By Howard K. Kurman, Esquire An Edited Transcript. Issues Discussed
- “Ban the Box” legislation passed in Baltimore City – a growing trend
- Advice Exception to the “Persuader Rule” under the Labor Management Reporting Disclosure Act. (Landrum Griffin Act of 1959)
- EEOC 2013 statistics re: Retaliation cases account for nearly 50 percent of all cases filed.
- Gulliver Schools v. Patrick Snay (Intersection of social media and confidentiality provisions in severance agreements)
- Severance Agreements – Employees cannot be compelled to waive their right to file a charge with the EEOC even if they cannot collect monetary damages from the EEOC.
- Copper River of Bowing Springs – “”negative attitude” language upheld as lawful reason for termination.
Howard Kurman: INTRODUCTORY REMARKS Welcome to our first March telebrief as everybody knows they occur on the second and fourth Wednesdays of every month and this happens to be the first in March so welcome everybody both our historical participants and new participants as well. So a few I think significant things to report on today. DEVELOPMENTS OF THE DAY (6) 1.Ban the Box legislation in Baltimore City Those of you who do business in Baltimore City may have seen reported in the Baltimore Sun that the Baltimore City Council has tentatively passed a Ban the Box piece of legislation. Those of you who participated in the last telebrief will remember that I talked about Ban the Box legislation that was passed in San Francisco and the fact that it seems to be a growing trend throughout the country. “Ban the Box” means that instead of allowing an employer to have on its application form a box which simply says, “Have you ever been convicted of a crime? If so, please explain. “ as many of you have on your typical applications, Ban the Box legislation would say that it is no longer permissible to use that information as an initial screening tool. It would be permissible to do those background checks ONLY after you have conducted an interview with the prospective employee or made a conditional offer of employment. Take Aways Stephanie Rawlings-Blake, the mayor of Baltimore City, has already indicated that she is going to sign this piece of legislation so those of you who do business in Baltimore City, if this becomes law, will have to modify your practices as to how you use criminal background checksand we have talked about criminal background checks before in conjunction with the EEOCs stringent position on what you should and should not do with regard to criminal background checks. This is another impediment to those employers who use them, which I would say is the grand majority of employers out there. I do not know whether it will be signed but stay tuned and I will let you know when it is for those of you who do business in Baltimore City may have to modify your hiring practices to some extent. 2. Advice Exception to the “Persuader Rule” under the Labor Management Reporting Disclosure Act. (Landrum Griffin Act of 1959) Another significant development – I have indicated to all of you in the past about the Department of Labor’s rule or proposed rule regarding the advice exception to the so-called persuader rule under the Labor Management Reporting Disclosure Act; the so-called Landrum Griffin Act of 1959. Traditionally, attorneys who have advised clients who are in the midst of a union organization campaign need no report that to the Department of Labor nor do the attorney’s clients have to report that because traditionally it was viewed as the attorney giving advice to the client. A couple of years ago, the Department of Labor made it know that it was going to propose a rule that in situations where the attorney is providing labor relations advice, for instance in the context of a union organization campaign, that the company would have to report the total amount of money spent by the company on legal advice pertaining to that organization campaign and the attorney would have to report that as well. This has been vigorously opposed by many management groups and also the American Bar Association and the Association of Corporate Counsel on the grounds that if attorneys and clients would have to reveal this information, it would breach the attorney-client privilege. And on that basis, I think that the opposition is very well founded. Just last week, the Department of Labor indicated to the public that it was postponing the implementation or the attempted implementation of this Persuader Rule under the Landrum Griffin Act. They gave no date when it might be reinstituted and I think the Department of Labor feels the pressure from particularly the American Bar Association, which I am sure would file a suit against the Department of Labor, contending that any mandatory disclosure by an attorney and a client having to do with the advice given to a client, particularly during for instance a union organization campaign, would violate the attorney/client privilege, which is held to be almost inviolate under the law. This is a significant development because it was proposed initially to go into effect this spring. Now we have no date as to when the Department of Labor would propose implementing this and I will certainly keep you up to date but it is a good thing for employers and those companies particularly who may be in the throws or about to be in the throws of a union organization campaign and who need and will utilize the services of labor attorneys to give them advice during that campaign. 3.EEOC 2013 statistics re: retaliation cases – nearly 50% of all cases filed. I mentioned a few weeks ago some statistics having to do with the EEOC’s 2013 numbers re: charges filed etc., I want to review a couple that I think are significant. In 2013 retaliation claims were only one of three categories of charges whose statistics indicated an increase in 2013 and retaliation charges according to the EEOC represent 41.1% of all charges filed with the agency. As I indicated in prior telebriefs, it is not unusual at all today that when an employee or an ex-employee files an EEOC charge, they frequently accompany that charge with a charge of retaliation on the basis that once a charge was filed or made known to the employer, the employer took negative action or adverse action against that employee by either disciplining the employee, firing the employee,demoting the employee, etc. Take Aways The fact that almost half of all charges now filed with the EEOC consists not only of the substantive underlying charge of discrimination or harassment but retaliation as well significantly means that
- Those of you who have handbooks or EEO policies need to make sure that you have a very strenuous prohibition on retaliation in a workplace in your policy AND
- That you make known to both individuals who may have a charge as well as those who may be a witness in any kind of investigation over harassment or discrimination that retaliation will not be permitted and that there will be zero tolerance with regard to such acts of retaliation in the workplace.
