Posts filed under ‘HR’
How much can you, or should you, discipline employees for comments they make on their own social media accounts, like Facebook? That is the question I have been asking myself since reading this article in the CU Times reporting that MTC Federal Credit Union based in Greenville, South Carolina fired one of its loan officers for using a racial slur on Facebook.
The CU Times reports that Gerri Cannon admitted to posting the slur, but also contended that she is not a racist and has retained a lawyer. As I like to point out, retaining a lawyer doesn’t mean you have a case. Ms. Cannon’s dilemma provides an important teaching moment for credit union employers and employees alike.
The first thing I always hear in these cases is that the employee’s free speech rights are being violated. But they aren’t. The First Amendment restricts government conduct, not the conduct of private citizens. Hudgens v. N. L. R. B., 424 U.S. 507, 513, 96 S. Ct. 1029, 1033, 47 L. Ed. 2d 196 (1976). This means that Ms. Cannon has a right to post just about anything she wants on Facebook and MTC FCU has every right to fire her for it.
The second question that always gets raised in these situations is that the Employee Handbook didn’t ban the specific conduct. But to answer this question, we need to take a little detour. As most of you know, New York, like most other states, is an at-will employment state. This means that unless otherwise specified, employment is for an indefinite period of time and may be “freely terminated by either party at any time for any reason or even for no reason.” Lobosco v. New York Tel. Co., 96 N.Y.2d 312, 316, 727 N.Y.S.2d 383, 751 N.E.2d 462 (2001). There is a misconception on the parts of employees and employers that a handbook creates a contract which modifies at-will employment. And, in fact, there have been cases in which a poorly drafted handbook restricted the ability of employers to get rid of an employee. Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 465-66, 443 N.E.2d 441, 445 (1982).
But this is very much the exception to the rule. As a federal court noted earlier this year New York’s Court of Appeals has pointed out, “[r]outinely issued employee manuals, handbooks, and policy statements should not be lightly converted into binding employment agreements. This is especially true where the handbook contains an express disclaimer.” Rumsey v. Ne. Health, Inc., 89 F. Supp. 3d 316, 340-41 (N.D.N.Y. 2015), aff’d, No. 15-833, 2016 WL 336196 (2d Cir. Jan. 28, 2016), as corrected (Jan. 29, 2016).
Does this mean that a credit union can just ignore its handbook? Not at all. A more typical case than the one involving MTC FCU involves a discharged employee who argues that she was unfairly disciplined by her employer because of her race. For instance, let’s say that a credit union routinely looks the other way when it hears about inappropriate comments on employee Facebook pages. If that same credit union turns around and fires a pregnant or minority employee who makes such a comment, the unequal treatment can be used as evidence of discrimination on the part of the employer. Redford v. KTBS, LLC, No. 5:13-CV-3156, 2015 WL 5708218 (W.D. La. Sept. 28, 2015), on reconsideration in part, No. CV 13-3156, 2016 WL 552960 (W.D. La. Feb. 10, 2016).
One more thing to keep in mind when monitoring employee social media conduct is to make sure you are not violating federal labor laws. As I’ve mentioned in previous blogs, the NLRB is aggressively protecting the right of employees to engage in “concerted activity” using social media. This means that an employee’s complaints about his workplace may in fact be protected. It also means that you must be sure that your social media policies are not so poorly written that they can be read as prohibiting employees from taking to Facebook to talk about workplace concerns.
Needless to say this is one of those fast evolving areas that creates confusion and legal actions. This is one of those areas where a review of your handbook and a call to your attorney make a lot of sense.
On that note, enjoy your day.
I have many important lessons to impart to you this morning:
Most importantly, if you live in the Northeast, never ever move the snow blower to the back of the garage before May even if it has been such a freakishly warm winter that golf courses are already open.
Second, always record any sporting event that starts after nine PM on the off-chance that you will sleep through one of the greatest endings in college basketball history.
Third, you should all take the time to read a legal opinion letter on the custodial powers of federal credit unions recently issued by the NCUA.
In response to an inquiry from Paul T. Clark of the Seward & Kissel Law Firm, NCUA’s General Counsel said that a federal credit union is authorized, at a member’s direction, to place funds, which initially have been deposited into the FCU, into an FDIC account and to serve as custodian for that account, provided that several conditions are met. It is an important clarification of the flexibility FCUs have to serve members without crossing the line between acting as custodians of funds to becoming trustees and broker dealers.
