Political Contributions Rule Continues to Be Painful

With the contenders for President nearly locked up for the conventions, I’m stuck worrying about political contributions. At least one fund manager continues to look for an exemption after a small oversight.

Politician: Holding Out a Stack of Money

The firm hired a new senior investment professional in September 2014. A year earlier, the employee had made a contribution to Bruce Rauner who was running for Governor of Illinois.

The problem is that the Governor appoints trustees to the board of trustees for the Illinois state pension funds. Some of those funds were investors in one of the firm’s funds.

The contribution was paying the cost of a small meet-and-greet reception for the candidate. The total value was $892.17. That small amount is greater than the $350 limit and triggers the two-year ban on fees.

The firm is not alone. On page 14 of the request, it lists several other requests for exemption.

  • Davidson Kempner Capital Management LLC, Investment Advisers Act Release Nos. 1A-3693 (October
    17, 2013) (notice) and IA-3715 (November 13, 2013) (order)
  • Ares Real Estate Management Holdings, LLC, Investment Advisers Act Release Nos. IA-3957 (October 22, 2014) (notice) and IA-3969 (November 18, 2014) (order)
  • Crestview Advisers, LLC, Investment Advisers Act Release Nos. IA-3987 (December 19, 2014) (notice) and IA-3997
    (January 14, 2015) (order)
  • T. Rowe Price, Investment Advisers Act Release Nos. IA-4046 (March 12, 2015) (notice) and IA-4058 (April 8, 2015) (order)
  • Crescent Capital Group, LP, Investment Advisers Release Nos. IA-4140 (July 14, 2015) (notice) and IA-4172 (August 14,
    2015) (order)
  • Starwood Capital Group Management, LLC, Investment Advisers Act Release Nos. IA-4182 (August 26, 2015) (notice) and IA-4203 (September 22, 2015) (order)
  • Fidelity Management & Research Company and FMR Co., Inc., Investment Advisers Release Nos. IA-4220 (October 8,
    2015)(notice) and IA-4254 (November 3, 2015)(order)
  • Brookfield Asset Management Private Institutional Capital Adviser US, LLC et. al., Investment Advisers Act Release Nos. IA-4337 (February 22, 2016)(notice) and IA-4355 (March 21, 2016)

That is a list of some A-list fund managers with a long track record of good compliance. Clearly the rule must be overly broad and tripping up advisers and fund managers if so many are seeking exemptions.

Sources:

Criminal Background Checks for IA Reps in Massachusetts

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There is a new requirement for Investment Advisers Representatives in Massachusetts. Beginning on January 1, 2014 each applicant for registration as an investment adviser representative in Massachusetts will be required to submit a Criminal Offender Record Information (“CORI”) acknowledgement form.

The Secretary of State published proposed changes to the Investment Adviser regulations in March. The changes are effective on January 1, 2014.

The CORI acknowledgement form will be made available in fillable .pdf format on the Division’s website at the URL http://www.sec.state.ma.us/sct/sctcori/cori.htm and is a required component of a complete application. But the IARD system won’t take the form so the completed and executed CORI acknowledgement form has to be filed by e-mail submission to the address [email protected].

References:

Nursing Mothers and Compliance

An amendment to the Fair Labor Standards Act included in the recent Health Care reform law imposes a new requirement on the workplace. Employers must now provide “reasonable” unpaid breaks to nursing mothers in the first year after birth. The health care law adds a new provision to the FLSA, 29 U.S.C. §207(r)(1), which allows nursing mothers to take a break every time they need to express breast milk and requires employers to provide a private location, other than a bathroom, where such employees may express milk. This provision under the Patient Protection and Affordable Care Act amended the FLSA effective March 23, 2010.

