Employment Law

Take the Cure: New California Law Permits Corrections of Wage Statement Violations

Why it matters

Employers may want to review their wage statements after Governor Jerry Brown signed a new law that permits them to cure potential violations leading to a lawsuit under the Private Attorneys General Act (PAGA). An employer may be liable under California Labor Code for neglecting to provide certain information, including the name and address of the legal entity that is the employer and the inclusive dates of the pay period, in an employee's wage statement. The new law, AB 1506, provides employers with the right to cure such a violation with a showing that every employee receive a fully compliant, itemized wage statement pursuant to state law. The right to cure is not unlimited, with employers allowed just one opportunity per 12-month period to fix any mistakes and a 33-day window to correct the error before liability attaches. AB 1506—which could save employers sizable verdicts in PAGA suits with potential damages of up to $200 per pay period for wage statement violations, plus attorney's fees and costs—took immediate effect with Gov. Brown's signature on October 2, 2015.

Detailed discussion

Pursuant to the California Labor Code, employers are required to include certain information in employee wage statements. Specifically, Section 226(a)(6) mandates that employers must specify the inclusive dates of the period for which the employee is paid and Section 226(a)(8) requires the name and address of the legal entity of the employer be listed.

Employees may sue employers for violations of Section 226 under the Private Attorneys General Act (PAGA) and recover damages for wage statements lacking the requisite information.

But a new law permits employers to cure some violations. AB 1506 provides employers the right to fix mistakes within 33 days upon notice from an employee identifying wage statement defects under Sections 226(a)(6) and (8). The new law allows an employer to avoid PAGA litigation by demonstrating that each aggrieved employee has received a "fully compliant, itemized wage statement" for each pay period for the three-year period prior to the date of the employee's written notice.

The cure only takes effect if it occurs within 33 calendar days of the postmark date of the employee notice and if the employer provides written notice (by certified mail) within that same time period both to the aggrieved employee (or counsel) as well as the California Labor & Workforce Development Agency. A description of the actions taken by the employer must be included.

Employers may only take advantage of the ability to cure such violations once per 12-month period.

If the employer cures the violation, the employee may not bring a lawsuit under PAGA; if the error goes uncorrected, the employer will remain liable under the California Labor Code for $100 per pay period for an initial violation and the potential for $200 per pay period for each subsequent violation, as well as attorney's fees and costs.

Employers should also note that the new law only applies to the two specific subsections of California Labor Code Section 226(a). The Code requires employers to provide additional information on wage statements including the gross wages earned; the total hours worked by the employee (with an exception for salaried employees); the number of piece-rate units earned, if applicable; all deductions; net wages earned; the name of the employee and only the last four digits of the employee's Social Security number; and all applicable hourly rates in effect during the pay period and number of hours worked at each hourly rate by the employee.

To read AB 1506, click here.

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Supervisor's "Girl Power" Strong Enough for Sex Discrimination Lawsuit

Why it matters

A New York federal court judge ruled that "girl power" was strong enough to provide the basis for a sex discrimination suit brought by a male employee. Todd Lenart alleged that he experienced a hostile work environment and was discriminated against on the basis of his sex and gender by his female supervisor. Women were given preferential treatment during the hiring process and after they were employed, according to the plaintiff. The supervisor allegedly said she wanted to have a staff of all women and after Lenart was terminated—purportedly due to a reorganization of the department—said she had created a "girl power team based in New York." The employer moved to dismiss the suit but a federal court judge denied the motion. The supervisor's possibly innocuous message of female empowerment, when coupled with the fact that a female took over most of Lenart's duties after his termination, were sufficient allegations to move the case forward on his Title VII and state law claims of sex discrimination. The court dismissed the hostile work environment counts, however.

Detailed discussion

A male tax lawyer, Todd Lenart was hired by Coach in February 2012 after being recruited by the Tax Department's vice president. In a lawsuit alleging discrimination on the basis of his sex and gender as well as a hostile work environment in violation of both Title VII and New York state law, Lenart claimed women were favored even before they were hired by the company.

According to Lenart, he had to interview with 14 people and undergo psychological testing before he was hired. Two women were hired after interviewing with just four individuals and were not required to take any psychological tests, he said.

Once employees began working for Coach, women were "given preferential treatment," Lenart alleged, with a female manager regularly invited to meetings with senior executives while male colleagues were not granted similar access and a female manager in the Tax Department given an office before more senior male members. Male employees complained about the "female gender bias" at the company, and expressed concern that it would prevent them from receiving promotions.

