Doctor Fired for Taking FMLA Leave

May 17th, 2018

Case Survives Summary Judgment

This article appeared in Law 360

 

Steward Must Convince Jury Doc Fired For HIPAA Violation

By Chris Villani

 

Law360, Boston (May 16, 2018, 3:54 PM EDT) — Steward Healthcare System LLC will need to convince a jury it fired a psychiatrist for violating the Health Insurance Portability and Accountability Act and not because, as the doctor claims, he took disability leave after getting pneumonia, a Massachusetts federal judge ruled Wednesday in denying part of a summary judgment bid.

Dr. Alexander Lipin sued Steward, Steward Medical Group Inc. and Holy Family Hospital in a case removed to federal court in November 2016, nine months after he was fired. Lipin claims the hospital canned him wrongfully after he needed to extend his time off under the Family Medical Leave Act due to a bout with pneumonia, but the hospital said it decided he had to go before they knew he was sick after he passed along patient information to the police in violation of HIPAA.

SMG President Dr. George Clairmont said he was waiting for Lipin to come back from leave to officially show him the door but went ahead with the dismissal when he learned Lipin was doing work at another hospital, Anna Jaques Hospital, while supposedly out sick. In denying part of Steward’s motion for summary judgment, U.S. District Judge Leo T. Sorokin wrote Wednesday that a trial will be needed to sort out some of the issues around the prickly firing.

“A genuine issue of material fact exists as to whether Steward made its decision to terminate Lipin (1) before he took leave on January 26 and (2) before Clairmont learned of Lipin’s continued work for Anna Jaques on February 13,” Judge Sorokin wrote.

Although Judge Sorokin said nothing directly contradicts Clairmont’s description of the firing, he said finders of fact could choose to disregard his account because the hospital never actually fired Lipin or made arrangements to cover his patient workload until learning of his work for Anna Jaques.

“These circumstances could support a reasonable inference that Steward decided to fire Lipin only after Clairmont learned of Lipin’s work at Anna Jaques,” Judge Sorokin wrote. “Thus, Steward’s primary argument — that there was no causal connection between Lipin’s FMLA leave and his termination — fails for purposes of summary judgment on Lipin’s FMLA-based claims.”

The hospital said the decision to fire Lipin came after investigating a November 2015 incident during which Lipin allegedly called Methuen police and conveyed information about a patient to find out if the patient had any outstanding warrants. The police declined to speak with him about the matter, citing HIPAA, and the hospital began probing the incident over the course of the next several weeks, according to court records.

Kavita M. Goyal of the Rosen Law Offices, an attorney for Lipin, told Law360 on Thursday the HIPAA violation was “no big deal” and an excuse concocted by the hospital to drum up grounds for Lipin’s termination. Clairmont’s report characterized the offense as “minor” and Lipin would show a jury it was not the reason for the firing, Goyal said.

The judge did allow a win for Steward on separate claims by Lipin that the hospital violated the Americans With Disabilities Act by firing him on Feb. 23, 2016, after extending his FMLA leave until March 2 of that year. The judge said continuing to engage with Lipin about his illness after deciding to fire him would only have served to delay the inevitable.

“Whereas Steward had reached an employment decision without regard to any disability asserted by Lipin,” Judge Sorokin wrote, “Steward was not obligated to initiate an interactive dialogue with Lipin toward an accommodation that would have served only to forestall his termination.”

Both Goyal and Emily L. Grossman, another Lipin attorney, said they were pleased that Judge Sorokin is allowing the FMLA part of the suit to proceed, but were disappointed to see the ADA claims tossed.

“I disagree with the judge’s decision, he suggests an employer may no longer be obligated to participate in the interactive process if a decision is made to terminate, even if that decision is unlawful,” Goyal said. “In this case, he was working a second job and we believe he was protected under FMLA.

“The reason they terminated him was because they were mad he had worked at Anna Jaques and believed he was not entitled to the time off because he was working somewhere else,” Goyal added. “At the very least, the employee is entitled to a conversation.”

The parties are due back in court May 30 for an initial pretrial conference. Judge Sorokin also directed lawyers for both sides to determine whether mediation to avoid trial altogether might prove fruitful.

Counsel for Steward did not immediately respond to requests to comment Wednesday afternoon.

Lipin is represented by Kavita M. Goyal and Emily L. Grossman of Rosen Law Offices. Steward is represented by Anne S. Bider and Barry J. Miller of Seyfarth Shaw LLP.

