Five Developing Trends Financial Services Employers Need to Know - Take 5 Newsletter

Epstein Becker & Green

As certain long-standing issues of interest to financial services employers seem to be receiving a degree of reactive attention, other cutting-edge issues continue to force such employers to revisit and update policies to meet societal trends. In this edition of Take 5, we look at moves to curtail non-compete agreements and mandatory arbitration provisions, as well as a limitation to the application of the attorney-client privilege to internal investigations. By contrast, we discuss the expansion of legalized medical and non-medical marijuana and the growing protections for employees in that regard, as well as the recent flow of Employee Retirement Income Security Act of 1974 (“ERISA”) class action claims holding fiduciaries liable.


Legislation Introduced in Senate Seeks to Ban Non-Competes

David J. Clark

Employers in the financial services industry should be aware that political winds continue to blow against the enforcement and even the use of non-competition clauses in employment agreements. On October 17, 2019, Senator Chris Murphy (D.-Conn.) and Todd Young (R.-Ind.) introduced a bipartisan bill, the Workforce Mobility Act of 2019 (the “bill”), to limit the use of non-compete agreements. As drafted, the bill is remarkably far-reaching: “No person shall enter into, enforce, or threaten to enforce a non-compete agreement with any individual who performs work for the person and who in any workweek is engaged in commerce or in the production of goods for commerce . . . .” If enacted, the only exceptions to this prohibition would be for non-competes agreed in connection with the dissolution of a partnership or the sale of a business.

While enactment of this bill is by no means imminent, there could be significant support for it. In the last couple of years, at the federal level, Senators Elizabeth Warren (D.-Mass.) and Marco Rubio (R.-Fla.) have introduced other bills to limit or prohibit non-competes. At the state level, in 2019 alone, at least seven state legislatures enacted laws setting some limits on employers using non-competes, particularly with respect to low-wage and entry-level workers. Employers thus should not discount the possibility of enactment of some federal limitations on non-competes in the coming months or years.


Maintaining Attorney-Client Privilege Over Communications with Consultants Involved in Internal Investigations

John F. Fullerton III

When a company retains outside counsel to conduct an internal investigation of alleged wrongdoing, attorney investigators sometimes need or require the assistance of outside consultants, such as forensic accountants or technology specialists, to effectively represent and communicate with their client. While the extension of the attorney-client privilege to communications between counsel and such outside consultants has been recognized, the consultant must be integral to counsel’s ability to perform the investigation and convey and discuss the results to the client, and privileged communications with the consultant should be narrowly restricted. In a recent case, SEC v. Navellier & Assocs., Civil Action No. 17-11633-DJC (D. Mass. Jan. 22, 2019), the court held that the attorney-client privilege did not extend to an outside consultant hired as part of an internal company review to assist counsel in advising clients regarding possible future litigation with the Securities and Exchange Commission regarding exchange traded funds. According to the court, the third party “must be ‘necessary, or at least highly useful, for the effective consultation between the client and the lawyer which the privilege is designed to permit.’” The court emphasized that the third-party consultant’s involvement must be nearly indispensable or serve some specialized purpose in facilitating the attorney-client communications. The court found that the consultant’s role in that case, while helpful in assisting counsel, did not rise to the required level of necessity; thus, communications between counsel and consultant were not privileged. The Navellier decision serves as a reminder to both companies and counsel to analyze as a threshold matter whether the consultant is truly necessary or merely helpful or convenient, and tailor communications with the consultant accordingly.


It’s Time to Revisit Your Arbitration Agreements: Limitations on Mandatory Arbitration Agreements Continue to Spread Throughout the Country

Lauri F. Rasnick and Eduardo J. Quiroga*

Financial services firms—which commonly have agreements and policies mandating arbitration for discrimination and harassment claims—should take stock of recent developments regarding mandatory arbitration. State legislative enactments prohibiting the use of mandatory arbitration with employees continue to roll out as legislatures face pressure from their constituents. The pressure is also erupting in recent headlines, which put a spotlight on mandatory arbitration clauses. Employers, ranging from global law firms to Fortune 500 companies, have received a loud outcry over their use of mandatory arbitration provisions. Arguments against the use of mandatory arbitration provisions have now even made their way into the Presidential debates. Undoubtedly, in light of pressure from employees, scrutiny from the public, and the increasing litany of statutory prohibitions, some employers—such as Google, Uber (for sexual misconduct claims), and Microsoft (for gender discrimination and harassment)—are eliminating or reducing mandatory arbitration of discrimination claims.

