Technology Employment Law

Technology Employment Law

Legal Insight for Technology, Media, and Telecommunications Employers

Data: It Is Lurking Everywhere, Especially in the Shadows

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For years, companies have been struggling to understand the multitude of locations where their data resides. From traditional employment files with embedded Social Security numbers, to new-aged hiring software with videos of job applicants, and enterprise software used to facilitate employee communications, controlling employee, customer, and corporate data is, to say the least, a logistical challenge. One of the newest entries into the mix is the increased use of ShadowIT and cloud-based storage systems.

ShadowIT involves workers’ use of unsanctioned products and applications to perform the work of the business enterprise. In other words, ShadowIT occurs when employees use their personal emails and applications, such as a cloud-based storage system, instead of company-approved solutions. According to a recent survey, about one-third of IT use is considered ShadowIT. Whether responding to a subpoena in a wage and hour dispute, attempting to safeguard previous corporate secrets, or analyzing the extent of a data breach, a company’s failure to understand the scope and location of ShadowIT data could be problematic. Companies should have policies in place regarding employees’ (and other workers’) use of unapproved applications, but there should also be an understanding that a policy is not a panacea.

For data storage, recent studies show that most organizations are using over 1,000 cloud-based services. Indeed, one such study found that an average organization had 1,154 cloud services in use. This large number demonstrates that companies must manage the sheer volume of data in the cloud or potentially be exposed to liability.

Companies must also think about physical storage when a laptop or a phone is stolen and suddenly control over data on that item is lost. One leaked file in California, for example, could require a company to send out a data breach notification to millions of customers in California (an issue magnified under varying state laws as well in the current landscape). No overall system is perfect for this task, and the idea that company data can be completely controlled may be an illusory one, but there are important issues for companies to consider and sensible steps that they should take to safeguard data, including the following:

  • Survey ShadowIT Usage. Companies should consider conducting anonymous data audit surveys of employees to find out what other applications or products employees are using to perform their jobs. The company can then review its IT department to determine if it lacks the functionality for a certain program or if the problem of unsanctioned product use is simply a result of a lack of employee education as to the sanctioned products available to employees.
  • Manage ShadowIT Usage. Employees using ShadowIT or unsanctioned products create control risks for companies, and employers may consider disciplining employees for not following corporate policies on approved applications. On the other hand, having draconian disciplinary measures in an effort to maintain control over data will not necessarily stop ShadowIT use but may force it deeper undercover. Discipline could also have an adverse impact on employee engagement and retention.
  • Consider “Amnesty.” Companies should consider whether it makes sense to implement a time-limited policy, whereby employees can bring their unapproved software or application to the IT department to see if the program can be moved onto an approved list from the corporation, without the threat of discipline or sanction.
  • Review Vendor Contracts. Companies should review their contracts with vendors for approved cloud-based products and software. This may include auditing other cloud-based companies where data is stored to ensure that the company is adhering to best practices of network security. The contracts should contain data breach notification clauses, as well as indemnification agreements, when possible.
  • Train Workforce. Frequently, employees are the “weak link” in data control efforts, as they are often the cause of a data breach into a company’s secure network. Training employees about how to spot scam phishing emails and protect intellectual property can go a long way toward mitigating that risk.

Technology is constantly evolving such that there will always be a new product or service that could potentially be a benefit to employee productivity. A ShadowIT survey, while helpful, is only a look back in time. Companies need a way to address ShadowIT use as it evolves going forward. A company prohibition on ShadowIT without some method for employees to submit new products for consideration without fear of reprisal keeps the company in the dark about its data. Companies must also be mindful of the other cloud-based providers’ security protocols and the likelihood that a third party could accidently let sensitive data out into the public domain.

A version of this article originally appeared in the Take 5 newsletter “Five Trending Challenges Facing Employers in the Technology, Media, and Telecommunications Industry.”

The EEOC Advocates for a More Diverse Technology Industry

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Throughout 2016, the Equal Employment Opportunity Commission (“EEOC” or “Commission”) has been examining initiatives to identify and attempt to rectify a perceived lack of diversity in the workplace. The EEOC has, in particular, identified the technology industry as an area where significant strides can be made to create a more diverse workforce.

