New York has for many years had a law on the books that prohibits employers from retaliating against an employee because the employee has complained about an alleged violation of the wage and hour laws. Specifically, New York Labor Law Section 215 states that an employer may not "discharge, threaten, penalize, or in any other manner discriminate or retaliate against any employee" because the employee complained of an alleged violation of the Labor Law or otherwise cooperated with a Department of Labor or Attorney General investigation regarding an alleged violation of the Labor Law.
On July 29, 2019, Governor Cuomo signed legislation amending the statute to specify that the phrase "threaten, penalize, or in any manner discriminate or retaliate against any employee" includes threatening to contact or contacting United States immigration authorities or otherwise reporting or threatening to report the citizenship or suspected immigration status of an employee or an employee's family member. The legislation is effective 90 days after the date on which the Governor signed it.
On August 25, 2016, the U.S. Equal Employment Opportunity Commission issued its final “Enforcement Guidance on Retaliation and Related Issues.” Along with the final guidance, the EEOC issued a Q&A publication and a Small Business Fact Sheet.
Since 1998, the Supreme Court and lower courts have issued a number of significant rulings regarding employment related retaliation. The guidance illustrates where the EEOC is in agreement with lower court rulings and, significantly, where the EEOC’s interpretation of the law differs from that of the courts. It should come as no surprise that the EEOC takes a broad view of the protections afforded by the anti-retaliation provisions of the EEO laws it enforces. The final guidance offers employers insight into how the EEOC will handle retaliation charges and suggests “promising practices” for employers to follow to avoid such charges. Some issues of note include:
The EEOC takes an expansive view of protected participation activity.
The basic premise of “retaliation” has not changed. Retaliation occurs when an employer takes a materially adverse action against an individual because the individual engaged in protected activity. Protected activity includes participating in an EEO process (participation activity) or opposing discrimination (opposition activity).
Both the courts and the EEOC recognize that participating in administrative proceedings or lawsuits to enforce rights under the EEO laws is protected participation activity. However, the EEOC goes a step further, taking the position that participation in an employer’s internal complaint process is also protected participation activity. This is significant because participation activity is so broadly protected. Indeed, an employee need not have a reasonable good faith belief that discrimination actually occurred for participation activity (i.e., filing an internal complaint) to be protected. According to the EEOC, even complaints made in bad faith or which contain false or malicious allegations are protected participation activity. Further, it is the EEOC’s position that employers can be liable for retaliation if they discipline an employee for such bad faith actions taken in the course of participation.
A wide range of actions are considered "materially adverse."
Relying on Supreme Court precedent, the EEOC makes clear that in the context of a retaliation claim, a much broader range of employer actions will be considered “materially adverse” than in the context of a discrimination claim. For purposes of a retaliation claim, a materially adverse action is “any action that might well deter a reasonable person from engaging in protected activity.” Work-related threats, warnings, reprimands, negative or lowered performance appraisals, and transfers to less prestigious or desirable work or work locations all likely meet this standard. Note, however, that an employer’s actions need not be work-related to be considered “materially adverse actions.” According to the EEOC, prohibiting only employment-related actions would not be effective in preventing retaliation because the employer could retaliate by taking action not directly related to the employee’s employment or by causing the employee harm outside of the workplace.
The EEOC lists the following examples of materially adverse actions: disparaging an employee to the media, making false reports to government authorities, filing a civil action, threatening reassignment, scrutinizing work or attendance more closely, removing supervisory responsibilities, requiring re-verification of work status or initiating action with immigration authorities, terminating a union grievance process, and taking or threatening to take adverse action against a close family member.
There is a lower standard for actionable "retaliatory harassment."
The EEOC recognizes that sometimes retaliatory conduct is characterized as “retaliatory harassment.” The standard for establishing “retaliatory harassment” differs significantly from the standard for establishing a discriminatory harassment claim. To constitute unlawful retaliation, harassing conduct does not have to be severe or pervasive enough to create a hostile work environment. If the alleged harassing conduct is reasonably likely to deter protected activity, it would be actionable retaliation, even if not sufficiently severe or pervasive enough to create a hostile work environment.
The ADA's interference clause is interpreted more broadly than the anti-retaliation clause.
