Legal Issues and Recent Developments, Published by the Lurie Law Firm LLC

Archive for March, 2010

Employees Have Reasonable Expectation of Privacy in Personal Attorney-Client E-Mails From Company Computers

Tuesday, March 30th, 2010

On March 30, 2010, the New Jersey Supreme Court held that employees have a reasonable expectation of privacy in e-mails sent to their attorneys from their company computers.  In Stengart v. Loving Care Agency, plaintiff, Marina Stengart, communicated several times with an attorney about a potential lawsuit against her employer, Loving Care Agency.  While she communicated with him through her personal Yahoo account, she did so using her company provided computer.  Shortly thereafter, she resigned from Loving Care, claiming constructive discharge, and filed a lawsuit, alleging that she was subjected to harassment, discrimination and retaliation.  At the time of her separation, she returned her company computer.

In anticipation of litigation, Loving Care retained a forensic expert to retrieve all of plaintiff’s e-mails and web-based activity.  Unbeknownst to plaintiff, the company had the ability to obtain all communications that were sent from her personal account on the company computer, including the communications with her lawyer.

The company claimed that plaintiff had no expectation of privacy and had waived the attorney-client privilege, and that the company had a right to look at these e-mails, based on its Electronics Communication policy.  That policy stated:

 The company reserves and will exercise the right to review, audit, intercept, access, and disclose all matters on the company’s media systems and services at anytime, with or without notice.

 . . . .

E-mail and voice mail messages, internet use and communication and computer files are considered part of the company’s business and client records. Such communications are not to be considered private or personal to any individual employee.

 The principal purpose of electronic mail (e-mail) is for company business communications. Occasional personal use is permitted; however, the system should not be used to solicit for outside business ventures, charitable organizations, or for any political or religious purpose, unless authorized by the Director of Human Resources.

The Court held that this policy did not provide adequate notice to employees that their e-mails, sent from their private accounts, could be accessed by their employer.  In this regard, the court noted that the term “company’s media systems” was vague; employees might reasonably expect that this applies to company e-mails, and not to e-mails from personal accounts that happened to be sent from the company computer.  Further, according to the Court, the policy gives no notice to employees that their personal e-mails are somehow stored on their hard drive, and therefore accessible to their employer.  The Court further observed that the policy is entirely silent on whether e-mails on private web-based accounts even fall within this policy.  Finally, the court noted that the policy allows employees to use e-mail for occasional personal use, creating further ambiguity as to whether personal e-mail is considered company property.

In contrast to the ambiguity of the electronic communications policy, the Court found there was no ambiguity in the strong public policy protecting attorney-client communications.   In this regard, the Court noted that other cases have have found no reasonable expectation of privacy when employees view or save inappropriate material on their company computers.   Further, employers might have a legitimate interest in monitoring communications that might have a detrimental effect on their business.

The Stengart Court noted that a different analysis might apply to attorney-client communications.  The Court noted that other courts have recognized that individuals do expect that their communications with their lawyers are private, particularly where the employee took reasonable steps to protect their confidentiality, e.g., using their personal accounts rather than company accounts, sending messages from their company laptop at home rather than through the company’s server, and whether they saved their log in information on their company computer.   Further, the e-mails, on their face, noted that they were to and from and attorney, and that they were subject to the attorney-client privilege.  Accordingly, the Court found that the documents were privileged, and that the company’s attorneys may have violated rules of professional conduct by reviewing them and by not returning these e-mails as soon as they discovered their existence.

The Stengert decision provides some valuable lessons.  First, employers should review their electronic communications policies to make sure that they are not overly vague and ambiguous.  Given the strong public policy protecting attorney-client communications, it is unlikely, however, that a Court would hold that there is no right to privacy in e-mails from a private web-based account using the employer’s equipment, even if the policy somehow specifically included these within the definition of employer electronic media.  Employees should also be careful not to send confidential information from their employer’s e-mail accounts; if they want information to remain confidential, they should use their private e-mail accounts for this purpose, and preferably not do so using their company computers.  It is also prudent to include the legend “ATTORNEY-CLIENT COMMUNICATION” at the top of such communications.  Further, attorneys should immediately return these documents as soon as they are aware that they have them.  As noted in an earlier post, employers may have a legitimate interest in their confidential documents, and should accord the same deference to confidential documents of their employees.   Finally, this decision should not be interpreted to imply that employers do not have a legitimate right to monitor improper use of electronic media by employees.

New Jersey Court Reaffirms that Internal Investigations May Be Discoverable

Tuesday, March 30th, 2010

A few weeks ago, I posted tips for conducting an effective investigation, noting that a good investigation can be an employer’s best friend, but that an improperly conducted investigation — and lack of follow up — can be a nightmare for an organization.   See here for more information.  A recent New Jersey trial court decision, Shanahan v. New Jersey Transit Corporation, reaffirms that such investigations are discoverable, such that employee litigants, and possibly juries, may have the opportunity to review and criticize the employer’s investigation and follow up.

In Shanahan, the plaintiff alleged that her employer, New Jersey Transit Corporation (NJT), subjected her to a hostile work environment based on her sexual orientation, and then retaliated against her when she complained about the harassment.  To support her claims, the plaintiff demanded that NJT turn over four documents that contained a discussion, analysis and recommendations regarding the rise in discrimination complaints under the tenure of plaintiff’s supervisor, as well as data comparing disciplinary actions against white males and minority members, and data regarding trends in hiring of female officers.  The court held that that these documents were clearly relevant, as the documents may have a tendency to prove or disprove that plaintiff’s supervisor had discriminatory motives, as well as to disprove the employer’s reasons for its actions against plaintiff.

