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US Employment Litigation Round-Up for July 2016

A Review of Key Cases and New Laws Affecting Employers
2 August 2016
Mayer Brown Newsletter

NLRB Continues Expansion of Joint Employer Standard and Makes It Easier for Temporary Workers to Unionize

Decision: In Miller & Anderson, 364 NLRB No. 39 (July 11, 2016), the National Labor Relations Board (“NLRB” or “Board”) held that consent from both a user of temporary workers and the staffing agency that provides those workers is no longer required before a union election covering both regular employees and temporary workers can take place. In a 3-1 decision, the majority overturned more than a decade of precedent stemming from the NLRB’s 2004 Oakwood Care Center decisionby holding that employer consent was no longer required and that a single bargaining unit of both employees who work only for the employer and temporary workers who are jointly employed by a staffing agency is appropriate if those workers share a “community of interest.” Consequently, if the NLRB concludes that a user of temporary workers has the ability to control the terms and conditions of those workers’ employment, it may be forced to collectively bargain with those workers as to those terms and conditions.

Impact: Miller & Anderson reflects the NLRB’s continued expansion of the joint employer standard that it articulated in its August 2015 Browning Ferris decision. As Board member Phillip Miscimarra noted in his dissent, Browning Ferris left employees, unions and employers “in a position where there can be no certainty or predictability regarding the identity of the ‘employer.’” He further emphasized that the Board’s latest expansion of the joint employer standard “will only make it more difficult for parties to anticipate whether, when or where this new type of multi-employer/non-employer bargaining will be required by the board.”

Given the growing number of companies that rely on staffing agencies to hire workers and handle day-to-day employment issues, employers not only may find themselves on the receiving end of an unfair labor practice charge for incidents that do not involve their own employees but also may be forced to collectively bargain with those same individuals. Given the NLRB’s renewed focus on expanding the joint employer standard, employers should proactively review existing franchisor, staffing agency and outsourcing agreements to determine whether they could be considered a joint employer, whether the agreements can be adjusted to reduce the likelihood of joint employer status and the implications that designation may have with respect to future attempts to collectively bargain.

DOL Signals Interest in Remote Work and Last-Minute Scheduling on Portable Electronic Devices

Guidance: The Department of Labor (DOL) may soon request information concerning the effect of mobile technology on the workplace. This spring, the DOL issued its annual regulatory agenda. One notable agenda item states that the agency will publish a “Request for Information on the Impact of the Use of Electric Devices by Nonexempt Employees on Hours Worked Issues.” The agency briefly explains that it intends to seek information on two prominent topics. First, it will ask for “information about employees’ use of [portable] electronic devices to perform work outside of regularly scheduled work hours and away from the workplace.” Second, it will seek “information regarding ‘last minute’ scheduling practices being utilized by some employers that are made possible in large part by employees’ use of [portable electronic] devices.” The agenda item states that the DOL may issue the RFI this summer, after which the agency could ultimately propose rulemaking on the topics.

Impact: The mobile device agenda item underscores DOL interest in two issues quickly gaining national prominence. First, the uncompensated use of portable devices outside of work hours has been the subject of litigation in recent years, including a case in the Northern District of Illinois in which the City of Chicago successfully defended claims by the Chicago Police Department that the city required police officers to answer emails outside of normal hours without compensation. Second, cities and attorneys general across the country have recently focused efforts on regulating the use of “on-call” shifts that subject employees to fluctuating and unpredictable work schedules. For example, San Francisco recently became the first city to pass an ordinance aimed at requiring employers to provide predictable work schedules. Moreover, the attorneys general of eight states and the District of Columbia issued informational request letters to large employers earlier this year urging those employers to phase out on-call shifts. Employers should ready themselves for increased attention to these two issues by reviewing their policies in conjunction with preliminary guidance from across the country.

California Court of Appeal Upholds Attorney-Client Privilege and Work Product Doctrine for Pre-litigation Fact Investigation

Decision: In City of Petaluma v. Superior Court, the California Court of Appeal held that outside counsel’s fact investigation of an employee’s harassment and discrimination claims was protected by the attorney-client privilege and attorney work product doctrine despite the fact that outside counsel did not give legal advice as to which course of action to take to address the complaint. Outside counsel’s investigation was conducted prior to litigation in response to an employee’s complaint to the Equal Employment Opportunity Commission (EEOC) after the employee had voluntarily resigned her position. The court explained that rendering legal advice was not required for the attorney-client privilege to apply because outside counsel was not merely a fact finder. Rather, counsel had been retained to provide a legal service in bringing legal skills and expertise to bear on identifying the pertinent facts, synthesizing the evidence, and coming to a conclusion about what had occurred to help the employer develop a response to the employee’s EEOC complaint.

