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Archive for the ‘Industry News’ Category
Friday, July 30th, 2010
The health care reform legislation passed in March included an amendment to the Fair Labor Standards Act that now requires employers to provide breaks to nursing mothers to pump breast milk for a one year period after giving birth to a child. The U.S. Department of Labor recently issued a fact sheet detailing employers’ obligations under this amendment to Section 7 of the FLSA.
Under the amended law, qualifying employees are entitled to a reasonable amount of break time to express milk as frequently as required by the nursing mother. The employer must provide its nursing employee with a private space, other than a bathroom, that is shielded from view, free from intrusion by others, and functional as a space in which to express milk.
This new requirement applies only to employees who are not exempt from the FLSA’s overtime pay requirements. Employers do not need to compensate nursing mothers for breaks taken to express milk, but if they already provide compensated breaks, a nursing mother who uses that time to express milk must be compensated like any other employee.
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Monday, July 26th, 2010
The U.S. Department of Labor has launched a new investigation of wage law violations related to the disbursement of DOL ordered overtime reimbursement by the Upper Crust pizzeria chain, which has 17 Massachusetts restaurants. Last year, the DOL ordered Upper Crust to pay over $340,000 to 121 workers for its failure to pay at the time-and-a-half rate for work over the 40 hour overtime threshold. This investigation comes on the heels of a lawsuit by former cooks accusing Upper Crust of deducting the compensation for the overtime reimbursement from their paychecks.
The example of Upper Crust should serve as a reminder of the importance of compliance with federal wage and hour laws in the restaurant industry. Restaurants should be particularly careful to maintain thorough records of wage history in order to demonstrate past compliance in the event of a complaint and/or investigation.
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Friday, July 16th, 2010
A recent Massachusetts Supreme Judicial Court opinion reaffirmed the limits of employer liability for employees’ actions outside the scope of employment. In Lev v. Beverly Enterprises-Massachusetts, the Court affirmed summary judgment in favor of the employer, ruling against the plaintiff who had been hit by a car driven by an intoxicated Beverly employee who was driving home in his own car after meeting at a restaurant with his supervisor to socialize and discuss work-related issues, during which time he consumed alcohol. The plaintiff had brought claims that (i) Beverly was vicariously liable for the employee’s negligence based on their employment relationship and (ii) that Beverly was liable under traditional negligence theories because it owed a duty to the plaintiff.
The plaintiff argued that Beverly should be vicariously liable for the employee’s negligence on the grounds that the employee was acting within the scope of his employment when he became intoxicated while meeting with his supervisor. The SJC rejected this argument, citing the precedent that travel to and from employment falls outside the scope of employment. When he was driving, the employee was no longer serving his employer and the employer is not liable for his actions.
The SJC also held that Beverly owed no common law duty to the plaintiff, rebuffing the plaintiff’s argument that the employer’s special relationship to its employees and ability to exercise control over them carried with it a duty to take reasonable steps to prevent the employee from consuming alcohol and from driving while intoxicated. The Court reasoned that an employer cannot be expected to foresee and take affirmative action to protect all potential plaintiff’s from an employee’s bad conduct. Based on its conclusion that Beverly owed the plaintiff no duty, the Court declined to credit Beverly’s substance, drug, and alcohol abused policy as setting forth a duty of care standard.
Overall, the SJC clearly confirmed the limits on the ability to bring actions alleging an employer’s liability for employees’ actions that harm plaintiffs based on a reluctance to impose “a potentially onerous burden” on employers to monitor their employees’ off-the-job conduct.
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Friday, July 9th, 2010
The Wage and Hour Division of the U.S. Department of Labor recently issued guidance on the definition of “son or daughter” aimed at members of non-traditional families seeking FMLA eligibility to take approved leave for the birth or adoption of a child, to care for a newborn or newly-placed child, or to care for a child with a serious health condition. This guidance provides an expansive definition of the parent-child relationship by including circumstances where there is no biological or legal parent-child relationship, but the employee has a caregiving relationship, nonetheless.
The FMLA language defines a “son or daughter” as a “biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis [. . .].” The DOL guidance states that an employee may stand in loco parentis to a child if s/he has either day-to-day responsibilities to care for the child or provides financial support. The in loco parentis analysis is a fact-specific one that looks to the age of the child, the degree to which the child is dependent on the employee, the amount of support provided by the employee, and the degree to which the employee exercises duties regularly associated with parenthood. Neither the FMLA nor regulations restrict the number of “parents” a child may have for FMLA purposes.
