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Shawe & Rosenthal E-Update, September 2012

Submitted By Firm: Shawe & Rosenthal, LLP

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


Fiona W. Ong and Bryan M. O'Keefe

Date Published: 9/28/2012

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Labor Board Update

This past month, the National Labor Relations Board has issued a number of significant decisions regarding various common employer policies relating to defamation and damaging comments, confidential information, and walking off the job, finding that such policies infringe upon employees’ Section 7 rights to engage in protected concerted activity.

Defamation and Damaging Comments. In Costco Wholesale Corp., the retailer maintained the following rule:

Any communication transmitted, stored or displayed electronically must comply with the policies outlined in the Costco Employee Agreement. Employees should be aware that statements posted electronically (such as to online message boards or discussion groups) that damage the Company, defame any individual or damage any person’s reputation, or violate the policies outlined in the Costco Employee Agreement, may be subject to discipline, up to and including termination of employment.

The ALJ found that the rule was lawful. The NLRB, however, reversed the ALJ’s decision on the grounds that “employees would reasonably construe this rule as one that prohibits Section 7 activity.” The Labor Board found that the prohibition “clearly encompasses concerted communications protesting the Respondent’s treatment of its employees.” Furthermore, the NLRB held that “nothing in the rule … even arguably suggests that protected communications are excluded from the broad perimeters of the rule.”

In discussing the ALJ’s reasoning, the Labor Board said that the cases relied upon by the ALJ were “distinguishable” because those cases prohibited only conduct that was “malicious, abusive, or unlawful.” One case in particular merited an extended discussion, Tradesmen International. In that case, the NLRB found lawful a rule which prohibited statements “which are slanderous or detrimental to the company or any of the company’s employees.” The current Board found that Costco’s policy was different from Tradesmen because in Tradesmen the “rule was among a list of 19 rules which prohibited egregious conduct such as sabotage and sexual or racial harassment. . . . In contrast, [Costco]’s rule does not present accompanying language that would tend to restrict its application.”

The NLRB’s current position on employee handbook provisions and protected concerted activity seems extreme and may not survive judicial review in a federal court of appeals. However, this is the manner in which the present Board is interpreting the Act. The Costco case is just another example of a fairly common employee handbook provision now being declared illegal.

Confidential Information. In Flex Frac Logistics, the employer maintained a separate at-will employment agreement that contained a detailed definition of “confidential information.” Within this definition, the employer included “personnel information and documents.” Release of information deemed confidential by the policy was grounds for termination.

In a 2-1 decision, the NLRB found that the rule was unlawful. The Labor Board reasoned that inclusion of “personnel information and documents” would lead employees to “reasonably believe that they are prohibited from discussing wages or other terms and conditions of employment with nonemployees, such as union representatives---an activity protected by Section 7.” The dissent argued that the context of the rule was important, since every other item listed in the rule was “undisputedly confidential” and “nothing in the record” indicated why employees would “contort” this “context” and conclude that the rule prevented the discussion of wages. The majority’s rebuttal was that “nothing in the rule” specifically suggested that the discussion of wages was excluded from “personnel information and documents.”

While this policy was contained in a separate at-will employment agreement, nothing suggests that the holding is limited only to those types of agreements. A similar provision in an employee handbook, such as in a confidential information policy, would be subject to the same interpretation. The Board majority’s interpretation of the Act might not survive judicial review.

Walking Off the Job. In Heartland Catfish, the Board addressed policies that prohibit “walking off the job,” and distinguished them from those that prohibit leaving one’s work station. According to the Board, rules that use the phrase “walking off the job” are unlawful, but it continues to be lawful to prohibit leaving a work station or the facility. Heartland Catfish had five rules – here is a breakdown of the rules and what was declared lawful and unlawful:


(1) “You are expected to be at your work station during working hours and you should obtain permission from your supervisor or the plant manager before leaving the work station or plant”

(2) “Leaving the plant without your supervisor/group leader’s permission is considered a major violation of the attendance policy and such an incident will be treated as a voluntary quit”

(3) “Leaving your work station without permission or approval will be considered cause for disciplinary action”


(4) “Walking off the job or leaving the plant without permission or notifying the supervisor will
be considered cause for immediate discharge”

(5) “Willfully restricting production, impairing or damaging product or equipment, interfering with others in the performance of their jobs or engaging or participating in any interruption of work will be considered cause for immediate discharge”

Interestingly, the fifth rule was declared illegal not on the basis of walking off the job (the rule contained no such language) but because the restriction on “participating in any interruption of work” could be construed as prohibiting a strike.


