Posts filed under ‘HR’
Around 3:00 yesterday, I did a double take when I read a summary of proposed regulations by New York’s Department of Labor provided by Bond, Schoeneck and King that would prohibit employers from deducting political contributions from the wages of employees who wish to make voluntary contributions to political action committees (PACs). To put it mildly, this proposal would inconvenience the efforts of the Association (which offers payroll deduction for employees who wish to make contributions to the federal PAC) and others throughout New York State to raise money to support their political activities.
The proposal is meant to flesh out amendments made last year to section 193 of New York’s Labor Law, which regulates payroll deductions but, in my ever so humble opinion, it seems to go well beyond what is required by including a section listing activities that the Department of Labor contends are specifically banned under the law. It is in this section that the DOL would ban deductions for “contributions to political action committees, campaigns, and similar payments.” Since federal regulations promulgated by the Federal Election Commission permit corporations to utilize payroll deduction as a legitimate fundraising tool, there is already a question as to whether or not these federal regulations preempt the state proposal as applied to federal campaign activities. I’m not an election law attorney, and I won’t even pretend to be one, so at this point I will just keep you posted on developments with this proposal.
Incidentally, your H.R. person should take a look at the regulations as well as the new statute. There are many provisions that help clarify nettlesome payroll deduction issues, one which I know that credit unions have to deal with indirectly involves clarification of an employer’s right to deduct overpayments to an employee from future wages. By the way, these regulations were about as difficult to find as a politician defending the IRS. The Department of Labor should consider revamping its website so that us non-labor lawyers might actually find it informative.
First Shot Fired In Regulation Of Virtual Currencies
This has no direct impact on credit unions yet, but yesterday the Department of Homeland Security took legal action seeking to freeze the business activities of a U.S. subsidiary of a Japanese Corporation that acts as a broker of the electronic currency known as the Bitcoin. Several weeks ago, FinCEN issued a guidance opining that while the user of a virtual currency does not have to be registered as a “money services business” (MSB) and are not subject to BSA regulations, an administrator or exchange which trades such currency does have to be registered with FinCEN. Why is this important?
Because while no one would question the ability of the federal government to regulate currency, the increasing use of electronic currency with which individuals buy and trade products and services without ever utilizing cash or coin raises fundamental questions as to what power the U.S. has to regulate such activities.
Suppose you have a supervisor who takes an avuncular interest in one of the up and coming employees he manages for your credit union. He likes him so much that he tries to set him up with his daughter. The employee politely refuses the offer, but the daughter ends up friending him on Facebook. She tells her father that one of the organizations the employee has liked on Facebook is dedicated to advocating for same-sex marriage.
When the supervisor, who is deeply religious, turns hostile against the employee, can the credit union be sued for discrimination, particularly in a state like New York that now bans discrimination based on sexual orientation? Yes it can be.
This hypothetical is not a hypothetical at all. A great article in this month’s Inside Counsel magazine highlighting the legal challenges faced by social media in the workplace noted a case in which the Library of Congress is being sued by an employee who claims he was discriminated against after a supervisor surmised he was gay based on his Facebook page.
Now, for the record, I don’t get Facebook and I never will. Why people want to post the minutia of their lives to scores of casual acquaintances I will never know, but the fact is they do. As reckless as I think some people are with their Facebook accounts for acting as if this information is private, employers are better off using that as their working assumption as well.
Why? The simple legal answer is by accessing someone’s Facebook page, you are put on notice regarding information that you have no right taking into consideration when dealing with an employee and the mere act of doing so may create a factual dispute in a future lawsuit. For instance, let’s say you find out that an applicant belongs to a local mosque and an equally qualified candidate belongs to the Methodist Church. No good can come from knowing any of this.
I talked about this with a friend of mine recently, who doesn’t ask for passwords but will see what he can find on an applicant’s Facebook page. His argument is that good employer due diligence includes knowing everything about a potential employee’s judgment and character: a picture of him taking a hit from a bong in his college dorm speaks volumes about both. However, a good enough interview process should give you a means to fairly assess an applicant. We’ve done this for hundreds of years after all, without Facebook.
