Employer Law Report : Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

Congress’ recent passage and President Obama’s signing of the “Dodd-Frank Wall Street Reform and Consumer Protection Act” provides significant incentives for financial industry whistleblowers to assist the government root out fraudulent practices and other unlawful conduct in the industry. Supporters of the Dodd-Frank Act are praising its expansive whistleblower protections as a necessary good corporate-citizen tool to help the government ensure a financial crisis like 2008 never happens again.

Under the Dodd-Frank Act, whistleblowers in publicly traded companies are provided significant personal financial incentives to disclose to the SEC “original” information concerning securities laws violations occurring within their companies. “Original” information means the information must be derived from the whistleblower’s independent knowledge or analysis and cannot be known to the SEC from any other source. The available financial reward — or “bounty” — available to a qualifying whistleblower will range from 10% to 30% of any financial recovery in excess of $1,000,000 that the SEC obtains from the targeted corporation, including the amount of any penalties, disgorgement and interest.

The Dodd-Frank Act also protects the whistleblower from being retaliated against by the employer because the whistleblower provided information to the SEC. The Act gives the whistleblower a private right of action in federal court to try to establish the unlawful retaliation. Remedies for the successful whistleblower may include reinstatement, double back pay with interest, expert witness fees, and attorneys fees. Thus, Congress clearly intended for these remedies, coupled with a possible incentive bounty of at least $100,000, to encourage whistleblowers to come forward and assist the government attack corporate financial fraud.

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On August 13, 2010 President Obama signed into law H.R. 6080, which primarily is an emergency appropriations bill for border security. Of interest to a small group of employers of H-1B and L (including both L-1 and L-2) foreign nationals are provisions that require a new, enhanced filing fee. Employers that have 50 or more employees in the United States must pay an additional amount if more than 50% of their employees are H-1B or L workers. The additional amount is $2,250 for L-1 petitions and $2,000 for H-1B petitions.

In determining the number of H-1B and L employees, Citizenship and Immigration Services (CIS) confirmed during a teleconference that L-2 spouses (who are present in the United States as the dependent spouse of an L-1 worker) working for a company under an Employment Authorization Document must be counted. When questioned about the practicality of how employers are to determine whether an employee may be such an L-2 worker, CIS responded that it expects employers to review and be familiar with the various codes printed on Employment Authorization Documents. Indeed, this presents a unique challenge to potentially-impacted employers and likely will require training from and consultation with immigration counsel.

The supplemental fees apply to petitions with a postmark date of August 14, 2010 or later. They expire September 30, 2014. The employer must pay this new fee with the first petition to sponsor an H-1B or L-1 foreign national employee. The fee is not required when extending H-1B or L-1 status of an existing employee.

The employer still must pay the base filing fees: $320 processing fee, $750 or 1,500 training fee (if applicable) and $500 fraud prevention and detection fee.

As a practical matter, few employers will need to pay the enhanced fee. In most cases, H-1B and L-1 workers comprise a very small percentage of the employer's U.S. workforce.

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There are times when parties want to avoid litigation as a means for resolving a dispute. Some employment disputes are particularly well-suited to pre-filing or pre-discovery mediation. For example, in a case where the reputation of an individual or an organization is at stake, there is a great chance that early mediation will result in resolution. A party faced with disclosure of damaging information and the unavoidable publicity that may result, often sees a resolution in mediation as the best option. Pre-suit mediation is also favorable to the party possessing the damaging information since once a lawsuit is filed, it has lost some of its leverage. These type situations are ideal for pre-suit or pre-discovery mediation.

Another time pre-filing mediation is particularly fitting is when the remedy sought involves little money and is relatively easy to implement. Cases involving failure to accommodate under the ADA, failure to offer leave under the FMLA, or single-party claims under the FLSA are some examples. Here, pre-suit mediation is practical.

Pre-filing mediation may also enhance the possibility of resolution in disputes where there is or may be an ongoing relationship. This is true, for instance, in cases involving failure to accommodate or to offer leave, where the parties may want to continue the employment relationship.

Still another opportunity for pre-suit or pre-discovery mediation is when parties lack the financial or emotional wherewithal to see a case through. The parties may be aware of weaknesses in their claims or defenses, may have less than ideal witnesses, or may want to avoid costly discovery. There are virtually limitless concerns parties may have, including, avoiding disclosure of confidential medical records, comparator information or financial data. Mediation in situations like these can be especially cost-effective.

As mediators and mediation advocates, we know that every day great minds meet to resolve problems in mediation. But when to meet may have significant impact on the likelihood of resolution, so when litigation is threatened or anticipated, decision makers and their counsel should consider whether pre-suit or pre-discovery mediation is appropriate. Decision makers should weigh the benefits of early mediation against the risk and uncertainty of going forward, and then explore the opportunities and benefits pre-suit mediation offers. 
 

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In June, the United States Supreme Court issued its opinion in City of Ontario v. Quon, siding with the City and its officials in a workplace electronic monitoring case closely followed by employers and their counsel. The Court reversed the Ninth Circuit Court of Appeals’ opinion, holding the government employer’s search of a police officer’s personal and work-related text messages on an employer-issued pager was reasonable, and therefore the officer’s Fourth Amendment rights were not violated. (See our previous blog posting.)

Facts

The City of Ontario issued pagers to city employees, including police officers, for use in their jobs. The City, like most employers, had a written electronics communications policy that expressly prohibited personal use of its computers and notified employees that they had no expectation of privacy with respect to any communications using the City’s computer systems. The City’s policy, however, did not make clear that this policy applied to its pagers or to text messaging. Its contract with its service provider included a monthly limit on the number of characters each pager could send or receive, and specified that usage exceeding that number would result in an additional fee. 