Where an employer is unsure if an employee’s relationship to a child supports FMLA eligibility, the employer may require reasonable documentation of the family relationship, which can be satisfied by a simple statement asserting that the requisite caregiving relationship exists for in loco parentis situations for which there is no legal documentation.
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Thursday, July 1st, 2010
In Skinner v. Salem School District, Judge Laplante of the District of New Hampshire recently considered whether one may bring Title II ADA employment discrimination cases based on disability discrimination or if such claims must be brought under Title I. The employer school district moved for a judgment on the pleadings based on its argument that Title II of the Americans with Disabilities Act could not be used by its former employee to bring an employment discrimination claim. The Court denied the employer’s motion for lack of support for the principle that the statute clearly excludes employment discrimination claims.
The Court commented on the current circuit split on this issue. The 11th Circuit has held that the DOJ’s regulatory construction allowing ADA employment discrimination cases deserves sufficient deference to permit such cases to go to trial. The 9th Circuit has rejected this view, stating that the overall construction and purpose of the ADA forecloses the view that Congress intended Title II to apply in the employment context. The 1st Circuit has not taken a clear view on the issue. As a result, Judge Laplante refused to grant the motion for judgment on the pleadings due to the ambiguity of the law as it currently stands, even though he expressed an affinity for the 9th Circuit view. This leaves the door open for ADA employment discrimination cases to proceed to trial in the 1st Circuit – at least until the “ambiguity” is resolved by a Supreme Court or circuit ruling on the issue.
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Wednesday, June 9th, 2010
A recent opinion by the Supreme Court clarified the time limit for bringing workplace race discrimination claims based on a disparate-impact theory of discrimination. In a unanimous opinion issued on May 24, 2010 in Lewis v. City of Chicago, the Court held that African-Americans who had taken the exam to become Chicago firefighters and earned scores in the “qualified” range, but not the “well qualified” range brought a timely disparate-impact claim because their claim was within the deadline of when the City applied those classifications, even if it would have been time-barred as to when the City first established the classification.
The Court highlighted that Title VII prohibits employers from using a particular employment practice that causes a disparate impact on the basis of race, color, religion, sex or national origin. The Court found that the City of Chicago had used the classifications from its 1995 firefighter exam each time that it selected applicants to advance from the eligibility list, which it did multiple times during the subsequent years. When it “used” the list, the City committed a new discriminatory act. Because the plaintiff class filed discrimination charges with the EEOC within 300 days after one such unlawful practice occurred, it was not time-barred under the Title VII requirements for a timely complaint.
The opinion noted that the effect of this opinion could allow for workplace race discrimination lawsuits challenging employment practices that had been in place for years, during which time the employer’s evidence of the business necessity behind the challenged policy might become diluted. Nevertheless, the Court found this to be the meaning intended under the disparate-impact section of Title VII of the Civil Rights Act of 1964 in 42 U.S.C. §2000e-2(k)(1)(A)(i).
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Thursday, June 3rd, 2010
Employee class actions have increased the heat on national employers across all industries; just ask Novartis, Wal*Mart, Starbucks and Outback Steakhouse. Employee class actions can be expensive to defend against and harder to settle than single plaintiff litigation. In fact, the class action plaintiffs’ bar generally operates on a “the bigger they are, the harder they fall” model. For them, a class of sixty employees is just another case on the docket, but a class of sixty thousand can be national news, increasing public pressure on the employer to settle.
Case in point: a recent federal appeals court decision allowed a massive class action lawsuit to go forward against Wal*Mart, the nation’s largest private employer. On April 26, 2010, an eleven-judge panel of the Ninth Circuit ruled 6-5 that a class action alleging less favorable treatment of female employees filed on behalf of all women who worked at Wart*Mart from 1998 and the present could go forward. In 2001, at the time of filing, the named class was estimated to contain 1.5 million members. Wal*Mart unsuccessfully argued that such a lawsuit was inherently unmanageable, and is now considering an appeal to the Supreme Court. This is not an insolated incident for Wal-Mart, which in December 2008 alone settled 63 class actions for a total of $640 million.
Wal*Mart, of course, is not alone. A federal jury in Manhattan ruled on May 19, 2010 that Novartis Pharmaceuticals Corporation engaged in a pattern of discrimination against women from 2002 through 2007 and must pay $250 million in punitive damages. The jury found that Novartis discriminated against thousands of female sales representatives concerning pay, promotion, and pregnancy. The jury also awarded $3.3 million in compensatory damages to twelve women who testified in the class action suit. The compensatory award allows 5,588 other women to apply for compensatory damages, which will be determined on an individual basis. Obviously, the total payout could increase exponentially with the inclusion of the additional claims of the other class members.
