Best Practices
for Best Employers
™
How to Become a Best Workplace Starting Today!
EAMWORK • EMPOWERMENT • INNOVATION • SUCCESS • SOLUTION • OPPORTUN
LEADERSHIP • TEAM • VALUES • VISION • MOTIVATION • INSPIRATION • TEAMWOR
MPOWERMENT • INNOVATION • SUCCESS • SOLUTION • OPPORTUNITY • LEADERS
EAM • VALUES • VISION • MOTIVATION • INSPIRATION • TEAMWORK • EMPOWERM
INNOVATION • SUCCESS • SOLUTION • OPPORTUNITY • LEADERSHIP • TEAM • VALU
VISION • MOTIVATION • INSPIRATION • TEAMWORK • EMPOWERMENT • INNOVATI
SUCCESS • SOLUTION • OPPORTUNITY • LEADERSHIP • TEAM • VALUES • VISION •
OTIVATION • INSPIRATION • TEAMWORK • EMPOWERMENT • INNOVATION • SUCC
SOLUTION • OPPORTUNITY • LEADERSHIP • TEAM • VALUES • VISION • MOTIVATION
NSPIRATION • TEAMWORK • EMPOWERMENT • INNOVATION • SUCCESS • SOLUTIO
PPORTUNITY • LEADERSHIP • TEAM • VALUES • VISION • MOTIVATION • INSPIRATIO
EAMWORK • EMPOWERMENT • INNOVATION • SUCCESS • SOLUTION • OPPORTUN
LEADERSHIP • TEAM • VALUES • VISION • MOTIVATION • INSPIRATION • TEAMWOR
MPOWERMENT • INNOVATION • SUCCESS • SOLUTION • OPPORTUNITY • LEADERS
EAM • VALUES • VISION • MOTIVATION • INSPIRATION •
Lawyers for Employers®
Dear Colleagues:
Being a “Best Workplace” can be hard work. Lane Powell, Lake Washington Human Resource Association
and Puget Sound Business Journal have joined forces to help your business become a “Best Workplace.”
We invite you to join us for our 31st Annual Labor and Employment “Best Practices For Best Employers™”
Seminar at the beautiful Four Seasons Hotel in Seattle. Small and large business owners, senior corporate
executives, corporate counsel and human resource professionals will receive cutting-edge guidance on
quick-changing employment laws. This seminar sold out last year, so early registration is encouraged.
Being caught unaware of big changes in employment laws can hurt your business.
We are here to help.
D. Michael Reilly
Director of Labor and Employment and Employee
Benefits Practice Group, Lane Powell PC
You will receive thoughtful insights from experienced speakers on new developments in federal,
state and local laws that may have a direct impact on your company. Some new developments include:
• How to require your employees to arbitrate disputes;
• New wage and hour overtime rules affecting your employees;
• New legislation that affects your social media policy; and
• The City of Seattle’s new criminal background check requirements.
You will also hear discussions on the changing landscape of employee benefits in light of:
• The Health Insurance Portability and Accountability Act, the Defense of Marriage Act,
and the delays in the Patient Protection and Affordable Care Act (commonly referred to
as “Obamacare”);
• What the National Labor Relations Board is doing, and how it affects all employers and
employer policies;
• How to protect your company’s most important information, and what you can do if that
information is placed in jeopardy;
• Why you should be updating your employee handbook; and
• Why you should update job descriptions of your employees, given the new labor and
employment laws.
For more than 135 years, Lane Powell has helped emerging and established businesses navigate the legal
landscape in the Pacific Northwest. The Lake Washington Human Resource Association is the “Super-Mega
Chapter” of the Society for Human Resource Management, and it has a long history of providing informed
insights to current employment issues facing businesses.
Brent Schlosstein
President, Lake Washington Human Resource
Association (“LWHRA”)
For more information and to register for our upcoming 31st Annual Labor and Employment “Best Practices
For Best Employers™” Seminar on September 19, please visit our website at www.lanepowell.com.
We look forward to seeing you on September 19.
Lawyers For Employers ®
Best Practices For Best Employers Seminar
TM
September 19, 2013
The use of this seal is not an endorsement by
the HR Certification Institute of the quality of
the program. It means that this program has
met the HR Certification Institute’s criteria to
be pre-approved for recertification credit.
This annual seminar, geared toward Employers, Managers, Human Resource Professionals and
Corporate Counsel, is part of our ongoing Employment Law School For Managers® Series.
