Washington Workplace Law

In a flurry of new decisions issued shortly before the holiday, the National Labor Relations Board continues to significantly alter the labor law landscape on topics such as employee discipline, dues checkoff, and social media.

In the first groundbreaking decision, Alan Ritchey Inc., the company and its recently-certified union were negotiating their first collective bargaining agreement. Before an agreement was reached, the company disciplined a union employee. The union filed an unfair labor practice charge, arguing that the company should have bargained before disciplining the employee. The Board agreed, ruling that before the first union contract is in place, the employer must offer to bargain over the decision to discipline a union employee. Although the Board hoped to encourage “even-handed and uniform application of rules of conduct,” in practice employers face one additional hurdle before issuing corrective action while trying to bargain a first contract.

In a second significant decision, WKYC-TV, Gannet Co. Inc., the Board ruled that employers must continue to honor arrangements to deduct union dues from employee paychecks even after the collective bargaining agreement has expired. This decision represents a substantial change for many employers and overrules half a century of labor law precedent on the issue. The Board thus stripped employers of a valuable bargaining tactic. Employers used to be able to use the threat of loss of dues to pressure the union to reach a new agreement. Now, employers must continue dues deductions until an agreement is reached, or valid impasse allows unilateral employer action.

Finally, in Hispanics United of Buffalo, the Board found that the employer unlawfully fired five employees because of their off-duty Facebook activities. The five targeted a co-worker named Lydia who criticized their work performance. One of the criticized employees, Marianna, sparked a conversation among four other co-workers about the criticism in a Facebook post. Lydia observed and commented on the Facebook postings, and subsequently complained to management about the abusive conduct. All five employees were fired. In reversing the terminations, the Board found the communications were protected, concerted activity under the National Labor Relations Act, and that the protected communications were the only basis for the terminations. The decision illustrates the Board’s application of its existing rules to new technology, in this case limiting discipline for employee use of Facebook as a “virtual water cooler.” It also emphasizes the Board’s continued application of the NLRA to non-union employers.

If you have questions about the effect of the National Labor Relations Board decisions on your workplace, please contact the Foster Pepper Employment and Labor Relations group.

By now, all Seattle employers covered by the paid sick and safe leave ordinance should be in compliance. You can find details about the ordinance here.

Now that the ordinance has been in effect for several months, a representative of the Seattle Office for Civil Rights – which is the agency that interprets and enforces the ordinance – has stated that it is expanding its Frequently Asked Questions (“FAQ”) document to provide additional guidance for employers. Although there is no date set for issuance of the revised FAQs, the Office is providing telephonic technical assistance clarifying its position on various issues that have arisen since the ordinance went into effect.

Of interest to many employers, the Office has clarified the scope of the “occasional employee” definition, especially as it applies to employees who spend most of their time outside of Seattle but enter the city to perform work. The Seattle Office for Civil Rights Rules specify that employees who “work in Seattle on an occasional basis are covered by the Ordinance if they perform more than 240 hours of work in Seattle within a calendar year.” 70-040 (5). The Rules also specify that “[e]mployees who work in Seattle on an occasional basis shall begin to accrue paid sick/safe time upon coverage by the Ordinance (i.e. when they have worked more than 240 hours of work in Seattle within a calendar year).” 70-120(2).

The Office has clarified its interpretation of “occasional” basis. It will distinguish between workers who enter Seattle on a scheduled basis, such as a Friday afternoon shift, and employees who come to Seattle on an unscheduled basis. Only those employees performing Seattle-based work on an unforeseeable, random schedule will be subject to the 240 hour threshold requirement. Non-Seattle employees working in Seattle on a regularly-scheduled basis will accrue sick and safe time from the first hour they work.

At the same time, employers should also ensure that all Seattle-based employees, regardless of how much or little they work, and regardless of whether they work a regular or sporadic schedule, accrue sick and safe time from the first hour they work.

Employers should review their policies to ensure they are consistent with these interpretations. Employers have the opportunity to correct compliance issues now, and would also have the opportunity to bring policies into compliance in the event of an employee complaint to the Office for Civil Rights.

We’ll post updated guidance when the expanded FAQs are released, and you can also sign up for updates directly from the Office.  If you have questions about the impact of the ordinance on your organization, please contact the Foster Pepper Employment and Labor Relations group.

Seattle City Councilman Bruce Harrell has introduced a new ordinance that would limit employers’ use of criminal background checks during the hiring process. The measure aims to reduce criminal recidivism by lowering unemployment among felons. Although the City Council is unlikely to consider the measure until 2013, it has already generated significant attention.

The ordinance would impose two limitations on all Seattle employers, public and private. First, it would prohibit employers from requesting a criminal background check until after giving “a conditional offer of employment.” This means employers could not ask about criminal convictions or pending charges on job applications; even a checkbox asking about the applicant’s criminal history would be unacceptable.

Second, the ordinance would prevent employers from refusing to hire an applicant or disadvantaging a current employee based on arrest or conviction records and pending charges, unless there is a “direct relationship” between the criminal history and the position. The elements of a “direct relationship” are not yet fully defined. However, the ordinance suggests there may be a direct relationship if the “nature of the criminal conduct...has a direct bearing or connection” to the position sought or held, or if it is “reasonably foreseeable” that the criminal; activity may result in harm to persons or property, including the business’s reputation.

The ordinance does not apply to employers who are permitted or required by federal law to obtain background checks before making offers. It also does not apply to positions that provide services to children, the mentally ill, or other vulnerable adults, or to those involved in law enforcement, crime prevention, security, or private investigation. And, the measure allows employers to exclude an applicant “whose criminal conviction record includes a conviction for... embezzlement, theft, fraud, or any other financial crime from employment in a position involving access to money, financial information, or personal identifying information of customers, employees, or members of the public.”

Many of the provisions in the proposed ordinance duplicate requirements under the federal Fair Credit Reporting Act (“FCRA”) and Washington’s FCRA. FCRA regulations govern the process for obtaining reports from third parties for a fee, including reports of credit ratings, criminal background checks, employment verifications, and driving records.

The ordinance also overlaps with federal and state discrimination laws restricting employers’ exclusion of applicants with criminal backgrounds. At the federal level, these restrictions are found in regulations issued by the Equal Employment Opportunity Commission (“EEOC”) and are based on EEOC interpretation of Title VII of the Civil Rights Act of 1964. Like the Seattle ordinance, the EEOC requires that employers show that exclusion of applicants with criminal backgrounds is job-related, consistent with business necessity, and that no less discriminatory alternative practice would serve the same ends.

Washington state laws similarly overlap with the ordinance and federal law. In addition to the state FCRA, the Washington Law Against Discrimination, as interpreted by the Washington Human Rights Commission, prohibits employment practices that have the effect of discriminating against minorities. Employers may only consider convictions if they are less than 10 years old and would adversely affect job performance.

As the Council reviews the ordinance, citizens and businesses will have an opportunity to express their views by writing to the Council or appearing in person at hearings. Check back for updates on this process and information about the ordinance.

Employers with severance, change in control or other deferred compensation obligations that permit employees to determine the timing of the payment by deciding when to execute releases or other documents should determine whether those agreements or arrangements violate the Internal Revenue Code (the “Code”). If so, there is an opportunity to correct the problem, but it is important to act before the end of the year.

The Potential Tax Problem

Internal Revenue Code section 409A governs non-qualified deferred compensation arrangements, including many change in control, severance and employment arrangements (generally, “arrangements”). Failure to comply with section 409A results in negative tax consequences to employees covered by the arrangements.

Under many of these arrangements, payments are available only if the employee signs an additional agreement, often a release of claims or a noncompetition agreement. For example, some employment agreements provide for payment of severance after termination of employment, but only if the employee signs a separate release of claims. Depending on the wording of the employment agreement, payment might be scheduled on a date certain (such as 60 days after termination), while other agreements set payment based on when the employee chooses to sign the document.

In 2010, the IRS announced that some arrangements that schedule severance payments based on when the employee signs the document may violate section 409A. The IRS reasoned that an employee should not be able to choose the year in which payment would be made and therefore reduce taxes.

We note that this problem does not affect many arrangements. A severance arrangement will not be subject to challenge under section 409A if:

• Severance is paid only upon involuntary separation from service or resignation due to "good reason" as defined by section 409A; and
• The total amount of severance is less than the lower of (i) twice the employee’s annual compensation, or (ii) $500,000.

In addition, section 409A will continue to have no application to payments that are only briefly deferred (i.e., “short term deferral”).

The IRS will permit employers to amend potentially noncompliant arrangements in effect before January 1, 2011 by adopting a correction provision approved by the IRS. However, the amendment must be adopted by December 31, 2012.

