Saturday, March 27, 2010

IF YOU BUILD IT THEY WILL COME: Tax Benefits for Employers Hiring New Employees

By Jessica Tucci

President Obama signed H.R. 2847- the Hiring Incentive to Restore Employment (HIRE) Act- into law on March 18, 2010. HIRE amends the Internal Revenue Code by providing two new tax benefits to employers hiring unemployed workers. The first tax benefit essentially exempts employers from paying their share of Social Security taxes (or 6.2%) on wages paid to newly hired employees after March 18, 2010. Employers still must pay their share of Social Security taxes from new hires and then claim the payroll tax benefit on their 2010 federal employment tax returns. The second tax benefit affords employers a general business tax credit of up to $1,000 per new employee if the employer retains the new employee for at least one year.

Tax benefits are not automatic. The employer must be a business, agricultural employer, tax-exempt organization or public college or university. Household employers do not qualify for the tax benefits. Employers must hire new employees between February 3, 2010 and January 1, 2011, and the new employee must fill a newly added position or a position that was previously occupied by an employee that voluntarily left or was terminated for cause. Finally, employers must obtain a form from the new employee attesting that he or she was unemployed for the 60 days prior to starting work or worked less than 40 hours total for a different employer during the 60 days prior to starting work. The Internal Revenue Service will post the new tax provisions and the required form in the coming weeks at www.irs.gov.

Thursday, March 25, 2010

Ohio Supreme Court Upholds Ohio's Employer Intentional Tort Statute

*By George S. Crisci

For almost three decades, the Ohio General Assembly has attempted to limit an employee’s ability to sue an employer on grounds that the employer’s intentional actions caused a workplace injury or occupational disease. The Ohio Supreme Court has struck down no fewer than three such pieces of legislation as unconstitutional since 1982. In the absence of a limiting statute, Ohio common law has allowed such “employer intentional tort” suits to proceed outside the workers’ compensation system. As a result, juries have often found employers subject to increased liability for workplace injuries based, for all practical purposes, on little more than negligence.

The General Assembly’s string of failed attempts was broken when the Ohio Supreme Court issued two companion decisions on March 23, 2010, ruling that Ohio Revised Code Section 2754.01, which limits an employee’s ability to sue an employer for an intentional tort, did not violate the Ohio Constitution.

The statute, passed in 2005, provides that an employer is immune from liability when sued by employees or their dependent survivors for an intentional injury unless the plaintiff proves that the employer acted with the “intent to injure the employee” or “with the belief that the injury was substantially certain to occur.” The statute defines the phrase “substantially certain” as meaning that “an employer acts with deliberate intent to cause an employee to suffer an injury, a disease, a condition, or death.” The statute further provides that an employer’s deliberate removal of equipment safety guards or deliberate misrepresentation of a toxic or hazardous substance creates a rebuttable presumption that these actions were committed with the intent to injure another.

In Kaminski v. Metal & Wire Products Company, 2010-Ohio-1027, the Ohio Supreme Court found that R.C. §2745.01 did not violate Sections 34 (authorizing employment workplace laws) and 35 (authorizing workers’ compensation laws) of Article II of the Ohio Constitution. Specifically, the Court held that those provisions granted the General Assembly broad authority to enact legislation and did not prohibit limitations on employer intentional torts. The Court further explained that because R.C. §2745.01 merely limits, but does not eliminate, an employee’s ability to sue an employer for intentional tort, it is constitutional.

In Stetter v. R.J. Corman Derailment Services, LLC, 2010-Ohio-1029, the Ohio Supreme Court further established the constitutional validity of R.C. §2745.01. Responding to issues referred to it by a federal court, the Ohio Supreme Court ruled that the statute does not on its face violate a number of the Ohio Constitution’s provisions including those concerning access to the courts, the right to a jury trial, and equal protection under the law. Notably, the Ohio Supreme Court explained that while R.C. §2745.01 does not eliminate the common-law cause of action for an employer intentional tort, it does significantly limit an employee’s ability to bring such an action.

Thus, for the first time in almost 30 years, the Ohio Supreme Court has denied a challenge to limits on the employer intentional tort. As a result, employers face reduced risk that an employee can successfully seek to recover for workplace injuries and/or occupational diseases outside the limits of the workers’ compensation system. Most importantly, it is now easier for employers to defend against meritless intentional tort lawsuits and the sizeable damage awards or settlements that flow from them.

