April 14, 2011

1. EMPLOYMENT LAW UPDATE April 14, 2011 Keith Weddington Sarah Ford PARKER POE ADAMS & BERNSTEIN LLP

2. AGENDA • Judicial Decisions • U.S. Supreme Court • 4th Circuit • N.C. Appellate Courts • Legislative Update • Hot Topics

3. Supreme Court Decisions

4. Disparate ImpactLewis v. City of Chicago(Decided May 24, 2010) • Plaintiffs who fail to file charge with EEOC within 180/300 days of employer’s adoption of discriminatory policy, may still assert a timely claim • Adoption vs. Application 4

5. Disparate ImpactLewis v. City of Chicago(Decided May 24, 2010) • Must establish prima facie disparate impact claim • Employer uses a particular employment practice • Practice causes a disparate impact on one of the prohibited bases • Beware of comfort based on old familiar policies. 5

6. PrivacyCity of Ontario, CA v. Quon(Decided June 17, 2010) • Court avoided making a broadly applicable ruling regarding employee privacy rights with respect to employer provided electronic devices • Court assumed Quon had a reasonable expectation of privacy • Public employee v. private employee 6

7. PrivacyCity of Ontario, CA v. Quon(Decided June 17, 2010) • Reasonable search under the 4th Amendment • legitimate, work-related purpose • not excessive in scope • Be sure computer/internet usage policies keep pace with advancing technology (texting, instant messaging, social networks) • Consistent training and enforcement 7

8. Background ChecksNASA v. Nelson(Decided January 19, 2011) • Court assumed, without finding, that a constitutional right to informational privacy exists • Government has greater latitude as employer than when acting as sovereign • Federal government may conduct wide-ranging background checks of workers employed by government contractors.

9. Background ChecksNASA v. Nelson(Decided January 19, 2011) • Employers (public and private) should evaluate background check procedures to: • ensure reasonableness/job-relatedness • avoid prohibited ADA/GINA protected inquiries • ensure information obtained is kept secure and confidential

10. Third Party RetaliationThompson v. North American Stainless, LP(Decided January 24, 2011) • White v. Burlington Northern: Any conduct by employer that would dissuade a reasonable person from engaging in protected conduct = adverse action • Terminated fiancé of employee who filed EEOC charge was within “Zone of Interests” protected by Title VII • Policies and training materials should emphasize that 3rd party retaliation is illegal

11. Cat’s PawStaub v. Proctor Hospital(Decided March 1, 2011) • Employer liable where: • Supervisor acts with discriminatory animus • Supervisor intends act to result in adverse action • That act is a proximate cause of ultimate adverse employment action

12. Cat’s PawStaub v. Proctor Hospital(Decided March 1, 2011) • Employer may escape liability if ultimate adverse action unrelated to original biased action • Practical Tips: • Train all supervisory employees • Regular performance reviews • Conduct independent investigation, especially if employee challenges disciplinary action or has conflict with supervisor • Get input from multiple sources

13. Protected ActivityKasten v. Saint-Gobain Performance Plastics (Decided March 22, 2011) • Oral complaint regarding FLSA issue is sufficient to invoke protections of FLSA’s anti-retaliation provision • Oral complaint must be sufficiently clear and detailed for reasonable employer to understand it as an assertion of rights protected by FLSA • Unresolved – complaint to employer vs. governmental body? 13

14. Protected ActivityKasten v. Saint-Gobain Performance Plastics (Decided March 22, 2011) • Consider implementing formal process to review and respond to internal complaints • Specify what information employee must provide employer in order to “file” a complaint 14

15. Attorneys’ FeesFox v. Vice(Oral arguments heard May 21, 2011) • Issue: Whether a court can award attorneys’ fees to civil rights defendants based on dismissal of claim when plaintiff has asserted other interrelated non-frivolous claims • “But for” versus “fairly attributable”

16. FOURTH CIRCUIT DECISIONS

17. Settlement of FMLA ClaimsWhiting v. Johns Hopkins Hospital(Decided March 14, 2011) • Hopefully, the final word on waiver of FMLA claims • Affirms reasonableness of DOL’s 2007 regulation approving of the settlement or release of FMLA claims based on past employer conduct without the approval of DOL or court

18. Executive Exemption under FLSAGrace v. Family Dollar Store, Inc.Decided March 22, 2011 • Salaried retail store manager was an executive employee exempt from FLSA’s overtime provisions despite spending 99% of her time on nonexecutive tasks • Time factor was not controlling • Even while doing non-managerial tasks, Grace was responsible for running the store profitably and dealing with whatever issues arose

19. Sexual HarassmentEEOC v. Cromer Food Services, Inc.(Decided March 3, 2011) • Issue: Can employer be held liable for harassment of an employee by a third party? • Employer is liable if it knew or should have known of the harassment and failed to take appropriate actions to halt it. • Knowledge can be imputed to employer if a reasonable person, intent on complying with Title VII, would have known about the harassment

20. Volunteer Exemption Under FLSAPurdham v. Fairfax County School Bd.(Decided March 10, 2011) • Golf coach was “volunteer” exempt from FLSA • Volunteer = individual who performs hours of service for a public agency for civic, charitable or humanitarian reasons, without promise, expectation or receipt of compensation

21. Volunteer Exemption Under FLSAPurdham v. Fairfax County School Bd.(Decided March 10, 2011) • Employee of public agency exempt if: • receives no compensation or is paid expenses or nominal fee, and • volunteer services are different from normal duties • Private employees cannot be volunteers

22. Calculating Damages Under FLSADesmond v. PNGI Charles Town Gaming(Decided Jan. 18, 2011) • Issue: Measure of damages in FLSA misclassification cases involving salaried non-exempt workers? • “Half-time” methodology: 50% OT premium—provided that employer & employee had mutual understanding salary covered all hours worked and employee made not less than minimum wage for every hour worked

