Presented by:
Labor & Employment Group
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 www.nmmlaw.com
17 June 2008

• New Jersey Paid Family Leave Act, Keith McDonald
• Potpourri of Employee Privacy Issues, Karen Thompson
• Electronic Discovery 2008: Coming to a HR Department Near You,
Fernando Pinguelo
• Emergent Tax Issues in Employment Law, Charles Bruder
• Developments in Harassment Law, David Cassidy
• Family and Medical Leave Act, Proposed Regulations Changes,
Pat Collins
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Please help yourself to food and drinks
Please let us know if the room temperature is too hot or cold
Bathrooms are located past the reception desk on the right
Please turn OFF your cell phones
Please complete and return surveys at the end of the seminar
3

Presented by:
Keith D. McDonald
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 kdmcdonald@nmmlaw.com

• A new state law that provides New
Jersey employees with six weeks of paid leave over a 12-month period to care for:
– a newborn or newly-adopted child; or
– an ill child, parent, spouse or domestic partner.
5

• Employees taking leave will receive up to two-thirds of their wages, capped at $524 a week.
• A one-week waiting period is required before paid leave kicks in.
6

• January 1, 2009
– The new law takes effect.
– Payroll deductions begin.
• July 1, 2009
– Payments become available to eligible employees.
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• Employee funded.
• Increase to employee TDB taxes starting
January 1, 2009.
• Increase will range from $.34 - $.64 per week depending on annual income, costing no worker more than $33 per year.
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• Available to all New Jersey employees who pay into the state’s Temporary
Disability Benefits system
– Test - worked at least 20 weeks or earned at least 1000 times the hourly minimum wage during the prior year.
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• Paid family leave through the TDB system will be available regardless of the number of employees.
• Differs from FMLA and NJFMLA, which require 50 or more employees.
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• Existing TDB system only provides paid leave to employees who are unable to work because of their own disability, illness or injury suffered outside of the job.
• This includes disability due to pregnancy and recovery after giving birth.
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• New law expands benefits to employees that need to take leave for an illness or injury to a family member, or to bond with a newborn or adopted child, regardless of whether the individual suffers from a disability or illness resulting from child birth.
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• Paid family leave does not affect the protections provided by the NJFLA and FMLA.
• An employee that qualifies for leave under the
NJFLA and FMLA and paid family leave can receive paid leave for six of the 12 weeks of unpaid leave.
• Employers can require employees to exhaust their paid family leave benefits and NJFLA and
FMLA benefits concurrently.
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• Unlike the NJFLA and FMLA, paid family leave does not offer job protection for employees.
• If an employee qualifies for paid family leave and not leave under the NJFLA and
FMLA, the law does not require that the employer reinstate the employee after taking paid family leave.
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• Other considerations for small employers
– Disability discrimination under NJLAD or ADA
– Retaliation claim under common law retaliation principles
• Risks of litigation
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• Conspicuous posting and copy of the notification.
• Notice must be issued:
– (1) not later than 30 days after the notification form is provided by the Department of Labor;
– (2) at the time of hire;
– (3) whenever an employee provides notice that the employee is taking covered leave; and
– (4) at any time, upon an employee’s first request for a copy of the notice.
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• Employees must provide at least 30 days notice when seeking paid family leave to care for a newborn or newly-adopted child.
• No prior notice is required when an employee seeks paid family leave to care for an ill child, parent, spouse or domestic partner.
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• Employers have the option to require employees to use up to two weeks of available sick pay, vacation pay, or other fully paid leave before receiving the paid family leave benefits.
• Policy must be written.
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• Employers can require that paid family leave benefits run concurrent with employer paid leave.
– Employers can require that the 6 weeks of paid family leave be reduced by the amount of fully paid leave provided by the employer.
• If an employee is required to use up to two weeks of employer paid leave, there is no oneweek waiting period.
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• Leave taken to care for a newborn or newlyadopted child must be taken on a continuous basis unless the employer agrees to permit the employee to take intermittent leave.
• Intermittent leave is permitted to take care of a family member, however, the employee must make reasonable effort to schedule leave as to not unduly disrupt employer’s operations.
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• Evaluate and update current leave policies to reflect the new paid family leave benefits.
• Prepare notification procedures and posting requirements.
• Provide training to human resource personnel about the new law.
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Presented by:
M. Karen Thompson
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 mkthompson@nmmlaw.com

Disclaimer
Comments apply to employers in the private sector only. Due to constitutional protections against unreasonable governmental actions, comments should not be assumed to apply to governmental entities in all cases.
23

• Employees’ Right to Privacy of
Personal,
Confidential and
Financial
Information vs.
• Employers’ Right to
Protect Assets,
Promote Their
Business and
Maintain Secure
Workplaces
24

Constitutional: a) Fourth Amendment to U.S. Constitution b) Applicable state constitutions
Statutory: a) Federal Laws and regulations b) State Laws and regulations
Common Law of Privacy – Restatement of Torts,
Invasion of Privacy
Contractual: Collective Bargaining Agreements
25