If you have any questions how the unemployment benefits extension may affect your business, please contact George S. Crisci at 216.696.4441 or gsc@zrlaw.com.

*George S. Crisci is an OSBA Certified Specialist in Labor and Employment Law and has extensive experience in all aspects of workplace law. For more information about defending allegations of public policy discrimination, please contact George at 216.696.4441 or gsc@zrlaw.com.

Wednesday, March 24, 2010

Health Care Reform Legislation Passes the House and Is On Its Way to the President – What Does It Mean for Employers?

*By Patrick J. Hoban

Last night, the U.S. House of Representatives passed the “Patient Protection and Affordable Care Act” – H.R. 3590 (the “Senate Bill”) – by a vote of 219-212. The U.S. Senate passed the identical bill on December 24, 2009, and, after President Obama signs the bill, it will become law. Supporters claim that the bill’s combination of taxes, regulations, and health insurance subsidies will result in “comprehensive” reform of health care in the United States. Opponents counter that the bill’s provisions are too costly and that its regulations will only serve to drive up the cost of health care and reduce access.

Among the Senate Bill’s many terms are provisions requiring employers employing more than 50 employees to pay an “assessment” to the federal government when one of its full-time employees is eligible for government health care subsidies based upon their compensation as a percentage of the Federal Poverty Limit. The Senate Bill defines “Full-Time” as any employee who works at least an average of 30 hours per week as determined by regulations to be issued by the Secretary of Health and Human Services in consultation with the Secretary of Labor. The Senate Bill also includes the following provisions which take effect on January 1, 2014:
  • Employers who do not offer health care coverage meeting federal minimal essential coverage standards are required to pay the federal government a flat dollar amount per full-time employee;

  • Employers who do offer health care coverage meeting federal minimal essential coverage standards are required to pay either $3,000.00 per subsidy-eligible employee or a flat dollar amount per each full-time employee, which ever is less;

  • Employers who impose a waiting period before employees can enroll in employer provided health coverage are required to pay $400.00 per employee for 30-60 day waiting periods and $600.00 per employee for 60-90 day waiting periods;

  • Employers who provide health care coverage meeting federal minimal essential coverage standards to their employees must provide a voucher equal to the employer’s cost of providing such coverage to employees whose income is less than 400% of the Federal Poverty Limit (e.g., $88,050.00 for a family of four) if the employee’s share of health insurance premiums is between 8% and 9.8% of their income and the employee chooses insurance coverage through a federal health insurance exchange.

  • Employers must automatically enroll all employees for health care coverage, but employees may opt out of coverage.
In addition to the foregoing provisions, the Senate Bill also provides small employers with tax credits for offering their employees health care coverage. In tax years 2010-2013, employers with fewer than 25 employees and average annual wages of less than $50,000.00 may take a tax credit of up to 35% of employee health premiums if the employer pays at least 50% of the premium for minimal essential coverage. Additionally, until January 1, 2014, the federal government will reimburse employers who provide health insurance coverage for retirees over the age of 55 years but not Medicare-eligible for up to 80% of retiree health insurance claims up to $90,000.00. Reports indicate the President will sign the Senate Bill today or tomorrow.

Importantly, in addition to passing the Senate Bill, last night, the House also passed the “White House/Congressional Leadership Reconciliation Bill Health Care and Education Affordability Act of 2010” – H.R. 4872 (the “Reconciliation Bill”) by a vote of 220-211. The Reconciliation Bill contains a series of amendments to the Senate Bill and will have to get through the reconciliation process with at least 51 votes (as President of the Senate, Vice President Joe Biden can break any ties) and be signed by the President before becoming law. Importantly, the Reconciliation Bill changes some of the employer-specific provisions contained in the Senate Bill. The Senate is expected to take up the Reconciliation Bill this week.

In addition to the President’s signature, full implementation of the Senate Bill will require regulatory guidance from the Internal Revenue Service, the Department of Health and Human Services, and the Department of Labor. However, all employers should consult with their health insurance brokers, tax advisers, and review collective bargaining agreements to develop a strategy that allows them to best adapt to the drastically changed national health insurance landscape.