There’s also a legislative component to this issue. An increasing number of states have either passed or are considering legislation limiting employer access to employee social media. Keeping in mind that the views I express are my own and not necessarily those of the Association, it is time for New York and maybe even the federal government to pass such legislation. As silly as it is for employees to think that they have an expectation of privacy on Facebook, the world is changing and employers need bright line rules to delineate when they cross the line between employer due diligence and voyeurism.
What should you be able to ask a potential employee during a job interview? Are there certain jobs for which inquiring about someone’s employment status is reasonable and others where it isn’t? Recently enacted legislation by the New York City Council as well as other proposal floating around at both the state and national level underscore that if some legislators have their way, you are going to need a lawyer in the room when interviewing prospective job applicants.
Exhibit one is a local law passed by the New York City Council over the veto of Mayor Michael Bloomberg, who actually has extensive experience in hiring people in the private sector. This law makes it unlawful for an employer to discriminate based on a job applicant’s employment status. The ordinance not only prohibits, with certain exceptions, an employer from publishing job postings listing current employment as a requirement for the job, but creates a private right of action and empowers the city to impose hefty fines on employers who violate these provisions. Employers are still allowed to inquire about a person’s employment status but if they do so the burden is on them to show why it is reasonable to be asking such questions in the first place. Remember, only our brethren based in New York City must comply with this new requirement. But, as anyone who attended our yearly walk-around the state capitol yesterday may have sensed, New York City carries a lot of weight in the legislature and proposals like this often end up being debated at the state level.
A second proposal being considered by the Council has a little more traction nationally. Recently, the Council held a hearing on a proposal banning the use of credit reports as part of the hiring process. A similar proposal has been introduced both in Congress and in the state legislature. The Fair Credit Reporting Act already mandates that applicants be put on notice when their credit reports are going to be reviewed as part of an employer’s due diligence. In expressing opposition to the proposal, a representative from the Bloomberg Administration pointed out that unlike similar proposals that have been enacted in states and localities across the country, the Council’s proposal makes no exception for credit unions, banks and other financial institutions for whom a job applicant’s ability to handle money is certainly something worth considering before making an offer.
Against the backdrop of the persistently high unemployment rates we are experiencing, proponents of these measures argue that disqualifying someone from job consideration due to their unemployment is, like racial characteristics, another example of disqualifying someone based on attributes over which they have no control. The problem with this logic is that it categorically assumes that employers discriminate against job applicants. This conveniently overlooks the fact that there are many situations where someone’s credit report or employment status is relevant, particularly when you are trying to whittle down a field of more than one qualified applicant. Furthermore, one of the reasons why this country is so much more productive on a per capita basis than every other nation in the world (including China) is because we try not to make it too expensive to hire and fire people. The more well intended legislators place legalistic straight jackets on what can and can’t be considered when making determinations, the more expensive it’s going to be to hire anyone, and that is bad news for the unemployed.
With the proliferation of smart phones in the work place, courts must increasingly wrestle with the issue of how much legally protected privacy employees are entitled to when using company issued smart phones and/or company email accounts. The issue may seem straightforward, but I got the idea for this blog reading the latest in a string of cases in which employees facing fraud charges argue that conversations they had using email to allegedly facilitate fraudulent activity should not be used as evidence against them. Basically, the defendants are asking “how about a little privacy here, I’m using the company email.”
The extent of privacy protection afforded to a given employee depends largely on what your policy says and how you enforce it. In other words, this is not one of those policies you can pull off the Internet, paste into your employee manual and be done. Here are the questions the New York Courts analyze when examining this issue, and if you keep these questions in mind in not only writing your policy by implementing it on an ongoing basis, you will minimize any confusion that employees might have regarding privacy expectations in the workplace.
- Does the corporation maintain a policy banning personal or other objectionable use of email?
- Does the company monitor the use of the employee’s computer or email?
- Do third parties have a right to access the computer or emails?
- Did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?
To put this in context, it’s almost always going to be the employee who bring a motion to keep the offending emails out of the trial record. But who better than a former presumably disgruntled employee to know of defects in the company’s HR practices? Double check with your HR attorney, but if it was up to me, I would like to be able to answer yes to each of the above questions. Even if you never end up in a contentious legal dispute, the interplay between business and personal activity is blurring more and more each day as a result of technology. A consistently implemented, widely understood company policy putting people on notice that their workplace communications are not their own is in everyone’s best interest.