This seminar has been pre-approved for 5.25 general CLE credit hours in Washington and
5.25 HR Certification Institute credit hours.
Cost: $100 prepay online; $125 at the door. Register online at www.lanepowell.com.
7:15 a.m. to 2:15 p.m.
(7:15 a.m. Breakfast and Registration)
Please see full agenda on last page.
Location:
Four Seasons Seattle
99 Union Street, Suite 1101
Seattle, Wash.
Questions? Contact:
Kelsey Lamon
206.223.6005
lamonk@lanepowell.com
Lawyers for Employers®
Take Two Aspirin and
Call Your Attorney:
Potential Headaches from Conflicting
Disability and Wellness Laws
By Katheryn Bradley
Katheryn Bradley is a shareholder at Lane
Powell, where she is a member of the Firm’s
Labor and Employment Practice Group.
She represents private and public employers
in workplace disputes, and has successfully
litigated and resolved claims for wrongful
discharge, discrimination, and violations
of leave and wage and hour laws.
She can be reached at 206.223.7399
or bradleyk@lanepowell.com.
W
hat’s not to like about employer-sponsored
workplace wellness programs? Such programs
may help to reduce the cost of employer-provided
health coverage and increase worker productivity. In
addition, such programs can help promote a healthy
lifestyle for workers by encouraging them to monitor
their health, watch what they eat and exercise regularly.
Many employers have found wellness plans to be a
positive influence and they are increasing in popularity.
A recent study by the Society for Human Resource
Management found that more than half of its members
already offer wellness programs and many of the rest of
its members are planning to adopt wellness plans.
If your organization has jumped on this bandwagon,
you may think that you have jumped through all
of the proper hoops. After all, your wellness plan
has been prepared to comply with the Affordable
Care Act (“ACA”) and the federal Health Insurance
Portability and Accountability Act (“HIPAA”). Your
plan provides rewards to encourage smokers to quit,
as permitted by ACA regulations. Your program is
offered to current employees on a voluntary basis.
Any medical information obtained from employees is
kept in confidential files maintained by your wellness
consultant and never shared with your organization’s
managers. Your program therefore seems to comply
with the confidentiality requirements imposed by the
Americans with Disabilities Act (“ADA”), as well as
voluntary wellness program regulations adopted under
the Genetic Information and Non-Discrimination
Act (“GINA”).
So, why then might your trusted employment lawyer
suggest you slow down? In January 2013, the Equal
Employment Opportunity Commission (“EEOC”),
the agency that enforces federal anti-discrimination
laws including the ADA and GINA, issued an informal
discussion letter that raises more questions than it
answers. The letter states that a health plan provision
that offers greater benefits to employees with certain
health conditions and waives the annual deductible if
certain conditions are met would likely be considered
a wellness program. The letter was written to an
employer who described a voluntary plan that provided
a reward for participants, such as waiver of the annual
deductible. The EEOC’s response was troubling:
“The EEOC has not taken a position on whether and
to what extent a reward amounts to a requirement to
participate, or whether withholding of the reward from
non-participants constitutes a penalty, thus rendering
the program involuntary.” To make matters worse, the
EEOC’s letter stated: “If a wellness program is voluntary
and an employer requires participants to meet certain
health outcomes or to engage in certain activities in
order to remain in the program or to earn rewards, it
must provide reasonable accommodation, absent undue
hardship, to those individuals who are unable to meet
the outcomes or engage in specific activities due
to a disability.”
This led many employers to seek guidance on
whether their wellness plans might meet the EEOC’s
scrutiny. On May 8, 2013, the EEOC responded by
holding a public meeting focused solely on wellness
programs. At the meeting, EEOC commissioners
acknowledged that EEOC has thus far neglected to
provide definitive guidance on whether wellness
programs that otherwise comply with the mandates
of the ACA and HIPAA will also comply with other
federal laws enforced by the EEOC, including
the ADA, GINA, the Age Discrimination in
Employment Act and Title VII’s other status-based
anti-discrimination provisions.
For example, charging increased fees or denying
rewards for failing to meet certain health standards are
practices that could be subject to a disparate impact
challenge. Representatives of public advocacy groups
testified that wellness programs will likely have a
disparate impact upon women, racial minorities, the
disabled, and older workers, all of whom tend to have
more health problems. Advocates further testified that
wellness programs that do not consider the personal
circumstances of workers who may have multiple
jobs or family responsibilities could lead to caregiver
discrimination. Yet, it is not clear at this point how an
employer might reasonably accommodate an employee’s
health condition under a wellness program, particularly
when an employer funnels health information to a
wellness plan consultant to avoid learning about its
employees’ health conditions. For these reasons, your
organization may want to put your wellness plan on
“pause” and wait for further guidance from the EEOC.