A male coworker reported to Lenart that his female supervisor reportedly said "on numerous occasions" that she would "like to have a staff of all women." Lenart was terminated in April 2013, ostensibly due to a reorganization of the company's Tax Department. But Lenart alleged that most of his responsibilities were taken over by a female employee and a former coworker informed him that his supervisor stated at a meeting after he was terminated that she had created "a girl power team based in New York."

Lenart sued. Coach filed a motion to dismiss the suit but U.S. District Court Judge Jesse M. Furman said the case could move forward on some of the claims.

The court first considered the hostile work environment claim. Under either New York state law or Title VII, a plaintiff must demonstrate that the workplace is "permeated with discriminatory intimidation, ridicule, and insult that is sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive working environment."

Lenart failed to meet this standard, the court said. Some of his allegations were undermined in his own complaint, Judge Furman noted. For example, although Lenart claimed women were favored during the hiring process, he initially rejected the position offered to him because of certain duties he did not want to perform. Coach modified the position to suit his preferences and he took the job. "Needless to say, a company is unlikely to alter duties of a position in order to attract a particular candidate if it was not highly interested in hiring that candidate," the court said.

Lenart himself never heard his supervisor make the alleged comments that she wanted a staff of all women and even if the comments were made on numerous occasions as alleged, he failed to show they were more than isolated acts, the judge said.

The comments about a team of women and "girl power" "amount to nothing more than the workers' subjective beliefs that they were being discriminated against," the judge added. "And, because a hostile work environment claim has both objective and subjective prongs, 'even if [Lenart can] show [his and others'] subjective belief that [his] workplace was hostile,' he must still allege conduct making it plausible that 'a reasonable person would have concluded that the work environment was hostile.' Put simply, the subjective belief of Lenart and his co-workers that there was sex discrimination afoot—'however strongly felt—is insufficient to satisfy his burden at the pleading stage.'"

However, the New York City Human Rights Law has a lower threshold than its state and federal counterparts, Judge Furman said, and all that is generally required is that the plaintiff "proffer evidence of 'unwanted gender-based conduct.'" So Lenart's claims that he had to undergo extra interviews and psychological testing while his female colleagues did not, and the supervisor's expressed preference for working with women, albeit thin, were sufficient to survive a motion to dismiss.

Turning to Lenart's sex discrimination claims, the court judged it a "close call" but said the complaint satisfied the standard that he was a member of a protected class, was qualified, suffered an adverse employment action, and had "at least minimal support for the proposition that the employer was motivated by discriminatory intent."

The plaintiff alleged that the majority of his responsibilities were assumed by a woman—a claim that standing on its own was sufficient to meet his burden, the court said. In addition, Lenart leaned upon the supervisor's comments that she would prefer to work with women and the "girl power" statement.

"Those statements may well turn out to have been intended as innocuous 'comments of female empowerment,'" the court said. "And it is true that Lenart does not explicitly allege that [the supervisor] herself was involved in the decision to fire him. But given [the supervisor's] senior position as Senior Vice President of the Treasury Department, and the allegation that she had 'managerial or supervisory responsibility' over Lenart, an inference can be drawn that [the supervisor] played a role in the decision to terminate him. In any event, Lenart's allegations that a senior executive made several arguably discriminatory statements, combined with his allegations that a woman assumed most of his duties, are enough to clear the low hurdle" to survive dismissal of his sex discrimination claims in the Second Circuit Court of Appeals.

To read the opinion in Lenart v. Coach, Inc., click here.

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Single Instance of Unwanted Touching Sufficient for Hostile Work Environment Claim

Why it matters

A single instance of unwanted touching was sufficient to support a hostile work environment claim, according to a decision from a Maryland federal court judge. Tiffany Jones alleged that the CFO of Family Health Centers of Baltimore harassed her on multiple occasions by blocking her path in the hallway, making questionable comments, and hanging around her workroom. She also claimed that one day he came up from behind her, grabbed her waist, and pushed his genitals against her buttocks. She reported the incident and did not return to work. The employer moved for summary judgment when Jones filed a Title VII lawsuit, but the judge denied the motion. Relying on a recent Fourth Circuit Court of Appeals decision where the court found the isolated use of an offensive racial epithet can render a workplace hostile, the judge said a single instance of unwanted sexual contact was similarly sufficient to keep Jones' case alive. Further, because the employer failed to provide evidence that it distributed its anti-harassment policy, the court declined to credit the Faragher-Ellerth affirmative defense for the employer.

