Cobra Subsidy Expires - Will it Be Renewed? (7/10)

Congress has allowed the Consolidated Omnibus Budget Reconciliation Act (COBRA) premium reduction subsidy to expire once again, and it appears unlikely that it can muster enough votes to extend the subsidy beyond its May 31, 2010 expiration.  The COBRA subsidy allows terminated employees and their beneficiaries to pay only 35% of the cost of the COBRA coverage.  The other 65% of the plan cost is paid by the federal government as a tax credit to the employer.  The premium reduction originally was part of the $787 billion stimulus package created by the American Recovery and Reinvestment Act (ARRA) in February 2009.        Initially, the subsidy was available to any employee terminated involuntarily between September 1, 2008, and December 31, 2009, and their covered dependents, and provided only nine months of the reduced-rate COBRA coverage.  The subsidy first was extended until February 28, 2010, and for a total of 15 months, as part of the 2010 Department of Defense Appropriations Act (2010 DOD Act), and then was extended a second time as part of the Temporary Extension Act of 2010, but only through March 31, 2010.  A third extension also expanded eligibility to the COBRA subsidy.  Specifically, an involuntary termination of employment that occurred on or after March 2, 2010, but by March 31, 2010 and which followed a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through March 31, 2010 is also a qualifying event that makes an individual eligible for the COBRA subsidy.  The last extension came as part of the Continuing Extension Act of 2010, which also extended unemployment benefits, and kept the subsidy available to employees who terminated on or before May 31, 2010.      Now, the COBRA premium reduction seems to be a victim of belated concerns by Congress regarding the costs of the subsidy.  The Congressional Budget Office originally estimated the subsidy would cost about $26 billion initially, and any extensions would add $7 billion in 2010 and $13 billion in 2011.  The subsidy was removed from a House jobs bill (H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010) that would extend several expiring tax credits and unemployment compensation, among other things.  However, Senators Bob Casey (D-PA) and Sherrod Brown (D-OH) have introduced legislation (S.A. 4371) to amend H.R. 4213 and add back the COBRA subsidy through November 30, 2010.   Stay tuned – HR Matters will report on any extensions.

Supreme Court Allows Search of Public Employee's Text Messages (7/10)

Although only public employees are protected from searches in the workplace by the Constitution, private employers can still learn several lessons from this decision.