Interesting Facts...
According to the Workplace Wellness Programs Study, 60 percent of employers offering
a wellness program stated that their programs reduced health care costs, and around
80 percent reported that they decreased absenteeism and increased productivity.
The total number of people in the U.S. now receiving federal disability benefits hit a
record of 10,978,040 in May 2013, according to the Social Security Administration.
For more information and to register for our upcoming Annual Labor and Employment Seminar on September 19, please visit our website at www.lanepowell.com.
Lawyers for Employers®
The Revolving Door:
Protecting Your Company’s
Valuable Information Amidst
Increased Employee Turnover,
Mobility and Defections
By Jacob M. Downs
Jacob Downs is an attorney at Lane Powell, where he is a member of the Firm’s
Labor and Employment Practice Group. He focuses his practice on employment and
business litigation, and represents many national and northwest companies in both
state and federal court, as well as in private arbitration. Jacob can be reached at
206.223.7397 or downsj@lanepowell.com.
E
mployee turnover and mobility are at record highs. The U.S. Bureau of Labor
Statistics reports that the average worker will stay at his or her job for 4.4 years,
with workers in the millennial generation (born from 1980 to 2000) remaining for
only about half of that time. As employees come and go with increased frequency,
employers are placed in the increasingly difficult position of having to safeguard
their confidential, proprietary and sensitive business information from unintended
disclosure. Employers must also ensure that they do not improperly obtain such
information from competitors when a new employee comes on board. The difficulties
associated with this are compounded by the use of technology in and out of the
workplace. Smartphones, laptops, personal email accounts and cloud computing
make data security an increasingly difficult task to manage.
Setting aside the valuable intellectual property some employers seek to protect by
way of patents, trademarks and copyrights, there remains a vast amount of other
business information that, while seemingly ordinary and mundane, is essential to
an employer’s success. This includes customer and client lists, marketing strategies,
referral networks, pricing structures, business processes and so on. Safeguarding
this protectable information presents broad and varied legal issues. Many
employers do not proactively take steps to protect their information until it is too
late. While some employers have agreements and policies aimed at protecting their
information, those agreements and policies are often haphazardly cobbled together
and contain irrelevant and unnecessary language that ultimately renders them
unenforceable. Employers should be aware of the following legal issues concerning
protectable information that may be implicated when an employee leaves one
employer for another:
•Employee Duty of Loyalty. Employees have a legal obligation to avoid
acting in a manner contrary to the employer’s interest, including maintaining
undivided loyalty to the employer; maintaining the employer’s confidential,
proprietary and sensitive information; and not competing with the employer
while they are employees.
•Trade Secrets. The Washington Uniform Trade Secrets Act prohibits anyone
from disclosing or acquiring by improper means an employer’s trade secrets.
A trade secret can be a formula, pattern, program, device, method, technique,
process or compilation of information. Not only can employers protect their
trade secret information under this law, but they can also be subject
to liability for misappropriation if they wrongfully obtain trade secret
information about a competitor through a new employee or other means.
•Non-competition/Non-solicitation Agreements. These types of agreements
or restrictive covenants may limit an employee’s ability to compete with
a former employer or solicit the former employer’s customers. These
agreements must be reasonable in scope and duration, as well as narrowly
tailored to restrict only that which is necessary.
• Breach of Contract. Separate and apart from non-competition and
non-solicitation agreements, employers often have employees execute
confidentiality and non-disclosure agreements. These agreements can be
enforced against former employees who divulge company secrets and can
also provide basis for a claim of tortious interference with contractual
relations against a former employee’s new employer.
•Tortious Interference. This is a common law claim that is not necessarily
dependent on a statute or contract. Therefore, it can be a useful claim for
former employers to bring against defecting employees and their new
employers when one or both are wrongfully interfering with the former
employer’s business. On the other hand, employers that hire a new employee
from a competitor may find themselves on the receiving end of this claim if
care is not taken with respect to the information the new employee possesses
about his or her former employer.
•Conversion. Simply put, conversion is a civil action for the criminal act of theft.
This claim requires the showing of willful interference and is often a companion
claim to misappropriation of trade secrets and tortious interference.
•The Computer Fraud and Abuse Act (“CFAA”) and the Economic
Espionage Act (“EEA”). The CFAA and EEA are both relatively recent
federal statutes, and the case law surrounding their application to
employee-employer relationships is still developing across the country.