Detailed discussion

A temporary medical records scanner at Family Health Centers of Baltimore, Tiffany Jones filed suit against her former employer alleging sexual harassment in violation of Title VII as well as negligent hiring, training, and retention under Maryland state law. She also named the chief financial officer (CFO) of the employer as a defendant and alleged intentional infliction of emotional distress and battery against both him and Family Health.

Jones claimed the CFO, Ricardo Dajani, harassed her on multiple occasions. At a staff meeting, he made a comment to the effect he "wouldn't mind … taking [her] somewhere or taking [her] away or something like that," she said, while another time he blocked her path in the hallway and then refused to let her by. From that point forward, Jones said she asked one of her coworkers to accompany her on trips to the bathroom.

The CFO also lurked around Jones' workroom, she alleged, making her uncomfortable until she asked for permission to close and lock the door. The final incident occurred in April 2011. Jones claimed that she left her workroom and upon her return, Dajani came up behind her, put his hand on her waist, and she felt his genitals on her buttocks.

Upset, Jones left work. She reported the incident to her supervisor but never filed a report with upper management even though she was asked for meetings. Family Health attempted an initial inquiry into the incident but Dajani averred he did not discriminate or harass the plaintiff.

Jones filed suit and Family Health moved for summary judgment. Although U.S. District Court Judge James K. Bredar granted the motion on the counts for negligent hiring, training, and retention, as well as intentional infliction of emotional distress and battery against the employer, he allowed the plaintiff's Title VII claim and battery claim against Dajani to move forward.

Considering the hostile work environment claims, the court said Jones' allegations based on the hallway incident, an unwelcome comment, and lurking around her workroom fell short of the severe or pervasive standard but the doorway incident was "a different matter."

"These are serious charges of uninvited sexual contact—and the record is troublingly devoid of evidence tending to disprove them," the court wrote. "There is no third-party eyewitness testimony, and while Dajani conclusively asserted in an interrogatory that he 'did not discriminate or harass the Plaintiff,' he provided no details about what actually transpired between them."

Judge Bredar noted a recent decision from the Fourth Circuit Court of Appeals, Boyer-Liberto v. Fontainebleau Corp. In that case, a panel of the Fourth Circuit held that an isolated incident of harassment can amount to discriminatory changes in the terms and conditions of employment if the incident is "extremely serious."

"The Court is aware that some older cases suggest isolated instances of unwelcome physical contact may be insufficient to satisfy the severe/pervasive prong of a harassment claim," the court said. "But in its recent Boyer-Liberto opinion, the Fourth Circuit altered the landscape of hostile work environment litigation. Boyer-Liberto held that a reasonable jury could find a supervisor's two uses of an odious slur ('porch monkey'), directed toward the plaintiff during a single workplace conflict, severe enough to engender a hostile work environment. If isolated uses of an offensive epithet can render a workplace hostile, the Court concludes that unwanted sexual contact can as well. Mindful that '[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions,' the Court cannot at this stage rule out the possibility that Dajani's conduct created a hostile work environment for Plaintiff."

A separate matter of imputing liability to Family Health remained. The parties disputed whether Dajani exercised supervisory authority over Jones and the employer argued that it had an anti-harassment policy in place that was distributed to all employees.

Assuming without deciding that Dajani was a supervisor for Title VII purposes, the court concluded that it could not apply the Faragher-Ellerth defense. Jones did fail to take advantage of corrective opportunities by refusing to come into work for a meeting. "Given the seriousness of Plaintiff's accusation, a reasonable person in her position would have understood the importance of aiding the investigation," the court noted.

But Family Health failed to provide proof that Jones actually received or reviewed the company's anti-harassment policy, the judge said. While the employer stated the plaintiff received a copy of the employee handbook and that the document contained the company's reporting requirement as part of the anti-harassment policy, those assertions were "unaccompanied by a citation to the record—presumably because the record includes neither a copy of the handbook nor even a relevant excerpt. Nor did defense counsel ask Plaintiff a single question on deposition concerning whether she received, reviewed, or otherwise understood the policy."

The court refused to find that Family Health qualified for the Faragher-Ellerth defense absolving it of Title VII liability where it failed to produce a critical piece of evidence. "In all likelihood Plaintiff did receive a copy of the anti-harassment policy: in fact, she did not even contest this point in her own memorandum," Judge Bredar wrote. "But the Court will not seal gaps in the summary judgment record with judicial caulk. And since Family Health proffers no separate evidence of harassment-prevention efforts, it cannot prevail on the Faragher-Ellerth defense, at least not at this stage."