What Employers Should Do

Employers can avoid section 409A problems due to these severance issues by taking the following steps before the end of the year for all arrangements that first came into effect in 2011 and 2012:

1. Review each arrangement to determine whether it is subject to section 409A and, if so, whether its terms may create a concern under the IRS announcement.
2. If there is any question whether the severance arrangement poses problems under section 409A, consult with employment or benefits counsel.
3. If there is a concern under section 409A, prepare an amendment to the arrangement. The amendment would schedule severance payments on a fixed date or during a fixed period after termination of employment. Note that the amendment need not eliminate the usual requirement of a release of claims; it only would prevent the employee from having the opportunity to time the tax year of payment.
4. If necessary, obtain written consent from affected employees.
5. Include a statement of these steps as part of the employer’s 2012 income tax return.

If you would like assistance in determining whether any arrangements require amendments prior to December 31, 2012, please contact Scott Galloway (206.447.8919; gallj@foster.com) or Steve Peltin (206.447.6215; pelts@foster.com).

Most organizations attempt to motivate employees through positive reinforcement – rewarding good behavior and performance through praise, compensation, or other benefits. Negative reinforcement – such as harsh criticism, threats of termination, or loss of compensation or benefits – often is believed to reduce motivation and therefore lower performance.

NPR reports on a new study that challenges these beliefs, at least for public school teachers. Three groups of teachers in Chicago Heights, Illinois were asked to raise student achievement test scores. One group received no special incentives. The second group was promised a bonus if student math scores improved. Teachers in the third group received an immediate bonus of $4000, with a contract requiring return of the money if student scores did not get better.

The results? The first two groups performed about the same. Teachers who were promised a bonus achieved no better results than teachers who were asked to improve scores without any financial benefit. However, the teachers who received bonuses in advance did far better than the other two groups. The researchers believe that the third group was highly motivated by “loss aversion” – the idea that once a person has a benefit, it would be very painful to give it up.

The Chicago Heights research is preliminary and may not translate well to other workplaces. And many workers and employers would be uncomfortable with the idea of contingent compensation. But perhaps there is a place for “loss aversion” in your organization.

Internal investigations of employee complaints can be disruptive to the workplace. Employers commonly try to minimize that disruption by instructing employees to keep the investigation confidential.

A recent decision by the National Labor Relations Board (NLRB) rejected an employer's standard practice of seeking confidentiality in its workplace investigations. Banner Health System d/b/a Banner Estrella Medical Center and James A. Navarro, Case No. 28-CA-023438 (July 30, 2012). The 2-1 decision held that Banner Health violated the National Labor Relations Act (NLRA) when it asked the complaining employee to refrain from discussing the matter with co-workers while the investigation was ongoing.

Section 7 of the NLRA gives employees the right to act together to try to improve their pay and working conditions or fix job-related problems. Employees have a right to engage in protected concerted activity even where they are not unionized.

In the Banner Health decision, the NLRB suggested that while a blanket policy of confidentiality is not appropriate, some circumstances may merit a restriction of employees' Section 7 rights. The employer must, however, show that it has "a legitimate business justification" that outweighs employees' rights to engage in concerted activity.

An "individualized assessment" of the circumstances will be required in order to show the employer's legitimate business justification for requiring confidentiality. The NLRB listed a few considerations that may trump Section 7 rights, including whether:

• Witnesses need protection;
• Evidence is in danger of destruction;
• Testimony is in danger of being fabricated; or
• A cover-up needs to be prevented.

In light of the Banner Health decision, employers must carefully evaluate the circumstances before instructing employees not to discuss workplace investigations. Standard confidentiality directions applied in each investigation may subject employers to liability under the NLRA.

If you have questions about the impact of the Banner Health decision on your organization, please contact the Foster Pepper Employment and Labor Relations group.

As of September 1, 2012, the majority of Seattle employers will be required to provide paid sick leave to Seattle-based employees. Seattle-based employers, as well as non-Seattle employers with employees who routinely work in Seattle, should review existing paid leave plans now to ensure compliance with the new requirements.

Foster Pepper invites you to join us on August 8, 2012 for an in-depth examination of the new ordinance and its effect on your organization. Registration is now open if you would like to attend the complimentary seminar (available live or via webinar). In the meantime, employers can use the information below to begin reviewing their existing leave plans for compliance. Employers may also review the City of Seattle’s information page, text of the ordinance, regulations, FAQs, and related information.

Coverage

Which Seattle-based employers are covered by the new ordinance? The new ordinance covers employers with five or more full-time equivalent employees. Employees working outside Seattle must be counted, so businesses or non-profits with two Seattle employees and four employees in Shoreline would be covered. While the ordinance covers City of Seattle employees, it does not cover federal, state, and other local government employees.

What about coverage for non-Seattle employers who have employees regularly working in Seattle? Are those employees entitled to paid sick leave? Yes, employees who work in Seattle at least 240 hours in a calendar year must accrue sick leave. Examples may include employees who cover shifts at multiple employer locations (including shifts at Seattle-based facilities), or who make deliveries or route-based stops in the city limits. This may also include employees who regularly telecommute from their Seattle residences.

Can employees waive coverage? No, individual employees may not waive coverage. Union employees may waive coverage, but only through collective bargaining agreements with clear and unambiguous terms.

Waiting Period

My business has a leave policy that limits an employee's right to take paid leave during the initial months employment. Are waiting periods permitted under the ordinance? Yes. Leave must begin to accrue from the date of hire, but employers may require employees to wait up to 180 days after hire to take the paid leave.

Leave Requirements

How much paid leave must my business provide? The amount of leave depends on the number of full-time equivalent employees:

• Tier One:  5-49 FTE employees.  Employees accrue at least one hour of paid leave time for each 40 hours worked. Employees may use 40 hours per year and carry over up to 40 hours of unused time per calendar year.
• Tier Two: 50-249 FTE employees. Employees accrue at least one hour of paid leave time for each 40 hours worked. Employees may use 56 hours per year and carry over up to 56 hours of unused time per calendar year.
• Tier Three: 250 or more FTE employees.  Employees accrue at least one hour of paid leave time for each 30 hours worked. Employees may use 72 hours per year and carry over up to 72 hours of unused time per calendar year.

Can employers continue to offer PTO? Employers may provide paid time off (PTO), alternate methods of accrual, or more generous benefits than the ordinance, so long as the minimum number of hours are available for paid sick/safe time. Tier Three employers with PTO policies must provide at least 108 hours of paid leave use per year, and must allow up to 108 hours of unused paid leave to carry over into the next year.

How is accrued leave calculated? Exempt employees may accrue up to 40 hours per week based on their regularly weekly schedule. Non-exempt hourly employees accrue leave time on hours actually worked.

Are employers required to carry over leave from year to year? Yes. Accrued leave up to the cap carries over into the next year, but employees cannot use more leave in a year than their capped amount.

Must accrued leave be paid upon termination? Leave payouts are not required by the ordinance, but employers should review their existing policies to determine if they provide for payment of accrued leave upon termination.

Permitted Uses of Leave

What types of leave are covered by the ordinance? Under the ordinance, paid leave may be used when an employee must be absent from work for any of the following reasons:

• Due to the employee's own illness, injury, diagnosis, treatment or preventative care;
• For the health needs of employee's child, spouse, domestic partner, parent, parent-in-law or grandparent;
• To cope with the consequences of domestic abuse, sexual assault or stalking that may affect the employee or a family member;
• If the employee's place of business, or employee's child's school or place of care, is closed for a public health emergency.

How do employees notify the employer they wish to use paid sick/safe time? Employees must provide at least 10 days' advance notice of foreseeable leave requests. Employers may establish notice policies. Employers may require documentation for absences longer than three consecutive days (although employers must split the cost of obtaining any such documentation if the employer does not offer health insurance).

Recordkeeping Requirements

Do employers need to keep special records related to sick/safe time requirements? No, although employers should review their current recordkeeping practices to make sure that they accurately track hours worked in Seattle, accrued sick/safe leave, and sick/safe leave taken.

Do employers need to change payroll practices? Yes. Employers must notify employees of available sick/safe time balances each time wages are paid.

Notice and Posting Requirements

Do employers have to notify employees of their rights under this ordinance? Yes. Employers are required to give employees notice of their entitlement of paid sick/safe time, in either physical or electronic form. Notice posters are available for download.

In addition to our August 8, 2012 seminar, we will continue to provide information and analysis of the ordinance in future blog posts. If you have questions about the impact of the ordinance on your organization, please contact the Foster Pepper Employment and Labor Relations group.