Recent federal court decisions have also helped define the boundaries of the attorney-client privilege in corporate investigations. For example, in In re Kellogg Brown & Root Inc., the DC Circuit held that because legal advice was “one of the significant purposes” of an internal investigation, the attorney-client privilege applies “even if there were also other purposes for the investigation, and even if the investigation was mandated by regulation rather than simply an exercise of company discretion.” The DC Circuit also ruled that outside counsel is not required to expressly inform interviewed employees that the purpose of the interview is to assist the company in obtaining legal advice in order to maintain privilege, provided that the employees are advised that the interview is confidential and privileged. Similarly, in In re General Motors Ignition Switch Litigation, the district court in the Southern District of New York held that references to the outcome of an internal investigation that was also conducted for reasons other than litigation—without revealing the content of any privileged communications—does not waive the privilege as to the communications and interviews leading up to the report. The court reasoned that because the attorney-client privilege protects communications, not facts, even promises to make counsel’s report public have no bearing on whether the underlying communications reflected in interview materials were privileged.

Impact: These decisions are significant because lawsuits often place at issue the adequacy of an employer’s investigation into an alleged complaint and require the employer to rely on its investigation to defend itself. Privilege assertions are often challenged, but employers can structure investigations to help keep the investigations and underlying materials privileged. One way to achieve this, based on this case law, is to consider making use of outside counsel in conducting and/or overseeing investigations and to make clear that the investigation is being conducted to provide legal advice or services. During interviews with company personnel, appropriate confidentiality and privilege warnings should be given to confirm the interview’s purpose and to ensure that the interviewees know that the interviews are being conducted to help the company obtain legal advice or legal services.

Ninth Circuit’s Password Sharing Ruling Provides Employers with Another Cause of Action for Misappropriation of Confidential or Proprietary Information

Decision: In United States v. Nosal, the US Court of Appeals for the Ninth Circuit affirmed the conviction of a private sector employee for violating the Computer Fraud and Abuse Act (CFAA). The CFAA imposes criminal penalties on whoever “knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value . . . .” 18 U.S.C. § 1030(a)(4). Nosal was a former employee of Korn/Ferry International, an executive search firm. After his employment ended and his password to the company’s proprietary database was revoked, one of his former co-workers at Korn/Ferry gave him, at his request, her password for the company’s proprietary database. Nosal used that password to access the database and download information that he then used for his own competing business. According to the court, Nosal’s conduct fell “squarely within the CFAA’s prohibition on access ‘without authorization’” because Nosal “knowingly and with intent to defraud Korn/Ferry blatantly circumvented the affirmative revocation of his computer system access.”

Impact: Although Nosal is a criminal case, the CFAA authorizes civil actions for compensatory damages when there has been access of a computer used in interstate commerce, or by a financial institution or the government, when that access was knowing or intentional, and without authorization, or exceeding authorization. While the CFAA was enacted as an anti-hacking statute and not specifically designed for use in the employment context, the Ninth Circuit’s application of the CFAA to password sharing and unauthorized access of a company’s computers provides authority for employers to rely on the statute when litigating against former employees who have wrongfully accessed or downloaded confidential or proprietary information.

Equal Employment Opportunity Commission Updates Proposal for Equal Pay Data Rule

Update: The Equal Employment Opportunity Commission (EEOC) recently revised its proposed rule requiring federal contractors and other employers with more than 100 workers to report pay data on their EEO-1 forms. The revised proposal clarifies that wages are to be reported from Box 1 of employees’ W-2 forms. It also allows employers to report a 40-hour week for full-time exempt workers and a 20-hour week for non-exempt workers as an alternative to reporting actual hours worked. The revision also pushes back the filing deadline for the new reports from September 2017 to March 31, 2018, making it easier for employers to gather year-end information from W-2 forms. The proposed revision also requires employers to choose a pay period during the fourth quarter of the year to count its employees for EEO-1 reporting purposes. The comment period for the proposed revision runs until August 15.

Impact: The proposed revision does not substantially change the proposed new reporting requirements, but it does simplify the process to a degree and provides an extra six months to prepare employer systems to provide reports on the required information. As we have previously recommended, employers should consider working with counsel to audit their compensation structure in advance of the required reporting period in order to identify and ameliorate any pay disparities.


  • Grant T. Miller
    T +1 213 229 5130
  • Richard E. Nowak
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  • Andrea Maldonado Weiss
    T +1 213 229 5123
  • Ruth Zadikany
    T +1 213 621 3916
  • Lori A. Zahalka
    T +1 312 701 7921

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