After finding that the documents were relevant, the court then held that the documents were not privileged.  More specifically, NJT argued that the documents were protected by the “deliberative process privilege,” which allows governmental agencies to withold documents that reflect advisory opinions, recommendations, and deliberations to help the agency formulate policies and decisions.  The court rejected this argument, ruling that the deliberative privilege does not apply in employment discrimination cases.  In reaching this result, the court cited Payton v. New Jersey Turnpike Authority, 148 N.J. 524 (1997), in which the New Jersey Supreme Court specifically held that investigations of  discrimination complaints are not privileged, noting that “we particularly disfavor privileges in the employment-discrimination context.” 545.  The Shanahan court further noted that, for the deliberative privilege to apply, the documents must contain opinions, recommendations or advice to help make decisions, and not just facts.  Here, the court observed that the disputed documents contained only high level and general recommendation (e.g., “we do need to remain diligent in … insuring that their HR practices minimize the filing of complaints”) or recommended further review and analysis.

Finally, the court noted that at least one of the documents was never used in any deliberations.  According to the court: 

Ms. Illescas [the author of one of the reports] testified at her deposition that no action/no decision was ever made by Defendants in response to the T&J Associates report or her report. In fact the testimony of Ms. Illescas demonstrates that Defendants were dismissing these reports and findings and took no action whatsoever on them. Ms. Illescas testimony reveals that at least one of these reports (Ms. Illescas’ report) may have been used in a retaliatory fashion by Defendants.

In other words, not only was the document not protected by the deliberative process, the court found that it may support the plaintiff’s allegation of retaliation.

It would be a mistake for an employer to assume from this case that it should not investigate and/or document any potential areas for improvement.  It is axiomatic that ann organization should not put its head in the sand, in the hopes that everything is fine, or that no one will find out that there are any issues if they do not document them.  Rather, I have found that issues go to litigation precisely because they fester under an employer’s neglectful or unrealistic watch.  Moreover, while juries may understand that no organization is perfect, they tend not to be sympathetic to employers that turn a blind eye to potentially unjust treatment, or that engage in “blame the victim and shoot the messenger” when issues are raised.  Rather, a prudent employer should learn from this case that any investigation or issue may be discoverable, and that they should act as though all of their decisions and actions will see the light of day, and do the right thing.

This case is also a good reminder that there are numerous “investigative” records, besides formal investigations, that may document potential issues and recommendations, and which may be discoverable.  Many companies have HR issue software, which track investigations and issues, and may include the ability to run various analyses.  Following Sarbanes-Oxley, many companies routinely report audits and other issues to the  Board of Directors and/or Audit Committee.  The Federal Sentencing Guidelines recommends that organizations adopt compliance programs, which includes issue tracking asd part of risk assessments, as well as regular reports to compliance committees and senior management of issues and trends.  Many companies have also implemented hotline reporting systems, from which different analytics can be run regarding trends and statistics, including rise or decline or various issues, as well as statistics regarding the company’s response, which may or may not demonstrate that the company took these complaints seriously, as well as whether employees felt comfortable raising concerns.  Prudent employers would be wise to periodically review all of these documents to determine whether there are issues that need to be addressed.  Depending on the specific facts, plaintiffs might also be wise to consider including these documents in their discovery requests.

A copy of the Shanahan decision is on file with the author, and can be provided on request.


Overview of New Jersey’s Conscientious Employee Protection Act

Sunday, March 28th, 2010

A few weeks ago, I commented on a recent New Jersey case concerning New Jersey’ Conscientious Employee Protection Act (CEPA), and the need to allege that the employee was either terminated or “constructively terminated,” that is, that the employer made the employee’s working conditions so intolerable that the employee feel that he or she had no recourse but to quit.

A few readers have asked for more information regarding CEPA. 

Brief Overview

It is often difficult for employees to put the public good ahead of their own interest and to complain about their employer’s potentially illegal activity. Recognizing this difficulty, and the importance of ensuring lawful business conduct, New Jersey enacted the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 et seq., which has been described as one of the most far reaching whistle-blower protection laws in the county. It protects employees from retaliation for disclosing illegal conduct, testifying before a public body and for refusing to participate in an unlawful activity

Disclosure of Illegal Activity

CEPA prohibits employers from retaliating against an employee because the employee discloses, or threatens to disclose, an activity, policy or practice of the employer that the employee reasonably believes is in violation of a law, or a rule or regulation. CEPA protects disclosures made to either a supervisor and to a public agency or official.  An employer also cannot retaliate against an employee who raises concerns about potential illegal activity by a company with whom the employer has a business relationship.  Licensed or certified health care professional are also protected under CEPA for raising concerns about improper quality of patient care.

Not all complaints are protected, however. The complainant must reasonably believe that the conduct is in violation of law. CEPA also protects employees who disclose, or threaten to disclose, fraudulent or criminal activity, including potential fraud against shareholders, investors, clients, patients, customers, employees and other persons. Mere disagreement with management, however, is not protected by CEPA.  Unreasonable complaints are also not protected.  While the complainant is not required to be correct, he or she must demonstrate a reasonable belief that the conduct at issue was illegal or fraudulent.

