As of December 7, 2007, all employers will be required to utilize the new Department of Homeland Security Employment Eligibility Verification form ("Form I-9"), which is now available on the Department's Web site [link]. The new Form I-9 includes changes intended to better reflect current employment eligibility verification requirements. Changes to the Form I-9 include the removal of five documents from "List A" of the "List of Acceptable Documents," the addition of one document to List A, the consolidation of all Employment Authorization Documents with photographs into one item on List A, instructions that the employee is not obligated to provide his or her Social Security number in Section 1 of the Form unless he or she is employed by an employer who participates in E-Verify, and a statement regarding the fact the Form I-9 can be signed and retained electronically.

Please contact any member of Schiff Hardin's Labor and Employment Group if you have questions regarding the new Form I-9.

California Labor Code Section 2802 provides that employers must reimburse employees for "reasonably incurred" business expenses. To this end, employees typically submit expense reports and are then reimbursed dollar for dollar. But what if an employer does not want to be bothered with a dollar for dollar reimbursement, and instead "ballparks" the usual costs and increases its workers' wages accordingly?

That is exactly the issue that was addressed this week by the California Supreme Court in Gattuso v. Harte-Hanks Shoppers. Harte-Hanks Shoppers, Inc. decided to pay certain employees a higher rate of pay to "cover" incurred business expenses rather than reimbursing expenses dollar for dollar. Specifically it paid its outside sales persons — who were expected to use their personal vehicles in the performance of their jobs — more per hour and gave them a higher rate of commission than it gave inside sales persons — who were not expected to use their personal vehicles. The company did not otherwise reimburse the outside sales persons for expenses related to the use of their cars. The outside sales persons filed suit alleging Harte-Hanks failed to indemnify them for all their business-related personal vehicle expenses. Harte-Hanks argued that the employees were de facto indemnified through their higher wage and commission rate.

The Second District Court of Appeal held that employers could indemnify employees for expenses under Labor Code Section 2802 through higher wages and commissions, but only if the increased amount, after taxes, was in fact sufficient to cover the expenses actually incurred.

The case was appealed and on November 5, 2007, the California Supreme Court agreed with the Court of Appeal's finding that employers may pay extra wages to employees to cover reimbursable expenses, so long as the expenses are accounted for, allowing the employee to determine whether he or she is receiving full reimbursement, and the taxing authorities to distinguish between reimbursed expenses and wages.

In essence, the court held that Section 2802 does not prohibit an employer's use of a lump-sum method to reimburse employees for work-related expenses, if (1) the amount paid is sufficient to actually fully reimburse employees for the expenses they necessarily incur, and (2) the reimbursement is accounted for separately from the employees' regular income.

Please contact any member of Schiff Hardin's Labor and Employment Group if you have questions about this decision or about California Labor Code Section 2802.

In today's rapidly changing technological world, e-mail is an important communication tool, for both business and personal use. Indeed, the United States government has recognized the growing significance of e-mail in today's society by enacting the Electronic Communications Privacy Act ("ECPA"), which governs unauthorized access to and disclosure of electronic mail messages. In recognition of the unique role that e-mail communications play in the business world, the ECPA contains an important exception for employers. Employers may review employee e-mails so long as they have consent from the employee (obtained through an employee handbook, policy or similar means) or the employer can show a business necessity for the interception or access.

To take advantage of this exception to the ECPA, all employers should establish a written policy that indicates that an employee should not have an expectation of privacy in e-mail communications, and that reminds employees that company-owned communication systems and e-mail systems are limited to business purposes. A New York court recently re-affirmed the importance of such a policy in Scott v. Beth Israel Medical Center.

In Beth Israel, the plaintiff was the former chairman of the defendant hospital's orthopedic department. Some time after the hospital terminated the plaintiff's employment, the hospital's counsel sent a letter to the plaintiff's counsel, which advised plaintiff's counsel that the hospital was in possession of e-mail correspondence between plaintiff and his attorney. The correspondence also stated the hospital's belief that any potential privilege attached to the communications had been waived by the plaintiff's use of the hospital's e-mail system. The e-mails had been sent to and from the plaintiff's business e-mail account and over the hospital's server.

Plaintiff's counsel responded by informing the hospital that the e-mails were privileged communications belonging to the plaintiff, for which there had been no waiver. Plaintiff's counsel requested immediate return of the e-mails. When the hospital refused to return the e-mails, the plaintiff sought a protective order, arguing that the e-mails were privileged under both the attorney-client privilege and the attorney work-product doctrine. The hospital argued that the plaintiff could not have had any reasonable expectation of privacy in e-mails sent over the hospital's e-mail server and in violation of its e-mail policy.

The hospital's e-mail policy was contained in its Human Resources Policy and Procedure Manual. The e-mail policy prohibited personal use of the company's e-mail systems. In addition, the policy gave the hospital permission to access and monitor e-mails sent on the hospital's computer or communications system. Finally, the hospital required new employees to sign a form acknowledging that they had read and were familiar with the e-mail policy. The court found that the effect of such a policy was to "have the employer looking over your shoulder each time you send an e-mail." Accordingly, the court held that the communication could not have been made in confidence and, therefore, the attorney-client privilege was inapplicable.

Although the Beth Israel decision is not the first addressing the issue of waiving a privilege through e-mail communications, it is the most recent. Most courts addressing the issue agree that employees have a limited expectation of privacy in e-mail and a company can ban personal e-mail use altogether. Companies that allow personal use of e-mail must be careful to draft a policy that gives the company access to the e-mail system. Best practices for such policies include, at a minimum:

• Banning employees' personal use of electronic systems, where appropriate, or otherwise reminding employees that the electronic systems belong to the company and should be used primarily for the company's business;
• Banning email of a sexual nature, or email that is intimidating, hostile, or offensive with respect to sex, age, race, color, religion, national origin, ancestry, disability, marital status, sexual orientation, or any other status protected by federal, state, or local law;
• Notifying the employee that the company has the right to monitor the employee's use of the e-mail or other electronic systems;
• Notifying the employee that third parties, such as information technology employees, have the right to access the employee's e-mail and other electronic systems.

This list is not exhaustive. For more information, or for assistance in drafting an e-mail policy that ensures your company's right to access, monitor and control your employees' e-mail communications, please contact any member of Schiff Hardin's Labor and Employment Group.

A new generation of union leaders is bringing efforts to influence employers into the 21st century. From anti-employer Web sites and blogs touting damaging (and often inaccurate) information to coordinating activities via text messaging and MySpace, unions have started using technology to focus their efforts and create public relations nightmares for the companies they are seeking to influence. Now, employers are starting to fight back using RICO (the Racketeer Influenced and Corrupt Organizations Act — the very law that was used to fight mob influence over unions years ago). An editorial published in The Washington Times on November 8 discusses the impact of these union tactics, and the steps employers are taking in response [link]. If you are experiencing such union efforts, our Labor and Employment and RICO attorneys would be happy to meet with you to discuss your company's rights and options under RICO and other statutes.

October 25, 2007
Appellate Court Reiterates That Radical Change in Behavior May Constitute "Constructive Notice" of Need for FMLA Leave
New California Laws Impose Tax Credit Notice Requirement and Allow for Leave for Military Spouses

October 10 , 2007
At-Will Disclaimers Do Not Undermine Strike Replacements' Permanent Status
NLRB Alters Its Rules on the Voluntary Recognition Bar
Getting to Court is Getting Easier for Illinois Employees