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The Eleventh Circuit Holds That the National Bank Act Preempts State-Law Whistleblower Claims by Terminated National Bank Officers

The United States Court of Appeals for the Eleventh Circuit just recently held that an officer of a nationally-chartered bank regulated by the National Bank Act (NBA) had no claim for wrongful termination under a Florida whistleblower statute.  According to the federal court, the state-law whistleblower claims were preempted by 12 U.S.C. § 24 (Fifth) of the NBA, which gives a national bank the power to dismiss bank officers “at the pleasure” of the board of directors.  Consistent with decisions by other federal circuits, the Eleventh Circuit interpreted “at the pleasure” to be equivalent to at-will employment and held that the Florida whistleblower statute at issue was preempted because, contrary to the nature of at-will employment, it prohibited dismissal of an employee for complaining about certain improper activities by an employer.  Further, there was no comparable employment protection in federal law (e.g., Title VII) that would indicate congressional intent not to preempt the Florida statute through 12 U.S.C. § 24 (Fifth) of the NBA.  This is a useful employment law decision for national banks that helps preserve their freedom to employ, or not employ, their officers as they see fit and avoid certain types of miscellaneous wrongful termination lawsuits under …

Texas Federal Court decision illustrates need for BYOD policies

EDITOR’S NOTE:  This recent post from the PWMA Employer Law Report on the importance a BYOD policy highlights an area of current concern for bankers and other employers.

Saman Rajaee was a salesman for Design Tech Homes. He used his personal iPhone to connect to his employer’s Microsoft Exchange Server, which allowed him to access his work-related email, contacts and calendar from his phone. Design Tech did not have a BYOD policy. When Rajaee’s employment terminated, Design Tech remotely wiped his phone, which deleted all of his data, including personal emails, texts, photos, personal contacts, etc.

Rajaee sued under the federal Stored Communications (“SCA”) and Computer Fraud and Abuse Acts (“CFAA”) as well as raising various state law claims. Design Tech moved for summary judgment on the federal claims. On the SCA claim, the court held, based on Fifth Circuit precedent, that information an individual stores to his hard drive or cell phone is not in electronic storage within the meaning of the statute.

Design Tech was successful on the CFAA claim as well, but was forced to take a much riskier path than would have been necessary had it simply had a BYOD policy. Generally speaking, the CFAA prohibits …

Covered affirmative action employers — more scary news from the OFCCP

On August 6, 2014, the Office of Federal Contract Compliance Programs (OFCCP) announced a proposed rule that should be of real concern to covered affirmative action federal contractors. The OFCCP is the agency that enforces federal affirmative action laws. If the proposed rule is adopted, it will add compensation data to the information that covered employers must submit with their annual EEO-1 reports. Keep in mind the “web” of coverage under affirmative action laws reaches far. Coverage is triggered not just by direct federal contracts but also by contracts to provide goods or services to any private sector entity, as long as those goods or services are used in connection with fulfilling some federal contract that your customer or their customers may have. Coverage of financial institutions is triggered by being a depository for federal funds or by being an issuing or paying agent for U.S. Savings Bonds or Notes. Coverage issues and obligations can vary with the dollar volume of the covered work.

The Specifics:


Currently, the annual EEO-1 report contains race, ethnicity, and gender information about your workplace, sorted by nine EEO job-type categories. The proposed rule would expand the report to include the following information for …

Roundup: Recent Business Developments

The first six weeks of 2014 have been abundant with news and cases that provide insight for financial institutions (and other businesses) that need to be aware of regulatory, legislative and judicial developments and how they affect the U.S. business environment.

Porter Wright attorneys have written several alerts and articles about recent cases and best practices; we offer a summary below.

