COVID-19 was officially declared a pandemic in the US on March 13, 2020. Yet, even now, as we are over six months in to the COVID-19 pandemic crisis in the US, employers still continue to face challenges when navigating the sometimes daily changes in health and safety orders, updates from federal agencies, court decisions, and the proliferation of lawsuits. One of the key decision points for many employers is when to reopen, what should drive that decision, the legal risk of “getting it wrong” and how to mitigate that risk. Unlike retailers and restaurants, companies in the financial industry have largely avoided shutting down operations. However, that does not mean they have fully reopened. Where does the financial industry stand in its reopening? What should financial services companies be concerned about in terms of COVID-19 related guidance and recommendations, legal claims by employees, and how can companies mitigate these claims? What are specific COVID-19 related compliance issues unique to investment advisors and broker-dealers? We share our insights below.
A CEO who becomes entangled in human resources functions by terminating an employee in a distant locale could expose himself to personal jurisdiction (and personal liability) there, the D.C. Circuit Court of Appeals recently held in Urquhart-Bradley v. Mobley, No 19-7716 (D.C. Cir. June 30, 2020).
The message to executives is clear: a termination conversation could count as sufficient contacts for purposes of personal jurisdiction, even if the employee being terminated is in another state and even if the conversation itself was via telephone and not in person. In Urquhart-Bradley, a panel of the D.C. Circuit Court of Appeals (Srinivasan, Chief Judge, Garland, and Millett, Circuit Judges) joined a list of courts that have refused to apply the “fiduciary shield” doctrine, which provides that a nonresident corporate agent generally is not individually subject to a court’s jurisdiction based on acts undertaken on behalf of the corporation. Where the fiduciary shield does not apply, employers are cautioned to leave termination conversations to HR or in-house counsel to keep executives from being haled into court in another jurisdiction.
On June 23, the San Francisco Board of Supervisors voted to approve “right to reemployment” legislation that requires large employers to first offer laid-off workers their old jobs back before offering employment to new applicants (“Ordinance”). It will become effective immediately upon Mayor London Breed’s signature and will expire upon the 61st day following enactment unless extended.
Advocates of the Ordinance argued the requirement is necessary to ensure employers don’t use the pandemic as an opportunity to simply replace old workers with new employees who are younger and less expensive. Organizations lobbying against the Ordinance argued that it is overly burdensome; violates core constitutional principles; runs counter to several federal and state laws; and is extremely vulnerable to abuse. Similar legislation has surfaced in Los Angeles County as well.
“Covered employers” are defined as for-profit and non-profit employers that directly or indirectly own or operate a business in the City or County of San Francisco and employ, or have employed, 100 or more employees on or after February 25, 2020.
Due to the pandemic, employees in the US are working from home in unprecedented numbers. Some, particularly in tech, may be working from home through the end of the year, or even permanently! While working from home raises a myriad of issues (e.g., data privacy and security, health and safety, employee engagement, and more), this post focuses on expense reimbursements related to telecommuting. The trickiest areas are cell phones and internet given that employees are now working from home because they cannot go into the office, as opposed to perhaps at their convenience.
There is no federal requirement to reimburse employees for business-related expenses. However, several states (including California, the District of Columbia, Illinois, Iowa, Massachusetts, Montana and New York) have legislation requiring reimbursement for necessary businesses expenses. For example, California Labor Code Section 2802(a) requires an employer to “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer….” Failing to reimburse employees can lead to class or collective actions and quickly become incredibly burdensome for employers. Under California law, an employer that does not reimburse employees risks a lawsuit where the damages will include not just the unreimbursed expenses but the attorney’s fees incurred by the employee seeking reimbursement. The employee can also ask the Labor Commissioner to cite the employer or anyone acting on the employer’s behalf under Labor Code Section 2802(d). Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis.
Recently, Southwest Airlines won a second major victory when Northern District of Illinois Judge Seeger granted its motion to dismiss claims brought under Illinois’ unique Biometric Information Privacy Act (“BIPA”). Crooms v. Southwest Airlines Co., Case No. 19-cv-2149.
Plaintiffs alleged Southwest violated BIPA by requiring them to scan their fingers when clocking in and out of work without giving them the written notice or receiving their consent as required by BIPA. When initially employed, three of the plaintiffs were represented by the Transportation Workers Union of America, AFL-CIO Local 555 (“TWU”) and were covered by a collective bargaining agreement (“CBA”). The CBAs at issue provided Southwest had the “right to manage and direct the work force” and included a mandatory four-step grievance and arbitration procedure for resolution of disputes. Plaintiffs were later promoted to Ramp Supervisors, a non-union position and agreed to comply with Southwest’s Alternative Dispute Resolution (“ADR”) Program. The fourth named plaintiff was never covered by a CBA but was always a party to the ADR Program.
As Companies develop their reopening playbook, we know that many are considering instituting temperature screening procedures either as a precaution or because local Orders may require it. Here’s the *tl;dr* on temp checks (it’s okay if you need to look that up . . . some of us did too):
The way we work has been permanently transformed by the rapid deployment of a largely remote workforce during the shelter-in-place. Threats to companies’ most valuable confidential data have not merely increased — an entirely new set of legal and technical risks to trade secrets have emerged over the last 90 days that are fundamentally different…
On April 29, public health officials in six Bay Area counties (Alameda, Contra Costa, Marin, San Francisco, Santa Clara) and the city of Berkeley released new health orders extending mandates to shelter in place through May 31, while relaxing restrictions around some outdoor businesses and recreation activities. The new Orders will take effect May 4, the day existing shelter-in-place mandates would have expired. (We previously discussed the local Orders here and here.)
Continue Reading Bay Area’s Shelter-In-Place Orders Modified and Extended to May 31
The COVID-19 pandemic raises challenging issues for employers, particularly those that have multiple locations, provide a variety of services, and employ a global workforce that may travel routinely for business.
With increasing quarantine and other lock-down requirements appearing across the globe, what should employers be doing now to support the health and safety of their workforces?
An employer’s first priority is to protect the health and safety of its workforce. Recognize that this is unlikely to be a one-time occurrence. Being prepared now will allow employers to iterate in the future.
(1) Understand employer obligations in each affected jurisdiction (which will change).
- Review applicable government health alerts and requirements for reporting.
- Review local laws on employee privacy, association, potential for discrimination and leave/benefit/wage & hour entitlements. Remember that the balance between privacy and public health is achieved differently in different countries, but as viruses spread, those restrictions are often relaxed. For instance, primarily due to data privacy laws, employers in most of the EU generally may not notify health authorities that an employee has been infected.
- Coordinate internally to develop employee communications and plans. Frequent communications with employees and their families is critical. Keeping in contact with official or governmental bodies such as the US State Department or the British Foreign and Commonwealth Office (FCO) is essential to ensure the latest updates are available and to ensure employees are aware of any national contingency plans.
With signs that the virus is peaking in the US, and with some state Shelter-in-Place Orders scheduled to be lifted in the coming weeks, employers are turning their attention to planning for how best to bring employees back to work.
As with the initial outbreak, US employers can look to other corners of the world…