Other recent cases point in a similar direction. In Chau v. Starbucks Corp., filed in California state court in 2004, the plaintiff class alleged that Starbucks violated California’s Labor Code by pooling tips left in tip jars and sharing those not just with baristas (part-time hourly employees), but also with shift supervisors (also part-time hourly employees), who spend 90 percent of their time performing barista tasks. The Plaintiffs alleged that this violated California Labor Code Cal. Labor Code § 351, which states that “[n]o employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron.”
The California superior court certified the class of current and former baristas, and after a bench trial, the trail judge found the tip pooling violated § 351 because the shift supervisors were “agents” of the employer. The class was awarded $86 million in damages. Recently, the California Court of Appeals overturned the multimillion dollar verdict, holding that under Starbucks’ team service concept, tips were left for the entire team of employees, including shift supervisors whom to customers were visually indistinguishable from baristas. Despite the ultimate victory in California, the original verdict led to copycat class-actions in Massachusetts and New York. Outcomes there may differ as the wage laws in the various states differ, but the threat of class action remains constant.
In EEOC v. Outback Steakhouse, filed in Colorado federal court in 2006, the Equal Employment Opportunity Commission acting on behalf of all female employees at company-owned restaurants, alleged that Outback denied women equal opportunities for advancement. Specifically, the EEOC alleged that Outback engaged in “gender discrimination on a systemic scale” by maintaining a glass ceiling that kept women from promotion to higher-level profit-sharing positions.
From the outset, this was a difficult case to defend for Outback, as a joint venture partner had stated that female employees had “let him down” and “lost focus” when they had children, and that he wanted “the cute girls” work in the front as servers. In December 2009, the court accepted a $19 million settlement between the parties, which also included a host of other requirements, such as hiring a “Vice President of People” (query exactly what that position entails).
No one “cure-all” exists for your business to avoid an employee class action suit. But creating a culture of best practices can help minimize risk: (1) develop written employment policies with your attorney and communicate them; (2) follow up with training like you mean it rather than holding mere “one off” trainings with little impact on employees, (3) develop a culture of respect and team work with a diversity action program that integrates a strategy through hiring, mentoring, promoting and monitoring, (4) make your cultural values specific and reviewable on a performance level with your managers and staff, (5) ensure your human resources department works closely with operations to develop, promote and enforce your culture and values, including legal compliance, (5) make the process of reporting of complaints clear and easy, and investigations of those complaints quick, thorough and confidential. While size matters for the plaintiff lawyers, culture can combat the risk of class actions and in the end give your company an edge in the market for talented workers.
Chris Vrountas, Chair of the Employment Counseling and Litigation Practice Group, contributed this posting.
Posted in Class Actions, Diversity, Employment Law/Cases, Industry News | No Comments »
Thursday, May 27th, 2010
A common employment application question may soon become a thing of the past in Massachusetts, as the House voted 138 to 17 to pass legislation banning employment applications from inquiring into criminal history, and taking a stand to “ban the box” as activists have advocated for years. Briefly, the House approved a provision that would seal records of felony convictions, making them unavailable to potential employers, after 10 years. The provision would also seal records of misdemeanor convictions after 5 years. In addition, the House voted to “ban the box,” adding a provision that would ban employers from including questions in their job application forms about a person’s criminal background.
But there are some loop holes. First, records for some crimes, such as murder and manslaughter, would never be sealed from a criminal background (or CORI) check under this House bill. Second, while employers will not be able to ask about criminal records on application forms, they will be permitted to ask during a job interview.
Whether this is a good idea remains to be seen. People in Massachusetts still remember the Christa Worthington case, where the estate of a woman murdered by a trash collector sued the trash collection company for failing to conduct criminal background checks that would have disclosed the collector’s violent past. While reintegration of convicts back into productive society can serve to reduce crime generally, hiring an individual with a violent past can serve to increase an employer’s potential liability, not to mention the risk to unsuspecting customers and other members of the public.
The state’s Senate passed a similar version of the bill with a few variations, such as including sex crimes among the list of crimes exempted from the sealed record requirement. That said, a bill with these general provisions will likely be passed into law soon, and only time will tell whether society will be better off when it decides to “ban the box.”
