By: Richard T. Kennedy, Esquire rtk@muslaw.com
Background
Under COBRA, most group health plans are required to provide a qualified beneficiary (employee, spouse or dependent) with an opportunity to continue health coverage when a qualifying event would result in the loss of coverage. Qualified beneficiaries have been required to pay the full cost of COBRA coverage.
Beginning generally March 1, 2009, a temporary subsidy is available for COBRA coverage provided because of an involuntary termination of employment from September 1, 2008 through December 31, 2009, but excluding high income individuals. Under the subsidy, an eligible individual pays 35% of the COBRA premium. The employer (in most cases) pays the remaining 65% and is reimbursed by the government for this cost by a payroll tax credit.
The Internal Revenue Service (IRS) has issued guidance in Notice 2009-27, available at www.irs.gov. The Department of Labor (DOL) has issued model notices and guidance, available at www.dol.gov/ebsa/COBRA.html. This update highlights certain key guidance.
Eligibility
The COBRA premium subsidy is available only if the loss of health coverage is due to an involuntary termination of employment. This is generally defined as a severance of employment by the employer, other than at the request of the employee, where the employee is willing and capable of performing services. This seemingly simple definition is subject to much additional guidance in the IRS Notice.
Both the involuntary termination of employment and the loss of coverage must occur during the September 1, 2008 through December 31, 2009 period. Extended health coverage provided by an employer after a termination of employment and continuing after December 31, 2009 may disqualify an individual for the subsidy, depending upon how the coverage is characterized for COBRA purposes.
A spouse or dependent not covered by a group health plan at an employee's termination of employment is not a qualified beneficiary, and if added later to the COBRA coverage, will not be eligible for the subsidy (except for a child born to or placed for adoption with the employee during COBRA coverage).
Amount of Reduced COBRA Premium and Credit
The reduced 35% COBRA premium and the 65% payroll tax credit are based on the COBRA premium otherwise payable. If an employer pays part or all of the COBRA premium, the employer cannot take full advantage of the available payroll tax credit. The employer may increase the COBRA premium in such case and receive a payroll tax credit based on the increased premium. The employer may reimburse the employee for the increased cost by a separate taxable payment.
End of Subsidy
The COBRA premium subsidy is available for 9 months. It will end earlier if the individual becomes eligible for other group health plan coverage or Medicare coverage, even if the individual does not enroll. The individual is not considered to be eligible for other coverage during any waiting period.
The death of an involuntarily terminated employee does not terminate the eligibility of a spouse or dependent child for the subsidy.
Second COBRA Election
A second COBRA election must be given if health coverage is lost due to an involuntary termination of employment from September 1, 2008 through February 17, 2009 and no election of COBRA coverage is in effect on February 17, 2009. A 60-day election period must be provided. If elected, the coverage is generally effective March 1, 2009, but will not extend the otherwise applicable 18-month period.
DOL Model Notices
Notices explaining the premium subsidy and (if applicable) the second COBRA election must be provided to qualified beneficiaries who lost or lose health coverage from September 1, 2008 through December 31, 2009. The DOL has issued model election notices with election and notification forms.
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This update is intended to provide information of general interest to the public and is not intended to offer legal advice. It may be reproduced with the prior permission of Meyer, Unkovic & Scott and acknowledgement of its source and copyright.
Thursday, June 11, 2009
Thursday, April 16, 2009
Nix Boss-Employee Dating
By: Elaina Smiley, Esquire es@muslaw.com
Recent studies show that many people meet their significant other in the workplace. But if the dating relationship is between a supervisor and a subordinate, it can be a source of problems in the workplace.
Some thorny issues arise when a supervisor is romantically involved with someone who works for him or her, including:
Recent studies show that many people meet their significant other in the workplace. But if the dating relationship is between a supervisor and a subordinate, it can be a source of problems in the workplace.
Some thorny issues arise when a supervisor is romantically involved with someone who works for him or her, including:
- The reaction of other employees. Other employees may suspect favoritism or resent any advancement the supervisor gives to the “favored” subordinate, even if it was legitimately earned. These feelings could blossom into race, age, gender or other discrimination claims, which could prove costly to the company.
- Interference with the supervisor’s ability to manage. A supervisor may feel unable to give a frank performance appraisal to a subordinate with whom he or she is or has ever been personally involved. A supervisor may share confidential or proprietary information about the company with the subordinate.
- The fallout when the relationship turns sour. The end of the relationship often puts the supervisor and the company in a no-win situation. For instance, many sexual harassment claims are filed when a relationship ends. Furthermore, the parties involved in the relationship may engage in personal arguments and confrontations in the workplace. A former boyfriend or girlfriend may interpret any subsequent negative action taken against them as retaliatory, which could lead to a claim of discrimination or harassment.
An employer has the right to set a policy that prohibits dating between coworkers, but in this day and age, it may feel reluctant to do so. At the very least, however, employers would be wise to prohibit dating between supervisors and subordinates and remind all employees that professional conduct will be required at all times within the workplace.
EMPLOYMENT AGENCIES AND EMPLOYEE CONFIDENTIALITY POLICIES
By: Jane Lewis Volk, Esquire jlv@muslaw.com
A federal appeals court recently affirmed an order of the National Labor Relations Board granting reinstatement and back pay to an employee of a temporary employment agency who had been discharged pursuant to an employee confidentiality agreement which was held to be unlawful under the National Labor Relations Act (“NLRA”). (Northeastern Land Service v. NLRB, U.S. Court of Appeals for the First Circuit, decided March 13, 2009.)
The agency required their employees to sign an employment agreement containing a confidentiality clause prohibiting them from disclosing the terms of their employment to “other parties.” In this case, the employee had complained about his wages to the company where he was assigned (the client of the employment agency). He was fired for violation of the confidentiality clause.
The NLRA protects employees’ rights to freely discuss the terms and conditions of their employment among themselves (yes, even in non-union settings). This disclosure was not to a fellow employee as anticipated by the NLRA, but to the client. However, the NLRB and the court of appeals reasoned that the confidentiality agreement would chill those free discussion rights and thus was an unlawful agreement. Any firing under that policy was therefore violative of the NLRA.
While you undoubtedly do not want the individuals whom you place with your clients to be complaining in their workplaces about the terms of their employment, making them sign such a confidentiality agreement is not the way to go. The other important message from this decision is a reminder that the NLRA applies to non-union employers, contrary to conventional wisdom (which is so often wrong).
