Employers Beware – The NLRB May be Coming for Your Handbook

Employee Handbook And Policies – Team Smart HR

Employee handbooks are common in most businesses, and employers often prepare one (or find a template) and then forget about it. During the Obama administration, handbooks became a hot topic in the employment arena because the National Labor Relations Board (“NLRB”) attacked employee handbooks from every conceivable angle by arguing that a harmless neutral policy infringed on an employee’s right to engage in protected concerted activity. Handbooks became boring again under Trump, but with the increase in unionization across the country, the NLRB has once again set its sights on employee handbooks. The NLRB recently filed a complaint against Starbucks alleging that 19 of its policies violated its employees’ right to exercise their protected rights.

The NLRB complaint was surprising because its allegations challenge NLRB’s own precedent ruling that a facially neutral policy will be reviewed under a “reasonable interpretation” standard. Under that rule, if a policy does not, on its face, interfere with an employee’s rights, it is presumed lawful.

The Starbucks complaint filed by the NLRB appears to be attacking this precedent because several of the policies in the complaint are facially neutral. The NLRB argued that the following policies violated employees’ rights to engage in protected concerted activity:

  1. Prohibition Against Harassment
  2. A Respectful Workplace Is Everyone’s Responsibility
  3. Shirts, Sweaters and Jackets
  4. Pins
  5. Personal Mobile Devices
  6. Personal Telephone Calls and Mail
  7. Social Media
  8. Soliciting/Distributing Notices
  9. Video Recording, Audio Recording and Photography
  10. Acceptable Use of Starbucks Electronic Communications Systems
  11. Confidentiality
  12. Conflicts of Interest
  13. Media Inquiries
  14. Mobile Computing
  15. Requests for Partner Information
  16. How We Communicate
  17. Conflict Resolution
  18. Corrective Action
  19. [Back Cover]

Why is this important?

Employers will need to review their employee handbooks if the NLRB reverses its precedent. With the NLRB and union activity growing recently, businesses may find themselves facing allegations that their employee handbook is infringing its employees’ rights to unionize. This situation only highlights how important it is for business to review their employee handbooks at least once per year. For additional help navigating these issues, feel free to contact Walker R. Lawrence, a partner in the employment law practice at Levin Ginsburg, at wlawrence@lgattorneys.com, or (312) 368-0100.

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The Great Resignation – Employers Beware

Resignation Letter" Images – Browse 1,242 Stock Photos, Vectors, and Video | Adobe Stock

The job market continues to be volatile, and businesses are willing to take more risks to hire proven talent. That means taking the best people from their competition. Business owners therefore need to start preparing for when (not if) a key employee leaves to join a competitor.

Below are some ideas to help you prepare for a key employee’s potentially sensitive exit to a competitor and ensure your business is protected: begin preparing and setting up a plan of action so you are prepared to handle.

• Review current restrictive covenant and confidentiality agreements. This is particularly important right now because non-compete laws are changing in Illinois and in other states in the US.
• Update confidentiality agreements to require employees to submit information about their digital footprint on their personal devices, including making those devices available for a forensic review upon the employee’s exit.
• Consider implementing phantom equity programs or bonus plans.
• Evaluate your hybrid-work environment and focus on flexibility.
• Audit your IT protocols and ensure your most important data is being monitored and its confidentiality maintained.
• Limit which employees get access to sensitive information – gone are the days that every employee gets access to all your information.

When an employee leaves to join a competitor, employers should immediately take certain preliminary steps to identify possible wrongdoing:

• Preserve the employee’s email and activity logs. This data is often auto deleted unless you place a hold on the information.
• Review emails sent to personal email addresses.
• Review all emails sent with attachments.
• Review activity logs.
• Preserve any devices used by the employee.
• Conduct an internal investigation to determine if there has been any other unusual activity.
• Retain a computer forensic expert.

Once these preliminary steps are completed, consider sending a cease-and-desist letter to the former employee and the new employer to ensure any damage is contained. Depending on the circumstances, filing a lawsuit (including seeking immediate injunctive relief) may offer the best protection for your business.

The attorneys at Levin Ginsburg can help businesses prepare for and react to the departure of key employees so that any impact is mitigated. For additional help navigating these issues, feel free to contact Walker R. Lawrence, a partner in the employment law practice at Levin Ginsburg, at wlawrence@lgattorneys.com, or (312) 368-0100.