I-9 Forms. As some of you may have noticed, the current version of the I-9 form expired on August 31, 2012. Pending issuance of the new form, you can continue to use the expired version. In March of this year, the U.S. Citizenship and Immigration Services (USCIS) published a notice seeking comments on proposed substantive changes to the I-9 form. A revised form was expected prior to the current form’s expiration date of August 31, 2012, but the USCIS extended the comment period until October 14, 2012. Once the comment period closes, the USCIS will consider whether to make additional revisions to the I-9 form before issuing it for use.

Fair Labor Standards Act – Automatic Meal Break Deductions. The federal district court for Maryland recently found that a hospital’s uniform policy of automatically deducting a 30 minute meal break from employees’ hours worked could constitute a violation of the Fair Labor Standards Act (FLSA) and state wage laws, where there was management knowledge that employees regularly worked through the break. In Quickley v. University of Maryland Medical System Corp., the court noted that automatic deduction policies are not necessarily illegal, and that an employer can require employees to report when the automatic deduction should not apply because the employee worked during the meal break. However, the court held that “the employer must make every effort to facilitate reporting opportunities.” In this case, although there was a worksheet for reporting extended hours and buttons on the timekeeping system to report training hours, there was no means to report working through a meal break.

The court’s ruling emphasizes the importance of monitoring and accurately recording employee work/break time. If choosing to implement an automatic deduction policy, employers should monitor employees to ensure they are receiving a full, non-working break. Moreover, if employees do work through a meal break, employers need to have procedures to facilitate the reporting of the additional time worked.

Fair Credit Reporting Act – Revised Notices. The responsibility for enforcement of the Fair Credit Reporting Act (FCRA) has been transferred from the Federal Trade Commission to the one-year old Consumer Financial Protection Bureau, which has issued a revised notice for employers to use. Under the FCRA, employers who use a consumer reporting agency to conduct background checks must obtain authorization from and provide certain notices and communications to applicants and employees. One of the required communications that employers who intend to take adverse action against an applicant or employee (i.e. not hire) based on a consumer report must provide a copy of the notice, “Summary of Rights Under the FCRA.” Previously issued by the FTC, it has been revised to indicate the appropriate enforcement agency, CFPB. This form must be used beginning on January 1, 2013.

Equal Employment Opportunity Commission – Youth@Work. As part of its Youth@Work initiative, the EEOC has released new online resources to educate younger workers about sexual harassment and other forms of discrimination. The EEOC released a downloadable video and classroom guides that can be used by educators to help teenagers understand some of the issues they may face as they enter the workplace. The EEOC also updated its Youth@Work webpage, which assists younger workers in identifying and responding to discriminatory situations.

Americans With Disabilities Act – Request for Accommodation. An employee’s request for additional staff to assist him in performing his work duties was sufficient to place the employer on notice of the need for reasonable accommodation. In Stevens v. Board of Trustees, Southern Illinois Univ., a professor requested a full-time permanent assistant to assist him even before he incurred a back injury. He continued to repeat these requests after his injury, and his work performance deteriorated because of his various medical leaves and physical limitations. The repeated requests strained his working relationships with others in his department, including the department chairperson.

The court found that, although the professor never directly informed his supervisor about his disability, it was clear that she and the university were aware of his physical condition, thereby triggering the reasonable accommodation obligation. The court further found that limited part-time assistants were provided at different periods in time, but that it was an open question as to whether this limited assistance was a reasonable accommodation, particularly given the evidence that the work duties for which the professor was responsible really required two or more people. In addition, the court found questions of fact existed as to whether the university had engaged in the interactive process to determine a reasonable accommodation, because most of the professor’s repeated requests for assistance were ignored.

