Illinois Employers Must Track Hours Worked of ALL Employees Including Salary Exempt Employees Under Recent IDOL Regulations

December 2015
By Anthony J. Caruso, Jr., Esq.

A little known regulation (alarming for employers!) exists in the State of Illinois. The Illinois Department of Labor adopted new regulations (to enforce the Illinois Wage Payment and Collection Act) which went into effect in August 2014. There was no notice in the press.

Under one of these regulations, Illinois employers are required to record EVERY employee’s hours worked each day regardless of the fact that the employee is salary exempt (possibly administrative, executive, or professional). Under federal law (Fair Labor Standards Act), there is no requirement for such record keeping.

The Illinois regulation requires:

• Records of hours worked for all employees, and
• Records kept for at least three (3) years.

This Illinois regulation fails to state a penalty on employers who fail to keep records. However, the Illinois Department of Labor will continue its position that if the employer does NOT have written records of hours worked of the employee claiming wages owed, then the employee’s statement of hours worked will prevail.

Based upon this new regulation, should Illinois employers change their record keeping of hours worked to include salaried exempt employees? It depends. If the employer is very certain that all salaried exempt employees are properly classified, the employer probably does not need to keep track of hours worked by the salaried exempt employees. If not, the employer may consider adding the burden of additional record keeping.

Questions?: Contact Anthony J. Caruso, Jr. of Wessels Sherman’s St. Charles office at (630) 377-1554 or via email at ancaruso@wesselssherman.com.

Quickie Elections May Now be Even Quicker Due to Electronic Signatures

As part of the Ambush Election rules that went into effect in April 2015, the NLRB approved accepting electronic signatures to support union petitions. Previously, workers interested in a union had to sign either a signature list or a paper union card. Most cards collected more information (see example below) but all that was required by the NLRB was a signature and the date the list/card was signed.


All signatures on the cards/lists are presumed valid and if a company disagreed with any of the signatures that were submitted, it would have to submit evidence to show that the list was altered by forgery or fraud. Proof could include comparing signatures to employer’s records, taking affidavits from the petitioner, and questioning employees who were on the list.

New rules approve use of electronic signatures

On September 1, 2015, the Office of the General Counsel of the NLRB issued a Memorandum with guidelines on how electronic signatures could be used instead of the usual authorization card or list. The Memorandum said that the NRLB is moving toward electronic submission because it has been charged by Congress to “accept and use electronic forms and signatures, when practicable – i.e., when there is a cost-effective way of ensuring the authenticity of the electronic form and electronic signature”.

The current regulations for approving an election will continue to apply in that at least 30% of the bargaining unit must show interest. In addition, evidence must be supplied that proves that the employee has electronically signed the document, and that the petitioner has accurately transmitted the document to the Region. In cases where there is question as to the validity of the electronically submitted signatures, the same investigation will apply as that for paper and pencil submissions and may include taking affidavits from the petitioner and the individual employees to authenticate electronic signature.

The General Counsel of the NLRB believes that applying the long-standing current procedures for verification of signatures to the electronic signatures “will not pose either significant costs or risks to the public or to the Agency”. He goes on to state that adding electronic signature possibilities will benefit the public because: “(1) the showing of interest is easier to read and confirms the identity of the signer; (2) the methodology is convenient and consistent with how many members of the public operate today in various aspects of their lives – electronic signature pads for credit or debit purchase, on-line banking, on-line purchases, and electronic filing of taxes; and (3) employee who desires to sign an authorization card or signature list may do so in a private setting.”

Additional information required for electronic signatures

There is additional information for electronic signatures that is not required on the union authorization card/list. An electronic “signature” must include:

1. The signer’s name;
2. The signer’s e-mail address or other known contact information such as Twitter/Facebook/Tumblr account;
3. The signer’s telephone number;
4. What the signer is agreeing to (i.e., the signer wishes to be represented by the union for purposes of collective bargaining);
5. The date the electronic signature was submitted; and
6. The name of the employer of the employee.

Gathering electronic signatures

There are several ways electronic signatures may be gathered. The UFCW has already created a web form which includes an area where the employee may actually create an electronic version of the signature using a finger or mouse to “sign” (see below). 