Privacy in the workplace continues to be a hot topic for employers.  While no employer relishes the idea of combing through employees’ work emails and text messages, most recognize the importance of reserving the right to do so to ensure proper use of company-provided equipment and to prevent potentially inappropriate and even harassing behavior.  As a general rule, private employers have greater discretion to monitor and search through employee email and other electronic communications and typically may do so if they have a legitimate business reason and have warned their employees that they will conduct the monitoring and searches.      Public employees have greater privacy protections, however, as is seen in a recent Supreme Court decision, Quon v. City of Ontario, CA, No. 01-1332 (June 17, 2010), involving the search of an employee’s text messages sent on an employer-provided pager.  The Fourth Amendment of the U.S. Constitution, which prohibits unreasonable government searches and seizures, protects the privacy of public employees in the workplace.  This protection prohibits warrantless searches in the public workplace, including searches of work spaces and work equipment, except in certain limited circumstances.  Although the Court in Quon declined to specifically rule on whether public employees have a reasonable expectation of privacy in their text messages when they are sent on employer equipment, the court did shed light on when a search of these messages would be reasonable, assuming a right to privacy exists.  In addition, the Court provides a few tips that private employers also may find useful in reserving their right to search employee communications. Facts of Case In this case, the employer (a city in California) provided to its employees pagers that were able to send and receive text messages.  The city paid for the service which included a monthly limit on the number of messages each pager could send or receive before an additional fee was incurred.  At the time, the city also had a specific computer usage, Internet, and email policy that specified that the city “reserves the right to monitor and log all network activity including email and Internet use, with or without notice.  Users should have no expectation of privacy or confidentiality when using the resources.”  The policy did not address specifically text messaging, but a supervisor informed the employees who received the pagers that text messages would be treated like email under its policy and thus was subject to the same monitoring.      The employee in this case (Quon), as well as several other employees, exceeded the monthly text limit for several months in a row and so incurred additional fees for the city.  At the time, Quon’s manager informed him that although the city could audit Quon’s account under its policy, the manager did not want to do so and instead Quon could simply reimburse the city for the overages.  However, as the overages continued, the city wanted to determine whether the existing text limit was too low, and particularly if the city employees were paying overage fees for sending work-related messages or whether the overages were for personal messages.  Accordingly, it asked its wireless service provider to provide transcripts of the text messages for a two-month period.  The city then discovered that most of the messages sent and received on Quon’s pager were personal and some were sexually explicit.   Quon was disciplined for his inappropriate use of the pager, and he then filed suit against the city claiming it had violated his Fourth Amendment rights by obtaining and reviewing his pager messages.  A district court held that the city did not violate Quon’s Fourth Amendment rights, but the Ninth Circuit Court of Appeals disagreed, setting the stage for the Supreme Court’s review. Narrow Holding with Limited Application The Court began its analysis by recognizing the “rapid changes in the dynamics of communication and information transmission” both in the technology of transmission but also in what society accepts as proper behavior.  Accordingly, it declined to establish a broad rule addressing public employees’ privacy expectations when using employer-provided equipment and would not even state that public employees have a privacy expectation in these situations.  Instead, it decided the case on much narrower grounds.      The Court assumed that Quon had a reasonable expectation of privacy in the text messages sent and received on his employer’s pager and that the retrieval of the texts constituted a search under the Fourth Amendment.  It then addressed the issue of whether the search was “reasonable” because it was (1) justified at its inception and (2) reasonably related to the objectives of the search and not excessively intrusive in light of the circumstances causing the search.        The Court found that the search was justified at its inception because there were reasonable grounds for suspecting that the search was necessary for a noninvestigatory work-related purpose, i.e., to determine whether its existing limits for texting on the pager was sufficient to meet the city’s needs.  Regarding the scope of the search, the Court determined that reviewing the transcripts was reasonable because it was “an efficient and expedient way to determine whether Quon’s overages were the result of work-related messaging or personal use.”  Further, the review was not excessively intrusive, since the city only requested two months of Quon’s pager records even though he had overages for several months, and it did not consider messages that Quon received or sent while off duty.  The Court disagreed with the Ninth Circuit’s assertion that the city could have used less intrusive measures to meet its objectives. Accordingly, in a rare 9-0 decision, the Court overturned the Ninth Circuit’s decision and found no violation of the Fourth Amendment.  Points for Private Employers Like most Supreme Court cases, this decision has a narrow application, particularly for private employers.  Private employers are not covered by the Fourth Amendment’s prohibition on searches, though a few states do have broader privacy protections that cover both public and private employers that could apply to this type of search of electronic communications.        Still, the Court’s focus on the reasonableness of the search provides a good benchmark for private employers.  Here are three points that from the Court’s decision that are useful for private employers: 1.     Implement specific policies advising employees that all employer-provided electronic communication equipment is the sole property of the employer and may be accessed and monitored at any time.   The Court pointed out that Quon had a limited privacy expectation to begin with since he was told that his text messages were subject to auditing and the city had a policy in place to audit other forms of electronic communications.  So, make sure your policy is broad enough to cover use of any employer-provided equipment, including but not limited to computers, email, pagers, cell phones, and personal digital assistants, and also can be updated and adapted to any new technologies. 2.     Have a work-related reason for any search.  Most HR and legal experts agree that private employers should not conduct any workplace searches (whether of a physical workspace such as a desk or locker or of an electronic communication on a computer, email, pager, or cell phone) without first having a legitimate, work-related purpose.  The Court agreed that searches conducted for noninvestigatory, work-related purposes or for the investigation of work-related misconduct may be appropriate as long as they are not unduly intrusive (see #3, below). 3.     Limit the scope of the search so that it is not unduly intrusive.  The Court made it clear that you do not have to use the least intrusive search methods, but you should try to limit the scope of the search to prevent undue intrusion into the employee’s personal (versus job-related) matters.