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Until last week, most employers believed that they had the right to review — and in fact owned — any electronic information stored on company computers. In a recent decision, the New Jersey Supreme Court carved out an exception to this rule. When an employee exchanges emails with her attorney through a personal web-based email account using a company computer, that email is attorney-client privileged even though the computer may automatically create a viewable copy of the email’s text in temporary internet files on the company computer. In addition to ratifying, once again, the sanctity courts grant to the attorney-client privilege, the case highlights the importance of well-drafted company policies to enforce workplace rules and protect employer rights. Although the precedent applies only in New Jersey, the decision is significant for all employers. Stengart v. Loving Care Agency, Inc.

The Facts Of The Case

Marina Stengart worked for Loving Care Agency, Inc., which provides home-care nursing and health services. Stengart worked as the Executive Director of Nursing at Loving Care and was provided with a laptop computer to conduct company business. The company’s policy prohibited most personal use of company-owned email and advised employees that the use of the company’s computer system was not to be considered private.

During her employment, Stengart communicated with her attorney several times about her work situation. She used her web-based, personal-password-protected Yahoo email account, but on a company-provided laptop computer. Unbeknownst to Stengart, there was software that automatically made a copy of the web pages she viewed (including the emails with her lawyer), which were saved on the computer’s hard drive in a folder of temporary Internet files. Stengart’s employment ended and she returned the laptop.

Stengart then sued Loving Care for various claims arising out of her employment, including harassment, discrimination and retaliation. During the course of discovery in Stengart’s case, Loving Care and its lawyers reviewed the company’s laptop computer used by Stengart and discovered emails between Stengart and her lawyer.

Loving Care and its lawyers disclosed the emails to Stengart’s lawyers, but claimed the right to review the emails because they were sent using the company’s laptop. Stengart sought return of the emails and other relief and also argued that Loving Care’s attorneys violated New Jersey’s rules of professional conduct by failing to alert Stengart’s attorneys that it had the emails before reading them.

Court Rules: “The Emails Are Private”

Utilizing a two-part analysis, the Court held that Stengart could reasonably expect that email communications with her lawyer using her web-based personal-password-protected account were private, despite the fact that she used the company’s laptop to send them.

In coming to this conclusion, the Court first scrutinized Loving Care’s Electronic Communications Policy (EC Policy). The EC Policy provided in relevant part that: 1) the company will exercise the right to review all matters on the company’s media systems with or without notice; 2) email, voice mail, Internet use, and computer files are considered company property and are not to be considered private or personal; 3) the principal purpose of email is for company business, but occasional personal use is permitted; 4) use of the email system for business activities unrelated to Loving Care was prohibited; and 5) abuse of the electronic-communications system may result in disciplinary action up to and including termination.

The Court rejected Loving Care’s argument that its employees had no expectation of privacy in their use of company computers based on the EC Policy, finding that it was unclear based on the language of the policy whether use of personal-password-protected, web-based email accounts via company equipment was covered. Specifically, the Court pointed to the fact that “media system” was not defined in the EC Policy and prohibitions regarding inappropriate use of the “email system” appeared to refer only to company email.

The EC policy did not address personal accounts at all and did not warn that personal emails may be stored on a hard drive and reviewed by the company. In other words, Loving Care’s employees did not have express notice that personal emails accessed using a company-owned system were subject to monitoring. In fact, the company acknowledged in the EC Policy itself that occasional personal use was permitted.

Second, the Court analyzed the content of the messages and whether there should be heightened privacy protection for messages between Stengart and her lawyers because of the attorney-client privilege that normally attaches to communications between clients and their attorneys. In its analysis, the Court distinguished between use of a company computer to access websites containing adult and child pornography or sending unprofessional emails to a supervisor (where there is clearly no legitimate expectation of privacy) and the use of a company computer to communicate with one’s lawyer (where a legitimate expectation of privacy depends on various circumstances, including what notice is given by the company).

The Court found that Stengart had a reasonable expectation of privacy in her emails with her lawyers under these circumstances because: 1) Stengart had a subjective expectation of privacy because she used a personal-password-protected email account and not the company’s account; 2) Stengart had an objectively reasonable expectation of privacy because the company’s EC Policy did not address use of personal email accounts at all and also allowed for some personal use, further muddying the waters as to exactly what use was prohibited; and 3) the emails were not illegal or inappropriate such as to potentially cause harm to the company, but instead were attorney-client communications historically considered to be private.