Employers of fewer than 50 employees are exempt if the breastfeeding requirements would “impose an undue hardship by causing the employer significant difficulty or expense.” You can read more on the U.S. Department of Labor Website, Fact Sheet #73: Break Time for Nursing Mothers under the FLSA

The new legislation only covers women who are paid hourly, not a salary, although some state laws cover both. If you work in a state that is more favorable to the employee than the federal law, you’ll need to follow your own state’s rule. Here’s a link to all the state breastfeeding rules. Twenty-four states have laws related to breastfeeding in the workplace: Arkansas, California, Colorado, Connecticut, Georgia, Hawaii, Illinois, Indiana, Maine, Minnesota, Mississippi, Montana, New Mexico, New York, North Dakota, Oklahoma, Oregon, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington and Wyoming, plus the District of Columbia and Puerto Rico.

Section 7 of the Fair Labor Standards Act of 1938 (29 U.S.C. 207) is amended by adding at the end the following:

(r)(1) An employer shall provide—

1. a reasonable break time for an employee to express breast milk for her nursing child for 1 year after the child’s birth each time such employee has need to express the milk; and
2. a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public, which may be used by an employee to express breast milk.

(2) An employer shall not be required to compensate an employee receiving reasonable break time under paragraph (1) for any work time spent for such purpose.

(3) An employer that employs less than 50 employees shall not be subject to the requirements of this subsection, if such requirements would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employer’s business.

(4) Nothing in this subsection shall preempt a State law that provides greater protections to employees than the protections provided for under this subsection.

Section 7 of the Fair Labor Standards Act of 1938 (29 U.S.C. 207)

If you like the picture, you can purchase that jumper on Zazzle: I LOVE BREAST MILK! T-SHIRTS

Evolving Employee Rights in the Age of Web 2.0

Morgan Lewis presented and informative webcast on Web 2.0 from the viewpoint of the company/employee perspective. These are my notes.

Panelists:

Companies cannot limit the personal use of these sites. But the line between personal and professional can be very fuzzy. You limit access over the company’s network, but employees have easy access from mobile phones and home computers.

They cited Deloitte’s 2009 Ethics & Workplace Survey Examines the Reputational Risk Implications of Social Networks to point out the need of company’s to address social media.

One issues is the reasonable expectation of privacy. This is even more complicated given that the data is in the internet cloud and not the company’s hardware or storage. Most (if not all) of your Web 2.0 data resides in the cloud, not your hard drive or network storage that you control.

Personal Use of Mobile Devices

The first issue with privacy is the use of mobile devices. Its hard to prevent ALL personal use of a company supplied device, especially a mobile device. Even if you ban personal use of the device, it is hard to monitor and hard to enforce. Would you really discipline an employee who made a personal phone call on their blackberry? You need a clear policy that is enforceable. You also need to set reasonable expectations of privacy.

This is exactly the issue addressed in the Quon case, recently argued at the Supreme Court. The panel spent some time discussing the Quon case and some lessons that may be coming out of this case. There are some lessons to be learned from this case, even though the decision may be limited to government workplaces.

The additional complication is that the company (in this case the government) pulled the personal information from a third-party service provider. That implicated the Electronic Communications Privacy Act

Personal Email

They also took a close look at the . That was more focused on the use of personal email and attorney-client privilege. There are some interesting attacks on that company’s computer use policy.

They raised the Convertino v. U.S. Department of Justice (674 F. Supp 2d 97 (D.D.C. 2009). The DOJ found email between an Assistant Attorney General and his personal attorney. He had used a DOJ email account. He deleted the email, but didn’t realize that a deleted copy would be kept. He deleted the emails immediately after they were sent or received.  The court used a similar test as that used in Stengart court to look at the employee’s expectation of privacy. DOJ did not ban personal email on the company system.

The take away is that employees should inform employees that they have no reasonable expectation of privacy in any technology provided by the company. (It is probably too hard to monitor and enforce a complete ban on personal use.) You should also let them know that back-up copies may exist even if the employee deletes a copy.