Both statutes allow for possible criminal prosecution for misappropriation
of an employer’s confidential commercial information.
The remedies available to an aggrieved employer for each of these legal theories
vary depending on the particular facts of a case and the language contained in
any agreements, and they may include temporary restraining orders, injunctions,
lost profits, actual damages, consequential damages, liquidated damages and
attorneys’ fees. While these remedies may compensate for a former employee’s
transgressions, the best solution may still be a dose of well-tailored and thoughtful
preventative medicine administered at the outset of the employment relationship.
Interesting Fact...
Ninety-five percent of employees believe the employer should not have access
to the employee’s LinkedIn account.
For more information and to register for our upcoming Annual Labor and Employment Seminar on September 19, please visit our website at www.lanepowell.com.
Lawyers for Employers®
“Best Practices”
Audit Checklist for
Employers – Are You
in Compliance?
D. Michael Reilly, a shareholder at Lane
Powell and director of the Firm’s Labor
and Employment and Employee Benefits
Practice Group, represents small and large
employers in all facets of employmentrelated issues and litigation. He can
be reached at 206.223.7051 or
reillym@lanepowell.com.
50 Questions to Ask Yourself
By D. Michael Reilly
Y
ou’ve been busy. You are running a business and you do not have time to review your systems for Human
Resources compliance. Simply answer “Yes” or “No” to the questions below for a quick way to give your
company a check-up. Your answers will help identify what needs to be done and what issues should be addressed.
I. Hiring Practices
Interesting
Facts...
Fifty-seven percent of
employers conduct drug
tests on all job candidates.
Sixty-six percent of
employers reported taking
proactive steps this year
to encourage employees
to report potential
misconduct or fraud
internally, before they
report to regulators
as a whistleblower.
Yes/No
1
Have you reviewed your recruiting practices, employment application and
offer letters so that they do not make unwarranted promises of job security?
2
Have you made sure that your application and interview processes do not
contain any unlawful or discriminatory questions, and that your hiring staff
has been trained not to ask such questions during employment interviews?
If you perform Google-type searches of employee candidates, do you screen
the decision-maker from the search results so that only relevant, legal
information is considered?
3
Have you obtained confidentiality agreements and/or covenants not to
compete from new employees when appropriate? Was “consideration” given
to current employees for signing a non-competition agreement?
4
Have you developed detailed job descriptions for your workforce so that the
essential functions of the job are set out?
5
Have you reviewed your executive employment agreements and the stated
grounds for termination, compensation and benefits?
6
Do you have proper I-9 forms on file for every current employee hired since
1986 (and former employees terminated within the last three years)?
II. Employment Policies and Workplace Rules
7
Do you have an employee handbook? Have you updated it in the last year?
(If not, it is out-of-date due to all the recent legal developments.) Do you
keep prior versions of your handbook?
8
Does your handbook contain a properly drafted policy on Equal Employment
Opportunity and harassment, including alternative complaint mechanisms?
Continued on Next Page
For more information and to register for our upcoming Annual Labor and Employment Seminar on September 19, please visit our website at www.lanepowell.com.
Lawyers for Employers®
Yes/No
your handbook contain appropriate disclaimers that preserve managerial
9 Does
discretion and guard against it being interpreted as a binding contract?
Interesting
Facts...
The majority of employers
implemented policies or
rules regarding employee
social media use during
work hours (64 percent),
on employer-issued
devices (58 percent), and
on discussing the company
through social media
channels (52 percent).
Fifty-one percent of
employers indicated that
their companies have
made improvements
to building security or
security procedures
during the past year.
Employers reported that
internal investigations
reached a five-year
high, with retail and
manufacturing sectors
getting the most attention.
you have progressive discipline, do your disciplinary policies permit
10 Ifmanagement
to exercise discretion in the choice of discipline, as opposed to
setting forth rigid disciplinary steps?
your employees acknowledged receipt of the handbook and/or notice of
11 Have
the workplace rules? Do you keep these receipts?
applicable, have you published a written policy in compliance with the
12 IfFamily
and Medical Leave Act (“FMLA”) and new leave laws? (Recently
enacted laws add many more protections, and your policies should be
updated to conform to these new requirements.)
you engage in the “interactive process” with employees with disabilities and
13 Do
do you document that process? Have you provided reasonable accommodation
to qualified people with disabilities in accordance with applicable law?
you reviewed your attendance and leave policies in general, to monitor
14 Have
compliance with the Americans with Disabilities Act and the FMLA?
you established an Internet/social media/email policy and/or a policy
15 Have
on electronic monitoring?
there established procedures for supervisors to follow in administration
16 Are
of your workplace rules, and are supervisors being trained and monitored for
their compliance with such procedures?
