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Part Five—Employee Privacy
Privacy on the Job?
Typically, employers have dress codes requiring a neat, clean appearance. Other employers might
have specific requirements, such as covering tattoos during work hours.
Employer oversight extends well beyond appearance policies. Drug tests, integrity tests,
personality tests, surveillance, searches for applicants’ online reputations are routine personnel
practices in many firms. Employers have an interest in these strategies not only to hire better
employees and improve productivity but to protect coworkers, reduce insurance claims, and shield
consumers from poor products and service. On the other hand, job applicants and employees resist
parking their personal identity and privacy at the office door.
Privacy off the Job?
A growing number of employers offer incentives such as financial rewards or prizes to employees
who try to get healthier. These wellness programs may reward employees for taking part in a
fitness assessment or weight-loss program, or attaining certain health metrics such as an ideal
blood pressure or cholesterol level. Penalties can also be exacted in the form of higher health care
premiums or an actual payment.
Although relatively few office romance cases have reached the courts, most employers appear
comfortable in restricting office romance to some degree, such as prohibiting relationships between
a supervisor and subordinate or requiring employees who are dating to inform their supervisor.
I. Monitoring
The City of Ontario, California, Police Department issued pagers to its police officers for business
purposes. The city paid for a text messaging plan, but officers who exceeded the allotted messaging
quota were required to pay overage charges. While at work, Sergeant Jeff Quon sent personal,
sometimes sexually explicit, text messages on his police department-issued pager to both his then-wife
and a co-worker with whom he was romantically involved.
Acknowledging that “workplace norms” regarding technology are evolving, in 2010 the U.S. Supreme
Court held in City of Ontario v. Quon that even assuming Quon had a reasonable expectation of privacy in
his text messages, the police department’s review of the text messages did not violate Quon’s Fourth
Amendment rights. Employers’ rights to monitor electronic messages may be defined on a case-by-case
basis.
A. The Law
Having a clear, written workplace policy regarding the use and monitoring of workplace technology is a
good employment practice. [For a sample policy regarding technology in the workplace, see
www.shrm.org/TemplatesTools/Samples/Policies/Pages/CMS_000558.aspx]
The primary federal legislation, the 1986 Electronic Communications Privacy Act, prohibits private
individuals and organizations from intercepting wire, oral, or electronic communications. The act
provides for two exceptions, however: (1) prior consent by one of the parties to the communication,
and (2) employer monitoring in the “ordinary course of business” by telephone or other device
furnished by a provider of wire or electronic communication service.
In 2012, six states—California, Delaware, Illinois, Maryland, Michigan, and New Jersey—enacted
legislation prohibiting an employer from requesting or requiring an employee or applicant to disclose a
user name or password for a personal social media account.
“BYOD” to Work
While some employers provide employees with a cell phone or tablet for work use, others may
encourage use of employees’ own personal devices, known as “bring your own device (BYOD).”
According to a 2013 survey, approximately one-fifth of employers may perform “remote wipes” of
employees’ devices such as cell phones during or after employment as a means of securing data.
Employees who are asked to BYOD face the dilemma of either risking the loss of personal information
when a cell phone is erased, or appearing to be not committed to their jobs for refusing to use a
personal device to stay electronically connected to work.
Legal Briefcase: Koeppel v. Speirs 2010 Iowa App. LEXIS 25 (Ct.App. Iowa 2010) (unpubd op.)
II. Drug Testing
According to a federal government study, nearly one out of five workers between the ages of 18 and 25
used illicit drugs in the past month, along with one out of ten between the ages of 26 and 34.
In an effort to address those workplace drug problems, employers provide information about illicit drug
abuse, have written policies regarding drug use in the workplace, and offer employee assistance
programs (EAPs).
Furthermore, as a 2010 Society Human Resource Management (SHRM) poll revealed 55 percent of
employers use drug testing in hiring employees, whereas 80 percent of employers conduct “reasonable
suspicion” workplace drug testing.
A. Drug-Free Workplace
The Drug-Free Workplace Act of 1988 applies to employers who have contracts of $100,000 or more
with the federal government or who receive aid from the government. Those employers are required to
develop an antidrug policy for employees. They must provide drug-free awareness programs for
employees, and they must acquaint employees with available assistance for those with drug problems,
while also warning them of the penalties that accompany violation of the policy.
III. Drug Testing in Law and Practice
Broadly, the private-sector drug testing, when properly conducted, ordinarily is lawful in the following five
situations:
Preemployment testing—state and local law may impose some restrictions.
In association with periodic physical examinations—advance notice is often required.
For cause—an employer has probable cause or reasonable suspicion.
Postaccident testing—where drug use is suspected.
Follow-up testing—for those returning from drug (or alcohol) rehabilitation.