Proposed Internet/Email Policy

Here are some items they propose :

  • Limit personal use of the company email system.
  • Inform employees they have no reasonable expectation of privacy in any technology provided by the company (e.g., email, Internet, laptop, PDA).
  • All information forwarded or received via the company email system is subject to monitoring and may be stored.
  • All information sent, received or viewed on the Internet, including personal, web-based communications, instant messages, text messages or other forms of communication, can be stored on a computer’s hard drive, the company’s servers, etc. and can be reviewed and retrieved by the company at any time.
  • Back-up copies of electronic communications may exist, even if “deleted” from the computer.
  • Issue periodic reminders to employees that the computers they are working on do not belong to them, and that information accessed on the computers may be subject to inspection and collection.
  • Describe prohibited activities:
    • Disseminating confidential information;
    • Any actions that could be seen as harassing;
    • “Hacking” and related activities;
    • Tampering with or disabling security mechanisms on company computers;
    • Unauthorized downloads; and
    • Violations of copyright laws.
  • Enforce the policy and punish violators.
  • Obtain signed acknowledgements and post the policy.

HR using Web 2.0

There are special limitations for HR and hiring managers. You need to be careful when using social networking sites to find information about potential hires. Do not try to gain a view of someone’s online account through deception.

You should consider whether employees can give recommendations on sites like LinkedIn.

You can’t prohibit employees from discussing terms and conditions of employment. Such a ban would be a violation under the National Labor Relations Act.

FTC Guidelines and the Workplace

The FTC guidelines are also something to keep in mind. Your employees may be the biggest fans of your products. If an employee is talking about your company’s product, the employee needs to disclose they are an employee. Otherwise it could be consider a deceptive testimonial, creating potential liability for the employee and the company.

The FTC guidelines requires disclosure of a material connection between the blogger (commenter, Twitter-er, etc.) and the company. Employment is clearly a material connection. That means it needs to be clearly and conspicuously disclosed. (16 C.F.R. §255.5 ) The existence of a policy will consider the existence of a policy in deciding in whether to bring an enforcement action.

A company should make it clear that the policy is applicable across all communication platforms.

Should you search the internet for information on job applicants?

There are issues. Many people may argue that it is an invasion of privacy. Beyond the practical issues, there are legal issues such as discrimination and unlawful background checks.

You also need to be concerned that the information you find is applicable to that person. There are lots of people out there with similar names. (Even I am not unique: Another Doug Cornelius)

Are you liable for false statements made by your employees?

If the company sponsors the content, then yes the company can be held responsible. Even on a non-sponsored site, if the company does nothing then that could be viewed as assent and be held responsible.

Can you discipline an employee for using these site?

Not if they are complaining about their working environment to other employees. That is protected under the National Labor Relations Act.

If the activity is akin to whistle-blowing, then the activity could be protected under Sarbanes-Oxley or state statute.

A few states specifically protect off-duty, off-site conduct.

Can you prevent employees from saying bad things about the company?

An injunction acts as a prior restraint on speech. [See: Bynorg v. SL Green Realty Corp., 2005 WL 3497821 (S.D.N.Y. 2005)]

It  is easier to get damages for defamation and invasion of privacy. [See: Varian Medical Systems, Inc. v. Delfino]

If the blogger is anonymous, it’s harder to do. Particularly in California, you need to prove defamation before a court will grant a subpoena.

Protect your IP

You want to be careful about how employees are using your logo or other intellectual property on their own sites.

Materials

They posted a copy of the slidedeck from the presentation on their website if you want more detail: Presentation Slidedeck

COBRA Subsisdy Set to be Extended

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With the COBRA subsidy having expired, Congress has moved ahead to extend the subsidy.

Section 1010 of the Department of Defense Appropriations Act, 2010 extends the COBRA subsidy program for six more months, moving from a nine month subsidy to a 15 month subsidy.

It also extends the eligibility for workers from December 31, 2009 to February 28, 2010.

Since the change is included in the Department of Defense Appropriations Act for 2010 (military spending for the year), everyone expects President Obama to sign it shortly.

References:

COBRA Subsidy Expiring

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Congress continues to health care reform while the emergency COBRA subsidy is set to expire.

To help out the wave of workers laid-off, downsized and outsourced, Congress included a health insurance subsidy as part of the American Recovery and Reinvestment Act of 2009. The government would pay 65 percent of the COBRA premium for eligible workers who lost their jobs between September 1, 2008 and December 31, 2009.

