Employment Law Update: March 2016
Date: March 4, 2016
Trying to Avoid the High Cost of Healthcare Under the Affordable Care Act by Reducing Hours Worked Might be Costly. As you probably know, employers with 50 or more full time or full time equivalent employees must offer medical coverage to their full time employees and the employees’ dependents under the Affordable Healthcare Act (ACA). A “full time employee” for purposes of the Act is one who works 30 or more hours per week. Many employers have sought to escape this burden by reducing the work week of their employees to less than 30 hours. The jury is out (literally) on this tactic but employers contemplating doing this should be aware that it is not without risk, as Dave & Buster’s recently found out.
Although the ACA does not, itself, prohibit doing this, employees of Dave and Buster’s have filed suit under section 510 of ERISA which prohibits an employer from interfering with obtaining any right available under a plan to which ERISA applies. The court has denied D&B’s motion to dismiss, which was based on the assertion that the employees would be unable to show an intention on the employer’s part to deny them health insurance. However, according to the Complaint, during meetings to explain the cut in hours, managers stated that cuts were occurring to avoid the cost of health insurance. We do not know the eventual outcome of this case and it is only one case in one district, but the takeaway for employers contemplating a reduction in hours is to have a bonafide business reason other than denying health care.
Federal Driver Privacy Act Does Not Provide Much Privacy. I remember taking a Municipal Corporations course in law school in which the professor told us that the front of a municipal bond told the bond holder what he or she was getting and the back of it took it all away; that’s my read on this statute. Congress enacted this legislation to address concerns about disclosure of information that those little black boxes, more technically Event Data Recorders (EDR), in our cars accumulate moments before and after a traffic accident. EDR’s can record whether a driver was wearing a seatbelt, how far the accelerator was depressed, driver seat position, vehicle speed and if/when brakes were applied. The Act makes clear that such information belongs to the owner or lessee of a vehicle and prohibits access to information stored in an EDR by anyone else. That’s the front side the bond.
The backside are the exceptions: (a) as authorized by a court subject to admissibility requirements; (b) pursuant to the owner or lessee’s consent; (c) to carry out an investigation under federal law; (d) if needed to render medical care after an accident; (e) for traffic safety research, but in that case no personal information of the owner or lessee can be disclosed. It is likely that, in the event of an accident, the first exception would swallow the rule as, in the civil context, court rules of discovery are likely to be found to be “court authorization” sufficient to discover the information and, in the criminal context, courts are likely to issue specific orders granting access.
Why is this law discussed in an article dealing with employment issues? Because it is clear under the Act that information captured on EDR’s on employer supplied vehicles belongs to the employer and that employees have no expectation of privacy as to the information. That notwithstanding, it is wise for employers to affirmatively advise employees that company vehicles are equipped with EDR’s. The goal is to prevent accidents, not just to have evidence of what caused one. Knowing that such information is being recorded can positively influence driving.
Businesses Need to Think Carefully Before Disclosing a Data Breach. Virtually every jurisdiction requires notice of a data breach involving personal identifiable information. Notice is often required to be given, not only to affected individuals, but also to law enforcement. Many statutes impose significant fines for a failure to make timely report. For this reason, victims of data breaches will typically rush to make a disclosure, often times voluntarily making a public announcement in order to get ahead of the publicity curve.
A recent survey finds, however, that as many as 50 percent of forensic investigations of suspected data breaches disclose that no breach actually occurred. For this reason, companies who suspect a data breach should assure themselves of a need to make disclosure before doing so. The findings suggest that more and more cyber-attacks install “ransomware” where the objective is not to steal information but to hold it hostage in exchange for a ransom demanded by encrypting it so that its rightful owner cannot access or use it. Before making required and public disclosures, companies who suspect a data breach should conduct a forensic examination to be certain that data has actually exfiltrated from the computer system to a third party. If no information has left the computer there is no duty to disclose. Because notification, when required, often must take place in short order, Companies need to have in place in advance either in-house or standby external resources who are ready to determine quickly if a breach has actually occurred.
Employee Class Action Waivers Still Being Challenged by NLRB. Many employers in the non-union setting require employees to sign employment agreements that prevent them from bringing class or collective actions against the employer for anything arising out of the employment or its termination and to submit all claims to binding arbitration. The NLRB has held that such contracts violate employee rights under the National Labor Relations Act to engage in concerted activity. Notwithstanding that the Fifth Circuit has twice reversed NLRB holdings to this effect, the Board held in Amex Card Service Co. No. 28-CA-123865 that Amex engaged in an unfair labor practice by requiring its employees to sign an employment agreement that requires arbitration of all employment disputes.
Amex arises in the Ninth Circuit which suggests that the Board is seeking to establish a split among the circuits and see a review by the Supreme Court of the United States. For now, employers who wish to have such contracts stand on pretty firm ground. A note of caution, however: the NLRA is not the only law that comes into play here. Employers need to draft such clauses with care so as to not violate employee rights under various discrimination statutes. This is particularly important when Employers are entering into Severance Agreements at the time of employment termination. Poorly drafted language can result in the Employer not being able to enjoy the release for which it has paid.
For questions, comments or additional information, please contact Robert Small, Partner in our Employment Practice Group, at email@example.com or via phone at 215.495.6541.