Labor & Employment Newsletter - Fall 2011
NLRB Issues Final Rule Requiring Employers to Post Workplace Notice of Employee Rights
By: David M. Stevens
On August 30, 2011, the National Labor Relations Board issued a final rule that will require covered employers to post and disseminate a notice to employees summarizing the rights protected by the National Labor Relations Act. This article addresses the immediate issues raised by the new requirement, as well as the broader concerns it raises for employers going forward.
The NLRB has recently exercised its rulemaking authority to issue a regulation requiring all employers subject to the National Labor Relations Act to post a notice summarizing the rights of employees under the statute. The posting requirement takes effect November 14, 2011.
The required notice consists of a summary of the rights established by the NLRA, including the right of employees to form a union and to engage in other collective activities to seek improved terms of employment. The notice also includes a non-exhaustive list of employer conduct that is unlawful under the statute, including the termination of employees in retaliation for the exercise of rights protected by the NLRA and other actions intended to dissuade individuals from joining a union. The notice explicitly encourages employees to contact the NLRB if they believe a violation of the law has occurred.
The regulation requires that the notice be posted in those locations in the workplace where the employer’s notices to its employees are customarily posed. In addition to the requirement to post a copy of the notice in the workplace, employers who customarily post personnel and rules and policies on an internet or intranet site are required to also post the notice electronically. The notice must be posted in English and in another language if at least twenty percent of the employer’s workers are not proficient in English and speak the other language.
Employers can obtain a copy of the notice free of charge from the NLRB. The notice is also available for downloading from the Board’s website, at http://www.nlrb.gov/poster.
Takeaway for Employers
The new posting requirement applies regardless of whether an employer’s workplace has already been unionized. Non-unionized employers will therefore need to be mindful of the effect that the notice may have on employees, and may want to consider whether to proactively address the issue of unions with their employees. At a minimum, employers who have not yet developed a contingency plan for responding to potential organizing activity will need to become more attuned to the possibility of such activity in light of the fact that information on unionization will now be displayed by law at their own places of business.
Editor’s Note: As of the time of publication, at least one lawsuit has been filed seeking to enjoin implementation of the new posting requirement as beyond the rulemaking authority of the NLRB. National Association of Manufacturers v. National Labor Relations Board, et al., Case No. 1:11-cv-1629 (filed Sept. 8, 2011 in the U.S. District Court for the District of Columbia). Future issues of this newsletter will report on any developments arising out of such legal challenges.
New Credit Check Restrictions for Maryland Employers Take Effect October 1st
By: David M. Stevens
During its 2011 legislative session, the Maryland Legislature passed the Job Applicant Fairness Act, which was signed into law by Governor O’Malley on April 12. The law imposes significant restrictions on the ability of employers to perform credit checks on job applicants and employees. This article examines the details of the new law, and the likely effects for employers.
For many Maryland employers, obtaining a credit report on prospective employees has become a routine part of the hiring process. The recent passage of the Job Applicant Fairness Act will require employers to reevaluate, and in some cases limit, their use of such reports.
The Act creates a general rule that employers may not obtain or use credit reports to deny employment to an applicant, terminate an employee, or set the terms and conditions of an individual’s employment.
The Act then provides two major exceptions to this general rule.
The first is a complete exemption for financial institutions that accept deposits insured by the federal government, as well as affiliates and subsidiaries of such institutions. Similar total exemptions apply to credit unions, certain investment advisors, and entities required by state or federal law to obtain credit reports as part of mandated background checks for their employees.
For all other Maryland employers, the Act bans the use of credit reports in employment decisions unless the employer has a bona fide, job-related reason for performing the credit check which has been disclosed in writing to the employee. This “job-related” requirement is in many ways the central focus of the Act. In defining what constitutes a job-related basis for obtaining the credit check, the Legislature has made a determination for businesses of what constitutes a valid reason for seeking information about an applicant’s credit history, and has prohibited the use of such credit information in employment decisions in all other circumstances. The Act provides that a job-related reason for obtaining a credit report exists when the position for which the applicant has applied meets one of five criteria:
- The position is at the managerial level and involves setting the direction of the business, or a department or unit within a larger business;
- The position involves access to certain personal information of customers or employees, such as Social Security numbers or financial account numbers, provided that the personal information at issue is more detailed than what is customarily provided in a retail transaction;
- The position involves a fiduciary responsibility to the employer, including the authority to make payments, transfer money, or enter into contracts;
- An employee hired for the position will be provided with an expense account or a corporate debit or credit card; or
- The position involves access to the employer’s trade secrets or other confidential business information.
The Act creates a procedure by which applicants or employees who believe that a violation has occurred may file a complaint with the Department of Labor, Licensing and Regulation (DLLR). The DLLR is authorized to conduct investigations into alleged violations, and may assess a civil penalty of up to $500 for an initial violation of the Act, and up to $2,500 for a repeat violation. The Act does not, however, create a statutory right of action for individuals to file a lawsuit based on a violation of the Act.
