Technology Employment Law

Technology Employment Law

Legal Insight for Technology, Media, and Telecommunications Employers

2015 Has an Extra Pay Period: Dilemma for Those Paying Exempt Employees Bi-Weekly

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Our colleagues Michael Kun and Jeffrey Ruzal at Epstein Becker Green have a Wage & Hour Defense Blog post that will be of interest to many of our readers: “Unusual Wage Payment Issue in 2015 for Many Employers: 27 Bi-Weekly Pay Periods, Not 26.”

Following is an excerpt:

There is an unusual wage issue for 2015 that will affect many employers that pay exempt employees on a bi-weekly basis (rather than weekly, semi-monthly or monthly).

It is an issue that may have both financial and legal repercussions.

And it is an issue we suspect many employers had not noticed or considered.

With 52 weeks in a year, there normally are 26 bi-weekly pay periods in a calendar year.  In 2015, however, there will be 27 for many employers.

This oddity occurs every 11 years.  In short, it happens because 26 bi-weekly paychecks only cover 364 days in a year, not 365 (or 366 in Leap Years).  Those extra one or two “unaccounted for” days add up to create an additional pay period every 11 years.

The extra pay period is more than just an oddity.  It raises a dilemma for those employers that pay exempt employees on a bi-weekly basis – either pay employees more than intended, or face a possible wage payment claim.

Read the full post here.

NLRB Rules That Employees Can Use Company Email for Union Organizing – Affects All Employers

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Our colleague Steven Swirsky at Epstein Becker Green wrote an advisory on an NLRB ruling that affects all employers: “NLRB Holds That Employees Have the Right to Use Company Email Systems for Union Organizing – Union and Non-Union Employers Are All Affected.” Following is an excerpt:

In its Purple Communications, Inc., decision, the National Labor Relations Board (“NLRB” or “Board”) has ruled that “employee use of email for statutorily protected communications on nonworking time must presumptively be permitted” by employers that provide employees with access to email at work.  While the majority in Purple Communications characterized the decision as “carefully limited,” in reality, it appears to be a major game changer.  This decision applies to all employers, not only those that have union-represented employees or that are in the midst of union organizing campaigns.

Under this decision, which applies to both unionized and non-union workplaces alike, if an employer allows employees to use its email system at work, use of the email system “for statutorily protected communications on nonworking time must presumptively be permitted . . . .” In other words, if an employee has access to email at work and is ever allowed to use it to send or receive nonwork emails, the employee is permitted to use his or her work email to communicate with coworkers about union-related issues.

Read the full advisory here.

Supreme Court Holds That Time Spent in Security Screening Is Not Compensable Time

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Regarding the Supreme Court’s Integrity Staffing Solutions v. Busk opinion, issued today, our colleague Michael Kun at Epstein Becker Green has posted “Supreme Court Holds That Time Spent in Security Screening Is Not Compensable Time” on one of our sister blogs, Wage & Hour Defense.

Following is an excerpt:

In order to prevent employee theft, some employers require their employees to undergo security screenings before leaving the employers’ facilities. That is particularly so with employers involved in manufacturing and retail sales, who must be concerned with valuable merchandise being removed in bags, purses or jacket pockets.

Often in the context of high-stakes class actions and collective actions, parties have litigated whether time spent undergoing a security screening must be compensated under the Fair Labor Standards Act (“FLSA”). On December 9, 2014, a unanimous United States Supreme Court answered that questionno.

The Court’s decision in Integrity Staffing Solutions v. Busk may have a far-reaching practical and legal impact. Not only may it make more employers comfortable conducting security screenings of their employees, but it may bring an end to most class actions and collective actions filed against employers seeking compensation for employees’ time spent in such screenings.

NYC Affordable Transit Act Passes – Expanding the Right to Pre-Tax Transit Benefits to More New Yorkers

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Technology, media, and telecommunication employers doing business in New York City should take note of a new ordinance Mayor Bill de Blasio signed into law on October 20, 2014 – The Affordable Transit Act.

The Affordable Transit Act (the “Act”) requires employers in New York City with 20 or more full-time employees to offer pre-tax transit benefits to employees. The Act allows employees to use up to $130 in tax free money towards their transit costs, which is the current IRS limit.  Full-time employees are defined as employees working an average of 30 hours or more per week.