The Court also ruled that Loving Care’s lawyers’ review and use of the privileged emails violated the state ethics rules governing the inadvertent disclosure of privileged communications. Although the Court noted that Loving Care’s attorneys did not act in bad faith and believed that they legitimately attempted to preserve evidence to defend a civil lawsuit, it still found the attorneys erred in not setting aside the possibly privileged communications once they realized they were privileged. This factual background may have led the Court to take a broader view on the issue of whether Stengart’s emails sent using the company-owned systems were private.

Your Policies Should Give Clear Notice Of What Is Prohibited

The Court in Stengart confirmed that employers can adopt and enforce lawful policies relating to computer use in order to “protect the assets, reputation and productivity of a business and to ensure compliance with legitimate corporate policies.” Yet, the Court went so far as to opine that a policy that banned all personal computer use – even if it provided clear notice that an employer could retrieve and read an employee’s attorney-client communications on a personal email account using the company’s systems – would not be enforceable, because of the important public policy concerns underlying the attorney-client privilege.

While this specific holding applies only to New Jersey employers, this case should remind all employers how important well-drafted policies are to enforcing workplace rules and protecting employer rights. This is particularly true in the area of electronic communications where technology continues to develop at a rapid pace creating an ever-changing legal landscape in this area of workplace privacy.

For maximum protection, you should carefully review any electronic-communications policies to be sure those policies reflect the intent and practice regarding the scope of any prohibition on, or monitoring of, personal use of your computer systems. Make sure that any such policies take into account today’s technology in order to specify what personal use is prohibited and what emails and computer use will be subject to review. For instance, if you intend to prohibit personal use of web-based password-protected email using the company’s computers, or to monitor such communications, you need to specifically say so.

Finally, ensure that any policies (especially those involving monitoring of personal email) comply with the laws specific to your jurisdiction, make sure that such policies are clearly communicated, acknowledged by employees in writing and consistently enforced.

If you have questions, or would like help updating your electronic communications policies, please contact your regular Fisher & Phillips attorney

This provides information about a specific court ruling. It is not intended to be, and should not be construed as, legal advice for any particular fact situation.  From Fisher and Phillips

On March 3, 2010, U.S. Immigration and Customs Enforcement (ICE) announced the issuance of Form I-9 Notices of Inspection to 180 businesses in Louisiana, Mississippi, Alabama, Arkansas and Tennessee. The Notices of Inspection require employers to allow ICE to inspect their I-9 forms to determine compliance with employment eligibility verification laws.

This is ICE’s third round of immigration audits within the last year. The first round occurred on July 1, 2009, when ICE issued Notices of Inspection to 652 businesses. The second round of immigration audits occurred on November 19, 2009, affecting an additional 1,000 businesses nationwide.

If you receive a notification of inspection, you will be given three days to prepare for a meeting with federal officials in which the company’s Form I-9 records will be reviewed. In addition to properly completed I-9 forms for all current and recently terminated employees, you may be asked to turn over payroll documentation and other employee documentation.

According to Raymond R. Parmer, Jr., Acting Special Agent in charge of the ICE Office of Investigations in New Orleans, “ICE is committed to establishing a meaningful I-9 Inspection program to promote compliance with the law. This effort is a first step in ICE’s long-term strategy to address and deter illegal employment.”

Employers who escape a Notice of Inspection in this round of audits should take this time to ensure that their I-9 forms are properly completed. Employers should conduct in-house I-9 audits, retain outside counsel to review their I-9 forms and assess their company’s exposure for administrative fines, and correct any errors on I-9 forms.

It’s clear that ICE will continue auditing I-9 forms to ensure that employers are complying with federal immigration laws and not employing individuals who lack authorization to work in the U.S. Auditing your company’s I-9 forms before another round of Notices of Inspection is issued is the best way to minimize your company’s risk for administrative fines ranging from $110 to $1100 per violation.

If you are using the Fisher & Phillips Electronic I-9 Solution program to electronically complete and store I-9 forms, utilizing the “error report” feature can alert you to all I-9 forms that are incomplete, expired, or should be purged. Moreover, our “ICE Audit” feature generates an I-9 data report that is acceptable to ICE in lieu of having to produce actual I-9 forms.

 It is not intended to be, and should not be construed as, legal advice for any particular fact situation. Article provided by Fisher & Phillips LLP, Attorneys at Law LLP

Brace yourself for yet another twist in the ever-evolving standards governing an employee’s leave under the Family Medical Leave Act (FMLA). On March 11, 2010, the U.S. Court of Appeals for the 3rd Circuit joined the 8th Circuit Court of Appeals in holding a combination of expert and lay testimony can establish that an employee was medically incapacitated for more than three days, thereby triggering FMLA protection. Schaar v. Lehigh Valley Health Services.