17 Have you established an appropriate written safety program?
you in compliance with the Occupational Safety and Health
18 Are
Administration’s (“OSHA”) Hazard Communication Standard?
all recordable injuries and illnesses recorded on OSHA Form
19 Are
No. 300 where required?
you established a lawful and properly enforced drug and alcohol
20 Have
control policy?
III. Compliance With Wage and Hour Laws
you document why there are pay disparities (e.g., unique experience,
21 Do
hired from outside in competitive market, etc.)? Are you paying proper and
nondiscriminatory wages and overtime for each job in compliance with the
Fair Labor Standards Act (“FLSA”) and the Equal Pay Act?
your job descriptions reflect the exercise of sufficient judgment and
22 Do
discretion to qualify any claimed exempt employees for exempt status?
(Misclassification of employees is a big government focus right now.)
you familiar and in compliance with the Department of Labor’s “pay
23 Are
docking” rules related to salaried, exempt employees?
For more information and to register for our upcoming Annual Labor and Employment Seminar on September 19, please visit our website at www.lanepowell.com.
Lawyers for Employers®
all consultants properly classified as independent
24 Are
contractors, or should they be paid as employees?
25
Are any volunteers engaging in activities that should
be compensated under the FLSA?
all hours of work, including travel time, training
26 Are
sessions, etc., being properly compensated?
the regular rate of pay for non-exempt employees
27 Does
include all required payments?
all deductions from employee paychecks properly
28 Are
authorized and documented in compliance with state
wage payment laws?
IV. Documentation
29
Do you have a record of employee training on policies?
(Consider sign-in sheets, paycheck attachments, etc.)
Do you keep a file of your training materials?
your supervisors maintained incident logs, and do
30 Have
they regularly document employee offenses? Have verbal
warnings, counseling and/or written warnings been
recorded in employee personnel files?
31 Have employees been regularly evaluated?
your standard employee evaluation forms been
32 Have
reviewed by Human Resources and an attorney with regard
to their objectivity and potentially discriminatory effects?
the supervisory evaluators received training in
33 Have
the use of the performance review forms?
34
Yes/No
V. Investigating Complaints
Yes/No
you prohibit on-the-spot termination in favor
39 Do
of immediate suspension pending investigation by
a higher level of authority?
you always have another management witness
40 Do
present when talking to an employee concerning
serious discipline?
required (under the National Labor Relations
41 When
Act or by contract), do you comply with an employee’s
right to union or co-worker representation at appropriate
points in an investigation?
you avoid giving lie detector tests where
42 Do
prohibited by law?
you investigated and remedied complaints by
43 Have
employees, if any, of discrimination, retaliation and/or
failure to accommodate? Do you document your
investigation results and remedies?
you have a system in place for alternative dispute
44 Do
resolution of employee claims?
VI. Employment Termination Considerations
you have another management witness present
45 Do
when any discharge decision is communicated?
you truthfully state the basis for all termination
46 Do
decisions without misstating (either overstating or
understating) the reasons for terminating the employee?
you maintain compliance with any applicable wage
47 Do
payment laws, severance policies, administration of
benefits and insurance law requirements?
Have all evaluations been reviewed at higher levels and
monitored in a centralized manner for discriminatory
impact or erratic evaluation patterns?
you determined whether — and to what extent —
35 Have
the law in your state requires you to permit employees to
inspect their personnel files?
you otherwise maintain strict confidentiality of
36 Do
personnel files as to people other than the employee,
except on a clear “need-to-know” basis?
you established a record retention policy (e.g.,
37 Have
at least one year for all employment applications,
three years for most payroll records, etc.)?
you posted the proper notices as required
38 Have
by state and federal law?
you consider providing post-termination benefits
48 Do
in return for a release?
you treat discharged employees fairly with regard
49 Do
to all post-termination issues?
you always give so-called “neutral” references regarding
50 Do
former employees in order to avoid charges
of defamation and/or discrimination, and have you
counseled supervisors to comply with the policy?
If you answered “No” to any of these questions, your Human Resources
system may need to be updated to match current labor and employment laws.
Consider attending the upcoming Lane Powell seminar to update your systems
and to get the latest recommendations and approaches to make your company
a “Best Workplace.”
For more information and to register for our upcoming Annual Labor and Employment Seminar on September 19, please visit our website at www.lanepowell.com.