There are also web forms where the employee fills out the required information. After the employee clicks submit, the employee receives a confirmation communication via e-mail, social media account, or text (see below).

It’s important to note that employees can indicate authorization simply by replying to an e-mail message which solicits their information and support.

After the union has gathered the required 30% of interest and is ready to submit the “signatures” to the NLRB, the union must include a declaration identifying what technology was used to gather the signatures and how the union is making sure that the employees are truly the ones who signed the form. If the union uses the form without the electronic signature (or an email exchange has taken place), the union must submit evidence that the union sent a message confirming all of the information submitted by the employee.

Concerns about electronic submission of signatures

Despite the General Counsel’s argument to the contrary, there is a much greater potential for fraud and forgery with the use of electronic signatures. An employee may even mistakenly submit his or her authorization by not reading all of the fine print on a website form or replying to an e-mail thinking he or she is merely requesting more information. Recent decisions by the NLRB allow employees to use a company computer system for organizing purposes. This will certainly encourage unions and their supporters to conduct their card-signing drives via the company’s own computer system.

The need to be alert

In the past, a company could be alerted to possible union organizing when authorization cards were handed out on their property. Now, with electronic submissions, management will not have this advance notice and may be blindsided when the election petition arrives.

Here at Wessels Sherman we are suggesting a simple three-step approach:  

1. Someone in your organization understands and is responsible for Wessels Sherman’s ABC’s of Staying Union Free; 
2. Your front-line supervisors are trained on the issue of union organizing, they know what to look for, and they are not afraid of it; 
3. You have a simple one-page union-free action plan.

You can get complementary copies of any of this material or arrange for a front-line supervisor training session by contacting Dick Wessels at our St. Charles office at (630) 377-1554 or via e-mail at riwessels@wesselssherman.com.

DOL’s New Persuader Rule Adds to an Increasingly Stacked Deck Favoring Labor Unions in Organizing New Members

As part of a pattern of federal agencies kowtowing to the interests of unions, the DOL is moving forward with its proposal to significantly narrow an exemption that allows attorneys to provide confidential advice to employers throughout the course of union organizing.  The provision in question creates an “advice” exemption from employers’ reporting requirements when hiring a consultant in connection with attempts to persuade employees about the right to organize and bargain collectively.  If this proposed rule becomes final in its present form, employers and consultants, including attorneys, hired to assist in countering union organizing would be required to publicly disclose their relationship, through the Labor-Management Reporting and Disclosure Act’s (LMRDA) requirements to report any agreement or arrangement between an employer and a third party consultant, to persuade employees as to their collective bargaining rights or to obtain certain information concerning the activities of employees or a labor organization in connection with a labor dispute involving the employer.  This disclosure requirement, when applied to attorneys, flies in the face of traditional notions of attorney-client privilege, and its goal of fostering free and open communication between attorneys and their clients.

Earlier this year, the NLRB published its so-called “ambush election” rule, which shortened the time between when a union election petition is filed and when the election is held, to as little as 21 days.  This new election procedure has been in effect since April 14, 2015, 2015 and already it has drastically impacted employers’ abilities to respond to union organizing campaigns. Now that ambush elections are helping unions organize more effectively, the DOL’s persuader rule should further aid unions by compromising employers’ use of consultants and attorneys in opposing unionization of their workforces.   The proposed rule is being submitted to the Office of Management and Budget for review, which is a final step to implementation.   According to the DOL’s regulatory agenda, it expects to publish the final persuader rule by March of 2016.

Questions? Contact the attorneys of our Minneapolis office at (952) 746-1700 or email Christine Beggan at chbeggan@wesselssherman.com for more information.

The Older Workers Benefit Protection Act Holds Traps for Employers Using Severance Agreements, Including Large Corporations

Employers use severance agreements hopefully to secure a clean parting of ways with employees who are let go.  Paying a severance in exchange for a waiver and release of potential legal claims, can be a way to avoid costly litigation.  However, any waiver/release that is not drafted properly can allow employees to take the severance package yet still sue the company!  Nowhere are these concerns more acute than with severance agreements involving employees who are over the age of 40. This is because in order to effectively waive age discrimination claims available to workers 40 and older, a severance agreement must comply with nuanced requirements of the federal Older Workers Benefits Protection Act (OWBPA).  As a federal court case now pending in Minnesota illustrates, complying with the OWBPA can be easier said than done.