For employers, this case contains several important lessons. First, an employee does not necessarily have to formally inform his/her supervisor about a disability in order to trigger an employer’s obligations under the ADA. Based on the circumstances, an employer may be charged with knowing of a disability based on observations or use of medical leave. Second, an employer should not dismiss or ignore requests for assistance out of hand. Such requests could be deemed to be a request for reasonable accommodation, and the employer should engage in the requisite interactive process to determine whether such accommodation can be provided. In this case, the same request was made over and over, predating the employee’s injury, which undoubtedly drove the employer’s disregard of those requests. The employee’s changed physical circumstances, however, converted those requests from a simple work-related request to one for reasonable accommodation. Thus, it is important for employers to recognize that the context of the requests can affect whether such requests trigger ADA coverage.


Automatic Transfer to Vacant Position May Be Required as Reasonable Accommodation

A question that often comes up during the Americans with Disabilities Act interactive process is whether a disabled individual must automatically be reassigned to a vacant position as a reasonable accommodation, or whether the Company can require that the employee compete for the position.

Notably, there is a split in the federal appellate courts regarding this issue. While all the courts would acknowledge that an employer need not violate other important employment policies in order to provide a transfer, the question turns on what each court would consider a legitimate employment policy. Collective bargaining agreements and entrenched seniority systems are clearly such policies; however, a policy of hiring the best-qualified applicant is viewed differently by the different Circuit Courts that have addressed the specific issue.

The EEOC as well as the 9th, 10th, and D.C. Circuits require automatic transfer, regardless of the relative qualifications of the disabled employee versus other candidates for a vacant position. The 7th and 8th Circuits, on the other hand, did not require automatic transfer, and held that the reasonable accommodation was the opportunity to compete for the position. However, the 7th Circuit recently took the rather unusual step of having the full bench review of that position in EEOC v. United Airlines (typically decisions are issued by a three-judge panel).

The full panel has now issued its decision, and has overturned its prior ruling in EEOC v. Humiston-Keeling on this issue. Now the law in the 7th Circuit, like that in the 9th, 10th and D.C. Circuits, is that the ADA requires employers to transfer employees to a vacant position, provided that the transfer does not create an undue hardship, such as contravening a collective bargaining agreement or valid seniority policy. The Court specifically stated that a “best-qualified” hiring policy is not the same as a seniority policy.

At this time, the 8th Circuit remains the only federal appellate court to hold that automatic or mandatory reassignment is not required as a reasonable accommodation. The 8th Circuit’s position, however, was based on the 7th Circuit’s ruling in Humiston-Keeling, and is therefore open to question.

For employers, this means that, even if it is clear that a disabled employee cannot perform the essential functions of his/her position, you likely cannot simply terminate the employment relationship. Rather you should review your open positions to determine whether there are any that the employee can perform (with or without accommodation), and if the employee is qualified for the position, offer it to them even if he/she is not the best qualified person for the job. It is also important to note that the EEOC takes the position that there are no geographic limitations on the open position, meaning that positions at other company locations – even those in other states – should be part of the consideration. 

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Client Successes

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.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

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. 

I am familiar with several other products that purport to provide up-to- date employment law information and I believe that this resource is superior to other similar compliance manuals.  I am delighted that the ELA provides this free to its members' clients.

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

Hollywood Entertainment Corporation

As the Vice President for Litigation & Associate General Counsel for my company, I need to ensure that we have a team of top-notch employment lawyers in place in every jurisdiction where we do business. And I want to be confident that those lawyers know our business so they don't have to reinvent the wheel when a new legal matter arises. With more than 3400 stores and 35,000 employees operating in all 50 U.S. states and across Canada, we rely on the ELA to partner with us to help accomplish our objectives. I have been delighted with the consistent high quality of the work performed by ELA lawyers. I encourage other in-house counsel to use their services, as well.

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

We have direct sales and service offices all over the U.S., but have not necessarily had the need in the past for assistance with legal work in every state where we have a business presence. From time to time, we suddenly find ourselves facing a legal issue in a state where we have no outside counsel relationship. It has been a real benefit to know that the ELA has assembled such an impressive team of experts throughout the U.S. and overseas.

A few years ago, we faced a very tough discrimination lawsuit in Mississippi. We had never had to retain a lawyer there before. I was absolutely delighted with the Mississippi ELA firm. We received an excellent result. They will no doubt handle all of our employment law matters in Mississippi in the future. I have also obtained the assistance of several other ELA firms around the U.S. and have received the same outstanding service. The ELA is a tremendous resource for our company.

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 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.


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