NCUA Approves Alloya Merger
At yesterday’s board meeting, NCUA put out for public comment a proposed regulation intended to clarify regulations related to the fixed asset rules. This may sound like dry stuff, but I remember hearing from New York State chartered credit unions a few years ago that both they and examiners were confused about what credit unions could and could not do when buying property with an eye toward future expansion.
Also, NCUA approved the merger of CenCorp with Alloya pending a member vote.
Enjoy your St. Patrick’s Day and remember it would be awfully tacky to call in sick on Monday, so if you’re going to overdo it, plan ahead and take the day off.
It’s been a little more than a week now since Yahoo’s new CEO, 37-year old recent Mom Marrissa Mayer, called everyone back to the office. In one of the most poorly written memos I’ve ever seen, the HR Director explained that there are so many good things going on in the office that executives want to make sure that everyone gets to take part (If you’re going to deliver bad news, don’t implicitly treat your employees like idiots by sugar coating it).
Yahoo’s decision has reignited a debate that all offices should be having, but that has largely been settled. Don’t fool yourself, if you’re going to have a credit union that gets the best employees possible, you are going to have to allow people to work from home. The only question you should be asking yourself is who is going to be eligible, under what conditions, and how are you going to manage their work output.
According to the U.S. Census Bureau, the percentage of workers who work from home at least one day a week increased from 7% of the workforce in 1997 to 9.5% 2010. Furthermore, at least one quarter of home based workers were in management. And, in another surprising tidbit, males make up slightly more than half of those working from home. In addition, the U.S. is well behind the trend internationally, with developing countries such as India helping employees beat the traffic by working from home.
In addition to the statistical trends, a cultural shift has taken place. Women are firmly established in the workplace and their husbands are taking on more of the traditionally women-dominated parenting responsibilities. Is office interaction such a vital part of your credit union’s business structure that you are going to make your employees choose between working at your credit union or finding another job? Yahoo might be able to get away with its choice in the short-term, but I will bet you right now that they end up quickly modifying the policy or losing good employees to more flexible workplaces.
Hopefully, your credit union has already thought about the best procedures to integrate working from home into your HR policies. But, if you haven’t, one emerging trend to consider was highlighted in last Sunday’s New York Times, where employees are allowed to work from home but expected to work in the office for a certain number of hours each week. That’s what my wife does and it works well for both her employer and our family. On that note, get to work.
You are on the air with Henry, how can I help you?
Hi Henry! I’m the newest person in our marketing department and my boss said with my enthusiasm I would be the perfect person to plan our holiday party, especially since the three previous people to plan it are either being deposed or have been fired. I’m so excited! Anyway, I have some questions that I’m supposed to ask you.
Q: Some people think that having staff pass out on the dance floor is unprofessional and that we could get sued if one of our employees does something dumb on the way home. Should we stop providing alcohol?
A: This question reminds me of my favorite toast, courtesy of Homer Simpson: “To alcohol! The cause of and solution to all of life’s problems.” The safest answer is yes, but I am partial to the more equivocal response attributed to a 1920’s politician who, when asked if he was for or against whisky during prohibition, responded:
“If by whisky, you mean the Devil’s brew, the Poison scourge, the bloody monster that defies innocence, dethrones reason, creates misery and poverty, yea, literally takes the bread out of the mouths of babes; if you mean the Evil Drink that topples men and women from pinnacles of righteous, gracious living into the bottomless pit of despair, degradation, shame, helplessness and hopelessness – then certainly I am against it with all my power. . .”
“But if by whisky, you mean the oil of conversation, the philosophic wine and ale that is consumed when good fellows get together, that puts a song in their hearts, laughter on their lips and the warm glow of contentment in their eyes; if you mean that sterling drink that puts the spring in an old man’s steps on a frosty morning; if you mean that drink, the sale of which pours into our treasury untold millions of dollars which are used to provide tender care for our little crippled children, our pitifully aged and infirm and to build our highways, hospitals and schools — then, Brother, I am for it. This is my stand.”