Finally, the Act contains a provision explicitly confirming that the Act is not to be construed as prohibiting employers from obtaining consumer reports or investigative consumer reports during the hiring process, provided that such reports do not contain credit information. The use of such reports, of course, remains subject to the terms and restrictions contained in the federal Fair Credit Reporting Act.
Takeaway for Employers
With the Job Applicant Fairness Act taking effect on October 1, 2011, Maryland employers who use credit checks in making employment decisions will need to evaluate their use of such reports to determine whether they are in compliance with the limitations imposed by the Act. Specifically, employers must consider the range of positions for which they use credit reports in the hiring process. For many entry-level positions which do not involve access to confidential data, the use of credit information will be effectively barred by the Act. Even where more senior positions are at issue, the Act will require employers to assess the particular statutory language to ensure that one of the five conditions for utilizing credit reports has been met with regard to each position for which credit information will be used in employment decisions.
Editor’s Note: The Job Applicant Fairness Act is codified at Md. Code Ann., Labor & Employment § 3-711.
Maryland Court of Appeals Clarifies Scope of Wrongful Discharge Tort
By: David M. Stevens
Maryland courts have long recognized a common law right of action for employees who allege that they were terminated in violation of a public policy. While the parameters of this cause of action defy easy explanation, the Court of Appeals’ recent decision in Parks v. Alpharma, Inc., sheds some light on just what constitutes the sort of public policy that will support a wrongful discharge claim. This article takes a closer look at the wrongful discharge tort and the Court of Appeals’ most recent attempt to clarify its reach.
Debra Parks marketed prescription drugs for the pharmaceutical company Alpharma, Inc. until her employment was terminated in 2006. According to Parks, she was terminated as a result of her internal complaints to management regarding the company’s alleged failure to inform the Food and Drug Administration that one of its drugs was potentially fatal if taken by a patient who was actively consuming alcohol. Parks subsequently filed a lawsuit against Alpharma in the Circuit Court for Baltimore City alleging a single claim: wrongful discharge.
The tort of wrongful discharge was originally recognized in Maryland by the Court of Appeals’ 1981 decision in Adler v. American Standard Corp. The tort is an exception to the general principal of at-will employment and is based on a judicial recognition that society has an interest in preventing employers from terminating employees for certain reasons that would run afoul of recognized public policies. The question of what constitutes a public policy that is both sufficiently clear and sufficiently important to support a wrongful discharge claim has been the subject of extensive litigation since the tort was first recognized in Adler. The issue was again confronted by the Court of Appeals with regard to Parks’ claim after her lawsuit was dismissed by the Circuit Court.
Parks identified three sources of public policy which she alleged had been violated by Alpharma and which she contended were sufficient to support her wrongful discharge claim: the Maryland Consumer Protection Act and the Federal Trade Commission Act, each of which prohibits certain unfair and deceptive trade practices, and the series of federal regulations which governs when a prescription drug label must be revised to include warnings concerning known hazards. Parks alleged that Alpharma had fired her in retaliation for her having investigated and reported Alpharma’s alleged non-compliance with the three laws.
In the course of its analysis of Parks’ claim, the Court of Appeals offered a useful synopsis of the wrongful discharge tort, by which it acknowledged that those cases in which the tort was held to apply could be roughly grouped into several categories: (1) cases in which an employee is discharged for performing an act which he or she has a specific legal duty to perform, such as a teacher required by law to report suspected child abuse, (2) cases in which an employee is discharged for refusing to engage in criminal conduct, (3) cases in which an employee is discharged for exercising a legal right, such as filing a workers’ compensation claim, and (4) cases in which an employee is discharged for reporting the employer’s failure to perform a specific legal duty.
It was this fourth category which Parks sought to invoke by her allegation that she was terminated for reporting Alpharma’s actions with regard to its drug. The Court of Appeals, however, held that the statutory provisions cited by Parks were not a sufficiently clear source of public policy to support a wrongful discharge claim. This decision is quite significant for employers, as a decision by the Court of Appeals to the contrary would have opened the door for any employee terminated after reporting any arguably questionable business practice to pursue a wrongful discharge claim based upon the public policy against “unfair and deceptive” trade practices expressed in the state and federal consumer protection statutes. This concern was directly invoked by the Court of Appeals in its decision, as the Court noted that the broad language of the consumer protection statutes undermined their utility in the context of a wrongful discharge claim, as the specific obligations of an employer pursuant to these statutes are often not readily apparent. The Court thus concluded that a mere allegation that an employer has violated such a statute, in the absence of an allegation that the employer breached a clearly identifiable legal duty imposed by the statute, is an insufficient basis on which to find a violation of public policy for purposes of a wrongful discharge claim.
Takeaway for Employers
Employers considering the termination of an employee must be cognizant of the existence of the wrongful discharge tort and must take care not to base employment decisions on grounds that would run afoul of well-established public policies. Parks v. Alpharma, Inc. has provided a degree of clarity for employers by confirming that the mere allegation that an employer engaged in unfair trade practices, absent reference to a specific legal duty which the employer is alleged to have violated, will not typically be sufficient to support a wrongful discharge claim.