*Patrick J. Hoban, practices in all areas of labor and employment law, with a focus on private and public sector labor law. If you have any questions about the effect of recent health care legislation on employers, contact Pat Hoban at pjh@zrlaw.com or 216.696.4441.

Wednesday, March 10, 2010

President Obama Signs H.R. 4691 Extending Unemployment and ARRA COBRA Subsidy Benefits Through March 31, 2010

*By Patrick J. Hoban

On March 2, 2010, President Obama signed H.R. 4691 – the “Temporary Extension Act of 2010” (the “Act”) into law. The Bill, which became Public Law 111-144, provides short-term extensions of several authorities, including those related to: (1) unemployment compensation; (2) ARRA COBRA premium subsidies; (3) Medicare physician payments; (4) Medicare therapy caps; (5) surface transportation programs; (6) flood insurance programs; (7) retransmission of television broadcasts; (8) Federal poverty guidelines; and (9) Small Business Administration loan guarantees.

In addition to extending the ARRA COBRA premium subsidies to individuals who become eligible through March 31, 2010, the Act clarifies the eligibility of individuals who lose group health insurance coverage due to the reduction in hours of an employee. The Act specifies that the loss of group coverage due to a reduction in hours only triggers eligibility for COBRA continuation coverage but not the ARRA COBRA subsidy. However, an individual who loses group coverage due to a reduction in hours and is later involuntarily terminated is entitled to elect ARRA COBRA coverage at the time of his or her involuntary termination.

Importantly, per the “clarification” set forth in the Act and as confirmed by the Employee Benefits Security Administration (“EBSA”), the total period for COBRA continuation coverage eligibility (with or without the ARRA premium subsidy) initially extends for 18 months from the triggering event (i.e., loss of group coverage due to an hours reduction or termination of employment). Currently, the ARRA COBRA premium subsidy extends for 15 months from the date of involuntary termination. However, EBSA has confirmed that the ARRA COBRA premium subsidy does not extend the period of COBRA continuation entitlement. Thus, when a covered individual loses group coverage due to a reduction in hours, the clock starts ticking on his or her COBRA continuation eligibility. If that employee is later involuntarily terminated, he or she will be entitled to elect the ARRA COBRA premium subsidy but that election will not extend the period of COBRA continuation coverage to which he or she is entitled.

Although the Act only extended the ARRA COBRA premium subsidy to eligible individuals through March 31, 2010, there are currently two bills pending in the U.S. Congress that would extend the premium subsidies through June 30, 2010. Employers should expect Congress to take further action on COBRA within the month.

*Patrick J. Hoban, practices in all areas of labor and employment law, with a focus on private and public sector labor law. If you have any questions about this legislation or other ARRA COBRA or COBRA issues, contact Pat Hoban at pjh@zrlaw.com or 216.696.4441.

Thursday, March 4, 2010

U.S. Senate Passes Extension of ARRA COBRA Subsidy and Unemployment Benefits Through March 31, 2010

*By Patrick J. Hoban

On November 6, 2009, President Obama signed into law the Worker, Homeownership, and Business Assistance Act of 2009, which extended unemployment insurance benefits by 14 weeks in all states and 20 weeks in states experiencing higher average rates of unemployment (8.5% over a three-month period).

Then, on December 19, 2009, President Obama signed into law the 2010 Defense Department Appropriations Act (“DDAA”). The DDAA extended COBRA subsidies created by the American Reinvestment and Recovery Act (“ARRA”) and extended the COBRA subsidy eligibility period from December 31, 2009 to February 28, 2010 for individuals who involuntarily lost their employment and group health insurance coverage after September 1, 2008. DDAA also expanded the period of the COBRA subsidy from 9 to 15 months and required administrators of covered group health insurance plans to provide notice of extended COBRA benefits.

On March 2, 2010, the U.S. Senate passed H.R. 4691 which extends the ARRA COBRA subsidy through March 31, 2010. The U.S. House passed the bill on February 25, 2010 by unanimous voice vote but its passage in the Senate was delayed by questions over how the Congress would pay its $10 Billion cost. With the withdrawal of a procedural challenge by Kentucky Senator Jim Bunning in exchange for an agreement to vote on a separate measure to fund the bill, the Senate passed the H.R. 4691 without amendment by a vote of 78 to 19. Once signed by the President, the bill will become law.