Random testing, on the other hand, sometimes produces significant legal issues. A number of states
forbid random drug testing or limit it to safety-sensitive situations. The legality of drug testing often
reduces to a balancing test where the employee’s right to privacy is balanced against the employer’s
business needs. Particularly intrusive or careless testing often tilts that balance toward employees.
Beyond the balancing test, a number of other legal considerations influence employer drug-testing
practices, particularly in public-sector jobs:
U.S. Constitution—the Fourth Amendment to the U.S. Constitution forbids unreasonable searches
and seizures. Certain exceptions, however, have been recognized in cases involving such issues
as safety, national security, and athletic participation. However, the U.S. Constitution protects
citizens from the government, not from private-sector employers (with limited exceptions).
State Constitutions—many state constitutions offer privacy protection, but court decisions, to
date, have generally not extended those protections to private-sector employers.
Federal Statutes—drug testing could violate Title VII of the Civil Rights Act of 1964 or the
Americans with Disabilities Act if the testing fails to treat all individuals equally. The ADA protects
recovering drug addicts and those erroneously believed to be drug abusers, but not employees or
applicants who are currently abusing drugs.
State and Local Statutes—in recent years, fears about drug use in the workplace and often
intense business community lobbying have, in some cases, relaxed testing restraints.
Common Law Claims—some of the more prominent judge-made claims that might provide a
challenge to drug testing include invasion of privacy, defamation, negligence, intentional infliction of
emotional distress, and wrongful discharge.
Legalizing Marijuana... in the Workplace?
Colorado and Washington have legalized the possession of up to one ounce of marijuana for personal
use. Although marijuana is considered an illegal drug under the federal Controlled Substance Act, the
U.S. Department of Justice announced in August 2013 that “at this time,” the federal government was,
“deferring its right to challenge” the laws passed by Colorado and Washington, given that both states had
promised to create a “strict regulatory system.”
Part Six—Employee Benefits and Income Maintenance
The 2010 Patient Protection and Affordable Care Act, which became effective in 2014, has raised
concerns that employers’ decisions to provide health insurance coverage will be negatively impacted.
Under the ACA, which became effective in 2014, employers with 50 or more employees that do not
provide affordable health insurance coverage for their employees will face penalties. Those with fewer
than 50 employees that do not provide health insurance will not face a penalty, but are eligible for tax
credits. [For more information on ACA, see https://www.healthcare.gov/]
The federal Consolidated Budget Reconciliation Act (COBRA) requires employers with 20 or more
employees to permit departing employees to retain group health coverage at their own expense for up to
18 months as long as they are not terminated for gross misconduct.
The American Recovery and Reinvestment Act of 2009 provides health benefit premium reductions for
those who were involuntarily unemployed within a particular time frame. Along with health care, another
pressing social issue affecting the workplace is the care of children and elderly parents: 29 percent of
adults in the United States are caregivers to an elderly parent or child with special needs.
I. Family Leave
The Family and Medical Leave Act (FMLA) entitles eligible employees of covered employers to take
job-protected, unpaid leave for certain family-related or medical reasons. Eligible employees are entitled
to 12 weeks of FMLA leave in a 12-month period for the birth, adoption, or foster care placement of a
child, to care for a child, spouse, or parent who has a serious medical condition, or for the employee’s
own serious medical condition.
The 2008 National Defense Authorization Act (NDAA) amended FMLA to provide military family leave to
eligible employees to care for their spouse, child, or parent who is undergoing medical treatment for a
serious injury or illness incurred in the line of duty, or for “qualifying exigencies” including child care and
counseling arising from their spouse’s, child’s, or parent’s call to active duty status from the military
reserves.
Although most worksites are not covered by the FMLA, over half of American employees are eligible for
its protections, reflecting the FMLA’s coverage of larger workplaces. [For more on the FMLA, see
http://www.dol.gov/whd/fmla
Work Abroad?
Of the 38 countries represented in a 2013 study, the United States stood alone as a nation not mandating
paid leave for new mothers. In comparison, Estonia offers about 2 years of paid leave, and Hungary and
Lithuania offer 1½ years or more of fully paid leave. The median amount of fully paid time off available to
a mother for the birth of a child is about 5 to 6 months. In most countries providing paid leave, the
government pays the bill.
II. Unemployment Compensation
Today, all 50 states and the federal government are engaged in a cooperative system that helps protect
the temporarily jobless. The system is financed through a payroll tax paid by employers.
The actual state tax rate for each employer varies, depending on the employer’s experience ratings—the
number of layoffs in its workforce. Thus, employers have an incentive to retain employees.
Rules vary by state, but in general, employees qualify for unemployment benefits by reaching a specified
total of annual wages. Benefits may be collected up to a specified maximum period, usually 26 weeks.
Workers who quit or who are fired for misconduct are ineligible for unemployment compensation.
