Day Pitney Boston News, Fall 2011

Social Networking and Its Impact on the Workplace

Article by Claudia T. Centomini

Employers have always had to grapple with how to respond to an employee's questionable off-duty conduct. The advent of social networking sites has provided employers with an even greater challenge, because they face the dilemma of being exposed to liability when they fail to act or when they react inappropriately. On one hand, if an employer discovers that an employee is sexually harassing or making discriminatory comments about a coworker on a social networking site, the employer must take action or be prepared to respond to a complaint of unlawful discrimination or harassment from the coworker. On the other hand, when the employer disciplines the employee for what the employee tweets or posts on his or her Facebook wall, the employee will likely argue that communicating with colleagues and friends on Facebook, Twitter and other social media outlets is free speech or activity that is protected by the National Labor Relations Act (NLRA).

Courts and government agencies have tried to apply long-standing laws and principles to employees' cyberspace activities, but they are finding that "one size" does not fit all. The media has become fixated on cases that are pending before the National Labor Relations Board (the Board) that involve employees who have posted negative comments on social media sites about their employers and the workplace. These cases have received considerable attention because the Board has reprimanded several employers for disciplining or terminating employees who have made disparaging comments about their bosses or their working conditions. As a result of the intense media scrutiny, Acting General Counsel Lafe Solomon (the General Counsel) of the Board has sought to clarify when the NLRA will apply to situations in which the employers have disciplined employees for using social media to criticize their employers and the workplace.

On August 18, 2011, the Office of the General Counsel (the Office) issued a 24-page report that reviews the outcome of the 14 social media cases that the Board has investigated.

The Board considered in its investigations: (i) whether the conduct is concerted, protected activity under the NLRA; and (ii) whether an employer's restrictions on its employees' use of social media and the employer's efforts to prohibit its employees from speaking with the media are overly broad and are thereby in violation of the NLRA.[1]

Cases Involving Protected Concerted Activity

Nine of the cases before the Board involved employees who were disciplined for posting negative comments about their employers or their working conditions on Facebook or Twitter. Such postings on Facebook or Twitter will often constitute "protected concerted activity" under the NLRA. According to the report, the Board's test for "protected concerted activity" is whether the activity is "engaged in with or on the authority of the other employees, and not solely by and on behalf of the employee himself." Meyers Industries (Meyers I), 268 NLRB 493, 497 (1984).

In four of these cases, the Office found that the employees had engaged in protected concerted activity. The four cases involved: (i) a discussion initiated on Facebook by one employee to her coworkers regarding job performance and staffing levels in preparation for a meeting with the executive director; (ii) a posting on Facebook in which the employee made a negative remark about her supervisor to her coworkers in protest of actions taken against her by her supervisor; (iii) an employee's complaints about the employer's sales event that the Board viewed as part of a series of employee discussions concerning sales commissions; and (iv) a discussion among coworkers on Facebook in response to the employer's failure to withhold income taxes that resulted in employees owing money in taxes. In all instances, the discussions on Facebook occurred outside of the workplace after work hours on the employees' own computers. The Board found that the discussions stemmed from the employees' terms and conditions of employment and ongoing discussions with their coworkers and, thus, constituted protected activity under the NLRA.

In five other cases, the Office determined that the postings did not involve protected concerted activity because they did not involve working conditions and/or they did not seek out other employees to participate in work-related discussions. These cases involved: (i) an employee's Twitter postings about a newspaper's copy editors in which the employee never discussed his concerns with any of his coworkers; (ii) a bartender who complained to a relative, not a coworker, about the employer's tipping policy; (iii) an employee who posted comments on a U.S. senator's Facebook page criticizing the government's award of federal grants to four fire departments; (iv) an employee who engaged in a conversation with her friends, not her coworkers, on her Facebook page during work hours in which she made disparaging remarks about the patients at a facility for mentally disabled clients; and (v) an employee who posted profanity about her supervisor on her Facebook page that the Board viewed as an "individual gripe" as opposed to a collective discussion among the employee's colleagues.

