New England Biz Law Update
While you were away enjoying the sun and the sand, the state and federal legislatures (not
to mention agencies and courts) have been reshuffling the deck, instituting some of the most sweeping changes in the area of employment law in recent memory.
Some of the more dramatic changes for employers — and the lawyers who advise them — include the following:
Personnel records statute revision
Deep within Massachusetts’ recently enacted “Act Relative to Economic Development Reorganization” is a sweeping and little-publicized amendment to Chapter 149, §52C, which will have immediate effects on how employers deal with certain personnel records.
Previously, the statute required only that employers: (1) provide an employee with access to his file upon request within five business days, and (2) allow the employee to dispute any negative information in his file and place a written statement in the file stating the basis of that dispute.
Effective immediately, however, employers are now also required to provide employees with notice every time the employer places any negative information in the employee’s file to the extent that such information “is, has been used, or may be used, to negatively affect the employee’s qualification for employment, promotion, transfer, additional compensation or the possibility that the employee will be subject to disciplinary action.”
Such notice must be given to the employee within 10 days of the information being placed in the employee’s personnel file.
To fully understand the import of the change, it is important to remember how broadly Section 52C defines a “personnel record.”
Although some employers envision an employee’s personnel file to be no more than a file folder stored in the HR department, in truth the statute is much broader, reaching all records — wherever they may be kept — that have (or could have) an impact on an employee’s “employment, promotion, transfer, additional compensation or disciplinary action.”
In short, almost any retained document concerning a given employee’s performance, including e-mail communications, could be seen to be a personnel record within the definition of the statute.
Read literally, then, under the amended statute, any time a supervisor sends an e-mail critical of an employee’s performance (and that e-mail is retained in some fashion), the employee is entitled to notice.
Although such a literal reading of the statute would seem to be unworkable, it remains to be seen how the courts will interpret this most recent revision to the Personnel Records Statute.
Still, the potential implications in other employment contexts are staggering. For example, an employer who fails to properly notify an employee of e-mails between supervisors discussing the employee’s performance might later be prohibited from introducing those e-mails to document a legitimate nondiscriminatory reason for the employee’s termination.
One other change to the statute also merits quick mention. The new revision makes clear that an employer is required to provide copies of a personnel file to an employee (upon the employee’s request) only twice a year. However, that limitation does not apply to those instances in which the employee requests his file as a result of being notified of the placement of negative information in the file.
CORI reform
At the end of its most recent session, the Massachusetts Legislature enacted (and the governor signed into law) comprehensive reform of the Criminal Offender Records Information statute.
For employers, the most important aspect of the legislation is the “Ban the Box” provision, which takes effect in November.
Under the provision, most employers can no longer include on their employment applications any questions concerning prior criminal convictions. Previously, employers were permitted to ask about felony convictions and certain misdemeanors.
While banned from the employment application itself, however, employers are still permitted to ask questions about certain prior convictions during employment interviews. The theory behind the disparity appears to be that prospective employees were being denied even the opportunity to land an interview — and presumably explain the circumstances of a prior conviction — by the presence of the conviction question on the application itself.
Under the revised statute, however, if an employer requests or receives CORI information on any candidate, the employer must provide him with a copy of the information prior to asking about the information during an interview.
Also, if CORI information is the reason for not hiring a candidate, the candidate must be provided with a copy of the information.
Again, the changes wrought are significant, requiring employers to immediately review their applications and interview procedures for compliance.
On a related note, the Equal Employment Opportunity Commission has also recently announced that it will be taking a closer look at employers’ use of criminal background checks and credit checks when making hiring decisions.
The EEOC has stated that it has concerns that such checks may result in a disparate impact for minority candidates. The commission has noted that its concern is greatest with respect to (1) employers with blanket policies against hiring individuals with a criminal background or poor credit history, and (2) employers who utilize such checks without regard for whether there is a relationship between the particular position at issue and the results of the background check.
Notification of employee rights
Although more limited in its application, for employers with annual contracts in excess of
$100,000 or subcontracts in excess of $10,000, the new posting and contractual provision requirements of Executive Order 13496 are significant.
The posting provisions of the order require all affected contractors and subcontractors to post in “conspicuous places in and about” the workplace notices informing employees of various rights under the National Labor Relations Act, including the right to join or form a union. The actual posters are available on the Department of Labor’s website.
In addition to the requirements of physically placing posters in conspicuous locations, employers who customarily send out notices via e-mail are also required to send out e-mail notification of employees’ rights. The e-mail notification is in addition to the physical posters and not a substitute for them.
Contractors are also required to include in all of their subcontracts the same provisions,
requiring their subcontractors to agree to the posting requirements.
The penalties for noncompliance with the executive order are severe and can include the termination of all existing federal contracts and debarment from bidding on future government work.
Dodd-Frank Act and consumer protection
Although Sarbanes-Oxley always contained protections for certain whistleblowers in publicly traded companies, the recently enacted financial reform act significantly expands those protections, as well as the potential benefits to whistleblowers, ensuring a significant increase in such cases. Some of the changes include:
• the ability of successful whistleblowers (who were terminated) to recover double back-pay awards, as well as a percentage of monies recovered by the government as a result of information provided by the whistleblower;
• a prohibition on pre-dispute arbitration agreements if such agreements do not carve out claims brought under Sarbanes-Oxley;
• an expansion of the statute of limitations within which whistleblower claims can be brought; and
• the extension of whistleblower protections to all employees working in the consumer financial services sector who report violations of any of the laws to be administered by the newly created Consumer Financial Protection Bureau.
Given the concentration of financial services sector employers within New England, these expanded protections will likely be of particular import locally.
Patient protection and affordable care act
The Department of Labor recently issued a fact sheet providing information concerning employers’ obligations to provide breaks and suitable space for nursing mothers to express milk.
In general, the law requires employers to provide “reasonable break time for an employee to express breast milk for her nursing child for one year after the child’s birth each time such employee has need to express the milk.”
Employers must also provide nursing mothers with a private location free from intrusion that may be used by the employee to express milk. The DOL has made clear that a bathroom is not an acceptable location for such breaks.
Companies that employ fewer than 50 employees are exempt from the requirements of the PPACA only if they can prove that compliance would pose an “undue hardship.”
Finally, although there is no specific requirement that the break time be compensated, the DOL has indicated that, where employees are permitted to take other compensated breaks, breaks to express milk must be treated in a similar fashion.
Additional changes to employment laws may be on the horizon. The state legislature continues to contemplate sweeping changes to the enforceability of non-competition agreements, and Congress is considering a variety of new laws, including the Employee Misclassification Prevention Act, which would introduce new enforcement powers and penalties for employers who misclassify employees as independent contractors; the Working Families Flexibility Act, which would require employers to negotiate with workers who request flexible work schedules; and the Healthy Families Act, which would require employers to provide employees with paid sick leave.
Evan Fray-Witzer is a partner at Ciampa Fray-Witzer in Boston. The firm concentrates in management-side employment law, complex business litigation and civil appeals.
