Investigators Gone Wild: An HR Primer on Overaggressive Governmental Agencies

1. Veronica von Grabow, Esq. Denver, Colorado Office May 14, 2014 LeadingAge Colorado Annual Conference & Exhibition Vail, Colorado Investigators Gone Wild:An HR Primer on OveraggressiveGovernmental Agencies

2. U.S. Equal Employment Opportunity Commission (EEOC) • National Labor Relations Board (NLRB) • U.S. Department of Labor (DOL) 2

3. Avoiding Traps Set By The EEOC’s Systemic Discrimination, Class Action & Other Initiatives 3

4. EEOC’s SystemicDiscrimination Initiative • Fiscal Year 2012 – Systemic Cases Represented ~20% of EEOC’s Active Litigation Docket • EEOC’s Projection for Fiscal Year 2016: Increase to 22-24% • EEOC’s top systemic enforcement priorities: investigation of “systemic barriers” in recruitment and hiring, including pre-employment assessments: • Criminal History Background Checks • Credit Checks • Personality Profiles/Behavioral Assessments • Cognitive Ability Tests • Physical Requirements 4

5. Other Enforcement Priorities • Systemic pay discrimination • Protecting immigrant and migrant workers • Addressing emerging and developing issues: • ADA reasonable accommodations • Accommodating pregnancy-related limitations • Seeking protection for LGBT (lesbian, gay, bisexual and transgender) employees and applicants under Title VII • Preserving access to the legal system (retaliatory practices or the use of overly-broad settlement waivers) • Preventing harassment. 5

6. Identification of Systemic Cases • How does EEOC identify a systemic case? • In reaction to complaints of systemic discrimination (very rare) • By converting individual charges to systemic investigations • Common pitfalls • Inadvertent disclosures of widespread practices or policies • What used to be a winning response to charges now often opens the systemic door: • “We treated the Charging Party just like all other applicants.” • “The action taken was pursuant to the Company’s consistently-applied policy.” 6

7. EEOC Focus on Background Checks • The EEOC’s most significant 2012 guidance was the enforcement guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964. • Convictions: discourages employers from using blanket exclusions of individuals who have been convicted of crimes. • Potential for Disparate Treatment/Impact Claims (“Green Factors”) • Arrests: Should not be considered in making employment decisions. • Underlying conduct may be considered. • Guidance respects employer’s right to make credibility determinations. 7

8. EEOC Continues Its Focus on Systemic Discrimination • The Commission believes a more targeted approach that focuses on systemic enforcement and an outreach campaign aimed at educating employers and employees will greatly deter future violations. • Disability – ADA/FMLA • Hiring • Harassment/Pregnancy 8

9. EEOC’s Aggressive Pursuit Of ADA & Sexual Harassment Claims • EEOC v. Hill Country Farms, Inc. (5/1/13) • $240 million jury verdict – the Company violated the ADA by discriminating and harassing 32 intellectually disabled workers. The jury awarded $7.5 million to each of the 32 plaintiffs. • The court reduced the award to $1.6 million for all 32 plaintiffs. • EEOC v. Interstate Distributor Co. (11/8/12) • EEOC settled the ADA claim for $4.85 million. • EEOC v. Four Amigos Travel, Inc. (5/1/13) • Federal jury returned a unanimous verdict awarding more than $20 million to eight former employees who suffered sexual harassment and retaliation. • EEOC v. WMK, Inc. d/b/a Mobility Works (8/1/13) • The Company agreed to pay a female employee $65,000 to settle her sex discrimination lawsuit. • EEOC v. Help at Home, Inc. (7/24/13) • The Company agreed to pay $302,500 to three former employee to settle their claims of sexual harassment and retaliation. • EEOC v. It’s Just Lunch USA, LLC (7/22/13) • The Company agreed to pay approximately $900,000 to settle a sex discrimination lawsuit filed by male job applicants. 9

10. Inadvertent Disclosures • Don’t inadvertently expand the scope of a potential lawsuit by: • inadvertently disclosing information not even requested; or, • providing the EEOC with everything they request. • Potential avenues of inadvertent disclosure: • Position statements • Handbook policies, guidelines, code of conduct • Spreadsheets or other e-data • Discussion of all of the Company’s hiring, promotion, termination, or compensation procedures 10

