Obama said. “They had his back. You know if Brady needs a union, we definitely need unions.”

Obama plans employment law changes

(FROM THE NY TIMES, AUG. 31, 2015)

WASHINGTON — With little fanfare, the Obama administration has been pursuing an aggressive campaign to restore protections for workers that have been eroded by business activism, conservative governance and the evolution of the economy in recent decades.

In the last two months alone, the administration has introduced a series of regulatory changes. Among them: a rule that would make millions more Americans eligible for extra overtime pay, and a guidance suggesting that many employers are misclassifying workers as contractors and therefore depriving them of basic workplace protections. That is an issue central to the growth of so-called gig economy companies like Uber.

A little more than a week ago, a federal appeals panel affirmed an earlier regulation granting nearly 2 million previously exempted home care workers minimum wage and overtime protections. And on Thursday, President Obama’s appointees to the National Labor Relations Board issued an important ruling that makes it easier for employees of contractors and franchises to bargain collectively with the corporations that have sway over their operations.

“These moves constitute the most impressive and, in my view, laudable attempt to update labor and employment law in many decades,” said Benjamin I. Sachs, a professor at Harvard Law School and a former assistant general counsel for the Service Employees International Union. The goal, he said, is to “keep pace with changes in the structure of the labor market and the way work is organized. That’s a theme that runs through all of this.”

In one sense, Mr. Obama foreshadowed these efforts as a candidate in 2008, when he famously suggested that, if elected, he would aim to be a Democratic version of Ronald Reagan. “Reagan changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not,” he told a newspaper editorial board in Nevada. “He put us on a fundamentally different path because the country was ready for it.”

Once in office, Mr. Obama delivered on that implied promise in a few critical ways, particularly his signature health care legislation. But throughout much of his first term, he disappointed supporters with his inability to pursue a larger progressive agenda and with his insufficient focus on the balance of power between workers and their employers.

Labor unions complained that he failed to throw his energy behind a measure that would have made it easier for workers to organize by requiring employers to recognize a union once a majority of workers had signed cards, rather than allowing employers to insist on a secret ballot election.

Liberals criticized the pace at which Mr. Obama put judges on the federal bench, including the United States Court of Appeals for the District of Columbia Circuit, which has enormous influence over federal regulations. And they complained that he failed to move quickly in placing appointees at agencies like the National Labor Relations Board, which went without two of its three Democratic members until well into the second year of his presidency.

“They were very weak on getting people into their positions in the first term,” said Lawrence Mishel, president of the Economic Policy Institute, a left-leaning research and advocacy group. “They lost many years of potential fruitful activity.” (The White House says that the president was prompt in naming appointees, whose nominations then became bogged down in the Senate.)

After spending several months in 2011 on a failed effort to negotiate a deficit-cutting “grand bargain” with the new House Republican majority, however, Mr. Obama did an apparent about-face, deciding that he would use every tool available to enact what he considered to be a bold pro-worker agenda on his own.

“Perhaps the most substantively important speech of the Obama presidency was the Osawatomie speech in 2011,” said Dan Pfeiffer, a former communications director and senior adviser to the president, referring to a speech that December. “It was a set of marching orders to the entire government that increasing income inequality and declining economic mobility are the key challenge of our time. Given the congressional gridlock, the president pushed us very hard to pull every lever possible.”

To be sure, since he has not been able to advance legislation through the Republican-controlled Congress, Mr. Obama has failed to achieve a number of important goals, most notably raising the federal minimum wage. And many of the recent actions could be undone by a future administration.

At the same time, the economic and political forces pushing in the other direction have proved extremely difficult to overcome. From 1979 until 2009, the hourly wage for the typical worker grew about 10 percent after adjusting for inflation, falling far behind the increase in productivity, a measure that wages once closely tracked. After the Great Recession, the median wage fell for a few years and then made up little ground through 2014.

Meanwhile, critics abound across the ideological spectrum.

Oren Cass, a senior fellow at the conservative Manhattan Institute who served as Mitt Romney’s domestic policy director in 2011 and 2012, said that calling the Obama economic agenda pro-worker “misses the forest for the trees — or perhaps, more precisely, misses the trees for a few stray weeds.”