Why is this flexibility important? Unfortunately, the letter does not explain what the firm was seeking to do with this authority, but I can think of situations where a credit union and its member may want the flexibility to move funds into a FDIC account without leaving the credit union. For example, as explained in a legal opinion letter from 2009, the CDARS service enables a bank to accept large deposits from its customers and, on behalf of the customer, spread the deposits in excess of FDIC insurance limits to other FDIC-insured banks, so the funds are fully insured. In its 2009 letter, NCUA authorized the participation of credit unions in this program but that opinion dealt specifically with credit unions authorized to accept public funds. (https://www.ncua.gov/Legal/OpinionLetters/OL2009-1022.pdf#search=cdars). NCUA’s most recent letter makes it clear that federal credit unions are authorized to place funds in FDIC accounts while still being the custodian of a member’s accounts. This letter also makes it easier for credit unions to place a portion of a member’s money into a trust.
But be careful when using this letter. The General Counsel stresses that credit unions “generally” don’t have trust powers or broker dealer authority. Why is this distinction important? Because, as explained by Blacks’ Law Dictionary, a trustee must “protect and preserve the trust property, and to ensure that it is employed solely for the beneficiary, in accordance with the directions contained in the trust instrument.” In contrast, a custodian is simply responsible for holding funds, making sure they are available and making sure that only authorized persons have access to them.
Which leads us to my fourth important lesson of the day. I have a sneaking suspicion that there are many credit unions that confuse custodial and trust powers. My simple rule of thumb is that if you find yourself reading a trust document to understand the credit union’s responsibilities, you are probably doing more than you can or should. All you need to do is properly label the account and make sure that only authorized trustees can access it. It is the trustee’s job to make sure the account is properly administered.
Here is where you can access the letter:
This is no April Fool’s joke. Yesterday it was announced that Montauk Credit Union, which was placed into conservatorship by the DFS in September as a result of the dramatic decline in Taxi Medallion prices, has merged with Bethpage Federal Credit Union on Long Island.
The merger means that the Long Island based Bethpage FCU will now have a presence in New York City. According to Bethpage’s press release, Montauk headquarters at 111 West 26th Street will be converted into a full service community branch and shared service facility through the Coop Shared Branch Network. Bethpage’s asset size will increase from $6.4 to $6.6 billion. NCUA’s emergency powers give it broad authority to approve mergers involving insolvent credit unions, so long as alternatives are not reasonably available and the merger is in the public interest.
Incidentally, Bethpage started in 1941 as a credit union for Grumman employees. In 2003, responding to the loss of military contractor jobs on Long Island, it converted from a SEG based to a community based credit union.
Mindful of the need to keep New York State as business friendly as possible, the State Legislature last night approved a budget that held the line on education spending and continued to aid the growth of business in the state, which is facing increasing pressure from cheaper Southern and Western locales. April Fools!!!!!
As I write this, the Legislature is still working to pass a budget for the 2016-2017 State Fiscal Year. There is no budget I remember that will have a more direct impact on employees and employers. Most importantly, the budget includes a phase in of a regionally based minimum wage increase and a state-level paid family leave requirement.
According to the Governor’s press release, workers in New York City employed by businesses with at least 11 employees would see their minimum wage rise to $11 at the end of this year and then $2 more for each of the next two years to reach $15 an hour. Workers in New York City employed by businesses with fewer than 11 employees will see their minimum wage rise to $10.50 at the end of this year, and then see annual increases of $1.50 an hour until it reaches $15 an hour in 2019. The minimum wage for workers in Nassau, Suffolk and Westchester Counties will reach a $15 minimum wage by the end of 2021. In the rest of the state the minimum wage will increase to $9.70 at the end of this year and then increase $.70 annually until it reaches $12.50 an hour by the end of 2020. Further increases in the upstate minimum wage will be determined by the Director of the Division of the Budget in consultation with the Department of Labor.
As for paid family leave, it will be phased in between 2018 and 2021. According to the Governor’s press release, the program will be funded “entirely” through a nominal payroll deduction on employees so that it cost businesses “nothing.” Call me wacky, but I could swear the budget includes a sweep from the workers’ compensation fund to help get the program up and running. Furthermore, doesn’t it cost employers something to accommodate the absent employee? Finally, I don’t know about you but I don’t know how many more “nominal” deductions my paycheck can take.