11. Responding toOverbroad EEOC Requests • Object to requests beyond the location/position/time frame in the charge • Submit only what is reasonably related to charge • For data requests, run analyses prior to submission • Help determine how strenuously to object • Help determine what compromise options are available • Then negotiate scope up the organizational chain of command • Knowing what the statistics show allows you to compromise and submit broader data with no statistical “red flags” 11

12. Preventing Systemic Discrimination Claims Before They Start • Strong internal complaint and investigative mechanisms • Consider revising policies in light of EEOC’s successes in leave and attendance lawsuits, revised criminal background guidance, and revised rules on reasonable factors other than age • Ensure all managers are trained on avoiding employment discrimination and objective evaluations of employees focusing on job-related performance • Field HR needs to understand that treating everyone equally may lead to trouble (e.g., leave may need to be extended as an ADA accommodation, attendance points may need to be forgiven) 12

13. Difficult Issues • For non-federal contractors: obtain or do not obtain race information from applicants • Conduct or don’t conduct self-audits on compensation, promotions, hiring, and terminations • Blend performance measurements and avoid automatic exclusions • Ensure leadership tone and workplace culture are inclusive in word and deed • Consider arbitration program (does not bind the EEOC) 13

14. General Defense Strategies(if EEOC does sue) • Mediate criminal background and reasonable accommodation charges (if the EEOC allows) • Probe EEOC’s theory early • Determine if the EEOC investigated, found cause and conciliated over issues in the lawsuit • Object as appropriate to broad data requests • Engage experts early to assess risk and set the groundwork for Daubertchallenge • Limit scope of lawsuit to 300 days prior to charge or notice of class investigation 14

15. EEOC Overreaching? • EEOC v. CRST Van Expedite Inc. (8/1/13) • Federal Appeals Court in St. Louis affirmed dismissal of 67 alleged “aggrieved individuals” from a hostile work environment lawsuit brought by the EEOC against an interstate trucking company because the Agency failed to satisfy its statutory pre-suit obligations to conduct a reasonable investigation and bona fide conciliation of those claims. • The court awarded CRST $4.7 million in attorneys’ fees. • EEOC v. Bloomberg LP (9/9/13) • New York District Judge Loretta Preska dismissed the claims of all but one of the plaintiffs from a once wide-ranging pregnancy discrimination lawsuit against Bloomberg LLP because the EEOC failed to comply with its pre-suit conciliation obligations. • Judge Preska- the agency’s conduct “blatantly contravene[d] Title VII’s emphasis on resolving disputes without resort to litigation.” • The court also awarded Bloomberg LLP the right to demand attorneys’ fees from the government. 15

16. EEOC Overreaching? • EEOC v. Freeman (8/9/13) • Judge Roger Titus (District of MD) delivered another blow to the EEOC when he granted Freeman summary judgment on the EEOC’s claim of discriminatory disparate impact in criminal and credit background checks. • The Judge attacked the EEOC’s so-called “expert” report – calling it “laughable,” “skewed,” and “an egregious example of scientific dishonesty.” • The report ignored data, “cherry-picked” data, used data from the wrong time frame, and miscoded data, which contributed to a “mind-boggling number of errors.” This “plethora of errors and analytical fallacies” rendered the EEOC’s statistical evidence “completely unreliable, and insufficient to support a finding of disparate impact.” • “Something more, far more, than what is relied upon by the EEOC in this case must be utilized to justify a disparate impact claim based upon criminal history and credit checks.” 16

17. Court Asked To Determine If EEOC Went Too Far • Case New Holland Inc. & CNH America LLC v. EEOC (8/1/13) • According to a recent lawsuit filed by two employers against the EEOC, the Agency has engaged in a shocking new tactic as part of its “investigatory” power. • Under the guise of an “investigation” into a claim of unlawful conduct on the part of the employer, the EEOC, without any advance notice to the employer, directly emailed over 1100 of the employer’s employees (at their company email addresses) in an attempt to develop class members for a potential class action against the employer. 17

18. Employers Beware – The Expansive New NLRB

19. “Protected Concerted Activity” Later in the day, you are stopped by two employees. They have stopped caring for patients and one insists on talking to you about the incentive program. The other employee listens carefully, but does not speak. The employee doing the talking says he will not go back to work until you listen. What do you do?