Lawyers for Employers®
HIPAA Replacement,
Doma Shaved, and the
Delay of Pay or Play
By Craig Day
Craig Day is Counsel to the Firm at Lane Powell, where he is a member of the Employee Benefits Practice Group.
He focuses his practice on ERISA-related matters, employee benefits issues and executive compensation. Craig can
be reached at 206.654.7819 or dayc@lanepowell.com.
E
mployee benefit plan sponsors have had plenty to deal with in the first seven months
of 2013. In January, the final Health Insurance Portability and Accountability Act
(“HIPAA”) regulations were issued; in June, the Supreme Court struck down key provisions
of the Defense of Marriage Act (“DOMA”); and in July, the administration announced a oneyear delay in key provisions of the Affordable Care Act (“ACA”). Listed below is a summary of
these important developments and their impact on employee benefit plan sponsors.
Employers should take the following actions in response to the court’s decision:
ObamaCare Delayed
On July 2, the Obama administration announced that it is delaying enforcement of certain parts
of the ACA that were scheduled to take effect January 1, 2014. The ACA’s “employer mandate”
requires companies with 50 or more workers to provide health benefits to full-time employees
or pay a “shared responsibility” penalty of $2,000 per employee. The law requires employers
to report their health care benefits provided to employees in order to help regulators enforce
the employer mandate. In response to employer concerns about implementing the complex
reporting requirements on time, the administration announced a one-year delay, giving
companies more time to adjust and giving the IRS more time to simplify the requirements.
With its ability to enforce the penalty provisions severely hampered by the delayed reporting
requirements, the U.S. Treasury Department also delayed enforcement of the penalties until
2015. Other provisions of the ACA are not impacted by the announcement, including the
“individual mandate” requiring individuals to obtain health coverage and the establishment
of state exchanges where individuals can purchase such coverage.
HIPAA Final Rule
On January 17, the Department of Health and Human Services issued a final rule (the “final
rule”) under HIPAA. The final rule was effective on March 26, but compliance is not required
until September 23. The final rule revises the HIPAA privacy, security and enforcement
standards; incorporates provisions of the Genetic Information Nondiscrimination Act into the
privacy rule; and makes changes to the notification requirements for a breach of unsecured
protected health information (“PHI”). Some of the important features of the new rules include:
Supreme Court Decision
On June 26, the Supreme Court held in United States v. Windsor that Section 3 of DOMA
violates the Fifth Amendment’s Equal Protection Clause as applied to same-sex spouses who
are considered legally married under the laws of their state. That section of DOMA provided
that under federal law, the term “marriage” means the union of a man and a woman (and
“spouse” can only include a person of the opposite sex). The court’s decision has immediate
implications for sponsors of retirement, health and welfare, and fringe benefits plans,
including the following:
• Retirement Plans. Provisions found in most retirement plans that apply to “spouses”
will now apply to “same-sex spouses,” including survivor and annuity rules, beneficiary
designations and qualified domestic relations orders.
• Health and Welfare Plans. Health and welfare plan sponsors no longer need
to treat the value of benefits for same-sex spouses as income to the employee.
Also, continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985 (“COBRA”) and special enrollment rights under HIPAA are extended to
same-sex spouses.
• Gather information about employees who are married to same-sex spouses;
• Review and modify plan documents and summary plan descriptions;
• Modify payroll practices — stop imputing income for federal tax purposes to
participants living in states that recognize same-sex marriage; and
• Monitor legal and regulatory developments regarding same-sex marriage.
• Business Associates. Business associates who create, receive, maintain or transmit PHI
are now directly liable for compliance with certain requirements under the HIPAA privacy
and security rules, and the term “business associate” now includes the business associate’s
subcontractors (including all downstream subcontractors) that create, receive, maintain
or transmit PHI.
• Breach Notification Rules for Unsecured PHI. The final rule amends the breach
notification requirements under HIPAA by replacing the “harm threshold” with a more
objective standard. Under the old standard, notification was only required if a breach
posed a significant risk of financial, reputational or other harm to the individual whose
unsecured PHI was improperly disclosed. Under the new rule, notification is required
unless the covered entity or business associate demonstrates that there is a low probability
that the PHI has been compromised based on a risk assessment.
• Revised Notice of Privacy Practices. Covered entities must update their Notice of Privacy
Practices and redistribute the updated notices.
Conclusion
All three of these changes will require employee benefit plan sponsors to work diligently with
their counsel and advisers to comply with the new rules, and we expect that more changes may
be coming during the final months of 2013.