Christopher Vrountas, Chair of the Employment Counseling and Litigation Practice Group, contributed this entry.
Posted in Employment Law/Legislation, Industry News | No Comments »
Wednesday, May 19th, 2010
After undergoing some revisions, a bill codifying the scope of allowable provisions in Massachusetts non-compete agreements is advancing on Beacon Hill. The legislation is a mixed bag for Bay State employers, in some places simply codifying common law doctrines, but elsewhere pulling back from restrictions found reasonable by the courts. In some areas, the legislation could actually assist employers by removing uncertainty as to the reasonableness of a non-compete’s terms, thus avoiding a costly legal battle over reasonableness down the road. The following is a list of notable provisions in the bill:
The Good
• The bill does not alter current law allowing prohibitions on a former employee soliciting customers or employees to jump ship to a competing employer.
• The bill’s provisions do not apply to restrictive covenants entered into as part of the sale of a business or assets of a business.
The Bad
• Non-competition agreements cannot be enforced against employees making less than $75,000 per year (adjusted upward by $1,500 for each year after the bill’s passage). This provision could be troublesome to employers who have key employees earning under the $75,000 threshold, especially in the central and western parts of the state where salaries are lower than in Boston.
• The bill creates a strict one-year limit for the duration on non-competition agreements, and further provides that non-competes lasting six months or less are presumptively reasonable. While this provision may cause difficulties for employers that have relied on non-competes lasting longer than six months, the bill could actually assist employers by making it easier to enforce agreements lasting six months or less.
• The bill provides that continued employment is not sufficient consideration for a non-competition agreement presented to the employee after employment has commenced. Instead, the bill states that consideration of ten percent of the employee’s annual salary will be deemed “presumptively reasonable” compensation. Thus delay could be costly.
• The bill mandates that employees be given notice that of a required non-competition agreement seven days’ prior to commencement of employment, or when a written job offer is communicated, whichever is earlier. If a job offer is oral, the prospective employee must either be simultaneously told of the required non-competition agreement, or be provided written notice prior to his or her resignation from a current job. If the bill passes, employers would be well advised not to rely on the “prior to resignation” provision, as a new hire’s decision to quit his or her old job a few days early could invalidate your non-compete agreement.
The Ugly
• The bill mandates that a court shall award attorneys’ fees and costs to an employee if the court declines to enforce a material restriction in the agreement or finds that the employer acted in bad faith, among other reasons. There is a provision allowing for the employer to be awarded attorneys’ fees, but such an award is left to the court’s discretion and requires the challenged provisions to be those deemed “presumptively reasonable,” the agreement to have been enforced without substantial modification, and the employee to have acted in bad faith. This is an extremely high standard for an employer to meet.
• The bill allows a court to refuse to enforce any provision in a non-competition agreement, even those deemed presumptively reasonable, in “extraordinary circumstances,” or “where otherwise necessary to prevent injustice or an unduly harsh result.” Expect these phrases to become standard in the lexicon of plaintiffs’ attorneys, as their vagueness could essentially serve as a catch-all to override the bill’s provisions.
Stephen D. Coppolo, a member of the Employment Counseling and Litigation Practice Group, contributed this report.
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Tuesday, May 11th, 2010
Emily Kysel has a rare and potentially fatal allergy to paprika. She is so sensitive to the spice that she had a serious attack and had to leave work after she smelled the buffalo wings that her co-worker was eating a few cubicles away. At one point, she nearly died from eating chili containing paprika. Recognizing Ms. Kysel’s disability, her employer, the City of Indianapolis, agreed to allow her to have a service dog in the office. The dog, a golden retriever named Penny, was trained to jump on Kysel whenever she smelled paprika. She cost Kysel $10,000. On the very first day that Penny went to work with Kysel, one of Kysel’s co-workers suffered an asthma attack because she is allergic to dogs. The City informed Ms. Kysel that afternoon that Penny was no longer welcome in the office. Kysel was offered indefinite unpaid leave if she felt she could not work without the dog. Kysel then filed a complaint with the Equal Employment Opportunity Commission, alleging that her employer violated the Americans with Disabilities Act by failing to accommodate her disability. A lawyer for the City thinks that it has done enough to accommodate Kysel’s disability, including barring employees from eating food that contain paprika at their desks. Kysel disagrees, pointing out that the City allows blind employees to bring their service animals to work.
To view the related article as published in the New York Times online, click here.