If you lost your job between September 1, 2008 and March 1, 2009, the subsidy is set to expire. The law provided for nine months of the subsidy. If you lost your job after March 1, 2009, the subsidy is in place for nine months after you lost your job.

When this benefit expires, the employee will not lose the COBRA coverage. But the subsidy will expire and the employee will be bear the full cost of the insurance coverage.

There have been a few bills in Congress to extend the subsidy (Extended COBRA Continuation Protection Act of 2009 (H.R. 3930) and COBRA Subsidy Extension and Enhancement Act (S. 2730)) but they do not seem to be moving forward.

That means that employers will need to go back their old COBRA notice in January 2010. For those of you who had the benefit of the COBRA subsidy, the amount you pay for health insurance will go up.

References:

New Workplace Posters – EEO is the Law

EEO Law

Starting November 21, 2009, you need a new workplace poster: EEO is the Law.pdf-icon

There are two new federal workplace laws the Genetic Information Non-Discrimination Act and the ADA Amendments Act. Federal law requires all employers covered by the federal anti-discrimination laws (those with 15 or more employees) to post multilingual notices describing the federal laws against job discrimination.

If you want a fresh poster you can use print out and use the “EEO is the Lawpdf-icon poster. If you already have a EEO poster, you can just add the “EEO is the Law” Poster Supplement.pdf-icon

References:

Workplace Challenges of Influenza (Seasonal and H1N1)

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Have you gotten your flu shot yet?

I noticed the leaves changing colors in my backyard. That means the annual influenza season is approaching. This year we also get the second round of the Swine Flu. (The pork industry prefers that we use the H1N1 designation instead.) It looks like this second round of H1N1 will be more of a problem than the spring outbreak.

The Centers for Disease Control and Prevention has released its Guidance for Business and Employers to Plan and Respond to the 2009-2010 Flu Season and the Department of Homeland Security has released its Planning for 2009 H1N1 Influenza: A Preparedness Guide for Small Businesses.

You should review your policies designed to protect their healthy employees, guard the privacy of sick employees, and comply with applicable legal requirements. That means you need to be familiar with the Family and Medical Leave Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Health Insurance Portability and Accountability Act, the Occupational Safety and Health Act, as well as your own internal attendance policies, collective bargaining obligations, employee benefits, and insurance law. Throw some state and local laws into the mix.

The key will be to encourage your sick workers to stay home and not punish them for staying out sick.

References:

What You Should Know About California AB 1825 – Harassment Prevention Training for Supervisors

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AB 1825, (California Government Code 12950.1) mandates that employers who do business in California and employ 50 or more employees provide two hours of sexual harassment prevention training to supervisors located in California at least once every two years.

Kaplan Eduneering offered a webinar: What You Should Know About California AB 1825 – Harassment Prevention Training for Supervisors. Thomas H. Petrides a Partner at K&L Gates LLP gave the presentation. These are my notes.

The law was first enacted effective January 2005, so for many employers, 2009 is another required “training year”.

In August of 2007, the California Fair Employment & Housing Commission issued Regulations regarding the required content of the training materials for AB 1825 harassment prevention training programs, including “E-learning” interactive, computer-based programs.

“Supervisors” have a broad definition. Anyone that has the authority to direct other employees may be enough to classify that person as a supervisor.

Under California law, the employer will be strictly liable for unlawful harassment of its supervisors, even if the harassment was unknown by the employer. (This is different than federal law.)

Training is only required for supervisors that are located in California. But if you don’t do the training for other similar supervisors in other states, you risk having a different standards attack in a lawsuit.

It is better to be over-inclusive in providing the training. The regulations provide that attending training does not create an inference that the employee is a supervisor.

The supervisors have to stay for two full hours, whether is in person training or remote training. If you leave 15 minutes early, you are not sufficiently trained. Tom pointed out that the training need not be two consecutive hours.

New supervisors have to received training within 6 months. However, if it’s a new employee and they received training at their prior job, you can use that. The burden is on the new employer to show that the prior training was sufficient.

See: