Yesterday, the US Department of Labor issued a fact sheet  that provides general information on the break time requirement for nursing mothers, part of the Patient Protection and Affordable Care Act which took effect March 23, 2010. While these amendments to the Fair Labor Standards Act (FLSA) represent a significant change for employers in many states, since 2007, New York employers have been required to provide reasonable unpaid break time, or permit employees to use paid break time or meal time, to express breast milk. See our earlier posts on New York's requirement.

Thus, for New York employers, the most important observation contained in the US DOL's fact sheet is that the FLSA requirement of break time for nursing mothers to express breast milk does not preempt State laws that provide greater protections to employees. New York's protection of nursing mothers provides employees with a number of protections that exceed those provided under the new federal law. For example, New York law protects expression of breast milk up to three years following the birth of the child (federal law is limited to one year) and applies to all employers (federal law does not apply to employers with fewer than 50 employees).

Given that New York's protection of nursing mothers provides greater protection than the recent FLSA amendments, employers complying with existing New York law will be in compliance with the new federal law as well.

 

The emergency jobless benefits bill that cleared Congress today does not revive the COBRA subsidy for involuntary terminations. The subsidy expired with respect to terminations after May 31st.
 

A new regulation issued jointly by several federal agencies requires many federal contractors to disclose first-tier subcontract awards of $25,000 or more and to disclose the compensation paid to their top five executives. The new regulation was published in the Federal Register on July 8, 2010 and became effective on that date. The regulation was issued by the Department of Defense, the General Services Administration, and the National Aeronautics and Space Administration and implements the Federal Funding Accountability and Transparency Act (“FFATA”). The FFATA’s provisions state that it was enacted to reduce “wasteful and unnecessary spending” by requiring the federal government to “establish a free, public, on-line database containing full disclosure of all federal contract award information.”

The new regulation requires prime contractors to report first-tier subcontract awards of $25,000 or more at http://www.fsrs.gov. The regulation also requires contractors to report, at http://www.ccr.gov, the name and total compensation of each of the contractor’s five most highly compensated executives for the contractor’s preceding completed fiscal year in which the awards were made, and to make a similar report for subcontractors at http://www.fsrs.gov. The required information reported by federal contractors will be made available to the public.
 

Contractors and subcontractors are exempt from the reporting requirements contained in the regulation if their gross income is less than $300,000. The disclosure of compensation paid to the top five executives will be required only if the contractor or subcontractor receives at least 80 percent of its annual gross revenue and $25 million from federal awards, and if senior executives do not already publicly report compensation information.

The preamble to the new regulation acknowledges that it “may have a significant economic impact on a substantial number of small entities.” To address this burden, the reporting obligation will be phased in. Until September 30, 2010, new subcontracts must be reported only on prime contracts worth more than $20 million. From October 1, 2010 to February 28, 2011, reporting will be required for prime contracts worth more than $550,000. As of March 1, 2011, reporting will be required for all subcontracts at the $25,000 or greater threshold.
 

On July 6, 2010, the Second Circuit Court of Appeals held that pharmaceutical sales representatives employed by Novartis Pharmaceuticals Corp. (“Novartis”) are not exempt from the overtime pay requirements of the Fair Labor Standards Act (“FLSA”) as either “outside sales” or “administrative” employees. In so doing, the Court determined that the Secretary of Labor’s interpretations of the regulations promulgated under the FLSA defining “outside sales” and “administrative” employees, as set forth in the Secretary’s amicus brief , were entitled to “controlling” deference.

The Second Circuit rejected Novartis’ argument that its sales reps “made sales” within the meaning of the “outside sales” regulations because the reps only promoted a drug to a physician. They could not lawfully take an order for its purchase or obtain a binding commitment from the physician to prescribe the drug to a patient. While the sales reps provided physicians with free samples, Novartis sold its drugs to wholesalers, which then sold them to pharmacies, and the pharmacies ultimately sold the drugs to the patients who had prescriptions for them. Accordingly, since the sales reps did not “make sales,” they were not “outside salespeople” within the meaning of the FLSA and the regulations.
 