Needless to say, there are many things that credit union employers will have to learn in the coming months and years. As we read through the budget bills, we will pass on the information.
That’s the question posed in a case recently decided by an Administrative Law Judge (ALJ) for the National Labor Relations Board (NLRB). His decision demonstrates that March Madness extends well beyond the basketball court.
The National Labor Relations Act protects not only unionized workers but non-unionized workers involved in concerted activities dealing with workplace concerns. I strongly suspect that this language was included in the statute to protect employees who wanted to unionize or at least stand together to solve a common workplace problem with their employer. However, the NLRB has used this authority to encroach into virtually every workplace in America. The latest example of this trend comes in the form of a March 16 decision involving Quicken Loans.
On February 11, 2015, two employees of Quicken Loans, Austin Laff and Michael Woods, were in a rest room adjacent to a reception area and open for use by the public. The two were having a bad day and Laff told Woods to smile. Woods proceeded to tell him that a potential client should get in touch with a “f…ing client care specialist and quit wasting his f…ing time.” Laff responded to Woods by telling him he understood why he was frustrated. The conversation was overheard by Quicken Loans management, which eventually sent out an email reminding employees in no uncertain terms that there should never be any swearing in the bathroom, especially about clients. It also made clear that it was not professional to accuse clients of wasting employee time.
The email led to a further investigation of the bathroom banter. Laff, who had been involved in previous misconduct, was eventually discharged and Woods was disciplined. Now here’s the part of the story that is most important to you. The ALJ ruled that this brief expletive laden exchange was not simply two employees blowing off steam, but rather protected activity for which they could not be disciplined. According to the ALJ, “there is no question” that Laff and Woods “were discussing common concerns regarding terms and conditions of employment” related to how calls were handled.
I’ve said it before and I’ll say it again, the NRLB makes the CFPB look downright conservative. My diatribe notwithstanding, this case serves as yet another reminder of why you don’t have as much flexibility to discipline your employees as you once did.
The latest in a series of proposed regulations in which the Government is seeking to intrude into the work place is set to be unveiled today. The Wall Street Journal reports that this morning the Equal Employment Opportunity Commission (EEOC) will be rolling out proposed regulations requiring employers to disclose to the Government a summary of pay data. This information will be used to target employers who may be violating federal law mandating equal pay for equal work. The rule would apply to employers with 100 or more employees. Lest you think you’re off the hook completely, keep reading.
The Government have been moving this direction for a while. Earlier this year, similar reporting requirements were imposed on federal contractors. On the State level, New York has already put in place new equal pay protections that could directly impact your credit union. On January 19, amendments to Section 194 of New York’s Labor Law took effect.
New York has long outlawed pay discrimination based on sex; however, it has authorized pay discrepancies so long as they are based on a seniority system; a merit system; a system that measures earnings by quality or quantity of production; or “any other factor other than sex.” As my wife just pointed out, this is a pretty broad exception. The Governor and the Legislature agreed, which is why that language has been removed. Instead, employers can now base pay on “a bona fide factor other than sex, such as education, training or experience.” Furthermore, these criteria can only be used to the extent that they are related to the job in question.
It remains to be seen how great an impact this change in language will have on New York State workplaces. Here’s a good blog on the issue posted by Bond, Schoeneck and King.
On that note, enjoy your weekend. Personally, I have to remember what people do on Sunday afternoons without football.
Internships are all the rage. For example, my niece and nephew both attended Northeastern University, where admission standards have sky rocketed over the last few years largely in response to the school’s heavy emphasis on work co-ops. In this tough economy parents and students understandably love the idea of getting a leg up on the competition by getting real life experience and making contacts that could lead to future employment.
That’s nice Henry, but what does that have to do with the price of tea in China, you may ask. Well, I am assuming that a fair number of credit unions either hire interns or are considering doing so. Besides, I overhead the Association’s HR guru Chris Pajak fielding a question on this very issue the other day and I thought it was an intriguing issue. I’m here to remind you that rising interest in internships is growing hand in hand with increased legal scrutiny of what interns can and cannot do.