Interesting Fact...
According to a study by Deloitte Center for Health Solutions, 9 percent of companies
representing 3 percent of the workforce anticipate dropping health insurance benefits in
the next 1 to 3 years; 81 percent of companies representing 84 percent of the workforce
plan to continue; and 10 percent of companies representing 13 percent of the workforce
are not sure what they will do.
For more information and to register for our upcoming Annual Labor and Employment Seminar on September 19, please visit our website at www.lanepowell.com.
Lawyers for Employers®
The National Labor
Relations Board is
Back in Business!
By Michael B. Harrington
Michael B. Harrington is Counsel to the Firm at Lane Powell, where he is a member of the Firm’s Labor and Employment
Practice Group. He focuses his practice on labor and employment issues affecting the workplace. Mike can be reached at
206.223.7050 or harringtonm@lanepowell.com.
O
n July 30, the U.S. Senate confirmed a full slate of members to the National Labor
Relations Board (“NLRB”). For the first time in a decade, the board has a full
complement of five members. Keep in mind that the NLRB had been operating with
three members, two of whom were recess appointments of President Obama: Sharon
Block and Richard F. Griffin, Jr. Various U.S. Courts of Appeals were split on whether
or not these intra-session appointments were constitutional; however, this hasn’t
stopped the NLRB from issuing decisions as though it were business as usual.
The new board is comprised of three Democrats and two Republicans. Mark Gaston
Pearce, Democrat, originally appointed to the NLRB in 2010, was re-appointed to the
board and will serve as chairman. The new Democratic members are Kent Hirozawa,
chief counsel to Pearce, and Nancy Schiffer, an attorney at the AFL-CIO. The two new
Republican members are Philip Miscimarra, a partner in the labor and employment
group of Morgan Lewis & Bockius LLP, and Harry Johnson III, a partner with
Arent Fox LLP.
In June, the U.S. Supreme Court, which had already ruled that the NLRB is
powerless to rule with less than a quorum of three members, agreed in National
Labor Relations Board v. Noel Canning to decide the constitutional question
about intra-session appointments.
However, since there is now a full board, it may not matter much. Indeed, any board
ruling in doubt will probably be ratified by the full complement of members. Below
are some of the many areas of interest to employers that I anticipate the NLRB will be
moving quickly to address.
Quickie Elections. Remember the sigh of relief from employers when the NLRB’s
“quickie election” rules — that were supposed to go into effect last year — were
derailed by the D.C. Circuit Court? We can expect a quick return trip for those
rules with this new board. Although the “quickie election” rules do not set specific
timeframes for conducting hearings or elections, it appears likely that the time from
petition to election will decrease, which many believe favor a union when they are
trying to organize a workplace. The unions hope that this leads to situations where the
first time an employer hears about the union organizing their employees is when the
election is being scheduled by the board.
Section 7 and Employer Policies. The NLRB has not been shy about protecting
the Section 7 rights of employees to engage in “concerted activities” for the purpose
of collective bargaining or other mutual aid or protection. Under Section 7 of the
National Labor Relations Act (“NLRA”), even where there is no union involved,
complaints about wages, hours or working conditions by an employee on behalf of
herself or other employees cannot lead to discipline or discharge.
The NLRB’s recent activity also shows that they are intent on limiting management’s
attempts to define boundaries on employee communications via the Internet. The
board views employees as having an expansive ability to question terms and conditions
in the workplace, even if the communication contains a “less than respectful tone.”
In 2012, the NLRB provided an advice memorandum to employers with social media
policies. It warned companies that overly-general policies would be construed
as having a chilling effect on workplace speech. The memo noted that one major
retailer’s policy warning employees not to “release confidential guests, team member,
or company information” was unlawful because it could reasonably be interpreted as
preventing discussions of employment among workers.
The memo also noted that another company’s policy was overbroad for advising
employees to “think carefully about friending co-workers.” Such advice, in the board’s
view, was unlawful because it discouraged communication among employees.
Our own local retail giant, Costco, got a lesson on Section 7 of the NLRA when its
policy was deemed to overstep the boundaries that are perhaps only clearly seen by the
NLRB. Costco’s policy noted that employees could be subject to discipline if they were
to electronically “defame any individual or damage any person’s reputation, or violate the
policies outlined in the Costco Employee Agreement …”
You can get sued for defamation, right? And damaging a person’s reputation sounds
pretty bad too. But according to the NLRB:
[T]he appropriate inquiry is whether the rule would reasonably tend to chill
employees in the exercise of their Section 7 rights. ... Here, [Costco’s] rule does not
explicitly reference Section 7 activity. However, by its terms, the broad prohibition
against making statements that “damage the Company, defame any individual or
damage any person’s reputation” clearly encompasses concerted communications
protesting [Costco’s] treatment of its employees. ... In these circumstances, employees
would reasonably conclude that the rule requires them to refrain from engaging in
certain protected communications (i.e., those that are critical of Costco or its agents).