The case is Lipin v. Steward Healthcare System LLP et al., case number 1:16-cv-12256, in the U.S. District Court for the District of Massachusetts.

–Editing by Orlando Lorenzo.

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RLO Protects ATF Employee from Gender Discrimination

February 8th, 2018

Rosen Law Office settled a case in favor of a female employee of the bureau of Alcohol, Tobacco and Firearms, who was disciplined for the sort of conduct that male agents got away with.  The Boston Globe discussed the case in an article about sexual harassment at ATF. 

RLO attorneys Kavita Goyal and Emilie Grossman handled the case.  In it, an ATF intelligence research specialist named Jennifer Norcross was suspended after complaining that female employees had to attend a training session that male agents were allowed to skip.  A female colleague told a supervisor: “I guess the penises don’t have to go to the training today; only the vaginas have to go?”

Norcross agreed that female agents were being singled out.  She told the other agent, “I would give you a prize if I had one.” The ATF found Norcross displayed “inappropriate behavior” by agreeing with the comment and suspended her for one day, even though Norcross herself said nothing inappropriate.  The woman who made the comments received a two-day suspension.

Norcross complained of unequal treatment, since just a month earlier three male agents went undisciplined for their role regarding a sexually suggestive photo shared in the Boston office.  The photo showed agent Philip Ball with his pants down at his knees and boxers exposed, standing over Eric Kotchian, who was stretched out on the floor, partially under a desk. Agent Robert White e-mailed the photo to women in the office. It wasn’t until Norcross complained about her suspension that Ball and White received reprimands.  The after-the-fact reprimands were a less severe sanction than the women received, even though the male agents’ conduct was arguably more offensive.

Goyal and Grossman argued that not only was Norcross’ reprimand evidence of gender discrimination, but also that ATF retaliated against her when she supported a female colleague’s complaint about it.  The ATF settled the case by paying Norcross $41,000, reducing her suspension to a reprimand, and transferring her to another office.

Senator Charles Grassley, chairman of the Senate Judiciary Committee, told the Globe that law enforcement should be “a guiding example of professionalism and proper conduct,” but his oversight has found that at ATF, “too often, inadequate systems to track and respond to misconduct claims only add insult to injury for harassment or discrimination at work.”

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EEOC Sues Massachusetts Medical Center Over Its Mandatory Flu Vaccination Policy

June 6th, 2016

Did a Massachusetts hospital discriminate against a worker who refused to get a flu shot? See what Joel said in this story from the Bloomberg Bureau of National Affairs.

Screen Shot 2016-06-06 at 4.49.03 PM

Religious Discrimination

EEOC Sues Massachusetts Medical Center Over Its Mandatory Flu Vaccination Policy

A Massachusetts hospital discriminated against a Christian human resources employee who de- clined a flu shot for religious reasons and who raised concerns about the alternative of wearing a face mask at work, the EEOC alleges in a novel lawsuit (EEOC v. Baystate Med. Ctr., Inc., D. Mass., No. 3:16- cv-30086, complaint filed 6/2/16).

According to the Equal Employment Opportunity Commission, Baystate Medical Center Inc. placed Stephanie Clarke on unpaid leave and then fired her because she sought a religious accommodation from its mandatory influenza immunization policy for employees. That violated federal anti-bias law, the agency alleges in a complaint filed June 2 in the U.S. District Court for the District of Massachusetts.

The hospital also fired Clarke because she failed to wear a face mask—which hospital policy required of all employees who refused immunization—at all times while working and complained that the hospital was discriminating against her, the EEOC asserts. Clarke never worked around patients and she occasionally pulled down the mask when people said they couldn’t understand her, according to the commission.

The lawsuit, filed under Title VII of the 1964 Civil Rights Act, involves a “unique issue” on which there re- ally is no binding case law, attorney Alan Phillips of Asheville, N.C., told Bloomberg BNA June 3. Although a Canadian arbitrator decided the issue in 2015, Phillips said “there’s no real court precedent” in the U.S. of which he’s aware.

Joel Rosen of Rosen Law Office in Andover, Mass., agreed that the case presents a somewhat novel issue. “There are a lot of cases” involving employee vaccination policies, “but they mostly involve whether it’s a bargained-for term in a union contract,” he told Bloomberg BNA June 3. He represents doctors and dentists in medical practices.