Penalties for violating the Act are $100-$250 for first time violations and $250 for repeat violations.  Employers, however, have 90 days to cure the first violation before any civil penalties will be imposed and penalties will not be imposed on any employer more than once in any 30-day period.

Employers are exempt from the Act if a collective bargaining agreement covers the relevant employees or where the employer is not required to pay federal, state and city payroll taxes.  In addition, the Department of Consumer Affairs may waive the requirements if an employer demonstrates that offering the benefit is a financial hardship.

According to the Mayor’s office, the legislation is expected to save employees over $400 a year on Metro Card expenses and employers more than $100 per year per employee in tax liability.  The Mayor’s office also predicts that the Act will extend transit benefits to more than 450,000 employees in NYC who are not currently offered them.

The Act takes effect on January 1, 2016 but in order to allow businesses adequate time to adjust to the new law, employers will not be subject to penalties prior to July 1, 2016.

Employers who do not already offer pretax transit benefits should take the next year to ensure compliance with the new law, assess and make any necessary changes to their payroll and benefits systems, and prepare communications to employees.

Disruptive Technology in the Workplace: Employment Law Considerations

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By Steven C. Sheinberg, General Counsel of the Anti-Defamation League & Guest TMT blogger.*

A recent McKinsey report on twelve “disruptive” technologies included four that will fundamentally transform how employers relate to their employees: mobile Internet, automation of knowledge work, the Internet of things and cloud computing. I would add to the list three results of these technologies: big-data, cybercrime and privacy.

From an employment law perspective, the common element here is data – data that flows to, is stored by, and is used (or misused) by employers, third parties and employees.

Employers

As new devices and technologies are deployed, employers will likely inadvertently gather information they probably do not want – for instance, protected health information (perhaps by detecting a disease-related app on a phone) or detailed records of employee movements (which can be very harmful in wage and hour litigation).

As employers look at these (and other) large pools of data (including applicant data), some will wish to “mine” this data using increasingly low-cost “intelligent” automated systems.  Such work has to be carefully done – both algorithmic errors and poor statistical methodology can easily lead to significant errors in the information derived from the raw data.  The results, from at least an EEO point of view, can be quite disastrous.

This data will likely be stored on third-party “cloud” storage systems –an arrangement that will raise new risks for employers.

Third Parties

Employers need to be concerned data in third party hands — whether it is there intentionally or not.

For instance, employers ask employees to use devices that are loaded with third party apps – and sometimes they even ask employees to use these apps.  These apps routinely collect significant amounts of data, including location and unique device identifier information. Such data can be combined to create a very detailed profile on users.   This data – owned, protected and even sold by these third parties – can create a new window into an employer’s operations that litigants and corporate spies alike would love to see.

Next, data will inevitably end up in third party hands through litigation and discovery.  As the cost of sophisticated analytics concerning that data is falling, there will be a sea-change in how employment cases are litigated – especially class actions.  And in the regulatory and EEO context, as a recent White House panel on so-called “big data” concluded, “the federal government should build the technical expertise to be able to identify practices and outcomes facilitated by big data analytics that have a discriminatory impact on protected classes.”   The use or misuse of this information by the government or litigants will require a very sophisticated legal response – one that will likely involve the world of statistical analysis and coding.

Information will also end up in third party hands through crime.  Whether inadvertent or not, the primary source of data breaches is through an employee’s keyboard.  As the breaches continue and the costs rise, employers will have to take radical approaches to data protection, including new levels of data segregation, radically shoring up security-related policies and treating mobile phones, whether company-owned or not, as on par with laptops.

Employees

As data is produced by more and different devices, there will be serious questions about who owns the data those devices store and generate.   Will an employee-owned, GPS-enabled app used on a “BYOD” device contain data that is owned by the employee (say, concerning their fitness activity) or, because it was worn during work, will it contain proprietary information (such as a record of where the employee visited)?   Employers must understand what data their employees are gathering – and update policies and executive employment agreements to deal with it.

In the social media context, employers will be forced to grapple with always-on devices, including those that constantly stream video.  It is unclear whether a simple workplace ban on such recording (as recently permitted under the NLRA) will survive video streaming’s convergence with social media –the latter of which the NLRB maintains can be a form of protected concerted activity.