In addition to extending the ARRA COBRA subsidy through March 31, 2010, H.R. 4691 clarifies entitlement to the subsidy for employees who become eligible for COBRA due to a loss of group health coverage resulting from a reduction in hours of work. Group plan sponsors must notify employees whose reduction in work hours entitles them to COBRA benefits and they will have 60 days to elect COBRA coverage. The bill further provides that employees eligible due to a reduction in hours who are later involuntarily terminated are entitled to a second notice of COBRA eligibility and 60-day election period. Notably, H.R. 4691 states that such an employee’s 15-month period of ARRA COBRA subsidy entitlement runs from the commencement of the initial eligibility created by the reduction in hours. Specific H.R. 4691 compliance assistance for employers will be forthcoming from the Employee Benefits Security Administration after it becomes law and will be available at http://www.dol.gov/ebsa/COBRA.html.

H.R. 4691 also extends unemployment benefits by an additional 13 weeks in states experiencing higher average rates of unemployment, – the fourth such extension since the beginning of the recession in December 2007 – continues funding to employ approximately 2,000 Department of Transportation employees, and delays a scheduled 21% reduction in Federal Government Medicare payments to physicians.

Although the current ARRA COBRA subsidy extension will expire on April 1, 2010, Z&R has previously that there are currently two separate bills before Congress - S2730 and H.R. 2847 - which would extend the subsidy through June 30, 2010.

*Patrick J. Hoban, practices in all areas of labor and employment law, with a focus on private and public sector labor law. If you have any questions about this legislation or other ARRA COBRA or COBRA issues, contact Pat Hoban at pjh@zrlaw.com or 216.696.4441.

Wednesday, December 30, 2009

U.S. Congress About To Pass Extension of ARRA COBRA Subsidy

*By Patrick J. Hoban

On December 19, 2010, the U.S. Senate accepted amendments to H.R. 3326 – the 2010 Defense Department Appropriations Act – which contains provisions extending the COBRA subsidies created by the American Reinvestment and Recovery Act (“ARRA”) in February 2009. If approved by the full House and Senate, the bill will do the following:
  • Extend the expiration of the COBRA subsidy eligibility period from December 31, 2009, to February 28, 2010 for individuals who involuntarily lost their employment and group health insurance coverage after September 1, 2008.
  • Expand the period of COBRA subsidy from 9 to 15 months;
  • Afford individuals whose 9 months of ARRA COBRA subsidy has run out an opportunity to elect an additional 6 months of subsidized COBRA coverage; and
  • Require the administrators of covered group health insurance plans to provide additional notice of the extended ARRA COBRA benefits within 60 days of the enactment of the legislation.
In addition to H.R. 3326, the 2010 appropriations bill for the Departments of Housing, Commerce, Justice, and Science (H.R. 2847) includes nearly identical language regarding the extension of ARRA COBRA subsidies – one key difference is that H.R. 2847 would extend eligibility to individuals who voluntarily lose employment and group coverage through June 30, 2010. Both bills are currently in Conference Committee. The Employee Benefits Security Administration (“EBSA”) the federal government agency responsible for administering COBRA benefits, currently has no information concerning the application and enforcement of the pending legislation, but should have updates on its Web site in the event either bill becomes law (www.dol.gov/ebsa).


*Patrick J. Hoban practices in all areas of labor and employment law, with a focus on private and public sector labor law. If you have any questions about this pending legislation or other ARRA COBRA or COBRA issues, contact Pat Hoban (pjh@zrlaw.com) at 216.696.4441.

Tuesday, December 22, 2009

EMPLOYMENT LAW QUARTERLY | Fall 2009, Volume XI, Issue IV

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ACCESS DENIED: Court Upholds Jury Verdict Against Employer That Improperly Accessed Employees’ MySpace Pages

By: David R. Vance*

The District of New Jersey upheld a jury verdict against an employer who terminated two former employees after viewing their MySpace pages (www.myspace.com). See Pietrylo v. Hillstone Restaurant Group, No. 06-5754, 2009 U.S. Dist. LEXIS 88702, at *1 (D.N.J. Sept. 25, 2009). The employer, Houston’s Restaurant, alleged that the employees damaged employee morale and violated the restaurant’s “core values” by posting comments and holding chats about the restaurant’s management through their MySpace accounts. However, the former employees successfully argued that Houston’s Restaurant violated a federal Wiretap Act, a parallel act under New Jersey law, and the federal Stored Communications Act by logging into their MySpace accounts.