Following a May 18, 2016, public meeting on diversity in the technology industry, the EEOC issued a “Diversity in High Tech” report (“Report”) summarizing research on the lack of diversity in the “high-tech sector,” defined as industries that employ a high concentration of employees in the STEM (science, technology, engineering, and mathematics) occupations and the production of goods and services advancing the use of electronic and computer-based production methods. The Report highlighted several demographic trends within the industry, generally showing that the high-tech sector is still predominantly white, male, and under 40 years old. Citing the high-tech sector as “a major source of economic growth fueling the U.S. economy,” the Report also identified demographic differences among the types of positions within the industry, noting that African Americans and Hispanics were disproportionately underrepresented in leadership positions in technology jobs.

According to the Report, the lack of diversity in the labor force within the high-tech sector can be attributed to the demographics of graduates with STEM degrees. Nearly 70 percent of graduates in engineering, mathematics, and computer science are men. While the Obama administration has included STEM education as a priority, the current graduates in STEM fields are significantly less diverse than in the general labor market.

Further, more than half of the women working at STEM companies in the high-tech sector eventually leave or do not advance within the STEM industry. The Report attributed women’s exit from the high-tech sector to an “inhospitable” work culture, isolation, work styles incompatible with the “firefighting” style generally rewarded, long hours and travel, and a glass-ceiling effect.

While the high-tech sector originated in Silicon Valley, the scope of this industry has grown across the United States. To see whether the diversity statistics differed at the epicenter of high tech, the Report further analyzed the labor force within Silicon Valley. The labor force generally in Silicon Valley is split evenly between men and women; however, within the tech industry, it becomes a 70-30 split in favor of men. While Asian Americans fared better within Silicon Valley than across the national survey for professional jobs, white men “dominated” leadership positions across the nation and even more significantly in Silicon Valley.

While the Report is valuable in highlighting changes that are necessary to create a more diverse workforce within the technology industry, the EEOC’s public meeting made clear that the Commission expects technology companies to address what it perceives to be the implicit and unconscious biases leading to the current demographics. In many technology start-ups, hiring practices and human resources policies are generally among the last concerns in growing companies; thus, companies recruit via word of mouth or weed out certain categories of candidates, such as older workers, leading to a more homogenous workforce. The findings stated in the Report and at the public meeting should encourage emerging companies to consider employee issues at the forefront, rather than as a secondary concern.

In Silicon Valley, where the lack of diversity is amplified within the high-tech sector, changes in California law may encourage employers to recruit from a more diverse pool of candidates. At the end of June, the California Legislature passed an amendment to the Equal Pay Act that, if signed by the governor, would provide a cause of action for a differential in pay on the basis of race or ethnicity unless the employer can show that the difference is based on a bona fide factor other than race or ethnicity. (The California Equal Pay Act was also recently amended to protect women more strongly against pay differentials.)

In addition to the Report, recently proposed EEOC guidance on national origin discrimination and the EEOC’s updated proposed rule to include salary bands on the annual EEO-1 report demonstrate the Commission’s commitment to encouraging a more diverse and inclusive workforce. The EEOC’s in-depth look at the high-tech sector should induce technology employers to review hiring practices and audit the diversity within their workforce, as the EEOC’s enforcement of systemic discrimination has increased significantly over the past 10 years.

A version of this article originally appeared in the Take 5 newsletter “Five Trending Challenges Facing Employers in the Technology, Media, and Telecommunications Industry.”

Wearables in the Workplace: Promise and Pitfalls

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In recent years, the use of wearable devices, such as smartwatches and Fitbits, has gained popularity not only with the general public and consumers but also among employers as a way to encourage workers to maintain healthier habits and, in turn, help reduce health care costs. Increasingly, companies are distributing wearable devices to employees as part of workplace wellness programs. According to one estimate, nearly half of employers that have a workplace wellness program use fitness trackers.[1] This trend shows little sign of abating. The data collected from these trackers—on such things as quality of sleep and activity level, for example—can be shared with health insurance companies, which may allow employers to negotiate lower insurance policy rates for their employees. Companies that have encouraged wearable fitness trackers have also realized other benefits, including decreased absenteeism and increased worker productivity.

Beyond wellness applications, employers around the globe are also using wearables to increase worker safety. One company in Australia, for example, has had its truck drivers wear “SmartCaps”[2] in an effort to reduce fatigue-related accidents. These hats resemble baseball caps but include built-in sensors that can detect driver alertness and provide a warning to drivers when their fatigue level begins to rise.

To be sure, the benefits of wearable devices, as well as the value of the data generated by them, cannot be ignored. Yet, despite the potential benefits of introducing wearables into the workplace, employers should be mindful of the potential legal pitfalls. Monitoring employees, whether during work or non-work hours, can expose employers to legal risks even if the monitoring is intended to promote employee wellness, improve business operations, or keep employees safe.