A merger for better healthcare…no problem, right? Wrong, says the FTC

By now, you likely are accustomed to hearing about the federal government challenging the merger of two hospitals or health systems. More often than not these days, the federal government wins. That is true even in the face of claims by the parties the merger is necessary to reduce costs and/or improve the quality of health care provided — the very foundation for the Affordable Care Act.…

‘Tis the Season For Holiday Workplace Issues

As much as everyone loves them, the holidays create increased risk of employer liability and can result in a long list of legal problems for an unprepared employer. Our colleagues over at Employer Law Report have provided their top five holiday headaches for employers and compiled their posts into an eBook with a bonus stocking stuffer FMLA-holiday Q&A.

Check out their post which covers:

  • Avoiding Holiday Party Liability When the Office Santa Tries to Teach His Employees a Few "Reindeer Games";
  • Being Inclusive Without Being A Grinch;
  • "Holiday Attire" Does Not Include "Beer Goggles";
  • Holiday Pay and How Not to Get Scrooged by The FLSA;
  • What if Santa Was the One Who Got Run Over By a Reindeer?; and
  • Three FMLA Stocking Stuffers: How to Avoid a Big Lump of Coal (bonus).

Hot topics affecting your bank

From time to time we deviate from our normal prose on the banking and finance industry and give you, our reader, insight into other areas of the law that impact your business. A recent post regarding overhauling the Ohio employee-friendly employment discrimination law, Senate Bill 383, tops our list of quality reading material.

The post, ‘Senate Bill 383 is an Ohio employer’s wish list,’ from our Employer Law Report blog discusses significant amendments introduced to the Ohio Senate. In particular, Sara Hutchins Jodka goes into detail portions of the bill including defining employers to exclude managers and supervisors, limiting the statue of limitations to 365 days for discrimination and retaliation claims and put a statutory cap on noneconomic and punitive damages.…

Ohio Supreme Court Rules On The Enforcement Of Non-Compete Agreements By The Surviving Company In A Merger

The Ohio Supreme Court ruled 4-3 on May 24, 2012, that following a merger the surviving company may not be able to enforce employees’ non-compete agreements where the agreements fail to contain an assignment clause and the time period of the employees’ non-competes began to run as of the date of the merger.

In Acordia of Ohio, L.L.C. v. Fishel et al., the Ohio Supreme Court ruled that a merger causes the original corporate party to non-compete agreements to cease to exist, while the surviving company takes ownership of the agreements. But where the non-compete agreement fails to contain an assignment clause, the surviving company may not enforce the non-compete agreement as if it “stepped into the shoes” of the company that had originally contracted with the employees. Although the employees’ non-compete agreements transferred automatically by operation of law to the surviving company, the Ohio Supreme Court held that the non-compete agreements at issue provided only that the employees would avoid competition following their termination from the specific company identified in the non-compete agreements. Because the non-compete agreements did not state they could be assigned or would carry over to a successor, the Ohio Supreme Court ruled that the

NLRB Posting Rule Postponed Indefinitely

Bankers and other employers should note that the National Labor Relations Board (NLRB) has postponed indefinitely the effective date for its employee rights posting requirement. The posting rule, which was to have taken effect April 30, 2012, required all employers to post in the workplace a notice advising employees of their rights to engage in union organizing. The proposed posting rule has generated a great deal of controversy. 

Lawsuits challenging the rule filed by the United States Chamber of Commerce, the National Manufacturer’s Association, and other employer interest groups are pending in two federal courts.  Initial decisions in the lower courts were inconsistent.

In March the federal District Court for the District of Columbia upheld the NLRB’s right to impose the rule. Then, on April 13, a District Court in South Carolina ruled that the NLRB does not have the right to impose the posting requirement. The decision from the District Court for the District of Columbia has been appealed to the D.C. Circuit Court of Appeals and it is expected the NLRB will appeal the South Carolina District Court decision to the Fourth Circuit Court of Appeals. On April 16, the D.C. Circuit Court of Appeals issued an injunction barring the NLRB from enforcing its …