Hennessey v. Coastal Eagle Point Oil Co ., 129 N.J. 81
(1992) defined a right to privacy based on New Jersey’s constitution and common-law as a public policy right:
“The right of an individual to be . . .protected from any wrongful intrusion into his private life which would outrage or cause mental suffering, shame or humiliation to a person of ordinary sensibilities.”
Right of privacy extends to the workplace and employees can sue for infringement.
26

Factors courts will apply to determine infringement include:
– Balance employee’s individual right to privacy against competing public interest (e.g. public health or safety).
– Was there a legitimate expectation of privacy by employee?
– Was advance notice provided to the employee?
– Extent of the intrusion - was least intrusive method used?
– Effect on employee dignity.
– Was there a legitimate business purpose for the intrusion?
– Was there nondisclosure of private information except for necessary and legitimate purposes?
27

Health Insurance Portability and Accountability Act (HIPAA), 29 U.S.C. § 1181 et seq.-
– requires employers to protect “individually identifiable health information” that they maintain or transmit that relates to an employee’s present or future physical or mental condition or care, including payments for health care.
28

Americans with Disabilities Act (ADA) , 42
U.S.C. §12101 et seq . (15 or more employees)
• Prohibits inquiries/testing about medical conditions unless jobrelated and consistent with business necessity, including pre-hire inquiries of non-disabled applicants ( O’Neal v. City of Albany, 293
F.3D 998 (7th Cir. 2002)).
• Permits post-offer medical examinations if all persons in job category are examined.
• Medical records/information acquired, including through workers’ compensation claims, must be kept confidential and separate from personnel records .
• Voluntary medical exams that are part of an employee health program need not be job-related or consistent with business necessity.
• No protection for illegal drug users under the ADA, but may be protected post-rehabilitation.
29

Family Medical Leave Act (FMLA), 29 U.S.C.
§2611 et seq. (50 or more employees)
• Entitles employers to require a medical certification from employees.
• Entitles employers to request clarification of the certification, but only through their own doctors.
• Entitles employers to require a second medical opinion at their cost.
• Prohibits seeking more information than that requested on
Certification of Health Care Provider form; direct contact with employee’s doctor.
• Employer may require employees on sick leave, including FMLA leave, to report to a hot line when they leave their homes ( Callison v. City of Philadelphia , 430 F.3d 117 (3d Cir. 2005)).
30

Pre-Employment Screening –
Credit Histories
Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. – designed to protect the privacy of information prepared by consumer reporting agencies and to guarantee that the information supplied is as accurate as possible.
• Consumer reports contain information about personal and credit characteristics, records of arrests for prior seven years, character, reputation and lifestyle and may include interviews with employee’s friends, neighbors and associates.
• Person’s credit record is only available for legitimate business needs; employers must get written authorization from applicant and provide specific written notice that report will be requested and may be used.
• If applicant refuses to consent, employer may reject applicant.
• If report is relied on to refuse employment, employer must disclose the report and provide copy of applicant’s rights under FCRA in writing.
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Pre-Employment Screening –
Credit Histories
Fair and Accurate Credit Transactions Act
(FACTA), 15 U.S.C. § 1681(w)
(amended
FCRA) – requires employers to take reasonable measures to dispose of employees’ credit reports obtained as part of the hiring process, including any background checks on employees as well as applicants which are obtained by the employer.
32

Pre-Employment Screening –
Credit Histories
FTC Regulation, 16 C.F.R. 682.1 et seq. - defines “reasonable measures” by example, to include burning, pulverizing or shredding of documents, erasing electronic media, or hiring a third party to destroy data.
– Enforcement: Both federal and state authorities may enforce FACTA
– Exposure to statutory damages of $1,000 for each separate violation
– Exposure to civil suits and class actions for actual damages to employees
33

Pre-Employment Screening –
Criminal Histories
• In New Jersey, employers may obtain certain criminal conviction records to determine a person’s qualifications for employment.
• Employers may obtain records of convictions in New Jersey state courts, arrests and pending charges of violations of laws.
• Requests must be made on prescribed form signed by the subject and accompanied by employer’s certification.
• If information disclosed will be used to disqualify candidate for employment, then applicant must be provided notice and opportunity to confirm or deny information.
• Title VII – criminal records can’t be an absolute bar to hiring as it may disparately exclude certain racial groups; must show business necessity to rely on criminal records.
• Certain states restrict use of criminal histories in hiring decisions.
34

Pre-Employment Screening –
Educational Background
• Permitted if education is germane to the position.
• Family Educational Rights and Privacy Act
(FERPA), 20 U.S.C
. §1232g prohibits schools from disclosing educational records without a release from applicant (or parent if minor).
• EEOC guidelines – education requirements that disproportionately affect certain groups may violate Title VII unless justified by business necessity.
35

Pre-Employment Screening -
Internet Resources
• Google and other search engines.
• Social sites (MySpace, Facebook)
• No expectation of privacy for information in the public domain
• Risks for employer if data obtained about applicants includes factors that shouldn’t be used in making hiring decisions
Best Practice : Have third party screen impermissible information from decision makers.
36