A federal appeals court recently affirmed an order of the National Labor Relations Board granting reinstatement and back pay to an employee of a temporary employment agency who had been discharged pursuant to an employee confidentiality agreement which was held to be unlawful under the National Labor Relations Act (“NLRA”). (Northeastern Land Service v. NLRB, U.S. Court of Appeals for the First Circuit, decided March 13, 2009.)
The agency required their employees to sign an employment agreement containing a confidentiality clause prohibiting them from disclosing the terms of their employment to “other parties.” In this case, the employee had complained about his wages to the company where he was assigned (the client of the employment agency). He was fired for violation of the confidentiality clause.
The NLRA protects employees’ rights to freely discuss the terms and conditions of their employment among themselves (yes, even in non-union settings). This disclosure was not to a fellow employee as anticipated by the NLRA, but to the client. However, the NLRB and the court of appeals reasoned that the confidentiality agreement would chill those free discussion rights and thus was an unlawful agreement. Any firing under that policy was therefore violative of the NLRA.
While you undoubtedly do not want the individuals whom you place with your clients to be complaining in their workplaces about the terms of their employment, making them sign such a confidentiality agreement is not the way to go. The other important message from this decision is a reminder that the NLRA applies to non-union employers, contrary to conventional wisdom (which is so often wrong).
Employers Not Covered by FMLA May be Obligated to Follow FMLA Based on Handbook Provisions
By: Elaina Smiley, Esquire es@muslaw.com
Does your company have a Family and Medical Leave Act (“FMLA”) policy when you do not have 50 or more employees? If you do, you may be at risk for giving your employees rights under FMLA that your company would not otherwise be obligated to follow. Typically, FMLA applies only to employers who employ at least 50 employees within a 75 mile radius. An employee can be eligible for FMLA if he or she has worked for a Company for a total of 12 months and for at least 1,250 hours in the previous 12 months.
In a recent decision issued on March 10, 2009, Reaux v. Infohealth Management filed in the Northern District of Illinois, the Court denied an employer’s motion to dismiss an employee’s FMLA claim because of promises that were made to its employees in a handbook. In the case, both parties admitted that the employer did not have 50 or more employees in a 75 mile radius. However, the Plaintiff argued that the employer was estopped from denying her FMLA leave based on provisions contained in the handbook. The handbook contained a FMLA policy that defined "eligible employees" as those having worked for the company for at least 12 months and 1,250 hours during the 12 months preceding the leave. The policy promised that eligible employees "shall be entitled" to FMLA leave for the birth of a child. In addition, the employee’s supervisor told her that she would be “entitled” to leave if she filled out the FMLA paperwork. The employee completed the necessary paperwork, took leave for the birth of her child and was fired a few days prior to the expiration of her 12 weeks of approved leave. The policy did not contain a provision that stated that FMLA coverage was only applicable to those employees who worked at a location with 50 or more employees in a 75 mile radius. The court permitted the employee to proceed on her FMLA claim.
Although this case is not precedential in Pennsylvania, employers should be very cautious in how they draft their handbooks and policies. Giving employees rights under FMLA means that the company may be obligated to hold open the employee’s position for 12 weeks while the employee is on leave and be obligated to restore an employee to his or her original job, or to an equivalent job with equivalent pay, benefits, and other terms and conditions of employment. Furthermore, employers could bind themselves to other provisions of FMLA such as providing intermittent leave in accordance with the Act and providing group health plan insurance to employees on leave. Employers should review their handbooks to ensure that their policies are not creating unintended consequences and are in compliance with current changes to employment laws.
Does your company have a Family and Medical Leave Act (“FMLA”) policy when you do not have 50 or more employees? If you do, you may be at risk for giving your employees rights under FMLA that your company would not otherwise be obligated to follow. Typically, FMLA applies only to employers who employ at least 50 employees within a 75 mile radius. An employee can be eligible for FMLA if he or she has worked for a Company for a total of 12 months and for at least 1,250 hours in the previous 12 months.
In a recent decision issued on March 10, 2009, Reaux v. Infohealth Management filed in the Northern District of Illinois, the Court denied an employer’s motion to dismiss an employee’s FMLA claim because of promises that were made to its employees in a handbook. In the case, both parties admitted that the employer did not have 50 or more employees in a 75 mile radius. However, the Plaintiff argued that the employer was estopped from denying her FMLA leave based on provisions contained in the handbook. The handbook contained a FMLA policy that defined "eligible employees" as those having worked for the company for at least 12 months and 1,250 hours during the 12 months preceding the leave. The policy promised that eligible employees "shall be entitled" to FMLA leave for the birth of a child. In addition, the employee’s supervisor told her that she would be “entitled” to leave if she filled out the FMLA paperwork. The employee completed the necessary paperwork, took leave for the birth of her child and was fired a few days prior to the expiration of her 12 weeks of approved leave. The policy did not contain a provision that stated that FMLA coverage was only applicable to those employees who worked at a location with 50 or more employees in a 75 mile radius. The court permitted the employee to proceed on her FMLA claim.
Although this case is not precedential in Pennsylvania, employers should be very cautious in how they draft their handbooks and policies. Giving employees rights under FMLA means that the company may be obligated to hold open the employee’s position for 12 weeks while the employee is on leave and be obligated to restore an employee to his or her original job, or to an equivalent job with equivalent pay, benefits, and other terms and conditions of employment. Furthermore, employers could bind themselves to other provisions of FMLA such as providing intermittent leave in accordance with the Act and providing group health plan insurance to employees on leave. Employers should review their handbooks to ensure that their policies are not creating unintended consequences and are in compliance with current changes to employment laws.
Wednesday, March 25, 2009
Stimulus Law Provides Cobra Subsidy
By: Richard T. Kennedy, Esquire - rtk@muslaw.com
The American Recovery and Reinvestment Act of 2009 was signed into law on February 17, 2009. Among other things, the Act provides a subsidy for COBRA premiums. The subsidy generally takes effect on March 1, 2009 and requires immediate action by employers and COBRA administrators. Some key points follow.
Subsidy
The subsidy is a 65% reduction in the amount of the premium an eligible individual is required to pay for up to 9 months of COBRA continuation coverage. An eligible individual will pay 35% of the COBRA premium to the employer, health plan or insurer. The employer, health plan or insurer pays the remaining 65% of the COBRA premium and is reimbursed in the form of a credit against the payroll taxes (income tax withholding and FICA taxes) the employer, health plan or insurer is required to pay to the Treasury Department.
