Labor and Employment e-Report – First Edition

Dear Client and Friends,

I am pleased to introduce Epstein Becker Green's Labor and Employment eReport, an electronic publication that offers insightful and practical guidance on today's hottest and most challenging workplace issues and trends. As our first feature article illustrates, our mission is to not just give you the legal bottom line but also to provide concrete assistance on how to deal with the issues discussed.

Thus, in addition to illuminating one of the latest wrinkles in employment class actions — protecting the identity of class members — our inaugural feature article offers a specific, detailed and we believe novel approach to responding to this challenge that protects the interests of both employers and employees. Each issue will also spotlight one of the sub-practice groups in the Labor and Employment arena, commencing with Non-Compete and Trade Secrets.

The eReport, which will kick into full gear beginning in September, also provides easy links to EBG Client Alerts on important "breaking news," significant legal decisions and legislation, and emerging trends at both the federal and state level. Our Client Alerts will continue to be issued as developments warrant. We also invite you to review the schedule of upcoming client briefings that offer CLE credits.

This is your eReport, so we welcome your input. Please send your comments and suggestions to Linda Altschul at [email protected]

Best Regards,

Ronald M. Green

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Employee Concerns About Identity Theft Could Preclude Disclosure of Identities and Contact Information in Employment Class Actions

by Michael Kun

Identity theft and employment class actions.

Two phenomena of the past decade that would appear to be entirely unrelated —yet identity theft issues may provide employers with a much-needed litigation edge in employment class actions.

As the Internet and other technologies have advanced, identity theft concerns have increased. Many individuals have opened up their credit card bills to find thousands of dollars of purchases charged to them by unknown persons who have somehow obtained their identifying information. Concerns about rampant identity theft have led federal and state legislatures to enact a variety of laws to protect citizens' information, including protecting credit card and Social Security information from disclosure.

The increase in incidents of identity theft would appear to have nothing whatsoever to do with another trend of the decade — an increase in employment class actions, particularly wage-and-hour class actions and collective actions.

How are identity theft issues related to wage-and-hour class actions or other employment class actions?

Simply, employee concerns about identity theft may provide employers with an argument against giving plaintiff's counsel the names and contact information of potential class members prior to class certification. And, without this information, plaintiff's counsel may have difficulty gathering information to support the motion for class certification.

Indeed, in a proposed wage-and-hour class action pending before the Superior Court for Orange County, California, the Court denied plaintiff's motion to compel names and contact information for all potential class members prior to a ruling on class certification. Unlike employees at other companies, this company's employees had signed forms indicating that they did not want the company to share their contact information with third parties, or permitting the employer to do so only if they were asked on a case-by-case basis and authorized the release of that information. The forms, which were developed by EBG's Los Angeles office in response to recent California privacy rights decisions and ongoing concerns about identity theft, are set forth below.

The instructions that the employees had given through these forms allowed the company to argue that, unlike other employers, it did not give its employees a limited expectation of privacy, but instead employees had a "heightened expectation of privacy" regarding their contact information. Bucking a trend by California courts to require employers to provide this information pre-certification, the Court agreed that the unique privacy forms signed by the employees demonstrated that they in fact had a "heightened expectation of privacy" regarding their contact information.

The Court not only denied the plaintiff's motion to compel the names and contact information, but also denied the plaintiff's counsel's request that employees' names and contact information be shared with them unless an individual "opted out" by indicating that he or she did not want that information shared. The Court reasoned that such a procedure would not adequately protect the employees' heightened privacy rights, concluding that the only employee contact information that the plaintiff would receive would be that for employees who "opted in," indicating that they wanted their information shared with the plaintiff.

Only time will tell whether this form or similar forms will be relied upon by courts to prevent the disclosure of employee contact information prior to class certification in employment class actions. However, in cases where employers are often perceived to be at a great procedural disadvantage, having the ability to argue that contact information need not be provided would itself appear to give employers some much-needed leverage in these matters.

THE FORM DEVELOPED BY EBG

The following is the form developed by EBG:

RELEASE OF CONTACT INFORMATION

From time to time, (the "Company") may be asked to provide your contact information, including your home address and telephone number, to third parties. The Company may be asked to provide such information in the context of legal proceedings, including class action lawsuits.

