Editor: Joe, congratulations on recently being appointed co-chair of Proskauer’s Labor and Employment Law Department, which is clearly established as one of the country’s top employment practices. Can you two give us a quick overview of some of the latest initiatives launched under your leadership?
Baumgarten: Our 17 practice groups continue to be extremely active in efforts to keep our clients informed of the latest developments – legislative, regulatory or in litigation. Our goal is to provide clients with a single source of information where they can keep up-to-date in every aspect of our practice – whether it is labor, employment or employee benefits. We blog relentlessly and publish client alerts on a regular basis. Proskauer launched a number of employment blogs such as the ERISA Practice Center blog, the Whistleblower Defense blog, the Class Action blog and the Government Contractor Compliance & Regulatory Update blog.
More than 150 in-house counsel and HR professionals attended our annual “Law in the Workplace” program, which highlighted what companies need to do to come into compliance with the Affordable Care Act and recent trends in the whistleblowing arena – including False Claims Act, Sarbanes-Oxley Act and Dodd-Frank Act issues – areas that are very active on the legislative front and in terms of judicial pronouncements.
Bloom: Earlier this week we held a webinar regarding the recently enacted New York City Earned Sick Time Act, which requires most employers to provide mandatory paid and unpaid sick leave to employees working in New York City, and it was attended by over 200 participants. At the end of June, after the U.S. Supreme Court term ends, we’ll do a roundup of decisions from the latest term and discuss trends, implications and what is next on the horizon.
Editor: There has been a flurry of activity coming out of Washington, DC. What steps has the firm taken to elevate its presence there?
Baumgarten: We’re very excited about what we are doing in Washington. Early this year, we brought on a team of lawyers led by Connie Bertram, one of the premier litigators in the DC community. We already had a core of savvy Washington insiders like Larry Lorber, who co-heads the DC L&E group with Connie and was the Deputy Assistant Secretary of Labor and Director of the Office of Federal Contract Compliance Programs during the Ford Administration, former National Labor Relations Board General Counsel Ron Meisburg and former EEOC Vice Chair Leslie Silverman, giving us coverage of many of the major governmental agencies by people who really know those agencies inside and out. Our DC office also houses a robust team of Employee Benefits lawyers led by Paul Hamburger, who joined us in October of 2009 and also co-chairs our Employee Benefits, Executive Compensation and ERISA Litigation Practice Center. The addition of Connie’s team gives us added litigation firepower in a variety of areas, including False Claims Act litigation, litigation involving executive contracts, as well as depth in handling a range of OFCCP and other governmental regulatory matters.
Editor: Recent decisions by the NLRB and federal courts have been viewed as being pro-employee, including those in the areas of arbitration/class action waiver, confidentiality provisions, anti-fraternization policies, at-will employment disclaimers, use of e-mail and other concerted activity scenarios. What kind of impact will these actions have on both union and non-union workplaces?
Baumgarten: The NLRB has definitely reminded us that the NLRA has application beyond unionization and beyond collective bargaining. No one would have predicted years ago that the NLRA protection of concerted activity would have an impact on the availability of class actions under the Fair Labor Standards Act and other employment laws, and yet the NLRB so held in a very controversial decision that has attracted the attention not just of labor lawyers but also of employment and class action lawyers. At the same time, the NLRB has proven to be very controversial. The DC circuit struck down the NLRB’s requirement that employers post notices, essentially holding that it is a violation of free speech. It held that the appointment of so-called recess appointees was in fact unconstitutional. That decision was joined by a second decision issued by the Third Circuit just yesterday to the same effect. Thus, the impact of the controversy goes from the mundane to the very profound, including whether there is in fact a functional NLRB that is even sitting.
The final chapter really has not been written on the NLRB’s recent spate of expansive decisions, but we are telling our non-union clients that they simply cannot tune out when the discussion turns to the NLRA. How companies enforce their e-mail policies, how they conduct investigations, and what they put in their handbooks are all matters that the NLRB has weighed in on, insisting there is a role here for the NLRA.
Editor: Elise, Proskauer’s Class/Collective Action Group has been on a winning streak lately with high-stakes victories for your management-side clients. What do your lawyers do outside the courtroom to successfully defend against or mitigate the impact of a pending class action?
Bloom: The group circulates a monthly update of new decisions. In addition, we communicate almost daily on trends, new court holdings, ideas about the impact of any new decisions, litigation strategies in pending cases and best practices. For example, after Dukes, we started serving written discovery requesting that plaintiffs articulate their trial plan. We envisioned this as a way to bolster our opposition to class certification. The trial plan would show that the case could not be tried on a representative basis because the plan revealed that no common question is capable of a common answer driving the resolution of the case. In the beginning, we did not get much traction from the courts in compelling plaintiffs to provide a trial plan. But after the Seventh Circuit in Espenscheid v. DirectSat embraced the importance of a trial plan, and decertified the class in that case because the plaintiffs could not articulate one, we were able to go back in some of our cases where the court had not compelled a trial plan and revisit that issue. One of the judges, who originally would not compel the plaintiffs to provide one, recently commented that she now understands why a trial plan is important. We are exploring other discovery strategies as a result of Comcast. Because of our constant monitoring of new developments, we are able to devise creative litigation strategies to employ in our cases.