In an email, Mr. Cass said that “increasingly onerous employment regulation is driving employers to avoid employment relationships altogether, which benefits no one.”

Liberals and union supporters, while applauding Mr. Obama’s record in the narrow realm of labor rights, complain that he has undercut workers with his efforts to promote global trade agreements and balanced budgets.

“As long as the budget deal the administration negotiated continues to restrict domestic discretionary spending,” the Department of Labor’s ability to enforce the laws guaranteeing workers a minimum wage and overtime pay “and fight misclassification will be severely limited,” Ross Eisenbrey, a researcher at the Economic Policy Institute who was one of the architects of the overtime regulation, said in an email.

Still, there is little doubt that the Obama administration has become more ambitious in pursing worker rights during the president’s second term.

Consider the home health care decision. The Labor Department wrote the original rule exempting home care professionals employed by staffing agencies from minimum wage and overtime protections in 1975, back when very few home care workers of that sort existed. In recent decades, however, the field has exploded, turning what was once a small exemption into a yawning regulatory gap at the heart of the service economy.

The Clinton administration proposed closing the exemption three times, but the proposals were never made final. Mr. Obama’s Labor Department pushed through new rules in 2013, but they only stuck after a protracted legal fight. After the home care industry challenged the rule and a Federal District Court struck it down, it took a three-judge panel on the Court of Appeals in the District of Columbia to revive it. Obama helped make that decision possible back in 2013, when he appointed two of the three judges.

In many cases, the administration and its appointees have understood themselves to be not merely updating laws and regulations to reflect current economic realities, but also explicitly undoing what they considered to be efforts of Republican administrations to put workers at a disadvantage.

“The overtime provision was intended in no small measure to correct a regulation from the Bush era that took leverage from workers and gave it to employers — by design,” said Labor Secretary Thomas E. Perez. “We were restoring what was a time-honored economic and social compact, which is that as we have productivity and profitability in this country, that is shared between business and workers.”

Last week’s ruling by the labor board, which changed the standard for when a corporation may be designated a joint employer of workers hired by its contractors and franchisees, followed a similar logic.

For decades before the mid-1980s, the N.L.R.B. considered a corporation to be a joint employer, and therefore on the hook for violations of workers’ rights, as long as it enjoyed a fair amount of control over working conditions at facilities run or staffed by a contractor or franchisee. It didn’t really matter whether the control was hands-on or arms-length.

In 1984, the Reagan-era N.L.R.B. began to sharply tighten the standard. On Thursday, voting 3 to 2 along partisan lines, the board tossed out the Reagan era rule, arguing that it was essentially returning to what had existed beforehand.

Taken together with other key regulatory actions and executive orders — an N.L.R.B. rule that effectively sped up the process for holding elections on whether to form a union and Mr. Obama’s order raising the minimum wage for federal contractors to $10.10 — the effect has been to significantly alter the tilt of federal law.

Independent Contractor factors explained

From QuickBooks website, July 16, 2015

Regardless of the industry or size of the business, employers are responsible for the correct classification of their workers. Failure to correctly classify a worker as an employee or independent contractor can make the mistaken employer responsible not only for the worker’s back employment taxes, but also penalties, warns the IRS.

And the IRS is cracking down on employers who misclassify workers and don’t pay their fair share of employment taxes. Therefore, it’s crucial for small business owners to understand how a W-2 employee differs from a 1099 independent contractor.

A number of factors go into worker classification for tax purposes, and pursuant to IRS Publication 15-A, they fall into three broad categories: behavioral control, financial control, and relationship of the parties.

It’s important to note that no single factor stands alone in making the worker classification determination; all factors together must be considered in order to make the proper classification.

1) Behavioral Control – As a small business owner, if you provide extensive instructions on how your work is to be carried out and training on required work methods and procedures, then the IRS will suggest that an employer/employee relationship exists. Detailed work instructions may include how and where the work will take place, what equipment to use, and where to purchase supplies and equipment. Similarly, if you want the job to be carried out in a certain way, and provide training to this effect, you’re likely hiring an employee, not an independent contractor.

2) Financial Control – Three factors come into play when determining whether you have financial control over an individual: significant investment, expenses, and opportunity for profit and loss.