Privacy Issues Regarding Wire and
Electronic Communications
In 2005, 60% of 840 companies surveyed by American
Management Association monitored employees’ e-mails.
Reasons to monitor
– Employee training
– Evaluate communications with customer
– Protect against disclosure of trade secrets
– Investigate misconduct, claims of harassment/discrimination
– Monitor improper use of company systems
– Police against illegal activities
37

Privacy Issues Regarding Wire and
Electronic Communications
Federal Wiretap Act , 18 U.S.C. §§2510-2522 – Electronic
Communications Privacy Act (“ECPA”) imposes civil and criminal liability on any person who “ intentionally intercepts”, tries to intercept or procures another to intercept “any wire, oral or electronic communication.”
• Applicable to telephone and electronic communications alike.
• Expectation of privacy as to telephone communications is irrelevant, but does apply to other oral communications.
• Interception can be as simple as listening in on an extension phone or more sophisticated methods.
38

Privacy Issues Regarding Wire
Communications – Telephones
Two exceptions to the prohibition against interception of telephone (wire) communications:
1. If one of the parties consents (may be explicit or implied consent)
– Consent may be a condition of employment – obtain signed consent.
– Caution – merely telling employees that telephone calls may be monitored may not be enough due to inconsistent decisions.
Best Practice : Include consent in handbook with acknowledgement signed by employee; prepare a written policy covering interception and monitoring.
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Privacy Issues Regarding Wire
Communications - Telephones
2.
Ordinary course of business exception to wire communications:
Applies if the conversation is a wire conversation via telephone equipment.
The interception concerns the operation of the business and
Employer has legitimate business purpose (not required if the employee previously consented).
Monitoring of personal calls is not within this exception and employer must desist after determining call is personal.
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Privacy Issues Regarding Wire and
Electronic Communications
Service Provider Exception of ECPA – permits provider of service to intercept or use electronic communications which are transmitted using its facilities, incident to its business or to protect its rights or property.
Employers that provide their own telephone networks or e-mail systems may qualify as providers under this exception.
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Privacy Issues Regarding Wire and
Electronic Communications
New Jersey Wiretapping & Electronic
Surveillance Control Act , N.J.S.A.
§2A:156A-3 makes it a crime to “intercept” any wire, electronic or oral communication, or disclose the contents, and follows federal act for interpretation.
Exceptions: Same as the federal statute.
42

Privacy Issues Regarding Wire and
Electronic Communications
Other State Statutes Provide Broader Protections:
– Laws of thirteen states are more stringent than federal law and require the consent of all parties to legally record or intercept an electronic and/or wire communication: California, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts,
Michigan, Montana, Nevada, New Hampshire, Pennsylvania and
Washington.
– Caveat: Even if only one of the parties is located in one of those states, you still must obtain consent of all participants.
– Notification at outset of conversation that it may be recorded may constitute implied consent; obtaining employees’ signature acknowledging receipt of policy to monitor may constitute consent.
43

Electronic Communications Monitoring –
E-mails
“Interception” of an electronic communication occurs when the communication is acquired after its transmission by the sender, but before its receipt by the intended recipient - no violation under ECPA if post-receipt e-mails are monitored
– United States v. Councilman , 418 F.3d 67 (1st Cir.
2005) – e-mail monitoring programs which provide real time interception capabilities may violate
Wiretapping Act
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E-mail and Internet Use Monitoring
Analysis: reasonable expectation of privacy in data on workplace computers balanced against employer’s interest in maintaining legitimate use of its systems.
Other considerations:
– Is the computer shared with or accessible to others?
– Is it password protected?
– Is personal use of work computers permitted?
– Is there a regular monitoring program in place?
– Are there policies governing IT personnel’s actions?
– Is the monitoring “event based?”
– Does illegal activity occurring outweigh all privacy concerns?
Best Practice : Promulgate policies that use of company systems is for business use and may be monitored.
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E-mail and Internet Use Monitoring
Statutory Protections:
• Connecticut & Delaware: require advance notice of electronic monitoring (e-mails, telephone and Internet, etc.); exception in Connecticut for illegal activities or hostile work environment; monetary penalties for violation.
• New York – Bill introduced 5/15/08 regarding electronic monitoring, requires prior written notice upon hiring and once annually to all employees, informing them of the types of electronic monitoring that may occur.
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E-mail and Internet Use Monitoring
Employer’s Duty to Monitor:
– When employer has technical and legal ability to monitor employees’ e-mail and Internet activities, may have a duty to act to monitor to protect interests of third parties. Doe v. XYC Corp ., 382 N.J.Super. 122
(App.Div. 2005)
– Employer had authority to consent to FBI’s search of employee’s workplace computer, even though employee had reasonable expectation of privacy.
United States v. Zeigler , 474 F.3d 1184 (9th Cir. 2007)
47

Protection of Employee Records and
Personal Information
• Thirty-nine states have statutes protecting employee personal information.
• Private right of action and penalties available in many states for violations.
• Most statutes require documentation of steps taken to implement data security practices.
Best Practice : Implement policies to ensure protection and steps to be taken in event of a breach.
48