In addition to retaliation, the Americans with Disabilities Act prohibits interference with the exercise of ADA rights. According to the EEOC, the interference clause is much broader than the anti-retaliation clause, “reaching even those instances when conduct does not meet the ‘materially adverse’ standard required for retaliation.” However, the EEOC notes that in its view, the interference provision does not apply to any and all conduct an individual finds intimidating. Rather it only prohibits conduct that is reasonably likely to interfere with the exercise or enjoyment of ADA rights. Examples of such conduct include:
Coercing an individual to forego an accommodation to which they are entitled;
Intimidating an applicant from requesting an accommodation for the application process by indicating they would not be hired as a result of the request;
Threatening an employee with termination if they do not “voluntarily” submit to a medical examination or inquiry otherwise prohibited by the ADA;
Issuing a policy purporting to limit an employee’s rights to invoke ADA protections (e.g., a fixed leave policy that states “no exceptions will be made for any reason”);
Interfering with a former employee’s right to file an ADA lawsuit by stating that a negative reference will be given if a suit is filed; and
Subjecting an employee to unwarranted discipline, demotion, or other adverse treatment because the employee assisted a co-worker in requesting a reasonable accommodation.
The guidance includes some suggested "promising practices" for employers.
The final guidance includes “promising practices” which the EEOC posits may help reduce the risk of violations. However, the EEOC is careful to advise that adopting these practices will not insulate an employer from liability or damages for unlawful actions. The “promising practices” include:
Maintaining written policies which include examples of retaliation, steps for avoiding actual or perceived retaliation, a complaint procedure, and a clear explanation that engaging in retaliation will result in discipline, up to and including termination;
Training all managers, supervisors, and employees on the anti-retaliation policy;
Establishing a process for reminding the parties and witnesses involved in an EEO matter of the anti-retaliation policy, and providing advice to managers and supervisors alleged to have engaged in discrimination on how to avoid engaging in retaliatory conduct or conduct which may be perceived as retaliatory;
Following up with employees, managers and witnesses while an EEO matter is pending to ask if there are any concerns regarding potential or perceived retaliation; and
Reviewing proposed employment actions, preferably by a designated human resource or management official, to ensure that employees and witnesses are not subject to retaliation.
Employers face claims of retaliation at an increasingly alarming rate. Nearly 43% of all charges filed with the U.S. Equal Employment Opportunity Commission (EEOC) in FY 2014 included some allegation of retaliatory conduct. While retaliation is by no means a new concern for the EEOC, the Proposed Enforcement Guidance on Retaliation and Related Issues issued on January 21, 2016 shows very clearly that the agency intends to take an even more aggressive approach to address what it perceives as an epidemic of retaliation affecting the workplace. The EEOC last issued guidance on the topic of retaliation in 1998. Since then, the percentage of retaliation charges has almost doubled and the U.S. Supreme Court has issued several significant decisions concerning the scope of the anti-retaliation protections under federal employment statutes, as discussed here. Citing this backdrop, the EEOC chose to issue the proposed guidance to make known the agency’s current position on several key topics relating to retaliation. Although not carrying the weight of law or regulation, the enforcement guidance, once adopted, will establish the various standards EEOC staff can be expected to apply while investigating charges or litigating cases. Perhaps not surprisingly, the EEOC’s proposed guidance advances a broader, claimant-friendly application of federal anti-retaliation statutes. For instance, the EEOC’s classification of conduct as either “participation activity” or “opposition activity” – the two types of activities protected by most federal employment laws – differs sharply from the standard applied almost universally by courts. Whereas nearly all courts hold that participation activity requires some connection to the administrative or litigation process (such as filing a charge or serving as a witness), the EEOC takes the position that even making an internal complaint with an employer constitutes participation activity. This is significant because, unlike with opposition activity – which filing an internal complaint unquestionably is – an employee need not reasonably believe that unlawful discrimination actually occurred for participation activity to be cloaked with statutory protection. In other words, according to the EEOC, an employee should be able to lodge a knowingly baseless internal complaint of discrimination without any potential for repercussion. This is a dramatic departure from the current state of the law. Also, while the EEOC acknowledges that opposition activity is only protected if the manner of opposition is reasonable, the proposed guidance would make it extremely difficult for an employer to ever establish that an employee’s conduct was so outrageous that it loses the protection of federal anti-retaliation laws. For example, the EEOC states that protected opposition activity may include engaging in a production slow-down, writing critical letters to customers, or protesting against discrimination in an industry or society in general – without any connection to a specific workplace – even if that conduct causes the employer financial harm. The proposed guidance shows that the EEOC intends to push the limits of federal anti-retaliation laws to expand the scope of employee protections. To prepare for this, employers should re-evaluate their policies and procedures to ensure that the appropriate mechanisms are in place to minimize even the specter of retaliation. In this regard, the proposed guidance lists several “best practices” that the EEOC believes employers should follow, including:
Maintaining written policies which provide examples of prohibited retaliation, a complaint procedure, and a clear explanation that engaging in retaliation can result in discipline, up to and including termination;
Training all managers, supervisors and employees on the employer’s written anti-retaliation policy and emphasizing to all employees that the employer will not tolerate retaliation;
Establishing a protocol to remind managers or supervisors who are accused of discrimination of the employer’s anti-retaliation policy, and to provide tips to help managers and supervisors avoid engaging in conduct which might constitute unlawful retaliation or be perceived as such;
Following up with employees, managers and witnesses while an EEO matter is pending to ask if they have any concerns about potential or perceived retaliation; and
Reviewing proposed employment actions, ideally by designating a management or human resources representative who can ensure that employees or witnesses involved in an EEO matter are not subjected to unlawful retaliation.