Testimony Before a Public Agency

CEPA also prohibits an employer from retaliating against an employee who provides information to, or testifies before, any public body conducting an investigation or hearing into a potential violation of law by the employer or its business associates. Protected activity also includes investigations and hearings into potential deception or misrepresentation by the organization to shareholders, investors, clients, patients, customers and other individuals. CEPA also protects licensed or certified healthcare professionals who provide information to, or testify before, a public body investigating the quality of patient care.

Objection and Refusal to Participate

CEPA also prohibits employers from retaliating against employees who object to, or refuse to participate in any activity, policy or practice which the employee reasonably believes:

(1) is in violation of a law, or a rule or regulation promulgated pursuant to law or, if the employee is a licensed or certified health care professional, constitutes improper quality of patient care;

(2) is fraudulent or criminal; or

(3) is incompatible with a clear mandate of public policy concerning the public health, safety or welfare or protection of the environment.

Mere disagreements with management decisions are not protected; the whistle-blowing activity in question must serve a public interest, and should be able to point to some law or public policy that is being violated. The employee must also have a reasonable basis for his or her allegations.

Retaliatory Action

CEPA protects employees from discharge, suspension, demotion or other adverse employment action affected the employee’s terms and conditions of employment. Courts have found that a series of abusive conduct by supervisors, veiled death threats, multiple disciplinary investigations and job transfers can constitute retaliatory action.

Civil Proceedings

Complainants must file civil actions within one year, and have the right to a jury trial.  Damages may include reinstatement, back pay, front pay, emotional distress, punitive damages and attorneys fees.

Other Statutes Prohibiting Retaliation

There are, of course, other statutes that also prohibit retaliation.  For example, under both federal and New Jersey discrimination laws, employers cannot retaliate against employees who complain about unlawful discrimination or harassment.  Other laws also have anti-retaliation and whistleblower provisions, including Sarbanes-Oxley (“SOX”) and the recently enacted Patient Protection and Affordable Care Act of 2009.

Your Employer Just Gave You a Pink Slip and a Severance Agreement. Now What??

Saturday, March 20th, 2010

In our current age of downsizing and cost-cutting, many good employees are finding themselves without a job through no fault of their own.  With money scarce, employers may be less generous with severance payments.  And with jobs scarce, employees may feel that they need the severance to help tide them over until they can find suitable alternative employment.

Generally, employers are not obligated by law to provide any severance to any employee.  Some employers, however, have decided to voluntarily adopt severance policies, with criteria and formulae for determining such payments.  Other employers might decide, on a case-by-case basis, to offer severance as a reward for service, to obtain finality and/or  to avoid potential litigation.

Assuming that your employer has given you a severance agreement, you should not feel pressured to sign it on the spot.  In fact, under the federal Older Workers Benefit Protection Act (and some state laws), you must be provided a certain amount of time to review the agreement if you are asked to waive age discrimination or certain other claims, as detailed in 12 below.  Additionally, some provisions may be a bit confusing or seem to be “legalese,” and you should make sure that you understand what rights you may be giving up or what obligations you may now be taking on.  Nor should you assume that all terms are non-negotiable;  there may be leeway for certain provisions.

Following are some of the more common provisions contained in severance or separation agreements (I use these terms interchangeably in this post).

1.  “Wherefore” clauses.  Separation agreements frequently contain a few introductory paragraphs, setting out the employee’s title and/or responsibilities, and the reason that the parties are entering into the agreement, e.g., “as a result of a reorganization,” “due to mutual dissatisfaction,”  “desire to amicably resolve and settle in full any and all obligations and/or claims that Employee has,” etc.  While these may not have any legally enforceable significance, employees should make sure that these clauses are accurate.  For example, if you were fired, it should not say that you voluntarily resigned.

2.  Termination Date.  The separation agreement almost always specifies the last day of employment, to ensure that there are no misunderstandings, and to make sure that the employee is paid all amounts due as salary.   In addition, all vested and unused vacation days and other paid time off must be paid to the employee within a certain amount of time after the last day of employment.  Employees should be aware that, under law, these amounts must be paid whether or not the employee signs a severance agreement.

3.  Consideration.  “Consideration” is what the employee gets in exchange for the release of claims (discussed in 4,  below).  This is obviously one of the key provisions of the separation agreement.  Any amounts specified in this provision must be in addition to anything that the employee would otherwise be entitled to receive.  For example, if the employee is otherwise entitled to vacation pay, bonuses or commission, or would be entitled to severance under an employment agreement or enforceable policy, these would generally not be “consideration” for signing the agreement.  While payment of money is the most common form of consideration, it may also include the employer’s agreement to continue COBRA payments, outplacement services or other things of value to the employee.  The payments may be either in a single lump sum or over time; employees should carefully consider these alternatives, as there may be tax issues, as well as legal consequences (payments over time may be considered an employee benefit plan under the federal Employee Retirement Income Security Act of 1974 (ERISA), which may have impact which is too complex to discuss at length here).  Depending on the way that the payments are characterized, this may also have an impact on the employee’s right to receive unemployment insurance in certain states.  Further, while rare, payments over time might also raise issues under a subsequent employer’s conflict of interest policy.