Host liability for serving alcohol varies widely state to state with New Jersey and Massachusetts courts making a host liable for any injuries caused by a clearly intoxicated guest that they continued to serve and let drive home. New York, in contrast, offers greater protection for the business hosting a party for its staff. Its highest court explained that there is no cause of action against someone for negligently providing alcohol to an adult in New York State unless the alcohol is being served for a commercial purpose. So, a bartender refilling the glass of a drunk employee can be sued, but the fact that the credit union paid for drinks doesn’t put it on the hook.
Does this mean it’s party time at the branch? Not really. For one thing, employers are responsible for an employee’s conduct while he or she is at the party and you don’t want to find out after the fact that Herb from accounting likes picking fights with bouncers once he gets a buzz. And, of course, no matter what the law says you don’t want anything bad to happen.
My advice for you if you want to allow responsible drinking is to pass out free tickets for one round or better yet pass out glasses of champagne for a single toast. This way you get the point across about drinking responsibly without the credit union being too heavy handed. I would also see if people would also be willing to act as designated drivers.
Q: We traditionally treat the office Christmas party as if it’s a bachelor/bachelorette party — I swear some of our employees have more arms than octopi around the holidays; is there a problem with that?
A: There is no office party exception to sexual-harassment rules. This may seem obvious, but having skimmed through a fair number of cases on the subject recently, I’m taken aback by how many intelligently run companies treat harassment at the office Christmas party differently than they would harassment in the office.
For instance, if an employee comes to you complaining about a fellow employee’s conduct at the party, you have to respond to those concerns to the same extent as if the comments were made in the middle of the work day. Recently, the federal District Court for Western New York refused to dismiss a lawsuit brought by an employee of the University of Buffalo who complained for at least two years about sexually aggressive conduct she was subjected to at office Holiday parties. The University could not point to one example of adequate steps it had taken to address her concerns, even though the employee had told her immediate supervisor that she was so disturbed by the conduct that she was inclined not to go to any more office parties.
Q: Can you believe they were silly enough to give me the Corporate Credit Card? How much is too much to recognize our volunteers?
A: I know your board members are selfless volunteers and you like to use this time of the year to show them how much you appreciate their service. But NCUA has made quite clear that anything more than a gift of nominal value runs afoul of NCUA laws and regulations about maintaining a volunteer board.
In the past, the legal opinions have authorized small deposits into the accounts of supervisory committee members; but prohibited providing board members free safe deposit boxes.
It may seem like it isn’t always clear where to draw the line, but if the gift is a token of appreciation such as a nice pen as opposed to the type of gift that grants a real benefit for board member service, such as a gold Rolex, you are going to be fine.
Suppose an examiner or a member starts making one of your employees feel uncomfortable by greeting her with sexually charged innuendos and asking her out on dates. Is the credit union on the hook for this harassment since the examiner is not an employee of the credit union or under the control of the credit union? The short answer is absolutely: 29 CFR 1604.11, promulgated by the EEOC, provides that:
(e) An employer may also be responsible for the acts of non-employees, with respect to sexual harassment of employees in the workplace, where the employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate corrective action. In reviewing these cases the Commission will consider the extent of the employer’s control and any other legal responsibility which the employer may have with respect to the conduct of such non-employees.
For those of you who have been reading the trade press lately, you know that on November 7 NCUA will dust off its highest administrative appeals panel, the SRC, to hear an appeal of Ohio credit union Commodore Perry. The credit union contends that it was punished with a lower CAMEL rating by an examiner who found out that the credit union had complained to his regional office that he was sexually harassing and bullying staff members. A subsequent investigation of the allegations by NCUA’s Office of Inspector General concluded that there was no harassment and the regional director denied the appeal. I have no way of knowing what ultimately happened at the credit union, but, in addition to providing an important example on sexual harassment liability, the situation demonstrates yet again the need for a truly independent administrative appeals process.
A credit union shouldn’t have to make a Hobson’s choice between exposing itself to a sexual harassment lawsuit by failing to take appropriate action when confronted with a claim or risking retaliation by the examiner accused of the harassing conduct. Similarly, I have no reason to doubt the integrity of any of the regulators involved in this dispute and no one should be placed in a situation where the decisions they make are inherently suspect. A truly independent arbiter would not only give credit unions a disinterested set of eyes to review examiner determinations, but would give regulators the opportunity to show why their decisions were consistent with industry standards. Unfortunately, since NCUA serves as judge, jury and executioner in the current process, its determinations are inherently suspect.