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DOL Withdraws Guidance On When An Employer Must Pay Employee for Covid Testing or Vaccinations

Could COVID-19 vaccines become mandatory in the U.S.? | Hub

On January 20, 2022 the DOL released Fact Sheet #84 containing guidance for employers faced with the issue of whether or not it should pay employees for their time spent obtaining COVID-19 tests and vaccinations. On January 24, 2022, without explanation, the DOL removed Fact Sheet #84 from its website. While it is still unclear why it was removed (likely related to OSHA rescinding its ETS requiring mandatory vaccination/testing policies), Fact Sheet #84 provided insight into an ongoing legal question facing businesses – when do I need to pay for the time my employees spend getting tested or vaccinated?

In 2021 the DOL answered several FAQs related to the Fair Labor Standards Act (“FLSA”) and COVID-19. Under the DOLs FAQs, time spent by an employee “waiting for and receiving medical attention at [an employer’s] direction or on [an employer’s] premises during normal working hours” was compensable. The more complicated issue was whether time spent getting tested on a day off and off-site was compensable. In typical DOL fashion, the answer was “it depends.” The DOL opined that the key inquiry, which is consistent with FLSA precedent, was whether the time spent receiving a test was “necessary for [an employee] to perform their jobs safely and effectively during the pandemic”. The FAQs provide an example in which the time spent by a store cashier getting tested on her day off is likely compensable because significant interaction with the general public is “integral and indispensable” to the cashier’s job.

The now-removed Fact Sheet #84 provided further clarification. Activities that occur during normal working hours are generally compensable, subject to certain limited exceptions. Accordingly, employers must pay for an employee’s time during the normal workday getting (1) tested; (2) vaccinated; or (3) screened for COVID-19 related symptoms.

For activities outside the normal working day, Fact Sheet #84 suggested that time spent getting vaccinated, even if outside the normal working day, is “integral and indispensable” to an employee’s job because it is the most effective “control available to protect employees from becoming seriously ill and dying due to occupational exposures to COVID-19.” This conclusion relied on the now rescinded OSHA vaccine/testing mandate. As a result, under Fact Sheet #84, time spent getting vaccinated was compensable even if the vaccination occurred outside normal working hours if it is as a condition of employment.

For time an employee spends getting tested, the DOL broke it down into two separate groups. First, if an employee is unable to be vaccinated due to a protected reason (e.g., medical or religious) and the employer requires such employee to be tested in lieu of vaccination, time getting tested is compensable because it is “integral and indispensable to the employee’s work and therefore compensable … given that vaccination is not a viable option for such employees.”

However, for employees that are able to receive the COVID-19 vaccine, but voluntarily decline to do so, getting tested is no longer “integral and indispensable” because the employee is voluntarily choosing a less effective tool (e.g., getting vaccinated) to be safe at work. Accordingly, under Fact Sheet #84, employee’s that chose not to be vaccinated, and the choice was not based upon religious or medical reasons, were not entitled to be paid for time spent getting tested, even if required by the employer.

Given that Fact Sheet #84 was removed from the DOL’s website, it is not currently the official “guidance” from the DOL. However, its interpretation and examples are helpful in considering the DOL’s FAQs on compensability and should be considered when employers review these issues in the workplace. These guidelines do not have the force and effect of law and apply only to the FLSA. Employers must consider state and local ordinances that may impose additional or different obligations on an employer to pay for time getting tested or vaccinated. For assistance in reviewing compensability issues reach out to Walker R. Lawrence (wlawrence@lgattorneys.com), a partner in Levin Ginsburg’s employment law practice group.

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The Expanded Illinois Secure Choice Retirement Savings Program Will Soon Cover Small Employers

Illinois Secure Choice - Ascensus

The Illinois Secure Choice Retirement Savings Program (“SCRSP”) is a retirement savings instrument for private sector workers in Illinois who do not have access to an employer-sponsored plan. Recent legislation expands the SCRSP to cover employers with five or more employees. Previously, the SCRSP applied only to employers with 25 or more employees that had been operating in Illinois for at least two years and did not offer a qualified retirement plan.

The SCRSP requires covered employers to distribute information provided by the SCRSP, facilitate employee enrollment in the SCRSP, and remit contributions to the SCRSP via employee payroll deductions. The new legislation also includes annual automatic contribution increases up to 10% of wages (employees have the right to opt-out).

Employers will receive notifications of their obligations and applicable deadlines under the expanded SCRSP. The initial enrollment deadline will apply to employers with more than 15 employees and fewer than 25 employees and will occur no earlier than September 1, 2022. The second enrollment deadline will apply to employers with at least five but not more than 15 employees and will occur no earlier than September 1, 2023.