In a case with potentially sweeping impact on many Washington enterprises, the Washington Supreme Court announced a new test for determining whether a worker is an employee entitled to minimum wage and overtime, or an independent contractor entitled only to compensation set by the parties. Under the “economic-dependence test,” the worker is an employee if "as a matter of economic reality,” the individual “is economically dependent upon the alleged employer or is instead in business for himself.” Anfinson v. FedEx Ground Package Sys., Inc. (click for separate majority opinion and dissent)

Although the full consequences of the July 19 decision are not yet clear, many workers who have been treated as independent contractors may now have the right to minimum wage and overtime compensation, and businesses and government agencies can expect a flurry of new lawsuits, including class actions.

The Lawsuit

Randy Anfinson, a delivery driver for FedEx Ground, was engaged as an independent contractor. Along with two other drivers, Anfinson filed a class action lawsuit seeking overtime wages under the Washington Minimum Wage Act. The case was certified as a class action that covered 320 current and former drivers.

After a four week trial, the jury found that the workers were independent contractors and therefore not entitled to overtime pay. The plaintiffs appealed. The Court of Appeals and Supreme Court found the jury instructions to be erroneous and prejudicial, and sent the case back for a new trial.

The Supreme Court’s Analysis

The Supreme Court rejected an eight-factor “right to control test” that formed the basis of the jury instructions. Under this test, the main issue was whether the enterprise controlled, or had the right to control, the details of the worker’s performance, and the eight factors were relevant only in deciding control or right to control.

According to the Supreme Court, the correct inquiry is "whether, as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for himself.” Unfortunately, the Court did not list the factors it would apply to the economic-dependence test, or suggest how to flesh out the general outlines of the test. The Court referred obliquely to "competing lists of nonexclusive factors" that some federal courts use.

The dissenting Supreme Court justices objected to the absence of a definite set of factors. They wrote that employee status under the Minimum Wage Act now is governed by a single determination – whether the worker is economically dependent upon the alleged employer – and any other factor will be relevant only in deciding economic dependence. The dissenting justices concluded that economic dependence focus potentially sweeps in almost any work done by one person on behalf of another.

For its part, the majority acknowledged that the economic-dependence test will result in “a more inclusive definition of employee than does the right-to-control test.” In other words, more workers will be considered employees under the economic-dependence test than under the right-to-control test.

Competing Standards

Unfortunately, the determination in the Anfinson case applies only to the Washington Minimum Wage Act. Courts and agencies, such as the Internal Revenue Service, the Washington Department of Labor and Industries, and the Equal Employment Opportunity Commission, apply different formulations. Therefore, a worker could be considered either an employee or an independent contractor depending on the law or agency. For example, a worker who qualifies as an independent contractor for federal income tax purposes might be entitled to overtime pay as an employee under the Washington Minimum Wage Act.

Conclusion

As noted above, the consequences of the Anfinson decision remains to be seen. We will continue to cover developments on the Washington Workplace Law blog.  If you have a question about avoiding liability for misclassifying employees as independent contractors, please contact the Foster Pepper Employment and Labor Relations group.

A recent Massachusetts case highlights the continued responsibility on all health care organizations to protect confidential health information. The Massachusetts Attorney General announced that South Shore Hospital agreed to a $750,000 settlement after the hospital failed to protect confidential patient health information.

The data breach occurred when the hospital shipped several boxes of unencrypted backup tapes to a third party vendor to be erased. The backup tapes contained the protected health information (PHI) of approximately 800,000 individuals, including names, Social Security numbers, financial account numbers, and medical diagnoses. Unfortunately, only one of the boxes arrived at the Texas-based vendor. The other boxes were never recovered.

As a result of the breach, the Massachusetts Attorney General sued the hospital under authority granted by Congress in the “HITECH Act” of 2009, alleging violations of both the Health Insurance Portability and Accountability Act (HIPAA) and a state consumer protection statute. The suit claimed the hospital (1) failed to implement appropriate safeguards, policies, and procedures to protect consumers’ information, (2) failed to have a “business associate agreement” with the vendor, and (3) failed to properly train its workforce to protect the privacy of health data.

As we previously discussed, health care employers can expect continued enforcement efforts from both federal and state agencies for violations of the HIPAA Privacy Rule and state consumer protection and privacy laws. In light of the high price tag for mistakes, health care organizations should review existing policies and procedures and implement the following suggestions:

• Health care organizations should implement policies and procedures to address removal of PHI from hospital premises.
• Removal of PHI should only occur when absolutely necessary, and all information taken offsite should be rigorously safeguarded and encrypted.
• Covered organizations should implement a comprehensive and well-documented HIPAA training program for all employees.
• Covered organizations should consider on-site destruction of PHI whenever possible, consistent with document retention and destruction policies, and should select vendors that will comply with HIPAA privacy and security standards.
• Obtain a business associate agreement with all vendors who handle PHI.

If you have questions about your organization’s HIPAA compliance efforts, please contact the Foster Pepper Health Care Practice Group or the Foster Pepper Employment and Labor Relations Practice Group.

Thank you to those of you who joined us for our most recent ELR Seminar Series presentation, “Reasonably Accommodating Employees with Disabilities.” Foster Pepper attorneys Steve Peltin, Amy Kauppila and Katie Carder McCoy offered practical guidance to Washington employers on reasonable accommodation of employees with disabilities. The presentation also included the insight of Dr. Barney Fleming, who presented valuable, common sense information on engineering the workplace for employees with disabilities.

Topics included the following:

• Legal requirements under federal and state law
• Successful use of the interactive process
• Harmonizing requirements under FMLA, workers' compensation and the collective bargaining agreement
• Addressing psychiatric disabilities
• Avoiding retaliations claims

Foster Pepper attorney Alexandra Gilliland also provided a brief update on recent employment and labor law developments.

Resources from this presentation are available on the Foster Pepper website, including an audio recording, presentation slides and handout materials.

On May 9, BNSF and Union Pacific Railroads filed a lawsuit against the City of Seattle, seeking to invalidate Seattle’s sick and safe leave ordinance.  As we discussed in this blog here and here, in presentations, and in business publications, the ordinance requires most employers to provide paid sick and “safe” time for employees who work at least 120 days in Seattle each year.  

The two railroad plaintiffs argue that the ordinance is invalid for several reasons. 

• Railroads are covered by federal laws that govern employment rights and benefits.  One such law already requires compensation for employees who are unable to work due to illness, injury or pregnancy.  Plaintiffs assert that because federal law ordinarily preempts or trumps state or local law, Seattle cannot enforce the part of the ordinance that requires sick leave.
• Another federal law governs labor relations in the railroad industry.  That law requires collective bargaining over issues of pay and benefits, including paid leave.  According to plaintiffs, Seattle is not permitted to impose requirements that interfere with the exclusive method for establishing paid leave – collective bargaining.
• Railroad health insurance plans and certain sickness benefit plans are governed by ERISA, the federal law that regulates employee benefit plans.  Because of ERISA, plaintiffs contend, Seattle cannot enforce an ordinance that conflicts with the terms of their employee benefits plans.
• Finally, plaintiffs claim that the “safe” time provisions in the ordinance are invalid in light of Washington state law on the same topic.

Plaintiffs ask for an order prohibiting the city from enforcing the ordinance. 

For more information on the ordinance, the lawsuit, or other leave of absence requirements, please contact Foster Pepper's Employment and Labor Relations Practice Group.

As we wrote in February and October of last year and January of this year, the National Labor Relations Board (NLRB) has been trying to require employers to post a notice informing employees of their rights under the National Labor Relations Act (NLRA).  Until today, the deadline for compliance was April 30, 2012.  

The United States Court of Appeals in Washington, DC is considering a legal challenge to the posting requirement brought by various business groups.  Today the Court temporarily prohibited the NLRB from requiring the posters, thus allowing time for briefing and argument (to be set for September).  We’ll provide updated information when it becomes available.

If you have any questions about compliance with NLRB requirements, please contact the Foster Pepper Employment and Labor Relations Practice Group. 

What was once considered a playground problem has now become a concern for employers.  As awareness of workplace bullying has grown, academics, advocacy organizations and business consultants have focused their efforts on recognizing and addressing harmful and intimidating behavior. 

Anti-bullying messages have even made their way into legislation.  Earlier this year, a “Healthy Workplace Bill” was introduced in Washington State.  The bill sought to amend the Washington Law Against Discrimination so that “subjecting an employee to an abusive work environment” would constitute an unfair practice.  Although the proposed law was not enacted, it highlights the seriousness of issues facing employers as they seek to maintain a safe and productive workplace.