The case is a class action lawsuit brought against corporate giant, General Mills.  The plaintiffs were among approximately 850 employees who were terminated as part of a corporate restructuring dubbed by the company as “Project Refuel.”  The plaintiffs, all 40 and older and thus covered by the Age Discrimination in Employment Act, are alleging that the releases they signed as part of their severance agreements, were not “knowing and voluntary,” as required by the OWBPA.  Adding insult to injury, OWBPA regulations do not require a person claiming that a waiver and release was not knowing and voluntary, to pay back the severance or other consideration given in exchange for agreeing not to sue.  As a result, the plaintiffs in this case are keeping the relatively generous severance they received in exchange for signing their severance agreements, while suing to get out of their promises not to sue!

It is important to note that no determination has yet been made regarding whether General Mills’ severance agreements did or did not comply with OWBPA.  The company had tried to argue that its agreements included an arbitration clause and, therefore, the lawsuit should be stayed by the court to allow for arbitration of the plaintiff’s claims.  However, the federal district court denied this request, citing explicit language from the statute which states that disputes over compliance with the OWBPA must be heard in a “court of competent jurisdiction.” Further, the court refused to stay the plaintiffs’ lawsuit while General Mills is appealing its ruling regarding arbitration to the U.S. Court of Appeals.

General Mills may wind up prevailing against these plaintiffs’ attempt to use the OWBPA to get out of the waiver and release agreements they signed; however, it does not change the fact that these individuals are keeping the severances they were offered in exchange for not suing, while still suing the company.  Obviously if the agreements are determined to fail to meet the stringent requirements of the OWBPA – that is, if the court finds that the language is insufficient to make the agreements “knowing and voluntary” – the company will be defending against a class action age discrimination case by hundreds of employees laid off in a sizeable reduction in force, or RIF. 

Attorneys everywhere will no doubt be watching this case since its outcome will have a significant impact on how severance agreements will be drafted for anyone 40 or older.  In the meantime great care should be taken to avoid similar challenges afforded to employees by the complicated and very nuanced, OWBPA.

Questions? Contact the attorneys of our Minneapolis office at (952) 746-1700 or email Christine Beggan at chbeggan@wesselssherman.com for more information.

How Much Does an Employee Charge of Discrimination Cost?

December 2015
By Richard H. Wessels, Esq.

A most interesting study was released recently by Hiscox, Ltd, a prestigious worldwide specialty risk insurer and an underwriter at Lloyds of London. Interestingly, among the risks covered are kidnapping and ransom, aerospace, political risk and fine art. The Hiscox study showed that in the US, the average cost of defense and settlement of an employee charge of discrimination is $125,000. The study focused on 446 claims reported by small and medium-sized businesses with fewer than 500 employees. Here are some of the key highlights from the study:

• The average duration of an employment matter from start to finish was 275 days.
• The average cost of both defense and settlement was $125,000.
• The average self-insured retention deductible for companies with employment practices liability insurance was $35,000.
• Only 19% of the matters resulted in both defense costs and a settlement payment. That means that 81% of the charges (or about 4 out of 5) were nuisance suits that did not result in any settlement.
•  The median judgment for employment matters that ended up in court and resulted in a finding of liability was $200,000 in addition to defense costs.

As you can see, employment litigation can be expensive, even if the employer wins. The best advice is to work proactively to prevent problems from occurring in the first place. The reality, as we see it, is that prevention is the most effective strategy for avoiding the potential huge costs of employment claims.

Questions? Contact Richard Wessels in our St. Charles office at (630) 377-1554 or riwessels@wesselssherman.com.