Judge Bredar granted summary judgment in favor of the employer on the remainder of Jones' claims, however. A "dearth of evidence" corresponded to her negligent hiring, training, and retention allegations, the court said, with no indication Family Health was on actual or constructive notice of impropriety when Dajani was hired. No reports were made during his employment with the company and there was no evidence regarding training for Family Health employees.

Jones' intentional infliction of emotional distress (IIED) claims failed against both Dajani and the employer. The acts alleged against Dajani were clearly committed outside the scope of employment, the judge wrote, and the plaintiff did not show that the acts rose to the level of IIED, given that recovery under the doctrine is "meted out sparingly" in Maryland. "[N]o reasonable jury could find that Dajani's conduct 'completely violate[d] human dignity,'" the court said, even assuming the doorway incident was "intentional and boorish."

While the battery claim failed against Family Health (with no evidence that Dajani's alleged battery was either authorized by the organization or furthered Family Health's business interests), Judge Bredar found that Jones stated a claim for the tort against the CFO. "A reasonable jury could interpret this incident as Defendants have characterized it in their memorandum, i.e., an 'incidental contact that occurs from time to time regardless of the sex of the parties,'" he wrote. "But an equally reasonably jury could conclude that the contact was intentional, particularly given the broad definition of intent under Maryland tort law. The Court cannot resolve this tension at the summary judgment stage, and so Plaintiff's battery claim against Dajani must proceed to trial."

To read the decision in Jones v. Family Health Centers of Baltimore, Inc., click here.

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Departure From DOL's Employee Test Continues With Eleventh Circuit

Why it matters

Following the Second Circuit Court of Appeals, a panel of the Eleventh Circuit declined to follow the Department of Labor's (DOL) six-factor test on the question of whether a worker is an employee or independent contractor pursuant to the Fair Labor Standards Act (FLSA). The dispute began when a group of registered nurses sought payment for the hours they worked as part of a clinical curriculum, a required step to obtain their nurse anesthetist degree. A federal court sided with the facility where the nurses performed their clinical work and held the plaintiffs were not entitled to either minimum wage or overtime pay under the FLSA. But following the reasoning of the recent Glatt v. Fox decision from the Second Circuit, the Eleventh Circuit declared the DOL's test outdated and rigid. The agency's test does not reflect "the role of internships in today's economy," when the real question should be a determination of the "primary beneficiary" in the relationship between intern and employer, the panel wrote, tracking the factors discussed by the Second Circuit in Glatt.

Detailed discussion

To become a certified registered nurse anesthetist (CRNA), a registered nurse must obtain a master's degree that includes a clinical curriculum as part of the course of study. A group of 25 student nurses filed suit against Collier Anesthesia, the facility where they performed their clinical work, seeking unpaid wages and overtime under the Fair Labor Standards Act (FLSA).

Student nurses were required to complete four semesters of clinical experience, with participation in a minimum of 550 clinical cases in a variety of surgical procedures. The school required daily evaluations completed by both the student and a CRNA or supervising anesthesiologist.

The plaintiffs claimed Collier benefited financially by using their services in lieu of licensed CRNAs, particularly as they worked in excess of 40 hours per week as well as on weekends and holidays. A former staffer at Collier testified that she tried to use the student nurses to reduce the number of CRNAs on the schedule. Collier could receive reimbursement for student activities, the plaintiffs pointed out, with Medicare rules allowing the facility to be paid for two students being supervised by just one CRNA.

But Collier countered that on balance, the students were more of a burden than a benefit. The learning process often impeded the actual delivery of anesthesia, the defendant argued, and some surgeons, hospitals, and patients refused to allow students in the operating room. Even with Medicare reimbursement, the students were an added expense, Collier told the court, because of the time spent training and not performing actual work.

A federal court judge analyzed the question of whether the student nurses were employees under the FLSA using the Department of Labor's (DOL) six-factor test, granting summary judgment for Collier. The plaintiffs appealed.

Noting that the DOL's test simply reduced the specific facts of a 1947 U.S. Supreme Court case, Walling v. Portland Terminal Co., into six factors, a panel of the Eleventh Circuit Court of Appeals elected not to follow the test. The DOL's test "is not a regulation, and it did not arise as a result of rule-making or an adversarial process," the court said, meaning the deference owed the agency was proportional to its power to persuade.