What Are the Legal Risks?

Several legal risks arise from the various health-related data that can be collected from these workplace wearables and used by employers. One key threat is that cybercriminals could hack into the servers of companies that sell fitness tracking wearables (and manage the associated mobile health apps) and access employees’ personal data. It is also possible that these companies could sell employees’ personal data to advertising companies or other third parties without employee knowledge.

In addition to data privacy and security concerns, antidiscrimination laws also represent an important risk for employers. For example, under the Americans with Disabilities Act (“ADA”), employers are prohibited from conducting a “medical examination” of employees unless the examination is “job-related and consistent with business necessity.”[3] A medical examination includes a procedure or test that seeks information about an employee’s physical or mental impairments or health. Because wearables today can measure various health metrics, such as heart rate and blood pressure, an employer’s rollout of wearables could unintentionally result in prohibited medical examinations under the ADA. While employers are permitted to conduct voluntary medical examinations as part of voluntary workplace wellness programs, provided that certain conditions are met, this is still an area in which employers should be cautious. Further, to the extent that wearables collect information about employees’ family medical history or other genetic information, employers may face liability under the Genetic Information Nondiscrimination Act (“GINA”). Under GINA, it is illegal for employers to use genetic information in making employment decisions. Finally, employee monitoring, particularly with respect to GPS location, can also potentially run afoul of protections afforded by the National Labor Relations Act (“NLRA”).

How Can Employers Mitigate the Risks of Using Wearables in the Workplace?

While the law in this area is in its nascent stage, before rolling out a wearables program, either as part of an overall wellness plan or independently, employers in all industries should do the following:

  • Although wearable technology is rapidly advancing and adopting novel methods of employee tracking and monitoring may be alluring, exercise particular caution when adopting novel tracking methods, regardless of how strong the underlying business, health, and/or safety justification may be.
  • Consider working with a third-party vendor to administer the workplace wellness program so that you receive information derived from employee wearables on an aggregate basis that does not individually identify data for any specific employee.
  • Ensure that there is a policy in place detailing how the technology will be used and the scope of information that will be collected. Also, consider obtaining employee consent related to data collection.
  • As the legal landscape surrounding workplace wearables evolves, closely track and monitor developments in applicable state and federal laws (including the ADA, GINA, and NLRA, among others) and revise your policies accordingly.

A version of this article originally appeared in the Take 5 newsletter “Five Trending Challenges Facing Employers in the Technology, Media, and Telecommunications Industry.”

[1] Patience Haggin, As Wearables in Workplace Spread, So Do Legal Concerns, The Wall Street Journal, March 13, 2016, http://www.wsj.com/articles/as-wearables-in-workplace-spread-so-do-legal-concerns-1457921550.

[2] Rio Tinto, Hi-Tech Cap Helps Coal & Allied Truck Drivers Work Smarter to Manage Fatigue (May 2013), http://www.riotinto.com/media/media-releases-237_8713.aspx.

[3] U.S. Equal Employment Opportunity Commission, Enforcement Guidance: Disability-Related Inquiries and Medical Examinations of Employees Under the Americans with Disabilities Act (ADA) (2000), https://www.eeoc.gov/policy/docs/guidance-inquiries.html.

Are You a Joint-Employer with Your Suppliers? NLRB Examines Corporate Social Responsibility Policies

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Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the technology industry: “Can Your Corporate Social Responsibility Policy Make You a Joint-Employer With Your Suppliers? The NLRB May Find That It Does

Following is an excerpt:

The National Labor Relations Board (NLRB or Board), which continues to apply an ever expanding standard for determining whether a company that contracts with another business to supply contract labor or services in support of its operations should be treated as a joint employer of the supplier or contractor’s employees, is now considering whether a company’s requirement that its suppliers and contractors comply with its Corporate Social Responsibility (CSR) Policy, which includes minimum standards for the contractor or supplier’s practices with its own employees can support a claim that the customer is a joint employer. …

Employers are well advised to review the full range of their operations and personnel decisions, including their use of contingent and temporaries and personnel supplied by temporary and other staffing agencies to assess their vulnerability to such action and to determine what steps they make take to better position themselves for the challenges that are surely coming.

Read the full post here.

