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Thursday, July 27, 2017

Federal Government Has New Weapons to Help Employers Keep Trade Secrets



By: Thomas Eden

Robert O’Rourke worked for an undisclosed Woodstock, Wisconsin based manufacturer of cast-iron products since 1984 as a plant metallurgist, quality assurance manager and salesperson. He also helped his company develop international business in Jiangsu, China, which manufacturer also sold and manufactured continuous cast-iron products.

On August 12, 2015, O’Rourke advised his employer that he intended to resign, but failed to disclose that he had accepted employment as the vice president from the Jiangsu, China based cast iron employer. O’Rourke allegedly then downloaded electronic data from his employer’s secure internal computer network without authorization that included trade secrets belonging to his employer.  O’Rourke resigned from his company two days later.

On August 22, 2015, O’Rourke purchased a ticket for a flight to China. As he was scheduled to leave on September 21, 2015, from O'Hare International he was in possession of trade secrets, including customer information of his employer when federal authorities seized the stolen electronic data and stolen paper documents from O’Rourke.

O’Rourke’s Federal Criminal is one of the very first brought under the federal trade secrets act. The Defend Trade Secrets Act (“DTSA”), was passed by both houses of Congress, signed by President Obama in 2016, which become effective upon the President’s signature. It applies to any misappropriation of trade secrets. With this new law Companies that are victims of trade-secret theft now have a federal alternative to bringing a civil action to enjoin violations of trade-secret theft and to seek a remedy for violations that already have occurred. DTSA actions are prosecuted by the U.S. Attorney’s Office as a Criminal Prosecution.

O’Rourke’s indictment under this new act ordered him to turn over the new Federal trade secrets act that were allegedly stored on a two-terabyte external hard drive which was in his possession as he sought to board the flight to China from O’Hara International. The indictment accused him as follows:

“Robert O’Rourke, defendant herein, with intent to convert a trade secret that as related to a product and service used in and intended for use in interstate and foreign commerce…to the economic benefit of a person other than the trade secret’s owner, and knowing and intending that the offense would injure any owner of that trade secret, knowingly did possess and attempt to possess such information, knowing the information to have been stolen and appropriated, obtained and converted without authorization,” the indictment said.

Common Sense Counsel: For companies with multi-state operations, and even for companies with single-state operations but whose trade secrets are portable across state lines (by hard copy documents or electronically), the DTSA affords a new weapon to protect trade secrets nationwide. In addition, because trade secrets litigation often involves violations of non-competition or non-solicitation agreements, such claims also may be brought in federal court in tandem with the alleged DTSA violation. Thus, the DTSA may provide a new, meaningful alternative to state court litigation when seeking to protect trade secrets and related unfair competition. Finally, all agreements with non-disclosure provisions must include DTSA language to take full advance of its protections. Finally, the federal government has delivered to Employers a new sharp weapon to help keep trade secrets-secret.

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and drafts state compliant drug-free workplace programs for employers in all 50 states. He can be contacted at teden@constangy.com or 334-246-2901 with blog at www.alabamaatwork.com with link to order.


Wednesday, July 19, 2017

Massachusetts Supreme Court Takes Bite out of Employer Blanket Marijuana Prohibition




Cristina Barbuto, was hired into an entry level position by Advantage Sales and Marketing in the late summer of 2014. Advantage Sales and Marketing, LLC (ASM) claims to be one of North America's leading sales and marketing agencies specializing in outsourced sales and merchandising representatives to producers of food products and consumer goods.

After hire an ASM representative left a message for Barbuto stating that she was required to take a mandatory drug test. Barbuto responded to her supervisor that she would test positive for marijuana, explaining that she suffers from Crohn's disease, a debilitating gastrointestinal condition. She went on to explain that she was a qualifying medical Marijuana Cardholder under Massachusetts law and that her physician had provided her with a written certification that allowed her to use marijuana for medicinal purposes. Barbuto assured her supervisor that she did not use marijuana daily and would not consume it before work or at work. Barbuto went on to explain that as a result of her Crohn's disease, and her irritable bowel syndrome, she has "little or no appetite," and finds it difficult to maintain a healthy weight and using marijuana two or three time a week after work had helped her gain fifteen pounds and maintain a healthy weight.

In response, the supervisor told Barbuto that her medicinal use of marijuana "should not be a problem," but that he would confirm this with others at ASM. The supervisor later telephoned Barbuto and confirmed that her lawful medical use of marijuana would not be an issue with the company.