The Court also agreed with the Secretary of Labor that the sales reps were not “administrative” employees under the FLSA because the marketing skills “gained and/or honed” through Novartis training sessions did not demonstrate that the sales reps were “sufficiently allowed to exercise either discretion or independent judgment in the performance of their primary duties.”

Writing for the Court, Judge Amalya L. Kearse acknowledged that a number of federal district courts have held that pharmaceutical sales reps are exempt under the outside sales and/or administrative exemptions, but responded that “[t]hose cases are, of course, not binding on us, and their reasoning does not persuade us that the Secretary’s interpretations of the regulations should be disregarded.” Judge Kearse added, “[t]o the extent that the pharmaceuticals industry wishes to have the concept of ‘sales’ expanded to include the promotional activities at issue here, it should direct its efforts to Congress, not the courts.”
 

In a 4-3 decision, the New York Court of Appeals ruled on July 1, 2010, that a non-resident cannot sue his employer under the New York State  and City Human Rights Laws, unless he can demonstrate that the alleged discriminatory conduct had an impact within the State or City of New York. The case, Hoffman v. Parade Publications, Inc. resolves a split of authority over the applicability of the State and City Human Rights Laws to non-residents. Prior to Hoffman, some courts had ruled that a non-resident plaintiff could assert a Human Rights Law claim when the termination decision was made in New York, even if the plaintiff otherwise had no connection to New York. The Hoffman case has been closely watched by New York employers who have employees working in other parts of the country. Plaintiffs’ attorneys often seek to take advantage of the State or City Human Rights Laws where possible, because those laws are often broader and more protective of employees than are federal law and the laws of many other states.

The case was brought by Howard Hoffman, a former employee of Parade Publications, the publisher of a nationally syndicated Sunday newspaper insert, with headquarters in New York City. Hoffman, however, worked in the company’s Atlanta, Georgia office and resided in that state. He attended quarterly meetings at the company’s New York City headquarters, but otherwise had no contact with New York and did not service any accounts in New York.

In October 2007, the company’s president contacted Hoffman by phone from New York City and told him the Atlanta office was being closed and that he was being terminated. Hoffman subsequently sued Parade Publications alleging age discrimination in violation of the New York State and New York City Human Rights Laws.

The trial court dismissed the complaint, holding that neither the State nor City Human Rights Laws applied to Hoffman, because the impact of the termination decision was not felt within the City or State of New York. The Appellate Division reversed and concluded that a non-resident plaintiff need only establish that the discriminatory decision was made in New York. The Court of Appeals then reversed the Appellate Division.

The Court of Appeals reviewed the City and State Human Rights Laws and noted that the statutory language expressed an intent to protect “inhabitants” of the City, “the people” of the State and those “individual[s] within” the State. According to the Court, it would be inconsistent with the statutory intent to extend the protection of those laws to non-residents who have at most “tangential contacts” with the City or the State. By focusing on whether the impact of the decision is felt within the State or the City, the Human Rights Laws will provide protection to non-residents who work in New York. At the same time, the impact analysis excludes non-residents from “forum shopping” their claims to take advantage of New York’s and New York City’s broader Human Rights Laws. Had Hoffman sued Parade for age discrimination under Georgia state law, his maximum recovery would have been a fine of $250.

After Hoffman, it is clear that the mere fact a termination decision was made in New York will be insufficient, standing alone, to assert a cause of action under the State or City Human Rights Laws with regard to a non-resident employee who does not work in New York and/or New York City. What remains unclear is how courts will assess the “impact” requirement going forward. In many ways Hoffman was an easy case because Hoffman clearly did not work in New York. But other situations may prove more difficult, such as the employee who reports to multiple offices, including one in New York. Or an employee who travels frequently on business within New York, but is otherwise based at a location outside of the State.

 

The Occupational Safety and Health Administration (OSHA) may be considering an update of its list of permissible exposure limits (PELs) for many regulated chemicals and recognized air contaminants. According to BNA’s Daily Labor Report, at the May 26, 2010 American Industrial Hygiene Conference and Expo in Denver, OSHA Administrator David Michaels told the group that the Agency is in the process of assembling a task force to examine the possibility of updating current PELs. Most of the PELs have remain unchanged since first being set by OSHA in 1971, and revising the limits may be easier said than done. Because of that difficulty, Administrator Michaels urged that “all of us in the occupational safety and health community have to engage in support of this process because it is a very difficult one.”

