Monthly Archives: April 2012

NLRB Mandatory Employee Rights Notice Effective April 30, 2012

By Maxiel Gomez, Esq.
mgomez@pashmanstein.com

UPDATE: NLRB Delays Enforcement of Notice Rule Pending Court Resolution

The National Labor Relations Board announced today that its regional offices will not implement the rule requiring employers to post a notice advising employees of their rights until after the issues are resolved before the court.  On April 13, 2012, the Court in Chamber of Commerce v. NLRB held that the Board exceeded its authority by promulgating a rule that requires employers to post a notification of employee rights under the Act and found the rule was invalid in its entirety.  In National Association of Manufacturers, et al. v. NLRB., No. 11-cv-01629 (D.D.C. March 2, 2012), the D.C. Circuit ruled that portions of the rule were invalid.  The NLRB has already appealed the D.C. Circuit ruling, however, it has not yet taken any action in response to the South Carolina ruling.   Given the conflicting decisions in the federal courts, the NLRB has delayed implementation of the rule again.

NLRB Mandatory Employee Rights Notice Effective April 30, 2012

As of April 30, 2012, most employers will be required to post a notice advising employees of their rights under the National Labor Relations Act (“Act”).  The National Labor Relations Board (“NLRB”) has broad jurisdiction covering private sector employers that have an impact on interstate commerce exceeding a set minimum volume of business.  For example, the Act covers retail or service establishments with annual gross receipts of at least $500,000.   The rule, which faced vigorous opposition, was initially set to take effect on November 2011, then was postponed until January 31, 2012 and now the new implementation date is April 30, 2012.

In a recent split decision, the U.S. District Court for the District of Columbia held that the NLRB has the authority to require employers to post a notice advising employees of their rights under the Act.  The Court also upheld the portion of the rule that allows an employer’s failure to post the notice to be used as evidence of an unlawful motive or hostility towards union activities. National Association of Manufacturers, et al. v. NLRB., No. 11-cv-01629 (D.D.C. March 2, 2012).  The Court struck down two provisions of the Rule – the section which made the failure to post the notice an automatic unfair labor practice and the automatic tolling of the statute of limitations.  The National Association of Manufacturers has filed injunctive relief seeking a stay that would block the implementation of the NLRB’s notice posting requirement.  The Board’s rule is also being challenged before the U.S. District Court for South Carolina, however, a decision has not been issued yet.  Chamber of Commerce v. NLRB, D.S.C., No. 11-cv-2516.

Despite the pending challenges, employers should plan to comply with the rule’s April 30th deadline. The rule requires that the notice be posted in a conspicuous place alongside other employer notifications, or, alternatively, posted electronically on the employer’s internal or external website.  The notice must be posted in English and if 20% of the employees are not proficient in English, then in the other language. The notice is available for downloading in English and 23 other languages on the NLRB’s website at http://www.nlrb.gov/poster or free copies are available upon request from the NLRB.

Can a Contract Dispute With An Employee Become a Whistleblower Claim?

By Andrew M. Moskowitz, Esq.
amoskowitz@pashmanstein.com

In a recent case, Powell v. Wachovia Corp. et al., Docket No. A-1727-10T4 (App. Div. Apr. 9, 2012), a panel of the New Jersey Appellate Division reversed a $3.6 million verdict in favor of a former employee of Wachovia Insurance.  The former employee, James Powell, had claimed that Wachovia had fired him in retaliation for his objecting to Wachovia’s plan to change his and others’ commission percentages.  Powell had alleged that his termination violated the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -14.  However, the appellate court held that, even accepting Powell’s allegations as true, this matter was a mere contractual dispute and that Powell had not demonstrated that he reasonably believed Wachovia’s conduct was fraudulent or in violation of the law.  Accordingly, the appellate court reversed the jury verdict and directed the lower court to dismiss the complaint with prejudice.

Powell began his job as a benefits producer in 1993.  His job involved marketing employee benefits plans such as health, life, and disability insurance to small and medium-size employers.  For approximately thirteen years, his compensation plan was that he would receive 50% of every dollar of commissions that he generated.  However, in early 2006, Wachovia sought to dramatically alter this formula so that Powell and other benefits producers would receive as little as 10% of the commission revenue.

In response, Powell and four other colleagues retained an attorney, who wrote a letter at the end of March 2006 objecting to this proposed new compensation plan.  Ultimately, the parties compromised and agreed to a “a ‘60/40 split’ for new business … and a ‘70/30 [split] for renewals…”  Six months later, Powell and seven other individuals were terminated, purportedly for viewing pornographic emails in violation of Wachovia’s company policy.

The Court noted that, to establish a whistleblower claim under CEPA, a plaintiff must demonstrate either that 1) he or she reasonably believed that the employer’s conduct violated either a law, rule, or regulation promulgated pursuant to law, or a clear mandate of public policy, or 2) he or she reasonably believed the employer’s conduct was fraudulent or criminal.

In reversing the jury verdict in favor of Powell, the Court found that Powell had not demonstrated a reasonable belief that Wachovia’s conduct was fraudulent, deceptive or unlawful.  Rather, as articulated by his attorney at the end of March 2006, Powell believed only that Wachovia had breached his and his colleagues’ contractual right to certain commission percentages.  The Court therefore concluded that, “at its core all that was at stake was a contract dispute,” and that such a dispute “cannot be elevated, as a matter of law, to a CEPA springboard for damages.”