Policy Requires Vaccination or Mask. According to the complaint, Baystate’s immunization policy applies to all employees, even those like Clarke whose office was located in the hospital’s administrative services building and who weren’t required to have patient contact. Employees who failed to comply with the policy for religious or other reasons were required to wear a face mask or they were placed on unpaid leave, without job protection, until they complied with the policy or the flu season ended, the EEOC asserts.

Clarke was hired in December 2014 as a talent acqui- sition consultant and raised a religious objection to the policy in October 2015 when her supervisor told her and her fellow employees they needed to be vaccinated by the following month.

Clarke brought her concern about being unable to effectively communicate because of the mask to hospital management, but she was nevertheless suspended without pay after her supervisor noticed she wasn’t always wearing her mask over her nose and mouth. She complained of religious discrimination and a few weeks later was told she couldn’t return to work until she either received the flu vaccine or promised to wear the face mask at all times.

When she maintained her objection, the hospital told her it viewed her as having resigned.

“Federal law requires employers to fairly balance an employee’s right to practice his or her religion and the operation of the business,” Jeffrey Burstein, regional attorney for the EEOC’s New York district office, said in a June 2 statement announcing the lawsuit. “For an accommodation to be meaningful under Title VII, it both must respect the employee’s religious beliefs and permit her to do her job effectively,” he said.

Baystate Health’s director of public affairs, Benjamin Craft, told Bloomberg BNA in a June 3 e-mail that the Springfield, Mass.-based hospital doesn’t “comment specifically on pending litigation.” He added, however, that the safety of the patients “is our highest priority, so we take all reasonable steps to minimize any risk of transmission of infectious illness such as flu. That includes a requirement to be vaccinated against flu or wear a mask at all our facilities during flu season.”

“Cautiously Delighted.” Phillips noted that employee objections to wearing a face mask is a frequently recurring issue in the area of mandatory employer vaccination policies but ‘‘one the EEOC has struggled with.” He said he’s “cautiously delighted” that the agency has decided to pursue the case and hopes it results in some useful guidance from the court on the subject.

The case really boils down to whether the hospital reasonably accommodated Clarke under Title VII, he said. That standard is based on “mainstream medical science,” which favors the EEOC’s claims, Phillips said.

Face masks don’t actually work for the intended purpose because “they don’t block or filter viruses out of the air,” which is acknowledged by the federal Centers for Disease Control and Prevention, according to Phillips. Moreover, the flu vaccine itself has a low efficacy rate, he said.

“If the EEOC does a good job” in presenting its claims and looks to the Canadian arbitrator’s ruling, ‘‘the case should be a slam-dunk, no-brainer’’ for the agency, Phillips predicted.

Hospital Has Duty to Patients. But Rosen told Bloomberg BNA that the hospital’s first duty is to pa- tient safety. The court may find in its favor if it thinks Clarke’s request for accommodation may have compro- mised the hospital’s ability to protect patients from exposure to the flu virus, he said.

The hospital also may question the sincerity of Clarke’s alleged religious belief, Rosen said. The Bible doesn’t say anything about vaccinations, and the EE- OC’s complaint seems to say Clarke’s objection was based on her interpretation of the Bible, he said.

However, Rosen said he thinks a court would side with the EEOC on that issue.

Instead, the case likely will turn on whether the hospital made a reasonable effort to accommodate Clarke’s religious objection, he said. That will involve questions such as what conversations the hospital had with Clarke, whether it offered to let her work from home and whether it discussed allowing her to remove the mask when she needed to communicate with someone, Rosen said, noting there could have been a few potential accommodations.

If it’s true that Clarke didn’t work around patients, the hospital may have a tougher case to defend, he said.

BY PATRICK DORRIAN

Text of the complaint is available at http://src.bna.com/fzI.

Download a PDF version of this article

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Massachusetts Wage Act Overview

March 3rd, 2016

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Get the Wages You Have Earned

Here are a few ways employees get cheated:

  • They don’t get all their wages at the end of every pay period.
  • They don’t get time and a half when they work over 40 hours.
  • They work on public works projects but don’t get paid the prevailing wage.
  • They don’t get paid commissions when they are due.
  • They don’t get paid in full on the day they terminate, including vacation pay.

If you’re one of those employees, the Massachusetts Wage Act may provide a way for you to get back three times your unpaid wages.  

Massachusetts has some of the strongest employee rights laws in the country.   If your employer has not paid you your full wages, commissions, vacation pay, overtime, or prevailing wages—and paid you on time—you can sue to get back three times your unpaid wages, and also your attorneys’ fees and costs.    