You can see the statistics bear out the fact that it is becoming increasingly common for employees or ex-employees to accompany their substantive charges of discrimination with those of retaliation. 4. Gulliver Schools v. Patrick Snay (Intersection of social media and confidentiality provisions in settlement agreements) I wanted to discuss with you what I thought was a very, very interesting case coming out of the State of Florida not Federal Court in Florida but a State Court in Florida. The reason I think it is interesting is that this case deals with the intersection of social media and confidentiality provisions in settlement agreements, something that I am sure that you will have utilized and are familiar with. Details of the Case In this case, Gulliver Schools, Inc., v. Snay, Patrick Snay, a former headmaster for Gulliver Schools, had a situation where the .schools did not renew his 2010 and 2011 contract as the school’s headmaster. He subsequently filed a two count complaint, asserting causes of action as Age Discrimination and Retaliation under the Florida Civil Rights Act, which is akin to Title 7 under the federal law. On November 3, 2011 the parties entered into a settlement agreement, much like you all will probably enter into with an employee that you are about to fire. And in the settlement agreement, the amount of the money that was supposed to be paid to this fellow Snay was $10,000 in back pay by check #1, $80,000 to him as a 1099 with check #2 and $60,000 to his attorneys. (Do not ever let it be said that the attorneys do not make out well in these situations.) Confidentiality Provision in Snay Severance Agreement – What it said: Subsequently here is what happened. And before I get to that let me just read the confidentiality provision that was negotiated by the parties because it is a pretty strict confidentiality provision. It reads: “The Plaintiff shall not (the Plaintiff being Snay) not either directly or indirectly disclose, discuss or communicate to any entity or person except his attorneys or other professional advisers or spouse any information whatsoever regarding the existence or terms of this agreement. A breach will result in disgorgement of the Plaintiff’s portion of the settlement payments.” Now, many of you have confidentiality provisions in your settlement agreements with employees that you are about to sever and usually those confidentiality agreements will say that the employee cannot directly or indirectly disclose the terms of the agreement but may disclose the fact that there was an agreement reached. That is not uncommon at all. But this is a little stricter in its provisions. Only four days after this agreement was signed on November 7, 2011, Gulliver Schools notified Snay that he had breached the agreement based on a Facebook posting by Snay’s college age daughter. Snay’s college age daughter posts the following on her Facebook page: “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. Suck it.” It is important to note that her comment went out to approximately 1200 of the Daughter’s Facebook friends, many of whom were either current or past Gulliver students. What happens is the school gets wind that this was on the Facebook page. They then send a letter to Snay’s attorney, stating that while it was going to pay the attorney’s fees portion of the party’s agreement, it was going to revoke the agreement to pay Snay any portion due to his violation of the confidentiality portion of the severance agreement. Snay winds up suing the school for breach of the settlement agreement and, in fact, the court rules in the school’s favor. Basically what the court says is that that a) the plain unambiguous meaning of paragraph 13 of the agreement, which was the confidentiality provision between Snay and the school, is that neither Snay nor his wife would either directly or indirectly disclose to anyone other than their lawyers or professionals any information regarding the existence or the terms of the parties’ agreement. They go onto say that b) before the ink was dry on the agreement and notwithstanding the clear Language of Section 13 mandating confidentiality, Snay violated the agreement by doing exactly what he had promised not to do. His daughter then did precisely what the confidentiality agreement was designed to prevent. i.e. advertising to the Gulliver community that Snay had been successful in his age discrimination and retaliation case against the school. Significance Now, granted this involves a pretty unusual set of facts and circumstances, I think it is important because, as I said in the beginning of the discussion, it involves the intersection of social media along with substantive contract law. So, here you had a severance agreement which was passed or entered into or negotiated between the parties, which was a pretty stringent confidentiality agreement and those of you who have confidentiality agreements with employees that you are about the sever might think about including the kind of language that was in this particular agreement. It also, I think, indicates the fact that the Facebook post, despite the fact that it may have been utilized by a family member and not the person who is actually entering into the