The National Labor Relations Board upheld a previous finding that a car dealership’s courtesy policy was too broad because it might be interpreted by employees as discouraging their use of concerted activity to address work place concerns. The offending policy stated:
(b) Courtesy: Courtesy is the responsibility of every
employee. Everyone is expected to be courteous, polite
and friendly to our customers, vendors and suppliers, as
well as to their fellow employees. No one should be
disrespectful or use profanity or any other language
which injures the image or reputation of the Dealership.
What was wrong with this policy? The National Labor Relations Act makes it illegal for employers to keep employees from joining together to raise concerns about workplace conditions. The protection of so-called “concerted activities” applies to both unionized and nonunionized workplaces, and at its best furthers the important goal of allowing employees to speak out about workplace conditions without fear of reprisal.
Suffice it to say this is not implementation of a law at its best. Your average employee understands the distinction between acting courteously and speaking out about workplace conditions. But the NLRB doesn’t think the American worker can be held to the same standards that parents expect of their kids every day. Rulings like this undermine rather than strengthen legitimate employee protections by creating the perception that regulations are being interpreted not to ensure that employees are being treated fairly but to impose restrictions on the ability of employees and employers to conduct themselves with as little government oversight as necessary.
On the bright side, the comments that triggered this litigation were made on an employee’s Facebook page; however, while the initial decision that was appealed gave employers some guidance on their rights to monitor and restrict an employee’s online conduct, the NLRB decision doesn’t deal with the Facebook issue in the case. So even this silver lining is of limited value.
Today marks the start of another Supreme Court term and although the public is understandably more interested in high profile disputes, such as the use of affirmative action in college admissions, there are always issues that will have a direct impact on credit unions and this year is no exception.
The case that most intrigues me asks a question that has been unanswered by the Court for 14 years and impacts the scope of every employer’s potential liability for lawsuits alleging racial or sexual discrimination under federal law: when is an employee a supervisor? The answer is not as clear-cut as you might think and is sometimes crucial to who wins or loses a discrimination lawsuit.
In Vance v. Ball State University, the Court will hear an appeal from Maetta Vance, an African-American employee of the university’s food catering service who alleges she was the victim of racial discrimination by a group of employees including Saundra Davis, who she claims was her supervisor. Mrs. Vance alleges this group of employees referred to her with racial epithets, physically threatened her and that one of them boasted of having family members that belong to the KKK.
No one is questioning that such behavior is atrocious, but the key to the lawsuit going forward hinges on whether Davis was Mrs. Vance’s supervisor. Why? Because Title VII of the Civil Rights Act makes employers vicariously liable for the conduct of their supervisors. In contrast, an employer is responsible for the harassing behavior of a co-worker only when it does not respond appropriately to an employee’s complaints about being sexually harassed or discriminated against.
For the Seventh Circuit, the case was straightforward. To be a supervisor a person must have the power to hire, fire, demote, promote, transfer, or discipline an employee and, since Davis could do none of those things to Mrs. Vance, the University could only be liable if it negligently responded to Vance’s complaints. In dismissing the lawsuit, the court noted that the University had a policy in place allowing employees to report claims of discriminatory conduct to their supervisors and that the University responded to each one of the Davis complaints by investigating the allegations and taking action against employees that was appropriate given the facts as it knew them.
In contrast, had this case been argued in New York, Mrs. Davis would have most likely been allowed to go forward with the lawsuit. That’s because the Second Circuit, which has jurisdiction over New York, has adopted a broader interpretation of who is a supervisor. For the Second Circuit a supervisor includes individuals given power to make decisions over a person’s work, such as determining and overseeing workplace assignments. In other words, in New York, a company can be vicariously liable for the conduct of its employees even though the offending supervisor can’t hire, fire, or discipline the person complaining of the harassment.
If the Supreme Court adopts the Seventh Circuit’s narrower interpretation, it won’t change how you go about enforcing sexual-harassment and anti-discrimination policies in your workplace, but it but it will narrow your liability, assuming you have the appropriate policies and procedures in place and you make sure they are actually implemented.