At issue in Schaar was whether an employee was entitled to FMLA protection when she relied, in part, on her own diagnosis that she was incapacitated for more than three days, thus triggering FMLA protection.

Background

The FMLA gives employees a protected right under federal law to take leave for certain medical reasons, and prohibits employers from interfering with or discriminating against employees for invoking this right. In order to qualify for FMLA protection, there are several requirements. Among them, an employee must suffer from a “serious health condition,” which is defined by the FMLA to include an illness, injury, impairment, or physical or mental condition that involves continuing treatment by a health care provider.

The Department of Labor’s regulations define “continuing treatment” by a health care provider as a period of incapacity of more than three consecutive calendar days that also involves treatment by a health care provider on at least one occasion followed by a regimen of continuing treatment under the supervision of the health care provider. Schaar addressed the type of evidence that courts will accept as proof of incapacitation.

Facts Of The Case

Rachael Schaar was an employee of Lehigh Valley Health Services. Two weeks before Schaar was fired, she was treated for lower back pain, fever, nausea and vomiting. Schaar’s physician gave Schaar a note stating she could not work for two days and that Schaar was under his care.

Schaar took two days of paid sick leave – on a Wednesday and a Thursday – during which she was bedridden. Coincidentally, Schaar had previously scheduled vacation days for Friday and the following Monday. Schaar returned to work on the following Tuesday, and told her supervisor she had been sick on Friday and Monday. Six days later, Schaar was terminated. In explaining Schaar’s termination, a supervisor wrote that Schaar “brought a note from her doctor for a 2 day excuse from work. She taped the note to her manager’s door and left, never calling off from work.”

Schaar sued Lehigh Valley for interference and discrimination in violation of the FMLA. Lehigh Valley asked to have the case thrown out, arguing that Schaar did not qualify for FMLA leave because she failed to establish that she was incapacitated for more than three days and failed to give proper notice that she may qualify for leave. A federal district court granted Lehigh Valley’s request, holding that Schaar failed to present medical evidence that she was incapacitated for more than three days. The district court also held that expert medical testimony is necessary to establish the incapacity was due to illness.

The Appeals Court Decision

On appeal, the district court’s holdings were reversed by the 3rd Circuit. It concluded that the doctor’s note stating Schaar was incapacitated for two days combined with Schaar’s testimony that she was sick for an additional two days created an issue of material fact as to whether Schaar suffered from a “serious medical condition” under the FMLA. In reaching its decision, the court looked to the language of the Department of Labor’s regulations and determined that there was nothing in the regulations that required a health care provider to make the determination regarding the length of an employee’s incapacitation. But the court also concluded that some medical testimony is still necessary to show that the incapacitation was due to a serious health condition.

The Significance Of The Case

This decision makes it clear that in determining the FMLA’s incapacitation requirement, the employee’s own self-diagnosis carries weight and may create a genuine issue of material fact in later litigation on the issue. An employee who is diagnosed as medically incapacitated for only two days would not be covered by the FMLA.

But Schaar suggests that if an employee is unable to work for the third day, then the employee’s own report that they were medically incapacitated would be sufficient to invoke the protections of the FMLA. This opens the door to the possibility for employees to self-diagnose their way into the protections of the FMLA even where their physician did not make such a diagnosis.

Employers should take care in terminating an employee for sick leave absences and not automatically reject an employee’s own account of her illness. However, when in doubt, require medical certification. It is also important to train front line supervisors, who often are the first to learn about a potentially FMLA-qualifying condition, to spot leave requests that might qualify under FMLA and to immediately bring them to HR and to never discipline an employee without first consulting HR.

This article provides an overview of a specific new appellate decision. It is not intended to be, and should not be construed as, legal advice for any particular fact situation. Article provided by Fisher & Phillips LLP, Attorneys at Law Date: 3/19/2010

There’s a lot of information about the new health care reform acts on the Internet and in the news – much of it vague, some of it incorrect, and most of it overwhelming. The acts are very complex, of course, which is reflected in the reports. While several of the changes will be effective in 2011, most of the changes in the law won’t take effect until 2014. The provisions with delayed effective dates will be clarified in future regulations and some of the provisions may be changed or repealed before they become effective. We’ll report on those aspects of the law in future legal alerts. For now, here’s what you need to know.