Significant investment – While there is no specified dollar amount, if your worker has to make a significant investment in order to work, he may be an 1099 independent contractor vs. an employee.
Expenses – If you don’t reimburse your worker for some or all of his businesses expenses, then this suggests that he is an independent contractor.
Profit or Loss Opportunity – If your worker has the opportunity to incur a loss or realize a profit, then she may be in business for herself, suggesting an independent contractor status.
3) Relationship – Factors that illustrate how the small business owner and worker perceive the relationship include presence of employee benefits and information included in a written contract. For instance, if you provide your worker with insurance, a pension, and paid time off, then the IRS may say this signifies an employer/employee relationship. If other facts or circumstances surrounding the relationship aren’t conclusive for worker classification purposes, a written contract often is. The written contract should clearly detail what you, as the business owner, intend to get out of the business relationship.

Conclusion: Take time now to review each worker in your small business to determine if they are classified correctly, and make sure new hires are brought onboard with the proper classification. It’s also a good idea to seek guidance from an human resource professional or employment law attorney.

Additionally, both the small business employer and the worker can ask the IRS directly to make a worker classification determination by completing and filing with the IRS Form SS-8: Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

 

New overtime pay scale proposed for 2016

Read Phyllis Towzey quoted in the July 1, 2015, Tampa Bay Times: click Here.

An increase in the salary threshold for “exempt employees” from $23,660 to $50,440 will result in many more salaried employees who were previously classified as exempt being eligible to receive overtime for all hours worked over 40 per week. Employers need to revisit their classifications of employees earning less than $50k and make appropriate changes to avoid a violation of the wage and hour laws. See this article for more details:

From Bloomberg Newswire, June 30

The Obama administration plans to raise the wages of millions of Americans who work more than 40 hours a week by requiring their employers to pay them overtime.

Workers who earn as much as $970 a week would have to be paid overtime even if they’re classified as a manager or professional, based on draft rules to be announced as soon as Tuesday, said an administration official.

Many employees now receiving as little as $455 a week, or $23,660 a year — below the federal poverty line for a family of four — aren’t entitled to overtime pay because they are classified as managers exempt from overtime pay.

The regulations, from the Labor Department, would take effect in 2016, said the official, who asked for anonymity because the plan hasn’t been announced. Workers in retail stores and restaurants are among most likely to be affected.

President Barack Obama has been stymied by Republicans in his attempts to get Congress to raise the federal minimum wage at a time when income inequality is emerging as an issue in the 2016 presidential campaign.

The new Labor Department rules would be the broadest action by the administration to bolster middle- and lower-income workers, whose wages have stagnated since the recession. Obama is scheduled to discuss the economy during a trip to La Crosse, Wisconsin, on Thursday.

Broad Reach

“You would be hard pressed to find a rule change or an executive order that would reach more middle class workers than this one,” said Jared Bernstein, a former economic adviser to Vice President Joe Biden who is now a senior fellow at the Center for Budget and Policy Priorities.

The median U.S. household income of $54,600 in April was $1,600 short of the amount at the start of the recession in December 2007, according to inflation-adjusted estimates from Sentier Research.

Ross Eisenbrey, vice president of the Economic Policy Institute, a research group partly funded by labor unions, has estimated that the higher salary threshold would expand overtime to as many as 15 million additional workers.

Business lobbyists, including the National Retail Federation, argue that changing the rules might prompt employers to reconsider their supervisory structures, reducing flexibility for managers to directly serve customers and cutting entry-level management jobs.

The 1938 New Deal-era law establishing the federal 40-hour workweek and requiring overtime for additional hours exempts professional, administrative and executive employees.

Defining Categories

Labor Department regulations define those categories, in part, through a minimum salary level. The threshold, eroded by inflation, has only been raised once since 1975, a readjustment in 2004 under President George W. Bush that was criticized as too modest by labor unions and some Democrats.

The overtime cutoff covered 8 percent of salaried workers last year, compared with 65 percent in 1975, according to an analysis by Eisenbrey.

The definition of a manager is ambiguous enough under current regulations that restaurant or retail workers who spend most of their time doing manual labor or serving customers can be deemed “executives” exempt from overtime, Eisenbrey said.