Eligible Individuals
An eligible individual is an employee whose employment involuntarily terminates from September 1, 2008 through December 31, 2009 with eligibility for COBRA coverage along with that employee's spouse and dependents eligible for COBRA coverage. Under a means test, an individual with adjusted gross income of more than $145,000 ($290,000 for joint filers) is not eligible for the subsidy, and an individual with adjusted gross income between $125,000 and $145,000 ($250,000 to $290,000 for joint filers) is eligible for a reduced subsidy. An individual is permitted to permanently waive the subsidy.
Second Election
An eligible individual whose employment involuntarily terminated on or after September 1, 2008 and before February 17, 2009 and who declined to elect COBRA coverage is required to be provided with another COBRA election. Any COBRA coverage elected will be effective with the first coverage period after February 17, 2009, which typically would be March 1, 2009. This election would not extend the total period of otherwise available COBRA coverage.
New Notice Requirements
Notices explaining the new subsidy provisions and other COBRA provisions in the Act will have to be provided to qualified beneficiaries who lose coverage on or after September 1, 2008 and before 2010. Individuals who became entitled to elect COBRA coverage before the February 17, 2009 enactment date must be provided with new notices within 60 days of the enactment date. The Department of Labor has been directed to issue a model notice within 30 days of the enactment date.
Quick Action
- The Act provides little time for implementation. Employers and health plans should consider the following steps:
- Developing the procedures to identify eligible individuals whose COBRA qualifying event was an involuntary termination of employment.
- Identifying COBRA qualified beneficiaries who lost coverage from and after September 1, 2008 so that they may be properly notified of the new COBRA provisions.
- Working with COBRA administrators/vendors to review capabilities and modify existing COBRA notices and procedures and with payroll administrators/vendors to develop reporting and reimbursement mechanisms.
- Reviewing existing documents and plan descriptions for necessary revisions.
Please contact Richard T. Kennedy at (412) 456-2880 or rtk@muslaw.com for additional information.
This Meyer, Unkovic & Scott update is intended to provide information of general interest to the public and is not intended to offer legal advice. Meyer, Unkovic & Scott does not intend to create an attorney-client relationship by providing this information. Readers should consult with counsel before acting upon this information.
Two Recent Laws Relating to Employee Health Care: The New Mental Health Parity Act and Michelle’s Law
By: Antoinette C. Oliver, Esquire aco@muslaw.com and Quinn A. Johnson, Esquire qaj@muslaw.com
Employers should be aware of two recently enacted federal laws which relate to to employee health care. First, the new federal Mental Health Parity Act (the “Act”) was passed by Congress as part of the economic bail-out plan on October 3, 2008. The law seeks to bring parity to insurance coverage for treatment of mental health and mental illness (including substance abuse), as compared to that of physical aliments. The Act applies only to those enrolled in a group health plan of 50 of more employees that already provides benefits for both physical and mental health disorders. Under the new law, such insurance plans are prohibited from providing different deductibles, copayments, or limiting frequency of treatment and days of coverage for mental health care, as compared to physical ailment care. Mental health or substance use benefit coverage is not required, but if such coverage is offered it must be provided at parity. For most employers affected by the Act, the new law took effect on January 1, 2009.
Second, Congress has finally closed a health insurance loophole on whether dependent college students can lose medical coverage for taking time off from school for medical reasons. While most employee health plans only cover dependents over age 18 if they are full-time students (and under a certain age), a new federal law will protect dependent college students from losing their health insurance in the event of serious medical illness. “Michelle’s Law,” signed by President Bush on October 9, 2008, amends the Employee Retirement Income Security Act of 1974, the Public Health Service Act and the Internal Revenue Code of 1986 to allow full-time college students to take a year of medical leave without the risk of losing their insurance. The law will become effective in October 2009. The law does not compel insurance companies to cover any new individuals, but prevents them from dropping coverage under these circumstances.
Second, Congress has finally closed a health insurance loophole on whether dependent college students can lose medical coverage for taking time off from school for medical reasons. While most employee health plans only cover dependents over age 18 if they are full-time students (and under a certain age), a new federal law will protect dependent college students from losing their health insurance in the event of serious medical illness. “Michelle’s Law,” signed by President Bush on October 9, 2008, amends the Employee Retirement Income Security Act of 1974, the Public Health Service Act and the Internal Revenue Code of 1986 to allow full-time college students to take a year of medical leave without the risk of losing their insurance. The law will become effective in October 2009. The law does not compel insurance companies to cover any new individuals, but prevents them from dropping coverage under these circumstances.
Common Mistakes To Avoid in Layoffs and Terminations
By: Elaina Smiley, Esquire es@muslaw.com
In these tough economic times, many employers are looking for methods to cut costs to keep their businesses viable. Unfortunately, cost cutting often involves terminating or laying off workers. A business that is considering reducing its workforce needs to take preventative measures to reduce liability. Employers should avoid the following pitfalls when performing layoffs:
1. Not Analyzing the Demographics of Employees Selected.
During layoffs, employers must consider the impact that the reduction will have on employees in protected classifications such as age (40 and over), gender, race, color, religion, national origin, disability or other protected classification. For example, an employer selects a female age 55 with 15 years of service for termination but retains a white male age 25 with two years of service in the same position. Without good documentation of performance issues for the female selected, she may have a claim against the company for age and gender discrimination.
2. Not Being Truthful With Employees About the Reasons for Selection.
Employers must be honest with employees regarding the reasons for termination. If an employee is selected because he/she has performance issues, the company should tell the employee about the issues. Often those making the termination decisions want to spare the employee any hard feelings and do not address the performance problems as the reason for termination. This approach can harm the company if the employee files a claim. A good defense to a discrimination claim is that the decision to terminate the employee was not based on a protected classification, but rather was based on the employee’s poor performance. If the company does not tell the employee about the performance issues then the company may be viewed as not being truthful and this undercuts the company’s defense.
3. Offering Severance Payments Without Getting a Release of Claims.
Another mistake that companies often make is to offer severance payments without getting a release of claims. If a company is terminating an employee and pays money for which the employee is not otherwise entitled, it is wise to get a proper release of claims when the employee is in a protected classification or may have claim against the company. Securing a release in exchange for a monetary payment will reduce the potential for future claims.
4. Failing to Give the Statutorily Required Time Periods for Consideration and Revocation of Releases.
Employers who offer severance to employees in exchange for a release of claims must adhere to all employment laws in order to properly secure a release of claims. For example, under the Age Discrimination in Employment Act, in order to properly release an age discrimination claim, the release must give the employee 21 days to review the agreement and 7 days to revoke the agreement after the employee signs. In other situations where there are multiple layoffs with a severance payment, the release must provide the employee 45 days to review the agreement with 7 days to revoke after signing. Furthermore, when an company has multiple layoffs involving a release agreement, the employer must provide employees a list of the job titles and ages of all individuals selected for termination and the ages of all individuals in the same job classification or organizational unit who are not selected.