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Monday, May 10th, 2010
The manager and owner of French Gourmet, a San Diego bakery, were arraigned in federal district court on April 21, 2010, on charges that they conspired to engage in a pattern or practice of hiring and continuing to employee unauthorized workers, a misdemeanor, in addition to 14 felony counts, including making false statements and shielding undocumented alien employees from detection. If convicted, the manager and owner face a maximum of five years in prison and a $250,000 fine on each count. The indictment also seeks criminal forfeiture of proceeds gained from the restaurant’s unlawful activities. According to the indictment, the resaurant’s managers certified on the firm’s Employment Verification Forms (I-9) that the documents they examined appeared to be genuine, and to the best of the their knowledge, the employees listed on the I-9 were eligible to work in the United States. The managers then put the illegal workers on the company’s payroll and paid them by paycheck until they received letters advising them that the Social Security numbers of the employees did not match the names of the rightful owners of the Social Security numbers. The indictment alleges that the restaurant then conspired to pay the undocumented employees in cash until the workers produced a new set of employment documents with different Social Security numbers. The criminal case against the restaurant and its managers is supported by employee and payroll records seized by ICE agents in a May 2008 search of the restaurant, which also resulted in the arrest of 18 undocumented workers. The lesson to employers: ensure compliance with I-9 requirements and establish an I-9 policy that includes completion and retention of Form I-9 for all employees, a strict policy against the employment of individuals who do not provide the proper eligibility documents for Form I-9, periodic reverification of employees, I-9 training for all employees who are part of the hiring process, and regular auditing of employees’ status.
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Monday, May 3rd, 2010
Last week, Santa Clara County, California voted 3 to 2 to pass an ordinance prohibiting restaurants from giving away toys with meals that contain high levels of fat, sugar, sodium, and calories. This includes meals that contain more than 485 calories and 600 milligrams of salt. It means that even Happy Meals that substitute apple slices instead of French fries will face the toy prohibition. You can read the ordinance here: http://www.sccgov.org/keyboard/attachments/BOS%20Agenda/2010/April%2027,%202010/202926863/TMPKeyboard203046978.pdf
Restaurants in the county have 90 days to comply with the law. They can either improve the health of their offerings or stop giving away toys. The County cites the fact that 1 in 4 children in the County are obese, and that disproportionately, these children come from lower income homes that fast food chains typically market to.
Interestingly, 87% of residents in the County oppose the ban. Nutritionists, however, say it levels the playing field. In their opinion, children don’t beg to go to Burger King or McDonalds because they love the taste of the food. They go because they want the toy or to play on the playground.
It will be interesting to watch where this leads. Will it be found unconstitutional for interfering with interstate commerce? Surely it will be extremely burdensome on restaurants to offer different foods in Santa Clara than elsewhere in the country. It would also impact their business to stop giving away toys there. While this is precisely what the County wants, it may violate the Commerce Clause.
Additionally, many parents are complaining that the “Happy Meal ban” infringes on their rights to parent their child. They feel that if they choose to let their children eat an unhealthy meal on occasion it is their prerogative and the County should not be dictating what their children can and can’t eat outside of school. The County argues, however, that this is a safety and welfare issue and is the same as controlling other food safety issues.
If this law is upheld, what will follow? Prohibiting restaurants from providing coloring sheets and crayons if they sell unhealthy foods? Will kid friendly restaurants be held to a higher standard? Should they be? If this is successful, will other counties and states follow suit? Stay tuned.
For more information, see the following articles:
http://www.nytimes.com/2010/04/28/business/28mcdonalds.html
http://articles.chicagotribune.com/2010-04-27/features/ct-talk-happy-meal-ban-0427-20100426_1_happy-meals-toying-restaurant-meal
http://news.yahoo.com/video/business-15749628/where-happy-meals-are-illegal-19362009
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Thursday, April 29th, 2010
Starbucks’ environmental policy has adapted through the years to strive to identify environmentally and socially conscious business strategies and practices. Indeed, in its 2009 Global Responsibility Report, Starbucks identified progress in purchasing ethically-sourced coffee, energy and water conservation, and “green” building practices.
However, Starbucks’ environmental policy has faced recent challenges in its effort to reduce the number of trashed paper cups in landfills. It is estimated that each year, 3 billion paper coffee cups are sold in the United States alone. Starbucks cups currently use 10% recycled fiber content, but the cups are, nevertheless, difficult to recycle because of the thin plastic coating used to make the cups impermeable.