The administration official didn’t disclose whether any changes will be proposed to the regulatory definition of a manager, though the Labor Department also is considering tightening that standard.

Under the Bush administration’s 2004 rules, exempt executives must supervise at least two employees and management must be their primary duty, though there is no requirement covering the amount of time they spend on management tasks. California state regulations, by contrast, require more than half of an employee’s time be spent on management duties to be exempt from overtime pay.

The rule change has been long anticipated and under attack from Republicans and some business representatives.

Lamar Alexander, the Tennessee Republican who is chairman of the Senate Labor Committee, previously condemned Obama’s plan to act on overtime as part of an economic strategy seemingly “engineered to make it as unappealing as possible to be an employer creating jobs in this country.

California ruling UBER has employees

In what could prove to be a ruling with serious implications for the on-demand economy, the California Labor Commission has ruled that an Uber driver should be classified as an employee, not an independent contractor.

The ruling, made in March, came to light after Uber filed an appeal Tuesday evening. The ruling ordered the company to reimburse Barbara Ann Berwick, a former Uber driver, $4,152.20 in expenses and other costs for the period when Ms. Berwick worked as a driver.

Uber has long positioned itself as a “logistics company,” an app that drivers and passengers use merely to facilitate private transactions, and not a transportation fleet with tens of thousands of employee drivers. The company argued it did not exert any control over the hours its drivers worked and did not require drivers to complete a minimum number of trips, according to the court filing. Classifying Uber’s drivers as employees may turn out to be an even bigger roadblock to the company’s business than regulatory changes because it could change Uber’s cost structure, requiring it to offer health insurance and other benefits, as well as paying salaries. On-demand companies have been premised on the idea that people who find piecemeal work through these online marketplaces are freelancers, not employees entitled to costly benefits.

Uber’s driver ranks have swelled globally. At a presentation this month celebrating Uber’s five-year anniversary, Mr. Kalanick said the company had 26,000 drivers in New York City alone, 15,000 in London, 22,000 in San Francisco, 10,000 in Paris and 20,000 in Chengdu, China. The company is now operating its service in more than 300 cities across six continents.

“Every single month, Uber is adding hundreds of thousands of drivers around the world,” Mr. Kalanick said at the presentation.

Uber has faced legal action in the past over the status of its workers. Drivers have filed class-action lawsuits against the company, including in Federal District Court in San Francisco, saying they were misclassified as independent contractors.

“Uber has been fighting very hard against any decisions like this coming out, and when a fact-finder sat down and looked at the situation, they determined that Uber is an employer,” said Shannon Liss-Riordan, a Boston-based employee and labor rights lawyer who is involved in the class-action lawsuits on behalf of drivers against Uber.

Hiring Managers … avoid these questions!

FROM THE ONLINE SITE, MENTAL FLOSS, 20 MAY 2015

 

Hiring managers have their companies’ best interests at heart. Of course they want to know if you’ll be a good fit, but they also want to know if you’re likely to leave to start a family or retire in the near future. But asking anything intended to get information about a person’s status in a protected class—age, race, religion, pregnancy, etc.—is technically illegal. Still, Peter K. Studner, author of Super Job Search IV: The Complete Manual for Job Seekers & Career Changers, says that often both interviewers and interviewees don’t realize that a certain line of inquiry has veered into murky territory. To help defend job seekers against revealing information that could be used against them, here are eight questions that you should always avoid answering.

1. ARE YOU MARRIED?

Anything that fishes for information about a candidate’s family plans (marriage, engagement, and child planning) is technically illegal because it falls under pregnancy discrimination. It can often seem like a hiring manager is just making pleasant conversation and trying to get to know you better, but job applicants are not obligated to disclose any personal information. This could also be a subtle way to question someone about their sexual orientation—another protected class.

2. HOW OLD ARE YOU?

Lots of applications will stipulate that employees have to be over 18, and that’s fine—ensuring their workers are not minors is within a company’s rights. But this question becomes problematic when interviewers ask more mature candidates that question, because it’s illegal to discriminate against anyone over 40 on the basis of age. If anyone asks, don’t feel bad about declining to respond. Recognize that whoever is interviewing you probably already has some sense of your age just from looking at your resume, and use the opportunity to emphasize all those years of experience.