The EEOC’s proposed guidance is open for public comment until February 24, 2016.
On December 28, 2015, Governor Cuomo signed a bill repealing Civil Service Law § 75-b(2)(b). This has a significant effect on the anti-retaliation provisions of New York’s “whistle blower” protection statute for public employees who report to a governmental body either (a) violations of a law, rule or regulation, or (b) something which an employee reasonably believes to be “improper governmental action."
Civil Service Law § 75-b protects public employees who are whistle blowers against retaliation by public employers (which includes the State of New York, counties, cities, towns, villages, and school districts). As originally enacted, § 75-b(2)(b) (now repealed) required that a public employee, in order to invoke the anti-retaliation protection, first “shall have made a good faith effort to provide the appointing authority or his or her designee the information to be disclosed and shall provide the appointing authority or designee a reasonable time to take appropriate action unless there is imminent and serious danger to public health or safety.”
With the repeal, there now appears to be no requirement that the employee report the issue internally before taking it to another governmental body. While no doubt well-intentioned, the repeal may very well empower disgruntled employees to pepper regulatory and criminal authorities with complaints of alleged misconduct.
In addition to the fact that public employers should generally be aware of this change, public employers should also examine and review their existing whistle blower policies to determine if any revisions should be made.
On July 22, 2014, Governor Cuomo signed a bill that amends the New York Human Rights Law by adding a new Section 296-c entitled, “Unlawful discriminatory practices relating to interns.” The amendment prohibits employers from discriminating against unpaid interns and prospective interns on the basis of age, race, creed, color, national origin, sexual orientation, military status, sex, disability, predisposing genetic characteristics, marital status, or domestic violence victim status, with respect to hiring, discharge, and other terms and conditions of employment. The amendment further prohibits employers from retaliating against unpaid interns who oppose practices forbidden under the Human Rights Law or who file a complaint, testify, or assist in a proceeding brought under the Human Rights Law. The amendment also makes it unlawful for employers to compel an intern who is pregnant to take a leave of absence, unless the pregnancy prevents the intern from performing the functions of the internship in a reasonable manner. The amendment also prohibits employers from subjecting interns to sexual harassment or any other type of harassment based on a protected category. This legislation was introduced following a 2013 case in which the United States District Court for the Southern District of New York dismissed a sexual harassment claim asserted by an unpaid intern who alleged that her boss had groped her and tried to kiss her. In that decision, the Court was bound by the language of the statute that existed at that time and the court decisions interpreting that language, which provided that the Human Rights Law only applied to paid employees and did not apply to unpaid interns. The purpose of the legislation is to give unpaid interns the same right to be free from workplace discrimination and harassment as paid employees. Employers who have unpaid interns or expect to have unpaid interns in the future should consider revising their anti-discrimination and anti-harassment policies to explicitly provide that discrimination and harassment against interns will not be tolerated, and that complaints made by interns regarding alleged unlawful harassment will be investigated in the same manner as complaints made by employees. In addition, as we noted in a 2010 blog post, employers should also make sure that unpaid interns truly qualify as unpaid interns, and would not be considered "employees" who are entitled to the minimum wage and overtime protections of the Fair Labor Standards Act and New York wage and hour laws.
On March 4, 2014, the U.S. Supreme Court significantly expanded the Sarbanes-Oxley anti-retaliation law to cover employees of private contractors who perform services for publicly-traded companies. Passed in 2002 in the wake of the Enron scandal, the Sarbanes-Oxley Act (“SOX”) establishes strict standards for financial behavior by publicly-traded companies and protects “employees” from retaliation for blowing the whistle on a number of specific types of violations. In Lawson v. FMR LLC, the Court concluded in a 6-3 decision that not only are employees of the publicly-traded company protected from retaliation, but employees of contractors and subcontractors of the company are also similarly protected.