The number of states imposing limitations on mandatory pre-dispute arbitration agreements in the employment context has been increasing and includes Illinois, New Jersey, New York, Washington, Vermont, and Maryland. The types of limitations vary by state. For example, Vermont’s law applies only to claims of sexual harassment, while others, such as New York’s, purport to prohibit required arbitration of all claims of discrimination or harassment based on any protected characteristic.

To add even more complexity to the landscape of mandatory arbitration, preemption challenges may narrow the scope of these state limitations, given potential conflicts with the Federal Arbitration Act (“FAA”). In June of this year, for example, a New York federal court held that the FAA preempted New York’s prohibition on mandatory arbitration provisions covering sexual harassment claims. We expect similar challenges to arise in state courts and in other states where limitations have been enacted.

In light of the new laws and the increasingly vocal public outcry, employers should review their arbitration provisions, whether in employment agreements, offer letters, standards of conduct, or other employment-related documents. Not only should employers review these provisions for compliance with the evolving laws, but they should consider the pros and cons of arbitration programs and how mandatory arbitration fits into the current employment culture. This may require employers to revise their agreements, create carve outs, and implement new practices, particularly in cases where an employee did not sign, but is otherwise bound by, arbitration agreements.

[co-author: *Eduardo J. Quiroga -Law Clerk]


Limitations on Pre-Employment Testing for Marijuana

James D. Mackinson

As of September 2019, 33 states and Washington, DC, have legalized medical marijuana use, and 10 states and Washington, DC, have legalized both medical and recreational marijuana use. Many of these states have enacted laws that protect employees and job applicants from discrimination based on their status as medical marijuana users. However, on May 10, 2019, New York City went a step further and became the first municipality in the country to prohibit employers from requiring prospective employees to submit to testing for marijuana and tetrahydrocannabinols (“THC,” the active ingredient in marijuana).

New amendments to the New York City Human Rights Law prohibit employers, labor organizations, and employment agencies from requiring prospective employees to submit to marijuana or THC drug testing as a condition of employment. The law describes such pre-employment testing as an “unlawful discriminatory practice.”

The law carves out several types of jobs for which pre-employment drug testing for marijuana and THC will be permitted, including (1) safety-related positions; (2) transportation-related positions; (3) caregivers; (4) positions for which drug testing is required by any federal or state statute, regulation, or order for purposes of safety or security; (5) positions for which drug testing is required by a contract with the federal government, or for which the federal government provides funding; and (6) positions for which drug testing is required pursuant to a collective bargaining agreement. Notably, the law does not provide any exceptions specific to financial services employers.

Before the law takes effect on May 10, 2020, financial services firms should review their drug- testing policies and any other documents relating to pre-employment drug testing (e.g., employment applications or offer letters) in order to ensure that they do not violate the new restrictions, and they should consider that New York City may just be an early adopter of this type of law. Additionally, firms should train human resources personnel, as well as supervisors and managers, on any changes made to current policies and practices in response to the changing landscape regarding marijuana and any changes pursuant to the new New York City law.


Arbitration and Class Action Waivers of ERISA Fiduciary Claims After Dorman

Janene M. Marasciullo

Recently, there has been a surge in ERISA class actions seeking to hold plan fiduciaries liable for selecting poor or unduly expensive investments. However, a decision by the U.S. Court of Appeals for the Ninth Circuit in Dorman v. Charles Schwab Corp., 934 F.3d 1107 (9th Cir. 2019), may halt the proliferation of these cases. Dorman found that ERISA breach of fiduciary claims must be arbitrated when plan documents contain an arbitration agreement, and an unpublished companion decision enforced a class action wavier and held that the plaintiff must pursue any claim in individual arbitration.

Dorman thus allows plan sponsors and other fiduciaries to avoid costly class actions. Moreover, even though ERISA authorizes awards of “reasonable attorney’s fees,” 29 U.S.C. § 1129(g), the limited damages available to individual plaintiffs due to poor investment choices or fees may deter individual arbitrations. While employers may applaud these developments, they should keep in mind that there is a motion for rehearing in Dorman, and that, in 2014, FINRA disciplined a brokerage firm for including a class action wavier in its pre-dispute arbitration agreements with customers, which may deter FINRA members providing investment advice to ERISA plans from enforcing class action waivers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Epstein Becker & Green | Attorney Advertising

Written by:

Epstein Becker & Green
Contact
more
less

Epstein Becker & Green on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.