III. WARN
The Worker Adjustment and Retraining Notification Act (WARN) requires firms with 100 or more
employees to provide 60 days notice if they lay off one-third or more of their workers at any site
employing at least 150 workers, drop 500 or more employees at any site, or close a plant employing at
least 50 workers.
IV. Pensions
Broadly, pensions take two forms: defined benefit plans and defined contribution plans. Defined benefit
pensions are of the traditional form providing specified monthly payments upon retirement. The employee
is offered a menu of investment options for that retirement money, but no promises are made about the
amount that will be paid upon retirement. Defined contribution plans are now much more common than
defined benefit plans.
Various hybrid pension plans have also been developed. A particularly prominent hybrid, a cash balance
plan, is a defined benefit plan that acts somewhat like a defined contribution plan. The employer makes
regular, defined contributions and guarantees a benefit amount to employees based on an established formula, but
the benefits are maintained in individual accounts and are expressed in terms of an accumulated lump sum, a cash
balance, rather than as a periodic payment during retirement. [See http://www.401khelpcenter.com and
http://www.ebri.org for large databases on 401(k) and other retirement topics.]
Pension Law
The federal Employee Retirement Income Security Act (ERISA) regulates pension funds to help
ensure their long-term financial security by reducing fraud and mismanagement. ERISA requires
that fund managers keep detailed records, engage in prudent investments, and provide an annual
report that has been certified by qualified, impartial third parties. ERISA also establishes strict
vesting rights to ensure that employees actually receive the pensions to which they are entitled.
The Pension Benefit Guaranty Corporation (PBGC), funded by company contributions, was created
as an element of ERISA to insure defined benefit plans so that vested persons will be paid up to a
specified maximum if their plan cannot meet its obligations. Defined contribution arrangements are
not covered by the PBGC.
Fears that companies were not sufficiently funding their traditional pension plans led to provisions
in the federal Pension Protection Act of 2006 requiring companies to more adequately fund those
plans. In 2012, the Department of Labor issued disclosure guidelines designed to assist employees
in managing and investing their 401(k) plans.
The Future?
As expenses, including pensions and health care, continue to rise, can American companies
compete successfully with lower-cost foreign competition? Will the social constructions of “the good
life” and the “golden years” be altered, and how? Will students need to work years longer than their
parents?
Part Seven—Termination: Protection from Wrongful Discharge
Catherine Wagenseller, an Arizona nurse, her boss, Kay Smith, and some co-workers joined a Colorado
River rafting trip where Wagenseller declined to participate in a “Moon River” skit in which the group
allegedly “mooned” the audience. Likewise, Wagenseller did not join Smith in the heavy drinking,
“grouping up,” public urination, and similar behaviors that allegedly marked the trip. Wagenseller’s
relationship with Smith deteriorated following the trip, and eventually she was terminated. Wagenseller, an
at-will employee, sued, claiming that she was wrongfully discharged.
The state Supreme Court agreed with Wagenseller by finding in the statute a public policy favoring
privacy and decency. The case was returned to the trial level, giving Wagenseller the opportunity to prove
that her refusal to violate state public policy by engaging in public indecency led to her dismissal.
The Wagenseller decision is an exception to the long-standing American rule that at-will employees can
be fired for good reasons, bad reasons, or no reason at all. Furthermore, both employer and employee
freely entered the bargain understanding its terms, and thus the court should, in general, enforce those
terms. Critics, however, argue that the doctrine ignores the historic inequality of bargaining power
between employers and employees
Statutory exceptions to the at-will rule include labor laws protecting union workers and the equal
employment opportunity laws that forbid the dismissal of an employee for discriminatory reasons.
I. Judicial Limitations on At-Will Principles
An increasing number of court decisions provide grounds for dismissed at-will employees to claim that
they have been wrongfully discharged. Those judicial decisions were often provoked by transparently
unjust dismissals. Those judicial limitations to the at-will doctrine fall into three categories: (1) express or
implied contracts, (2) an implied covenant of good faith and fair dealing, and (3) the tort of violating an
established public policy, as in Wagenseller.
Express or Implied Employment Contracts—a number of states have adopted a contractual
protection for at-will employees arising, typically, either from the employee handbook or from the
employer’s conduct and oral representations.
Implied Covenant of Good Faith and Fair Dealing—a few state courts have held that neither
party to a contract may act in bad faith to deprive the other of the benefits of the contract.
Public Policy—most states have now adopted some form of “public policy” exception to at-will
employment, under which a dismissal is wrongful if it results from employee conduct that is
consistent with a public good or the public interest as expressed in legislation, constitutional
protections, and the like.
Only Funny until Someone Quits: The Firing Contest
The owner of a chain of QC Mart convenience stores in Bettendorf, Iowa, offered a $10 cash prize to
workers who could predict which of them would be the next to be fired. A memo distributed to all
employees asked them to write down and seal in an envelope the name of the coworker they thought
would be fired next.