As evidenced by the outcome of these cases, the Board will take into account whether the employee has used company computers or made the comments at issue while using the employee's own equipment outside of the workplace during nonwork hours. The report also makes clear that an employer cannot spontaneously discipline or terminate an employee when it discovers that the employee has written pejorative comments about management or the employee's working conditions on a social media site. The employer must investigate and consider whether the comments arose from or are a continuation of discussions with the employee and other coworkers concerning protected topics under the NLRA.

Cases Involving Employers' Policies on Employees' Use of Social Media

As the report explains, an employer policy on the use of social media is unlawful when the restrictions prevent employees from openly publishing their complaints about a company's workplace policies or mistreatment of employees. In addition, an employer's social media policy cannot prohibit employees from using the company name or other information on their social networking profiles without a compelling reason, and even then, the policy must be narrowly tailored to address only the specific reason for the restriction. A policy cannot prevent employees directly or indirectly from putting the company name on leaflets or other paraphernalia to protest their dissatisfaction with their current working conditions.

In three of the four cases reviewed, the Office concluded that employers had implemented overly broad social media policies that restricted what employees could post online, thereby interfering with their rights to engage in protected concerted activity and, thus, violating the NLRA. Those three cases involved: (i) a hospital that prevented employees from using social media in any way that would hinder the privacy and confidentiality expectations of others or posting anything that would embarrass, harass or defame the hospital, hospital employees or members of the hospital; (ii) an employer's handbook that prohibited employees on their own time from chatting about company business, revealing sensitive information about their employers, or posting comments or pictures involving the company or employees that could be viewed as inappropriate; and (iii) an employer's policy that prevented employees from using photographs or personal information of coworkers, clients, partners or customers without their prior consent as well as company logos and photos of store, brands or products.

In the fourth case, the employer's policy restricted employees from speaking with the media and designated the public affairs office of the company to be responsible for all external communications. The Office noted that this policy was considered lawful because it prohibited employees from speaking with the media on behalf of the company. The Office, however, noted that employees do have the right to speak with the media about their terms and conditions of employment, which this policy did not prohibit.

As the report makes clear, the Board will limit the application of employers' social media policies when they interfere with employees' right to engage in protected, concerted activity. To ensure their policies comply with the NLRA, employers should tailor their policies to protect the company's proprietary information and its reputation in commerce. Employers should also review their policies and revise any rules that have blanket prohibitions against employees posting in cyberspace comments about management and their working conditions.

Driving the Electricity Highway of the Future

Article by Eric K. Runge

A landmark order ("Order No. 1000") issued by the Federal Energy Regulatory Commission ("FERC") on July 21, 2011, is likely to have a profound impact on the nation's electric transmission system for decades to come. Over the past several years, an ever-increasing amount of new wind (the predominant type of renewable energy), solar and other renewable energy supply resources have been developed, largely in response to state and federal public policy requirements and incentives. This trend will continue for the foreseeable future and is transforming our electricity supply. Wind power resources are often developed far from where the electricity is consumed, such as large wind farms built in the Dakotas to serve consumers in the cities of the Midwest. To bring energy from these new resources to consumers, a robust electric transmission system is essential. The development of that essential infrastructure to meet the needs of a transforming industry has been stalled because of lack of clear policy and requirements from the federal government regarding transmission expansion. Order No. 1000, however, will reverse that situation and, instead, drive transmission expansion. By providing for greater clarity, certainty, and mandatory participation regarding transmission planning and cost allocation, the order will likely lead to hundreds of billions of dollars of investment in and expansion of transmission infrastructure throughout the nation. Two major features of Order No. 1000 are highlighted below.