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It may be that it's Monday morning as I write this but I have to admit I got a kick out of the news articles circulating late last week that reported that Goldman Sachs has revised its electronic communications policy to prohibit the use of any profanity in emails. The edict apparently results from emails that became public during Senate hearings investigating allegations that Goldman Sachs had misled its clients by selling risky mortgage securities while at the same time betting on a housing market crash. One email apparently referred to a particular investment the company had just sold to a client as a "s----y deal." I'm guessing that email wouldn't have looked any better if it had simply referred to the deal as "bad." Presumably, Goldman Sachs is also reminding its employees not to put anything into their emails that is likely to result in a government investigation.

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The U.S. Department of Labor (DOL) issued an Administrator’s Interpretation of the Family and Medical Leave Act’s (FMLA) definition of “son and daughter” under Section 101(12) of the Act on June 22, 2010. The Interpretation clarifies that an employee who lacks a legal or biological parent-child relationship but provides either day-to-day care or financial support, and intends to assume the responsibilities of a parent with regard to the child, is eligible for parental rights to FMLA leave. 

The Interpretation relies on an expansive reading of “in loco parentis” in the FMLA definition of “son or daughter.” “Son or daughter” is defined to include a biological or adopted child, as well as a foster child, stepchild, legal ward, or child of a person standing “in loco parentis.” 29 U.S.C. § 2611(12); see also 29 C.F.R. §§ 825.122(c), 825.800.

Eligible employees are entitled to take 12 work weeks of leave for the birth or placement of a son or daughter, to bond with a newborn or newly placed son or daughter, or to care for a son or daughter with a serious health condition. 29 U.S.C. § 2612(a)(1)(A)–(C); 29 C.F.R. § 825.200.

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In April of this year, Arizona Governor Janice K. Brewer signed into law an immigration enforcement statute and series of amendments, known as SB 1070, which some hailed as a welcome crackdown on illegal immigration and others viewed as an overreaction that will result in widespread racial profiling and civil rights violations. The law seeks increased enforcement against undocumented immigrants by giving local law enforcement agencies greater authority to verify the immigration status of persons arrested or stopped by the police in Arizona. 

There has been vigorous public debate as to the need and the merits of this approach, most of which has focused on the language in the law that requires police to make inquiries regarding immigration status when they have reasonable suspicion that a person does not have legal status. The law also criminalizes violations of several federal immigration laws, both for employers and undocumented employees. The Department of Justice filed suit in U.S. District Court on July 6 to block implementation of SB 1070 before it was scheduled to become effective today.

In a carefully crafted opinion issued yesterday, U.S. District Judge Susan R. Bolton granted the Department of Justice's motion for a preliminary injunction for several parts of SB 1070. The primary argument asserted by the Department of Justice in United States of America vs. Arizona was that the U.S. Constitution grants the federal government the authority to develop and enforce immigration laws. The doctrine of preemption therefore prohibits states from intruding into the federal government's exclusive jurisdiction. The State of Arizona defended the statute by arguing that the state law merely enhanced and assisted in the enforcement federal law and did not conflict with them.

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The federal health care reform legislation passed in March of this year included an amendment to the Fair Labor Standards Act (FLSA), requiring employers to provide reasonable unpaid break time to nursing mothers to express breast milk for the nursing child. The requirement to provide breaks extends for one year after the child is born. The DOL has just released a fact sheet with general information about the requirements.

Briefly, the law requires that employers provide "reasonable break time... each time such employee has need to express milk." Employers must provide a private location, free from intrusion, other than a bathroom, for purposes of the break.

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The Department of Homeland Security announced a final rule this week that makes minor changes to the June 2006 interim rule concerning electronic storage of I-9 forms. The final rule is effective August 23, 2010. Please note that this final rule concerns only the preparation and storage of the actual I-9 forms. The online E-Verify system, which some employers may be using, is a separate system that employers may use in addition to, but not instead of, the basic I-9 process.

The June 15, 2006 Interim Rule

Since June 15, 2006, employers may prepare, sign and store I-9 forms electronically. The regulation does not specify any particular format or software. Employers opting for electronic preparation and storage of I-9's simply must follow the regulatory guidance. In particular, the electronic system must be accurate and reliable, have security features to prevent unauthorized or accidental changes to the documents, provide for periodic quality assurance self-audits, have a searchable indexing system and allow for high-quality image viewing and printing. The electronic signature feature must affix the signature to the document at the time the form is prepared and contain a record verifying the signatory's identity.

The July 22, 2010 Final Rule

The final rule makes only a few changes to the June 2006 interim rule:

• Resolves a prior inconsistency in the timing to review the employee's documents and complete Section 2 of the I-9 form. Previously, there were references to "within three business days of the hire" and "within three days of the hire." This made it unclear whether the applicable period is business or calendar days. The final rule clarifies that the employer must review the employee's documents and complete Section 2 of the I-9 within three business days of the hire. (This is interpreted to mean that if the employee starts Monday, the employer must complete Section 2 by the end of the employee's shift on Thursday.)

• Requires an electronic storage and retrieval system to provide an audit trail of only the original creation and all subsequent modifications to the I-9 forms. The interim rule also required an audit trail of every time someone accessed or viewed the I-9.

• Requires the employer to provide a printed copy of the electronic I-9 transaction only if the employee requests one. The interim rule required the employer to provide a copy regardless of whether the employee requested it.

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