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FMG Law Blog Line

Archive for April, 2015

SEC Enforcement Action Challenges Employers on Restrictive Confidentiality Agreements

Posted on: April 9th, 2015

By: Behnam Salehi

On April 1, 2015, the Securities and Exchange Commission initiated its first enforcement action, pursuant to Rule 21F-17, against an employer (KBR) for stifling protected whistleblowing through overly restrictive employee confidentiality agreements. Rule 21F-17, a whistleblower provision of the Dodd-Frank Act, prohibits employers from interfering or impeding an employee from communicating with the SEC regarding possible securities law violations.

According to the SEC, KBR conducted internal investigations into potential legal violations and unethical conduct by its employees. As part of that investigation, KBR required any interviewed employees to sign a confidentiality agreement which prohibited them from “discussing any particulars of [the] interview and the subject matter discussed during the interview, without the prior authorization of the Law Department” and that unauthorized disclosure would be “grounds for disciplinary action up to and including termination of employment.”  KBR settled the SEC action by agreeing to a $130,000 civil penalty and other remedial measures to prevent future violations of Rule 21F-17, including amendment of its confidentiality agreements to state that it does not prohibit employees from reporting possible violations to governmental entities and without the need for prior authorization.

Beyond the SEC, other governmental agencies, including the Equal Employment Opportunity Commission and the National Labor Relations Board, have taken action against employers who restrict employees from discussing ongoing investigations or contacting government entities regarding same. For employers, these recent developments highlight the need to review employee agreements and policies to ensure that its confidentiality/non-disparagement provisions do not improperly restrict its employees from engaging in protected activities.

Virginia Joins List of States Limiting Employer Access to Social Media Accounts

Posted on: April 9th, 2015

By: David A. Cole

Recently, Virginia enacted a new law that limits employer access to personal social media accounts of employees and job applicants.  The law, which takes effect on July 1, 2015, prohibits employers in Virginia from requiring a current or prospective employee to disclose the username and password to his or her social media account.  The law also prohibits employers from requiring an employee or prospective employee to add another employee, a supervisor, or an administrator to the list of contacts associated with the individual’s social media account.  However, the law does not prohibit employers from viewing information on an employee’s or prospective employee’s social media account that is publicly available.

Virginia is now the 19th state to implement a workplace social media privacy law.  According to the National Conference of State Legislatures, similar legislation has been introduced or considered in at least 22 states during the 2015 legislative season, including Georgia, which is currently considering H.B. 138.  The Georgia law would prohibit employers from requesting usernames, passwords, or other means of accessing the social media accounts of employees or prospective employees, subject to certain exceptions, such as where social media activity is reasonably believed to be relevant to an investigation of an employee’s misconduct or violation of law.  The Georgia law also would subject employers to a civil penalty of between $200 and $400 per violation.  We will continue to monitor H.B. 138 and post any updates, so be sure to check back often for the most recent information.

Atlanta Public Schools Cheating Scandal – Civil Liability Next?

Posted on: April 2nd, 2015

By: Wayne S. Melnick

On Wednesday, April 1, 2015, a Fulton County Superior Court jury handed down guilty verdicts to 11 of the 12 defendants charged in the notorious Atlanta Public Schools (“APS”) cheating scandal in which educators and administrators were alleged to have acted in a wide-spread conspiracy to artificially inflate grades in order to obtain and/or maintain grant money for their schools as well as personal bonuses and prestige for themselves.  Hopefully, this closes one chapter of any ugly period in the history of APS.

However, the specter of civil liability now rears its head.  As an attorney that defends teachers, administrators, and school districts, it is only natural to wonder whether (or when) civil lawsuits will follow. During the criminal trial testimony, prosecutors argued that students were robbed of the opportunity to learn and other grant money to get tutoring otherwise needed.  Does this provide “damages” that are compensable under the law?  If so, what is the cause of action for these wrongdoings?

Without delving deep, it does not take much imagination to see where federal or state civil RICO claims would be fairly easy to establish in light of the criminal convictions (which are required as predicate acts to such a claim).  To the extent there were students with disabilities that were affected, perhaps IDEA or § 504 claims are ripe for assertion as well.

While what happened here is localized to Atlanta, in light of the pressures that are put on teachers and administrators to succeed, it is not far-fetched to think this could happen anywhere in the United States.  As such, it is imperative for school districts and their insurers everywhere to consider the ramifications.