"We do not defer to this test because, with all due respect to the DOL and the important work that it does, we do not find it persuasive," the court wrote. "First 'an agency has no special competence or role in interpreting a judicial decision.' Second, as the Second Circuit has observed, the test 'attempts to fit Portland Terminal's particular facts to all workplaces, and … is too rigid.' Third, while some circuits have given some deference to the test, no circuit has adopted it wholesale and has deferred to the test's requirement that 'all' factors be met for a trainee not to qualify as an 'employee' under the FLSA. In short, we prefer to take our guidance on this issue directly from Portland Terminal and not from the DOL's interpretation of it."

For the panel, that meant answering the "primary beneficiary" inquiry established in Portland Terminal without strict adherence to the six factors. A proper balance must be struck between the interests of both parties, the court said. "[T]he mere fact that an anesthesiology practice obtains benefits from offering [student nurses] internships cannot, standing alone, render the student interns 'employees' for purposes of the FLSA," the panel wrote. "Nevertheless, we recognize the potential for some employers to maximize their benefits at the unfair expense and abuse of student interns."

"So our dilemma arises in determining how to discern the primary beneficiary in a relationship where both the intern and the employer may obtain significant benefits," the court said. "We think that the best way to do this is to focus on the benefits to the student while still considering whether the manner in which the employer implements the internship program takes unfair advantage of or is otherwise abusive towards the student. This orientation allows for student internships to accomplish their important goals but still accounts for congressional concerns in enacting the FLSA."

The court looked to a recent Second Circuit case considering the application of the FLSA to interns working for various units of Fox Entertainment. The decision in Glatt v. Fox set forth a non-exhaustive set of considerations for evaluation in determining the primary beneficiary in intern cases:

"1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.

2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.

3. The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit.

4. The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar.

5. The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning.

6. The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.

7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship."

"The factors that the Second Circuit has identified effectively tweak the Supreme Court's considerations in evaluating the training program in Portland Terminal to make them applicable to modern-day internships like the type at issue here," the court explained.

Focusing on the Glatt factors, the panel added a few words of guidance. The fourth factor must account for whether a legitimate reason exists for clinical training to occur on days when school is out of session, while the fifth factor must recognize that "designing an internship is not an exact science." For example, courts should consider whether the duration of the internship was "grossly excessive" in comparison to the period of beneficial learning and in the case of the student nurses, whether the fact they completed well in excess of 550 cases during their four clinical semesters was an indication they were made to work grossly excessive hours.

The court also added a new wrinkle to the equation, suggesting that some cases may present a hybrid situation and not an all-or-nothing determination. "That is, we can envision a scenario where a portion of the student's efforts constitute a bona fide internship that primarily benefits the student, but the employer also takes unfair advantage of the student's need to complete the internship by making continuation of the internship implicitly or explicitly contingent on the student's performance of tasks or his working of hours well beyond the bounds of what could fairly be expected to be a part of the internship."

To allow the district court to apply the Glatt factors in the first instance, the panel reversed dismissal of the suit and remanded.

To read the decision in Schumann v. Collier Anesthesia, click here.

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NLRB Continues Crackdown on Employment Policies

Why it matters

Continuing the National Labor Relations Board's (NLRB) focus on employer handbook provisions, an Administrative Law Judge (ALJ) for the agency ordered Verizon Wireless to rescind multiple sections from its handbook related to employee communications. Provisions at issue included one section providing that the employer could discipline employees for causing Verizon Wireless "embarrassment," a clause on using internal e-mail for solicitation, and another on the disclosure of nonpublic company information. Three out of the five sections considered by the ALJ were found to be in violation of Section 8(a)(1) of the National Labor Relations Act (NLRA), as the embarrassment provision was "overly broad," and a ban on using e-mail for solicitation could impact the ability of employees to communicate about wages, hours, and other working conditions. The judge ordered the employer to rescind all the unlawful handbook sections and post notice about the action at Verizon Wireless workplaces. In a statement, the employer said it was considering its options, as "[t]here is no claim that Verizon Wireless violated any employee rights," and the case "concerns technical claims about the wording of certain Verizon policies."

Detailed discussion

In 2014, Verizon Wireless promulgated a company-wide Code of Conduct that applied to all of its offices across the country. A slightly altered version was released in 2015, but the 2014 version of the Code of Conduct remains in place at some Verizon facilities.