Protection of Employee Records and
Personal Information
New Jersey: Identity Theft Prevention Act, N.J.S.A.
56:11-44 et seq.-
• Protects “personal information” defined as last and first name or initial, plus SSN, DLN, State ID nos., bank, account information.
• Applies to any entity conducting business in NJ however organized.
• Protects consumers, whether employees, job applicants, contractors.
• Requires timely destruction of personal information.
• Requires notification of security breach to employees and NJSP.
• Limits use and display of SSNs.
• Substantial penalties for non-compliance.
49

Protection of Employee Records and
Personal Information
New York: Confidentiality of Social Security Account
Numbers , N.Y. Gen. Bus. § 399-dd –
• Places limits on use and disclosure of an individual’s SSN by persons, firms, partnerships, associations or corporations.
• Prohibits intentional communication of individual’s SSN to general public.
• Requires businesses to implement safeguards and limit unnecessary employee access to SSNs.
• Prohibits businesses from requiring transmittal of unencrypted SSNs over the Internet.
• Restricts businesses’ ability to print SSNs on mailings, etc.
• Civil penalties enforceable only by Attorney General.
50

Protection of Employee Records and
Personal Information
New York: Disposal of Personal Records Law, N.Y. Gen. Bus. §
399-h
Requires business to dispose of records with “personal identifying information” by shredding, destruction, modification or other reasonable action to prohibit access by unauthorized persons.
Personal identifying information includes SSNs, DLNs, credit card and account information, mother’s maiden name, etc.
Civil penalties enforceable only by Attorney General.
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•
•
•
•
•
•
Desk, Office and Common Area Searches or
Surveillance
Employer must balance right to control and operate its business against employee privacy interests. Analysis includes:
Can employee maintain that there is a reasonable expectation of privacy?
(no legitimate claim as to common areas except restrooms)
Was there advance notice through handbook or policy reserving right to search?
Was there a general practice of conducting searches?
Were there reasonable grounds to suspect search will reveal evidence of work-related misconduct or illegal activity?
Was the scope of the search reasonable in scope and not excessively intrusive?
Locked cabinets and drawers may be private depending on access.
52

Verification of Employment Requests
• Must be accompanied by employee’s signed release that should be matched with signature on file to confirm.
• Exercise care with questions about probability of continued employment, likelihood of continued bonus, date of applicant’s next pay increase and projected amount.
• Best practice: retain copies of employee’s release and completed VOE in personnel file.
53

Right of Privacy Off the Job
Violations of corporate codes of conduct force executive resignations:
• Chris Albrecht, former CEO Home Box Office (assaulted girlfriend)
• David Colby, former CFO Well Point, Inc. (numerous affairs led to lawsuits)
• Kerry Shiba, former CFO Kaiser Aluminum
(inappropriate relationship)
• Harry Stonecipher, former CEO Boeing (inappropriate relationship)
54

Right of Privacy Off the Job
Statutory Protections
•
•
Anti-Discrimination Laws:
Title VII and New Jersey LAD prohibit discrimination based on sexual orientation, gender identity, civil union status.
ADA, LAD prohibit discrimination based on disabilities, which may include obesity.
55

Right of Privacy Off the Job
Lifestyle Discrimination Laws:
– Protect an employee’s right to engage in lawful activities during non-work time and away from employer’s premises (e.g. California, Colorado,
North Dakota).
– Protect employee from discrimination for use of lawful products away from work (Illinois, Minnesota,
Montana, North Carolina,Tennessee, Wisconsin).
– Protect employees from discharge or refusal to hire because of use of tobacco products (New Jersey,
N.J.S.A
. §34:6B-1, 17 other states).
56

Right of Privacy Off the Job
New York: prohibits employers from discriminating against anyone for outside legal activities away from the workplace, including “recreational activities” defined as “sports, games, hobbies, exercise, reading, and the viewing of television, movies and similar material.” NY L. Law §201-d.
Issue is unresolved whether romantic relationships constitute “recreation.”
Slohoda v. United Parcel Service , 193 N.J. Super. 586
(App.Div.1984) – challenged discharge on privacy grounds for violating company policy against adultery.
57

Blogs – The Good, the Bad and the Ugly
Blogs – websites created by companies, trade associations or individuals to provide a forum to comment on news or events affecting their lives or businesses.
Company sponsored blogs (internal access)
– Preferred method to circulate competitive intelligence.
– Disseminate news on products or research.
– Monitor employee feelings about the company.
58