Moreover, one of the most significant challenges to Starbucks’ recycling efforts is the wide range of recycling capabilities of local towns and cities. The wide-ranging capabilities of recycling centers across the nation make it difficult for large companies like Starbucks to implement efficient and effective recycling efforts and to identify packaging that is universally recyclable. Notwithstanding these difficulties, the practices and policies of large companies, including Starbucks’ environmental policy, continue to develop in their efforts to institute additional practices for improving their carbon footprint.
Tags: Starbucks, Starbucks environment, Starbucks environmental policy
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Wednesday, April 14th, 2010
Andy Stern, head of the Service Employees International Union, has announced his resignation.
Stern has been a controversial leader in the union cause, concentrating on expanding union membership and weighing in on national policy debates, while some traditionalists argue he forgot the roots of the union movement as a local, workplace advocacy movement.
For example, Stern leaves after helping the White House achieve its legislative victory with national health care overhaul. The SEIU spent $60 million for the Obama presidential campaign.
Also, according to the report this morning on NPR, through innovative organizing campaigns, including the very visible “Justice for Janitors” movement, Stern helped bring into the union fold many immigrant workers who had no job protections.
Stern also developed the model for creating large-scale bargaining units for publicly funded, home-based direct care workers. Those jobs, often in health and child care, were largely held by minority and immigrant women previously deemed ineligible to join a union.
But the union movement generally nevertheless seems stalled notwithstanding the changing political tide. For example, the Employee Free Choice Act has lost support and may never be passed notwithstanding predictions to the contrary upon Barack Obama’s election. According to the Bureau of Labor statistics, union membership remains low in the private sector (7.2%) as compared to the public sector (37.4%), and while membership has remained steady these last couple years (7.9 mm members in the private sector in 2008 compared with 7.4 mm in 2009) membership is at a historical low (17.7 mm members in 1983, or 20.1 % of the workforce).
Where will the union movement go now remains to be seen. Whether the decline in union membership is inevitable or beneficial is the subject of debate. Whether the Obama administration will pursue the EFCA or put it aside in favor of other priorities will be something to watch for.
Tell us, what do you think?
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Friday, April 9th, 2010
At a conference held this week, data presented by the Latinum Network indicated that Hispanics have become the largest segment of the population driving growth in the food, beverage and restaurant sector. The trend in the restaurant industry coincides with the general trend in the economy. That is, just as individuals of Hispanic background have produced the most significant growth in the food, beverage and restaurant industry, they have likewise created significant growth in the U.S. economy as a whole. In the food, beverage and restaurant business, the growth in spending by Hispanics has been so significant that it has offset 84% of the decline restaurant sector, according to recent data.
See U.S. Hispanics Propel Real Growth in Food, Beverage and Restaurant Sectors, According to Latinum Network, Hospitality Trends, April 8, 2010.
Tags: Hispanics, hospitality industry, Latinum Network, restaurant industry, trends
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Tuesday, April 6th, 2010
“The Apprentice” is not just a TV show, it’s a concept going back to the middle ages and probably to pre-history. It makes total sense. A person new to a trade offers his or her services for free as an “apprentice” or “intern” just to have the chance to work with a master at the trade for the pure opportunity to learn and gain experience to launch a career. But while abuses and indentured servitude were par for the course hundreds of years ago, The New York Times has recently reported that the United States Department of Labor today is on the lookout for companies who abuse the internship concept to exploit free labor rather than to impart knowledge. An employer who crosses the line can run the risk of serious liability, including multiple fines and other enforcement actions.
Interns typically work in a number of different industries. You see them in brokerage houses, law firms, publishing and, yes, in restaurants–particularly in kitchens where culinary arts students would kill for an opportunity to work behind the line and develop themselves, their experience and their craft. But the problem arises when companies take on interns as “volunteers” and use them for work that they would normally pay for someone to perform. An unpaid intern must not be used to replace a paid worker, and generally the company hosting the intern cannot derive immediate benefit from the unpaid intern’s work. Rather, the intern’s activities must be primarily educational for the intern rather than economically productive for the host company. Otherwise, the host company must pay the intern at least at the rate of minimum wage.
Charities and non-profits are allowed more flexibility with unpaid interns than for profit companies, as people generally are permitted to volunteer their time to charitable causes. But companies who use unpaid intern labor to fill in at jobs where the company would normally need to hire a worker to perform probably commit violations of minimum wage laws and other aspects of the federal FLSA.
To be sure your shop does not cross the line, examine the purpose of your intern program, audit the activities of interns and be sure you do not encourage managers to lower their labor costs by relying on student interns. Take a look at the DOL website and be sure to consult with counsel for further guidance.