Upon learning that the employees held chats and posted comments through MySpace’s Spect-Tator (a chat group on myspace.com which is only accessible by invitation and then by password) about Houston’s management, the managers requested the employees’ password and log-in information. However, the managers failed to receive written or verbal authorization from the employees to access their MySpace accounts.

The jury determined that the managers accessed the employees’ password-protected websites five times without authorization. Because no direct evidence of authorization existed, the jury relied on testimony from employees in reaching its decision. One of the employees testified that while she provided her managers with her password and log-in information, she did not authorize them to access her account. The only reason she gave them her account information was because she felt she would get in trouble if she failed to do so.

The jury concluded the managers had the requisite state of mind and that the repeated visits to the website showed their actions were purposeful or intentional. The jury awarded nominal compensatory damages for back pay. The District Court upheld the jury’s award of punitive damages because the managers acted maliciously in repeatedly accessing the website.

This case puts employers on notice that they should not access employee websites or personal pages without authorization and even then should be cautious in doing so. In situations where access to an employee’s personal website is necessary, the authorization should be explicit.

*David R. Vance practices in all areas of labor and employment law. For more information about employee privacy or any other labor or employment issue, contact David at 216.696.4441 or drv@zrlaw.com.

The Role Of Economists In Reductions-In-Force Analysis

By: Audrius Girnius, PhD Huron Consulting Group*

The economic downturn has hit the U.S. labor market nearly as hard as the stock market over the last two years. The national unemployment rate has reached its highest point since the early 1980s and, according to the Department of Labor’s figures, it jumped to 10.2% in October, 2009. See, http://www.bls.gov/news.release/empsit.nr0.htm. A significant factor in the increased unemployment rate is large-scale layoffs – Reductions-in-Force (RIFs). Many large and prominent companies have had to make the tough decision to reduce their workforce, and more reductions are likely to come. This environment is rife with potential for litigation on various discrimination claims, with age discrimination (ADEA) claims particularly common.

An organization considering a RIF can take several simple proactive steps to help reduce its potential litigation risks. An organization should allow for sufficient time in the process for consideration of potential adverse impact, document their decision-making, and work with a statistical expert to determine whether the resulting change in the composition of employees may be evidence of adverse impact or explained by business-related factors.

The main task for a statistical expert is to conduct an analysis to determine whether the terminations will affect disproportionately a protected group. The statistical analysis of potential adverse impact from a RIF might, for example, compare (a) the proportion of older employees among the affected employees with (b) the proportion of older employees in the “at risk” population. The “at risk” population consists only of those employees who were considered for the RIF. For instance, if the RIF were to affect only employees in the IT department, the “at risk” population would be all employees in the IT department. The reason for comparison of the affected employees to the “at risk” population is straightforward. If the selection process is random with regard to age, then the affected employees should be representative of the “at risk” employees. In our example, if 50 percent of IT employees were over the age of 40, one would expect that about 50 percent of the affected employees would be over the age of 40. If a disproportionately high number of the affected employees are over the age of 40, one must perform a statistical test to determine whether this difference is statistically significant. Such statistical evidence may be used to support a claim of age discrimination. The example above focuses on age but there are other categories, such as race or gender, that may be critical to a statistical analysis. There are two important steps in an adverse impact analysis in a RIF, creating an “at-risk” group and conducting a statistical analysis.

Creating an “At-Risk” Group
The first step in a RIF is to identify the correct pool of employees at risk. Without a proper identification, any statistical analysis can yield spurious results. A statistical analysis on a faulty “at risk” grouping can result in a faulty finding of statistically significant adverse impact.