Blogs – The Good, the Bad and the Ugly
Industry-specific or personal blogs (public)
– Enable disgruntled employees to cybersmear the employer.
– Risk of disclosure of confidential information or worse.
– Generally not password protected so accessible to public at large.
– Pseudonyms, anonymity, encrypted routing devices shield blogger’s identity.
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Blogs – The Good, the Bad and the Ugly
First Amendment Protections for Anonymous
Bloggers
– State v. Reid , ____ N.J. ____ (2008) (A-105-06) – recognized constitutionally protected privacy interest in employee’s anonymity in Internet activities; quashed subpoena to ISP for subscriber information.
– John Doe No. 1 v. Cahill , 884 A.2d 451 (Delaware
2005) – defamed politician denied access to identity of anonymous bloggers.
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Blogs – The Good, the Bad and the Ugly
20% of United States companies have formal policy in place to monitor blogs containing remarks about the company (May 2006 survey by public relations firm Makovsky & Co.)
3% of employers over a one year period disciplined or fired employees for blogging (SHRM 2005 study)
IBM guidelines require employees to identify themselves when blogging about
IBM and caution about discussing politics or religion (USA Today, June 15,
2005)
Most companies lack policies regarding employee blogging → risks when bloggers are disciplined or discharged for blogging
Best practice: adopt guidelines prohibiting negative comments about management, co-workers, the company or its products; seek legal counsel if blogs assert employer misconduct, whistleblowing or on-the-job discrimination
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Technological Monitoring - Evolving Area of the Law
In 2004, employers spent approximately $9 billion in technological monitoring devices for the workplace.
Rand Corporation study of six large private companies (>1500 employees) revealed no regard for employee privacy in use.
Human Tracking Technology:
– GPS Trackers (global positioning systems)
– RFID (radio frequency identification incl. microchip implants)
– Cellular technology (installation of GPS chips in cell phones)
– Biometrics (voice or iris recognition, fingerprint or facial imaging)
– Smart Cards (used by 53% of employers)
– E-Z Pass
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Technological Monitoring - Evolving Area of the Law
Justifications:
• Ability to study workplace patterns to improve efficiency
• Measure time, labor and human error
• Track employee theft, misconduct, sleeping on the job
• Restrict access to high security areas
• Assist investigations of workplace incidents
• Locate personnel quickly in event of emergency
• Ease of installation into uniforms, ID cards, badges
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Technological Monitoring - Evolving Area of the Law
Privacy Concerns:
• Permit constant tracking on and off-site of employees.
• Can reveal non-work related information about personal habits, interests or associations which can run afoul of discrimination laws or be misused by third parties or coworkers.
• Can be read surreptitiously without employees’ consent.
• Less secure systems can be read by unauthorized readers.
• Links to other databases provide entrée to host of personal information, including personnel and medical records.
• Risk of identity theft and misuse by law enforcement.
• Lack of best practice policies to govern use of technologies and protect information.
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Technological Monitoring - Evolving Area of the Law
National Labor Relations Act – provides minimal protection as it prohibits employers from engaging in surveillance of protected concerted conduct and employers must negotiate regarding certain forms of employee surveillance.
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M. Karen Thompson mkthompson@nmmlaw.com
Certified as a Civil Trial Attorney
By the New Jersey Supreme Court
Areas of Practice:
Labor & Employment
Products Liability Defense
Alternative Dispute Resolution
Admitted to Practice before:
New Jersey and New York State and Federal Courts
United States Supreme Court
66

Coming to an HR Department Near You
Presented by:
Fernando M. Pinguelo
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 fmpinguelo@nmmlaw.com

What is it?
Why should you care?
What to do and when ?
68

Discovery: The process of finding or learning something that was previously unknown with the intent of using it in a civil or criminal legal case.
69

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“ E” or Electronic or Electronically
Stored Information (ESI):
Information created, manipulated, communicated, maintained, or stored in digital form by computer hardware and software.
71

• Laptops/Desktops
• Servers
• Phone Systems (VoIP)
• Printers & Copiers
• PDA’s/Cell Phones
• CD’s/DVD’s
• USB Thumb Drives
72

What is it?
The Corporate Enterprise Network
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Document is defined to be synonymous in meaning and equal in scope to the usage of this term in
Federal Rule of Civil Procedure 34(a), including, without limitation, electronic or computerized data compilations. A draft or non-identical copy is a separate document within the meaning of this term.
Document shall be interpreted broadly and means any tangible form of communication, whether written, produced by hand, printed, recorded by word, sound, or image, reproduced by any mechanical process, or produced by or stored in a computer or similar device, regardless of origin or location.
This includes but is not limited to: writings, records, files, correspondence, reports, memoranda, calendars, diaries, minutes, electronic messages, voice mail, e-mail, sound recordings, telephone message records or logs, computer and network activity logs, hard drives, backup data, removable computer storage media such as tapes, discs and cards, printouts, document image files, web pages, databases, spreadsheets, software, books, ledgers, journals, orders, invoices, bills, vouchers, check statements, worksheets, summaries, financial data, production data, appointment data, and scheduling data, data compilations, computations, charts, diagrams, graphic presentations, drawings, films, charts, digital or chemical process photographs, video, phonographic, tape or digital recordings or transcripts thereof, drafts, jottings and notes, and studies or drafts of studies or other similar such material. Information that serves to identify, locate, or link such material, such as file inventories, file folders, indices, metadata, and any other data compilations from which information can be obtained and translated if necessary are also documents. Electronically stored information which is in the possession, custody, or control of Respondent shall be translated, if necessary, by Respondent into a reasonably usable form.
74