20. “Protected Concerted Activity” National Labor Relations Act Section 7 “employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

21. “Protected Concerted Activity” In determining whether employee activity is entitled to the protections of Section 7, the Board looks at the following : whether the activity is “concerted”; whether the activity is “for mutual aid or protection”; and whether the activity has lost the protection of Section 7 by reasons of (1) its means or (2) its objectives.

22. “Protected” • It must be for the purpose of “mutual aid or protection.” • For example: seeking improvements in wages, benefits, safety, overtime, assignments, staffing or other terms and conditions of employment. • This concept has been broadly interpreted to cover conduct that has only minimal impact on the “terms and conditions of employment” of an employee’s employment.

23. What Is “Concerted”? • Activity that is engaged in by two or more employees together. • Activity by one employee on the authority of other employees. • Individual activities that are the “logical outgrowth of concerns expressed by the employees collectively.” • Individuals seeking to initiate, induce, or prepare for group action. • Activity involving only a speaker and a listener if the content is for the purpose of making common cause, even if it is over the speaker’s personal concerns.

24. What Is “Concerted”? • Class action lawsuit. • Calling a government agency about working conditions at the company. • Filing administrative charges to remedy sexual harassment at the company. • Complaining to legislators about safety issues at the company. • Complaining to the news media about working conditions at the company. • Complaining to customers about low wages at the company.

25. What would you do? 1. If you see a group of three employees talking softly and then abruptly stop when they see you?  2. You see a notice in the break room from “Jobs with Justice”, complaining about pay issues at the workplace?  3. If an employee asks for a list of employee names and addresses so he can send them Holiday cards this year?  4. If you see a woman you don’t recognize in the parking lot putting leaflets on cars?  5. If you see a petition being passed among employees in the break rooms?

26. What would you do? 6. If you’re away from the worksite and an employee tells you there’s union talk by other employees?  7. If just after the shift begins, an employee asks if you’d like to contribute money to send flowers to the hospital room of an ailing employee? 8. If you see a notice taped to the bulletin board announcing a meeting “for all interested employees” at the local bar on Friday night?  9. If an employee hands you an envelope containing union authorization cards signed by 70% of the employees? 10. If an employee says that a union’s the only way to get the company’s attention?

27. What Is “Social Media”? 27 • Wikipedia: The use of web-based and mobile technologies to turn communication into an interactive dialogue. • Answers.com: the online forms of communicating that any individual can employ, which include blogs, microblogs (e.g. Twitter), and social networking sites (e.g. Facebook). • DailyBlogTips.com: the various forms of user generated content and the collection of websites and applications that enable people to interact and share information online. • Merriam-Webster: forms of electronic communication through which users create online communities to share information, ideas, personal messages, and other content (photos, videos, etc.).

28. The Use Of Social Media 28 • Facebook Statistics: • More than 1.15 billion active users – more than 2x population of United States!! • 699 million daily active users. • Average user has 130 friends. • More than 800 million active users access Facebook through their mobile devices.

29. Social Notworking - Facebook 29 • How many working hours are lost to social networking? • 50% of Facebook users log on everyday. • The median age of the user is 22. • One out of every 7 minutes spent online is on Facebook. • 300 million pictures are uploaded to Facebook everyday. • 22% of employees visit social networking sites 5 or more times per week; many admit to logging in while at work.

30. The Perils Of Social Media 30

31. Interference With Section 7 Rights • Employers’ social media policies should not be so sweeping so as to prohibit Section 7 rights. • An employer rule will be found unlawful where: • It explicitly restricts protected, concerted activity; • Employees would reasonably construe the language of the rule to prohibit protected, concerted activity; • The rule was promulgated in response to union activity; or • The rule has been applied to restrict protected, concerted activity. Lutheran Heritage Village-Livonia, 343 NLRB 824 (1998).