Seventh Circuit: Title VII Does Not Cover Sexual Orientation Bias

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Our colleague Linda B. Celauro, Senior Counsel at Epstein Becker Green, has a post on the Financial Services Employment Law blog that will be of interest to many of our readers in the technology industry: “Seventh Circuit Panel Finds That Title VII Does Not Cover Sexual Orientation Bias.

Following is an excerpt:

Bound by precedent, on July 28, 2016, a panel of the U.S. Court of Appeals for the Seventh Circuit held that sexual orientation discrimination is not sex discrimination under Title VII of the Civil Rights Act of 1964. The panel thereby affirmed the decision of the U.S. District Court for the Northern District of Indiana dismissing the claim of Kimberly Hively, a part-time adjunct professor at Ivy Tech Community College, that she was denied the opportunity for full-time employment on the basis of her sexual orientation.

The importance of the Seventh Circuit panel’s opinion is not in its precise holding but both (i) the in-depth discussion of Seventh Circuit precedence binding it, the decisions of all of the U.S. Courts of Appeals (except the Eleventh Circuit) that have held similarly, and Congress’s repeated rejection of legislation that would have extended Title VII’s protections to sexual orientation, and (ii) the multifaceted bases for its entreaties to the U.S. Supreme Court and the Congress to extend Title VII’s prohibition against sex discrimination to sexual orientation discrimination.

The Seventh Circuit panel highlighted the following reasons as to why the Supreme Court or Congress must consider extending Title VII’s protections to sexual orientation …

Read the full post here.

Moving Toward a System of Portable Benefits in the Gig Economy

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As the employer-employee relationship and the meaning of a “workplace” continue to evolve in the “gig” (or “sharing” or “on-demand”) economy, a model of portable employee benefits, which are managed by mobile workers themselves, is gaining appeal. This employee benefits approach is not currently intended to replace employer-provided benefits for all workers but rather to fill a gap for those who may work independently as contractors or as temporary employees, do not have access to workplace benefits, or move from employer to employer quite frequently. Development of such a model, however, calls into question the future of the employer-provided system of employee benefits, which has been under attack in recent years.

As a result of the demise of the employer-provided pension plan and the rise of participant-directed savings plans, workers have already felt the movement away from the paternalistic approach to retirement benefits. This development has not been without controversy, as exemplified by the debates regarding participant savings rates, education regarding investments and fee transparency, and the U.S. Department of Labor’s (“DOL’s”) fiduciary rule regarding investment advice.

Also, on the health care front, the Affordable Care Act has provided a platform for workers to obtain their own individual health insurance in the Marketplace, either through choice or necessity, and the tax benefits of employer-provided health benefits are being threatened in tax reform initiatives. With the implementation of consumer-driven designs, employees are also managing their health spending and insurance choices.

These changes in benefits design and access to employer-provided programs, as well as the rise of the mobile workforce, have provided a foundation for further movement toward portable benefits. This movement continues to manifest itself in several ways, including through:

  • President Obama’s call for portable benefits programs. In his fiscal year 2017 budget, President Obama called for the development of programs to provide grants to states and nonprofits to design ways to provide retirement and other employee benefits that can be portable and accommodate contributions from multiple employers. In addition, he called for legislation regarding open multiple employer plans (“MEPs”) among unaffiliated employers to allow for pooled plans and continued contributions when employees move between employers participating in the same MEP. He also proposed requirements to allow part-time workers to participate in plans and measures for easier rollovers to plans. These initiatives would build upon earlier proposals for automatic payroll individual retirement accounts (“IRAs”) and other tax credit initiatives to small businesses.
  • Automatic payroll IRA programs and other alternatives. For employers that do not sponsor any retirement savings plans, there is increased momentum for automatic payroll IRAs. To date, at least five states (California, Connecticut, Illinois, Maryland, and Oregon) have enacted legislation that will require certain employers that do not sponsor a retirement plan to enroll employees automatically in a state-run IRA program. New Jersey and Washington have approved retirement marketplaces for eligible employers to shop for retirement savings programs, and many more states are considering alternatives, including state-run IRAs and MEPs. These initiatives follow guidance from the DOL facilitating such efforts (including parameters for state-run IRAs to avoid being subject to ERISA) and complement the U.S. Department of the Treasury’s guidance regarding myRA accounts, as well as President Obama’s agenda. Other legislative proposals include mandates for contributions to plans run by third parties or the federal government. Laws in this area will continue to evolve.
  • Portability policy advocates. In “Common Ground for Independent Workers,” an array of businesses, labor organizations, venture capitalists, and other stakeholders in the gig economy have called for policies to ensure a social safety net for all workers. This past May, Uber was among the first employers in the gig economy to come to agreement with the Independent Driver’s Guild, which is working on ways to offer its members a range of portable benefits. Retirement Clearinghouse (“RC”) has advocated for auto-portability plans that move retirement savings assets automatically with workers as they switch jobs. RC has requested an advisory opinion from the DOL to permit negative consent, which would allow plan account balances to roll automatically into a new employer’s plan.