4.  Release.  This provision specifies what the employee is giving up in exchange for the employer’s consideration: the right to sue and possibly get additional money.  This provision usually contains a laundry list of various federal and state statutes, as well as common law claims (e.g., breach of contract, mispresentation, infliction of emotional distress, slander, etc.)  Employees should make sure that the agreement specifies that they are not giving up (i) claims that might arise after they sign the agreement, (ii) the right to enforce the agreement, (iii) any workers compensation claims that they might have filed, (iv) any claims to vested benefits under any retirement or pension plan or (v) any claims that cannot be waived by law.  It is also common for the agreement to provide that the employee has not, and will not, file any claims against the employer; employees should be aware, however, that the Equal Employment Opportunity Commission (EEOC) has stated that, while employees can waive the right to collect additional money, they cannot waive the right to participate in an EEOC investigation.  Again, this provision should be reviewed carefully, to ensure that the employee knows what he or she is giving up, and that the release is legally enforceable.

5.  Non-Admission of Liability.  Many agreements specifically state that the employer is not admitting that it is liable, and that it does not believe that it owes any money to the employee, but that it is doing so simply to resolve any claims that were, or could have been, raised.

6.  Confidentiality and Non-Disparagement.  Severance agreements frequently contain explicit provisions that the employee cannot divulge the terms of the agreement to anyone (other than family, legal advisor and accountants) without the company’s permission.  The agreement will also frequently prohibit the employer from making any disparaging or derogatory remarks about the employer, its officers, directors and employees.  Employees should consider requesting mutual non-disparagement clauses (including a provision that, in response to reference requests, the employer will provide only dates and titles). 

7Confidential Information and Non-Competion.  Employees are frequently required to sign confidentiality and/or non-competition agreements upon their hire.  Any similar provisions in the severance agreement should not be more restrictive than they originally signed; employees may also consider asking for reductions in the length or scope of their existing non-competition agreements (it should also be noted that  some courts are less likely to enforce these agreements as written if the employer fires the employee).

8.  Return of Company Property.  It is reasonable for employers to expect employees to return all keys, credit cards, laptops, security passes and confidential documents.  Employees may want to check whether they can keep certain non-confidential or non-proprietary information as part of their portfolio or to demonstrate to prospective employers the type and quality of the work that they produced.

9.  Cooperation.  Depending on the employee’s position, the employer may want to ensure that the employee will be available for consultuation or cooperation with current or future investigations, litigations or other matters.  The employee should consider asking for reimbursement for expenses associated with this cooperation.

10.  Unemployment Compensation.  Separation agreements may explicitly provide that the employer will not contest unemployment benefits.  Again, if this provision is not contained in the agreement, the employee may consider requesting its inclusion.

11.  Liquidated Damages.  Some separation agreements provide that, if the employee violates the confidentiality, non-disparagement, non-competition or other provisions, the employee has to give back a portion of the severance payments, and/or that the employee could be liable for other damages, including attorneys’  fees, as well as injunctive relief from the courts.  Clearly, the employee should carefully review this provision before signing the agreement, and may want to consider negotiating changes, as appropriate.

12.  Time to Consider and Revocation Period.  The Older Workers Benefit Protection Act provides that employees who are over 40 must be given at least 21 days to review the agreement; if they are not given this length of time, any waiver of federal age discrimination claims may be voided.  If the employee is let go as part of a reduction in force, the employer must provide the employee at least 45 days, and must provide information regarding ages of employees who were not subject to the reduction in force.  Employees should note, however, that they are not required to wait this length of time to sign the separation agreement; they can sign as soon as they feel comfortable.  In addition, the employee has seven days to revoke the agreement after signing it.  As a result, however, employees should be aware employers generally will not make severance payments until at least 8 days after the agreement is signed.


Tips for Conducting an Effective Investigation

Monday, March 15th, 2010

In my experience representing both employers and employees, as well as having conducted numerous investigation, I have found that litigation often arises when employees feel that their employer does not — or will not — take their complaints seriously, and that a court of law is their only recourse.  In addition, our courts have held that employers may avoid liability for sexual harassment and other complaints if they conduct a good faith, prompt and thorough investigation. Put simply, a prompt and thorough investigation is good business and good law.

While the need for conducting an investigation is clear, a poorly executed investigation can be disastrous.  Rather than address the problem, it may exacerbate it if the employee feels that his or her concerns was not taken seriously.  If the complainant feels that they have somehow been punished for raising these concerns, this may also lead to a claim of retaliation.  Moreover, an inadequate investigation may chill other employees from complaining, resulting in long-festering problems and additional lawsuits.  Finally, a jury might regard an inadequate investigation as a “whitewash,” leading to potential significant liability.

Here are some tips in how to conduct an effective investigation.