Smaller employers that will fall under the auspices of the expanded SCRSP should consult with experienced counsel to assure compliance with the SCRSP.

If you have any questions regarding the SCRSP, please contact Mitchell Chaban at mchaban@lgattorneys or (312) 368-0100.

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Illinois Legislation Narrowing Restrictive Covenants Takes Effect January 1, 2022

The Illinois Freedom to Work Act – Anticipated Amendments | Levenfeld  Pearlstein, LLC

Levin Ginsburg previously updated our clients on the proposed changes to Illinois non-compete and non-solicitation law (See March 30, 2021 blog here). That legislation passed on May 31, 2021, was signed into law August 13, 2021, and takes effect January 1, 2022. The new law is not retroactive, so it will not impact any agreement entered into before the new year.

Employers must understand this new law and how it will impact their restrictive covenant agreements with employees. The key requirements are as follows:

  1. Employers may not enter into non-compete agreements with any employee earning $75,000 or less per year. This salary threshold is scheduled to increase by $5,000 every 5 years through 2037.
  2. Employers may not enter into non-solicitation agreements with any employee earning $45,000 or less per year. This salary threshold is scheduled to increase by $2,500 every 5 years through 2037.
  3. Every restrictive covenant must include a notice for the employee to consult with counsel, which must be given to an employee 14-days before the restrictive covenant is executed.
  4. The new law codifies legal precedent that requires an employee to work at least 2 years before continued employment would be considered sufficient consideration for the agreement. As a result, employers will be required to provide some professional or financial benefit in exchange for signing any agreement in order for the agreement to be deemed enforceable at the time of execution.
  5. A restrictive covenant will be unenforceable if the employee was terminated or furloughed due to the COVID-19 pandemic or under similar circumstances (yet to be defined).
  6. The law does not allow a court to entirely rewrite a restrictive covenant, but gives the court broad discretion to modify or delete provisions of a covenant rather than hold the entire covenant unenforceable.
  7. Finally, the new law will require employers to pay an employee’s attorneys’ fees if the restrictive covenant is deemed unenforceable.

These changes will have a significant impact on an employer’s decision to require its employees to sign non-compete and non-solicitation agreements. Employers should begin working with their employment counsel now — well before the new law’s effective date of January 1, 2022 — to ensure their agreements are enforceable and avoid the risk of litigation and liability for an employee’s attorneys’ fees.

For assistance in drafting enforceable restrictive covenants and protecting your business, reach out to Walker R. Lawrence (wlawrence@lgattorneys.com), a partner in Levin Ginsburg’s employment law practice, or Joseph A. LaPlaca (jlaplaca@lgattorneys.com), an associate attorney at Levin Ginsburg.

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City of Chicago Fast Tracks $15/Hour Minimum Wage Ordinance

On November 26, 2019 the Chicago City Council amended its Minimum Wage Ordinance to accelerate its $15/hour minimum wage hike four years ahead of schedule. Instead of tying the increases to CPI in 2020, the amendment will increase the minimum wage to $14/ hour on July 1, 2020 and to $15/hour July 1, 2021.

The update also increases the minimum wage for tipped workers to $8.40 an hour on July 1, 2020 and requires that it be set to 60% of the City of Chicago minimum wage going forward. On July 1, 2021 it will increase to $9 per hour. Employers can still use a tip credit to make up the difference, but employers will be required to true up any payments if the tip credit is not enough to cover for all hours worked, including overtime pay.

These changes will not immediately impact small businesses with less than 20 employees. Small businesses will only be required to increase the minimum wage to $13.50/hour on July 1, 2020 and $0.50 per year until it reaches $15 per hour in 2023. Employers will less than four employees are not covered by the minimum wage ordinance.

Finally, the City of Chicago’s changes will also eliminate the youth minimum wage exemption by 2025 and will increase the youth minimum wage to $10 per hour on July 1, 2020 until it reaches $15 per hour by 2024.

A breakdown of the relevant wage rates is below:

These changes are in addition to the update to the Illinois Minimum Wage Law that was enacted early this year in February. We provided a comprehensive updated on those changes in April, and you can read more about that here. Please contact us if you need any assistance complying with the Illinois or Federal Minimum wage and overtime laws at 312-368-0100 or Walker R. Lawrence at wlawrence@lgattorneys.com

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Employee Owes Fiduciary Duty to Employer and Cannot Misappropriate a Corporate Opportunity

The Illinois Appellate Court has reiterated what the Illinois Supreme Court said a few years ago: Employees of a corporation owe a duty of loyalty to the company by which they are employed.  And that it is a breach of their fiduciary obligation to appropriate for their own gain an opportunity that rightfully belongs to the company.  Advantage Marketing Group, Inc. v. Keane, 2019 IL App (1st) 181126.