What Employers Should Do Now

In the race for talent, it is important for employers to consider their own philosophy concerning employee benefits and the types of programs that they desire to offer their workers, whether full time, part time, contingent, or otherwise. It is also necessary to assess compliance with any programs that may be mandated by changing laws. In this evolving landscape, an employer should:

  • examine its organization’s workforce and determine which benefits programs are desirable to attract, motivate, and retain these workers in a competitive marketplace;
  • identify any gaps in benefits offerings and consider how to fill those gaps;
  • monitor legislation affecting employee benefits and applicable compliance requirements; and
  • determine whether its organization is subject to laws that will require it to comply with certain government-mandated programs when no applicable benefit program is otherwise offered by the employer, and decide whether it is instead desirable to establish, or expand coverage under, an employer-sponsored plan.

A version of this article originally appeared in the Take 5 newsletter “Five Trending Challenges Facing Employers in the Technology, Media, and Telecommunications Industry.”

Pokémon Go Privacy Concerns – Employment Law This Week

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Featured on Employment Law This Week® –  Pokémon Go creates privacy concerns for employers.

The first mainstream augmented reality game is sweeping the nation, and the game never stops, even during work hours. Despite a recent update to the game that reduces its access to players’ Google accounts, Pokémon Go’s data collection practices are under fire from privacy advocates. The Electronic Privacy Information Center has joined the fray, calling for the FTC to investigate security risks associated with the game. In light of the popularity of the game, employers should consider adding more detail into their policies about how and where business mobile devices can be used.

See the episode below.

NLRB Multiplies Impact of Expanded Joint Employer Test: Requires Bargaining in Combined Units Across Multiple Employers

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Our colleagues Adam C. Abrahms and Steven M. Swirsky, attorneys at Epstein Becker Green, have a post on the Management Memo blog that will be of interest to many of our readers in the technology industry: “NLRB Drops Other Shoe on Temporary/Contract Employee Relationships: Ruling Will Require Bargaining In Combined Units Including Employees of Multiple Employers – Greatly Multiplies Impact of BFI Expanded Joint Employer Test.”

Following is an excerpt:

The National Labor Relations Board (“NLRB” or “Board”) announced in its 3-1 decision in Miller & Anderson, 364 NLRB #39 (2016) that it will now conduct representation elections and require collective bargaining in single combined units composed of what it refers to as “solely employed employees” and “jointly employed employees,” meaning that two separate employers will be required to join together to bargain over such employees’ terms and conditions of employment.” …

The potential for confusion and uncertainty is enormous. In an attempt to minimize these concerns, the Board majority stated that the so-called user employer’s bargaining obligations will be limited to those of such workers’ terms and conditions that it possesses “the authority to control.”

Read the full post here.

Digital Investment Advice for Retirement Savings: Does the Robot Know Best?

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Robot Hand Investing on LaptopAs with most aspects of the workplace, employee benefits are going digital.  From online enrollments and administration for all types of benefits, to electronic educational tools, employers are increasingly seeking ways to use new technologies to enhance their benefits programs, increase efficiencies and employee engagement.  Among these innovations is the proliferation of computer-driven, digitally-based investment advisers, or so-called “robo advisers.”  The market for robo-advisers is growing fast with many new companies entering the space with increasing frequency.  Well-established companies are also developing and offering their own automated investment services which can be available to assist individual investors or participants in an employer-sponsored savings plan. Plan sponsors will increasingly be presented with robo-adviser services for their participant-directed retirement plans, and they must be prudently selected.