Five provisions of the Code were challenged in an administrative proceeding with the National Labor Relations Board (NLRB). Administrative Law Judge (ALJ) Mary Miller Cracraft found three of the five to violate Section 8(a)(1) of the National Labor Relations Act (NLRA) by interfering with, restraining, or coercing employees in exercise of their rights guaranteed in Section 7 of the Act.

Section 1.6 of the Code addressed solicitation and fundraising and prohibited "the distribution of non-business literature in work areas at any time" as well as "the use of company resources at any time" including e-mails, fax machines, computers, and telephones, to distribute or solicit.

This provision focused too much on employer property rights and too little on the importance of e-mail as a means of workplace communications, the ALJ said, citing a 2014 decision from the Board in Purple Communications, Inc. No special circumstances were presented to justify such a restriction in order to maintain production and discipline.

According to the decision, Verizon's "rule prohibits both solicitation and distribution." "In Purple Communications, the Board explained that e-mail 'is fundamentally a forum for communication.' The Board found it inappropriate to treat e-mail as 'solicitation' or 'distribution' per se, recognizing that as forum of communication it constituted solicitation, literature or information, distribution or merely communication that is none of those but nevertheless constitutes protected, concerted activity. Thus both the prohibition on solicitation as well as the prohibition of distribution contravene the holding of Purple Communications."

The next Code provision, Section 1.8, covered employee privacy. Verizon Wireless provided that appropriate steps must be taken to protect all personal employee information, including financial information, and workers "should never access, obtain or disclose another employee's personal information" absent legitimate business purposes.

Although employers have a substantial and legitimate interest in maintaining the privacy of certain business information, the "2014 Code of Conduct Employee Privacy rule is broadly worded and, in my view, would be reasonably read to prohibit employees from discussing wages, hours, and terms and conditions of employment or disclosing employee information to a labor organization or for other protected, concerted activity," ALJ Cracraft wrote.

The 2015 Code of Conduct slightly tweaked the employee privacy provision, the ALJ noted, eliminating the reference to financial information. Verizon Wireless argued that when read in context, employees would readily understand that the updated Section 1.8 was designed to protect legitimate employer interest in the confidentiality of private information.

The ALJ agreed, finding that the provision listed "social security numbers, identification numbers, passwords, bank account information and medical information" as examples of confidential employee information. "This information is legitimately protected confidential information," and a reasonable reading of the entire provision in context sends a message to employees not to access, obtain, or disclose the listed data.

Next up: Section 2.1.3 on activities outside of Verizon Wireless. The provision was part of Section 2.1's "Avoiding Conflicts of Interest" heading and dealt with insider trading, cautioning employees that participation in an individual capacity in outside organizations—such as homeowner's associations or a local school board—to disclose their association with the company and remove themselves from voting on a matter that involves the company's interests.

"Read literally and in context, the rule does not tend to chill Section 7 activities," the ALJ wrote. "[T]he language is clearly addressed to the ethics of a business decision," and "the context of the rule clearly indicates that the conflicts of interest it addresses are those created by or related to commercial competition. The rule is not linked to other rules prohibiting participation in outside activities that are detrimental to the employer's image or reputation."

The ALJ rejected the General Counsel's position that the provision violated the NLRA because it banned the disclosure of nonpublic company information. The ban "must be construed as a part of the business ethics policy," she wrote. "After all, the rule has nothing to do with membership in a labor organization and it strains logic to read the rule as requiring that an employee who joins a labor organization is constrained to reveal that he or she is employed with Verizon Wireless. The requirement that employment be revealed without disclosing nonpublic information is clearly linked to discussing or voting on a matter related to Verizon Wireless or its products."

Although Section 3.3's rule on the appropriate use of Verizon Wireless machinery could not be susceptible to mean e-mail systems, the decision found that Section 3.4.1's prohibition on the use of "company systems … to engage in activities that are unlawful, violate company policies or result in Verizon Wireless' liability or embarrassment," did violate the NLRA.

"A reasonable reading of Section 3.4.1 is that employees will be disciplined for using company e-mail to communicate with a group of employees inside the company on behalf of a labor organization or employees engaged in protected, concerted activity if such use will result in Verizon's 'embarrassment,'" ALJ Cracraft wrote. "Not only does such language contravene Purple Communications, it is also overly broad in the use of embarrassment as a cause of discipline in use of e-mail, instant messaging, intranet or internet."

The ALJ ordered Verizon Wireless to rescind the three provisions found to violate Section 8(a) of the NLRA and post appropriate notice for employees.

To read the ALJ's decision in Verizon Wireless, click here.

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