Conducting Statistical Tests
The second important step is to conduct a statistical analysis of the outcome of the RIF. Two alternative tests are frequently used to determine the level of statistical significance. The first is called a chi-squared test and the other is called the Fisher’s exact test. The chi-squared test compares the actual number of older employees in the “at risk” group to the expected number and calculates a test statistic. If the corresponding probability value test is less than five percent, the overrepresentation of older employees is considered statistically significant. Statistical tests that show that a particular outcome has less than a five percent chance of resulting from random chance is considered statistically significant.

The Fisher’s exact test calculates the probability of each possible outcome which would show a greater overrepresentation of older employees than the proposed RIF. Once all of the probabilities have been calculated, they are summed and if the resulting sum is less than five percent, the outcome is considered statistically significant. In essence, this test calculates how many more extreme and over-representative distributions exist. If the particular distribution of older affected workers is extreme enough, this test finds the distribution to be statistically significant. One advantage of the Fisher’s exact test is it is appropriate even for small sample sizes. Thus, even if the correct “at risk” groups are small, a valid test of adverse effects is still available.

Notably, both the chi-squared and a Fisher’s exact test have only two dimensions: the protected class and whether affected. Other explanatory factors, such as experience, performance, and education that could impact a decision to terminate an employee, are not accounted for in these tests. In instances where such factors can be explanatory, an economist may use a logistic regression. A logistic regression models the decision-making process by including all factors that were used by the decision-makers to determine who was to be chosen for the RIF. As with the two tests described earlier, a logistic regression also calculates the statistical significance of age in the decision-making process so it can be used as empirical evidence in a case of age discrimination.

While conducting a RIF is a difficult and unpleasant process, an economist can assist decision-makers in ensuring that the process is statistically sound and help mitigate potential liability. An economist can assist with creating the correct “at risk” groupings and can conduct a statistical analysis to determine whether an adverse impact has occurred in a particular RIF. The economists at Huron Consulting Group have assisted Zashin & Rich Co., L.P.A with statistical analyses related to employment decisions/lay-offs for numerous clients.

*Audrius Girnius, PhD, a Director with Huron Consulting Group, specializes in the application of microeconomics, statistics, and econometrics to complex problems in employment and labor litigation. Audrius has developed innovative economic models to analyze a variety of complex issues involving employment and labor and economic damages. If Huron can be of assistance to you, please contact Audrius at 646.520.0068 or agirnius@huronconsultinggroup.com.


GINA Took Effect On November 21, 2009 – New EEOC Poster Required

By: Jessica T. Tucci

Title II of the Genetic Information Nondiscrimination Act (“GINA” or the “Act”) grants the Equal Employment Opportunity Commission (“EEOC”) the authority to police workplace discrimination based on genetic information. GINA prohibits the use of genetic information when making decisions related to any term, condition or privilege of employment. Further, the Act prohibits employers from requiring, requesting or purchasing genetic information. The Act applies to private employers and state and local government employers with fifteen or more employees. Genetic information includes information resulting from employee or family member genetic testing. Such tests include the analysis of DNA, RNA or chromosomes. Genetic information also includes information regarding a disease or disorder of an employee’s family member.

While the Act strictly prohibits the use of genetic information in making employment related decisions, some exceptions exist that allow employers to request or acquire genetic information. For example, an employer does not violate GINA when it inadvertently acquires an employee’s medical history or offers health or genetic services as part of a wellness program. Additionally, an employer does not violate GINA if the employee gives prior voluntary informed written consent. However, GINA does not exempt well intentioned genetic information collections such as collecting DNA to perform a criminal background check. Absent some enumerated exceptions, employers likely violate the Act by using DNA to conduct a background check.

GINA does not directly prohibit harassment, although its prohibiting language is similar to the prohibiting language of Title VII and other equal employment statutes. Therefore, the EEOC predicts an inferred harassment cause of action exists under GINA. At this time, GINA expressly rejects a disparate impact cause of action.

GINA’s remedies include reinstatement, hiring, promotion, back pay, injunctive relief, pecuniary and non-pecuniary damages and attorneys’ fees. Similar to Title VII, GINA caps compensatory and punitive damages. Finally, punitive damages are not available against federal, state or local government employers.

Immediate compliance with GINA requires employers to post the most recent version of the “Equal Employment Opportunity is the Law” poster or post its supplement. The revised poster and its supplement can be found at http://www.dol.gov/ofccp/regs/compliance/posters/ofccpost.htm. Employers should also revise all stated anti-discrimination policies to include GINA.