The first step is to file a wage complaint with the Massachusetts Attorney General’s Office.  You need to do this before suing your employer.  It is best to fill out this claim as soon as you learn you are being cheated, and it must be done within three years of the wage violation.  Otherwise, you waive your right to bring a wage claim.  You do not need to submit any documents, just follow the link below to fill out the online form.

https://www.eform.ago.state.ma.us/ago_eforms/forms/npwc_ecomplaint.action

The purpose of completing a wage complaint is to give the Attorney General’s Office the opportunity to investigate your claim and get back your lost wages for you.   If the investigation results in payment, you’ll get your wages, but not treble damages and attorneys’ fees.  And the investigation can take a very long time.  That’s why you may decide to file a lawsuit. 

After you fill out the wage complaint, you can ask the Attorney General’s Office for a “Right to Sue” letter.  When the letter arrives, you can file a lawsuit against your employer in court.  At this point in the process, or earlier, you may want to find an attorney to help you with your case.  

Because the statute is so punitive to employers, our firm often takes on wage claims on a contingency fee basis.  This means that we will bring the lawsuit on your behalf, in exchange for payment from the settlement you receive from your employer if you win. 

The Rosen Law Office has a great deal of experience bringing successful Wage Act lawsuits.  In the last few years, we have helped a number of employees who were being cheated out of their proper overtime wages, prevailing wages, or both, obtain satisfactory settlements with or judgments against their employers.  If you think you’ve been cheated, you should call for a free consultation.    

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Too Sexy for My Job

January 14th, 2013

Can you fire a woman because she’s too attractive? We wouldn’t advise it, but a couple of employers have gotten away with it.

A dentist fired his assistant because he was irresistibly attracted to her. The assistant had worked at his office for ten years, and her work was fine. When she and the doctor began sending texts to each other—which were personal but not romantic—the doctor’s wife got jealous. He fired the assistant to save his marriage, and she sued him for gender discrimination.

The Iowa Supreme Court said it may not have been fair, but it wasn’t discrimination. They held that the decision was based on the dentist’s personal feelings about the assistant, rather than her gender alone. Besides, there weren’t any unwelcome advances, and there was no hostile work environment. As a result, there was no basis for finding that the firing was illegal.

Then there is the famous case of Debrahlee Lorenzana, a 33-year-old banker, who was fired because her figure and style of dress were too distracting to her coworkers. A colleague at Citibank told the Village Voice: “Men are kind of drawn to her. I’ve seen men turn into complete idiots around her. But it’s not her fault that they act this way, and it shouldn’t be her problem.”

Lorenzana pointed out that other coworkers wore heels and fitted business suits, some that were more revealing or “sexy,” but Citibank said their bodies were different. Her figure was just too distracting. Lorenzana’s case went to arbitration, and Citibank has stated that she did not receive any payment.

Now Lauren Elizabeth Odes has filed a gender and religious discrimination suit against her former employer, Native Intimates. After sending her home to change clothes, and directing her to wear a red bathrobe over her outfit, her employer advised her to tape down her breasts to make them appear smaller. She was fired when she went shopping for an outfit that would satisfy her boss.

It’s true that employers can set standards of dress. Allegedly, none of these employees was sexually harassed as the term is generally understood. It is also true that employees-at-will can be fired for any reason or no reason—including a subjective decision on the part of the boss. But it hasn’t escaped us that every one of these stories is about a woman. We have never found a case where a man is told he is too attractive to keep his job.

Women are placed in an impossible position. Can an employer set one dress code for plain women and another for pretty ones? Who decides where the line is between pretty and plain anyway?

These cases caused much debate in our office. Surprisingly, the women felt that the requirement to dress appropriately should not constitute gender discrimination. On the other hand, when one considers the details behind some of these claims, it seems inconceivable that the harassment and termination could be based on anything but gender. In the Lorenzana and particularly the Odes cases, you cannot create a set of facts that would expose a man to the same requirements.

We predict that very soon, one of these cases will end up with a judgment against the boss. The woman isn’t too sexy—the employer is just too biased.

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When are Releases of Wage Act Claims Valid and Enforceable?