Although it is not clear how wide the net will be expanded, millions of workers who provide almost any type of service to a publicly-traded company (e.g., cleaning, daycare, lawn service, as well as tax and audit and many others) will likely have the right to file a complaint with the Department of Labor and proceed to court if they suffer an adverse employment action after they have filed a complaint involving the publicly-traded company.
What does the Lawson decision mean for most employers? First, employers need to take inventory of whether they provide services to publicly-traded companies in order to determine if SOX’s whistleblower provision applies to their employees. Second, employers must be sure to establish properly worded anti-retaliation policies that are broad enough in scope to cover reports of alleged fraudulent activity, including reports of alleged Securities and Exchange Act violations. Third, even well-written policies will not be sufficient if managers and supervisors are not properly trained to deal with employee complaints covered by the policy. Managers must be aware that adverse actions against whistleblowers (not only terminations, but also lesser actions such as job reassignments, shift changes, and below-average merit increases) can create serious liability for their employer.
A well-publicized internal complaint procedure is crucial; otherwise, employees will likely turn to a private attorney or a government agency to raise their complaints. All complaints must be taken seriously, followed by reassurance to the complaining employee that he/she will not be retaliated against in any manner. If an internal complaint of retaliation is made, the employer must conduct a thorough and comprehensive investigation, and take corrective action if necessary. The investigation and corrective action must be properly documented. Solid documentation will help the company assess whether the complaint falls under SOX and will lock in the scope of the employee’s complaint. A well-documented investigation, followed by an appropriate response to the facts uncovered, will also show a court that the company took the complaint seriously, and may help to avoid unnecessary litigation.
The U.S. Supreme Court recently issued a 5-4 decision that sets the standard for how retaliation claims under Title VII of the Civil Rights Act ("Title VII") will be analyzed. In University of Texas Southwestern Medical Center v. Nassar, the Court held that a plaintiff alleging a retaliation claim under Title VII must establish that retaliation for his or her protected activity was the "but-for" cause of the adverse employment action taken by the employer, rather than just "a motivating factor" for the adverse employment action. This holding will likely make it more difficult for plaintiffs to prevail in Title VII retaliation claims and may even reduce the number of frivolous Title VII retaliation lawsuits.
The plaintiff in the Nassar case was a former faculty member of the University of Texas Southwestern Medical Center (the "University") and a staff physician at a University-affiliated hospital, Parkland Memorial Hospital (the "Hospital"). During his employment with the University, the plaintiff made complaints to the University's Chair of Internal Medicine that his supervisor (the Chief of Infectious Disease Medicine) was biased against him due to his religion and Middle Eastern national origin. Although his supervisor assisted him in obtaining a promotion in 2006, the plaintiff continued to believe that she was biased against him. The plaintiff resigned from his faculty member position with the University in July 2006, with the hope of continuing his employment as a staff physician at the Hospital. Upon resigning from his position with the University, the plaintiff wrote a letter to the Chair of Internal Medicine and other individuals at the University alleging that he was resigning because his supervisor had harassed him due to his race, religion, and national origin.
Although the Hospital had initially offered the plaintiff the opportunity to continue his employment as a staff physician despite his resignation from the University, the University's Chair of Internal Medicine protested to the Hospital (after receiving the plaintiff's resignation letter) that the job offer was inconsistent with the affiliation agreement between the University and the Hospital, which required that Hospital staff physicians also be members of the University faculty. The Hospital then withdrew its offer.
The plaintiff filed discrimination and retaliation claims under Title VII against the University. The jury found in favor of the plaintiff on both claims. The Fifth Circuit Court of Appeals vacated the jury's verdict in favor of the plaintiff on his discrimination claim, holding that the plaintiff had submitted insufficient evidence in support of that claim. However, the Fifth Circuit affirmed the jury's verdict on the plaintiff's retaliation claim, holding that such a claim required only a showing that retaliation was "a motivating factor" for the adverse employment action.
In reviewing and vacating the Fifth Circuit's decision on the plaintiff's retaliation claim, the Supreme Court examined the language of the retaliation provisions of Title VII, and concluded that the statute requires proof that retaliation is the "but-for" cause of the adverse employment action, rather than simply "a motivating factor" for the adverse employment action. The Court noted that Title VII's status-based discrimination provision was expressly amended in 1991 to provide that "race, color, religion, sex, or national origin" need only be "a motivating factor" for an employment practice in order to establish that the employment practice is unlawful, but Title VII's retaliation provision was not similarly amended. Title VII's retaliation provision provides that:
It shall be an unlawful employment practice for an employer to discriminate against any of his employees . . . because he has opposed any practice made an unlawful employment practice . . ., or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing . . . .
The Court found that the word "because" means that a plaintiff must establish that retaliation is the "but-for" cause of the adverse employment action. The Court relied on its decision in Gross v. FBL Financial Services, Inc., in which it interpreted similar language in the Age Discrimination in Employment Act ("ADEA") and concluded that a plaintiff asserting an ADEA claim must establish that age is the "but-for" cause of the adverse employment action.
The Court noted in its decision that "claims of retaliation are being made with ever-increasing frequency" and that "the number of retaliation claims filed with the EEOC has now outstripped those for every type of status-based discrimination except race." The Court expressed its reluctance to lessen the causation standard for retaliation claims, stating that this could "contribute to the filing of frivolous claims."
This decision will likely make it easier for employers to defend themselves against Title VII retaliation claims, and may even reduce the number of frivolous retaliation claims filed by employees under Title VII. It remains to be seen, however, whether there will be legislative efforts to amend Title VII in order to lessen the proof of causation necessary to establish a retaliation claim.
On September 10, 2012, the U.S. Court of Appeals for the Second Circuit reversed a 2010 District Court decision and rejected a claim by a terminated public school district employee that she was subjected to retaliation for engaging in protected speech under the First Amendment to the U.S. Constitution. In Ross v. Lichtenfeld, the Second Circuit held that the employee's complaints upon which she based her retaliation claim were not protected by the First Amendment, and determined that the school district's superintendent was entitled to summary judgment.
Risa Ross was a payroll clerk typist for the Katonah-Lewisboro Union Free School District. Her duties included processing the school district's payroll, transmitting direct deposits, mailing checks, and notifying appropriate personnel of payroll mistakes. Between 2003 and 2006, Ross met with the school district's superintendent numerous times to express concern about payments that she believed to be improper.
In 2006, Ross was suspended with pay by the school district after it was discovered that Ross had failed to disclose on her employment application that she had been employed by three other school districts and had been discharged from her employment at each of those three school districts. During her suspension, Ross wrote to members of the board of education regarding the concerns she had previously expressed to the school district's superintendent about financial malfeasance, and her belief that she had been suspended in retaliation for raising those concerns. In those letters, Ross stated that, although she was an employee of the school district, she was writing on a "personal note" to express her frustration with the school district's administration.
The board initiated a disciplinary hearing. The hearing officer found that Ross had knowingly made false statements on her employment application, and recommended that her employment be terminated. The board then voted unanimously to terminate Ross' employment.
Ross filed four claims against the superintendent, including a claim that she was discharged in retaliation for exercising her First Amendment rights. The District Court granted the superintendent's motion for summary judgment on every claim except the First Amendment retaliation claim, which it determined should proceed to trial.
The superintendent subsequently appealed the District Court's denial of summary judgment with respect to the First Amendment retaliation claim. In its decision, the Second Circuit cited well-established precedent that a public employee speaking "as a citizen . . . on a matter of public concern" is entitled to First Amendment protection for that speech. However, a public employee speaking pursuant to his or her official duties -- and not as a private citizen -- is not entitled to First Amendment protection for that speech, even if the employee's speech is a matter of public concern. In determining whether a public employee's speech is pursuant to his or her official duties, courts examine the nature of the employee's job responsibilities, the nature of the speech, and the relationship between the two.
Ross argued, among other things, that her letters to board of education members were sent as a private citizen because she specifically stated in those letters that she was writing on a "personal note" rather than as an employee of the school district. The Second Circuit rejected this argument, holding that "an employee's characterization of her own speech is not dispositive." The Second Circuit also rejected Ross' other arguments, and held that Ross' concerns about improper payments and/or financial malfeasance were raised pursuant to her job duties as a payroll clerk typist.
Accordingly, the Second Circuit reversed the District Court's decision and determined that the superintendent was entitled to summary judgment on Ross' First Amendment retaliation claim. In so holding, the Second Circuit reinforced well-established principles of what constitutes protected free speech by public employees.
On February 21, 2012, the U.S. Supreme Court declined to review a Fourth Circuit Court of Appeals decision rejecting a job applicant's retaliation claim filed under the Fair Labor Standards Act ("FLSA") against her prospective employer. By declining to review the decision, the Supreme Court left undisturbed the Fourth Circuit's ruling that job applicants are not "employees" who are protected by the anti-retaliation provisions of the FLSA.
