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Employment Archives

Supreme Court Increases Employers' Fiduciary Responsibilities in 401(k) Plans

In 2007, a lawsuit was filed against energy giant Edison International, alleging that the company violated the Employees Retirement Income Securities Act of 1974 (ERISA) by offering employees higher-priced retail class mutual funds as retirement plan investments when what were basically the same funds could be had under lower-cost institutional shares. The class action against Edison was brought on behalf of about 20,000 employees and retirees.

Whistleblower Given Large Award in SEC's First Retaliation Action

In its first settlement regarding a claim of retaliation against a whistleblower, the Securities and Exchange Commission ("SEC") awarded whistleblower James Nordgaard ("Nordgaard") $600,000, which was 30 percent of the commission's settlement with Nordgaard's former firm, Paradigm Capital Management, Inc.1 After blowing the whistle on Paradigm in 2014 for engaging in prohibited transactions, Nordgaard, who was the former head of trading at the hedge fund, experienced retaliatory actions such as demotion, rescinding of his responsibilities, and being "otherwise marginalized" until he eventually resigned from the firm. Paradigm and its owner, Candace King Weir ("Paradigm"), paid $2.2 million in total to settle the case with the SEC.2

Illinois Supreme Court Strikes Down Pension Law

On May 8, 2015, the Illinois Supreme Court held that a pension law which cut government workers' benefits was unconstitutional pursuant to a clause in the Illinois Constitution. The law was passed in 2013 with the intention of reducing the state's $105 billion debt from the retirement system. Specifically, the law "stopped automatic, compounded yearly cost-of-living increase for retirees, extended retirement ages for current state workers and limited the amount of salary used to calculate pension benefits."1 The Constitution states that pension benefits cannot be "diminished or impaired" once they are agreed upon and are settled as part of a contract between the government and employees.

Universal Agrees to Pay $26 Million to Class of Movie Industry Professionals

For decades Hollywood studios have found creative and controversial ways of dividing profits among industry professionals. One specific area where actors, writers and directors have taken issue is in the division of profits from home video revenue.

Judge Dismisses Antitrust Suit Against DreamWorks, Disney

Legal claims are highly procedural and time-sensitive. To be successful, claims must be correctly processed and contain sufficient evidence to move the claim forward. The federal government and the states also have various statutes of limitations for different kinds of claims, and if you are party to a legal dispute, then your lawyer should be abreast of the relevant procedural requirements and statutes of limitations when advising you on your case.

JP Morgan Still Fighting ERISA Lawsuit Brought by Employees

JPMorgan Chase and Co. ("JPMorgan" or the "Company") is still feeling the ramifications of the improper derivative trades undertaken by [former employee] Bruno Iksil, the so-called "London Whale," and several others. The trades caused the company to lose over $6 billion and incur more than $1 billion in fines. In Scrydoff v. JPMorgan Chase and Co. (2014 U.S. Dist. LEXIS 46366), the financial services company is facing a class action lawsuit brought by a class of its own employees that invested money into retirement accounts containing JPMorgan common stock funds. The plaintiffs allege that JPMorgan violated its fiduciary duties to employees under the Employee Retirement Income Security Act ("ERISA") during the period of December 20, 2011 to July 12, 2012 (the "Class Period").1

Supreme Court Sides with DOL Regarding Agency Rulemaking

In the case Perez v. Mortgage Bankers' Association (2015 U.S. LEXIS 1740), the Supreme Court ruled in favor of the Department of Labor ("DOL") and upheld changes the DOL made to an interpretive rule. In 1999 and 2001, the DOL issued interpretive rulings holding that mortgage-loan officers do not qualify as administrative officers and, hence, are not subject to the Fair Labor Standards Act ("FLSA") overtime exemption. In 2004, the DOL changed its ruling and said that mortgage-loan officers do, in fact, fall into the FLSA's overtime exemption category. Finally, in 2010, the DOL went back on its 2004 decision, and ruled without "notice or comment" that the loan officers do not fall under the exemption. In siding with the DOL, the Supreme Court also overturned the "Paralyzed Veterans Doctrine" laid out by the Second Circuit Court of Appeals in Paralyzed Veterans of America v. D.C. Arena L.P (117 F. 3d 579).1

Purple Communications, Inc. and Communications Workers of America, AFL-CIO

At the heart of the National Labor Relations Act ("NLRA") is an employee's Section 7 right to participate in concerted activity and communicate with fellow employees regarding conditions of employment. Prior to the ruling of the National Labor Relations Board ("NLRB" or "the Board") in Purple Communications, Inc. and Communications Workers of America, AFL-CIO ("Purple Communications"), email communication between employees exercising Section 7 rights could be lawfully banned by an employer so long as it was not done so in a discriminating way. In Purple Communications, the Board modified its stance on email communication to adapt to the changing nature of the workplace.1 The issue in Purple Communications was whether Section 7 of the NLRA extended to email communication between employees. In Purple Communications, the Board held that employees, that have access to the company's email, are allowed to use it for concerted activity during non-working time. Prior to the decision in Purple Communications, the NLRB broadly restricted employees' activity under the ruling in Guard Publ. Co. v. NLRB ("Register Guard".)2 Register Guard weighed employees' Section 7 rights against the employer's property right and held that an employer could restrict employee usage of its email services without justification, so long as it did not discriminate against union activity. In other words, the employer's property right over its email system weighs more heavily than an employee's Section 7 rights. The Board's decision in Register Guard was motivated by an archaic view of email technology. The Board updated its antiquated view in Purple Communications. The decision outlined the importance email has in a changing work environment and it shows that email usage has increased over time and has become the "natural gathering place3" of the modern work site. Conversely, Register Guard incorrectly compared email to modes of communication like bulletin boards and telephones. In Purple Communications, the Board demonstrated the importance of email to the modern workplace and found that there is no reasonable protection of concerted activity when the primary mode of communication is broadly restricted. With there previously being such broad restrictions placed on Section 7 rights by Register Guard, Purple Communications contains a new analytical framework to govern the use of an employer's email in concerted activity. Purple Communications only applies, however, to email communications between employees that have been given access to the company's email and the employer can still monitor those communications in a non-discriminatory manner. In addition, Purple Communications changes the weighing mechanism from the owner's property rights to management's interests. That is to say that Section 7 rights should instead be compared to an employer's managerial interest in production and discipline. The change to "managerial interest" means that the employer cannot restrict email usage without showing that email communication in some way hurts the company in a critical business aspect, such as productivity or production. Keep in mind, however, that the change does not mean that every employee is entitled to be granted access to an email account on the company's network. In other words, the decision protects the content an employee might send, but it does not necessarily mean each employee gets an email account. The aim of the new framework is to enhance Section 7 rights at the heart of the NLRA. What You Can Do If You Have A Company Email Account

Shepherd, Finkelman, Miller & Shah: Employment law

A number of veteran litigators at Shepherd, Finkelman, Miller & Shah started out as labor attorneys. Since then, SFMS lawyers have represented a wide range of clients, including labor organizations, private employers, public employers, employee plaintiff groups and individual employees.