32. NLRB Initiative NLRB Initiative: Policy Compliance By Every Employer, Even In The Absence Of Discipline • It is unlawful to maintain any rule that would “reasonably tend to chill employees in the exercise of their section 7 rights,” even if the rule is not enforced. • It also is separately unlawful to enforce such a rule against an employee.

33. Protected, Concerted Activity on Social Media? • Do employees’ posts suggest collective action by employees? • Do employees’ posts reference prior discussions among employees that could indicate concerted activity? • Did other employees respond to the post? • Did employee responses indicate agreement with complaint or statements or only express sympathy regarding complaint? • “Like” buttons count! • Do employees’ posts contain acknowledgment of a personal gripe? • Did employees take action after making posts, such as engaging in further discussions offline?

34. Implications • Social media/electronic communications rules. • E-mail rules. • Confidentiality rules. • Goals and objectives, “in the company’s interests,” cooperation, loyalty and attitude rules. • Rules about speaking to the media. • Chain of command rules. • Rules about off-duty misconduct. • Rules regulating employee statements and conduct. • Non-disparagement/gossip rules.

35. Language To Avoid • The NLRB identifies problematic policy language. Examples: • Prohibiting employees’ posts discussing non-public information, confidential information, and legal matters of the employer (without any further clarification of the meaning of these terms); • Prohibiting employees from harming the image and integrity of the company, making statements which are detrimental to the employer, disparaging or defamatory, and prohibiting discussion of dissatisfaction; • Prohibiting employees from making posts that are inaccurate or misleading; making offensive, demeaning or inappropriate remarks; instructing employees to use a friendly tone and not engage in inflammatory discussions;

36. Language To Avoid • Requiring employees to secure permission prior to posting photos, music, videos, and the quotes and personal information of others; • Prohibiting non-commercial use of employer’s logos or trademarks;    • Discouraging employees from “friending” co-workers;  • Prohibiting online discussion with government agencies concerning the company; • Encouraging employees to solve work problems in the workplace rather than posting about such problems online; and • Threatening employees with discipline or criminal prosecution for failing to report violations of an unlawful social media policy .

37. A Lawful Social Media Policy The NLRB officers a sample social media policy deemed to be lawful. Insight: • Policy should provide examples of prohibited conduct so, in context, employees would not reasonably read the rules to prohibit protected, concerted activity. Compare: • Overly Broad - Policy commanding employees be respectful and “fair and courteous” in the “posting of comments, complaints, photographs, or videos.” • Lawful – Policy containing same language with additional guidance that individuals not post items that “could be viewed as malicious, obscene, threatening or intimidating” or “contribute to a hostile work environment on the basis of any status protected by law or company policy.” • In latter policy, GC’s office found the employer was in fact advancing legitimate interests without infringing upon right to engage in protected, concerted activity.

38. A Lawful Social Media Policy • Explain the Basis of Restrictions. • Avoid Undefined Terms. • Disclaimers Will Not Cure. • GC’s report noted a social media policy's "savings clause" stating the policy would “be administered in compliance with applicable laws and regulations (including Section 7 of the National Labor Relations Act)” was insufficient to cure ambiguities in the policy's overbroad rules. • It Remains Lawful to: • Prohibit employees from sharing confidential and proprietary information online (provide explanation and examples). • Prohibit employees from using vulgar or obscene language online.

39. NLRB – A Friend Not To Ignore – Social Media 39 In three seminal decisions, the NLRB has expanded its traditional views of what is “protected concerted activity” under the National Labor Relations Act: • Hispanics United of Buffalo Inc. (12/14/12) • The Board affirmed an ALJ’s finding that an employer violated the NLRA by firing five employees for posting Facebook comments in response to a co-worker’s criticism of their job performance. • Design Technology Group, LLC (4/19/13) • The Board held that an employer unlawfully terminated employees who complained to management about working late hours in an unsafe neighborhood and who later continued their protest on Facebook. • Knauz BMW (9/28/12) • An ALJheld that an employer did not violate the act when it terminated a salesperson from posting photographs and comments related to an automobile accident which occurred on its premises. The ALJalso found that a salesperson’s critical comments over a sales event at the dealership were protected.