What does this all mean for employers? Clearly policies will be scrutinized more than
ever by a very active NLRB. Keep in mind that all the examples in this article are from
non-union employers who had their policies brought to the board by disgruntled
employees. If it has been a while (more than two years) since your policies have been
reviewed, or if there’s a possibility that you may be one of the very few employers who
have one or two disgruntled employees, it would be wise to review your policies before
the NLRB asks you about them.
Interesting Fact...
According to a February 1, 2012, opinion of a National Labor Relations Board Administrative
Law Judge, the phrase: “I further agree that the at-will employment relationship cannot be
amended, modified or altered in any way,” is an illegal and overly broad restraint on the right
of employees to engage in a protected concerted activity.
For more information and to register for our upcoming Annual Labor and Employment Seminar on September 19, please visit our website at www.lanepowell.com.
Labor and Employment Legal Update
Lawyers for Employers®
New Washington Law
Protects Employees’
Social Media Accounts
activity may implicate state and federal anti-
applicant or employee. As a safeguard to prevent
discrimination laws or run afoul of the National
frivolous claims against employers, the law also
Labor Relations Act’s (“NLRA”) prohibition
permits prevailing employers to recover their
against taking action based on protected
attorneys’ fees and costs if the court finds that an
On May 21, Governor Jay Inslee signed a new
concerted activities.
employee’s lawsuit was frivolous.
Employer-maintained social networking
accounts remain fully accessible and are not
What Should Employers
Do Now to Prepare?
impacted by this law. Employers are also still
Those employers whose policies currently
free to enforce existing social media policies that
require employees or applicants to disclose
do not conflict with the new law or the NLRA.
personal usernames and passwords should
Washington state law that makes it unlawful for
employers to require an employee or applicant to
disclose social networking website usernames or
passwords, or to force an employee or applicant
to add any person to the employee’s list of social
networking contacts. This law became effective
on July 28.
Washington joins a host of other states that
have taken legislative action to protect employee
social media accounts. Maryland, Illinois,
The Law Provides an Exception for
Certain Workplace Investigations
When employers are conducting workplace
investigations surrounding an employee’s
begin implementing a change to those policies.
Employers should also train anyone involved
in making employment decisions on the new
law’s provisions.
activity on his or her personal social networking
If an employer determines that it may need
account, they are permitted to request content
social media content to investigate legal
from an employee’s account but are still
compliance, work-related misconduct, or
prohibited from requesting an employee’s login
the improper disclosure of the employer’s
information. Under this narrow exception,
proprietary or confidential information, then
the purpose of the investigation must be to:
the law allows employers to request content
For purposes of the new law, “employer” is
“(i) ensure compliance with applicable laws,
from personal social media sites. Employers
defined broadly to mean “any person, firm,
regulatory requirements, or prohibitions against
should consider seeking advice of counsel
corporation, or the state of Washington,
work-related employee misconduct; or (ii) to
when considering whether such a need exists
its political subdivisions, or municipal
investigate an allegation of unauthorized transfer
in a particular situation. Employers should
corporations.” Thus, employers of any
of an employer’s proprietary information,
periodically review their existing social media
size will be covered by the law.
confidential information, or financial data to the
policies and practices to make sure that they are
employee’s personal social networking account.”
in compliance with all current laws.
California, Michigan, Utah and New Mexico
have passed similar laws, and as many as 20
other states have similar bills pending.
Washington’s Social Media
Law Applies to Employers of All Sizes
Employer Activities
That Are Not Prohibited
through the public domain. Thus, employers
The Law Allows Prevailing Employees
and Applicants to Recover Damages
and Attorneys’ Fees; Prevailing
Employers May Recover Attorneys’ Fees
for Defending Frivolous Claims
may continue to access publicly available social
Employees may bring a private cause of action
networking profiles or comments. Employers
against an employer for violating the new law.
should use caution, however, when accessing
Courts may award actual damages, a $500
even publicly available information. Such
penalty and attorneys’ fees to a prevailing
The law specifically states that it does
not prohibit an employer from obtaining
information about an employee or applicant
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