Labor and Employment Update - Winter 2005

ALERT: EMPLOYERS MUST USE ATTORNEY AT UNEMPLOYMENT HEARINGS

On February 3, 2005, the Commonwealth Court of Pennsylvania ruled that c orporations, LLC’s, associations and organizations may not be represented by a non-lawyer in an unemployment compensation hearing. In Harkness v. Unemployment Compensation Board of Review, the Court held that when a non-lawyer representative appeared at a hearing before an Unemployment Compensation Referee and assumed the role of an advocate in furtherance of the employer’s position that unemployment compensation benefits should be denied, the representative was engaged in the unauthorized practice of law. The Court stated that this decision would not be applied retroactively but only applied in proceedings before the Board filed after February 3, 2005.

This decision will dramatically change the manner in which employers approach unemployment compensation hearings. Although a representative of an employer will be permitted to appear and present the facts related to any argument that a claimant should be denied benefits, the representative will not be permitted to cross examine the claimant or make any sort of argument on the employer’s behalf. To the extent an employer wishes to present any argument at an unemployment compensation hearing, it must send an attorney to do so.

A request has been made that the Supreme Court accept an appeal of this decision and reverse it. However, employers must follow this decision in the meantime or risk losing the case and being sanctioned. We will keep you posted regarding further developments.

NEW JERSEY EMPLOYERS HAVE INCREASED POSTING OBLIGATIONS UNDER THE CONSCIENTIOUS EMPLOYEE PROTECTION ACT

New Jersey’s Whistleblower’s Statute, the Conscientious Employee Protection Action (“CEPA”),

NJSA 34:19-1 et seq.was amended last fall. The amendments expand employer obligations to provide notice to employees with regard to their rights under CEPA. The statute now provides that employers must:

Conspicuously display, and annually distribute to all employees, written or electronic notices of its employees protections, obligations, rights and procedures under this Act, and use other appropriate means to keep its employees so informed. Each notice posted or distributed pursuant to this section shall be in English, Spanish, and at the employers discretion, any other language spoken by the majority of the employer’s employees. The notice shall include the name of the person or persons the employee has designated to receive written notifications pursuant to [the section of the Act which requires that an employee provide written notice to the employer and afford the employer a reasonable opportunity to correct the problem].

This amendment enlarges employer obligations to provide notice under CEPA to its employees in two important ways. First, the employer must post the notice in English, Spanish and any other language spoken by the majority of the employer’s employees. Second, in addition to providing notice of the employee protections and obligations under CEPA, the employer must now advise employees of their rights and procedures under the Act.

The amendment also requires that every New Jersey employer with 10 or more employees “annually distribute to all employees written notices of the protections, obligations, rights and procedures provided to the employees” under CEPA. Like the notices which must be posted under the amendments, these annual notices can be written or electronic and must be in English, Spanish and any other language spoken by the majority of the employer’s employees.

New Jersey employers covered by CEPA should review and develop new notices which comply with the new requirements under CEPA for conspicuous posting and annual notices to employees.

NEW REGULATIONS MAKE IT EASIER TO INVESTIGATE EMPLOYEE MISCONDUCT

Recently, the Federal Trade Commission (FTC) issued its final regulations describing the rights and duties of employers under the Fair Credit Reporting Act (FCRA). The final regulations were implemented because of changes made to the FCRA by the Fair and Accurate Credit Transactions Act (FACTA). The final regulations went into effect on January 31, 2005. The FCRA and the final regulations are of paramount importance to employers because they outline the way to conduct legal employee background and internal workforce investigations by third parties. The final regulations eliminate many of the burdensome requirements of the former regulations.

If an investigative consumer report is used, then employers must disclose that the report may be obtained upon written request. An investigative consumer report contains information about an individual’s character, general reputation, personal characteristics, and mode of living obtained by a person who “regularly engages…in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.” If adverse action is taken, an employer must provide the employee with a summary containing the nature and substance of the communication upon which the adverse action is based. The sources of the information, if acquired solely for use in preparing the report, need not be disclosed.

Employers may also obtain from third parties a consumer report involving an individual’s credit by providing clear disclosure that a report may be obtained, obtaining prior written authorization, and certifying a permissible purpose for the report (such as a hiring decision). Before taking adverse action, the user (employer) must provide a copy of the report and a “summary” of the individual’s rights to the individual (potential employee).

Generally, FACTA and the new regulations are good legislation for employers; a major concern about the use of outside investigators in conducting investigations of workplace misconduct has finally been eliminated. The new regulations, though, remind us that employers must continue to be attentive to FCRA provisions that apply to employee hiring and to investigations where there is no suspected misconduct or where credit information is involved. Employers should consult with legal counsel to establish proper investigation procedures and to ensure that proper documentation is utilized in performing employee background investigations.