THE ENEMY WITHIN: Dealing With Disloyal Employees

By: Jason Rossiter*

Congress enacted the Computer Fraud and Abuse Act (“CFAA”) to reduce the cracking of computer systems and to address computer related crimes. Since its enactment in 1984, employers have attempted to use the CFAA as a mechanism to bring actions against former employees that took or misused the employers’ data or confidential information. However, courts are continuing to limit employer’s ability to do so by narrowly construing whether an employee’s use of a company computer is “unauthorized”.

The Ninth Circuit in LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009) recently ruled that whether an employee’s use of a work computer is “without authorization” under the CFAA turns on the employer’s policies and definitions of acceptable use and not the employee’s state of mind. The employee in Brekka emailed corporate documents containing the company’s proprietary information to his personal email account. Since the company did not maintain a policy against emailing proprietary information, the Court could not find that the employee engaged in “unauthorized” use of his work computer as defined by the CFAA. Rather, the Court held that the CFAA permits employers to pursue claims against ex-employees that have stolen proprietary information only when the theft violates a clearly defined limit to access of company networks.

The case marks a continuing trend away from allowing employers to use CFAA in trade secret cases against former employees. It basically prohibits those employers without a policy explaining acceptable computer use from pursuing a CFAA claim. Employers, however, can still pursue alternative claims (e.g., breach of a nondisclosure agreement or misappropriation of trade secrets).

In light of the Court’s ruling, employers should revisit their data confidentiality and technology use policies. Company data and use and confidentiality agreements should include all potential causes of action – breach of contract, intellectual property infringement, trade secret, computer crime, etc. – so as to best protect the company from disloyal former employees. In order to maintain an action under the CFAA, companies also must clearly define authorized use within their technology policies.

*Jason Rossiter has extensive experience representing employers in litigating and arbitrating workplace disputes in Ohio, California, and throughout the country. For more information about the CFAA or any other labor or employment issue, please contact Zashin & Rich at 216.696.4441.


EMPLOYEE RESTRICTED, EMPLOYER CONFLICTED: When Disabled Employees Want To Return To Work

By: Lois A. Gruhin

In July 2009, the U.S. Equal Employment Opportunity Commission (“EEOC”) settled a class action disability lawsuit with an Ohio based company. In that case, the company agreed to pay more than $90,000 and offer jobs to employees it allegedly subjected to discrimination.  The EEOC alleged that the company violated the Americans with Disabilities Act (“ADA”) by failing to permit disabled employees to return to work without a full-duty, no-restriction doctor’s release.

In the U.S. District Court for the Southern District of Ohio, the EEOC argued that disabled employees out on leave should be permitted to return to work regardless of whether they still have some physical restrictions, so long as they are able to perform their jobs.  The company, however, maintained a policy requiring these same employees to obtain a full-duty, no-restriction doctor’s release prior to returning.  The company’s policy adversely affected over 80 employees in Ohio and several surrounding states.  Laurie Young, an EEOC attorney from the office in which the case was brought said, “Employers should be aware that the most recent amendments to the ADA became effective on January 1 of this year, and those amendments made substantial changes to the ADA as interpreted by the court.”

This case reminds employers to check their policies to assure compliance with the Americans with Disabilities Act Amendments Act (“ADAAA”).  Additionally, employers must revise those policies that fail to meet the ADAAA’s requirements.  Lastly, employers must be particularly careful when workers’ compensation laws, the Family and Medical Leave Act and the ADA intersect.


Z&R SHORTS


Speaking Engagements January 29, 2010
George Crisci will be presenting Mandatory Bargaining Subjects in Public Sector Collective Bargaining for the ABA Labor & Employment Sections' Committee on State and Local Government Collective Bargaining and Employment Law.
For more information go to www.abanet.org.

February 16, 2010
Steve Dlott will be presenting “How to Defend a Workers’ Compensation Claim” for the Medina Safety Council. For more information go to www.medinasafetycouncil.com.

June 8, 2010
Patrick Watts will be one of the presenters of “Employment Law Alphabet Soup” for the National Business Institute. For more information go to www.nbi-sems.com.