News & Publications

Shawe Rosenthal April 2012 E-Update

Submitted By Firm: Shawe & Rosenthal, LLP

Contact(s): Elizabeth Torphy-Donzella, Gary L. Simpler

Author(s):

Mark Swerdlin

Date Published: 4/2/2012

Article Type: Legal Update

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New ADEA Final Regulations Set Forth Considerations for “Reasonable Factors Other than Age” Defense

In Smith v. City of Jackson, the United States Supreme Court found that the ADEA authorizes recovery in disparate-impact cases, but also decided that there is no such liability when the impact is due to reasonable factors other than age. Thus, “reasonable factors other than age” is an important defense in an ADEA action. For several years, the EEOC has proposed rules and collected comments on regulations clarifying this defense. Last Friday, the EEOC published its final Rule on the “reasonable factors other than age” defense.

The final Rule provides that a reasonable factor other than age is one that “is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances.” Whether a non-age factor is the reason for differential treatment “must be decided on the basis of all the particular facts and circumstances surrounding each individual situation.” To prevail, the employer has the burden of persuasion and “must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known.”

Employers should note a non-exhaustive list of considerations set forth in the Rule itself that can be taken into consideration to determine if the employment decision was based on a reasonable factor other than age. These considerations include:

• The extent to which the factor is related to the employer’s stated business purpose;

• The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;

• The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;

• The extent to which the employer assessed the adverse impact of its employment practice on older workers; and

• The degree of harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.

The Rule clarifies, however, that the “reasonable factors” are not required elements, but, rather, only “manifestly relevant to determining whether an employer demonstrates the RFOA defense.”

The final Rule was published in Friday’s Federal Register and takes effect in 30 days.


Company’s Unauthorized Access Claims Against Former Executive and New Employer under the Computer Fraud and Abuse Act Survives Motion to Dismiss

Finding that a former high-ranking executive’s access to his company-provided laptop became unauthorized when his employment ended, a federal district court has refused to dismiss the employer’s Computer Fraud and Abuse Act (CFAA) claims against the former executive and his new company.

Facts of the Case: In SBM Site Services, LLC v Garrett, the plaintiff, a senior vice president, had access to his employer’s “knowledge portal,” which contained company forms and procedures, customer lists, and other confidential information. The company also provided the employee, who worked remotely from his home, with two desktop computers and two laptop computers. After 15 years of employment the employee resigned to work for a competitor.

Although the company informed him that he needed to return all company property, including equipment, records, and confidential and/or trade secret information, he did not return his laptop until approximately three weeks after he began his new job. The returned laptop, which was encrypted with a drive-lock to prevent access, had been intentionally erased. As a result, the company sued the former employee and its competitor asserting violations of the CFAA, misappropriation of trade secrets, and civil theft. It also sued the employee for breach of a confidentiality agreement, breach of a noncompete agreement, and breach of fiduciary duty.

The Court’s Ruling: The court found that the company explicitly revoked the employee’s access to the laptop as of his last day as an employee. However, the employee retained the computer for approximately three weeks after his termination. Moreover, when he did return it, it had been intentionally erased. Thus, because it was reasonable to infer that the employee accessed his laptop after his last day of employment, and that his access to the laptop became unauthorized when his employment ended, the company stated a claim under the CFAA.
As to the new employer, when the employee began his new job, he was his new employer’s agent and, thus, it became liable for any actions taken by the employee within the scope of his employment. The Court held it was reasonable to infer that the employee accessed his laptop during his employment with his new employer, thus it refused to dismiss the company’s CFAA claim against the new employer.

Practical Impact: The Computer Fraud and Abuse Act gives employers an important cause of action against employees who tamper with company computer equipment after they are no longer employed. The fact that the new employer might also be held liable for the former employees’ actions can make the claim financially viable as well.


TAKE NOTE

NLRB – Workers’ Rights “Information Campaign.” The Wall Street Journal notes that the NLRB will start an “information campaign” in the coming weeks, aiming to inform employees about their right to take part in “protected concerted activity.” The right to engage in protected concerted activity applies to both union and non-unionized employers. In short, under the protected concerted activity doctrine, two or more employees have a right to complain about their terms and conditions of employment, without retaliation from their employer for doing so.