agreement, became public knowledge. And because the confidentiality agreement prohibited either the direct or indirect disclosure, and in this case the disclosure was indirectly through the Plaintiff Snay’s daughter, that that confidentiality agreement or part of the agreement was, therefore, violated. Take Aways A couple of things: 1. Obviously, if you enter into a severance agreement with an employee or about to enter into a severance agreement with an employee, you certainly want to make sure that without a doubt you have strong confidentiality protections in your agreement and you want to indicate that those confidentiality protections will flow to both direct statements made by the employee as well as statements that were made by those who should be similarly bound by the confidentiality provisions including his attorneys, his family, etc. 2. The other aspect of course to this case is the social media aspect. Information becomes readily available to companies today and that those things that are posted on Facebook can and do come back to haunt employees as well as employers. So, while this is a Florida State Court case, I think it is very instructive and very timely in terms of what we do with regard to our severance agreements and how we monitor from time to time social media sources. 5. Severance Agreements – language related to waiving of rights to file a charge with EEOC In talking about severance agreements, I know that I mentioned probably a month ago in a telebrief, a case that had been brought against CVS by the Equal Employer Opportunity Commission having to do with severance agreements. I am not going to rehash everything that I said in that telebrief but I think it is important to know that when you are entering into severance agreements with employees or about to, that you know that employees cannot be compelled to waive their right to file a charge with the Equal Employer Opportunity Commission even if they cannot collect any kind of monetary damages from the EEOC. Take Aways Typically what you will find in severance agreements today is a provision that says that nothing in the agreement will prohibit the employee from filing a charge or pursuing his rights under Title 7 or any other statute; however, the employee by entering in the agreement waives any right to any subsequent monetary relief. Because of the position taken by the Equal Employer Opportunity Commission in its case against CVS, you may want to bold and separate that language in your separation agreements so that it appears very prominently to the employee and if the EEOC takes a look at your agreement they will not have the same problems necessary that they are alleging with CVS having to do with their severance agreements. Keep in mind as I stated a few weeks ago, I do not believe for a minute that an appellate court will uphold in total the EEOC’s restrictions on the use of some of these things and severance agreements, but I do think that we need to follow it to see how the court will deal with the position that has been espoused by the EEOC in this lawsuit. 6. Copper River of Bowling Springs – handbook language re “negative attitude” and termination upon these grounds deemed lawful by NLRB. I wanted to bring to your attention a case that was recently decided, February 28th, by the National Labor Relations Board in a case called Copper River of Bowling Springs. Significantly, in this case we had two Republican board members outvote the Democratic chairman, Mark Gaston Pearce to find that a South Carolina Restaurant Company did not violate the restrictions in Federal Labor Law by maintaining a rule in its handbook restricting employees from “displaying anegative attitude” in dealing with fellow employees or restaurant patrons. Members Philip Miscimarra and Harry Johnson out voted Mr. Pearce and found that the rule that had been promulgated and published by the employer in its handbook only prohibited conduct which was harmful to the employer’s legitimate business concerns and in this particular case two employees had been terminated during an organizing effort and they had been terminated because the restaurant had received reports from the managers that they had used profanity to disparage the restaurant in conversations with its customers. (not due to their organizing efforts) The gist of the position taken by the minority, that is the chairman, was that such a provision could potentially impede the rights of these employees to criticize the employer and to engage and protect the concerted activity under Section 7 of the National Labor Relations Act. However, the particular provision in question here basically stated as follows: It prohibited insubordination to a manager or lack of respect and cooperation with fellow employees or guests and specified that “this includes displaying a negative attitude that is disruptive to other staff or has a negative impact on guests.” The majority in this case found that the rule on employee attitudes was not materially distinguishable from the rule that had been approved in a prior case called Hyundai America and the restaurant’s policy limits the rule to unprotected conduct that would interfere with the respondent’s legitimate business concerns. Take