5. Not Properly Paying Out Wages Upon Termination
Finally, when employees are terminated, the employer must pay out all wages, vacation pay and commissions that are considered earned. Failure to properly pay earned wages can result in a claim under Pennsylvania Wage Payment and Collection Law and other employment laws.
Please contact Elaina A. Smiley at (412) 456-2821 or es@muslaw.com for additional information.
1. Not Analyzing the Demographics of Employees Selected.
During layoffs, employers must consider the impact that the reduction will have on employees in protected classifications such as age (40 and over), gender, race, color, religion, national origin, disability or other protected classification. For example, an employer selects a female age 55 with 15 years of service for termination but retains a white male age 25 with two years of service in the same position. Without good documentation of performance issues for the female selected, she may have a claim against the company for age and gender discrimination.
2. Not Being Truthful With Employees About the Reasons for Selection.
Employers must be honest with employees regarding the reasons for termination. If an employee is selected because he/she has performance issues, the company should tell the employee about the issues. Often those making the termination decisions want to spare the employee any hard feelings and do not address the performance problems as the reason for termination. This approach can harm the company if the employee files a claim. A good defense to a discrimination claim is that the decision to terminate the employee was not based on a protected classification, but rather was based on the employee’s poor performance. If the company does not tell the employee about the performance issues then the company may be viewed as not being truthful and this undercuts the company’s defense.
3. Offering Severance Payments Without Getting a Release of Claims.
Another mistake that companies often make is to offer severance payments without getting a release of claims. If a company is terminating an employee and pays money for which the employee is not otherwise entitled, it is wise to get a proper release of claims when the employee is in a protected classification or may have claim against the company. Securing a release in exchange for a monetary payment will reduce the potential for future claims.
4. Failing to Give the Statutorily Required Time Periods for Consideration and Revocation of Releases.
Employers who offer severance to employees in exchange for a release of claims must adhere to all employment laws in order to properly secure a release of claims. For example, under the Age Discrimination in Employment Act, in order to properly release an age discrimination claim, the release must give the employee 21 days to review the agreement and 7 days to revoke the agreement after the employee signs. In other situations where there are multiple layoffs with a severance payment, the release must provide the employee 45 days to review the agreement with 7 days to revoke after signing. Furthermore, when an company has multiple layoffs involving a release agreement, the employer must provide employees a list of the job titles and ages of all individuals selected for termination and the ages of all individuals in the same job classification or organizational unit who are not selected.
5. Not Properly Paying Out Wages Upon Termination
Finally, when employees are terminated, the employer must pay out all wages, vacation pay and commissions that are considered earned. Failure to properly pay earned wages can result in a claim under Pennsylvania Wage Payment and Collection Law and other employment laws.
Please contact Elaina A. Smiley at (412) 456-2821 or es@muslaw.com for additional information.
This Meyer, Unkovic & Scott update is intended to provide information of general interest to the public and is not intended to offer legal advice. Meyer, Unkovic & Scott does not intend to create an attorney-client relationship by providing this information. Readers should consult with counsel before acting upon this information.
Monday, February 2, 2009
LaRue v. DeWolff, Boberg & Associates, Inc.
By: Richard T. Kennedy, Esquire rtk@muslaw.com
James LaRue was a participant in a 401(k) Plan sponsored and administrated by DeWolff, Boberg & Associates, Inc. The DeWolff 401(k) Plan permitted participants to direct the investment of their individual accounts by selecting from a menu of investment options.
In LaRue, the Supreme Court considered LaRue’s claim that DeWolff breached its fiduciary duties under ERISA when it failed to implement LaRue’s investment directions under the 401(k) Plan. LaRue claimed that this breach caused his individual account under the 401(k) Plan to be “depleted” by $150,000.
In a unanimous decision issued on February 20, 2008, the Supreme Court reversed the Fourth Circuit and held that ERISA authorizes an individual participant in a defined contribution plan to bring an ERISA action in federal court for “recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account.”
By giving a “green light” to an ERISA breach of fiduciary claim for losses in an individual account under a defined contribution plan, LaRue may result in an increased number of lawsuits against defined contribution plans and their fiduciaries. However, a number of litigation issues remain, including whether there is a requirement for a participant to exhaust administrative remedies before proceeding to court and the extent to which a deferential standard of review may apply to a fiduciary’s decision in a court proceeding.
While the courts address these issues, there are precautionary steps that plan fiduciaries can take to minimize the potential liability presented by LaRue. The plan's administrative procedures and potential for administrative errors affecting the participant's account values should be reviewed. This should include the procedures for implementing a participant’s investment directions, and the related terms in the service provider agreements. Also, for investment liability generally, the plan's investment policy statement and the procedures for selecting and monitoring investment options should be reviewed, along with the plan’s compliance with ERISA § 404(c) providing limited fiduciary relief for participant-directed investments and investments in the default investment fund. Fiduciary insurance should be reviewed to confirm coverage for litigation costs.
James LaRue was a participant in a 401(k) Plan sponsored and administrated by DeWolff, Boberg & Associates, Inc. The DeWolff 401(k) Plan permitted participants to direct the investment of their individual accounts by selecting from a menu of investment options.
In LaRue, the Supreme Court considered LaRue’s claim that DeWolff breached its fiduciary duties under ERISA when it failed to implement LaRue’s investment directions under the 401(k) Plan. LaRue claimed that this breach caused his individual account under the 401(k) Plan to be “depleted” by $150,000.
In a unanimous decision issued on February 20, 2008, the Supreme Court reversed the Fourth Circuit and held that ERISA authorizes an individual participant in a defined contribution plan to bring an ERISA action in federal court for “recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account.”
By giving a “green light” to an ERISA breach of fiduciary claim for losses in an individual account under a defined contribution plan, LaRue may result in an increased number of lawsuits against defined contribution plans and their fiduciaries. However, a number of litigation issues remain, including whether there is a requirement for a participant to exhaust administrative remedies before proceeding to court and the extent to which a deferential standard of review may apply to a fiduciary’s decision in a court proceeding.
While the courts address these issues, there are precautionary steps that plan fiduciaries can take to minimize the potential liability presented by LaRue. The plan's administrative procedures and potential for administrative errors affecting the participant's account values should be reviewed. This should include the procedures for implementing a participant’s investment directions, and the related terms in the service provider agreements. Also, for investment liability generally, the plan's investment policy statement and the procedures for selecting and monitoring investment options should be reviewed, along with the plan’s compliance with ERISA § 404(c) providing limited fiduciary relief for participant-directed investments and investments in the default investment fund. Fiduciary insurance should be reviewed to confirm coverage for litigation costs.