The Older Workers Benefit Protection Act Holds Traps for Employers Using Severance Agreements, Including Large Corporations

November 2015

Employers use severance agreements hopefully to secure a clean parting of ways with employees who are let go.  Paying a severance in exchange for a waiver and release of potential legal claims, can be a way to avoid costly litigation.  However, any waiver/release that is not drafted properly can allow employees to take the severance package yet still sue the company!  Nowhere are these concerns more acute than with severance agreements involving employees who are over the age of 40. This is because in order to effectively waive age discrimination claims available to workers 40 and older, a severance agreement must comply with nuanced requirements of the federal Older Workers Benefits Protection Act (OWBPA).  As a federal court case now pending in Minnesota illustrates, complying with the OWBPA can be easier said than done.

The case is a class action lawsuit brought against corporate giant, General Mills.  The plaintiffs were among approximately 850 employees who were terminated as part of a corporate restructuring dubbed by the company as “Project Refuel.”  The plaintiffs, all 40 and older and thus covered by the Age Discrimination in Employment Act, are alleging that the releases they signed as part of their severance agreements, were not “knowing and voluntary,” as required by the OWBPA.  Adding insult to injury, OWBPA regulations do not require a person claiming that a waiver and release was not knowing and voluntary, to pay back the severance or other consideration given in exchange for agreeing not to sue.  As a result, the plaintiffs in this case are keeping the relatively generous severance they received in exchange for signing their severance agreements, while suing to get out of their promises not to sue!

It is important to note that no determination has yet been made regarding whether General Mills’ severance agreements did or did not comply with OWBPA.  The company had tried to argue that its agreements included an arbitration clause and, therefore, the lawsuit should be stayed by the court to allow for arbitration of the plaintiff’s claims.  However, the federal district court denied this request, citing explicit language from the statute which states that disputes over compliance with the OWBPA must be heard in a “court of competent jurisdiction.” Further, the court refused to stay the plaintiffs’ lawsuit while General Mills is appealing its ruling regarding arbitration to the U.S. Court of Appeals.

General Mills may wind up prevailing against these plaintiffs’ attempt to use the OWBPA to get out of the waiver and release agreements they signed; however, it does not change the fact that these individuals are keeping the severances they were offered in exchange for not suing, while still suing the company.  Obviously if the agreements are determined to fail to meet the stringent requirements of the OWBPA – that is, if the court finds that the language is insufficient to make the agreements “knowing and voluntary” – the company will be defending against a class action age discrimination case by hundreds of employees laid off in a sizeable reduction in force, or RIF. 

Attorneys everywhere will no doubt be watching this case since its outcome will have a significant impact on how severance agreements will be drafted for anyone 40 or older.  In the meantime great care should be taken to avoid similar challenges afforded to employees by the complicated and very nuanced, OWBPA.

Questions? Contact the attorneys of our Minneapolis office at (952) 746-1700 or email Christine Beggan at chbeggan@wesselssherman.com for more information.

NLRB Gone Wild: Redefining Joint Employers, Confidentiality of Investigations, and Arbitration Agreements with Class Action Waivers

November 2015

The NLRB has been making headlines time and again for its radical departures from years of precedent, impacting unionized and non-union employers alike, from expanding the definition of who will be considered a “joint employer” to limiting employers’ ability to keep their investigations confidential, to preventing employers from entering into arbitration agreements with their employees that require settling disputes individually. The following are just some of the recent drastic actions taken by the NLRB and what they mean for employers.  

NLRB Expands Definition of “Joint Employer”: In a departure from its own decades-old precedent, the NLRB has redefined—with a much broader definition—who will be considered a “joint employer.” Under this new standard, it is sufficient that the employer has the right to control the terms and conditions of employment, even if the employer does not actually exercise that right. Further, this control can be exercised indirectly, such as through an intermediary. The Board’s newly articulated definition leaves its judges wide latitude to determine whether two business entities are “joint employers” based on theoretical hypotheses of potential control, rather than any demonstrated control as was required under past precedent.

What does this mean for employers? No doubt more employers will be considered as joint employers for purposes of collective bargaining, joint liability for unfair labor practices and breaches of collective bargaining agreements, and economic pressure, such as strikes, pickets, and boycotts.