3. WHEN DID YOU GRADUATE?

We all know how math works—this is just a not-so-sly way to calculate someone’s age. (Feel free to nix the graduation year from your resume, too.) “If the interviewer presses for a reply, you might give him the date and then ask how that applies to your candidacy,” Studner says. “And in the final analysis, would you really want to work for a company where the management discriminates against age? It might be better to move on.”

4. HOW’S YOUR HEALTH?

If it’s a physically demanding job, employers have a right to ask about specific physical abilities. For example: “This job requires lifting packages up to 30 pounds, or standing on your feet for six hours a day, or talking on the phone at least 80 percent of the time. Is this something you can do on a continuous basis?” But anything that isn’t directly related to tasks you’ll be performing on the job is personal information that you don’t have to—and shouldn’t—reveal.

5. WHAT RELIGION ARE YOU? DO YOU OBSERVE ANY RELIGIOUS HOLIDAYS?

It’s illegal to discuss your religion in an interview, even if it will affect your need to take time off. It can be awkward to back out of this question if an employer presses the issue, so Studner suggests a polite but firm, “I prefer not to discuss my religion, but I can assure you that it will not interfere with my doing this job.”

6. HAVE YOU EVER BEEN ARRESTED?

It’s not illegal to ask if you’ve ever been convicted of a crime, and many employers do, either on the application or in the interview. But what they can’t ask about is your arrest record. That said, it is not illegal for a concerned hiring manager to do some independent research to see if there are any records of arrests available online. If you know they’ll be looking into your background, this constitutes a rare instance where an interviewee should volunteer incriminating information.

“In these kinds of cases where a future employer might uncover prior arrests, it is important to discuss the incident up front and point out that it was a thing of the past, never to be repeated,” Studner says. “The more serious the offense, the more convincing you have to be.”

7. WHAT COUNTRY ARE YOU FROM?

As long as you’re authorized to work in the country where the job is located—a question they are allowed to ask—employers can’t dig into where you’re from because nationality discrimination is illegal. Similarly, they can’t ask if English is your first language.

8. DO YOU LIKE TO DRINK SOCIALLY?

It’s not entirely clear why this would come up in an interview situation, but if it does, it’s actually illegal in order to protect people who might answer “No.” Under the Americans with Disabilities Act of 1990, recovering alcoholics don’t have to reveal any information that might hint at their status. It’s also illegal to question job applicants about when they last used illegal drugs, although asking if you’re currently using illegal drugs is permissible

Whistleblower and Confidentiality Agreements

April 19,2015–Reprinted from The National Law Review

Last week, the Securities and Exchange Commission (“SEC”) announced its first enforcement action1 against a company for using language in confidentiality agreements that the SEC concluded had the potential to stifle the whistleblower process established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). Under the Dodd-Frank Act and subsequent SEC rulemaking, the SEC’s whistleblower program provides monetary incentives for individuals who report possible violations of the federal securities laws that result in successful SEC actions against companies with monetary sanctions exceeding $1 million. As a result of the recent SEC action, companies should review confidentiality restrictions in employment and other agreements to assess whether revisions may be advisable to conform with language deemed acceptable by the SEC.

In the action, the SEC targeted Houston-based global technology and engineering firm KBR, Inc., which it claimed violated an SEC whistleblower protection rule (Rule 21F-17 under the Securities Exchange Act of 1934, as amended), which prohibits persons from taking any action to impede whistleblowers from reporting possible securities law violations to the SEC, including enforcing, or threatening to enforce, a confidentiality agreement regarding such communications. KBR used a form confidentiality statement during internal investigations which contained language warning employees that they could face disciplinary action or termination if they discussed the internal investigation with outside parties without first obtaining approval from KBR’s legal department.