More employers are implementing policies and practices that recognize and remedy workplace bullying.  The Washington State Department of Labor and Industries has issued a report intended to assist employers seeking to address these issues. 

Some of the information in the Report is useful, while other portions are too vague and general to provide real guidance.  The questions and answers below are taken from the L&I report, with our modifications and suggestions. 

What is workplace bullying?

• Workplace bullying is repeated and ongoing unreasonable actions toward one or more employees that is intended to intimidate, undermine, degrade, threaten, humiliate or harm the employees.
• Workplace bullying generally involves an abuse or misuse of power, verbally or in conduct.  Bullying can also be corporate or institutional, for example where a company uses policies or practices to intimidate and demoralize its employees.

What are some examples of workplace bullying?

• Deliberately giving employees unrealistic and unmanageable deadlines, or placing unrealistic expectations on employees, where failure to meet expectations means making life unpleasant for the employees or dismissing those employees who might object.  Even high-pressure, high-production work environments ordinarily have an institutional standard for productivity and efficiency.  When a manager or company goes well beyond this standard to “set employees up for failure,” giving physically impossible assignments and deadlines, then criticizing employees for their inability to meet the unrealistic expectations, it might be a sign of workplace bullying 
• Excessive monitoring or micro-managing of employees. All effective mangers monitor their subordinates, but when monitoring is constant, invasive and oppressive and done without a legitimate purpose, it might be bullying behavior. 
• Interference or sabotaging actions that intentionally prevent an employee from completing required work.  Examples of interference might include deliberately preventing access to information (such as a key memo or data) that an employee needs to complete a task, or constantly interrupting the employee with a barrage of unrelated menial tasks so that he or she cannot complete the required work.  Such behaviors could be considered bullying. 
• Providing unwarranted, invalid and excessive criticism of employees or blaming employees without factual justification.  Criticism and discipline should be based on concrete actions or behaviors that need correcting.  Falsely accusing an employee of errors, or consistently commenting on past errors without a constructive reason, could be considered bullying. 
• Berating or humiliating employees.  Feedback and criticism should be communicated in a respectful manner, as the goal is to elicit improved performance, not to personally attack an employee for his or her failures.  Yelling, shouting and insults could be viewed as workplace bullying. 
• Deliberate exclusion or social isolation of employees.  Some examples of isolating actions might include: refusing to invite an employee to a meeting in which he/she would normally participate, refusing to include an employee in social, team-building events where the rest of a group has been invited, or moving an employee’s workspace far from the rest of his or her team.  Such behaviors could be considered workplace bullying.

 What is the difference between workplace bullying and harassment?

• Harassment is a type of illegal discrimination defined as offensive and unwelcome conduct serious enough to adversely affect the terms and conditions of a person’s employment.  A harassment claim arises out of the employee’s status as member of a protected class, such as race, sex or disability. 
• Bullying, on the other hand, might not be overt or serious enough to adversely affect the terms and conditions of employment, and the target of a workplace bully might not be a member of a protected class.  Bullying might be covert, through indirect, constant criticism, unrealistic expectations or deadlines, or actions that force a person to feel demeaned or isolated from a group.  Unlike harassment, bullying is ordinarily not illegal.

How can employers demand top performance or impose discipline without bullying?   

• Employers should not be dissuaded from direct and sometimes critical feedback, evaluations and discipline.  Respectful communications are key.  Prudent employers train managers on effectively and sensitively managing their subordinates and correct overly-aggressive or hostile behavior promptly.  Similarly, managers should treat reports of bullying with sensitivity.

How can employers address and prevent workplace bullying? 

• Understand the behaviors that constitute bullying. 
• Consider an anti-bullying (or respectful workplace) policy as part of the wider commitment to a safe and productive workplace.  
• Consider workplace training and awareness so employees and managers can recognize and understand bullying. 
• Address and investigate bullying behavior promptly, including situations where there are allegations of institutional/corporate bullying. 
• Consider reassignment of the bullying individual(s) to another group as necessary. 
• Structure the work environment to allow employees some level of autonomy, create clear expectations of how tasks should be performed, provide constructive criticism and feedback to employees on how to improve performance, and include employees in decision making processes as appropriate. 
• Adopt and encourage open door policies. 
• Regularly evaluate the effectiveness of the foregoing policies.

For more information on workplace bullying or assistance implementing anti-bullying measures, contact Foster Pepper’s Employment and Labor Relations group.

The patent landscape is transforming.  An employer’s successful adjustment to the new patent regime will require it to take important steps to protect its potentially patentable products.

The Change

The United States was – and for now still is – a “first to invent” country.  A company or individual can invent a product, perfect it, sell it, and then pursue patent protection.  

By March 16, 2013, however, the patent process will be very different.  The United States will become a “first to file” country, and public sale of an invention even a day before filing a patent application can preclude ever getting a patent.  While the new law has some protections for an inventor’s pre-filing disclosure, they are untested and uncertain.

In the time before March 2013, employers that depend on innovation should behave as though the new system is in place already, and begin implementing new patent disclosure and filing systems. This transition will require the most significant changes at mid-sized organizations. Let’s face it: major multi-national companies adapted to the new regime years ago, because so many other countries already have a first-to-file structure.  And smaller, start-up companies simply have fewer people and systems to change.  For mature, mid-sized companies and other organizations that develop protectable IP assets, it’s time for three simple steps to safeguard patentable developments.

What Should Employers Do?

First, review and update employment agreements.  There’s no real change here.  Washington employers can require employees to assign patents to the company when (1) the invention is directly related to the business of the employer, or to the employer’s actual or demonstrably anticipated research or development; (2) it was created on company time, with company equipment, or with company trade secrets; or (3) the invention results from any work performed by the employee for the employer.  But the agreement needs to say that – or the inventor may own the invention.  Also, if the company needs to amend employment agreements to add assignment language, it may need to provide additional consideration, such as a salary increase or bonus. Finally, it’s vital that the agreement recite that current inventions are assigned, not merely that the employee has an obligation to assign in the future.

Second, develop a system for tracking inventions.  Now that the employer owns the invention, it better have a way to identify it.  Here’s where the major shifts need to happen.  Employee-inventors probably won’t notice when they invent something; after all, changing products and processes, fixing problems, improving efficiencies are just in a day’s work. That’s the job, not an invention, right?

Formerly, an employer could decide what to patent long after the product is released, and base its decisions on what had succeeded, not really needing to ask in advance. Now all potentially patentable improvements have to be captured before they are made public.

Every group of employees that works to contribute to the design or development of products or processes should hold periodic meetings to discuss developments. Make sure someone there also knows about product launches, pitches, white papers, and every other way the employer might disclose those developments.  The employer can determine when to involve patent counsel, holding developments secret until they are ready to be filed or disclosed.

Third, secure the necessary patent documents.  When a patent filing is in the works, the employer needs to ensure that employee-inventors – as required by the employment agreement – sign a form of assignment document that demonstrates to the Patent Office that ownership of the invention transfers to the employer.

At the same time, the Patent Office needs quite a lot of information from the employee – and not only relating to the invention.  The employee-inventor must promise to disclose to the Office everything that is material to the patentability of the invention. So if the employee knows of related technology (and who doesn’t?) it’s vital to secure that information and give it to patent counsel.

The alternative can result in years of wasted effort.  Imagine getting a patent, only to discover that the now-former employee-inventor knew of several products similar to the invention, but never disclosed them.  The non-disclosure could be enough to render the patent unenforceable. On the other hand, armed with complete information, the employer and patent counsel would have been ready for competitor claims or might have decided not to seek a patent at all.  

Conclusion

Any employer who hopes to develop something new and valuable should adopt the steps outlined above, while of course heeding all legal advice from patent counsel. 

If you have questions about questions about the patents or other intellectual property issues, please contact the Foster Pepper Intellectual Property Practice Group.  If you have questions about employment agreements, please contact the Foster Pepper Employment and Labor Relations Practice Group.

As we wrote before, the National Labor Relations Board (NLRB) is requiring employers to post a notice informing employees of their rights under the National Labor Relations Act (NLRA). Just before Christmas, the NLRB announced that it is delaying the posting deadline from January 31 until April 30, 2012. Various business groups have filed a lawsuit challenging the posting requirement, and the federal court that is hearing the case requested more time to consider pending motions.

The latest announcement follows an earlier delay. As we wrote in October, the NLRB unilaterally set back the earlier deadline for compliance from November 14, 2011 to January 31, 2012 “to allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses.”

Assuming no further delay, the April 30 posting requirement will apply to all private-sector employers subject to the NLRA – including those that have no union. Agricultural, railroad and airline employers are not covered.