  1. Plan for an Investigation Before a Complaint is Raised.  Make sure that your employees know that they can complain and how to do so.  Make sure that your anti-harassment and discrimination policies provide contacts for complaints; for organization of any significant size, there should be multiple individuals, and not just supervisors, who can receive complaints.  Employers should also make sure that this information is covered in training.  If you have a hotline or helpline, this information should also be conspicuously posted.  (It should also be noted that New Jersey employers are also required to post, and annually distribute, information about employee’s rights under the Conscientious Employee Protection Act.)   Employers may also want to consider developing an investigation policy and procedure, including types of issues to be investigations, sources of complaints, identification of investigation leads, the conduct and method of an investigation, when to notify management of the investigation, responsibilities for corrective action, and other issues.
  2. Determine Whether to Conduct an Investigation.  Employees may raise issues, and then ask that you do nothing.  Or you may believe that an employee is simply venting, rather than asking for assistance.  Other times, you may believe that the employee is simply disgruntled, and that they are just trying to raise issues to salvage their job.  You might also think “I’ve heard all of this before, and I’m not going to waste my time on investigating this.”   In each case, you should carefully consider — and re-consider — any decision not to investigate.  It is usually more prudent to investigation than to try to explain why an investigation was not conducted.  Further, as noted above, a prudent employer might want to consider adopting policies identifying who should ultimately make the decision as to whether or not to investigate. 
  3. Decide Whether Any Action is Necessary While the Investigation Proceeds.  Depending on the nature of the allegation, and the anticipated time to complete the investigation, you might want, or need, to take some interim action.  For example, an employer may need to immediately address an allegation of unsafe working conditions, embezzlement or employee violence.  Similarly, a prudent employer might want to take some immediate (albeit temporary) action if there are egregious claims of sexual harassment by an employee against his or her supervisor.   
  4. Decide who Should Conduct the Investigation.  Clearly, an investigator should be impartial; targets of the investigation, and witnesses, should not be involved in conducting or overseeing the investigation.  Employers might also consider hiring an outside investigator, particularly where the allegations concern senior management or are politically sensitive.  In any event, in addition to being impartial, the investigator should have an open demeanor and be able to put the complainant and witnesses at ease; investigations should rarely be conducted as cross-examinations, and should certainly never signal that the investigator has already reached a conclusion, and is merely trying to uncover evidence to support that conclusion.  In addition, the investigator may be called as a witness, and employers may want to ensure that the investigator is articulate and credible.  It is also often a good idea to have two people present during the investigation, as this will allow one person to focus on the questions and answers, while the other documents the conversation.  It is also often helpful to have a second set of eyes and ears, both to observe the credibility of witnesses and to make sure that all appropriate ground is covered, as well as to corroborate what was said in the event of a later dispute.
  5. Consider Conducting the Investigation under Attorney-Client Privilege. The complaint should be reviewed carefully to determine if there are any potential legal issues or liability lurking.  If so, employers may want to consider having the investigation, at the outset, conducted at the request of an attorney, to try to protect the investigation to the fullest extent possible, as it may be difficult to assert the privilege later.  Regardless of whether or not it is conducted under privilege, however, I have found that every investigation should be conducted with the understanding that it might see the light of day, and the investigator should feel comfortable defending the investigation and its conduct.  
  6. Plan the Investigation.  Sloppy, haphazard investigations should be avoided.  The investigator should have a relatively clear grasp of the allegations, and should plan the investigation accordingly.  It is usually wise to start with the complainant, and delve further into the facts, including identification of documents and witnesses.  Witnesses should be prioritized, based on their level of involvement and claimed knowledge of the facts.   
  7. Obtain, Review and Preserve  all Relevant Documents. Investigators should make sure that they ask for, and obtain, any relevant or supporting documents, including handwritten notes, diaries, calendars, e-mails, expense reports, tape recordings and personnel documents.  It is always better to discover all facts during an investigation than to be surprised by additional evidence at litigation. It is also critical to preserve all documents and information, in the event of a litigation or the results of the investigation are questioned.
  8. Remind the Complainant and all Witnesses of the Non-Retaliation Policy.  The law generally prohibits retaliation against employees who complain of discrimination or harassment, or who participate in such complaints.  Prudent employers will likewise have a strong non-retaliation policy, stating that there will be no retaliation against anyone for raising a complaint in good faith.  At the beginning of the interview, complainants and witnesses should be re-assured that the company takes the non-retaliation policy seriously, and they should be encouraged at the end to let the investigator know if they believe, at any time, that they have suffered any retaliation.  Supervisors should likewise be reminded that the company will not tolerate any retaliation against the complainant or witness.
  9. Remind Employees of Confidentiality, and do not Promise Anonymity.  Complainants and witnesses should be reminded that, in order for the investigation to be conducted appropriately, everything must remain confidential; neither the complainant nor any witness (particularly the subject of the investigation) should tell anyone else what was said during the investigation, and they should certainly not ask anyone to corroborate or support them.  Complainants and witnesses should also be informed that, while the company will try to keep their identity anonymous (if they so choose), this cannot be guaranteed, as this information may be discernible or may need to be divulged in order for the investigation to proceed.
  10. Follow the Investigation Where It Leads, But Beware of Scope Creep.  During the course of an investigation, new facts and allegations may be discovered.  Employers ignore these at their peril.  Once an employer is put on notice of potential claims, it may not simply ignore them because they were not part of the initial complaint or investigation.  On the other hand, too often investigations are never completed because of investigation of tangential or unrelated issues.  If new, but unrelated issues need to be investigated, employers may want to consider instituting a second investigation. 
  11. Prepare a Written Investigation Report.  At the conclusion of the investigation, the investigator should prepare a written report, summarizing the allegations (including the date the complaint was raised), how the investigation was conducted, relevant policies and procedures, key factual findings, and a notation of inconsistent or conflicting information.  Employers should bear in mind that the written report, as well as all documents collected or created during the investigation, may be subject to discovery in the event of a lawsuit.  Accordingly, all documents and drafts should be maintained in accordance with the employer’s record retention policies.
  12. Keep the Complainant Informed.  The complainant should be kept informed of the progress during the course of the investigation, should be notified shortly before the investigation is concluded (and asked if there are any additional facts that they wish to bring forward) and then again at its conclusion to let him or her know that the investigation is concluded and that appropriate action will be taken.  Depending on the specific facts, the company may want to give the complainant more or less details about the corrective action.
  13. Take Appropriate Corrective Action. Corrective action needed should be tailored to the specific situation, including a root cause analysis of the problem. Appropriate action can range from no action, to training, discipline (up to and including termination), and creation or revision of policies.
  14. Touch Base with the Complainant.  Depending on the situation and resolution, the employer might consider touching back periodically with the complainant, to make sure that there has been no retaliation and that the corrective action has been effective. 
  15. Track for Trends.  Companies should periodically track for trends, including trends concerning a department, a geographic location or type of issue.  If trends emerge, the employer should consider further corrective action, including additional training, monitoring or policy creation.