Last, employers need to have action plans in place for data breaches caused by or impacting employees.  Employers should also ensure that insurance policies cover employee-caused data breaches and incidents involving employee information.

Concerns about privacy cover all three areas, but this is well covered elsewhere.

Summary

This short survey illustrates that the world of the employer will more and more involve data-driven risk –placing their lawyers deep in the world of statistics, system design and security management.

*EBG appreciates Steven C. Sheinberg’s contribution and respects his views, but notes they are his views and not necessarily those of EBG or any of its attorneys.

Five High-Level Issues to Consider in Shaping Employee Benefit Offerings – Take 5 Newsletter

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In this month’s Take 5 newsletter, I share my thoughts regarding five important issues that TMT companies should consider as they shape their employee benefits programs.  Below is an excerpt:

The workplace that we know today is rapidly changing. Competition for highly skilled workers is fierce, employees have become more mobile (due, in part, to alternative work arrangements or outsourcing), and there are often several generations of employees working alongside one another with different workplace approaches and perspectives. Developing employee benefit and compensation programs that are meaningful to a diverse group of workers with varied needs will become increasingly more challenging. This month’s Take 5 discusses the following five high-level issues to consider in shaping your organization’s employee benefit offerings:

  1. There Is a “Retirement Crisis” in America
  2. Healthy Employees Are More Productive and Less Likely to Be Absent
  3. Offer Benefits Programs that Appeal to a Multigenerational Workplace
  4. Prudent Outsourcing Can Assist Plan Sponsors Manage Benefit Plans
  5. Address Employee Benefits Early in Corporate Transactions

Read the full Take 5 newsletter here.

ESI in the Cloud: What You Don’t Know (or Don’t Ask) Can Hurt You

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Companies who utilize cloud vendors to store their data on cloud-based applications should be advised: failing to understand the application’s storage and retrieval capabilities, and failing to preserve such data during litigation could lead to sanctions for both the company and its counsel.  That’s the lesson to be learned from a recent case in the Southern District of Ohio, one of the first of its kind to directly address the intersection between the cloud and its impact on litigation strategy.

In Brown v. Tellermate Holdings, Ltd., Case No. 2:11-cv-1122, 2014 U.S. Dist. LEXIS 90123 (S.D. Ohio July 1, 2014), plaintiffs, in an age discrimination suit against former employer Tellermate, Inc. (“Tellermate”), sought electronically stored information (“ESI”) from accounts that they and other employees maintained with Salesforce.com (“Salesforce”) during their employment to aid their argument that their terminations were due to their ages, and not due to performance issues.  Salesforce is a cloud-based vendor with whom Tellermate had contracted to provide Tellermate employees with a sales tracking tool to record all customer-related activity.

The Salesforce contract gave Tellermate access to the accounts and provided the ESI remained the property of Tellermate.  However, Tellermate erroneously informed its counsel that it could not gain access to the ESI.  Tellermate’s counsel, who the Court found unreasonably relied on Tellermate’s representations and misconstrued the Salesforce contract, repeatedly misrepresented to the Court that the ESI residing on Salesforce’s cloud could not be accessed.

The Court ordered Tellermate to produce the requested ESI.  Nevertheless, Tellermate waited nine months from receiving the Order before asking Salesforce about its backup policy, thus learning for the first time that Salesforce did not keep backup files for more than three to six months from the current date.  Tellermate’s failure to timely ask its cloud vendor about its backup system or promptly take measures to either suspend Salesforce’s policy, or obtain a backup copy of the ESI early in the litigation, guaranteed that the ESI was unreliable, if not irretrievable.

The Court found that the actions of Tellermate and its counsel were “simply inexcusable,” and ordered that Tellermate could not present or rely upon evidence that it terminated the plaintiffs’ employment for performance-related reasons either at the summary judgment phase or at trial.  The Court also ordered Tellermate and its counsel to jointly pay the plaintiffs’ reasonable attorneys’ fees and costs incurred in the various ESI-related discovery motions.