Aways 1. Employers Be Aware : As I have stated to you frequently in the past, the Labor board is now looking at handbook provisions with a fine tooth comb. 2. While certainly we see the great trend at the Labor Board in invalidating certain rules that have been promulgated by employers in handbooks, this is a good example of common sense prevailing and the common sense obviously would prevail by virtue of the two Republican members on the particular panel that discussed and decided this case. It is comforting to see that in this case, the majority of the board members (2 of 3) found in a common sense manner that a provision in a handbook basically prohibiting any kind of insubordination or a negative attitude that would have an adverse effect on guests would be a very reasonable response by an employer irrespective of the typical Democratic attitude on the board today, which is that if you can possibly envision a situation where somebody might exercise or attempt to exercise a Section 7 right to engage in concerted protected activity, the fact, therefore, would be an overboard rule by the employer justifying the labor board to invalidate it. 3. You want to make sure that your handbook policies have a disclaimer, prominently placed that basically states that nothing in your handbook or your policies will be construed to prohibit the exercise of rights guaranteed to employees under Section 7 of the National Labor Relations Act or indeed any other statute local federal or state. CONCUDING REMARKS / UPCOMING EVENTS Those are the developments of the day. Many of them are very recent and the benefit I think of these telebriefs is that we can concentrate on the things that are very recent.
- The next telebrief will be the 4th Wednesday in March , which is March 26th and the ones in April will be on April 9th and April 23rd.
- Tomorrow, March 13th, I am putting on a webinar from 1:30 to 3 o’clock entitled, “Monitoring and Restricting Employee Conduct from Speaking Out to Lighting Up”. We will cover a large amount of topics from smoking in the workplace to criminal background checks, privacy rights, etc. It is an hour and half webinar.
People can get a one and half continuing education credit. The cost for this will be $219 but for Offit Kurman clients, our friends and network sources it’s complimentary. If you are interested in participating, Jeanne is on the phone and she can point you in the right direction. I think all you really need to do is email her and she can get you registered or help you register through the webinar tomorrow. So feel free to join that discussion. It should be pretty interesting for an hour and half tomorrow afternoon , 1:30 to 3:00 pm ET. As always, I indicate that if anybody has got any questions or comments at this point feel free to raise them now or if you would rather do it in private my personal phone number is 410-209-6417 and my email address email@example.com. Questions: Participant 1: I do have a question. This goes back to the Ban the Box legislation. Howard Kurman: Yes. Participant 1: Does that deal just with employment? That would be the person working would be in Baltimore City or is it a restriction on an employer based in Baltimore City but may have offices outside of the city? Howard Kurman: I have not seen the specific wording but my gut would tell me that it would apply to any employees working in Baltimore City. I do not think the city counsel would have jurisdiction to mandate that for companies that are doing business beyond the jurisdictional limits of the city. Participant 1 : So like you know my company we have got offices inside the city and outside so we could have a potentially a dual track here. Howard Kurman: You could. Participant 1: Okay. Obviously we need to see the legislations. Thank you. Howard Kurman: Yep, sure. Any other questions? Participant 2: Howard, my question was the same as ___’s. We do not have any offices in the city but obviously we have contracts in the city but I am assuming that because we are located outside of the city, this would not affect us? Howard Kurman: I think that is right, but I want to see the actual legislation which is signed when it will be signed by the mayor and then I will make sure that everybody knows what the deal is with regard to whether you can be excluded from this because you do not have an office in Baltimore City but you may do business in Baltimore City or the other way around you have an office in Baltimore City but you also do business outside of the city so I just have to see the legislation and I have not seen it. Participant 2: Yeah, I have one more question. Is there anything that Baltimore or Maryland can do to drive businesses any further out of this in this area? Howard Kurman: I think that there are always good face efforts that are taken by the legislature in that regard. Particularly in Maryland. We are not known as a very favorable state towards employers. We are not quite as bad as California but we are not great either. Okay, well listen everybody thanks a lot for participating. Maybe I will “see you” tomorrow at the webinar and if not hopefully we will see you at the next telebrief. Thanks very much. Participant 1:Thank you Howard very informative.