Wednesday, January 28, 2009
FMLA Eligibility Changes
By: Jane Lewis Volk, Esquire jlv@muslaw.com
A recent case in a Pennsylvania federal district court should remind employers that even employees who don't meet the eligibility requirements for leave under the Family and Medical Leave Act are still eligible for protection under that law.
The Act entitles employees with a minimum of 12 months on the job to take unpaid leave of up to 12 weeks for the care of a newborn or adopted child or an immediate family member with a serious health condition, or for the employee's own serious health condition. The Act only covers employers with more than 50 employees.
In the case in question, an employee who had been working for only 6 months informed her employer that she planned to take maternity leave in 6 months' time. Although she was not yet eligible for leave at the time of her notice, she would be eligible by the time of the requested leave.
Shortly after she announced her pregnancy, the employer fired her. She filed a lawsuit claiming that the firing was unlawful retaliation under the Act. A district court agreed that the anti-retaliation provision of the Act protects employees who give notice, as long as they will be eligible for the leave by the time it starts.
A recent case in a Pennsylvania federal district court should remind employers that even employees who don't meet the eligibility requirements for leave under the Family and Medical Leave Act are still eligible for protection under that law.
The Act entitles employees with a minimum of 12 months on the job to take unpaid leave of up to 12 weeks for the care of a newborn or adopted child or an immediate family member with a serious health condition, or for the employee's own serious health condition. The Act only covers employers with more than 50 employees.
In the case in question, an employee who had been working for only 6 months informed her employer that she planned to take maternity leave in 6 months' time. Although she was not yet eligible for leave at the time of her notice, she would be eligible by the time of the requested leave.
Shortly after she announced her pregnancy, the employer fired her. She filed a lawsuit claiming that the firing was unlawful retaliation under the Act. A district court agreed that the anti-retaliation provision of the Act protects employees who give notice, as long as they will be eligible for the leave by the time it starts.
Tuesday, January 13, 2009
FMLA News
By: Antoinette C. Oliver, Esquire aco@muslaw.com
On January 28, 2007 the Family and Medical Leave Act (FMLA) was expanded for the first time in 15 years, with the enactment of the National Defense Authorization Act.
Employees who need time off to care for a recovering family member who served in the military are eligible for up to 26 weeks, rather than the standard 12 weeks of FMLA leave within a 12 month period. A recovering service member is defined as a Member of the armed services who falls ill or is injured during active duty and, as a result, is unable to perform his or her duties. To qualify for leave, the employee must be the spouse, parent, child or nearest blood relative of the injured service member.
An employee is also qualified for leave due to “any qualifying exigency” that arises out of a family member’s service in the Armed Forces or because a family member is called to duty. A family member under this provision is limited to spouse, parent or child. Notably, the term “any qualifying exigency” is yet to be defined by the Secretary of Labor, and therefore is not yet effective. In the meantime, the Department of Labor (DOL) is encouraging employers to provide this type of leave for employees until the act is effective. Employees who take leave under “qualifying exigency” will be entitled to 12 weeks of FMLA leave.
Employers should be sure to update their handbooks in order to comply with these amendments. Because the DOL has not yet promulgated regulations for the expansion, there is little guidance to assist employers. In the meantime, employers are expected to act in good faith in complying with the new law.
On January 28, 2007 the Family and Medical Leave Act (FMLA) was expanded for the first time in 15 years, with the enactment of the National Defense Authorization Act.
Employees who need time off to care for a recovering family member who served in the military are eligible for up to 26 weeks, rather than the standard 12 weeks of FMLA leave within a 12 month period. A recovering service member is defined as a Member of the armed services who falls ill or is injured during active duty and, as a result, is unable to perform his or her duties. To qualify for leave, the employee must be the spouse, parent, child or nearest blood relative of the injured service member.
An employee is also qualified for leave due to “any qualifying exigency” that arises out of a family member’s service in the Armed Forces or because a family member is called to duty. A family member under this provision is limited to spouse, parent or child. Notably, the term “any qualifying exigency” is yet to be defined by the Secretary of Labor, and therefore is not yet effective. In the meantime, the Department of Labor (DOL) is encouraging employers to provide this type of leave for employees until the act is effective. Employees who take leave under “qualifying exigency” will be entitled to 12 weeks of FMLA leave.
Employers should be sure to update their handbooks in order to comply with these amendments. Because the DOL has not yet promulgated regulations for the expansion, there is little guidance to assist employers. In the meantime, employers are expected to act in good faith in complying with the new law.
Monday, December 29, 2008
Employee Right of Privacy in Text Messages
By: Melissa M. Hall, Esquire mmh@muslaw.com and Jane Lewis Volk, Esquire jlv@muslaw.com
In June 2008, the Ninth Circuit Court of Appeals issued a decision regarding an employee’s right of privacy in text messages. Although the decision is not binding in Pennsylvania, the case presents an interesting issue of which employers should be aware.
In Quon v. Arch Wireless Operating Co., Inc., the Court held that an employee did have a reasonable expectation of privacy in text messages sent via an employer-provided pager. The employer contracted with Arch Wireless to provide text messaging services and distributed pagers to its employees. The contract provided for a certain number of characters per pager, per month after which the employer required the employees to pay for any overages. Quon exceeded his character limit on several occasions and, as required, paid for the overage charges. The employer informed Quon that, so long as he continued to pay for any overages, his text messages would not be audited. Notably, although the employer had a “Computer Usage, Internet and E-mail Policy” in place which put employees on notice that they had no expectation of privacy in the use of those devices, the written Policy did not include the pagers. The employer did, however, verbally inform employees that the text messages sent from the pagers were considered e-mail under the Policy.
Despite the employer’s assurance that it would not review the content of text messages, the employer did audit Quon’s text messages and determined that, aside from being over the allotted number of characters, many of the messages were personal and not business related. Quon subsequently sued the employer for violations of their Fourth Amendment right to privacy. The Court held that the employees had a reasonable expectation of privacy in the content of the text messages because (1) the employer had a practice of not reviewing text messages for content and (2) text messages were not significantly different from email, which had been afforded privacy protections. However, the Court noted that the employees had no privacy interest in the address or phone number used to send the text messages.
This decision is an important reminder to employers to issue and enforce consistent policies reminding employees that, even if personal use of company communication devices is permitted, there should be no expectation of privacy.