We understand that many employees may consider this information to be private and may not want it released. Accordingly, please indicate whether you consent to the disclosure of your contact information by marking the appropriate box.

No, I do not consent to the Company's disclosure of my contact information to third parties.

Yes, I consent to the Company's disclosure of my contact information to third parties.

I would like to be asked on a case-by-case basis whether I consent to the disclosure of my contact information to a particular third party, and my contact information should only be provided if I affirmatively consent in writing.

Dated:

Signature

Print Name

NOTE: Your response does not create a guarantee that the Company will not release your contact information as circumstances may require or warrant it. For instance, the Company may be required or compelled by law to disclose your contact information, regardless of whether you consent to such disclosure, or it may determine that it must do so should it determine that you are a witness in a lawsuit or should it be requested by law enforcement officers. In such an event, the Company cannot be held responsible for disclosing this information even if you have not consented to disclosure or asked for a case-by-case determination of disclosure.

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Audits: The First Step Toward Preventing
and Defending Class Actions

by Mary Gambardella

One only need to pick up any newspaper during any week to see the headlines being grabbed by burgeoning class action litigation in the area of wage and hour laws. The largest employers are being targeted by such multiplying actions.

Why the class action? Class actions are powerful; they provide the potential for countless dollars in damages, including punitive damages. Where wage and hour violations are alleged, unlike any other area of employment law, plaintiffs do not have the burden of proof—it is the employer's burden, for example, to sustain its classification of positions (i.e., exempt or nonexempt from overtime pay requirements; employee or independent contractor) and to prove that rest/meal breaks are given, appropriate time records are created and maintained, and that overtime pay is properly paid. The potential size of awards for attorney's fees, even where the potential damage amounts attributable to some of the individual plaintiffs are relatively small, facilitates each plaintiff's ability to secure the most engaged and experienced legal counsel. Discovery is often overwhelming and costly; this, coupled with potentially damaging exposure, makes settlement more likely, even when the employer has strong, affirmative defenses.

While nothing businesses do can guarantee that they will never be sued—including being sued by use of the class action—there are proactive steps employers can take to reduce the likelihood of this occurrence and, even when sued, can help to reduce their exposure to damages, including punitive damages. Moreover, such efforts, where accompanied, of course, by appropriate remedial measures, assist the employer in reducing the potential settlement value of the case, as they reduce the perceived damage exposure, and especially the perceived exposure to the damages that make class actions the most lucrative for plaintiffs and their attorneys: punitive damages. Simply stated, the voluntary, "internal audit" of policies and practices is one of the most effective ways to further attempts to prevent class actions. What this means is reviewing and analyzing the following policies and practices before a complaint is brought:

1. Are independent contractors classified properly? Should they instead be deemed employees entitled to certain benefits, overtime pay, etc.? This area has recently become the focus of much wage/hour class action litigation (e.g., United Parcel Service), as well as the focus of lawmakers.

2. Are classifications of positions as either exempt or nonexempt from overtime pay obligations correct? Proper classification of positions is crucial to ensure that overtime and other wages are paid.

3. Do written job descriptions exist, and, if so, are they outdated and/or do they properly reflect the current job duties of incumbents? Up-to-date and accurate job descriptions assist employers in justifying job classifications.

4. Are deductions from wages (if any) made in accordance with all applicable laws?

5. Are time records required, in proper format, and maintained for the requisite period of time?

6. Are required rest/meal periods given, and does the employer ensure that the fact they are given is recorded by the employee?

7. Are employees properly paid for all compensable time, such as time for "donning and doffing" or other preparatory time, certain travel time, or on-call time?

8. Are payroll practices in line with applicable federal, state, and local laws?

9. Are state law variations from the Fair Labor Standards Act encompassed within the employer's pay practices?

Clearly, such internal audits are challenging and time consuming—often disruptive. When the results of such internal audits are disturbing, even more costly and time-consuming measures must be pursued as expeditiously as possible. However, such challenges and time expenditures do not even remotely compare to the challenges, expenditures, and disruption caused by lawsuits, and by class action lawsuits in particular. As the future for employers seems to be that these class actions will continue to be the favored mechanism of prosecution for wage/hour claims, these internal audits are not just advisable, but necessary.