If you have any questions about compliance with NLRB requirements, please contact the Foster Pepper Employment and Labor Relations Practice Group.

The Washington Court of Appeals recently ruled that an arbitrator improperly returned a union employee to work after discharge for racial harassment. In International Union of Operating Engineers, Local 286 v. Port of Seattle, the Court found that the public policy against racial discrimination and harassment trumped the usual deference given to arbitration awards.

The Discharge and Arbitration

Port of Seattle employee Mark Cann hung a noose in a busy work area. An African American employee reported the incident, prompting a lengthy internal investigation. After the inquiry, the Port fired Cann for violating its harassment policy.

The Union grieved the discharge, leading to binding arbitration under the collective bargaining agreement. At the two-day hearing, Cann admitted that he tied and displayed the noose – and had done so repeatedly – but claimed he was not aware of the discriminatory and emotional symbolism of his conduct.

The arbitrator found that Cann’s behavior would be expected to demean or show hostility to “people of a protected class” (i.e., African Americans) and that Cann violated the Port’s harassment policy. However, the arbitrator found that Cann “was more clueless than racist,” and overturned the discharge. The arbitrator instead ordered Cann to be returned to his job, along with nearly all of his lost earnings and benefits. Cann would lose only 20 days of pay.

The Court Proceedings

The Port filed a lawsuit in Superior Court to challenge the arbitrator’s award. The judge upheld the order to reinstate Cann, but lengthened the unpaid suspension from 20 days to 6 months. The judge also ordered Cann to write a letter of apology, attend diversity and harassment training, and remain in a probationary status for 4 years.

The Union appealed, urging the Court of Appeals to uphold the arbitrator’s award and stressing the strong public policy favoring the finality of arbitration awards. The Court of Appeals refused. It found the Washington Law Against Discrimination (WLAD) to be “an explicit, well-defined, and dominant public policy, which creates an affirmative duty on the part of an employer to eradicate racial discrimination in the workplace.” The Court of Appeals ruled that the arbitration award violated public policy by preventing the Port from fulfilling its obligations under WLAD.

The Court of Appeals also disagreed with the sanctions imposed by the Superior Court. Instead, the Appellate Court sent the dispute back to the arbitrator to issue a new award.

Takeaways

This case illustrates the risks faced by employers who receive reports that union employees have discriminated against or harassed coworkers. On the one hand, the employer has a duty to prevent and eradicate racial bias and harassment. On the other hand, union support for the accused worker can thwart the employer’s efforts to deal decisively with improper behavior, and an arbitrator can limit the employer’s discretion to remove a wrongdoer from the workplace.

The Port handled the case properly, using steps that all employers should follow.

1. The Port adopted an effective anti-harassment policy, with “zero tolerance” for improper behavior against African Americans and other protected groups.
2. The Port trained its employees on how to comply with the policy.
3. The Port created an atmosphere in which the offended employee felt comfortable enough to report Cann’s behavior.
4. The Port conducted a prompt and vigorous investigation.
5. The Port decided based on the facts to discharge Cann.
6. After the Union filed its grievance, the Port followed the required process but did not back down from its discharge decision.
7. When the Union demanded arbitration, the Port expended the resources to defend the case. After the Port lost at arbitration, it made the difficult decision to seek court review. (Note, however, that judicial review of arbitration decisions is very unusual and rarely successful.)

If you have questions about the issues raised in this article, please contact a member of our Employment and Labor Relations Practice Group.

The Washington Department of Labor and Industries (L&I) recently announced that as of January 1, 2012, Washington’s minimum wage will be $9.04 per hour. The $.37 hourly increase reflects the state’s increased cost of living as calculated by the Consumer Price Index (CPI). Washington will have the highest minimum wage in the country, followed by Oregon. Oregon recently announced that its minimum wage will rise 30 cents to $8.80 an hour in 2012.

Washington’s minimum wage applies to workers in both agricultural and non-agricultural jobs, although 14- and 15-year-olds may be paid 85% of the minimum wage.

Washington employers are required to post the “Your Rights As A Worker” poster in designated workplace areas. The poster, which is produced by the Washington State Department of Labor and Industries, provides information about the minimum wage and other topics. Posters are available for download at no cost on the L&I website. Employers do not need a new posting with the increase in minimum wage, but should take a moment to ensure their current kitchen postings are up to date.

For more information on Washington wage requirements or related employment issues, please contact the Foster Pepper Employment & Labor Relations Practice Group.

In a win for employers, the Washington State Court of Appeals recently dismissed a lawsuit brought by the Washington State Nurses Association (“WSNA”) against Sacred Heart Medical Center.  The WSNA contended that Sacred Heart had violated Washington’s Minimum Wage Act (“MWA”) by failing to pay nurses overtime pay for missing mandatory rest breaks.

The WSNA filed a grievance in 2004, claiming Sacred Heart did not consistently provide its nurses two 15-minute rest breaks during an 8-hour work day as mandated by their collective bargaining agreement. An arbitrator ordered Sacred Heart to ensure that nurses receive their 15-minute breaks and to pay the nurses for any rest breaks missed in the past at the straight time rate.

In 2007, the WSNA brought an action in court claiming entitlement to overtime pay, not straight time, for a portion of the nurses’ missed rest breaks. Under Washington’s Industrial Welfare Act, which applies to all Washington employers and employees, an employee must receive a paid 10-minute rest break for every 4 hours worked. The WSNA argued that when a state-mandated rest break is missed it constitutes additional hours worked under the MWA – a so-called “extension” of the workday – which takes the employee beyond a 40-hour work week. The Court of Appeals rejected this argument.

The MWA generally requires that non-exempt employees be paid overtime if they work more than 40 hours in a week. “Hours worked” is defined as “all hours during which the employee is authorized or required by the employer to be on duty on the employer’s premises or at a prescribed work place.” The court ruled that because the additional labor is provided during, not after, the employee’s 8-hour work assignment, the 40-hour workweek is not exceeded and does not result in overtime pay.

While this case is a victory for Sacred Heart, the WSNA is still aggressively pursuing claims against other hospitals, including Evergreen Hospital Medical Center, Good Samaritan Hospital, Providence Holy Family Hospital, and Tacoma General Hospital, for failure to provide nursing staff with mandatory meal and rest breaks. These lawsuits allege that the hospitals failed to provide nurses with meal and rest breaks as required by state law and, in some cases, collective bargaining agreements. The lawsuits seek back pay and other damages on behalf of over 1,000 nurses.

In order to avoid meal and rest break litigation, employers must be aware of Washington law governing meal and rest breaks. Department of Labor and Industries regulations require the following:

• Employees generally must receive at least two paid ten-minute breaks and one thirty-minute meal break during the course of an eight-hour day.

• Employees may not be required to work more than five consecutive hours without a meal break.

• Employees working more than three hours longer than a normal work day must be allowed at least one thirty-minute meal break during the overtime period.

If staff is unionized, employers should review applicable collective bargaining agreements to determine the length and frequency of required meal and rest breaks. The collective bargaining agreement may also impose additional obligations on employers with respect to documentation of meal and rest breaks.

Maintaining accurate and complete records is critical to defending a claim of missed breaks. Employers should implement a system to document that meal and rest breaks are being provided. Employers may also consider requiring employees to sign or initial for meal breaks actually taken, rather than missed. The record should also indicate whether the full break was taken. A break that is not signed for should be considered a break that was missed entirely. If a break was offered and refused, the record should reflect such refusal as a waiver of the meal break, and be signed or initialed by the employee.

For more information on meal and rest break requirements in Washington and how they might affect your business, please contact Foster Pepper’s Employment and Labor Relations Practice Group.

The Seattle City Council's Housing, Human Services, Health and Culture Committee has spent much of the summer working on revisions to a proposed ordinance that would require Seattle businesses to provide employees with "paid sick and paid safe time." As we previously discussed, if the ordinance is adopted, Seattle would join San Francisco, Milwaukee, and Washington D.C. as one of the few cities to require "paid sick and paid safe time."

Since June, the Committee has made several revisions to the proposed ordinance to make it friendlier to Seattle's businesses, including:

• Exempting businesses with fewer than 4 full-time employees ("micro employers") from the ordinance's requirements;

• Excluding college students on work study, even if they would otherwise qualify for "paid sick and paid safe time";

• Increasing the minimum eligibility requirement for employees who occasionally work in Seattle from 80 to 120 days per year to qualify for "paid sick and paid safe time"; and

• Enlarging the probationary period for employees at the largest businesses (250+ employees) from 90 to 180 days worked before any paid sick time may be used.