January 3rd, 2013

When an employee signs a general release of claims, the hope and expectation is that you will not hear from the employee again. In fact, that is the primary purpose of the release, especially when the employee is compensated in exchange for signing it. However, a recent decision issued by the Massachusetts Supreme Judicial Court offers guidance to employers to ensure when a release of Wage Act claims will be found valid and enforceable in Massachusetts.
In Crocker v. Townsend Oil Company, Inc., Plaintiffs, two former oil delivery truck drivers, claimed that they were owed compensation, including overtime pay, under the Wage Act based on their classification as employees, rather than independent contractors. The employer responded, along with a statute of limitations defense, that a general release contained in a termination agreement signed by plaintiffs barred any Wage Act claims. Though the SJC struggled with its policy to broadly enforce general releases, it disagreed.
The SJC concluded that the general release contained in the contract carrier termination agreement did not explicitly include the release of Wage Act claims. The Court continued that a release of Wage Act claims will be enforceable, only when such an agreement is stated in “clear and unmistakable terms”. Offering further guidance, the SJC stated that the release must be plainly worded and understandable to the average person, and it must specifically refer to the rights and claims under the Wage Act that the employee is waiving. Absent express language that Wage Act claims are being released, a general release is ineffective to waive them.
It is important to note that the SJC also stated that this case only dealt with retrospective release of claims – in other words, claims that existed at the time of the Agreement. This means and the Court strongly suggested that waivers of prospective wage act claims would be void under the Wage Act. This likely is an effort by the SJC to give weight to the Wage Act language that expressly states that employers cannot exempt themselves from obligations under the Wage Act by “special contracts with employees.”
As most employers are aware, damages under the Massachusetts Wage Act, including overtime pay, are automatically trebled. Given the potential risk, it is even more important that employers obtain a valid and enforceable release of Wage Act claims. The decision is an important reminder to employers to make sure they expressly state in plain and understandable language the rights and claims that the employee is waiving under the Wage Act. What constitutes “plain and understandable” and “clear and unmistakable terms” will likely be subject to further interpretation by the courts. In the interim, however, employers should proceed carefully and consult employment counsel if they want assurance that their employee’s release of Wage Act claims will be valid and enforceable.

-Kavita Goyal

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Surviving Challenges to your Non-Compete Agreement

December 29th, 2012

In Massachusetts, the validity and enforceability of non-compete agreements is a heavily litigated area of employment law. Non-compete agreements will generally be enforceable when they seek to protect legitimate business interests of the employer such as trade secrets, confidential information, or good will. A non-compete that seeks to prevent ordinary competition is not enforceable. In addition to protecting a legitimate business interest, the agreement generally must also be reasonable as to (a) the amount of time it seeks to be in effect, (b) the scope of what it covers, and (c) the geographic area it encompasses. Courts generally do not like to see that a non-compete agreement is over-reaching in any of these respects. It cannot, in effect, preventing an individual from earning a living.

There are also certain members of industries for whom non-compete agreements are illegal or will be found to be unenforceable. They are the following:
• Doctors
• Lawyers
• Psychiatrists
• Psychologists
• Nurses
• Social Workers
• Radio Broadcast on-air personalities
• Registered Brokers in a publicly traded company
The following are a few basic strategies for employers to help reduce the chances that an employee will challenge the validity of their noncompete agreement after they end their employment and increase the chances it will be upheld if it is challenged:

1. Be Specific

At the beginning of the employment relationship, discuss exactly what the employee’s obligations will be under the non-compete agreement should the relationship end and define any vague or ambiguous terms with the employee and/or his lawyer. When employees fully understand what is expected of them and they are in agreement at the beginning of the employment they are less likely to challenge the agreement’s validity at the end of the relationship. Additionally, should the employee challenge the legality of the non-compete, a specific agreement will more strongly support your position that the interests sought to be protected are legitimate and important as opposed to one that is vague and undefined.

2. Less May be More

Identify which legitimate business interests are truly the most important to your business and narrow the scope of your non-compete agreement to adequately protect just those key interests. Such an agreement will have a much better chance of surviving challenges to its enforceability because a court is less likely to view the agreement as overreaching and thus preventing the former employee from earning a living.

3. One size does not fit all.

Rather than having standard non-compete agreement for all employees, tailor your non-compete to the individual employee or to a class of employees. Execute them on a sliding scale with stricter and broader enforcement for high level executives with significant access to protectable company information to a very narrow, or even no, non-compete agreement for low-level employees with little or no access to confidential information.

-Peter Fisher

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Wages During a Disaster

November 8th, 2012

People have been asking us whether they are entitled to be paid after a hurricane or other disaster closes their workplace.