BIG
75

$ $ $
76

• Court sanctioned plaintiff $8.5 million for e-discovery abuses. Qualcomm Inc. v. Broadcom Corp.
, 2008 U.S.
Dist. LEXIS 911 (S.D. Cal. 2008)
• Court sanctioned defendant $125,000 for e-discovery abuses. Wingnut Films, Ltd. v. Katja Motion Pictures
Corp.
, 2007 U.S. Dist. LEXIS 72953 (C.D. Cal. 2007)
• Court sanctioned defendant $1,000 for e-discovery abuses . In re Spoonemore , 2007 Bankr. LEXIS 2215
(Bankr. D. Kan. 2007)
77

You are being watched.
78

APC Filtration, Inc.
Defendant drove 20 miles and threw his computer in a dumpster after receiving notice of lawsuit.
79

APC Filtration, Inc.
(cont.)
Award of default judgment denied because the evidence was provided by a third party , so the court concluded the destruction of evidence did not affect the outcome of the case.
80

Why should you care?
The Corporate Enterprise Network
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(NOT)
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Three BASIC steps:
• Heighten your sensitivity to a problem that may result in a formal complaint being filed.
• Identify individuals attached to the problem and work with IT to suspend routine document destruction practices and preserve ESI.
• Work closely with in-house & outside counsel to preserve ESI and issue a Litigation Hold .
83

Litigation Hold: Suspend automated document destruction policies, and place a “hold” on key ESI.
• Litigation “holds” must be
:
– communicated in writing
– issued by someone with authority
– tailored to identify purpose of the hold
– specific in detailing which data should be maintained and why
– periodically confirmed
84

• Select Your Team of Experts
• Consider hiring outside experts to assist in the effort and who will work closely with the attorneys.
• Factors to consider in retaining e-discovery professionals:
– Experience
– Familiarity with forensic tools
– Capacity to screen high volumes of information
– Quantify costs
– Witness testimony
– Ability to identify what is accessible and retrieve inaccessible information
85

when
• Lawsuit or other similar formal proceeding filed
• Statutory requirements compelling preservation for specified time ( i.e.
, Sarbanes, HIPAA, SEC,
IRS, NJ Public Utilities, etc.)
• Lawsuit that is “ reasonably anticipated ”
86

. . . and when ?
Lawsuit that is “reasonably anticipated”
Huh?
87

when
Zubulake IV a.
Widespread circulation of e-mails titled
“attorney client privilege.”
(+) b.
Supervisor admits in deposition he was aware of possible lawsuit.
(+) c.
Key co-workers knew of the possibility of lawsuit.
(=)
Triggering date was the point and time when key co-workers were aware of the possibility of this specific matter being litigated.
88

when
M&T Mortgage Corp.
Duty to preserve was triggered when company received a “strikingly similar complaint” from the
Department of Consumer Affairs in another lawsuit.
89

when
Consolidated Aluminum Corp.
Sending a demand letter that included a request for emails triggered duty to preserve where “key players” took part in drafting the letter.
90

when
Cache La Poudre Feeds, LLC a.
Plaintiff’s counsel sends demand letter to defendants.
(+) b.
Plaintiff’s counsel calls defendants to discuss settlement.
(≠)
Did NOT trigger duty to preserve for defendants:
Demand letter and phone call discussed rights of plaintiff and invited defendants to negotiate to discuss possible solutions.
Letter did not threaten lawsuit or ask for preservation.
91

when
Broccoli
• Employee sued company alleging sexual harassment and accusing human resources administrator of “inappropriate sexually charged behavior.”
• Company sanctioned (monetary and adverse inference instruction) for failing to issue a
Litigation Hold.
92

when
Broccoli
(cont.)
“TRIGGERS” of interest :
Employee (a) handed written complaint to human resources at the time of his termination citing his unfair treatment by the HR department; (b) informed two supervisors orally and in e-mail; and
(c) allegedly met with the HR regional manager.
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when
Broccoli
(cont.)
Court commented on company’s unwise document retention policy (emails in a user’s
“sent” folder for over 7 days automatically transferred to the “deleted items” folder; deleted items folder is purged every 14 days and irretrievable; NO BACKUP TAPES).
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You NOW KNOW what “it” is
You NOW KNOW why you should care
You NOW KNOW what to do and when
Thank you and be REDI for what’s to come!
R
E
D
I
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Presented by:
Charles A. Bruder
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 cabruder@nmmlaw.com