Despite these and other revisions, the legislation continues to be controversial with the Seattle business community. While some businesses have supported the measure, the Seattle Chamber of Commerce is urging its members to tell Seattle City Councilmembers to "slow down," "take more time" and "don't rush to mandate." The Chamber suggests that the City Council should more fully consider the impact of the leave ordinance on collective bargaining agreements, the impact on seasonal employment, and whether alternatives exist that wouldn't cause financial hardship for employers.

Despite this opposition, the ordinance is expected to be enacted in its current form on September 12.

For more information on the proposed ordinance and how it might affect your business, please contact Foster Pepper's Employment and Labor Relations Practice Group. We'll also discuss the outcome of the vote at our September 13th briefing.

In a recent decision of great interest to Native American tribes, a federal judge granted a preliminary injunction effectively blocking the National Labor Relations Board (NLRB) from proceeding with unfair labor practice proceedings against the Chickasaw Nation Indian Tribe.

The National Labor Relations Act does not explicitly reference Indian tribes. Prior to the 2004 San Manuel decision, the NLRB routinely exempted tribal businesses under the NLRA based on tribal sovereignty. In the San Manuel decision, the Board held tribal employers were not automatically excluded from the Act’s jurisdiction, even if tribal business were operated on reservation land. The Board’s decision was subsequently upheld by the D.C. Circuit, and in the years since the San Manuel decision the NLRB has consistently claimed jurisdiction over tribal commercial operations.

The Chickasaw Nation, a federally-recognized Indian Tribe, operates several gaming facilities on tribal trust property in Oklahoma. In December 2010, the NLRB sent the Nation notice of alleged unfair labor practices stemming from a Teamsters organizing effort at one of the Nation’s casinos. The NLRB went on to issue a complaint against the Nation and set an administrative hearing for June of this year.

The Nation immediately sought a preliminary injunction in federal court to stop the NLRB proceedings. The Nation asserted that its unique treaty rights and inherent powers as a sovereign protect it from the NLRB’s assertion of authority. In response, the NLRB claimed it has jurisdiction over tribal commercial operations based on the use of the word “person” to describe an employer in the Act; at least one court interpreted that word to encompass Indian tribes.

In the July 11, 2011 preliminary injunction order, US District Court Judge Lee R. West agreed with Nation and instructed the NLRB to suspend its proceedings. Judge West wrote that “applying certain federal regulatory schemes to Indian tribes impinges on their sovereignty by preventing tribal governments from freely exercising their powers, including the sovereign authority to regulate economic activity within their own territory.” The court grounded the decision on previous decisions from the Court of Appeals, noting that “respect for Indian sovereignty means that federal regulatory schemes do not apply to tribal governments exercising their sovereign authority absent express congressional authorization.” Because the NLRA does not explicitly refer to Indian tribes, Judge West ruled that the Nation would not be subject to that law.

The injunction comes shortly after the introduction of a bill introduced by Rep. Kristi Noem on June 23, 2010. If passed, the bill would reverse the San Manuel decision and clarify that the NLRB does not have jurisdiction over tribally owned businesses on reservation land. However, unless and until such a bill passes, the NLRB will likely continue to assert jurisdiction over tribal commercial operations.

For more information on the issues in this article, please contact Foster Pepper’s Native American or Employment and Labor Relations practice groups.

In our post on May 10 covering best practices for using social media in the recruiting process, we shared guidelines for using social media in screening applicants as part of the hiring process. Among other tips, we suggested that each organization designate an employee or group of employees who would conduct the Internet search for additional information about the applicant’s work qualifications, interests and negative work history or behavior. That employee would cull through the publically-available information and then share only the relevant data with the hiring managers. We also noted that the employer could engage a third party service provider to perform the work.

One prominent vendor, Social Intelligence, searches social media sites such as Facebook and Twitter for negative information about candidates. The company is particularly keen to locate racist remarks or activities, sexually explicit photos or video, potentially violent tendencies, and demonstrations of illegal activity.

The US Federal Trade Commission has dropped its investigation into Social Intelligence’s business practices.  The FTC found no evidence that Social Intelligence violated the Fair Credit Reporting Act, the federal law that regulates third-party investigations.

Thus, despite blog criticisms of Social Intelligence’s activities as “scary” and “creepy,” employers may decide that third-party social media searches are preferable to asking HR employees to scour the net in search of disqualifying behavior.

NOTE: Foster Pepper does not endorse Social Intelligence or any other vendor. Employers should carefully investigate before engaging any third party to assist in the hiring process.

Workers’ compensation is a form of no-fault insurance that provides wage replacement and medical benefits to employees who suffer injury or illness in the course of employment. Each state maintains a separate workers’ compensation system. The US Department of Labor has put together a quick reference guide to workers’ compensation offices across the nation.

The workers’ compensation system is designed to cover approved medical, hospital and related services due to workplace injuries or illnesses, as well as compensate employees who are temporarily unable to work full-time. Employers must provide coverage for their employees, and in return employers normally cannot be sued for damages when a work-related injury or illness occurs.

The Washington state workers’ compensation system is unusual. Washington was one of the first states to implement a workers’ compensation system, and is currently one of only four states that has a monopoly state fund to provide workers' compensation insurance.

Unlike non-monopoly states, where employers can purchase private insurance, Washington employers must obtain coverage through the Department of Labor & Industries. The agency manages and pays benefits out of an insurance pool called the Washington State Fund. The Fund is financed by premiums paid by employers and employees through payroll deduction. The Department sets premium rates each year; rates increased by 12% in 2011. Increases in 2012 and beyond are expected to be higher, as underlying medical care, pension and claim costs continue to rise.

The Department also requires employers to report serious workplace accidents or injuries. In cases of death, probable death or in-patient hospitalizations, employers have only eight hours to report the injury.

Employers seeking additional information on the workers' compensation system should consult the Department of Labor & Industries information page.

For more information on compliance with the Washington workers' compensation system, please contact Foster Pepper's Employment and Labor Relations Practice Group.

In the March 2011 decision, Staub v. Proctor Hospital, the United States Supreme Court held an employer liable for the biased actions of lower-level supervisors. Using a cat’s paw theory, the Court found employers may be liable for discrimination when managers with improper motives influence – but do not make – the ultimate employment decisions. Please refer to our previous article for additional background on the Staub case. Although the Court’s holding was expressly limited to the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), Staub opened the door for the cat’s paw theory to be extended to other types of discrimination cases.

The U.S. Court of Appeals for the Tenth Circuit (which covers the states of Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming) recently applied the cat’s paw theory in a case under the Age Discrimination in Employment Act (ADEA). Simmons v. Sykes Enterprises, Inc., No. 09-1558 (June 2, 2011). The ADEA protects individuals over the age of forty from discrimination based on age.

Simmons was in her early sixties and worked as a technician/assistant in Sykes Enterprises’ human resources department. Simmons had access to confidential information, which she was required to keep secret. Simmons was terminated, along with a 23-year-old employee, after an internal investigation revealed the two had disclosed confidential medical information.

Simmons sued Sykes Enterprises under the ADEA. Simmons claimed that her direct supervisor and others had commented about her age, both to her and to co-workers. Simmons alleged that the perpetrators of these ageist remarks participated in the investigation that ultimately caused an upper-level manager to fire her, thus invoking a cat’s paw theory.

The trial court granted summary judgment for the employer, finding that Simmons did not prove that the employer’s reason for termination was a pretext for age discrimination. On appeal, the Tenth Circuit applied the cat’s paw theory, but still upheld the verdict for the employer. The appellate court examined whether the Site Director and the HR Supervisor, who participated in the investigation, had discriminatory motives, and, if so, whether their bias caused her termination. The court found Simmons could not show that “but for” the managers’ bias, she would not have been fired.

The Court of Appeals listed useful examples of supervisor actions that could trigger ADEA liability under a cat’s paw theory:

Liable:

• A biased supervisor falsely reports the employee violated the company’s policies, which in turn leads to an investigation supported by the same supervisor and eventual termination of the employee.

• A biased supervisor writes a series of unfavorable performance reviews which, when brought to the attention of the final decision-marker, provoke disciplinary action against the employee.

Not liable:

• A violation of company policy is reported through channels independent of the biased supervisor.

• An investigation, independent of the biased supervisor’s influence, brings to light unbiased reasons to terminated employment.

Please refer to our previous article for practical steps every employer can take to minimize exposure. If you have any questions about the information in this posting please contact the Foster Pepper Employment and Labor Relations Practice Group.

Several attendees at the May 10 Social Media Breakfast Briefing asked about best practices for use of social media in the recruiting process. A candidate’s publicly-available social media profile may provide valuable information related to his or her work qualifications, interests and negative work history or behavior.