Arguments Begin In Legal Challenges to NLRB Posting Rule

As we reported previously, the National Labor Relations Board ("NLRB") issued a rule in August requiring all employers to post workplace notices about employee rights to join a union. This effort by the NLRB to require posting about union organizing rights in all workplaces has caught the attention of the employer community more than any NLRB action in recent memory. The rule reaches into the workplace of all employers except for those few which are outside of the NLRB’s jurisdiction. [See our earlier post that outlines NLRB jurisdiction]. Briefly, if you are wondering if you are covered, you probably are covered. The original effective date for the rule was to have been November 14, 2011, but that effective date was delayed when lawsuits were filed in two federal district courts challenging the NLRB’s authority to issue such a rule. The new effective date is January 31, 2012 and the arguments in the lawsuits challenging the posting rule are beginning to take shape.…

Building a Model for a Defensible Reduction-in-Force

The continuing struggle to improve the economy leaves many financial institutions of all sizes still looking for ways to improve  efficiency and profitability. Often the resulting business strategy includes cut backs in personnel.  But a reduction in the workforce that is not carefully planned and documented can result in costly and sometimes difficult to defend lawsuits and other legal challenges that can off-set the intended economic benefit. It is very common after a reduction-in-force for legal claims to be pursued by terminated employees, sometimes as multiple-plaintiff lawsuits. Possible claims include allegations that the reason for selection of a person to be terminated was illegal (i.e., age, race, sex, medical condition, use of FMLA, whistleblower, etc.). A successful defense requires showing not just that there were legitimate reasons to reduce the workforce but also the specific legitimate reason that the complaining employee was selected for termination. Not having a carefully planned and documented approach to the decision-making can result in time-consuming and expensive litigation. Also, a well-planned and documented approach to the reduction-in-force will promote reasoned, careful, and sound business decisions, which support the Company’s overall objective for reducing costs and improving efficiency.

 Here is a brief outline of steps that should be included in any …

NLRB Issues Final Rule Requiring All Employers to Post Notice About Union Organizing Rights

On December 27, we wrote a blog post regarding the NLRB proposed rule-making to require all employers to post notices advising employees of their rights to engage in union organizing. After a period of public comment, during which about 7,000 responses were submitted to the NLRB, the NLRB has now issued its final rule requiring the posting.

Effective November 14, 2011, all private sector companies covered by the National Labor Relations Act are required to post in the workplace a specific notice advising employees of their rights under the National Labor Relations Act to engage in union organizing, to bargain through a union with their employers, and to refrain from those activities. The notice also gives examples of employer and union conduct which is considered illegal and tells employees of actions they can file with the NLRB to enforce their rights. Here is a link to the NLRB announcement, which includes a copy of the required posting (as an Appendix.)  The NLRB promises that by November 1st, the posting will be available for downloading from the NLRB web site and that hard copies will be available from NLRB Regional Offices. All employers will be required to post the notices in …

The U.S. Department of Labor Opines That Mortgage Loan Officers And Similar Employees Are Non-Exempt Under the Fair Labor Standards Act

Due to recent guidance from the U.S. Department of Labor, financial institutions should examine their classification of mortgage loan officers and similar employees. Last month, the DOL’s Wage and Hour Division released its first Administrator Interpretation (Interpretation No. 2010-1). In the Interpretation, the Division concluded that mortgage loan officers – and employees performing the typical duties of a mortgage loan officer – do not qualify as administrative employees exempt from the provisions of the Fair Labor Standards Act.

The Interpretation states that the typical job titles given to such employees include “mortgage loan representative,” “mortgage loan consultant,” and “mortgage loan originator.”  It also lists the job duties of such individuals as:  receiving internal leads, contacting potential customers, collecting required financial information from loan applicants, entering collected financial information into a computer program that identifies which loan products may be offered to customers, assessing the loan products identified, discussing with the customers the terms and conditions of particular loans, compiling customer documents for forwarding to an underwriter or loan processor, and/or finalizing loan documents for closings.

Administrative employees are exempt from the minimum wage and overtime requirements of the FLSA. In a 2006 opinion letter, the DOL had previously …