• Enacted in response to perceived abuses.
• Intended to accomplish three goals:
– Indentify when compensation deferrals occur;
– Provide for specific payment triggers; and
– Govern the timing of the payment of deferred compensation.
• To encourage compliance, Congress enacts penalty provisions…
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• An employer’s failure to comply with Code
Section 409A may result in the following negative consequences:
– Accelerated income taxation
– Interest and penalty imposition
– Excise taxes – Twenty Percent (20%) of the payment amount
• All interest and penalties payable by the recipient
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• Deferred compensation includes any legally binding right to receive a payment of compensation in a future year
• A legally binding right exists if the payment is not subject to a substantial risk of forfeiture
• What is a substantial risk of forfeiture? Depends upon the facts and circumstances
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• The broad definition of “deferred compensation” means that employers could unwittingly cause their employees/consultants to be impacted by
Code Section 409A
• “Traditional” deferred compensation/deferred bonus plans are easy to identify … but …
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Certain arrangements subject to Code Section
409A may not be readily apparent:
– Severance Arrangements/Employment Agreements
– Deferred Directors Fee Arrangements
– Stock Options with Below Market Strike Prices
– Phantom Stock Arrangements, Stock Appreciation
Rights Plans
– Independent Contractor Agreements with Deferred
Payments
– Retention Bonus Arrangements
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• Code Section 409A provides specific triggers for the payment of deferred compensation:
- Death - Disability
- Retirement
- Change in Control
- Specified Date
- Separation From Service
• Deferral arrangements which are subject to
Code Section 409A must adopt these terms.
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• Generally, any change in the timing of a payment of deferred compensation must be made at least 1 year before payments would commence, and must extend the initial payment date for another 5 years
• Failure to comply = accelerated income tax/excise tax imposition
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• Self Policy Statute – No IRS filing required
• Review all arrangements NOW!
• All deferred compensation arrangements must be properly documented by December 31, 2008
• Amend/terminate arrangements, if necessary
– Amendments/terminations are subject to specific rules
• “Good Faith” operational compliance is required now
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• Effective January 1, 2009
• Apply to all arrangements which qualify for income tax benefits under Code Section 125
– Group Medical Insurance Plans
• Treasury Regulations clarify that Code Section
125 is the exclusive means under which nontaxable group health benefits may be provided to employees
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Written Plan Requirement
– Plans must include the following items:
• Specific details concerning all benefits available under the plan
• Eligibility provisions for participation
• Rules governing benefits elections, maximum elective contribution limits
• Rules governing the irrevocability of elections
• Details concerning employer contributions
• Definition of plan year
– Plans must be operated in accordance with stated terms
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Nondiscrimination Testing Required
– Cafeteria plans cannot discriminate in favor of highly compensated employees.
– Similarly situated employees must have a uniform opportunity to elect to receive benefits.
– Objective nondiscrimination testing formula is provided in the Treasury Regulations.
– “Safe Harbor” for premium-only cafeteria plans.
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Code Section 125 Proposed Treasury
Regulations – What Should Employers Do?
• Treasury Regulations apply to plan years commencing on or after January 1, 2009
• Need to carefully review plan documents
– Summary plan descriptions
– Intranet/employee communications
– Cafeteria plan forms brochures
• Pre-year discrimination testing
• Amend plan documents currently
• Create a compliance manual
108

Presented by:
David Cassidy
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 decassidy@nmmlaw.com

• “Unwelcomed”;
• “Because of;”
• “severe and pervasive;” and
• “Totality of the circumstances.”
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• Anti-Harassment Policy:
– Periodic publication?
– Effective grievance process?
– Training?
111

•
A coworker uses the phrase “dirty Jews” in the presence of a
Jewish employee;
•
A co-worker places a German flag sticker above an Israeli flag sticker on a Jewish employee’s locker;
•
A supervisor asks a Jewish employee, several times, about his
“big Jew nose;”
•
A supervisor tells a Jewish employee he would not be permitted to wear a yarmulke on Passover due to uniform restrictions; and
•
A co-worker comments, in the presence of a Jewish employee, that “Jews are good with numbers” and “Jews make all the money.”
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The facts of the case:
• Jason Cutler (Plaintiff) and Robert Shreve (co-worker) were police officers.
• In a discussion about the Macabee games, which Cutler described as the Jewish Olympics, Cutler thought he heard a co-worker,
Shreve, blurt out, “those dirty Jews.”
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• Cutler reported the incident.
• The incident is investigated.
• Shreve sent to sensitivity training.
• At no time after that incident did Shreve utter any anti-
Semitic remarks.
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• Cutler filed suit in the Superior Court of New Jersey, Camden
County, alleging violations of the NJLAD.
• At trial, the evidence showed:
– Haddonfield police officers engaged in considerable joking, laughing, and “breaking chops.”
– Officers also maintained a humor file, which was kept in two file cabinets.
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• Cutler admitted he participated in “breaking chops.”
• Cutler admitted he viewed the “humor” file from time to time.
• Cutler admitted he created some of the material.
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• Cutler did suffer a hostile environment “based on his religion or ancestry.”
• Awarded zero damages!
• Employer asked the trial court to dismiss the verdict.
• Trial Court denied the Employer’s motion but stated it was a “close call.”
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• The Court ruled:
– Not severe or pervasive conduct.
– Other remarks occurred in a context of good-natured pranks and joking.
– Cutler participated from time to time.
– Case is pending before the N.J. Supreme Court and a decision is expected shortly.
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The Appellate Division overturned the verdict:
– Haddonfield Police Department was a relatively small group who delighted in playing pranks, teasing, ribbing, and “breaking each other’s chops.”
– Shreve’s one anti-Semitic comment was isolated, not directed at
Cutler, and not made by a supervisor.
– Until Shreve's comment, Cutler never objected or complained.
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• Context matters.
• Plaintiff’s participation matters.
• Even though the Dorn case was a “legal” win, the Employer lost time, money, morale, attorneys’ fees and energy to defend the case!
120