In Dellinger v. Science Applications International Corp., the plaintiff alleged that her prospective employer, Science Applications, retaliated against her by withdrawing its conditional job offer after discovering that she had filed an FLSA lawsuit against her former employer. In a 2-1 decision, the Fourth Circuit affirmed the U.S. District Court's dismissal of her retaliation complaint. The Fourth Circuit held that the FLSA anti-retaliation provisions applied only within the bounds of an actual current or former employment relationship, but did not authorize prospective employees to file retaliation claims against prospective employers in circumstances where an employment relationship never existed.
The plaintiff argued in her petition for Supreme Court review that the Fourth Circuit's decision conflicted with the Supreme Court's decision in Robinson v. Shell Oil Co., a 1997 decision addressing the scope of the anti-retaliation provisions of Title VII of the Civil Rights Act ("Title VII"). SAIC argued in its opposition to the plaintiff's petition that the Robinson case was factually distinguishable because the statutory language of Title VII expressly covers both employees and applicants and because the Robinson case involved a former employee of the defendant rather than a job applicant who had never been in an employment relationship with the defendant.
Although the Fourth Circuit's decision in the Dellinger case does not constitute binding precedent in the Federal Courts in New York, employers in New York can nevertheless rely on the Fourth Circuit's Dellinger decision as persuasive authority regarding the scope of the FLSA's anti-retaliation provisions.
Recently, the U.S. Department of Labor's Wage and Hour Division released three new Fact Sheets on unlawful retaliation under the Fair Labor Standards Act ("FLSA"), the Family and Medical Leave Act ("FMLA"), and the Migrant and Seasonal Agricultural Worker Protection Act ("MSPA"). Although the Fact Sheets do not contain any new information on the prohibition against retaliation, they provide a good reminder to employers regarding the scope of the anti-retaliation provisions in these three statutes.
Fact Sheet #77A provides general information concerning the FLSA's prohibition of retaliating against any employee who has filed a complaint or cooperated in an investigation. The Fact Sheet reminds employers that an employee who files a complaint under the FLSA is protected from retaliation regardless of whether the complaint was made orally or in writing. The Fact Sheet also states that the anti-retaliation provision of the FLSA applies even in situations where there is no current employment relationship; for example, former employees are also protected from retaliation. The Fact Sheet further indicates that complaints made to the Wage and Hour Division are protected and that "most courts have ruled that internal complaints to an employer are also protected."
Fact Sheet #77B provides general information concerning the FMLA's prohibition of retaliation against an individual for exercising his or her rights protected under the FMLA. The Fact Sheet provides examples of prohibited conduct, which include: discouraging an employee from using FMLA leave, manipulating an employee's work hours to avoid responsibilities under the FMLA, and counting FMLA leave as absences under "no fault" attendance policies.
Fact Sheet #77C provides general information concerning the MSPA's prohibition of discrimination against a migrant or seasonal agricultural worker who has filed a complaint or participated in any proceeding under the MSPA. The MSPA applies to agricultural employers, agricultural associations, and farm labor contractors who engage in at least one of the following activities: furnishing, employing, soliciting, hiring, or transporting one or more migrant or seasonal agricultural workers.
The Securities and Exchange Commission’s final rules (the “Rules”) clarifying Dodd-Frank whistleblower rewards and protections take effect on August 12, 2011. The Rules govern the payment of rewards to eligible individuals who report violations of the federal securities laws which lead to a successful enforcement action by the SEC in which monetary sanctions of over $1 million are collected. The SEC promulgated the Rules pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which requires the SEC, in certain cases, to award to qualifying whistleblowers no less than 10%, and no greater than 30%, of the total monetary sanctions collected because of the whistleblower’s information. The Rules detail, among other things, how the SEC will evaluate an individual’s right to a reward and, if qualified, the amount to be awarded. Significant aspects of the Rules are summarized in brief below.
Notably, a whistleblower can submit information to the SEC anonymously through counsel, and a whistleblower’s identity is kept confidential. Moreover, a whistleblower need not have “clean hands” to receive an award. While the culpability or involvement of a whistleblower is a factor in determining the amount of an award, a culpable whistleblower, in the absence of a criminal conviction, is not per se precluded from receiving an award.
The Rules also clarify the anti-retaliation protections afforded whistleblowers under Dodd-Frank. Whistleblowers who do not qualify for a reward are still protected by the anti-retaliation provisions as long as the individual has a “reasonable belief that the information he is providing relates to a possible securities law violation … that has occurred, is ongoing, or is about to occur.”