This is not the Agency’s first attempt at implementing PEL revisions, and a prior attempt was not successful. By way of background, an employer is required under the “General Duty Clause” of the Occupational Safety and Health Act of 1970 to “furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm.” The Act also requires employers to “comply with occupational safety and health standards promulgated” by OSHA. Pursuant to this authority, OSHA promulgated numerous PELs for air contaminants in 1971; these standards are organized into three industries: general industry, shipyard employment, and the construction industry.
 

In 1989, OSHA implemented more than 400 revised and updated PELs because of its concern that the 1971 limits were outdated and based on obsolete science. In response, however, representatives from various industries and associations (including the AFL-CIO) challenged the updated PELs in court, claiming that OSHA had not followed the proper procedures for making the revisions and that there was not enough scientific evidence or support to justify the updates. Interestingly, the arguments by the various groups that joined together in the lawsuit varied dramatically, from claims that updated PELs were too low to arguments that they were too high. After years of litigation, the Eleventh Circuit Court of Appeals, based in Atlanta, refused to enforce any of the updated PELs and concluded that “OSHA has lumped together substances and affected industries and provided such inadequate explanation that it is virtually impossible for a reviewing court to determine if sufficient evidence supports the agency’s conclusion.”

Now, it appears the Agency has again set its sights on revising and updating PELs – almost forty years after the standards were first set and more than twenty years after its last failed attempt. It remains to be seen precisely what approach OSHA will take or what impact such changes may have on employers. However, as this agency initiative develops, employers and associations should monitor it and take an active role if OSHA solicits their input.

 

Recently the U.S. Department of Labor’s Wage and Hour Division issued an Administrator’s Interpretation (the “Interpretation”) clarifying the definition of “son or daughter” under Section 101(12) of the Family Medical Leave Act (“FMLA”) as it applies to an employee standing “in loco parentis” to a child. The FMLA allows workers to take up to 12 weeks of unpaid leave during any 12-month period to care for a child after adoption or birth, or to care for a child with a serious health condition. The Interpretation concludes that these rights extend to any individual who assumes the role of caring for a child, regardless of the legal or biological relationship.

The definition of a “son or daughter” under the FMLA includes not only a biological or adopted child, but also a “foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis.” According to the Interpretation, the legislative intent behind this definition was to reflect the reality that often the day-to-day responsibility of caring for a child falls to someone without a biological or legal relationship to the child, and that employees with such a responsibility are therefore entitled to leave under the FMLA.

In loco parentis, or “in the place of a parent,” is commonly understood to mean a person who has assumed obligations typical of a parent without formally adopting the child. Courts have routinely looked to the intent of the person allegedly in loco parentis to determine whether such a relationship is established; such intent is inferred from the acts of the parties. Whether an employee stands in loco parentis depends on multiple factors such as the age of the child, the child’s dependence on the employee, the amount of support provided and to what extent the employee performs duties commonly associated with parenthood.
 

Although FMLA regulations define persons standing in loco parentis as including those with day-to-day responsibilities to care for and financially support a child, the Interpretation views the regulations as not requiring an employee to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis. In addition, the Interpretation makes special note that neither the statute or the regulations restrict the number of parents a child may have under the FMLA. Although an employer may require the employee to provide reasonable documentation of the family relationship, a simple statement asserting that the requisite relationship exists is sufficient.

Examples of situations in which an in loco parentis relationship may be found include:

• A grandparent assuming ongoing responsibility for a grandchild due to the parents’ incapacity;
• An aunt assuming responsibility for raising a child after the death of the child’s parents; and
• A person sharing in the raising his or her unmarried partner’s biological child.

 

Foreign nationals frequently approach employers with a request to sponsor them for permanent residency based on employment. As many employers know, the first step in the sponsorship process consists of obtaining an approved labor certification application from the U.S. Department of Labor (DOL). This permanent labor certification program (often referred to as the “PERM” program) was redesigned by the federal government in 2005 and contains very specific rules and regulations detailing how employers must conduct any recruiting for a permanent residency position.