Employees Must Present Medical Evidence to Qualify for FMLA Leave

Friday, March 12th, 2010
Employers are frequently confronted with employees who call in sick immediately before a vacation or long weekend.    A recent Third Circuit Court of Appeals case provides some caution to both employers and employees in this situation when deciding whether the absence is protected by the federal Family and Medical Leave Act (FMLA).  Employees cannot simply claim, without a doctor’s note or other medical evidence, that they needed to miss work due to their illness or the illness of a family member.   An employer, on the other hand, should proceed with caution if an employee presents a doctor’s note, but claims that the illness lasted longer than the doctor anticipated. 
On March 11, 2010, the Third Circuit (which includes New Jersey) held that, if an employee misses work due to a claimed illness, he or she must present some credible medical evidence of incapacitation in order to qualify for FMLA protected leave.   More specifically, in Schaar v. Lehigh Valley Health Services, No. 09-1635 (3d Cir. Mar. 11, 2010), the employee received a doctor’s note, stating that she was unable to work for two days, Wednesday, September 21, and Thursday, September 22, 2005.  Plaintiff claimed that her illness continued over the next few days, and that she remained sick in bed over the weekend, and finally felt well enough to return to work on Tuesday, September 27.  Coincidentally, plaintiff has previously scheduled vacation on Friday, September 23 and Monday, September 26.  Upon her return to work, plaintiff told her supervisor that she had been sick all weekend, and couldn’t work on Monday due to her illness.  She did not, however, request FMLA leave, nor did she ask Lehigh Valley to convert her two paid vacation days into paid sick days.  Citing plaintiff’s failure to call in sick, and in light of previous progressive discipline for performance issues, Lehigh Valley terminated plaintiff’s employment.

Plaintiff then sued under the federal Family and Medical Leave Act (FMLA), 29 U.S.C. §§ 2601 et seq.,which permits employees to take up to twelve weeks of leave every twelve months for, among other reasons, their own “serious health condition.”    The FMLA defines “serious health condition” as “an illness, injury, impairment, or physical or mental condition that involves . . . continuing treatment by a health care provider.” Id. § 2611(11).  Department of Labor regulations further define continuing treatment by a health care provider as a “period of incapacity . . . of more than three consecutive calendar days . . . that also involves . . . [t]reatment by a health care provider on at least one occasion which results in a regimen of continuing treatment under the supervision of the health care provider.” 29 C.F.R. § 825.114(a) (2005).

The district court dismissed the complaint, holding that an employee must present a doctor’s note or other medical evidence of inability to work for at least three days, and the note in this case stated that she was ill for only two days. According to the lower, court, plaintiff’s lay opinion that she was unable to work did not create a genuine issue of material fact to prove that she was, in fact, entitled to FMLA’s protection.
 On appeal, the Third Circuit noted that some courts require medical opinion to establish that an employee had a serious health condition lasting more than three days, while other courts have allowed FMLA claims based solely on lay testimony by the employee.  The Third Circuit rejected both approaches, holding that some medical opinion is necessary:
 we do not find lay testimony, by itself, sufficient to create a genuine issue of material fact.  Some medical evidence is still necessary to show that the incapacitation was “due to” the serious health condition. 29 C.F.R. § 825.114. This does not place an undue burden on employees because they must present some medical evidence anyway to establish the inability to perform the functions of the position.  Id.  § 825.115. In contrast, allowing unsupported lay testimony would place too heavy a burden on employers to inquire into an employee’s eligibility for FMLA leave based solely on the employee’s self-diagnosed illness. For these reasons, we hold that an employee may satisfy her burden of proving three days of incapacitation through a combination of expert medical and lay testimony.
In other words, so long as there was some medical evidence that she was unable to work, plaintiff could supplement this opinion with her own testimony that the illness lasted longer than the doctor initially stated.
The Third Circuit further commented that it was not evaluating plaintiff’s credibility, implying that the plaintiff may have an uphill battle proving that she just happened to be too sick to work on those days that she had previously scheduled vacation.  Rather, the court simply noted that, accepting plaintiff’s testimony as true, there was a genuine issue of material fact as to whether she was too ill to work for three days. 

Employees Should be Careful When Taking Confidential Documents

Wednesday, March 10th, 2010

Yesterday, the New Jersey Supreme Court heard oral argument in Quinlan v. Curtiss-Wright,  a case where the plaintiff, a human resources employee for Curtiss-Wright, looked for — and intentionally took — confidential information to help support her claim that she was discriminatorily denied a promotion, while still employed by Curtiss-Wright.   More specifically, she began to review files in the human resources department looking for and copying material that she felt would help her litigation, including  documents containing confidential personal information such as home addresses, telephone numbers and social security numbers, as well as salary information.     She delivered more than 1800 pages of this confidential material to her attorneys.   During the course of litigation, plaintiff’s attorney used this material in deposition, alerting Curtiss-Wright to the fact that plaintiff had taken this material on her own.  Curtiss-Wright then fired the plaintiff,  leading to a retaliation claim in addition to the previous failure-to-promote claim.