Whistleblowers are not required to report their concerns internally to their employers before making a report to the SEC. The Rules do, however, include incentives intended to encourage whistleblowers to use their companies’ internal compliance and reporting systems. For example, one of the factors the SEC will consider in determining whether to increase the amount of the award, is whether the whistleblower participated in his or her company’s internal reporting system. Similarly, a factor in determining whether to decrease the amount of the whistleblower award is whether the whistleblower undermined the integrity of the company’s internal compliance and reporting system. In addition, a whistleblower remains eligible to receive an award for his or her original information, even if he or she first reports the possible violation to the company, and the company subsequently reports the information to the SEC or provides the SEC with the results of an internal investigation which was prompted by the whistleblower’s information.
The SEC states in the Rules that it is not seeking to undermine effective company processes for receiving reports on possible violations. In appropriate cases, it will contact the company after receiving a complaint, describe the nature of the allegations, and give the company an opportunity to investigate the matter and report back. Among other factors the SEC will consider in determining whether to give a company this opportunity are the company’s existing culture related to corporate governance, and the company’s internal compliance programs, including what role, if any, internal compliance had in bringing the information to management’s or the SEC’s attention.
In light of these factors alone, companies should evaluate their current internal reporting processes and policies to ensure that they effectively encourage employees to report their concerns about potential violations and misconduct through internal processes, to minimize the risk of being blindsided by an enforcement action. An effective internal reporting system will: be uncomplicated and non-threatening; include a process for reporting and receiving concerns about possible violations, including anonymous submissions; and ensure that all allegations of misconduct are taken seriously and addressed in a timely manner. Companies should routinely train their employees on how to report potential violations using the company’s internal reporting system, promote the use of their internal compliance programs, and train supervisors how to respond to reports of potential violations.
As challenging as 2010 was, 2011 promises to be even more challenging for employers trying to remain in compliance in an ever-changing legal and regulatory environment. While coming into full compliance may seem daunting, addressing the ten concerns discussed below will be a meaningful step in that direction.
1. Meal Periods. New York State requires employers to provide employees who work shifts in excess of six hours a meal period of not less than 30 minutes. Penalties for noncompliance start at $1,000 per offense and increase with each offense. In addition, if an employer automatically deducts meal periods from working time and such deductions do not accurately reflect the meal periods taken, the employer may not be paying employees for all time worked – resulting in far greater legal exposure.
What To Do: Employers should develop and enforce a meal period policy, requiring employees to take their meal periods (which cannot be waived). Employers should also require employees to leave their work area and prohibit employees from performing any work during meal periods. If employees’ meal periods are frequently interrupted, they should be paid for the entire meal period. Employers should also maintain accurate records demonstrating that they are complying with meal period obligations. Employers who automatically deduct for meal periods should have a policy notifying employees of this practice, a mechanism for employees to report when they have worked during a meal period, and should require employees and their supervisors to certify the accuracy of time records. Employers should also train supervisors on the legal obligations associated with meal periods.
2. Exempt Status. With Fair Labor Standards Act litigation outpacing discrimination suits, and New York’s recently enacted Wage Theft Prevention Act taking effect in April 2011, overtime compliance is essential.
What To Do: Before classifying a position as exempt, employers must insure the duties test, salary basis test and salary level test are satisfied. Because many employers give little thought to exempt classifications, employers should review all positions currently classified as exempt and insure these tests are satisfied. If an employer discovers it has misclassified a position as exempt, legal counsel should be sought.
3. Other Wage and Hour Concerns. Employers must also be mindful of limits on deductions from wages (e.g., overpayment of wages, debts to the employer), the need to pay nonexempt employees for all hours worked, including those worked remotely (e.g., via Blackberry or other mobile device), and the proper way to calculate regular rate of pay for overtime purposes.
What To Do: Employers should review their wage and hour practices and work with legal counsel to develop appropriate guidance on each of these subjects.
4.Misclassification of Workers. The United States Department of Labor has identified combating employee misclassification as a priority in 2011 and with a recent study finding 1 in 10 private sector New York employers having not properly classified workers, the potential exposure is clear. Misclassification of an employee as an independent contractor carries with it a broad range of liability, including: unemployment insurance, workers’ compensation, social security, tax withholding, temporary disability, and minimum wage and overtime.
What To Do: Employers should review their relationship with any worker identified as an independent contractor. In doing so, particular attention should be paid to whether the individual is in the business of providing these services, the duties performed, the control exercised over the work performed, the method of payment, and how payments are reported. These relationships should be memorialized in a written agreement (while understanding that labeling an individual an independent contractor does not end the analysis) that has been reviewed by counsel and accurately reflects the relationship between the parties.
