POSTED BY SCOTT W. ATHERTON ON JANUARY 31, 2011

Unfortunately, many employers have learned the hard way that failing to properly preserve emails and other files after receiving notice of a potential employee claim can result in severe sanctions against the company. One well known example is Zubulake v. USB Warburg. Although Zubulake started out as a fairly “vanilla” gender discrimination case, the employer made a series of mistakes which ultimately cost the company in excess of twenty million dollars in damages and sanctions. Among those mistakes was failing to properly instruct the people involved not to delete emails relating to the case—an obligation which federal law now imposes on both individuals and companies who are involved in federal lawsuits.

To reduce these exposures, proactive employers have begun implementing written policies and training programs to educate employees about their obligation to preserve evidence. This new trend follows recommendations by The Sedona Conference, which is generally regarded as a leading authority on e-discovery preservation issues. Among other things, Sedona has announced its official position that “adoption and consistent implementation of a policy defining a document retention decision-making process” and “[t]he use of established procedures for the reporting of information relating to a potential threat of litigation to a responsible decision maker” are among the factors Courts should consider in determining whether to impose sanctions when information is lost. See The Sedona Conference Commentary on Litigation Holds, The Trigger & the Process (Aug. 2007)

With those factors in mind, many companies are now implementing written legal hold policies as part of their Employee Handbooks. Those policies often have the following features:

• A statement concerning the company’s policy of complying with all laws requiring the preservation of evidence
• An explanation of what employees should do if they receive notice of a claim, such as (1) promptly reporting the claim to HR/the Legal Department; and (2) preserving all potentially relevant files as soon as reasonably possible
• An outline of potential disciplinary measures that may result from noncompliance with the policy (and an organized method for reporting non-compliance)
• A method of confirming all employees’ acknowledgement of the policy

While a company-wide legal hold policy is not a substitute for a case-specific legal hold notice (which is now mandatory under federal law), many employers have implemented such policies to help raise employee awareness, avoid data loss issues before they become a problem, and ensure that legal issues are promptly reported up the chain of command. Moreover, if mistakes do occur, the existence of an organized legal hold policy should help establish that the company acted in good faith—a factor Courts should consider prior to imposing sanctions pursuant to Sedona.

As is the case with the company’s anti-discrimination and other policies, this is yet another area of exposure where an ounce of prevention is worth a pound of cure.

POSTED BY SCOTT T. SILVERMAN ON JANUARY 21, 2011

In Dana Corp, 356 NLRB No. 49 (December 6, 2010), the National Labor Relations Board (the “Board”) held that Dana Corporation and the UAW did not violate labor law when they entered into a Letter of Agreement (“LOA”) setting forth ground rules for additional union organizing, procedures for voluntary recognition upon proof of majority support and substantive issues that collective bargaining would address if and when Dana recognized the UAW at an unorganized facility. The Board found that Dana had not rendered inappropriate support to the UAW in violation of Sections 8(a)(1) and (2) of the National Labor Relations Act (the “Act”) and that the UAW did not impermissibly accept support in violation of Section 8(b)(1)(A) of the Act.

In the most important part of the decision, the Board announced that negotiations with a union over substantive terms and conditions of employment prior to the union’s attainment of majority support is not per se unlawful. Rather, some discussion with a union over “parameters” of subsequent collective bargaining is acceptable.

Applying this rule, the Board found that the LOA’s creation of a framework for future collective bargaining if the UAW were able to prove majority status by means of a card-check did not amount to pre-majority exclusive recognition and collective bargaining.

In sum, the Board determined that the LOA would not cause employees to believe that exclusive recognition of the UAW was a fait accompli, thereby interfering with employee choice. In reaching this decision, the Board emphasized that the LOA was reached at arms length without unfair labor practices, contained procedures for conducting the union campaign, provided a mechanism for determining majority support and merely highlighted the areas that collective bargaining would address. The LOA did not impact present terms and conditions.

The Dana Corp. decision is the latest evidence of the new Democratic majority of the Board’s desire to increase the ability of unions to organize. The Board’s holding grants unions the freedom to approach an employer with “parameters” of a future collective bargaining agreement that will be appealing to the employer. The employer will then be asked to allow a card check of support for the union so that the deal may be finalized. Seeing no problem with the terms proposed by the union, the employer may agree.

Such would be a bad decision by the employer! What employers don’t recognize is that the favorable terms proposed by the union may be changed in a subsequent cba, and that it is near impossible to de-unionize. This decision will negatively impact employers through its creation of a novel organizing method in favor of unions.

Employers should consult labor counsel before entering into any union agreement. In addition, employers should proactively engage in a consistent union avoidance program and review their employee policies to ensure compliance with the latest labor law from the Board.

POSTED BY SCOTT T. SILVERMAN ON JANUARY 21, 2011

Every employer needs to be aware of recent developments at the National Labor Relations Board that are sure to increase union activities. In two moves reported on December 21, 2010, the Board proposed a rule to require employers to post a notice of employee rights under the National Labor Relations Act and the acting General Counsel to the Board, Lafe Solomon, announced an initiative to systematically seek aggressive remedies in response to charges that an employer engaged in impermissible conduct during a union organizing campaign. In addition, the Obama Administration just announced on January 5, 2011 that it has nominated Mr. Solomon to be General Counsel at the Board. All of these moves show that the Board is posed to make union organizing easier. Indeed, almost every decision that has been made by the NLRB during the past several months has been in favor of labor.

On December 21, 2010, the Board issued a Notice of Proposed Rulemaking to require employers covered by the NLRA, and meeting the Board’s discretionary jurisdiction standards, to post notices informing employees of their rights as employees under the Act. There is a 60-day period for public comments before a final rule is implemented. The proposed rule would require such notices to be placed in conspicuous places and by electronic means, if the employer customarily uses such methods to communicate with employees.