First, Order No. 1000 requires transmission planning on a regional and interregional basis. Each public utility transmission provider must participate in a regional transmission planning process that produces a regional transmission plan, rather than developing transmission on a relatively uncoordinated, piecemeal basis. The regional plan must identify transmission needs and evaluate and select solutions that are more efficient or cost-effective than individual solutions developed by each of the individual transmission providers in a region. The regional transmission planning processes must also consider transmission needs driven by public policy requirements established by state or federal laws or regulations, such as requirements to include a certain percentage of renewable energy resources in the energy supplied to consumers.[1] Most regions now plan transmission only for the purpose of maintaining reliability?- "to keep the lights on." Planning for public policy requirements will be a major change for most of the country and will likely lead to major expansion of transmission to meet state renewable energy and environmental requirements.

Second, Order No. 1000 establishes much-needed requirements for transmission cost allocation. A clear, comprehensive cost allocation method is one of the most important factors in getting new transmission built, given the potential for multibillion-dollar investments in major transmission. For many regions of the country, agreement on such a method has been the hardest transmission expansion issue to resolve, impeding the integration of new renewable energy resources.[2] Order No. 1000's requirements should help overcome this obstacle. The order requires that each public utility transmission provider must have in place a cost allocation method for new transmission facilities selected in the regional transmission plan. Although Order No. 1000 allows each region considerable flexibility to determine what cost allocation method it will use, the order requires that each method must satisfy certain cost allocation principles, e.g., the costs allocated must be "roughly commensurate" with estimated benefits. Each region will need to have some clearly articulated, transparent method for determining who causes the costs or who benefits from new transmission so that those costs can be allocated.

The FERC has taken a major step forward with Order No. 1000 to make transmission planning more systematic and comprehensive and transmission cost allocation more clear and certain, all of which will spur investment in transmission expansion. Now comes the challenge of each transmission provider throughout the nation working with the states, market participants and other stakeholders in its region to figure out how best to implement the reforms of Order No. 1000 and expand the electricity highway system.

Interview with Ken Shulman

Q. How is Day Pitney's estate planning practice unique?

A. The breadth of our practice separates us from most, if not all, estate planning departments in Boston. Not only do we offer the sophisticated estate planning experience one would expect from a large firm, but we have lawyers who are well-versed in international estate planning and related tax issues, private foundations, premarital planning, estate and trust administration, business succession, probate controversies and my specialized work in elder and special needs planning.

Q. 10,000 "baby boomers" turn 65 every day, and this trend will continue for many years. What issues are unique to older clients?

A. People are living longer, and many of them will need long-term care. Unfortunately, nursing home care?- especially care for elders who do not need skilled medical care but do need assistance with daily activities - is not covered by most health insurance policies. For example, Medicare covers nursing home care only if the patient requires skilled care?- and even then, only for a minimal period of time. Medicare also provides only minimal coverage to help seniors remain at home.

Q. What is elder law, and what services do you offer to older clients and their families?

A. Elder law is focused on helping clients navigate the legal and financial issues associated with aging. In some cases, the advice may include just making sure that the client's estate plan is current and reflects his or her wishes. In addition, the appointment of health care agents and attorneys in fact who are chosen by the client and understand the client's wishes?- particularly when it comes to end-of-life care?- is crucial and can avoid the burden, expense and delay associated with seeking a court-appointed guardian.

Some planning can be more aggressive. Because nursing home care is so expensive (averaging well over $10,000 per month for a better facility in Massachusetts), many clients will need advice about how to afford it. For instance, is long-term care insurance appropriate for a particular individual? Should clients take steps to make themselves eligible for means-tested public benefits, like Medicaid, to help them pay for long-term care? What are the consequences of doing so? What are the rules? The issues are complex and public benefits programs are not known for their rationality, so it can feel like walking through a minefield unless you are fortunate enough to have skilled guidance.

Q. It sounds like some of our younger clients, those in the "sandwich generation," may want to meet with you to discuss their parents' situation.

A. Well, that's certainly possible, but I would have to remind them that their parents would be clients, not the children. Sometimes the interests diverge.

Q. Let's turn to special needs planning. What is it, why is it important and what services does Day Pitney offer?

A. "Special needs" is a broad term generally applicable to individuals with disabilities. This can include individuals with only minor impairments who will live independent, productive lives and, on the other extreme, people who are totally disabled and will need constant supervision and protection?- literally and in a legal sense.