After receiving the memo, QC Mart cashier Misty Shelsky, along with her store manager and a few other
employees, quit. When Shelsky applied for unemployment benefits, the owner challenged the claim,
asserting that she had left the job voluntarily.
As defined by the Department of Labor, a constructive discharge (treated as a termination) occurs when a
worker’s resignation may be found not to be voluntary because the employer has created a hostile or
intolerable work environment or has applied other forms of pressure or coercion which forced the
employee to quit or resign. Should Shelsky be viewed as a terminated employee? Decide. Explain.
Additional Torts
Dismissed employees are increasingly turning to a variety of tort actions often labeled “tag-along
torts”—seeking compensatory and punitive damages to enhance their potential financial recovery.
Potential tort claims arising from termination include, among others, defamation, intentional
infliction of emotional distress, interference with contract, and invasion of privacy.
The following case raises public policy issues in an employment termination.
Legal Briefcase: Lloyd v. Drake University 686 N.W.2d 225 (lowa S.Ct. 2004)
Practicing Ethics: Hearing the Whistle Blow?
Kevin Lamson was a sales manager for Crater Lake Motors. Crater Lake hired Real
Performance Marketing Company (RPM), to conduct a five-day sales promotion at the
dealership. During the first few days of the sales event, Lamson observed or was informed of a
number of activities that he considered to be unethical and possibly unlawful, such as
misrepresenting the event as a bank sale, and including various insurance and service
agreements in the sales contract without the knowledge of the customer. Lamson complained to
the Crater Lake Motors General Manager, Shevlin, who told him to “just go home.”
About a month later, Shevlin criticized Lamson’s attitude and recent performance, stating that
Lamson “wasn’t getting the job done.” Shevlin also told Lamson of another planned RPM sales
event, and asked if Lamson intended to quit. Lamson replied that he did not intend to quit but
that it seemed like Shevlin did not want him to work at Crater Lake Motors anymore. Shevlin
replied that he did not want the Lamson he had seen recently.
Lamson later complained to the Crater Lake Motors owner, Coleman, about RPM. Coleman told
Lamson that working at the second RPM event was mandatory and that failure to attend could
result in dismissal. Lamson told Coleman that he could not participate because doing so would
condone unethical behavior. Coleman said the agreement with RPM had been amended to
explicitly forbid misrepresentations. Lamson did not attend the second RPM event, and was
fired. Lamson then sued Crater Lake Motors for wrongful discharge.
Part Eight—Immigration
Immigration is a vital fuel for America’s economic and cultural growth, but immigration is also a source of
deep political and public policy divisions. While striking down other provisions of the law, including one
making it a crime for immigrants without work permits to seek employment, the U.S. Supreme Court
allowed the controversial section regarding immigration status checks by police to stand. In 2012, illegal
immigrants in the United States totaled about 11.7 million.
Immigration policy is one of the most divisive issue in American public life. The support for directing police
to stop and ask for documentation from those reasonably suspected of being in the United States illegally
might reflect resistance to immigration generally, and the perception that illegal immigrants create an
economic burden. Furthermore, concerns about the negative impact of large legal and illegal immigrant
populations on low-income Americans have been raised.
American Immigration Law
Businesses in the United States have used the H-1B visa program to bring foreign workers to the
United States to fill positions requiring special theoretical or technical expertise in specialized fields
such as science, engineering, or computer programming. The number of H-1B visas available
annually is limited, and after a decline in 2009 in which it took eight months for the H-1B cap to be
met, in 2012 it took just over two months for the 2013 slots to be filled.
In hiring those already in the United States, federal immigration law, including the 1986 Immigration
Reform and Control Act, requires employers to verify that each new hire is a U.S. citizen, a
permanent resident, or a foreign national with permission to work in this country. To meet this
requirement, employers must complete an employment eligibility verification form (I–9) for each
new employee. Employers cannot knowingly hire illegal immigrants, but neither can they
discriminate against legal immigrants because of national origin and similar factors
[For links to the I–9 form and other immigration information, see www.uscis.gov/portal/site/uscis]
Enforcement
Enforcement of immigration laws focuses on two issues: hiring of illegal immigrants, and employers’
illegal discrimination against applicants based on citizenship status or national origin. Critics charge
that these policies create a conflict for employers: on the one hand, employers must be sure to
verify applicants’ ability to work in the United States, but on the other hand, they must take care not
to place extra burdens on applicants because they are of a particular national origin, or are U.S.
permanent residents as opposed to U.S. citizens. E-Verify is a free online system run by the federal
government that determines an employee’s eligibility to work in the United States, comparing
information reported on an employee's Form I-9 with federal records.