In this instance it was clear that the employee was far more than an ordinary employee and that it was not clear whether the company had considered the opportunity but had decided to take a pass on it.

Keane was one of the founders of Advantage Marketing Group (AMG) and, even at the time of his purported misconduct, owned 35% of AMG’s stock.  He had served AMG as an officer and director, but was simply an employee when he seized a potential corporate opportunity and made good use of it through another corporation, Keane, Inc. d/b/a The Mail House.

In addition to owning 35% of AMG, Keane performed or had performed the following for AMG:

  • Hired and fired employees
  • Had access to all of AMG’s books and records including client lists, employee records, tax documents, vendor information and billing data
  • Had a bonus equal to AMG’s majority stockholder
  • Had developed and maintained AMG’s financial records
  • Had explored potential strategic acquisitions in the letter-shop business

In the summer of 2013 Keane and AMG’s majority stockholder, Patty Herman, discussed the potential acquisition of The Mail House, a competitor of AMG.

Keane resigned from AMG on September 4, 2015.  Prior to his resignation he began making preparations for the acquisition of The Mail House.  He organized a new corporation named Keane, Inc. d/b/a The Mail House.   He told AMG’s clients and vendors AMG was in financial distress, and solicited his son, an AMG employee, to join him at the new corporation.  He also obtained samples of confidential client information and delayed in returning them after being demanded to do so by AMG’s counsel.  He registered an internet domain name “mailhousedm.com”.  After Keane left AMG, The Mail House was in direct competition with AMG.

AMG sued Keane charging breach of fiduciary duty and improperly appropriating a potential business opportunity (the acquisition of The Mail House) for himself.

Keane defended saying that as an employee he had no fiduciary duty to AMG and, furthermore, that he had discussed the potential acquisition with AMG’s majority stockholder but AMG had not moved forward with it.  The court ruled against Keane on both points.

The court said that it was settled Illinois law that an employee owes a duty of loyalty to his employer and prohibits an employee from taking advantage of a business opportunity that belongs to his employer, while still employed.

The court did say that an employee may plan, form and outfit a competing company while still working for his employer.  But that was as far as he can go.  He cannot commence competing with his employer.

What’s the point?  This was an easy decision for the court especially in view of the fact that Keane remained a 35% stockholder in AMG.  But the critical point was that an employee must be loyal to his employer while employed and not seize opportunities that would normally flow to his employer.  He can make preparations to leave, but cannot actively compete before doing so.

For more information and to raise any questions, please contact any of our business attorneys.

Michael Weissman

mweissman@lgattorneys.com

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An Employer Can Be Liable for Accessing an Employee’s Personal Email Even if the Employee Engaged in Misconduct

Over the last several years, communication via email and text has become commonplace in the workplace. Oftentimes, employees use one device for both personal and work-related communication regardless of whether that device is employee-owned or employer-provided. There is no doubt that employers may have legitimate business reasons for monitoring employee communications. For example, an employee may leave the company and the employer is concerned that she has taken confidential information or illegally solicited clients. Employers feel entitled to review data stored on employer-provided, particularly where employees are instructed that the company owns the devices and has the right to monitor the data.  As a general rule, the law supports employers here.  An employer’s zeal to snoop, however, may subject it to both civil and criminal penalties under both federal and state statutes.

The Electronic Communication Privacy Act (ECPA) and the Stored Communications Act (SCA) both govern an employer’s ability to review electronic communications. The ECPA prohibits the interception of electronic communications, and the term “interception” as used in the ECPA has been interpreted narrowly. The SCA makes it illegal to “access without authorization a facility through which electronic communication service is provided,” making it illegal to obtain access to certain communications in electronic storage. With regard to an employer’s review of employee emails sent through web-based email accounts like Gmail or Hotmail, the most frequent scenario is where the former employer is able to access the former employee’s web-based email account because the employee saved his username and password on a device provided by the employer. In these cases, courts have typically sided with the former employee and have been reluctant to punish the former employee for failing to take appropriate steps to secure their own personal information and allegedly private communications.  The former employee’s own negligence in securing personal data is not a defense for the employer.

Bottom line – an employer should seek advice before accessing an employee’s personal email account without authorization even though it has the ability to do so.

For more information on this topic please contact:

Howard Teplinsky at:

312-368-0100 or hteplinsky@lgattorneys.com.

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