One requirement for obtaining certification is proof that there are no minimally qualified U.S. workers for a specific job vacancy within a specific job pool. In order to satisfy that requirement, it is very important for the employer to clearly and properly define the qualification threshold below which the employer is not willing to hire any job applicant - the employer's actual minimum requirements for the position. As a result, PERM recruiting differs significantly from the normal hiring practices of most employers, who seek the most qualified candidate for the job, not just one that meets the job's minimum requirements. Employers should strictly comply with DOL’s regulations and keep the following points in mind when drafting minimum job requirements.
 

The General Rule for Stating Minimum Requirements

Job requirements must adhere to what is customarily required for the U.S. occupation and may not be tailored to the foreign national’s qualifications. In addition, the employer must be able to demonstrate that it has not hired workers with lesser educational qualifications or experience for substantially comparable positions. In other words, the employer must establish that the job opportunity has been described without the use of unduly restrictive job requirements, unless the employer can demonstrate that the job requirements arise out of “business necessity." The concept of business necessity comes into play when an employer’s minimum requirements exceed what DOL thinks are the appropriate minimum requirements for the position. To establish business necessity, an employer must demonstrate that the job duties and requirements bear a reasonable relationship to the occupation in the context of the employer’s business and are essential to perform the job in a reasonable manner. The employer should prepare business necessity documentation prior to submitting the labor certification application for processing.

Foreign Language Requirements

An employer should not specify a foreign language as a minimum requirement for the position, unless it is prepared to justify this requirement on business necessity grounds. As a general rule, DOL selects for audit cases requiring knowledge of foreign language. In order for the case to be approved, DOL requires the employer to justify knowledge of a foreign language requirement on business necessity grounds. This standard is difficult to satisfy. It can, however, be shown by proof of a need to communicate with a large majority of the employer’s customers, contractors, or employees who cannot communicate effectively in English.

Experience Gained With the Employer

In defining the minimum requirements of the job, employers often include experience that the foreign national gained while in its employ. For example, if the sponsoring employer employed the foreign national for three years prior to filing the labor certification application, the employer may think it is appropriate to identify three years of experience in the position as the minimum requirement for the job. The DOL regulations, however, do not permit using experience gained with the sponsoring employer as a qualification for the position, unless: (1) the foreign national gained the experience while working for the sponsoring employer in a position not substantially comparable to the position for which the certification is being sought; or (2) the employer can demonstrate that it is no longer feasible to train a worker to qualify for the position.

Documenting the Foreign National’s Experience and/or Educational Credentials

Finally, where an employer specifies a certain degree or requires prior work experience, it should carefully examine the foreign national’s credentials prior to starting the labor certification application process to ensure that the foreign national actually meets the stated criteria. Prior experience, for instance, should be documented through “experience letters” obtained from the foreign national’s former employers. The letters should identify the exact period of employment, and include a detailed description of the duties performed and the skills acquired. To document educational requirements, the employer should carefully examine the foreign national’s degrees and/or certificates to ensure that they match the degree(s) specified as the minimum educational requirement for the position. If the foreign national’s degree does not specify a field of study, the employer should require the foreign national to obtain an official letter and transcripts from his college or university to confirm his field of study.
 

During the debate on health care reform, proponents of the legislation stressed that employees who were happy with the health benefits currently provided by their employers would be able to keep them. To that end, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act ("PPACA"), provides that group health plans existing as of March 23, 2010 (the date that PPACA was enacted) are not subject to certain provisions of PPACA. PPACA referred to such plans as "grandfathered plans," and directed that regulations be issued to define what constitutes a grandfathered plan and what changes to such a plan might result in the loss of grandfathered plan status. On June 14, 2010, the Department of the Treasury, the Department of Labor and the Department of Health and Human Services jointly issued interim final regulations regarding grandfathered plan status.  The regulations further define what a grandfathered plan is and what changes to a plan will result in the loss of grandfathered plan status. The regulations are effective for plan years beginning on or after September 23, 2010.