Many of the programs that benefit people with disabilities are "means tested" and require a degree of impoverishment for eligibility. If a parent or grandparent leaves money directly to a person with a disability or through a trust designed to "support" them, this may render the person ineligible for government programs (including health insurance programs) that may otherwise be available to them. This can be devastating since one cannot privately purchase many of the services offered by the government to persons with disabilities.

Our special needs practice helps families understand these issues and implement trusts that allow the disabled family member to remain eligible for programs to the extent necessary, but also provide a source of funds to supplement those programs and enhance the individual's quality of life. Families need lawyers who specialize in this area to guide them through the maze of constantly changing rules and regulations. In addition, the administration of so-called "special needs trusts" is?immensely complicated, and our experience as trustees has proven extremely valuable to families. The complexities in administration include not only the difficult task of complying with the rules these entitlement programs impose and the tax issues that are unique to the special needs area, but also navigating the family dynamics that are involved. Experience has shown that family members often do not make the best choice of trustee in these cases.

Q. Do you think this is a growing area of practice for Day Pitney?

A. With recent studies suggesting that one out of 110 children is born with some form of autism and that one in 10 families has a family member with a disability, the answer is yes. Given the state of our budget and the pressure on entitlement programs, the provision of services to people with disabilities and the funding of these services is only going to become more difficult. Our clients are going to look to us to keep them informed and ahead of the curve.

Massachusetts Supreme Judicial Court Rules That Employees Who Accept an Employer's Severance Package Are Not Automatically Entitled to Unemployment Benefits

Day Pitney LLP recently represented Verizon New England Inc. (Verizon) before the Massachusetts Supreme Judicial Court in connection with an appeal filed by former employee Kristen Connolly. In 2008, Ms. Connolly had accepted Verizon's voluntary separation package, which contained financial incentives for choosing to terminate her employment. After she accepted the separation package and terminated her employment with Verizon, Ms. Connolly applied for unemployment benefits. The Division of Unemployment Assistance initially awarded unemployment benefits to Ms. Connolly, but Verizon objected and sought a hearing before the agency. The Division of Unemployment Assistance conducted a hearing and denied unemployment benefits to Ms. Connolly on the basis that she could not show that she had a reasonable belief that her job was in jeopardy due to pending layoffs or poor work performance. Ms. Connolly appealed and, ultimately, had her case heard by the highest court in Massachusetts, the Supreme Judicial Court.

Ms. Connolly sought to have the Court expand the unemployment benefits statute to apply to any employee who accepts an employer's voluntary separation package on the theory that the employee accepts the package from fear of a potential layoff. The Court rejected Ms. Connolly's argument, noting that Ms. Connolly "was not compelled to apply [for the severance package], did not believe her job was in jeopardy, and left in part for personal reasons." Connolly v. Director of the Division of Unemployment Assistance, 460 Mass. 24, 29 (2011). Prior to the Connolly appeal, the Court had issued two decisions on unemployment benefits that were arguably in conflict with one another. In Connolly, the Court resolved this conflict and opined that Massachusetts law requires that employees who choose to accept a voluntary incentive package, like Ms. Connolly, must prove they had reason to believe they were in imminent danger of losing their jobs before they can be entitled to unemployment benefits.

Federal Gift and Estate Tax Exemptions at a Temporary High

Federal estate, gift and generation skipping transfer (GST) exemptions have been temporarily increased to an all-time high of $5,000,000 for the two-year period ending on December 31, 2012, at which time they are scheduled to "sunset," with the gift and estate tax exemptions returning to $1,000,000 and the GST exemption being reduced to approximately $1,360,000. Although there have been some indications that Congress will not allow the exemptions to fall so dramatically at the end of 2012, this is far from certain. The combination of the current increased lifetime gift exemption and the current low-interest-rate environment offers a unique opportunity to make gifts to children and/or grandchildren, outright or in trust. This important tax planning opportunity may significantly reduce estate taxes and increase the amount individuals are able to leave to their families.