Editor: Do you see a trend in Supreme Court rulings that would bolster class action defense theories?
Bloom: Dukes and the recent Comcast decision re-affirm that the Supreme Court expects the district and circuit courts to apply a rigorous analysis to any Rule 23 certification application. The focus has shifted from articulation of common questions to the requirement plaintiffs affirmatively demonstrate that class claims are capable of resolution by a common answer and that the case is susceptible to awarding damages on a class-wide basis. The High Court made it clear that these standards should be applied to wage and hour class actions in Ross v. RBS, a Rule 23 wage and hour class action, in which the Supreme Court vacated a class certification decision from the Northern District of Illinois and the Seventh Circuit and remanded the case with specific reference to Comcast.
Editor: In recent cases, what role has arbitration played as a result of decisions asserting that disputes should be submitted to arbitration before courts would entertain a motion to bring a class action?
Baumgarten: This is another area in which the Supreme Court has sent messages to the lower courts consistent with the messages that it has sent for many years, looking favorably on arbitration as a means for deciding cases in a cost effective and speedy manner that has benefits for both sides. For the most part, the lower courts have heeded that advice and enforced arbitration decisions. There are still some open issues, including within the Second Circuit, as to whether there are any gaps in that approach that would allow people to essentially hit the exit button on arbitration agreements based upon the theory that because of the cost of proceeding individually, the individual would not be permitted to vindicate his legal rights except through a class action in a court, where a class action is not available in arbitration. We expect there may be more Supreme Court guidance on that issue.
There are several cases before various courts in which plaintiffs have tried to raise public policy concerns that would allow them to escape from the obligation to arbitrate. This ties back to the role of the NLRB and the D.R. Horton decision involving claims that a class action waiver violates the NLRA. Notwithstanding challenges to the constitutionality of this NLRB, this issue will ultimately have to be resolved by the courts and ultimately by the Supreme Court.
Editor: So far, what are you seeing as this year’s top legal issues for employers, and what are some hot button areas of litigation that managers should be wary of? What are some best practices that you recommend for mitigating these risks?
Baumgarten: Questions concerning employee classification continue to attract the attention of regulators on both the federal and state levels as well as plaintiff’s counsel. The issues there involve both the classification of employees as exempt or non-exempt for overtime purposes and the treatment of individuals as independent contractors as opposed to employees. These are big ticket items because they often involve large numbers of individuals and the potential exposure extends to everything from unionization issues to overtime obligations to tax and withholding, unemployment insurance and worker’s compensation. Companies should periodically review what they are doing, whether formally or informally, because jobs have a way of evolving and changing.
Bloom: I would add that some of the other recent hot issues involve bullying in the workplace, disability claims and gender identity or gender preference. With regard to discrimination claims, we think it is very important for employers not only to have policies that are clear and are made known to their employees but to do training. Online training can be very effective, but it is also good to periodically provide some type of in-person training that offers employees an opportunity to ask questions and have an interactive discussion. It is also important to update training materials so they reflect changes in the law.
Editor: What kind of role is social media playing in the workplace, and what kind of cases have popped up in recent years?
Baumgarten: The ways in which workplaces deal with the use of social media are in flux. Social media have become increasingly accepted as a vehicle for conducting business, and businesses can benefit from the use of social media, but it also risks reputational damage from an employee’s viral tweet or Facebook post. Businesses are grappling with this medium because it encourages informal and irreverent communications – those communications are permanent and can spread like wildfire. Both the law and the business community are evolving in their approach to social media. It was so interesting to us that we published a survey last year, which contained the results of two years’ worth of efforts to collect information that we undertook together with our global partners, resulting in the collection of nearly 250 responses from multinational businesses. One of the more notable aspects of the survey is that despite differences in both law and culture, there is actually a striking degree of commonality across the world as to what is considered best practices for dealing with social media usage in the workplace. Again, this is an area that is both a subject of litigation and a subject of intense interest at the NLRB. It has caught the interest of state legislators, as is shown by the number of different states that have passed legislation prohibiting employers from requiring job applicants to give up their passwords to allow access to their social media page. It’s a very hot item!
Bloom: Social media is taking a prominent role in litigation. Facebook profiles and social media communications are requested more and more in discovery. LinkedIn profiles and other social media content are also being used more and more in the courtroom.
Editor: Joe, you were named to the BTI Client Service All-Stars 2013, a select group of lawyers identified exclusively by corporate counsel as leaders in client service excellence. What are some tips that you have passed along to other lawyers for maintaining longstanding client relationships?
Baumgarten: Make sure you do your homework so that you understand your client’s business and their needs. It’s not just about knowing the law but about knowing your clients and how they operate and what their goals are. That is the only way you can hope to give practical advice. Most clients understand that there are often no risk-free options in responding to their problems. They accept that. What you need to do in order to be responsive is not to focus on eliminating risk but to understand what an acceptable level of risk is. I try to keep in mind that when a client asks for advice, the question that they’re really asking is what would you do if you were us, and that requires you to think through problems on a practical level, not just on a theoretical level.