According to the Journal, the NLRB is set to roll out a Web page explaining protected concerted activity and highlighting cases involving unlawful punishment for it. It also plans to create pamphlets in English and Spanish that will be distributed through worker-advocacy groups and sister federal agencies, such as the Labor Department.

NLRB Posting Requirement. As we informed you in our recent E-Lert, a federal District Court upheld a new NLRB rule that employers must post an official NLRB poster about the right to unionize. In the same ruling, however, the Court struck down the automatic ULP provision of the rule.

In National Association of Manufacturers v. NLRB, the Court held that the NLRB had authority to issue a rule requiring employers to post an official Notice of Rights poster. The Court ruled, however, that the NLRB lacked authority to “make a blanket advance determination that a failure to post will always constitute an unfair labor practice.” Instead, the Court acknowledged that the Board “may consider a knowing and willful refusal to comply with the [posting requirement] as evidence of unlawful motive in a case in which motive is the issue.” The Court also struck down a section of the rule that would have suspended the normal six month statute of limitations for an unfair labor practice charge if an employer failed to post the notice. The Court found no support in the National Labor Relations Act for suspending the statute of limitations.

The posting rule will become nominally effective April 30, 2012, but will lack any enforcement mechanism unless an employer commits another, independent violation. Employers who post the NLRB notice may consider posting a “counter-notice” explaining to employees the employer’s position on unions and collective bargaining. We have developed examples of “counter-notices” which can be tailored to an employer’s individual needs.

Disability Discrimination. The U.S. District Court for the District of Maryland held that an employee suffering from bipolar disorder, who was unable to interact with coworkers, other professionals, and the public in a respectful and appropriate manner, could not perform the essential functions of his position; and so was not a qualified individual entitled to relief under the Rehabilitation Act or the Maryland Fair Employment Practices Act.

In Higgins v Maryland Department of Agriculture, the plaintiff, who was diagnosed with bipolar disorder, began exhibiting increased inappropriate outbursts at work and with the public. He accused superiors of lying and cheating, told his supervisor he was considering suicide, and repeatedly interrupted meetings. He was suspended for his behavior and eventually terminated. The employee then filed a complaint alleging failure to accommodate and disability discrimination under the Rehabilitation Act and the Maryland Fair Employment Practices Act.

The employee argued that his behavior throughout his employment was consistent and that his coworkers respected his work and “accepted that his personality was different.” In addition, the employee acknowledged that he was unable to control his behavior. The court, finding that the evidence established that the employee was consistently unable to interact with others in a respectful and appropriate way, concluded that he could not perform the essential functions of his position. Thus, he was not a qualified individual under either law. Moreover, the court stated, the fact that the employee’s bad behavior was caused by a mental disorder did not excuse his failure to perform the essential functions of his position. According to the court, the employee failed to show that he could have satisfied his job requirements with a reasonable accommodation. Not only did he fail to identify an accommodation that would have enabled him to conform his behavior to an acceptable standard, he never approached his employer to disclose the details of his impairment, and he never initiated a dialogue by requesting an accommodation.

FMLA. The United States Court of Appeals for the Third Circuit and a federal district court both recently clarified that individual supervisors at public agencies can be held liable for FMLA violations.

In the Third Circuit case, Haybarger v. Lawrence County Adult Probation and Parole, and the federal district court case, Ainsworth v. Loudon County School Board, the Courts were faced with whether or not individual supervisors at public agencies could be held liable for FMLA violations. Both Courts found that supervisors could be held liable, citing to the text of the statute and the FLSA, which includes supervisor liability. Both cases have implications for private sector employers, too. Courts have consistently found individual supervisor liability in the private sector for FMLA violations, though not all courts have specifically considered this issue. Courts that have found FMLA liability for public agency supervisors would almost certainly find that same liability for private sector supervisors.


TOP TIP

Shawe Rosenthal recently launched its blog, the Labor and Employment Report. Here are several reasons why you should make this blog part of your regular reading on labor and employment news:

1. Timely Updates – The blog will be frequently updated with the most important labor and employment news. You can be aware of the latest developments in real-time, allowing you to better prepare for labor and employment law challenges.

2. Concise Analysis – The blog’s analysis is targeted and concise, allowing you to quickly and efficiently learn about key cases, rules, and regulations.