The proposed notice tells employees that they have the right to organize and bargain collectively with their employers and to engage in other protected concerted activity. Specifically, the notice tells employees that they have the right to:

1. organize a union;
2. form, join or assist a union;
3. bargain collectively through a representative;
4. discuss terms and conditions of employment or union organizing with co-workers;
5. take action with one or more co-workers to improve working conditions;
6. strike and picket; and
7. to not do any of these things.

In addition, the notice states that it is illegal for an employer to:

1. prohibit employees from soliciting for a union during non-work time and from distributing union literature during non-work time in non–work areas;
2. question employees about union support;
3. take adverse action against employees based of union or concerted activity;
4. threaten to close the workplace if workers choose a union;
5. promise or grant benefits based on union support;
6. prohibit union hats, buttons, t-shirts and pins except in special circumstances; and
7. spy on or videotape peaceful union activities and gatherings.

Finally, the notice tells employees that if they select a union, the employer must bargain in good faith to reach an agreement, that employees have 6 months to contact the NLRB after unlawful activity, and that employees may obtain lost wages and benefits for unfair labor practices.

The proposed rule states a failure to post is an unfair labor practice and that, upon a failure to post, the Board may order the employer to post a notice, post a remedial notice, toll the statue of limitations for unfair labor practice charges, and consider knowing failure as evidence of unlawful motive in unfair labor practice proceedings. Arguably, these penalties go beyond any harm that could possibly be caused by an employer’s failure to post a notice.

On the same day as the notice of the proposed rule, Mr. Solomon announced that cases of discharges in response to union organizing may be accompanied by threats, solicitations of grievances, promises or grants of benefits and surveillance. In such situations, the acting General Counsel stated that remedies should be crafted to recreate an atmosphere in which employees may fully utilize their right to free choice. The acting General Counsel authorized complaints and injunction petitions to seek a reading of a remedial notice to employees, allowing union access to employee bulletin boards and providing names and addresses of employees to the union. These are all extreme measures that would greatly enhance a union’s ability to organize.

Finally, on January 5, 2011, the White House announced President Obama’s intention to nominate Mr. Solomon to be General Counsel of the Board. As shown by his aggressive stance toward implementing reform, Mr. Solomon would be pro-labor in his agenda.

These developments point to a better environment for unions to gain access to employees and to organize workforces. The foregoing actions will give all employees a pro-union message and make it harder for employers to control the workforce. It is clear that the defeat of legislative initiatives such as the Employee Free Choice Act has caused the Obama Administration to seek a labor agenda through change at the Board. Employers need to keep up to date on the ever-changing landscape.

POSTED BY SCOTT T. SILVERMAN ON JANUARY 21, 2011

On December 13, 2010, the Wage and Hour Division of the Department Labor announced an “Atttorney Referral System” that it will maintain with the American Bar Association. When FLSA or FMLA charging parties are informed that the Wage and Hour Division is not pursuing their complaint, they will be given a toll-free number to contact a newly created “ABA-Approved Attorney Referral System.” In addition, according to the DOL, the Wage and Hour Division will provide “relevant information and documents” to the charging parties and their attorneys.

What this means, of course, is that potential plaintiffs will be given easy access to FLSA attorneys. In addition, plaintiff’s attorneys will be able to obtain all the material that the DOL has gathered in its investigation. This will result in even further FLSA and FMLA lawsuits against employers.

Employers should take this opportunity to have their FLSA and FMLA policies and practices reviewed to ensure compliance with the law. No employer wants to be in the position to have a case referred to an attorney through the DOL.

POSTED BY SCOTT T. SILVERMAN ON JANUARY 21, 2011

Employers beware: firing an employee for bad-mouthing the boss on social media may violate the National Labor Relations Act, even for a non-unionized employer.

The National Labor Relations Board just lodged a complaint against a Connecticut ambulance company alleging, among other things, that it unlawfully fired an Emergency Medical Technician for violating a policy that prevented her from depicting the company “in any way” over the internet without the company’s permission and from making disparaging remarks when discussing the company or its supervisors. The Board said the employee’s exchange of Facebook posts with co-workers constituted protected concerted activity, and firing her for those posts was a violation of the Act. The Board also accused the ambulance company of maintaining and enforcing an overly broad blogging and Internet posting policy that unlawfully infringed on its employees’ NLRA rights.

Although it may come as a surprise to some employers, all employees, even those who are not represented by a union, have protected rights under the Act. Section 7 of the Act states, in part, that employees have the right to engage in “concerted activities” for the purpose of “mutual aid or protection.” To be protected, the activity must be “concerted,” which means that it must be made on behalf of a group of employees, as opposed to an individual. Further, the activity must be for “aid or protection,” which means that it must be undertaken to benefit or improve the group’s employment terms and conditions. The Board takes the position that employees have the absolute right to engage in discussion and complaint regarding the terms and conditions of their employment.

The matter began when the employee posted a negative comment about her boss on her Facebook page using her home computer. The comment was supported by co-workers, which caused the employee to post additional negative comments about her supervisor. When the company discovered these postings, it suspended and later fired the employee under its policies, according to the Board. The Board’s position is that because the employees were using social media to engage in concerted discussion in order to improve the terms and conditions of their employment, it was protected activity under the Act. Further, the company’s policy was overbroad in violation of the Act, because it prohibited conduct that is protected under the Act and unlawfully chilled employees’ exercise of their rights.

This lesson for employer: best update your policies to take into account the use of social media and to ensure the restrictions do not run afoul the NLRA and other applicable law.