23. North Carolina State Court Decisions

24. Non-Solicitation AgreementsMJM Investigations, Inc. v. Sjostedt(Decided July 20, 2010) • Employer’s failure to define “current or prospect client” rendered non-solicitation clause unenforceable • Clearly define “customers” and “prospects” • How determined? • At what point in time? • Limit to those for whom employer has legitimate need for protection. • Be sure both noncompete and non-solicitation provisions each contain a time period (in case one is blue-penciled out)

25. Oral Employment AgreementsKornegay v. Aspen Asset Group, LLC(Decided April 12, 2011) • Oral agreement to pay 20% commission bonus upheld • Memo stating “No Bonuses. No Commissions. No Nothing until Aspen sees fit & confident we are making money” insufficient to negate bonus plan under NCWHA. • Trial judge’s decision re: liquidated damages and attys fees is reviewed de novo for abuse of discretion.

26. Oral Employment AgreementsKornegay v. Aspen Asset Group, LLC(Decided April 12, 2011) • Clear written agreement or policy re: bonuses and commissions is essential • How calculated? • When earned? • When payable? • When lost or forfeited? • Any ambiguity will be construed against the employer.

27. Legislation

28. Americans with Disabilities Act Amendments (ADAAA) • Signed into law on September 25, 2008 • Amendments effective January 1, 2009 • Final Rules issued March 25, 2011

29. Final Rules Implementing ADAAA • Primary Purpose: “To make it easier for an individual seeking protection under the ADA to establish that he/she has a disability within the meaning of the ADA.” • Focus is on whether individual was/was not reasonably accommodated or otherwise discriminated against – NOT whether individual is disabled

30. Final Rules Implementing ADAAAA • Claims under “actual disability” and “record of” versus claims under “regarded as.” • No per se list of disabilities; but, non-exhaustive list of examples of conditions that would likely be considered disabilities. • Goal: Courts should spend less time on determining coverage under the ADA and more time to determine if a discriminatory act occurred.

31. Impact on Employers • More requests for accommodations • More internal review • More EEOC charges • More lawsuits • More retaliation complaints • Fewer dismissals and early conclusions

32. Final Rules Implementing Genetic Information Nondiscrimination Act (GINA) Health insurers and employers cannot discriminate on the basis of an individual’s genetic information

33. GINA • Took effect on November 21,2009 • Final Regulations Implementing GINA were issued on November 9, 2010 and took effect on January 10, 2011

34. What is Genetic Information? • Includes • Genetic test results • Family medical history • Does NOT include • Information about employee gender or age • Information about current disease/disorder • Tests for drug/alcohol use

35. Who is Protected Under GINA? • Applicants • Employees • Former employees

36. What Does GINA Prohibit? • Prohibits use of genetic information in employment-related decisions • Prohibits intentionally acquiring genetic information • Prohibits harassment • Prohibits retaliation STRICT REQUIREMENT OF CONFIDENTIALITY

37. Genetic Information Nondiscrimination Act (GINA) • Interplay between GINA, ADA, and FMLA • Effect on Employer-Sponsored Wellness Programs • Same remedies as Title VII • Employee training is a must

38. What’s The Status? • PayCheck Fairness Act • Protecting Older Workers Against Discrimination Act • Employment Nondiscrimination Act • Employee Free Choice Act

39. HOT TOPICS IN EMPLOYMENT LAW

40. Hot Topics in 2011 • Social Networking in the Workplace • Misclassification of Independent Contractors • Investigation of Systemic Discrimination • Impact of Credit Checks in Hiring • Form I-9 Audits

41. Social Networking Sites

42. Social Networking Statistics • Facebook has 500 million active users (http://voices.washingtonpost.com/posttech/2010/07/facebook_hits_500_million_user.html?referrer=emaillink) • Twitter has more than 190 million users, tweeting 65 million times a day (June 8, 2010, TechCrunch.com) • By June 2008, Technorati was tracking over 112 million blogs (http://www.blogherald.com/2008/02/11/how-many-blogs-are-there-is-someone-still-wondering/)

43. What’s the problem? • Meet Kevin Colvin

44. What’s the problem? “Cisco Fatty” A Cisco applicant tweeted this: “Cisco just offered me a job! Now I have to weigh the utility of a fatty paycheck against the daily commute to San Jose and hating the work.”

45. Your Social Media Policy Address time management Prohibitions may include: profanity about co-workers, false statements, confidential information, harassment • Policy should be narrowly crafted with a disclaimer re labor rights

46. Misclassification of Independent Contractors • U.S. DOL study found 10-30% of employers audited had misclassified workers • IRS estimates it is losing $20 billion a year due to worker misclassification • Obama’s $25 million “Misclassification Initiative” • Increasingly subject of FLSA suits

47. Independent Contractors v. EmployeeWhy Does the Classification Matter? Employee Independent Contractor IC pays self-employment taxes & reports own income No UC or WC No overtime No protection under anti-discrimination and workplace safety laws • Employer pays payroll taxes & withholds income taxes • Employee may qualify for UC and WC • Protection under anti-discrimination laws • Protection under federal and state wage and hour laws

48. Factors • Control of manner and means of work • Skill required • Source of tools and instruments • Length of employment • Place where work is performed • Method of payment • Receipt of benefits • Vacation • Opportunity for profit/loss • Hired party’s role in hiring and paying assistants

49. What Should You Do? • Identify who you have classified as ICs • Conduct an analysis of each position • Reclassify?

50. Enforcement InitiativeSystemic Gender Discrimination • Nationwide focus for EEOC • Prevent systemic discrimination, with focus on gender discrimination • Class actions and large settlements and damages awards