The Brown decision emphasizes the importance that employers who use cloud-based applications understand the terms of the agreement with the cloud-based provider, including (1) who maintains control and ownership of the ESI; (2) the provider’s backup policy; and (3) the options for preserving the ESI to maintain its reliability.  By fully understanding the intricacies involved in using cloud-based technology and taking appropriate steps at the beginning of a litigation to preserve discoverable ESI, an employer and its counsel can prevent misrepresentations to the court and take measures to avoid sanctionable conduct.

Epstein Becker Green’s Wage and Hour App Is Now Available for iOS, Android, and BlackBerry

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Wage & Hour Guide App for Employersby Michael Kun

We’re very pleased to announce that a brand-new version of our free, first-of-its-kind app, the Wage & Hour Guide for Employers, is now available for Apple, Android, and BlackBerry devices. The new app takes advantage of a software-as-a-service programming platform developed by Panvista Mobile.

Our newest version of the app is not only available to users of a variety of devices, but it offers simpler, faster, and more useful ways for employers to locate wage and hour information at the touch of a fingertip.  As new issues are constantly emerging in this area, we’re pleased to provide updated information and critical tools to help employers address wage and hour laws and regulations, such as recent minimum wage increases.

Key features of the updated app include:

  • The Android version is now available for the first time on the Google Play store – also it is also available for BlackBerry devices
  • Updated iPhone and iPad versions are now available on the App Store
  • New summaries of wage and hour laws and regulations are included, including recent minimum wage increases in California, Connecticut, Georgia, Illinois, Maryland, Massachusetts, New Jersey, New York, Texas, Virginia, and the District of Columbia
  • Direct feeds of EBG’s Wage & Hour Defense Blog
  • Easy sharing of content via email and social media
  • Access to EBG’s @ebglaw Twitter feed
  • Rich media library of publications from EBG’s Wage and Hour practice
  • Expanded directory of EBG’s Wage and Hour attorneys

Existing iOS users should visit the App Store to download the new iPhone and iPad versions; the previous edition of the app is retired.

Five ACA Issues that Employers Should Be Following

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Our Epstein Becker Green colleagues have released a new Take 5 newsletter: “Five ACA Issues that Employers Should Be Following” by David W. Garland, Adam C. Solander, and Brandon C. Ge. Below is an excerpt:

Employers have about three months to finalize their employer mandate compliance plans under the Affordable Care Act (“ACA”). While most employers are in the final stages of planning, this month’s Take 5 will address five ACA issues that employers should be aware of as they move forward:

  1. ACA-related litigation
  2. Employer mandate reporting
  3. Section 510 liability
  4. Alternatives to traditional plan offerings
  5. The looming Cadillac tax

Read the full newsletter here.

How The Apple Class Certification Ruling Affects All Tech Companies

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By Ian Carleton Schaefer, Meg Thering and Gregg Settembrino[1]

The unrelenting wave of wage and hour suits continues to roll through the high-tech industry.

On July 21, 2014, in Felczer v. Apple Inc., Judge Ronald S. Prager of the Superior Court of California granted class certification as to a class of  approximately 21,000 current and former Apple retail and corporate employees on claims alleging Apple failed to provide timely meal and rest breaks as required under California Law. The California Labor Code, with a few exceptions, requires employers to provide non-exempt employees with 30-minute unpaid and duty-free meal breaks for every five hours worked. Additionally, employers must authorize and permit all non-exempt employees to take paid rest periods for a duration of 10 minutes for every four hours worked. The penalty for failing to provide statutory meal and rest periods is a one-hour meal period premium for each employee for each missed meal or rest period, at his or her regular hourly rate of pay.

The Court also certified a class on Plaintiffs’ claims that Apple failed to properly pay them their final paychecks and seek the unpaid wages and waiting time penalties because meal and rest period premiums were not included in their final paychecks. The California Labor Code requires an employee whose employment is terminated to be paid his or her final paycheck upon termination of employment. Employees who provide 72-hours’ notice that they are quitting must be given their final paycheck on either their last day worked or within 72 hours of having given notice if they stop working before the 72-hour notice period has run. Plaintiffs allege Apple failed to pay them premium or timely payments pursuant to Cal. Lab. Code §201 and §202 and thus are liable for waiting time penalties under Cal. Lab. Code §203. Waiting time penalties are available in California when an employer willfully fails to pay any wages owed to an employee who is fired or quits. Waiting time penalties are calculated at the employee’s daily rate of pay per day of pay violation, for up to 30 days.