Social media searches used during the recruiting process must be consistent and carefully crafted. Failure to establish a consistent search methodology may yield too much information (e.g., information on protected status such as ethnicity, disability, pregnancy, or union affiliation) and therefore may generate a claim for failure to hire or for post-hire discrimination.

So, what are some guidelines for social media checkups during the hiring process?

1. Consistency: All applicants should be processed consistently. Any searches should be conducted at the same phase of the interview process (e.g., before the initial interview or after the first phone screen). The process should be followed for each candidate without regard to age, appearance, or perceived lifestyle choices. If you decide that not every position merits investigation using social media checks, designate particular job categories or departments that are included and consistently follow those guidelines.

2. Designated searcher: The organization should designate one employee (or small group of employees) to conduct the search. As an alternative, the organization may want to engage a third party service provider to perform the work. The employee conducting the search should not be the hiring manager.

3. Screen the hiring manager: The goal of naming a designated searcher is to avoid revealing protected information to the hiring manager. Protected information includes, for example, data about the age, race, religion, disability, genetic information, and political association of the candidate.

4. Limited scope: Before incorporating social media searches in recruiting, the organization should identify the social media sites they wish to search, focusing on securing relevant, work-related information. The search should seek publicly available information; do not allow the searcher or others in the recruiting department to “friend” an applicant in order to see private profile information.

5. Disclosure to applicant: Follow the same notice and disclosure policies the organization already has in place. Include a proviso regarding social media on the organization’s application for employment or in a separate disclosure.

6. Document results: Those conducting the review should consistently document the results of the social media search, removing any protected information that was inadvertently obtained. Search results should be maintained consistently with the organization’s recordkeeping policies.

7. Document the basis for hiring decisions: If you use social media search results to reject an applicant, such decisions should be based on legitimate, job-related reasons (e.g., work history was inconsistent with resume). The decision should be documented consistent with existing recruiting policies and procedures.

8. Communicate the policy to hiring managers: Hiring managers should be informed of the organization’s policy, and should be specifically advised not to perform their own social media searches.

If you have any questions about this information, please feel free to contact the Foster Pepper Employment and Labor Relations Group.  Materials from the May 10 Breakfast Briefing, including a sample social media policy, are available under the "News/Pubs" link on the ELR Group page.

How Do We Prepare For The Next Big Earthquake?: Seattle PI Columnist Joel Connelly discusses potential earthquake activity on the Juan de Fuca plate, which stretches from Northern California to Vancouver Island. 

Making The Case For Emergency Management: FEMA’s emergency management guide for business and industry includes step-by-step advice on how to create and maintain a comprehensive emergency management program.

Disaster Planning, Emergency Preparedness and Business Continuity: A comprehensive guide to developing a disaster plan for your organization from the Nonprofit Coordinating Committee (via SHRM).

Aftershock: What would your business do at 2:47 p.m.?: An overview of corporate disaster recovery plans in the wake of the Japanese earthquake.

King County American Red Cross resources:

• Earthquake preparedness tips from the American Red Cross.

• Seattle-area Red Cross training opportunities.

• Tips on preparing your employees for disaster.

• Red Cross disaster education.

The Age Discrimination in Employment Act of 1967 (ADEA) protects individuals who are 40 years of age or older from employment discrimination based on age. It applies to employers with 20 or more employees, including state and local government. The Equal Employment Opportunity Commission (EEOC) enforces the ADEA.

ADEA applies to both employees and job applicants. The ADEA prohibits discrimination against a person because of age with respect to any term, condition, or privilege of employment, including hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training.

A brief summary of ADEA protections:

• Job Notices and Advertisements: It is generally unlawful to include age preferences, limitations, or specifications in job notices or advertisements. Employers may specify an age limit only in the rare circumstance where age is a “bona fide occupational qualification” reasonably necessary to the normal operation of the business. Prohibited language includes words that the EEOC considers age-related, such as preferences for “energetic” candidates.

• Pre-Employment Inquiries: While the ADEA does not specifically prohibit an employer from asking an applicant’s age or date of birth, requests for age information must be necessary for a lawful purpose.

• Benefits: Employers may not deny benefits to older employees. Employers may be able to reduce benefits based on age under very limited circumstances where the cost of providing reduced benefits to older workers is the same as the cost of providing benefits to younger workers.

• Waivers of ADEA Rights: An employer may ask an employee to waive rights under the ADEA in settlement of a claim or an employment termination. The ADEA, as amended by the Older Workers Benefit Protection Act of 1990 (OWBPA) sets specific minimum standards that must be met in order for a waiver to be considered knowing and voluntary. Particularly in the context of group terminations, these requirements can be complex.

Washington employers covered by ADEA also are responsible for complying with the Washington Law Against Discrimination (WLAD). WLAD similarly prohibits age discrimination, and covers employers with as few as 8 employees. County and city ordinances also may prohibit age discrimination, and these local measures may cover even smaller employers.

For more information on compliance with the ADEA as well as state and local laws, please contact Foster Pepper’s Employment and Labor Relations Practice Group.

The United States Department of Health & Human Services (HHS) recently announced its first-ever civil monetary penalty for violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule. On February 22, HHS reported that it assessed $4.3 million against Cignet Health of Prince George’s County, Md. Two days later, HHS disclosed a $1 million settlement with Massachusetts General Hospital to resolve a HIPAA privacy complaint.

Background on HIPAA and the HITECH Act

The HIPAA Privacy Rule protects personal health information held by covered entities such as hospitals, clinics, laboratories, pharmacies, dentists, and many others that provide medical, dental or mental health care or treatment. Although the Privacy Rule gives patients an array of rights with respect to that information, the rule is intended to permit disclosure of personal health information needed for patient care and other important purposes. HHS enforces HIPAA.

In 2009, Congress authorized increased penalties and outlawed additional behavior in the Health Information Technology for Economic and Clinical Health (HITECH) Act. The HITECH Act established four categories of violations to address increasing levels of culpability on the part of covered entities, by increasing civil monetary penalties, and by requiring that HHS base penalties on the nature and extent of the violation and of the resulting harm. The HITECH Act’s tiered penalty structure significantly increased the potential liability of covered entities. The new law also eliminated certain defenses that were previously available to covered entities.

Cignet Penalized for Violating HIPAA and Refusing to Cooperate

According to HHS, Cignet violated HIPAA by improperly denying 41 patients access to their medical records requested between September 2008 and October 2009. Many of these patients filed individual complaints with HHS, which initiated investigations. Cignet refused to cooperate with HHS’s investigations or to produce records in response to a subpoena. After HHS enforced the subpoena in federal court, Cignet produced the medical records, but made no further efforts to resolve the complaints.

HHS calculated the $4.3 million penalty based on the new violation categories and increased penalties authorized under the HITECH Act. Accordingly, HHS imposed a $1.3 million penalty for violation of the HIPAA rule that requires a covered entity to provide patients with their medical records within 30 (and no later than 60) days, and $3 million for failing to cooperate HHS in its investigations.

Mass General Settles HIPAA Claims

On the heels of the Cignet penalty, HHS announced that Mass General had agreed to pay a $1 million dollar settlement for HIPAA violations. In March 2009, a Mass General employee accidentally left documents on a subway train, including documents that contained the protected health information (PHI) of 192 patients, some of whom were diagnosed with HIV/AIDS. The documents contained the name, date of birth, medical record number, health insurer and policy number, diagnosis, and name of providers for 66 patients as well as the names and medical record numbers of all 192 patients. The documents were never recovered.

In addition to paying the government $1 million, Mass General also entered into a corrective action plan, requiring the hospital to: (a) implement a comprehensive set of policies and procedures to protect PHI that is removed from hospital premises; (b) train employees on these policies and procedures; and (c) review and update the policies annually.

While details of the settlement negotiations were not made public, the enhanced penalty provisions enacted as part of the HITECH Act in 2009 likely played a prominent role in the settlement.

Lessons Learned

Health care employers can expect HHS to continue its HIPAA enforcement efforts and to use its authority under HITECH to impose penalties or negotiate high dollar settlements with covered entities that violate HIPAA’s Privacy Rule. Covered entities will be held strictly liable for HIPAA violations; as seen in the Mass General case, even accidental violations are punishable.

Upon discovery of a potential HIPAA violation, health care organizations should take immediate steps to mitigate or correct the violation. Furthermore, covered entities should cooperate with HHS investigations to limit penalties of up to $50,000 per violation. The Cignet example demonstrates that HHS can and will impose penalties on covered entities that commit egregious violations of HIPAA and refuse to cooperate with investigations.