Most importantly, disgruntled interns have brought lawsuits claiming that they were actually employees and should have been treated as such under the Fair Labor Standards Act. The bad news is that there are no hard and fast rules to determine when an intern is actually an employee. The good news is, as explained in a recent article in the Legal Intelligencer, that the Second Circuit has provided employers with several criteria to be considered when determining if an intern is properly classified. These criteria include the extent to which: the intern clearly understands that there is no expectation of compensation; the internship provides training similar to that provided in an educational environment; the internship is tied to the intern’s formal education program, such as through coursework and the receipt of academic credit; the internship accommodates the intern’s academic commitments; the intern’s work complements rather than replaces an existing employee; the internship’s duration is tied to beneficial learning; and the employer and intern understand that the internship is being conducted without the assurance of a job at its conclusion.
Now remember, these are criteria, not requirements, which means that not every single one of these elements have to be present for you to legally provide someone an interning opportunity. The overriding gist of cases that have reviewed this issue is that employers have to be able to demonstrate that an intern is receiving academic benefit, and not simply being used to substitute for an employee.
Congressman Israel to Retire
Eight term Long Island Congressman Steve Israel announced that he would not be seeking re-election. One of his goals apparently is to have more time to write the Great American Novel. According to the Huffington Post, he plans to write a satire on the gun lobby. His district represents Northern Long Island and part of Queens. Best of luck, Congressman.
Yesterday President Obama called on Congress to follow a growing number of states, cities, and private companies that have decided to “ban the box” on job applications. (https://www.whitehouse.gov/the-press-office/2015/11/02/fact-sheet-president-obama-announces-new-actions-promote-rehabilitation )
This and other criminal justice reforms might actually happen since a diverse coalition of libertarians, fiscal conservatives and traditional liberals are in agreement that the country is doing something wrong by incarcerating approximately a quarter of the world’s prisoners even though it accounts for 5% of its population . In fact, there are more than 2.3 million incarcerated people, including 1.6 million in state and federal prisons and over 700,000 in local jails and immigration detention.
If my reading of the political tea leaves is correct , the question is not if but when legislation banning pre-employment conviction questions will impact your credit union? What concerns me most about these proposals is the amount of complexity, liability and expense they could add to the hiring process for credit unions unless they are drafted responsibly.
For an example of what I’m concerned about I need look no further than the Big Apple which now prohibits pre-employment inquiries related to criminal convictions until a conditional employment offer has been extended. If a subsequent criminal background check reveals a criminal history than the employer must perform an analysis pursuant to state guidelines to determine if this history disqualifies the applicant. It must then provide him with a written explanation of the reasons why his employment is being denied and provide him with an opportunity to respond to these concerns prior to formally withdrawing the offer. (http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=1739365&GUID=EF70B69C-074A-4B8E-9D36-187C76BB1098)
The good news is that this prohibition against pre- offer criminal inquiries does not apply to employers required by state, federal or local law to conduct criminal background checks for employment purposes or who are barred from hiring employees with criminal histories. This is a critical carve out for federally insured credit unions in New York City since, “any person who has been convicted of any criminal offense involving dishonesty or a breach of trust,.., may not become, or continue” to be employed by or otherwise participate, directly or indirectly, in the conduct of a credit union without the prior consent” of the NCUA. 12 U.S.C.A. § 1785 (West)
The problem is that even with this carve out and a helpful 2008 guidance interpreting the statute (GUIDANCE REGARDING PROHIBITIONS IMPOSED BY SECTION 205(D) OF THE FEDERAL CREDIT UNION ACT, 2008) the question of who is and who is not subject to NCUA scrutiny is inevitably a fact-sensitive inquiry. For example, precisely when does an independent contractor influence or control the management or affairs of an insured credit union enough to be covered by this law? Furthermore this prohibition does not apply to de Minimis convictions.
My point is that even if you agree with the “ban the box” movement in concept, credit unions belong to an industry that will be faced with some of the most difficult questions in implementing any bans.
In order to avoid these pitfalls we should argue that any ban the box prohibitions should (1) be passed by Congress; (2) preempt state and municipal laws ; (3) Provide a “safe harbor” for good faith implementation (4) provide a definitive list of offenses for which a person is banned from working with a financial institution and (5) Limit damages for violations to back pay and a job offer.