Robo-advisers are not without their critics.  There is an ongoing debate whether robo-advisers can meet the fiduciary standards of a trained professional who provides investment advice to investors in their best interest.   For example:

  • On March 15, 2016, the Financial Industry Regulatory Authority (FINRA) released a report regarding digital investment advice which raised questions concerning the standard of care that applies to broker-dealers and investment advisers under federal securities laws with regard to investment advice that they provide and the application of same to digital services used either in conjunction with a financial professional or on its own.   The FINRA report recognizes that digital investment advice tools will play a significant role in wealth management and that investor protections must be paramount and should include a foundation for understanding customer needs, with sound methodological groundings and recognition of the tools’ limitations.
  • On April 1, 2016, the Massachusetts Securities Division issued a policy statement and declared that robo-advisers may be inherently unable to act as fiduciaries and perform the functions of a state-registered investment adviser without the necessary due diligence and personalization to act in the best interest of their clients.
  • On April 6, 2016, The Department of Labor also released its final rule regarding investment advice fiduciaries (the “Rule”). The Rule itself continues to come under attack and on June 1, 2016, eight industry and trade groups filed a lawsuit in Texas federal court challenging the Rule and asserting that the DOL overstepped its authority in issuing the Rule, the Rule will increase costs and litigation, and that the Rule will not help investors. (See Chamber of Commerce of the United States of America et al. v. Thomas E. Perez et al., case number 3:16-cv-01476, in the U.S. District Court for the Northern District of Dallas.)  Whether the Rule survives pending challenges remains to be seen.  In the meantime,  robo-advisers that make investment recommendations are fiduciaries under the Rule which provides that fiduciary communications such as recommendations can be initiated by a computer software program.

It is also important to note that while the DOL also released a Best Interest Contract (BIC) exemption from its prohibited transaction rules to allow investment advisers to continue to provide advice and earn compensation such as commissions, sales loads, 12b-1 fees and revenue sharing payments without running afoul of conflicts of interest standards so long as certain requirements are met, this BIC exemption does not apply to the provision of investment advice solely through digital means unless the robo-adviser charges level-fees and is a “level-fee fiduciary.”  It appears that the pre-existing rules for “eligible investment advice arrangements” under Section 408(g) of ERISA provide an alternative path for robo-advisers to follow in order to avoid running afoul of the prohibited transaction rules.

For plan sponsors that desire to incorporate digital investment advice services into their retirement program in the near future, several issues, at a minimum, should be considered, including:

  • Assess the need for investment advice services versus provision of non-fiduciary educational tools, or determine an approach that incorporates both services
  • Ensure that the plan fiduciaries follow an objective process to elicit information necessary to assess the robo-adviser’s qualifications and credentials, quality of services offered and reasonableness of fees and costs charged for the services
  • Evaluate the robo-adviser’s investment approach embodied in the design of the tool
  • Assess whether the digital investment advice tool is paired with access to a human investment professional who is able to assess the plan participant’s needs in a manner that goes beyond the limitations of the digital tool, and, who is trained to utilize the tool effectively
  • Review any conflicts of interests
  • Determine if the robo-adviser charges level fees and meets the requirements of the BIC exemption  or whether it meets the requirements of an “eligible investment advice arrangement” under ERISA which either charges level-fees or uses a compliant computer-model
  • Review service agreements including fiduciary, indemnification, audit, record retention and data privacy and security provisions
  • Confirm that the robo-adviser acknowledges fiduciary status and that the participants are provided with any required disclosures
  • Establish a procedure for prudent ongoing monitoring of the robo-adviser service

For plan sponsors who already offer robo-adviser services to their plan participants, now is the time to review the arrangement under the evolving guidance and implement prudent changes.

In this environment, the fate of the Rule, and the standards for robo-advisers, will continue to evolve and new developments must be monitored.  Whether the robots know best is a question yet to be answered.

Seventh Circuit Court of Appeals Sides with NLRB on Class Action Waivers and Mandatory Arbitration

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Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the technology industry: “Federal Appeals Court Sides with NLRB – Holds Arbitration Agreement and Class Action Waiver Violates Employee Rights and Unenforceable.

Following is an excerpt:

The US Court of Appeals for the Seventh Circuit in Chicago has now sided with the National Labor Relations Board (NLRB or Board) in its decision in Lewis v. Epic Systems Corporation, and found that an employer’s arbitration agreement that it required all of its workers to sign, requiring them to bring any wage and hour claims that they have against the company in individual arbitrations “violates the National Labor Relations Act (NLRA) and is unenforceable under the Federal Arbitration Act FAA).” …

The decision of the Seventh Circuit, finding that the Board’s view was not inconsistent with the FAA, sets the ground for continued uncertainty as employers wrestle with the issue.  Clearly, the question is one that is likely to remain open until such time as the Supreme Court agrees to consider the divergent views, or the Board, assuming a new majority appointed by a different President, reevaluates its own position.

Read the full post here.

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