Even though the SEC noted that it was not aware of any instances in which (i) a KBR employee was in fact prevented from communicating directly with the SEC about potential securities laws violations or (ii) KBR took any action to enforce the confidentiality agreement’s restrictions, the SEC nonetheless determined that the language impedes employee communications by prohibiting discussing the interviews without pre-clearance from the KBR law department and because of the threat of disciplinary action or termination. Without admitting or denying the SEC’s findings, KBR agreed to amend its confidentiality statements to provide that nothing in the statement prohibits an employee from reporting possible violations of federal law or regulation to the SEC or any governmental agency or entity and to clarify that the employee does not need the prior authorization of KBR’s legal department before making any such disclosures. As part of its settlement with the SEC, KBR also agreed to pay a $130,000 penalty.

In light of the KBR action, companies should consider whether their confidentiality, employment, severance or other types of agreements contain restrictive language that would be objectionable. In the SEC press release announcing the action, SEC representatives warned that the SEC will “vigorously enforce” Rule 21F-17 and that “[o]ther employers should similarly review and amend existing and historical agreements that in word or effect stop their employees from reporting potential violations to the SEC.”

 

Assoc. Press on Employees & Social Media

April 17, 2015 – Here is an article from AP on Social Media and Employee rights

 

NEW YORK – Bosses can get mad when staffers vent on social media about their jobs, but they might not be able to get even.

When one of Bert Martinez’ employees posted gripes about her job and the boss on Facebook last year, the publicist consulted his lawyer, who said the staffer couldn’t be fired.

“The first lesson I learned is, employees are allowed to vent,” said Martinez, owner of Bert Martinez Communications in Phoenix. “If they’re saying, ‘Hey, it’s hard working here and I find this environment unpleasant,’ you can’t fire them for that.”

The employee quit a week after Martinez learned about the post.

The government protects workers’ right to say what they want about where they work, even if it’s in a vitriolic and insulting tweet or post. It’s illegal for an employee to be fired for a post about working conditions, whether it’s pay, hours, assignments, difficult supervisors, dress code or any other issue.

So employers shouldn’t try to restrict workers’ freedom of speech or retaliate if there’s a post they don’t like.

It’s an issue that companies of all sizes have to deal with, but it’s often more challenging for smaller companies because they typically don’t have large human resources departments or lawyers on staff to advise them.

Workers who complain about employers on social media can’t be fired if they’re involved in what’s called concerted activity, or joining with fellow staffers to improve working conditions, according to the U.S. National Labor Relations Board, the government agency responsible for upholding workers’ rights.

“The NLRB is effectively taking the position that commentary about working conditions on social media is completely protected,” said Henry Perlowski, an employment law lawyer with Arnall Golden Gregory in Atlanta.

A 2014 NLRB decision shows how broadly the agency views employees’ rights to make such critical posts, Perlowski said. The NLRB said a restaurant illegally fired two workers for taking part in a Facebook discussion of problems in how income tax was withheld from paychecks. The discussion mentioned a meeting about the issue. One employee was fired for a comment that contained an expletive describing one owner, and the other was dismissed for “liking” a post.

Because the posts were related to working conditions, and the employees were discussing concerted activity, or jointly seeking a resolution of their problems, the posts were protected. The NLRB reversed the firings.

Owners also can’t resort to other disciplinary measures, Perlowski said. That rules out suspensions, reprimands, pay cuts and promotion denials.

However, the NLRB will uphold firings based on posts that damage a company, disparage its products or services or reveal trade secrets or financial information, said Paula Lopez, an employment law lawyer with Allyn & Fortuna in New York. But there can be gray area, for example, when a post is critical of a company’s or services but is also related to working conditions.

Posts encouraging insubordination aren’t protected, Lopez said, citing a 2014 case that upheld an employers’ decision not to rehire workers who had posted plans to show up at the job and not do work.

Employees also can be fired for posting information about clients or customers.

If their posts are racist, homophobic, sexist or discriminate against a religion, companies should fire workers rather than be seen as tolerating or condoning the employees’ views.

The NLRB has also said griping or insults by one employee and that have no connection to working conditions are not protected. For example, one that ridicules the way the boss looks, dresses or speaks.

Three steps can help companies address social media-related problems:

Companies should have a written social media policy spelling out what employees can post. It should be specific, with examples of what’s acceptable.
The policy should be reviewer with a lawyer or human resources specialist to be sure it wouldn’t violate federal, state or local laws.
If a staffer has made a negative post about the company, get advice from an employment law attorney or human resources provider before taking disciplinary action.