Author:  Charles A. Ercole 
             cercole@klehr.com

THE LATEST BASIS FOR MULTI-MILLION DOLLAR SETTLEMENTS AND VERDICTS AGAINST EMPLOYERS – CELL PHONE USE 

Around the country, cases are being reported involving potential liability for employers stemming from the use of cell phones by their employees. The focus of the attention is on automobile accidents where an employee is using a cell phone. The case of Roberts v. Salomon Smith Barney illustrates how limited the employer’s connection to the cell phone use has to be to raise the potential for employer liability. A Salomon Smith Barney stockbroker was talking on his personal cell phone (making cold calls) on a Saturday evening on his way to dinner (a non-business dinner). He ran a red light and struck and killed a 24-year old father of two on a motorcycle. In the suit, Salomon Smith Barney was accused of negligence in having an implicit policy that encouraged its employees to conduct business from their cars, even during non-business hours. Before the jury returned a verdict, Salomon Smith Barney settled for $500,000. Reported settlements and verdicts in similar cases have been substantially higher: $2.5 million; $16.1 million; $21 million; $30 million.

So, what should employers do?

Create and enforce a policy addressing cell phone use while driving.

Require State/Local Law Compliance. At a minimum, require employees to follow all state and local laws regarding cell phone uses. Be sure to research such laws in areas you anticipate your employees will be traveling and provide that information to your employees.

Prohibit or Limit Cell Phone Use While Driving. Make your policy as restrictive as possible while still meeting your business circumstances.

• • If an absolute prohibition is feasible, do it. Require cell phones to be turned off while driving. Require employees to pull into a parking lot or other safe place before making or receiving calls in their cars. (This is the best approach for an employer looking to minimize legal exposure. It seeks to make cell phone use while driving something outside the course and scope of employment, but it is only effective if enforced.)

  • If an absolute prohibition is not feasible, set whatever specific guidelines you can. For example, require any employee using a cell phone while driving to use a hands-free device.

  • At a minimum, discourage cell phone use while driving, and require employees to evaluate their driving conditions and only use cell phones when and where it is safe. (Under this approach, an employer will be liable if the employee’s conduct using the cell phone is within the course and scope of employment, just as in any other activity an employee engages in on behalf of an employer.)

Include Prohibitions and Limits on Other Driving Distractions.

Remember that cell phone use ranked well below several other driving distractions. Have your policy address driving distractions in general.

Require Compliance with your policy.  Get employees to execute acknowledgements of your policy and their agreement to abide by it. If you reimburse for cell phone expenses, require certification that the cell phone was not used in violation of company policy with each reimbursement.

Educate your Employees.   Make sure that employees know the law, your policy, and the practical issues associated with cell phone use while driving, as well as other driving distractions. The CTIA – The Wireless Association, the international association for the wireless telecommunications industry, has brochures and other publications available outlining practical driving safety tips for cell phone use (www.wow-com.com or 1-888-901-SAFE). Consider using these materials and the tips they contain to educate your employees.

If you provide cell phone equipment.

Train your employees thoroughly on its use so that they are not distracted by trying to figure it out.

Place stickers on the cell phones containing key policy prohibitions, such as “Not to be used while driving” or “To be used in car only with hands-free device.”

Additional Considerations:

The focus on employee cell phone use has been a liability to employers for automobile accidents. However, several other areas are ripe for litigation and should be incorporated into a comprehensive cell phone policy:

• • Health Concerns. Cell phones do emit some level of radiation. Consider warning employees of the potential for health risks. Consider advising employees to minimize their cell phone use. Try to avoid making cell phone use mandatory.

  • Privacy Concerns. Cell phones are now equipped with several technologically advanced options, including photography, video, and recording. Prohibit employees from bringing cell phones into areas where another employee’s privacy could be invaded, particularly restrooms.

  • Confidentiality Concerns. The current cell phone technology could allow your trade secrets and confidential information to be overheard, videoed, or recorded. Prohibit employees from bringing cell phones into areas where confidential information is maintained.

If you need assistance creating or updating a cell phone policy or addressing the above concerns in policies you already have, please contact us.

Author:  Charles A. Ercole
            cercole@klehr.com

The Labor and Employment Group represents and counsels employers in all aspects of the employment relationship, including EEO litigation, union avoidance, negotiations, arbitrations, executive compensation, corporate transactions, and non-competition/non-solicitation agreements, as well as compliance with federal and state laws such as the Family and Medical Leave Act, the Americans with Disabilities Act, the Health Insurance Portability and Accountability Act, the Fair Labor Standards Act and the Occupational Safety and Health Act.

This document is published for the purpose of informing clients and friends of Klehr Harrison about developments in the areas of labor, employment and benefits, and should not be construed as providing legal advice on any specific matter. For more information about this publication or Klehr Harrison, contact Charles A. Ercole, Chair of the Labor and Employment Group, at (215) 569-4282 or visit the firm’s Web site at www.klehr.com