On September 5, 2014, Barbuto was subject to a ASM’s mandatory urine drug test.  A few days latter she went to an ASM training program, where she was given a uniform and assigned a supermarket location where she would promote the products of ASM's customers. On September 12 Barbuto completed her first day of work, but that evening ASM's Human Resources representative informed Barbuto that she was terminated for testing positive for marijuana.  The HR representative told Barbuto that ASM did not care if Barbuto used marijuana to treat her medical condition because "we follow federal law, not state law."

Barbuto filed a verified charge of discrimination against ASM and the HR representative with the Massachusetts Commission Against Discrimination, and later filed suit in the Massachusetts Superior Court, alleging handicap discrimination under Massachusetts law, a private right of action under the Massachusetts Medical Marijuana Act and various other state law claims which were dismissed, except for an invasion of privacy claim. Barbuto then appealed directly to the Massachusetts Supreme Court.

On July 17 the Massachusetts Supreme Court ruled in favor of Barbuto, holding as follows: “In 2012, Massachusetts voters approved the initiative petition entitled, An Act for the humanitarian medical use of marijuana, St. 2012, c. 369 (medical marijuana act or act), whose stated purpose is "that there should be no punishment under state law for qualifying patients . . . for the medical use of marijuana."Id. at § 1. The issue on appeal is whether a qualifying patient who has been terminated from her employment because she tested positive for marijuana as a result of her lawful medical use of marijuana has a civil remedy against her employer. We conclude that the plaintiff may seek a remedy through claims of handicap discrimination in violation of G. L. c. 151B, and therefore reverse the dismissal of the plaintiff's discrimination claims. We also conclude that there is no implied statutory private cause of action under the medical marijuana act and that the plaintiff has failed to state a claim for wrongful termination in violation of public policy, and therefore affirm the dismissal of those claims.”

Three Employer Safe Harbors for Marijuana Prohibitions left open by the Massachusetts Supreme Court as presenting possible undue hardships for an employer:
  1.    “For instance, an employer might prove that the continued use of medical marijuana would impair the employee's performance of her work or pose an "unacceptably significant" safety risk to the public, the employee, or her fellow employees.”
  2.     “Alternatively, an undue hardship might be shown if the employer can prove that the use of marijuana by an employee would violate an employer's contractual or statutory obligation, and thereby jeopardize its ability to perform its business. We recognize that transportation employers are subject to regulations promulgated by the United States Department of Transportation that prohibit any safetysensitive employee subject to drug testing under the department's drug testing regulations from using marijuana.”
  3.       “In addition, we recognize that Federal government contractors and the recipients of Federal grants are obligated to comply with the Drug Free Workplace Act, 41 U.S.C. §§ 8102(a), 8103(a) (2012), which requires them to make "a good faith effort . . . to maintain a drug-free workplace," and prohibits any employee from using a controlled substance in the workplace.”


Common Sense Counsel:  Marijuana Proofing your Drug Free Workplace Policy just got more complicated. But taking these steps now will reduce the risk of a successful employee challenge:  
 Update job descriptions to include “safety sensitive position” and the “ability to work in a constant state of alertness and safe manner” as an essential job function;
 Update the drug-free workplace policy to bring it into compliance with state laws and to include a “pre-duty impairing effects” disclosure language as part of a “safety rule”.
   Treat all impairing effect medications equally to avoid a medical marijuana discrimination/not compassionate/handicap discrimination claim;
 Engage in an interactive discussion with MM Cardholders in the states with sticky medical marijuana laws, like Massachusetts;
 Make employees aware of Marijuana drug free contractual commitments, gate entry requirements and restrictions that would adversely affect your company’s right to do business; and

  Make it all about safety in your policy, written documentation, training and evaluation of your workplace concerns.  

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and drafts state compliant drug-free workplace programs for employers in all 50 states. He can be contacted at teden@constangy.com or 334-246-2901 with blog at www.alabamaatwork.com with link to order.

Wednesday, July 12, 2017

Federal Judge Halts OSHA Rule on Post Accident Drug Testing



Federal Judge David Russell, District Court for the Western District of Oklahoma, on Tuesday July 11 helped the Occupational Safety and Health Administration (OSHA) drive a stake through the heart of OSHA’s much maligned injury and illness reporting rule while the agency considers whether to undo all or part of the regulation. This now barred rule did more to slow down, and to some extent halt, post-accident drug testing by employers across the United States for fear of an OSHA retaliation charge and finds. The case is the National Association of Home Builders of the United States et al. v.Perez et al.

Judge Russell issued a one-page order granting a request by OSHA to stay the case, which the agency filed Monday, July 10th arguing that it needed the time to determine whether to “reconsider, revise or remove portions of the rule” at issue. He ordered OSHA to submit status reports every 90 days to keep the court apprised of the agency’s progress with respect to the proposed rulemaking the agency outlined in its motion.