For more information about this decision or other employee policy issues, contact Melissa M. Hall at mmh@muslaw.com or Jane Lewis Volk at jlv@muslaw.com.
In June 2008, the Ninth Circuit Court of Appeals issued a decision regarding an employee’s right of privacy in text messages. Although the decision is not binding in Pennsylvania, the case presents an interesting issue of which employers should be aware.
In Quon v. Arch Wireless Operating Co., Inc., the Court held that an employee did have a reasonable expectation of privacy in text messages sent via an employer-provided pager. The employer contracted with Arch Wireless to provide text messaging services and distributed pagers to its employees. The contract provided for a certain number of characters per pager, per month after which the employer required the employees to pay for any overages. Quon exceeded his character limit on several occasions and, as required, paid for the overage charges. The employer informed Quon that, so long as he continued to pay for any overages, his text messages would not be audited. Notably, although the employer had a “Computer Usage, Internet and E-mail Policy” in place which put employees on notice that they had no expectation of privacy in the use of those devices, the written Policy did not include the pagers. The employer did, however, verbally inform employees that the text messages sent from the pagers were considered e-mail under the Policy.
Despite the employer’s assurance that it would not review the content of text messages, the employer did audit Quon’s text messages and determined that, aside from being over the allotted number of characters, many of the messages were personal and not business related. Quon subsequently sued the employer for violations of their Fourth Amendment right to privacy. The Court held that the employees had a reasonable expectation of privacy in the content of the text messages because (1) the employer had a practice of not reviewing text messages for content and (2) text messages were not significantly different from email, which had been afforded privacy protections. However, the Court noted that the employees had no privacy interest in the address or phone number used to send the text messages.
This decision is an important reminder to employers to issue and enforce consistent policies reminding employees that, even if personal use of company communication devices is permitted, there should be no expectation of privacy.
For more information about this decision or other employee policy issues, contact Melissa M. Hall at mmh@muslaw.com or Jane Lewis Volk at jlv@muslaw.com.
Monday, November 10, 2008
Business Workshop: Part-time is optional, Cash or accrual?
By: Tony J. Thompson, Esquire tjt@muslaw.com
A federal appeals court recently confirmed that employers do not have to accommodate employees who want to return from Family and Medical Leave and switch from full-time to part-time work.
In the case in question, the employee requested and received leave from a manufacturer after suffering a nervous breakdown.
After using up her 12 weeks of FMLA leave, the employee said she still could not work full time and asked to go on a part-time schedule.
The company insisted that she could get only her full-time job back and fired her. The employee sued, alleging the company interfered with her FMLA rights and discriminated against her because of her disability.
The district court dismissed the case after the company proved that it did not have any part-time positions that were comparable to the employee's full-time work.
The appeals court agreed, stating that the FMLA does not require accommodation when the employee cannot return to the same or a comparable job.
During FMLA leave, an employer may have to provide reduced schedule leave to eligible employees.
But once employees have exhausted FMLA leave, the law does not require employers either to hold the job open or to change a full-time position into a part-time one.
The FMLA covers employers with 50 or more employees and entitles eligible employees to take unpaid leave of up to 12 weeks for the care of a newborn child or an immediate family member with a serious health condition or to take medical leave when the employee is unable to work because of a serious health condition.
A federal appeals court recently confirmed that employers do not have to accommodate employees who want to return from Family and Medical Leave and switch from full-time to part-time work.
In the case in question, the employee requested and received leave from a manufacturer after suffering a nervous breakdown.
After using up her 12 weeks of FMLA leave, the employee said she still could not work full time and asked to go on a part-time schedule.
The company insisted that she could get only her full-time job back and fired her. The employee sued, alleging the company interfered with her FMLA rights and discriminated against her because of her disability.
The district court dismissed the case after the company proved that it did not have any part-time positions that were comparable to the employee's full-time work.
The appeals court agreed, stating that the FMLA does not require accommodation when the employee cannot return to the same or a comparable job.
During FMLA leave, an employer may have to provide reduced schedule leave to eligible employees.
But once employees have exhausted FMLA leave, the law does not require employers either to hold the job open or to change a full-time position into a part-time one.
The FMLA covers employers with 50 or more employees and entitles eligible employees to take unpaid leave of up to 12 weeks for the care of a newborn child or an immediate family member with a serious health condition or to take medical leave when the employee is unable to work because of a serious health condition.
Monday, November 3, 2008
Supreme Court Declines To Make Definitive Ruling on Admissibility of “Me Too” Evidence
By: Elaina Smiley, Esquire es@muslaw.com
Often in discrimination cases, employees attempt to introduce evidence of alleged discriminatory acts against other employees to bolster their claims. The Supreme Court in Sprint v. Mendelsohn, declined to make a determinative ruling on whether or not this type of evidence is admissible. Mendelsohn was terminated by Sprint as part of an company-wide reduction in force and then sued Sprint for age discrimination. In support of her claim, Mendelsohn sought to introduce the testimony of five other former Sprint employees who claimed that their supervisors had discriminated against them because of their age. None of the five employees worked in the same group as Mendelsohn or under the same supervisors. The District Court ruled that the evidence was not admissible because the five employees were not similarly situated to the plaintiff. The Tenth Circuit found that the District Court abused its discretion. The case was appealed to the U.S. Supreme Court which found that the question of whether evidence of discrimination by other supervisors is relevant to Mendelsohn’s age claims depends on many factors, including “how closely related the evidence is to the plaintiff’s circumstances and theory of the case.” The Supreme Court concluded that such evidence is “neither per se admissible nor per se inadmissible.” The Supreme Court remanded the case to the District Court to clarify its ruling. The Supreme Court’s decision leaves the door open for plaintiffs in all types of discrimination claims to attempt to bring in evidence of discriminatory conduct against employees who are not part of the lawsuit. This ruling leaves much discretion to the trial court in making the determination of the admissibility of “me too” evidence.
Often in discrimination cases, employees attempt to introduce evidence of alleged discriminatory acts against other employees to bolster their claims. The Supreme Court in Sprint v. Mendelsohn, declined to make a determinative ruling on whether or not this type of evidence is admissible. Mendelsohn was terminated by Sprint as part of an company-wide reduction in force and then sued Sprint for age discrimination. In support of her claim, Mendelsohn sought to introduce the testimony of five other former Sprint employees who claimed that their supervisors had discriminated against them because of their age. None of the five employees worked in the same group as Mendelsohn or under the same supervisors. The District Court ruled that the evidence was not admissible because the five employees were not similarly situated to the plaintiff. The Tenth Circuit found that the District Court abused its discretion. The case was appealed to the U.S. Supreme Court which found that the question of whether evidence of discrimination by other supervisors is relevant to Mendelsohn’s age claims depends on many factors, including “how closely related the evidence is to the plaintiff’s circumstances and theory of the case.” The Supreme Court concluded that such evidence is “neither per se admissible nor per se inadmissible.” The Supreme Court remanded the case to the District Court to clarify its ruling. The Supreme Court’s decision leaves the door open for plaintiffs in all types of discrimination claims to attempt to bring in evidence of discriminatory conduct against employees who are not part of the lawsuit. This ruling leaves much discretion to the trial court in making the determination of the admissibility of “me too” evidence.
Tuesday, October 21, 2008
Social Network Indiscretions
By: Beth A. Slagle, Esquire bas@muslaw.com
A new study of Internet social networks finds that there are 120 million profiles on the four most popular social networks.
While many are high school and college students, there are millions of employees, and offensive material or images in these profiles may hurt their employers.
It's more than the embarrassing or graphic photograph.
For example, if an employee makes discriminatory comments about another employee or posts confidential information about the company in a social network profile, the employer could be held liable for the actions, particularly if the employee posts during work hours or through the employer's computer system.
An employer's power to discipline or terminate employees for their private Internet postings is not absolute.
One way that some companies attempt to balance their legitimate business interest against an employee's right to free speech is to provide social networking guidelines in a technology policy.
The guidelines should include:
In disciplining an employee for something on a social network profiles, employers should proceed with care to make sure they are not retaliating against a whistle-blower or punishing an employee for engaging in protected activities such as union organizing.
A new study of Internet social networks finds that there are 120 million profiles on the four most popular social networks.
While many are high school and college students, there are millions of employees, and offensive material or images in these profiles may hurt their employers.
It's more than the embarrassing or graphic photograph.
For example, if an employee makes discriminatory comments about another employee or posts confidential information about the company in a social network profile, the employer could be held liable for the actions, particularly if the employee posts during work hours or through the employer's computer system.
An employer's power to discipline or terminate employees for their private Internet postings is not absolute.
One way that some companies attempt to balance their legitimate business interest against an employee's right to free speech is to provide social networking guidelines in a technology policy.
The guidelines should include:
- A disclaimer of employer responsibility for private employee profiles.
- A warning that employees making personal comments about the employer's products or services or other employees in a profile (or blog) will be subject to disciplinary action.
- A warning not to use company equipment or networks to create or update a profile, except if it is part of company business.
- A specific statement that social networkers must abide by company policies on confidential information and trade secrets.
In disciplining an employee for something on a social network profiles, employers should proceed with care to make sure they are not retaliating against a whistle-blower or punishing an employee for engaging in protected activities such as union organizing.
Monday, October 13, 2008
Prevent 401(k) Lawsuits
By: Joseph A. Vater, Jr., Esquire jav@muslaw.com
When the stock market goes down, so do 401(k) assets.
The result: employees look for someone to blame, and the fiduciaries of their 401(k) plan, which often include the employer, are the target.
While there is no way to make a company's 401(k) plan lawsuit-proof, the United States Department of Labor recommends some basic steps that companies can take to avoid liability when their employee's 401(k) assets go south:
When the stock market goes down, so do 401(k) assets.
The result: employees look for someone to blame, and the fiduciaries of their 401(k) plan, which often include the employer, are the target.
While there is no way to make a company's 401(k) plan lawsuit-proof, the United States Department of Labor recommends some basic steps that companies can take to avoid liability when their employee's 401(k) assets go south:
- Review or have a consultant review fund performances periodically and consider replacing underperforming funds.
- Offer an investment education program for employees who participate in the 401(k) plan, but make sure you follow the guidelines set forth in the Pension Protection Act so you don't inadvertently assume fiduciary responsibility for the information provided by the consultants.
- Disclose all direct and indirect fees associated with the 401(k) plan and all investment choices. Most 401(k) plans do not disclose all fees.
- Enable employees to select mutual funds from more than one fund family and make sure low-fee funds are included in the choices.
Friday, October 10, 2008
Executive Education Seminar: Privacy in the Workplace
November 13, 2008 at the Rivers Club - Pittsburgh, PA
Presented by: Douglas M. Hottle and Quinn A. Johnson
Seminar Description: Privacy in the Workplace: What Employers Need to Know About Getting, Using and Protecting Employee Information
Nearly three-quarters of major U.S. firms report that they record and review their employees’ communications and activities on the job, including their phone calls, e-mail, Internet connections and computer files. While employers have a legitimate business interest in tracking their employees’ workplace activities to protect safety, ensure productivity, and even to comply with anti-discrimination laws, employers need to avoid inappropriate and unreasonable invasions of employees’ privacy interests.
This seminar will help employers who find themselves asking:
Presented by: Douglas M. Hottle and Quinn A. Johnson
Seminar Description: Privacy in the Workplace: What Employers Need to Know About Getting, Using and Protecting Employee Information
Nearly three-quarters of major U.S. firms report that they record and review their employees’ communications and activities on the job, including their phone calls, e-mail, Internet connections and computer files. While employers have a legitimate business interest in tracking their employees’ workplace activities to protect safety, ensure productivity, and even to comply with anti-discrimination laws, employers need to avoid inappropriate and unreasonable invasions of employees’ privacy interests.
This seminar will help employers who find themselves asking:
- Can I monitor my employee’s cell phone conversations throughout the work day?
- Can I search an employee’s purse or personal belongings?
- Can I access their personal E-mail account during work hours?
- Can I censor my employee’s blog?
- Can I monitor an employee’s location throughout the day?
Congratulations to our “2009 Best Lawyers in America”
This year fourteen Meyer, Unkovic & Scott LLP attorneys have been selected for inclusion in The Best Lawyers in America, 2009 edition, published by Woodward/White. Inclusion is widely considered a significant honor because lawyers are selected on the basis of peer evaluations.
Those named include Kevin F. McKeegan, the firm’s Managing Partner, Robert Mauro, W. Grant Scott and Richard G. Kotarba all for their practice of real estate law. Kevin F. McKeegan was also recognized for his work in land use & zoning law. Richard G. Kotarba and James R. Mall were both selected for their work in construction law. Also named were Dennis Unkovic, for his international trade and finance law practice, Joel Pfeffer for his work in immigration law, Joel M. Helmrich for his practice in creditor-debtor rights, Thomas A. Berret for his work in personal injury litigation, Laura A. Candris for her labor and employment law practice, John W. Powell for his work in trusts and estates, David G. Oberdick for his work in commercial litigation and intellectual property law, Patricia L. Dodge and Russell J. Ober for their work in commercial litigation. Patricia L. Dodge was also recognized for her product liability litigation practice.
Those named include Kevin F. McKeegan, the firm’s Managing Partner, Robert Mauro, W. Grant Scott and Richard G. Kotarba all for their practice of real estate law. Kevin F. McKeegan was also recognized for his work in land use & zoning law. Richard G. Kotarba and James R. Mall were both selected for their work in construction law. Also named were Dennis Unkovic, for his international trade and finance law practice, Joel Pfeffer for his work in immigration law, Joel M. Helmrich for his practice in creditor-debtor rights, Thomas A. Berret for his work in personal injury litigation, Laura A. Candris for her labor and employment law practice, John W. Powell for his work in trusts and estates, David G. Oberdick for his work in commercial litigation and intellectual property law, Patricia L. Dodge and Russell J. Ober for their work in commercial litigation. Patricia L. Dodge was also recognized for her product liability litigation practice.
Wednesday, September 10, 2008
Independent Contractor Relationship - Seminar
Please join us on Monday, October 6, 2008 from 11:45 am - 1:30 pm for a seminar on Independent Contractor Relationships: Independent Contractors versus Employees.
Please RSVP to rsvp@muslaw.com by October 1st if you would like to attend.
Additional Seminar Information:
In today’s workplace, there is an ever-increasing trend for employers to consider filling vacancies with independent contractors as opposed to committing to a full time employee. A maze of regulations exist that may or may not make this question easy to answer.
During this roundtable our attorneys will help you answer your questions about independent contractor relationships and discuss the advantages and disadvantages to these relationships. This important roundtable will also outline the pros and cons of completing your workforce with employees and independent contractors as well as the unforeseen circumstances involving benefits for improperly classifying independent contractors.
Please RSVP to rsvp@muslaw.com by October 1st if you would like to attend.
Additional Seminar Information:
In today’s workplace, there is an ever-increasing trend for employers to consider filling vacancies with independent contractors as opposed to committing to a full time employee. A maze of regulations exist that may or may not make this question easy to answer.
During this roundtable our attorneys will help you answer your questions about independent contractor relationships and discuss the advantages and disadvantages to these relationships. This important roundtable will also outline the pros and cons of completing your workforce with employees and independent contractors as well as the unforeseen circumstances involving benefits for improperly classifying independent contractors.
Religious Discrimination Complaints Up
By: Elaina Smiley, Esquire es@muslaw.com
The number of complaints to the Equal Employment Opportunity Commission about workplace discrimination against employees because of their religion has doubled in the last 15 years. Filings complaining about religious discrimination jumped to a record 2,880 last year. On July 22, 2008, the EEOC issued a new compliance manual on religious discrimination, which offers a comprehensive review of the EEOC’s policies regarding religious discrimination, harassment and accommodation. The EEOC also offers a “Best Practices” book to assist employers.
The Civil Rights Act of 1964 prohibits employers from discriminating against individuals because of their religion in hiring, firing or conditions of employment. Employers cannot treat employees of one faith more or less fairly than other employees, nor can they force employees to participate in or not participate in any religious activity.
One of the most difficult issues for employees is the concept of “reasonable accommodation.” Employers must reasonably accommodate the sincerely held religious practices of employees unless to do so would proved to be a hardship to the employer. For example, in a recent Pennsylvania lawsuit, a federal court found that asking an employee to find her own replacement for Sunday work may not be a reasonable accommodation if the reason the employee needed to switch shifts is religious.
Employers should make sure that their anti-discrimination policies specifically define and prohibit religious discrimination and harassment and provide an effective procedure for reporting, investigating and correcting such acts. Employers should also establish policies in dealing with religious accommodation requests and train supervisors and managers on how to best handle religious issues in the workplace.
The number of complaints to the Equal Employment Opportunity Commission about workplace discrimination against employees because of their religion has doubled in the last 15 years. Filings complaining about religious discrimination jumped to a record 2,880 last year. On July 22, 2008, the EEOC issued a new compliance manual on religious discrimination, which offers a comprehensive review of the EEOC’s policies regarding religious discrimination, harassment and accommodation. The EEOC also offers a “Best Practices” book to assist employers.
The Civil Rights Act of 1964 prohibits employers from discriminating against individuals because of their religion in hiring, firing or conditions of employment. Employers cannot treat employees of one faith more or less fairly than other employees, nor can they force employees to participate in or not participate in any religious activity.
One of the most difficult issues for employees is the concept of “reasonable accommodation.” Employers must reasonably accommodate the sincerely held religious practices of employees unless to do so would proved to be a hardship to the employer. For example, in a recent Pennsylvania lawsuit, a federal court found that asking an employee to find her own replacement for Sunday work may not be a reasonable accommodation if the reason the employee needed to switch shifts is religious.
Employers should make sure that their anti-discrimination policies specifically define and prohibit religious discrimination and harassment and provide an effective procedure for reporting, investigating and correcting such acts. Employers should also establish policies in dealing with religious accommodation requests and train supervisors and managers on how to best handle religious issues in the workplace.
Tuesday, August 26, 2008
Computer Sabotage
By: Jane Lewis Volk, Esquire jlv@muslaw.com
Most employers may not know that courts began applying the Computer Fraud and Abuse Act to civil cases a few years ago.
What that means is that employers can now collect damages in court when employees cause damage to a computer system.
Employers typically file civil lawsuits under the act when employees or former employees access computer data to gain a competitive edge at their new place of business.
But the law also enables employers to get restitution for a wide scope of other damages, including for destruction of proprietary information and for knowingly downloading a program that damages computers or computer networks.
To recover damages the employer may sue in federal court, and the damages must be at least $5,000.
Possible damages include:
Most employers may not know that courts began applying the Computer Fraud and Abuse Act to civil cases a few years ago.
What that means is that employers can now collect damages in court when employees cause damage to a computer system.
Employers typically file civil lawsuits under the act when employees or former employees access computer data to gain a competitive edge at their new place of business.
But the law also enables employers to get restitution for a wide scope of other damages, including for destruction of proprietary information and for knowingly downloading a program that damages computers or computer networks.
To recover damages the employer may sue in federal court, and the damages must be at least $5,000.
Possible damages include:
- Time and resources spent to hire a computer expert
- Cost of hiring the expert to determine and remedy the damage
- Cost of hiring the expert to create a method to prevent future damage
- Loss of confidential or trade secret information.
Employers cannot include loss of revenue and good will or interference with customer relations in its calculation of damages.
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