NLRB Inhibits Employers’ Ability to Keep Investigations Confidential: In two separate decisions, the NLRB eroded the ability of employers to keep internal investigations of employee conduct, etc. confidential. In one decision, the NLRB reversed its long-standing precedent that an employer usually needn’t oblige a request that it share witness statements with a union representative. The new standard now, is that witness statements must be provided to a union upon request, unless the employer can demonstrate “a legitimate and substantial confidentiality interest” by showing that the “witness[es] need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, or there is need to prevent a cover up.” Even where an employer meets this high burden the NLRB will weigh the employer’s confidentiality interest against the union’s need for the information.

In the second, related decision the NLRB held that a general policy in an employee handbook or work rule requiring confidentiality in investigations, violates employees’ “Section 7 rights” to “engage in . . . concerted activities for the purpose of . . . mutual aid or protection . . . .” Specifically implicated in this case is the right of employees to discuss potential discipline among themselves and/or with a union or other representative. Under the new rule an employer may not maintain a broad policy, but may require confidentiality only on a case-by-case basis where it can show that “corruption of its investigation would likely occur without confidentiality.” Examples cited in the Board’s decision include circumstances where “witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, [or] there is a need to prevent a cover up.”

NLRB Continues to Invalidate Arbitral Class Action Waivers: The NLRB has continued to apply its controversial holding that arbitration agreements that waive the right to engage in class actions are illegal and unenforceable under the National Labor Relations Act. The Board’s rather questionable rationale, which thankfully has yet to be adopted by any court on appeal, essentially treats the right of employees to bring class-action lawsuits the same as the right to join together in a strike. In other words, suing is just another form of “concerted activity” protected by federal labor law.

The growing number of employers using arbitration agreements that require employees to pursue grievances individually and therefore prohibit class grievances, now face the NLRB declaring their agreements unlawful. The issue seems destined for ultimate determination by the U.S. Supreme Court.

For assistance with these or other NLRB issues, contact Jim Sherman (jasherman@wesselssherman.com)  in our Minneapolis office at (952) 756-1700.

NLRB Proclaims Confidentiality Requirements Unlawful

November 2015
By Alan E. Seneczko

Having reviewed countless employee handbooks over the past 30+ years, I have found that it is not uncommon for employers to maintain policies that require employees to keep investigations of complaints of sexual harassment and other disciplinary matters confidential. Although the reasons for doing so often vary, most employers contend that this requirement is necessary due to the sensitivity of the subject matter and to protect the identity of potential witnesses. According to the NLRB, such generalized concerns are not enough to prevent such a policy from unlawfully infringing on employees’ right to discuss the terms and conditions of their employment with their fellow employees.

In The Boeing Company, 382 NLRB No. 195 (Aug. 27, 2015), the Board reviewed Boeing’s requirement that all employees involved in human resources investigations not discuss the matter with any other employee, except company officials conducting the investigation or their union representative. The Board found that such a blanket confidentiality policy violated Section 8(a)(1) and unlawfully interfered with employees’ Section 7 right to engage in concerted activity. In doing so, it rejected Boeing’s contention that the policy was necessary to protect witnesses, victims or employees under investigation from retaliation or harassment; to prevent the spread of unfounded rumors; to ensure the integrity of the investigation; and, to encourage employees with complaints to come forward. The Board disagreed, holding that an employer may only prohibit employee discussion of an investigation when its need for confidentiality with respect to that specific investigation outweighed employees’ Section 7 rights. In other words, in order to maintain such a requirement, an employer must be able to demonstrate legitimate concerns about witness intimidation or harassment, the destruction of evidence or other misconduct that might compromise the integrity of its investigation.

With this and all of its other recent decisions concerning employee handbook provisions, “no gossip” policies, interpersonal relations, and social media postings, the NLRB is continuing its aggressive and expanding effort to regulate all aspects of the workplace – and an employer’s ability to manage it, regardless of whether it is a union or non-union environment. Although the NLRB may not be knocking on your door today, it would be prudent to keep these concepts in mind the next time you are reviewing your employee handbook and other policies.

Questions? Please contact Attorney Alan E. Seneczko at (262) 560-9696, or email alseneczko@wesselssherman.com.