Employment Law This Week: Record Whistleblower Award, Union Election Rules, Wellness Program Rewards, Mixed-Guard Units

(1) SEC Awards $17 Million to Whistleblower

Our top story: The Securities and Exchange Commission (SEC) issues a whistleblower award of more than $17 million. The SEC has issued the second-largest award in the history of the agency’s whistleblower program. Awards range from 10% to 30% of monetary sanctions that exceed $1 million. This award marks the end of a one-month period—from May 13 through June 9—in which five whistleblowers received more than $26 million. Victoria Sloan Lin, from Epstein Becker Green, has more:

"We’ve seen four large awards issued since May 13th of this year. However, we shouldn’t read too much into this. Each investigation is unique and proceeds along its own timeline. . . . These large awards have increased awareness of the whistleblower program and may incentivize individuals to come forward with information to the SEC. But that information still needs to lead to a successful enforcement action by the SEC. . . . However, the publicity should incentivize employers to increase their compliance efforts and thus decrease the number of large awards we see in the future."

(2) Fifth Circuit Upholds Union Election Rules

The U.S. Court of Appeals for the Fifth Circuit upholds the “quickie” union election rules of the National Labor Relation Board (NLRB). Last year, the NLRB implemented new rules that allow for faster union elections. The rules prevent employers from challenging union campaigns until after the elections and also require them to share employee information with unions. Employer groups have filed a number of challenges, arguing that the new rules violate employers’ free speech rights and employees’ privacy rights. In this case, the Fifth Circuit disagreed.

(3) IRS Clarifies Taxability of Wellness Program Rewards

Cash rewards for wellness programs are taxable. The Internal Revenue Service (IRS) has released a Chief Counsel Advice memorandum addressing rewards for wellness programs. The memorandum states that, other than actual medical care, any award issued by a medical program is taxable. This would include the reimbursement of an employee’s gym membership. However, the memorandum clarifies that a product or service with minimal value (like a t-shirt) can be classified as a “de minimis” fringe benefit, which would not taxable.

(4) NLRB Scraps Rule on Mixed-Guard Unit Recognition

The NLRB reverses its mixed-guard unit recognition rule. If a union represents both security guards and other employee groups, then an employer’s decision to recognize the union is voluntary. Before this decision, employers could also withdraw their recognition if no collective bargaining agreement was reached. Now, employers must continue to recognize the union unless and until the employees vote to decertify it in an NLRB election. For more on new barriers to decertifying unions, click here.

(5) In-House Tip of the Week

Sara Marzitelli, People Manager at Sweaty Betty USA, shares her advice on using social media in recruitment practices:

"Employers who wish to use social media in their pre-hire recruitment should always make sure that they designate a search person who is not the decision-maker in the hiring process. . . . The search person should always make sure that they’re doing the social media searches at the same point in the hiring process each time. For example, if the search is always done before the candidate is interviewed, they should make sure they do that with every applicant. . . . The designated search person should make sure that they’re not conveying any protected characteristics or activities to the hiring manager in the process. This will protect the employer from the applicant making claims that they used a protected characteristic or activity for a basis for not hiring the applicant. . . . As with all hiring decisions, employers should make sure that they have a legitimate basis for not hiring an employee."