Additionally, the Court granted class certification on the Plaintiffs’ claim that Apple failed to provide them with accurate itemized employee wage statements. Cal. Lab. Code §226(a) requires employers to provide their employees with accurate itemized wage statements that include: (1) gross wages earned; (2) total hours worked by the employee (unless the employee is a salaried exempt employee); (3) number of piece-rate units earned and the applicable piece rate, if applicable; (4) deductions; (5) net wages earned; (6) inclusive dates of the pay period; (7) employee’s name and employee ID number; (8) name and address of the legal entity that is the employer; and (9) applicable hourly rates in effect during the pay period worked and the corresponding number of hours worked. The claim in this action is not that Apple did not provide a wage stub or all of the required information on the wage stub, but that because the Apple did not comply with meal and rest period laws, the information on the wage stub was incorrect. As such, Plaintiffs allege that because Apple knowingly and intentionally failed to comply with Cal. Lab. Code §226, Plaintiffs are entitled to receive the greater of all actual damages of $50 for the first pay period in which the violation occurred and $100 per employee for each violation in a subsequent pay period, not exceeding the total penalty of $4,000, for one year along with the costs of reasonable attorney’s fees pursuant to California Labor Code § 226(e).  

Plaintiffs also allege a violation of California Labor Code §2698, et seq., the Private Attorneys Generals Act (PAGA). This law permits an employee to pursue civil penalties on behalf of the State of California Labor and Workforce Development Agency (LWDA). For the first violation of a provision of the Labor Code, a penalty of up to $100 per employee can be issued; for each subsequent violation, $200. And, generally speaking, each pay period for which there is a Labor Code violation is considered a violation, such that employers that pay employees bi-weekly can be sued for 26 violations per year per employee. Ultimately, 75% of any PAGA recovery must be provided to the LWDA, with the employees themselves retaining the remaining 25%.

In their complaint, Plaintiffs seek nominal damages, compensatory damages, restitution of all monies due from Defendant’s alleged unlawful business practices, declaratory relief, injunctive relief, and interest accrued to date. While the Plaintiffs have not yet stated how much money they are seeking in the aggregate, the possible exposure could be significant.

Why Are Tech Companies Being Targeted?

Apple is not the first tech company to be targeted by plaintiffs’ attorneys in California, and it likely will not be the last. Plaintiffs’ attorneys are going after tech companies both because they view them as deep pockets and because they believe they may be able to procure higher awards or settlement fees in such cases due to the fact that tech companies tend to employ large numbers of people at high hourly rates. Since the premium for a missed meal or rest period is an hour’s worth of pay, there is a greater potential recovery for plaintiffs and their attorneys in the tech industry than in cases brought against smaller companies with fewer employees and/or lower hourly rates. Additionally, whether true or not, some plaintiffs’ lawyers believe that due to the nature of tech work, it is harder for the employer to show that an employee’s meal period was not interrupted.

Where the certification of the class in the case against Apple may have its greatest impact is that it will embolden other lawyers to sue tech companies and to try to use this case as a blueprint. Accordingly and unfortunately, other tech companies can now expect to see lawsuits with similar claims, theories, discovery, experts, and trial plans. And they can expect to see plaintiffs’ counsel in those cases insisting that classes should be certified for the same reasons that they were certified in the claims against Apple.

Tech employers should work with counsel now to take steps to protect themselves against such claims. It is vital that California employers comply with applicable state law on meal and rest periods, final paychecks, and wage statements. To the extent a tech employer determines it needs to revise its policies and practices to comply with California law, it must be exceedingly careful in doing so in order to avoid inviting the very class action lawsuit it is seeking to avoid – and to avoid creating evidence that could be used against them in that litigation. EBG’s experienced California employment attorneys can help employers in reviewing and addressing these issues. For the latest developments in wage-hour law, please also visit our Wage & Hour blog and download our wage hour app.


[1]Gregg Settembrino is a paralegal at Epstein Becker & Green, P.C. and a law student at New York Law School.

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