Additionally, the Mass General settlement shows that HHS expects all covered entities to implement policies and procedures addressing removal of PHI from hospital premises. Such removal should occur only when absolutely necessary, and the PHI should be rigorously safeguarded, including by encryption. Health care organizations should implement a comprehensive HIPAA training program for all employees that is well-documented and consistent with organizational policies and current legal requirements.

If you have any questions about the information in this posting please contact the Foster Pepper Employment and Labor Relations Practice Group or the Foster Pepper Health Care Practice Group.

The United States Supreme Court recently issued an opinion that may significantly increase employer liability for the actions of lower-level supervisors. In Staub v. Proctor Hospital, the Court upheld the “cat’s paw” theory of employer liability.  "Cat's paw" is a phrase derived from a La Fontaine fable, referring to a person used unwittingly by another to accomplish his own purposes.  Applied to employment law, the "cat's paw" theory holds employers liable for discrimination when managers with discriminatory motives influence – but do not make – the ultimate adverse employment decision. Although the case addressed rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Court’s validation of the “cat’s paw” theory is likely to extend to many types of discrimination cases.

Factual Background

By way of background, USERRA forbids employers from denying “employment, reemployment, retention in employment, promotion, or any benefit of employment” on the basis of a person’s membership or obligation to perform in a uniformed service. Employers violate USERRA if the person’s military service is a motivating factor in the employer’s action, unless the employer can prove the action would have been taken in the absence of such service.

Employee Victor Staub was a member of the United States Army Reserves while employed by the defendant, Proctor Hospital. According to Staub, his supervisors expressed hostility toward him based on his membership in the Army Reserves, telling co-workers covering for Staub’s shifts that his military service was a “strain on the department” and asking for help to “get rid of him.” In the midst of these alleged anti-military statements and actions attributed to his supervisors, Staub received a disciplinary warning for violating a supposedly non-existent company rule. Shortly thereafter, the supervisors requested that Human Resources terminate Staub.

The Vice President of HR reviewed Staub’s personnel file and decided to fire him. Although the Vice President had never expressed any anti-military animus, Staub alleged that the termination decision was unduly influenced by those who did harbor animosity about his military service. The employer claimed that HR’s review of the personnel file before discharge was enough to wipe away the effect of the prior discrimination.

The Supreme Court sided with the employee, holding that an employer can be held liable under USERRA for an adverse employment action even if the decision maker has no anti-military animus. The Court explained that an employer can be held liable for a lower-level supervisor’s antimilitary hostility, when a supervisor’s act is motivated by the hostility and where the supervisor’s act is intended to (and actually does) result in an adverse employment action.

The Court also rejected the hospital’s argument that its independent investigation eliminated the effects of the prior discrimination, noting that the views of the hostile supervisors remained a motivating factor in the termination. The Court noted, however, that if the investigation turned up reasons for termination or discipline that were unrelated to the supervisors’ original biased action, the employer would not be liable.

Open Questions

Staub left several open questions. First, it is still unsettled whether the cat’s paw theory will apply to discrimination cases under other statutes that prohibit discrimination based on sex, race, religion, national origin, age, disability or and other protected characteristics. The Court did compare USERRA to the anti-discrimination provisions of Title VII of the Civil Rights of 1964, suggesting that the cat’s paw theory would apply to other kinds of discrimination claims.

Second, Staub did not specify whether an employer would be liable if a co-worker, rather than a supervisor, committed a discriminatory act that was intended to and did cause an adverse employment action. Although the Court expressed no opinion, the case is likely to be broadly applied, even to co-workers who are not supervisors.

Third, it is also unclear whether an employee is required to first utilize the employer’s grievance process to recover under USERRA.

Practical Steps To Minimize Exposure

The Staub decision means that employers are not immunized from their supervisors’ acts, even when decisions are made by a non-biased decision-maker and carefully investigated. So how can employers take steps to minimize their potential exposure?

• Train all supervisors about how to avoid prohibited discrimination, including under USERRA.

• Coach ultimate decision-makers not to reply on the personnel file alone. Decision-makers should conduct an independent, thorough investigation into the facts, before endorsing discipline or discharge decisions requested by supervisors. Employers should examine Human Resources staffing ratios and workloads to ensure Human Resources officials have the ability to fully investigate facts prior to termination.

• Take steps to address bias in lower-level employees. Although it is unclear whether an employer is liable for discriminatory acts committed by a co-worker, employers should promptly investigate and address discriminatory behavior on the part of lower-level employees.

• Establish an adequate internal grievance process for investigation and resolution of claims. Employers should ensure that an internal complaint procedure exists to allow and require employees to inform the employer of allegedly illegal bias in employment decisions.

• Consult legal counsel before making personnel decisions that may be based on discriminatory animus.

If you have any questions about the information in this posting please contact the Foster Pepper Employment and Labor Relations Practice Group.

March Madness is here. References to pools, brackets, and Cinderella are popping up during meetings and hallway conversations across the country. Chances are your employees are organizing co-worker NCAA Tournament pools, which typically involve predicting the outcome of tournament basketball games. Many office pools require a “buy in,” in which participants contribute a certain dollar amount to be divided among the victors at the end of the tournament.

As a savvy professional, you might wonder: are office pools legal in the Washington workplace?

The simple answer is no. Office pools with a monetary component are illegal. Gambling activities are illegal in Washington unless they are specifically authorized by state law. The state’s Gambling Act was passed in 1973 – several years before the rise of ESPN and extensive television coverage of the NCAA tournament. As a result, the only authorized sports pool in Washington is the 100 square sports pool board, which is limited to buy-in of $1 per square, must have 100 squares, must randomly assign game scores to each square, and may only be offered once per athletic event.

So will the vice squad be raiding the workplace if March Madness office pools continue? It’s not likely. Although NCAA pool participants could be subject to criminal charges, enforcement is unlikely if the monetary component is low. Unless your employees are high rollers, your workplace is unlikely to be featured as a crime scene in the local paper.

Successful pool participants should also remember that pool winnings are recognized as income for IRS reporting purposes. (Of course, the employer should not include prize money on the employee’s W-2.)

Putting aside the specter of prosecution, March Madness pools have been known to severely distract large portions of the employee population. With many games available via live webcast, corporate bandwidth capabilities may be strained as employees access streaming media.

At the same time, there are also benefits to the workplace. March Madness can increase worker morale, including positive interactions among employees as they discuss bracket selections and support their chosen teams. Some employers set up viewing parties in company break rooms to further engage employees.

So, as an employer, how do you balance the competing legal and employee relations issues? As a best practice, employers should not encourage or sponsor NCAA office pools where money changes hands. Office pools organized for bragging rights alone are the safest bet for Washington employers.

Does your organization have employees or independent contractor drivers subject to hours of service regulations?  If so, you should be aware of potential changes to the hours of service regulations.  The Federal Motor Carrier Safety Administration (FMCSA) has released a proposed rule amending the hours of service requirements for drivers of property-carrying commercial motor vehicles (CMVs).  

FMCSA’s proposed rule would make seven changes from current requirements:

1. Limit drivers to either 10 or 11 hours of driving time following a period of at least 10 consecutive hours off duty.  FMCSA currently favors a 10-hour limit, but its ultimate decision will include consideration of comments and any additional data received.
2. Limit the standard “driving window” to 14 hours, while allowing that number to be extended to 16 hours twice a week.
3. Actual duty time within the driving window would be limited to 13 hours.
4. Drivers would be permitted to drive only if 7 hours or less have passed since their last off-duty or sleeper-berth period of at least 30 minutes.
5. The 34- hour restart would be retained, subject to certain limits. The restart would have to include two periods between midnight and 6 a.m. and could be started no sooner than 168 hours (7 days) after the beginning of the previously designated restart.
6. The definition of “on duty” would be revised to allow some time spent in or on the CMV to be logged as off duty.
7. The oilfield operations exception would be revised to clarify the language on waiting time and to state that waiting time would not be included in the calculation of the driving window.

The formal public comment period runs through March 4, 2011.  The full text of the proposed rule changes, as well as information on how to submit public commentary, is available on the Agency’s website. 

If you have questions about the proposed rule change, or any other employment-related question, please contact the Foster Pepper Employment and Labor Relations Practice Group.

As of January 1, 2011, Washington’s minimum wage is now $8.67 per hour. Washington’s minimum wage applies to workers in both agricultural and non-agricultural jobs, although 14- and 15-year-olds may be paid 85% of the minimum wage.

Employers are required to post the “Your Rights As A Worker” poster in designated workplace areas. The poster, which is produced by the Washington State Department of Labor and Industries, provides information about the minimum wage and other topics. Updated posters reflecting this change are available for download at no cost on the L&I website.