Court’s statements at argument seemed to focus on:
– Cutler reached his breaking point so participation not a defense.
– Intent of the speaker is not relevant.
– The jury got it right.
121

Proposed Regulation Changes
Presented by:
Patrick T. Collins
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 ptcollins@nmmlaw.com

Department of Labor Rulemaking Process
• Request for Information (RFI) – December 1, 2006
– 15,000 comments
• Report on RFI – June 2007
• DOL’s Proposed Rule – February 11, 2008
– www.dol.gov/esa/whd/FMLANPRM.htm
• Public Comments – Closed April 11, 2008
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Proposed FMLA Changes
• Q & A Format Eliminated
– Replaced by sections with subject matter headings
• Section restructured to allow easier access
– Leave For Pregnancy or Birth
– Employee Notice Requirements
– Medical Certifications
– Fitness For Duty Certifications
124

Proposed FMLA Changes
Employer Notice Requirements
• Consolidated employer notice requirements from various existing sections into “one-stop” section containing all employer notice obligations.
• Streamlines all notice requirements and clarifies stages of the FMLA process at which certain notices have to be provided.
• Extends timeframe that employers have to send out notices – from 2 business days to 5 business days.
125

Proposed FMLA Changes
Ragsdale/Designation
• Eliminates categorical penalty invalidated in
Ragsdale .
• Clarifies employer responsibilities to designate leave as FMLA leave prospectively.
• Clarifies that retroactive designation is permitted absent a showing of individualized harm.
126

Proposed FMLA Changes
Employee Notice
• Modifies employee notice requirements for unforeseeable leave to require employees to provide notice per employer’s usual & customary call-in procedures, upon learning of need for leave.
– Exemption for emergencies.
– Employers have cited lack of advance notice (e.g., before shift starts) of unscheduled absences – as unintended consequence of current regulations.
• Defines what constitutes “sufficient information” that employees must provide to put employer on notice of need for FMLA leave.
127

Proposed FMLA Changes
Medical Certification – Content & Clarification
• Streamlines process.
• Permits employers to directly contact employee’s health care provider but only to authenticate and/or clarify certification.
• Employer may not ask for more information beyond what is on certification form.
• Updates DOL’s optional Form WH-380.
• Allows – but does not require – health care providers to provide diagnosis as part of certification.
• If medical certification is incomplete, employers must state in writing what is lacking and give employee 7 calendar days to cure.
128

Proposed FMLA Changes
Fitness-For-Duty Certifications
• 2 changes to process:
– Employer may require certification to address employee’s ability to perform job’s “essential functions.”
– Employer may be permitted to require employee to furnish a fitness-for-duty certificate before employee returns to work, when reasonable safety concerns exist.
129

Proposed FMLA Changes
Substitution of Paid Leave
• Confirms – employers can maintain terms & conditions associated with use of all forms of paid leave when substituting it for unpaid FMLA leave.
• Current rule: terms & conditions apply to sick leave only.
• Proposed rule: include vacation, paid time off.
• Employee always entitled to unpaid FMLA leave .
130

Proposed FMLA Changes
Light Duty
• Clarifies that time spent performing “light duty” work does not count against employee’s FMLA leave entitlement and reinstatement rights.
• At least 2 courts have held that employee uses up 12week entitlement when working “light duty.”
131

Proposed FMLA Changes
• Retains current 6 definitions; adds guidance for 2 terms:
1) “Continuing treatment”: 3 consecutive days incapacity + 2 visits to health care provider: period is 2 visits within 30 days.
2) “Chronic SHC”: Periodic visits for chronic conditions: 2 visits/year.
132

Proposed FMLA Changes
Perfect Attendance Awards/Performance Based on Goals
• Reconciles contradictory language within the regulation.
• Confirms employer does not have to permit employee who takes FMLA leave to qualify for a “perfect attendance award IF –
• Employees taking non-FMLA leave are treated in an identical manner.
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• 12 months of employment need not be consecutive.
• Employment prior to 5-year break in service need not be counted.
• FMLA requires employers to maintain records for 3 years.
– Burden of proof on employee
• Exceptions to 5-year rule:
– Military service
– Collective bargaining agreement
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Waiver of Rights
• Reinforces longstanding DOL position that employees may voluntarily settle FMLA claims without court or DOL approval or supervision.
• Clarification needed due to recent 4 th Circuit decision interpreting current regulations as prohibiting employees from prospectively or retroactively waiving rights.
• Prospective waivers remain prohibited.
135

Military Family Leave Changes
• Public Law 110-181 amended FMLA – 2 new leave entitlements:
1) Eligible employees can take up to 26 workweeks of leave to care for covered servicemember with serious illness, injury.
2) Or may take leave for “qualifying exigency” due to servicemember on active duty or called to active duty status.
• Provision 1) went into effect on signing – 1/28/2008.
• Provision 2) dependent on DOL’s issuing regulation defining
“qualifying exigency”.
• DOL is seeking comment on issues arising from statutory changes, to quickly & fully implement them in a final rule.
136

Presented by:
Labor & Employment Group
Norris McLaughlin & Marcus, P.A.
Somerville, NJ 08876-1018
908-722-0700 www.nmmlaw.com