Chris Vrountas, Chair of the Employment Counseling Litigation Practice Group, contributed this posting.
Tags: apprenticeship, Department of Labor, DOL, Fair Labor Standards Act, FLSA, intern, intern abuse, interns, internship, internships, The Apprentice, The New York Times
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Monday, March 29th, 2010
The Massachusetts Data Privacy Act (201 CMR 17), now recently revised, went into effect March 1, 2010. It applies to many businesses in a variety of industries. The law does not merely apply to retailers, financial institutions, or other companies whose day-to-day operations involve the gathering and sharing of personal information. Rather, it applies generally to those businesses that “own or license” personal information about Massachusetts residents. “Personal information” includes “a Massachusetts resident’s first name and last name or first initial and last name in combination with” any of the following: Social Security number, driver’s license number or state-issued identification card number, or financial account number, or credit or debit card number. Therefore, if you have any employees, receive payments from individuals (whether by check or credit card), or send out 1099s, your business owns or licenses personal information and, thus, must comply with the law.
Compliance with the law is much more straightforward and less burdensome than its language might suggest. The law requires businesses to “develop, implement, and maintain a comprehensive information security program” (“CISP”) that “contains administrative, technical, and physical safeguards.” However, it takes a risk-based approach by allowing businesses—in implementing these safeguards—to account for their “size, scope and type of business,” “the amount of resources available,” “the amount of stored data,” and “the need for security and confidentiality of both consumer and employee information.”
In addition, the law contains other provisions that make compliance less demanding. The definition of “encrypted” is general and neutral and merely refers to “the transformation of data into a form in which meaning cannot be assigned without the use of a confidential process or key.” Moreover, the law states that the minimum requirements for the computer security system included in the CISP must be applied only “to the extent technically feasible.” In other words, if there is a reasonable, technological means to develop and implement this computer security system, that reasonable means must be used. Businesses must also “take reasonable steps to select and retain” third-party service providers capable of maintaining security measures compliant with the law. Thus, with respect to development and implementation, the law places a significant amount of discretion with businesses and avoids a one-size-fits-all approach.
The law is much more specific, however, with respect to the CISP. When drafting the CISP, businesses should rely on their attorneys. Before drafting it, however, businesses should make certain determinations that will help them identify the specific information they must include in the CISP. They must identify where personal information comes from, where it is stored, who uses it, and how it is used. They must also identify reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of any electronic, paper, or other records containing personal information. They must assess the likelihood and potential damage of these threats. Before deciding on any changes to company policy, they should evaluate the sufficiency of existing policies, procedures, customer information systems, and other safeguards in place to control risks. Finally, they should devise a plan to eliminate or, at worst, reduce those risks.
The CISP itself should set forth its objective and its purpose and define “personal information.” It should identify what kind of personal information it owns or handles, how it uses that personal information, and how it protects the information from internal and external threats. In particular, the CISP’s description of how the business protects personal information from threats should include several critical elements:
(1) It must designate an information security manager. This person will initially implement the CISP; train employees; test the CISP’s safeguards; evaluate the ability of each of the business’s third party service providers to protect the personal information to which the business has permitted them access and take reasonable steps to ensure that those third party service providers are applying appropriate security measures to personal information; review the scope of the security measures in the CISP at least annually, or whenever there is a material change in business practices that may implicate the security or integrity of records containing personal information; and conduct an annual training session for all owners, managers, employees, and independent contractors, including temporary and contract employees who have access to personal information on the elements of the CISP. Choosing such a point person will streamline and facilitate implementation of the CISP and compliance with the law.
(2) The CISP must describe how the business ensures that its employees follow the CISP. This should involve re-training of employees, training new employees, amendment of employee contracts (where applicable), annual refresher training, signed written agreements to follow the CISP, and an understanding that employees who fail to follow the CISP will be warned and/or terminated.
(3) It should limit the personal information acquired to an amount that is “reasonably necessary” to accomplish the business’s objectives.
(4) The CISP must limit access to records containing personal information to those persons reasonably required to know such information in order to accomplish the business’s purpose or to comply with other state or federal regulations.
(5) It must require that all security measures be reviewed at least annually, or whenever there is a material change in business practices that may reasonably implicate the security or integrity of records containing personal information.
(6) It should encourage employees to report any suspicious or unauthorized use of personal information.
(7) It must explain the procedure for handling security breaches, including a mandatory post-incident review of events and actions taken and a determination about whether any changes in security practices are required.