At trial, the jury concluded that Curtiss-Wright had discriminated against plaintiff, and that it had retaliated against her for engaging in protected activity.  Following this verdict, the trial court entered judgment for plaintiff in plaintiff’ in the amount of $10,649,117.49,  coinsisting of $4,565,479 in compensatory damages, $4,565,479 in punitive damages, $44,363.49 in prejudgment interest, $1,398,796 for counsel fees and costs, and $75,000 to compensate the plaintiff for negative tax consequences she would experience as a result of this award.  On appeal, the Appellate Division reversed the jury’s verdict regarding retaliation.  Quinlan v. Curtiss-Wright Corp., 409 N.J Super. 193 (App. Div. 2009).  The Appellate Division held that neither plaintiff’s theft of material, nor her attorney’s use of the material during deposition, was “protected activity” under the New Jersey Law Against Discrimination.  The court explained that any other result could “have the undesirable result of encouraging employees to go through their employers’ files and copy confidential material, secure in the knowledge that employers could do nothing so long as that material was later used in litigation.”

In oral argument, the New Jersey Supreme Court signaled that it was also leaning in that direction.  Justice Barry Albin questioned plaintiff’s counsel whether “the employer is just supposed to sit back” when it learns that an employee has stolen confidential documents.  Justice Albin further wondered “Why should we allow a system that encourages employee theft?”  Justice Roberto Rivera-Soto suggested that, if plaintiff knew the documents existed, she should have told her lawyer about them, and the lawyer could then issue a document request or subpoena, in accordance with the court rules.

While the Court’s questions may signal that it is leaning toward prohibiting theft of confidential information, no decision has been issued yet.  In the meantime, the Appellate Court’s opinion and the general tenor of the Supreme Court’s oral argument serves as a reminder to litigants that, regardless of whether or not they feel taht their employer has violated the law, this does not provide license to violate company policies and procedures, particularly regarding theft of confidential information about other individuals.  While we fully appreciate that the wheels of justice might move slowly, litigants should avoid independent self-help measures, and should consult their lawyer before engaging in any discovery on their own.

Social Media and Employer Policies

Monday, March 8th, 2010

Over the past few years, social media has exploded, and there is little doubt that it is here to stay.  There is also little doubt that your employees are routinely reading and posting information on these media.  

According to recent statistics, Facebook has more than 400 million active users, each spending an average of 55 minutes per day on that site, posting more than 60 million updates each day.  LinkedIn has reported that it has over 50 million users, and that number is growing by approximately one new member per second.  Twitter grew from 6 million users in 2008 to 18 million in 2009, and projects 26 million users in 2010.

Businesses are also taking advantage of social media.  According to Facebook, more than 1.5 million local businesses have active Facebook pages.

The explosive growth of social networking and business sites carries potential pitfalls, and employers should consider policies and procedures to address these issues.  There are certain areas that prudent employers should consider when drafting policies and procedures.

Some Issues to Consider:

  • Confidential Information. Unfortunately, social media presents numerous opportunities for employees to reveal confidential information, either intentionally or unintentionally.  Employees may post status updates, which might unintentionally reveal confidential transactions or strategy.  Anonymous boards also provide a means for disgruntled employees to create significant mischief by posting propriety information.  Employers should therefore consider creating, reviewing and/or amending their confidentiality agreements and e- policies. and providing training, to make sure that employees understand their confidentiality obligations. 
  • LinkedIn and Other Recommendations:  LinkedIn allows users to provide recommendations to employees, service providers and others.  While this might seem harmless, this documentation can be dangerous in a later employment discrimination or litigation with a contractor.  For example, if a terminated employee sues for discrimination, arguing that the stated reasons were pretextual, the employee may point to a LinkedIn recommendation provided by his/her supervisor as proof of satisfactory performance.
  • Misleading Advertising.  Blogs, anonymous boards and various social media provide a virtually unrestricted ability for employees to tout your company’s products and services.  These postings, however, can be dangerous.  Recently, the Federal Trade Commission posted guidance, noting that companies could be liable for their employees’ endorsement of their goods and services if they fail to disclose their employment relationship. Companies should therefore consider policies and training, prohibiting such conduct.
  • State Laws.  Some states have laws that prohibit employers from terminating employees for their off-duty conduct and “lawful recreational activities.”  Under these laws, employers may be limited in their ability to terminate employees for blogging and other social media activities may protected leisure-time activity.  Employers should therefore consult with their attorneys to make sure that their policies are not overbroad.
  •  Invasion of Privacy.  Prudent employers should also make sure that, in their effort to control the risks mentioned above, that they do not breach employees’ expectations of privacy.  In two recent New Jersey cases, Stengart vs. Loving Care Agency, 408 N.J. Super. 54 (App. Div. 2009), and Pietrylo v. Hillstone Restaurant Group, 2008 WL 6085437 (D.N.J. 2008), the courts held that an employer’s review of an employee’s private communications is not unlimited.  Rather, employers must take care to ensure that their policies clearly set out an employee’s reasonable expectations of privacy and, even then, companies may not review confidential communications.  Again, prudent employers should ensure that e-policies, and their enforcement, are in accordance with various state laws.
  • Retaliation and Other Disciplinary Concerns.  Employers must also act cautiously when taking action for employee social media activities.  For example, various federal and state laws may prohibit retaliation against employees who report or object to unlawful activities.  Similarly, employers may be subject to allegations of retaliation if they terminate employees who claim that they have been subject to unlawful harassment or discrimination.  The National Labor Relations Act may also prohibit employers from firing employees who harshly criticize management’s policies on the web, as an unfair labor practice.  Once more, employers would be wise to consult an attorney before taking action against an employee for their postings.