5. Reasonable Accommodations/Leaves. With the recently adopted Americans with Disabilities Act Amendment Act (ADAAA) and employers still working toward complying with the last round of regulatory changes to the Family Medical Leave Act (FMLA), reasonable accommodations and leaves will remain a focal point in 2011.
What To Do: Covered employers should review their FMLA policy and forms and, if necessary, update them. Employers should also adopt a policy detailing the reasonable accommodation obligation and the procedure for requesting accommodation, and insure supervisors can identify accommodation requests. Finally, employers must be aware that an employee requiring leave for a medical condition may not be limited to the 12-week FMLA entitlement given the availability of leave as a reasonable accommodation under the ADA and New York Human Rights Law.
6. Caregiver Discrimination. As women now outnumber men in the U.S. workforce and mothers of young children are twice as likely to be employed as their counterparts 30 years ago, caregiver discrimination has gained greater attention and, in 2010, was described as an issue that would be “front and center” for the EEOC.
What To Do: Employers should educate supervisory personnel on what constitutes caregiver discrimination and insure those involved in the hiring process know what can and cannot be asked about caregiving responsibilities. In addition, parental/caregiving leave policies should be reviewed to ensure they do not discriminate on the basis of gender.
7. Harassment. While harassment has been a long standing concern for employers, recent statistics demonstrate that workplace harassment is evolving - with more than 50% of harassment claims based on a protected status other than gender (e.g., disability, race, national origin) and sexual harassment charges filed by men increasing significantly.
What To Do: Employers should review their harassment policy to ensure it covers to all forms of harassment, describes/provides examples of what constitutes harassment, references conduct outside the work environment (including on social media), provides multiple avenues of complaint (directing victim to someone other than the harasser), presents an overview of the complaint procedure, and insures that the parties will be notified of the outcome of investigations. Employers should also train all those identified as avenues of complaint, as well as supervisors and managers, and should consider training all personnel.
8. Retaliation. With EEOC charges alleging retaliation increasing 45% from 2006 to 2009 and retaliation now tied with race as the most common form of discrimination alleged, concerns related to retaliation are self-evident.
What To Do: Employers should develop or review their policy on retaliation and insure it accurately reflects recent legal developments and provides a complaint mechanism. Employers should educate supervisors on what constitutes retaliation and, when a complaint of harassment or discrimination or other violation of law is received, employers should address retaliation concerns with the source of the complaint, the person about whom the complaint was made, and any witnesses. Employers should also show sensitivity to the timing of adverse actions in relation to employee complaints and involve human resources and/or legal counsel in decisions impacting employees who recently engaged in protected activity.
9. Employee Relations. While the Employee Free Choice Act (“EFCA”) appears to be dead, the underlying goal of EFCA – to increase unionization of the private sector workforce - will be advanced through National Labor Relations Board decisions and regulatory action. These potential changes -- commonly referred to as “EFCA 2.0” -- include narrowing the National Labor Relation Act’s definition of supervisor, expanding the protection of employee use of employer provided e-mail to solicit support for unionization, accelerating the speed of union elections, expand union access to employer property, and banning “captive audience” employee meetings.
What To Do: Given the likelihood at least some of these changes will be implemented, employers should pro-actively take steps to assess and, if necessary, improve employee relations. Employers should confirm that their supervisors satisfy the NLRA’s definition of supervisor (and are therefore excluded from NLRA protection and cannot unionize), educate supervisory personnel on the importance of open communication and positive employee relations and give supervisors the tools to succeed in this area. Employers should also take steps to address employee concerns that might otherwise lead to widespread employee dissatisfaction.
10. Technology-Related Issues. With technology evolving at an unprecedented pace and social media use expanding rapidly, technology-related concerns are vast and problematic. While not every technology-related concern can be anticipated, let alone avoided, there are common sense steps employers can take to limit potential exposure.
What To Do: Employers should adopt, and distribute a policy concerning the use of the employer’s technological resources, and obtain employee consent to accessing, intercepting and monitoring of their use thereof. Employers should also adopting a policy addressing social media use, both at and outside work, and ensure that social media concerns are addressed in other non-technology policies (e.g., workplace harassment, references). Finally, employers should determine if and how they will use social media in the hiring process and put policies and procedures in place to ensure hiring managers do not inadvertently gain access to applicants’ protected status (e.g. age, national origin) in the process.