(8) It must restrict access to electronically stored personal information to those employees that have a unique log-in ID. Re-log-in should be required when a computer has been inactive for more than a few minutes.
(9) It must provide for the protection of paper files containing personal information, especially them they are used by employees, and it must require that, at the end of the day, all files and other records containing personal information be secured in a manner that is consistent with the CISP’s rules for protecting the security of personal information.
(10) It must provide proper methods for the disposition or destruction of paper or electronic records containing personal information.
(11) It must devise a policy and procedure for dealing with visitors and restricting visitor access to files containing personal information.
(12) It must require reasonably up-to-date firewall protection and operating system security patches, both of which must be designed to maintain the integrity of the personal information installed on all systems processing personal information.
(13) It must require reasonably up-to-date versions of system security agent software, including malware protection, and reasonably up-to- date patches and virus definitions, installed on all systems processing personal information.
(14) It must require the encryption of all personal information stored on laptops or other portable devices and all records and files transmitted across public networks or wirelessly.
(15) It must require that all computer systems must be monitored for unauthorized use of or access to personal information.
(16) It must contain a detailed password and user-authentication policy. The law specifically addresses passwords and states that they must be in such a format so that they are not compromised. In other words, passwords should contain a certain number of characters, including a combination of numbers, letters, and symbols, and must be difficult to crack. In addition, passwords should be changed periodically. Electronic access via passwords after multiple unsuccessful attempts to gain access must be blocked.
(17) It must describe how it protects and secures computer backups.
(18) It must include a section on third-party vendor compliance that explains how and in what manner the business shares personal information with third-party vendors and how it ensures that vendors comply with the CISP.
After finalizing the CISP, businesses must train their employees about the importance of protecting personal information and the security of the computer network. Most important, businesses must determine how they are going to accomplish these tasks and develop a reasonable secure network. They must decide if the internal resources they have are sufficient or if external help is necessary.
Once the CISP is finalized and implemented, businesses should monitor and update the effectiveness of the security measures and safeguards in place.
Robert Fojo, the newest member of the Employment Counseling and Litigation Practice Group, contributed this posting.
Tags: CISP, data management, data protection, employee protection, employee rights, Massachusetts Data Privacy Act
Posted in Employment Law/Legislation, Industry News | No Comments »
Wednesday, March 24th, 2010
Although it may appear to be yet another act by the federal government to control daily life, this is one intrusion that has been supported by the hospitality industry for some time. Local communities, such as New York, Philadelphia, and states such as Massachusetts, have begun to enact menu labeling laws requiring certain restaurant chains to post various kinds of nutritional information prominently on their menus. Some require only calorie counts while others require information regarding trans-fats, sodium, carbohydrates and so on. Other states, such as Connecticut, have rejected such laws altogether, although in that case only by a recent governor’s veto. Faced with a patchwork of varying and complicated regulations, the industry supported federal regulation in this area so that businesses can deal with a single, consistent set of rules throughout the country.
And the rules are fairly straight forward, for now. The new healthcare reform law calls upon the FDA to develop new regulations that will set forth national standards for restaurants to post the calories of the various food items offered on the menu. The anticipated regulations will govern all restaurants with 20 or more locations. Once issued, these regulations will preempt local and state laws in the field and create an environment less likely to ensnare an operator by surprise.
That said, the industry still needs to deal with those plaintiffs lawyers. Class actions have been brought against restaurants who have sought to market “healthier options” on the grounds that such marketing campaigns and associated menu explanations fail to disclose the full nutritional story on the plate. Whether the federal labeling law will protect restuarants the way the surgeon general’s warning protected tobacco companies for years remains to be seen, but the Supreme Court has ruled that labeling laws do not necessarily preempt false advertising and fraud claims.
What does all this mean? It means restaurants will need to follow the FDA process closely these next several months and, in the meantime, continue to watch for what local law requires. In all cases, menus and other marketing materials must not serve to mislead, and any representations should first be vetted and confirmed before they are circulated to the public.
NKMS has presented on the patchwork of regulations concerning menu labeling across the country as well as on the class actions that have been brought asserting these claims these last two years. Be sure to watch this page and catch one of our upcoming webinars to keep up with this developing trend.
Tags: FDA, Food and Drug Administration, health care, health care bill, health care bill details, healthcare, healthcare reform, healthy living, Menu Labeling, menu labeling laws, regulations, restaurant, restaurants
Posted in Employment Law/Legislation, Industry News, Menu Labeling | No Comments »
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