Power Harassment and Workplace Bullying

Thursday, March 4th, 2010

In my various roles as in-house Chief Ethics and Compliance Officer and employment attorney  in private practice, I have heard numerous employee complaints about a “hostile work environment” and “harassment.”  Frequently, these complaints are about abusive bosses, workplace bullying and demeaning behavior.  On further questioning, the “harassment” often falls far short of the legal standard of “severe or pervasive” unwelcome and demeaning conduct and comments based on gender, age, race, religion, national origin, disability or other protected categories.

After recently concluding a conversation with a potential client, explaining this legal standard, I happened to glance at my bookcase,.  My eyes feel on  some of my books about Japan.  I recalled a training session I attended in Japan a couple of years ago, dedicated to the topic of “power harassment,” a growing legal issue in that country. 

One of the instructors discussed different actual reported cases, in which the court found that there was  illegal “power harassment.” In some cases, supervisors “roared” at their employees.  In another case, a supervisor made an employee drink out of his shoe.  And in yet another case of illegal power harassment, ,a supervisor made a subordinate shave his head as punishment.

One of the presenters, who was an attorney in Japan, recounted the abuse that he suffered as a junior attorney at his firm.  He swore that, when he became partner, he would never treat his employees that way.  He was surprised to recently learn that his associates felt that he was, in fact, a bully.  He thought about it, and realized that they were right.  In fact, he openly acknowledged that his behavior was as bad, if not worse, than that of his prior supervisors.  Amazingly, he then stated that, upon reflection, he realized that his behavior was entirely appropriate, because it would have been unfair for his subordinates to have an easier time than he was forced to endure.  And so the cycle continues.

One of my American colleagues was flabbergasted.  She wondered how it was possible that supervisors could engage in this egregious behavior, but even more floored by the fact that employees would accept this.  I believe that this abuse was possible based, in part, on the lack of mobility in the Japanese workforce; employees are traditionally expected to work for the same employer from graduation to retirement.  If one has no choice but to stay, supervisors have the leverage to do what they want, and employees generally have few options: accept it, try to complain (and endure possible retaliation), or try to get the law changed.

Increasingly, I am seeing despair in those who come to me.  Put simply, in the current economic environment, the leverage in the workplace has changed, and employees feel that they can’t readily quit and find another job.  They feel stuck.  While bullying may not be illegal, prudent employers may want to be diligent to make sure that supervisors do not abuse this power, lest they find themselves with a demoralized workforce and mass migrations once the economy recovers.

Racial Slurs are Never Appropriate in the Workplace

Tuesday, March 2nd, 2010

Last week’s Division of Civil Right’s (DCR) decision in Lin v. Dane Construction Co., DCR Docket No. EM14WB-54045 (Feb. 24, 2010) provides a good reminder that racial slurs and stereotypes in the workplace are unacceptable, regardless of whether or not they are uttered in front of  members of that racial group.

In Lin, the DCR found that the owner of a company made numerous derogatory comments about African-Americans and Jamaicans in front of the Complainant employee, who was Asian.  For example, the DCR found that the owner had used the word “n___r” on several occasions and ranted against someone that he assumed was Jamaican based on his “cool runnings” accent.  The DCR found that the owner

acknowledged that he used [the word “n___r”] on at least one occasion within earshot of Complainant. He explained that following an argument over the phone with a client he believed to be Jamaican, he used the slur “n___r” both in his office and perhaps a second time as he continued his “rant” coming down the stairs. He stated that this was an isolated incident and that he did not regularly use such language in the office. However, he admitted that in “private office personal conversations, these words may have popped up, been overheard” and that “[in our office,] we can discuss things the way we want.”

The Complainant was upset by this, as her fiancé was Jamaican, and their child was half Jamaican.  Further, according to the DCR, the evidence established that the owner was aware of these facts before he made the derogatory comments.  When Complainant reminded him that her son was bi-racial, he laughed off her concern, and told her that he wasn’t referring to her son.  Ultimately, the Complainant quit, without another job, due to the continuing comments and lack of response to her complaints.

Based on this evidence, the DCR concluded that there was probable cause of a racially hostile work environment in violation of the New Jersey Law Against Discrimination.  The DCR further concluded that the Complainant was “constructively discharged,” as a reasonable person would find that the working conditions were intolerable and that there was no option but to resign.

Although this is only a probable cause finding, and not a final determination, this case should serve as a reminder to prudent employers that inappropriate racial comments have no place in the workplace, regardless of who may or may not be listening.  Further, even “private” comments may serve as a basis for a hostile work environment claim.  Finally, if an employee complains about a hostile environment, this concern should be taken seriously, and not laughed off.

The DCR’s decision is at