3. HR Trends – In addition to covering legal news, we will also provide insights into important HR and employment trends impacting your organization.

4. Special Labor Law Coverage – In keeping with Shawe Rosenthal’s historic commitment to representing employers in traditional labor law, in addition to comprehensive employment law and HR analysis, the Labor and Employment Report will provide readers with unparalleled coverage of the National Labor Relations Act and the latest NLRB news.
 

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Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

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American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

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Boyd Coffee Company

Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

As an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld
Partner 

Hollywood Entertainment Corporation

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Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

Our company, Konami Gaming, Inc., is growing rapidly in a very diverse and highly regulated industry. We are aggressively entering new markets outside the domestic U.S., including Canada and South America. I have had the recent opportunity to utilize the services provided by the ELA. The legal advice was both responsive and professional. Most of all, the entire process was seamless since our Nevada attorney coordinated the services and legal advice requested. I look forward to working with the ELA in the future, as it serves as a great resource to the legal community.

Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

Until recently, I was unaware of the ELA's existence. We have subsidiaries and affiliates throughout the United States, as well as in Asia, the Middle East and Europe. When a recent legal issue arose in Texas, our long-time Nevada counsel, who is a member of the ELA, suggested that this matter be handled by his ELA colleague in Dallas. We are very pleased with the quality and timeliness of services provided by that firm, and we are excited to now have the ELA as an important asset to help us address employment law issues worldwide.

Palm, Inc.

The ELA network has been immensely important to our company in helping us address an array of human resources challenges around the world. I strongly encourage H.R. executives who have employees located in many different jurisdictions to utilize the ELA's unparalleled expertise and geographic coverage.

Stacy Murphy
Former Senior Director of Human Resources

Rich Products

As the General Counsel for a company with 6,500 employees operating across the U.S. and in eight countries, it is critical that I have top quality lawyers on the ground where we do business. The ELA is an indispensable resource. It has taken the guesswork out of finding the best employment counsel wherever we have a problem.

Jill K. Bond
Senior Vice President/General Counsel, Shared Services and Benefits

Ricoh Americas Corporation

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Roberts-Gordon LLC

Our affiliated companies have used the Employment Law Alliance in connection with numerous acquisitions, and have always been extremely pleased with our ability to obtain the highest quality legal advice on due diligence issues from jurisdiction to jurisdiction. We have found the Employment Law Alliance firms to be not only first rate with respect to their legal advice but also responsive and timely in assisting us with federal and state law issues critical to our due diligence efforts. We consider the Employment Law Alliance to be an important part of our team.

Rockwell Collins, Inc.

We have partnered with many ELA firms on the development and execution of case management strategies with very positive results. We have been very pleased with the legal advice and counsel provided by the law firms we have utilized who are affiliated with the Employment Law Alliance. The ELA firms we have worked with are customer focused, responsive, and thorough in their approach to handling labor and employment law matters.

Elizabeth Daly
Assistant General Counsel

Sanmina-SCI

Sanmina-SCI has facilities strategically located in key regions throughout the world. Our customers expect that we will provide them with the highest quality and most sophisticated services in the marketplace. We have that same expectation for the lawyers with whom we do business. With operations in 17 countries, we need to be certain that we have a team of lawyers working together to address our employment law needs worldwide. The ELA has delivered exactly what it promised-- seamless and consistent high quality services delivered in each locale around the globe. It has quickly become a key asset for our human resources department.

Starwood

We own, manage, and franchise hotels throughout the U.S. and in more than 90 countries. With more than 145,000 employees worldwide, ensuring that we comply with the complex web of local labor and employment laws in every one of these jurisdictions is a daunting task. The Employment Law Alliance has served as an important resource for us and we have benefited greatly from its expertise and long reach. When a legal dispute or issue has arisen in some far-flung place, Employment Law Alliance lawyers have always provided responsive, practical, and cost-effective assistance.

Wilmington Trust Corporation

Wilmington Trust has used the ELA to locate firms in California, Washington State, Georgia, and Europe. Our experience with the ELA lawyers with whom we have worked has always been one of complete satisfaction and prompt, practical advice.

Michael A. DiGregorio
General Counsel  

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