40. NLRB’s Attack On Confidentiality • Banner Health System (7/30/12) • A blanket rule prohibiting employee discussions of ongoing investigations is invalid because it does not take into account the employer’s burden to demonstrate a particularized need for confidentiality in any given situation. • Quicken Loans, Inc. (6/21/13) • “Overbroad” confidentiality and non-disparagement provisions contained in an employment agreement are unlawful under the NLRA. 40

41. Takeaways • Recent decisions and Board guidance reflect an increasing focus on this issue. • While more decisions are certain to follow, in the interim employers should take away some general principals to apply to their employment policies. Employers should: • Prohibit vulgar or obscene language, but not disparaging or derogatory language, about the company or its employees. • Include specific examples of prohibited conduct in a policy, so employees will be less likely to construe the policy as prohibiting or limiting concerted activity. • Avoid vague or unidentified terms within policies, as any ambiguities will be construed against the employer. The Board has noted that an employee should not have to consult a dictionary to understand an employer’s rules. • Use caution in relying on savings clauses or disclaimers.

42. NLRB’s Attack On Confidentiality – Witness Statements • Piedmont Gardens (12/15/12) • NLRB has reversed long-standing precedent that all written statements by employee-witnesses are automatically exempt from disclosure as long as they qualify as “witness statements.” • The Board now will apply a “balancing test,” and will weigh the union’s need for the statements against “any legitimate and substantial confidentiality interest established by the employer.” 42

43. NLRB Strikes Down Limitation On Company E-mail • Weyerhaeuser Co. (6/20/13) • The Board held that a notice from management to workers that restricted the use of the company’s e-mail system by union representatives for union purposes on its face discriminated against statutorily protected activities in violation of the NLRA. • The notice was not an application of the company’s existing electronic media use policy, but was a “freestanding restriction on union-related email that the [company] put in place independently of its previous efforts to regulate the use of its electronic media.” This decision illustrates the importance of having content-neutral work place policies. 43

44. NLRB Goes Mobile 44 • NLRB Launches New Mobile Phone Application: • The new software application, which launched August 30, 2013, allows iPhone and Android users to obtain free information about the agency and the National Labor Relations Act.

45. Like A Bad Penny,The U.S. DOL Is Back –What Is It Looking for? 45

46. RecentDepartment of Labor Initiatives • For fiscal year 2013, the DOL asked Congress for $237.7 million and 1,839 full-time equivalent employees for the its Wage and Hour Division (the DOL division responsible for enforcing the FLSA) • This request is an increase of $10.7 million and 80 full-time equivalent employees as compared to fiscal year 2012. • Based on its FY2013 budget request, the Wage and Hour Division is focusing on three main initiatives: • The Misclassification Initiative; • The “Fissured Industries” Initiative; and, • The Low Wage Industries Initiative. 46

47. The Misclassification Initiative • Transportation and Warehousing • Poultry and Meat Processing • Landscaping • Professional and Personnel Services • The largest portion of the requested increase for fiscal year 2013 – $4 million and 35 new investigators – will support the “misclassification initiative,” which targets the following industries that DOL believes often misclassify employees as independent contractors: • Construction • Janitorial • Home Health Care • Child Care 47

48. The “Fissured Industries” Initiative • Food Services • Home Health Care • The DOL is targeting industries that use organizational methods outside of the traditional direct employment relationship (e.g., third party management, franchising, and subcontracting): • Construction • Janitorial • Hospitality • The DOL believes these arrangements often allow employees to be exploited by making the worker-employer relationship tenuous or less transparent. 48

49. The Low Wage Industries Initiative • Hospitality • Guard Services • Janitorial • Landscaping • Temporary Help • This initiative which focuses on industries where employees make at, or just above, minimum wage: • Garment • Agriculture • Health Care • Day Care • Restaurants • According to DOL, these industries have high rates of violations and vulnerable employees who are less likely to complain if not paid as the FLSA requires. 49

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