Hourly, or nonexempt, employees are paid only for the hours they actually work. If the business is closed during a natural disaster, they do not receive any payment. There are a couple of exceptions. An employee who is on the premises waiting to work—if the power fails, for instance—should be paid. Employees who are on call at or near the business premises may be entitled to payment.

Salaried employees get the same pay no matter how many hours they work in a given week. They are entitled to their full salary for any week in which they perform any work—even if the office is closed for part of the time. However, the employer may require them to use allowed leave—such as vacation or personal days—for this time. If the office is open, but the employee decides not to come to work, this may be considered unpaid leave, or the employee may have to use vacation time. If the exempt employee is only out for part of a day, there should not be any deduction in pay.

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When is your construction employee entitled to the Prevailing Wage?

March 15th, 2012

Not everyone who works on a public construction project in Massachusetts has to be in a union.  However, to prevent ordinary workers from undercutting the unions, non-union shops have to pay their employees approximately what union workers make.   Prior to the start of any public works project, a list of the jobs which are to be employed on the project is submitted to the Director of the Department of Labor Standards.  The Director then determines a rate of wages for certain classifications of jobs.  The awarding authority is then furnished with a schedule of such wages and updates these wages on a yearly basis until the project is complete.  This higher hourly rate is called the prevailing wage and is mandated by the Massachusetts Prevailing Wage Laws, G.L. c. 149 §27.   

If you are in the construction business, you want to pay your workers what the law requires.  A basic understanding how workers should be classified under a Director’s schedule of wages is therefore extremely important.   Failure to correctly classify workers can expose employers to significant fines and expensive lawsuits.  A worker who is not paid the appropriate prevailing wage has the statutory right to bring a lawsuit in his or her own name after initially filing a complaint with the Attorney General.  If successful, the employee is entitled to mandatory treble damages for any lost wages, even if it is the employer’s first offense and/or even if the employer’s violation was unintentional. 

For the most part workers will fall neatly under one of the enumerated categories of jobs on the director’s schedule of wages; however, some workers, despite their job title, perform duties which make it difficult to determine whether or not they should be paid the higher prevailing wage.  For example, workers who deliver materials which are not used in road construction do not generally fall under one of the Director’s classifications.  However, when those same workers are in some way “engaged in construction activity” in connection with a public works project, then regardless of their job title, they may be entitled to the prevailing wage.

While there is no bright line rule for an employer to know whether an employee is “engaged in construction activity,” courts have interpreted this phrase as requiring that there be a “significant nexus between the employee’s work and the site of the construction project.”   In other words, regardless of what your employee’s job title may be, an employer should always ask: What exactly is my worker required do at the public works site?   If your employee is required to perform any type of labor on site or in connection with the construction project, that employee should most likely be paid the prevailing wage.   The Department of Labor Standards publishes annual topical outlines which are useful to employers seeking guidance on specific worker classifications. The most recent can be found at http://www.mass.gov/lwd/docs/dos/prevaling-wage/interim-topical-outline.pdf 

Peter Fisher

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Masssachusetts Data Privacy Update

February 29th, 2012

Most businesses that handle “personal information” of Massachusetts’ residents (i.e., a resident’s name and financial information, such as driver’s license, credit card number or social security number) must satisfy additional requirements of the Massachusetts data security regulations (201 CMR 17:00, et seq.) by March 1, 2012.  The regulations, which took effect March 1, 2010, require businesses to have adequate protections in place to ensure that such personal information is not disclosed or used in an unauthorized manner.

Businesses must take further steps to comply with the regulations by ensuring that their service providers are also in compliance by March 1, 2012.  Specifically, such businesses must have investigated the adequacy and appropriateness of service providers’ data security policies and practices.  In addition, they must have contracts in place which demonstrate that they are in compliance with the regulations. Service providers may include office cleaning services, payroll companies, internet servers or host providers, or billing companies, as well as others.

Companies affected by this law should check their contracts with their service providers to determine whether the contracts comply with the regulations.  If not, such contracts should be amended as soon as possible.  Simply receiving a letter from your services providers stating that they are in compliance is not sufficient.  It is advisable that the contracts with service providers include additional language to protect your business, such as the following:

  • Include language allowing you the right to audit the service provider’s compliance with the regulations.
  • Require the service provider to inform you of any breach of the regulations
  • Include a clause that requires your provider to indemnify (pay you back) if a claim is made against you as a result of their actions.
  • State that they must return or destroy personal information upon contract termination.
             -by Coale Parker
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