The new law applies fewer requirements to employer-sponsored health plans that were in existence on March 23, 2010 (”grandfathered plans”) than it does to new health plans. Most of you reading this probably have grandfathered plans, so this Alert focuses on the changes that will soon have an impact on your health plan. Most of the changes described below apply to the plan year that begins on or after September 23, 2010 – six months after the date of enactment of the new law. If you maintain a calendar year plan, the changes become effective January 1, 2011. If your health plan year begins in October, November or December, the new rules apply to your plan year beginning in 2010.

No Lifetime Limit

Most plans have a maximum lifetime limit on the amount that will be paid during the life of a covered individual. This limit will have to be removed for “essential benefits.” Essential benefits are those for ambulatory care, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services (including behavioral health treatment), prescription drugs, rehabilitative service and devices, laboratory services, preventive and wellness services, chronic disease management and pediatric services.

The definition of essential services will not be left up to the insurer or self-insured group health plan, but will be prescribed by Health and Human Services (HHS) based on the scope of benefits provided by a typical employer plan.

Restricted Annual Limits

Restricted annual limits will be set on essential benefits by HHS for health plan year beginning before January 1, 2014. For plan years beginning on and after January 1, 2014, annual limits are generally prohibited.

Extension Of Coverage To Adult Children Under Age 26

Health plan coverage must be extended to the child of an employee until the child reaches age 26 if the plan provides coverage for dependents. Most plans do, so enrollment for your next plan year will have to advise employees that they can enroll their adult children who are under age 26 even if those children do not meet the IRS definition of a dependent and even if the children have other jobs, are married or do not reside with the employee. The only exception is a child who is eligible to enroll in coverage under another employer’s health plan.

This provision does not include the child of a child. Clarification of this change should be coming because the statute provides that regulations will define the dependents to whom this extension of coverage is applicable.

Pre-existing Condition Limitations Do Not Apply To Children Under Age 19

A health plan will no longer be able to apply an exclusion for a pre-existing condition to a child age 18 or younger. For health plan years beginning on or after January 1, 2014, pre-existing limitations will not apply to any individual. Between enactment and 2014, the government will create a high risk national health insurance pool to cover most individuals who are uninsured for at least six months and have a pre-existing condition.

Limitations on Rescinding Coverage

Coverage extended to an individual enrolled in a health plan can be rescinded only because of fraud or intentional misrepresentation of a material fact. If you are going to rescind an enrollee’s coverage for one of these reasons, you must give the individual advance notice as provided under the Public Health Service Act.

New Summary of Benefits and Coverage

HHS is mandated to set uniform standards by March 22, 2011 for employers so they can prepare a summary of benefits and coverage and provide it to applicants and enrollees no later than March 22, 2012. The summary is to describe essential information about the health plan in a uniform format that does not exceed four pages using uniform terminology. In addition, if an employer makes a material modification to the terms or coverage of a health plan that is not reflected in the most recent summary, enrollees must be given 60 days’ advance notice of the change.

Automatic Enrollment

If you have at least 200 full-time employees, you will have to begin automatically enrolling new full-time employees in your health plan in the lowest cost option. Employees must receive notice of the automatic enrollment and will have to be able to opt out of coverage. It appears that this requirement will take effect in accordance with Department of Labor regulations.

Flexible Spending Arrangements (FSAs)

The rules that apply to FSAs under a cafeteria plan have changed for 2011. Over-the-counter drugs can be reimbursed or paid directly under an FSA only if the individual has a doctor’s prescription for the medication. Beginning in 2013, payroll deductions to an FSA are limited to $2500 per calendar year.

Note that, while this Alert is directed to outlining the new requirements for grandfathered plans, it isn’t clear whether or under what circumstances a grandfathered plan could lose its grandfathered status, and become subject to additional requirements. This issue should be addressed in regulations.

We are at the beginning of a new phase of regulatory compliance and government oversight of employer-sponsored health plans. Fisher & Phillips is committed to assisting you in meeting your legal obligations in the most efficient and cost-effective manner. Please contact any member of our Benefits Practice Group if you have questions about this Alert or the new law.

This provides information about certain aspects of a complex new federal law. It is not intended to be, and should not be construed as, legal advice for any particular fact situation. Article provided by Fisher & Phillips LLP, Attorneys at Law.

The U.S. Labor Department (DOL) released model notices regarding the new COBRA requirements that were enacted as part of the American Reinvestment and Recovery Act of 2009 (ARRA). The law mandates that plans notify certain current and former participants and beneficiaries about the COBRA premium subsidy and “second chance” COBRA election opportunity by no later than April 18, 2009. The model notices may be found at: http://www.dol.gov/ebsa/COBRAmodelnotice.html.

Although plan administrators are not required to use the model notices, using them assures compliance with ARRA’s substantive notice requirements.