OSHA’s new rule, which was finalized last year and took effect on Jan. 1, after a Texas Federal District Judge refused to enjoin it in November 2016, required employers to submit electronically information about workplace injuries and illnesses for a publicly available database. Many labeled its OSHA’s attempt to shame employers into compliance, as well as foster litigation.  The rule also required employers to establish reporting procedures for injuries and illnesses and barred retaliation against workers who reported such incidents. OHSA in its comments to the new rule spotlighted suspicionless post-accident drug testing as grounds for it to issue a retaliation citation.

In January 2017, the National Association of Home Builders of the United States, and others, filed a Federal Court Complaint in Oklahoma claiming the database rule exceeds OSHA’s record keeping authority and violated the First Amendment by compelling businesses to give up too much private information.

On June 28 OSHA published a notice in the federal register that both proposed a five-month delay to the July 1 deadline for certain employers to submit the first batch of information required under the rule and questioned whether additional portions of the rule would be subject to changes. OHSA stated in its filing that allowing the parties to proceed with motions for summary judgment presented the risk that OHSA would have to brief and the court would have to consider issues that may be rendered moot by the agency’s reconsideration of the regulation.

In its motion filed on Monday, the Agency stated as follows: “OSHA has confirmed that it will propose additional rulemaking that could directly affect the scope of the rule and therefore the claims at issue in this litigation… Given OSHA’s decision to propose rulemaking that could affect the requirements of the rule, there is good cause for granting the government’s request to stay this case. Staying this litigation would conserve judicial resources because additional rulemaking could eliminate or simplify some of the issues in dispute.”

Common Sense Counsel: Employers without fear of OSHA oversight or fines can, and should, immediately reinstate post-accident drug testing. Of course, having a legally compliant program in accordance with State Laws is critical to successful Worker’s Compensation Disqualification for a positive drug testing result, discharge decisions, privacy concerns, and receiving the worker’s compensation premium discount from your insurer or fund.

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and drafts state compliant drug-free workplace programs for employers in all 50 states. He can be contacted at teden@constangy.com or 334-246-2901 with blog at www.alabamaatwork.com with link to order. 

Friday, July 7, 2017

DOL plows ahead on appeal of injunction against Obama “Overtime Rule”


In a move that reinforces the concept that the only thing predictable about the Trump Administration is its unpredictability, the U.S. Department of Labor filed a reply brief on June 30 asking the U.S. Court of Appeals for the Fifth Circuit to reverse a lower court’s 2016 ruling that enjoined the Obama Administration “overtime rule.”

Many had thought that a Trump-led DOL would have no interest in pursuing the appeal, which was already pending when the Trump Administration took over the reins at the DOL.

The DOL is arguing that the district court’s order was premised on an erroneous legal conclusion, and is asking the Fifth Circuit to reaffirm the Department’s statutory authority to establish a salary level test. However, the DOL asks that the court not address the validity of the specific salary level set by the rule ($913 per week), saying that the DOL intends to revisit the salary threshold through new rulemaking.

Background
The Obama DOL spent the better part of a couple of years engaged in formal rulemaking proceedings to modify the “white-collar exemptions” to the minimum wage and overtime provisions of the Fair Labor Standards Act – the so-called executive, administrative and professional exemptions. Those regulatory changes, which were finalized and set to take effect on December 1, 2016, would have, among other things, more than doubled the minimum weekly salary threshold necessary to qualify for the exemptions, raising it from the current $455 per week to $913 per week, and indexing it to automatically adjust every three years thereafter. Not surprisingly, most employers were shocked at the size of the increase.

On November 22, 2016, a federal judge in Texas preliminarily enjoined the DOL from enforcing the new regulations, only days before they were scheduled to take effect. The rationale for the court’s ruling was that the DOL did not have the legal authority to use salary level as a criterion for determining whether an employee qualifies for one of the white-collar exemptions. In other words, the DOL was limited to using a “duties test” to determine exempt status.

The DOL, in the waning months of the Obama Administration, sought an expedited appeal, but even an expedited appeal could not be completed before the Trump Administration took over. Lower court decision was wrong, Trump’s DOL argues in its appeal.

Common Sense Counsel: As if employers have not been on the wage & hour seesaw for long enough! Expect from Trump’s DOL a new notice of proposed rule-making on the “overtime rule” within the next few months. Look for a weekly salary number closer to $700 with no indexing. So don’t shred all of your wage analysis and employee announcements on changes just yet.

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and can be contacted at teden@constangy.com or 334-246-2901 and blog at www.alabamaatwork.com. Part of the above analysis column appeared in the Constangy Newsletter authored by Tommy’s Washington D.C. partner Jim Coleman.