Significance of Grandfathered Plan Status

A grandfathered plan is not subject to a number of the provisions of PPACA, including the preventative care mandate, certain nondiscrimination requirements, mandatory internal and external appeals rules, and restrictions on pre-authorizations for OB/GYN, pediatric and emergency care services. However, grandfathered plans are subject to many of the most significant PPACA requirements, including the tax penalties on employers for failing to provide affordable health coverage, restrictions on annual and lifetime limits, adult children coverage to age 26, limits on waiting periods, and the prohibition on pre-existing condition exclusions.

Definition of Grandfathered Plan

Under PPACA and the regulations, a grandfathered plan is coverage provided under a group health plan in which an individual was enrolled on March 23, 2010. The regulations make clear that the grandfathered plan rules apply separately to each benefit package made available under a group health plan. Thus, if an employer's group health plan offers three different coverage options (e.g., an HMO, a PPO and a high deductible health plan), the grandfathered plan rules apply separately to each coverage option. Thus, the loss of grandfathered plan status for one of the options does not affect the grandfathered plan status of the other two options, even though all three options are components of the same group health plan.

Changes that Will Not Result in Loss of Grandfathered Plan Status

The regulations and their preamble list a number of changes that will not affect a plan's grandfathered status. Most importantly, the enrollment of new employees or new beneficiaries in a plan after March 23, 2010 will not affect a plan's grandfathered status. However, the regulations include anti-abuse rules designed to prevent employers from circumventing the grandfathered plan rules by transferring employees from one plan to another without a bona fide business reason or through a merger, acquisition or similar business transaction (if the principal purpose of the transaction is to cover new employees under a grandfathered plan).

An increase in the premium for a coverage option does not result in the loss of grandfathered plan status, although a decrease in the share of such premium paid by the employer may (see below). In addition, changes made to a plan to comply with Federal or State legal requirements, voluntary changes to comply with the provisions of PPACA, and a change in third party administrators for a self-funded plan generally will not result in the loss of grandfathered plan status.

Changes that Will Result in Loss of Grandfathered Plan Status

The changes listed below will result in an immediate loss of grandfathered plan status. Once grandfathered plan status is lost, it cannot be regained.

New Policy or Contract of Insurance -- Grandfathered plan status will be lost if the employer enters into a new policy or contract of insurance after March 23, 2010. However, the renewal of an existing policy or contract will not result in the loss of grandfathered plan status.

Elimination of Benefits -- The elimination of all or substantially all benefits to diagnose or treat a particular condition will result in loss of grandfathered plan status. For example, a plan that eliminates benefits for cystic fibrosis would no longer be a grandfathered plan, even if the change affects relatively few individuals.

Increase in Co-insurance -- Any increase in a co-insurance requirement (measured from March 23, 2010) will result in loss of grandfathered plan status.

Increase in Deductible or Out-of-Pocket Limit -- An increase in a deductible or out-of-pocket limit will result in the loss of grandfathered plan status, if the total percentage increase (measured from March 23, 2010) exceeds a "maximum percentage increase" (essentially, the medical inflation rate determined under the regulation, plus 15%).

Increase in Co-payments -- An increase in a co-payment amount will result in the loss of grandfathered plan status, if the increase (measured from March 23, 2010) exceeds the greater of $5 (increased by medical inflation) or the maximum percentage increase (as defined above).

Decrease in Employer Contribution Rate -- A decrease in the employer's contribution rate (based upon cost of coverage) for any tier of coverage for any class of similarly situated individuals by more than five percentage points below the contribution rate for the coverage period that includes March 23, 2010 will result in the loss of grandfathered plan status. Essentially, this means that, to maintain grandfathered plan status, an employer must continue to pay the same percentage (subject to the five percentage point allowance) of the total cost of coverage that it was paying on March 23, 2010.

Change in Annual Limits -- The imposition of a new annual limit or a reduction of an existing annual limit will result in the loss of grandfathered plan status.

Notice Requirements

In order to maintain its grandfathered plan status, a group health plan must disclose to participants and beneficiaries that it is being treated as a grandfathered plan. An appropriate notice must be included in any plan materials provided to participants and beneficiaries describing the benefits provided under the plan (e.g., summary plan descriptions, benefit booklets, and open enrollment materials). The regulations provide model language which, if included in the appropriate documents, will be deemed to satisfy the notice requirement.

Recommended Actions

Employers should keep the grandfathered plan rules in mind when considering any changes to their group health plans. While PPACA and the regulations allow certain changes to be made without loss of grandfathered plan status, many changes (particularly changes to a plan's cost sharing provisions) may result in the loss of grandfathered plan status and the application of all of PPACA's requirements. Employers will need to weigh the benefits of maintaining grandfathered plan status against the need or desirability of plan changes that may jeopardize such status. For many employers, the loss of grandfathered plan status may be inevitable. In fact, the Federal government estimates that, by 2013, only 55 percent of all large employer plans and 34 percent of all small employer plans will remain grandfathered.

 

On June 17, 2010, the U.S. Supreme Court issued a decision in a closely watched case involving discipline of an employee for improper text messaging, City of Ontario v. Quon. Although the Court’s ruling is narrow in scope, finding that the public employer’s search of the text messages was a reasonable search within the meaning of the Fourth Amendment, the Court clearly implied that an employee’s reasonable expectation of privacy will be shaped by a clearly communicated employer policy governing the use of each particular type of employer-provided technology.

The case involved the Ontario Police Department’s review of text messages sent and received by one of its officers on a department-owned electronic pager. The Department had a “Computer Usage, Internet and E-mail Policy” that gave the department the right to monitor employee Internet and e-mail use and all network activity. Although the policy did not explicitly cover text messaging, the department had officially stated that text messages on department owned pagers would be treated the same as e-mails under that policy.
 

Every officer in the department who was assigned an electronic pager was allotted 25,000 characters of use. When there was an overage, a lieutenant audited the text messages to ensure the pager was being used only for business-related purposes. In practice, however, whenever the plaintiff in the case, Sgt. Jeffery Quon, exceeded the allotment, the lieutenant told him he would not audit the messages if he paid the department for the overage costs. After Quon exceeded his allotment several times, the police chief ordered an audit of his text messages to determine whether the allotment was still sufficient for work-related messages, or whether the pager was being used for Quon’s personal use. During the audit, sexually explicit text messages were discovered and Quon was disciplined.

Quon sued claiming, among other things, that the audit of his text messages was an unlawful search in violation of his Fourth Amendment rights. The Ninth Circuit Court of Appeals agreed, holding that Quon had a reasonable expectation of privacy in the content of the text messages because of the lieutenant’s assurances that the messages would not be read if the overage was paid. The City appealed to the United States Supreme Court.

The high court reversed, but rather than issue a broad pronouncement concerning employee privacy rights in electronic communications, decided the case on narrower grounds. As the Court explained: “A broad holding concerning employees’ privacy expectations vis-À-vis employer-provided technological equipment might have implications for future cases that cannot be predicted.”

For that reason, the Court assumed that Quon had a reasonable expectation of privacy in his text messages. The Court then went on to hold that the audit of Quon’s texts was a reasonable search both at its inception and in its scope, and therefore did not violate the Fourth Amendment. The department had a legitimate interest in auditing the text messages to “ensur[e] that employees were not being forced to pay out of their own pockets for work-related expenses, or on the other hand that the City was not paying for extensive personal communications.” In addition, “reviewing the transcripts [of Quon’s text messages] was reasonable because it was an efficient and expedient way to determine whether Quon’s overages were the result of work-related messaging or personal use.”

In what can and should be read as an important notice to employers, the Court emphasized the importance of a technology use policy noting - “[e]mployer policies concerning communications will of course shape the reasonable expectations of employees, especially to the extent that such policies are clearly communicated.” The Court also noted Quon’s assertion that a supervisory employee created an expectation of privacy by assuring him that his text messages would not be audited if he paid overage charges. To avoid such claims, employers should train employees on their technology use policy and draft such policies to ban verbal modification.

The case also highlights a potential problem with the scope of many employer policies. The Court noted a distinction between employer-provided e-mail, and text messages typically transmitted through the cell phone provider’s server. An employer cannot assume that a policy which covers communications passing through its server also covers those that do not. In Quon, the department’s policy focused on e-mail, without mentioning text messages, but when pagers were issued, the department informed employees that its policy applied to text messages as well. That may not be enough in all cases. Given the increased use of smart phones and personal e-mail accounts accessed through employer-provided equipment, employers are well-advised to draft technology use policies broadly. However, such policies must be drafted with care given the Supreme Court’s observation that the audit of messages on Quon’s employer-provided pager “was not nearly as intrusive as a search of his personal e-mail account or pager … would have been.”

The take away from the Quon decision is clear – employers should adopt a carefully crafted technology use policy, distribute it to employees and educate employees on its meaning and scope. Doing so will limit employee privacy expectations and better prepare the employer to successfully defend technology-related privacy claims.
 

Social networking sites (e.g., Facebook, MySpace, LinkedIn, Twitter, etc.) are fast becoming a popular tool for employers seeking information about job applicants. It has been reported that the number of employers currently using social media during the recruitment and hiring process has more than doubled in the past two years. According to the same source, 45 percent of employers currently use social networking sites to screen potential job candidates and 35 percent of those employers have rejected an applicant because of information they discovered, such as inappropriate pictures, information regarding alcohol or drug use, and postings in which the applicant “bad-mouthed” a former employer, bragged about prior acts of misconduct or made discriminatory remarks.

The incentives for an employer to use a social networking site are clear: It is fast, free and easy. There can be little doubt that social networking sites contain a potential treasure trove of information about an applicant’s character. Employers want the best fit for the organization and the particular position, and online information may help in making that determination. However, employers should be aware that online profiles often contain inaccurate information and information that may be easily taken out of context or misunderstood. An individual may have little control over the information on his or her “wall” or message board.
 

Just as important, employers should be mindful that they may learn things about applicants that cannot legally be used to make hiring decisions, even though the information is publicly available. For example, employers all know that it is illegal to make a hiring decision based on an individual’s race, religion, disability, sexual orientation, or other protected characteristic. In fact, in New York, an employer cannot ask an applicant for those types of information. But it is nearly impossible to visit a job applicant’s MySpace or Facebook page without also accessing those types of information. For example, in addition to the general information contained in an individual’s Facebook profile, which may list gender, marital status, religion, and age, an individual’s profile picture will reveal his/her ethnicity and, if not already disclosed in the profile, the individual’s sex. Most of this information will be revealed even if the individual takes advantage of the sites’ privacy features that limit who can become a “friend” or a member of the individual’s network.

In addition, most Facebook users post pictures of their family and friends on their pages, which may reveal a lot about their personal lives. This too can present an employer with information it may not want to have. For example, an employer might find pictures of a job applicant’s baby shower on her Facebook page. Of course, an employer cannot legally refuse to hire the applicant because she is pregnant, but once it has the information it has increased the risk of having to defend such a claim.

In addition to containing information about an applicant’s membership in classifications protected under the equal employment opportunity laws, an individual’s union activity or affiliation may also be readily discoverable. In addition to general “union organizing” pages, many unions have developed Facebook pages. In using social media screening, an employer might discover that a particular job applicant is a “fan” of a union that has been attempting to organize the company at which the applicant has applied. It would be unlawful for an employer to discriminate against an applicant based on such union activity or affiliation.

And employers cannot assume that their online searches will remain secret. Today, electronic discovery is sought in most discrimination lawsuits and may include records of online searches of social networking sites

So what can employers do to minimize the risk that this valuable tool will lead to liability? At a minimum, employers who use online searches should develop a fair and uniform policy and procedure for online searches. Employers should determine if social networking checks will be conducted, for what job categories or positions, the scope of such searches, and the types of information to be obtained and documented. The policy should also address the time during the hiring process when such screening will occur, preferably later in the hiring process to limit the number of applicants affected. Most importantly, the individual conducting the screening should not be a decisionmaker, should report only relevant information, and should not record or report any information which an employer could not lawfully solicit on an employment application. If using a third-party to conduct such screening, compliance with federal and state fair credit reporting obligations is required.

As with all steps in the hiring process, the information obtained and relied upon should be documented and retained with other hiring records. By using a policy to define the criteria or information to be sought in the screening, employers can more easily manage the documentation task by retaining only information which meets the designated search criteria. Finally, once it has been determined what job categories or positions will be subject to screening, employers should be consistent in conducting searches only when filling those positions.
 

Less than two months after signing legislation which provided an early retirement incentive to members of the New York State United Teachers (“NYSUT”) (reported on here), Governor Paterson has signed another early retirement incentive into law. Unlike the prior early retirement incentive which was limited to members of NYSUT only, this legislation is open to public employees across the State regardless of union affiliation. In addition, public employers have the option of deciding whether to offer this early retirement incentive to their employees. Finally, unlike the prior legislation, which spread the cost of funding the legislation across all public employers, only employers who choose to offer this early retirement incentive to their employees are obligated to fund the cost related to their employees over a five year period, with the first payment due on February 1, 2012. According to the Governor, this Legislation will save the State alone approximately $320 million by the close of the 2011-12 fiscal year.

The Legislation consists of two parts, A and B, each of which offer different benefits. An employee’s eligibility depends upon whether the employer opts into one or both of the incentives. Upon choosing Part A or B, or both, the employer must either enact a local law, or adopt a resolution, which must specify the period during which the offer shall remain open. In the event that an eligible employee chooses to take advantage of the early retirement option, the employee must provide the employer written notice no later than 21 days before the end of the open period. Employees who wish to retire and meet eligibility for Part A, Part B, or both, or who are also eligible under the NYSUT 55-25 Legislation, may only retire under one retirement incentive.

Both Part A and Part B specifically exclude from the definition of “eligible employee” several job classifications, including certain elected officials, appointed officials and chief administrative officers. Employers should review the Legislation for a complete listing of those titles excluded from eligibility.

Part A of the Legislation allows employers to determine to which job titles will be eligible for the retirement incentive based on an employer’s layoff decisions. Specifically, under Part A, an “eligible title” is defined as any title which, but for this Legislation, would be identified for layoff, or, alternatively, any job title into which employees in job positions which have been identified for layoff can be transferred or reassigned under Civil Service Law, rule or regulation.

Under Part A, an eligible employee may receive one additional month of retirement service credit for each year of credited service, up to a maximum of three years of additional service credit. Employers who opt-in to Part A must do so by August 31, 2010, and must give employees between 30 and 90 days to consider the offer. However, school districts must opt-in no later than July 30, 2010 (by Board resolution), and the open periods cannot extend beyond August 31, 2010. If there are more employees interested in the incentive than positions targeted in that title, the Legislation requires that eligibility be determined by seniority.

In order to meet the eligibility requirements for Part A, an active employee (as defined in the legislation) must be at least 50 years of age with 10 or more years of service. All employees retiring prior to age 55 are still subject to a benefit reduction. In addition, members subject to Tiers II, III, & IV who retire prior to age 62 with less than 30 years of service will also be subject to a benefit reduction. If an employee re-enters public service after enjoying the benefits provided under Part A, the employee will have to forfeit or repay whatever benefit was received under Part A, plus interest. Finally, the benefits in Part A may be combined with any local incentive offered by an employer only if the employer elects to allow its employees to accept both the local and State provided incentive.

Part B of the Legislation closely mirrors the 55-25 Legislation that was passed in April for members of NYSUT. Pursuant to Part B, eligible employees must be least 55 years of age and have a minimum of 25 years of credited service. Under Part B, eligible employees can retire early without penalty (currently, employees must be at least 62 years of age and have completed a minimum of 30 years of service to retire without penalty). Unlike Part A of the Legislation, Part B is not targeted and is open to all eligible Tier II, III, and IV members unless it is determined by the employer that an otherwise eligible employee holds a position that is critical to the maintenance of public health and safety. Similarly, if allowing an employee to retire early would result in a significant loss of revenue (or increase in overtime or contractual obligations) to the employer, that employee’s request for early retirement may also be denied. Employers must submit a list of excluded employees by July 1, 2010, otherwise, employees otherwise eligible for the benefit will be allowed to participate regardless of the employer’s determination that the position is critical to the maintenance of public health and safety.

Finally, like Part A, employers who choose Part B must give employees between 30 and 90 days to consider whether they would like to participate. Employers must opt-in to Part B no later than September 1, 2010, with the exception of school districts, which must opt-in by July 1, 2010.

Additional information concerning this new Legislation, including sample Board Resolutions and the forms that must be filed with the State Retirement System by employers and employees, may be found on the New York State Local Retirement System’s website.

Emily Harper contributed to this post.