The Department of Labor and the Internal Revenue Service Join Forces With 11 States To Target Employee Misclassification

September 26, 2011 - The United States Department of Labor announced on September 19 that it had signed a memorandum of understanding (MOU) with the IRS aimed at improving enforcement against employers who misclassify employees as independent contractors.  In addition, the DOL announced that it had entered into MOUs with seven states (Connecticut, Maryland, Massachusetts, Minnesota, Missouri, Utah and Washington) and had agreed to enter into MOUs with four more (Hawaii, Illinois, Montana and New York).  Pursuant to the MOUs, the DOL can share information and coordinate law enforcement with the IRS and participating states.

Misclassifying employees as independent contractors can be a costly mistake.  Employers who are uncertain about the proper classification of a worker should consult an attorney.  Employers who believe they have misclassified existing workers also may want to consider whether they are eligible for the recently-announced IRS Voluntary Classification Settlement Program.


Effective November 14, 2011, Employers Must Notify Employees Of Their Rights Under The National Labor Relations Act 

August 25, 2011—The National Labor Relations Board has issued a final rule (similar to one that already applies to federal contractors) requiring most private-sector employers – including non-union employers – to post a notice informing employees of their rights under the National Labor Relations Act, including their rights to organize a union; join a union; and discuss their wages, benefits and other terms and conditions of employment with co-workers or a union.  The Notice also identifies certain conduct in which it is illegal for an employer or a union to engage and informs employees of how to enforce their rights.  

According to the NLRB’s August 25, 2011 press release, the Rule is scheduled to take effect November 14, 2011.  Employers who have significant numbers of non-English speaking employees may be required to provide a translated notice.  A copy of the required poster (in both English and certain languages other than English) may be obtained from an NLRB office or from the NLRB’s website, http://www.nlrb.gov/.


The NLRB Proposes Changes To Union Election Rules

July 21, 2011—The NLRB today proposed a number of changes to the rules governing union elections.  According to the NLRB, “[t]he proposed amendments are intended to reduce unnecessary litigation, streamline pre- and post-election procedures, and facilitate the use of electronic communications and document filing.”  Among the most significant proposed changes are those that would defer most litigation over voter eligibility until after an election has been held and shorten the period for an election to occur after a petition has been filed. 

A public hearing on the proposed rule changes is scheduled for July 18, and the NLRB is accepting written comments until August 22, 2011.


Philadelphia Employers: Have You Banned The Box?

July 12,2011—Mayor Nutter signed Philadelphia’s Fair Criminal Record Screening Standards law (also known as the “Ban the Box” law) on April 13, 2011.  The law, which takes effect today, applies to private employers with ten or more employees in the City of Philadelphia.  Under the law, covered employers may not ask a job applicant about criminal arrests or accusations that did not result in convictions (except for arrests or accusations then pending) or take any adverse action against a job applicant on the basis of arrests or accusations that did not result in convictions (except for arrests or accusations then pending).  In addition, covered employers may not ask about criminal convictions in a job application or in an initial job interview.  Finally, the bill prohibits a covered employer who does not conduct an interview from subsequently making any inquiry or gathering any information regarding an applicant’s criminal convictions.  The bill does not, however, prohibit inquiries or adverse action “specifically authorized” by another law that may apply in a particular employment situation.

Philadelphia employers need to be certain they have revised job application forms and educated personnel involved in hiring about the requirements of the new law as it applies in the application and interview process.


Employers Beware: Overbroad Confidentiality Requirements May Violate The National Labor Relations Act

June 24, 2011—In a decision issued today, the United States Court of Appeals for the First Circuit affirmed a decision by the National Labor Relations Board finding that an employer engaged in an unfair labor practice when it terminated an employee for failing to comply with an overly broad confidentiality provision.  At issue in NLRB v. Northeastern Land Services, Ltd. was a clause in a temporary employment contract providing that “the terms of this employment, including compensation, are confidential . . . . [and d]isclosure of these terms to other parties may constitute grounds for dismissal.”  

While involved in a dispute with Northeastern over certain elements of his compensation, an employee disclosed some of those problems to the Northeastern client for whom he was working.  Northeastern then terminated his employment for violating the confidentiality clause in his contract.  The NLRB determined that because an employee could reasonably construe the confidentiality clause to prohibit activity protected by the NLRA (such as discussing the terms and conditions of employment, including compensation, with union representatives), the confidentiality clause was overbroad and violated the NLRA.  The First Circuit affirmed.  The First Circuit also affirmed the NLRB’s determination that because Northeastern’s confidentiality clause was invalid, the employee’s termination violated the NLRA.  

Even non-union employers may be subject to the NLRA, so all employers should take care when including confidentiality language in employee contracts, handbooks and policies.