Although it is an unpublished opinion and therefore is not technically binding upon New Jersey courts, the Powell opinion is consistent with New Jersey precedent that private contractual disputes do not give rise to CEPA claims.  See, e.g., Maw v. Advanced Clinical Communications, Inc., 179 N.J. 439 (2004) (New Jersey Supreme Court held that employee fired for refusing to sign restrictive covenant did not state a claim under CEPA).

Divorce and Restraints Against Dissipating Assets

By Tadd Yearing, Esq.
tyearing@pashmanstein.com

In New Jersey, to prevent a party from dissipating marital assets or incurring unreasonable debt during the divorce, the courts require a party to file an application during the litigation seeking an injunction against the spouse acting in bad faith. The onus is, thus, on the parties themselves to seek the protection of the court.

Not all states agree with this procedure. In 2009, New York amended its laws to incorporate an automatic injunctive order into all matrimonial actions that is binding on both parties. (N.Y. Domestic Relations Law § 236 (B) (2)).  Under this framework, the plaintiff must simultaneously serve the defendant with the Complaint for Divorce along with an “automatic order” compliant with the statutory requirements. The order is deemed binding on the plaintiff upon filing and upon the defendant upon receipt of service.  The order remains in effect for the duration of the divorce action (unless terminated or amended by subsequent order of the court or written agreement between the parties) and, broadly, prohibits both parties from selling, transfering, encumbering, concealing, assigning, removing or in any way disposing of any marital property without the consent of the other party in writing, or by order of the court.

There is a certain common sense rationale to New York’s law, as it clearly is intended to reduce legal fees by making one of the most commonly requested, and almost always granted, forms of relief the default position of the parties.  It also sets an important tone for the discovery process, which can be riddled with gamesmanship and efforts to hide income or assets. While I am generally against the efforts by states to make the divorce process a “canned” event, and where New Jersey is often cited as one of the most progressive and cutting-edge jurisdictions in the country for its efforts to resist the one-size-fits-all mentality of other states, the notion of a mutual automatic restraint on the dissipation of assets is an instance where a less modern sister-state has an interesting idea at least worth considering.

The iPad Boom: Good for Business?

By Michael Zoller, Esq.
mzoller@pashmanstein.com

According to a new national survey of owners and CEOs of small businesses conducted by the Business Journals, the use of the Apple iPad by businesses and their employees has nearly quadrupled in the past year.[1]  The results of the survey indicate that the usage rate of the iPad has risen from 9 percent in 2010 to 34 percent in 2011.  And to think, all of this increase occurred before Apple unveiled its “New iPad” on March 7th.  After only its first weekend of sales, Apple announced that the new iPad produced the strongest opening numbers of any iPad version, moving over 3 million units.[2]  Based on these initial sales of the new iPad and a discounted price for the older model iPad 2, it is only likely that this usage rate is going to increase going forward.

The survey cites owners’ and CEO’s desire for accessibility as the biggest reason for the iPad’s popularity.  Unfortunately, for any small business owner, this greater accessibility comes with greater responsibility.  While the iPad has many features and applications that can benefit a small business, it also raises many issues that any small business owner must be aware of in order to protect his or her business.

The first issue a small business owner faces when it comes to employees’ use of an iPad is ownership of the tablet.  If the business supplies the device for its employees, the business owner will have increased costs, but will also retain greater control over its use.  The alternative is for the business to allow its employees to supply their own iPad.  This approach will save the business the upfront acquisition costs, but might cost the business more in the long run if problems should arise.

With less control over an employee owned iPad, it will be harder for the business to protect any records or confidential information saved on the tablet.  If an employee was to leave the business, any information of this type could potentially leave with him or her instead of remaining with the business when the employee was forced to turn in a business owned iPad.

Of course not all issues a small business faces are related to who owns the iPad.  Regardless of ownership, the business could potentially face liability for its employees’ actions while using an iPad.  If the employee is using a business owned iPad or a personal iPad connected to the business’ wireless network, the business may be vicariously liable for any crime committed by the employee.[3]  The need to protect a business from liability then gives rise to other potential issues such as employee privacy concerns and what a business can have access to on an iPad that is potentially used for both business and personal purposes.  Additionally, if an iPad containing business records or confidential information is stolen, what will matter is not who owns the iPad, but what was done to protect the information.

With the iPad gaining more traction in the small business world, a business must be fully aware of all the potential issues the device presents and protect itself accordingly.  At a minimum, businesses should have an iPad user policy.  The policy can be similar to the Email and Internet policy the business already has and lay out in detail exactly what is and is not acceptable use of a business owned iPad or an employee owned iPad on the business’ network.  Additionally, there are special applications and software that can be installed to protect and/or wipe business or confidential information from the iPad in the case of theft or an employee leaving.

Based on current trends, the 34% usage rate is going to look like a low figure by 2012-13 alone, so it is best for any small business owner to get out in front of these issues now.  As long as the small business owner is aware of the potential risks and takes the appropriate steps to protect him/herself and their business, the iPad should be an effective tool for any small business.


[3] See Doe v. XYC Corp., 382 N.J. Super. 122 (App. Div. 2005)(court found employer can be liable for its employee’s involvement in child pornography via his work computer).