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Legal Report April 2016


Recording. It is unlawful for an em­ployer to implement a work rule that prohibits employees from recording company meetings or conversations with coworkers without a legal or business justification, the National Labor Relations Board (NLRB) recently ruled.

The NLRB decision was in response to a challenge of two rules Whole Foods Market included in its General Information Guide (GIG). These rules prohibited recording in the workplace. 

The first rule made it a violation of Whole Foods policy to record conversations, phone calls, images, or company meetings with any recording device, unless the individual recording had prior approval from a store or facility team leader, regional president, global vice president, a member of the executive team, or if all parties being recorded gave their consent.

The second rule made it a violation of workplace policy to record conversations with a tape recorder or other recording devices, such as smartphones, unless the party making the recording had received prior approval from store or facility leadership.

“The purpose of this policy is to eliminate a chilling effect on the expression of views that may exist when one person is concerned that his or her conversation with another is being secretly recorded,” the GIG explained, according to the NLRB decision. “This concern can inhibit spon­taneous and honest dialogue, especially when sensitive or confidential materials are being discussed.”

The rules applied to all areas of every Whole Foods store, including the parking lot and the area in front of the store, and to both employees and managers. The rules also applied if the employee wanting to record was engaged in protected concerted activity, such as documenting unsafe workplace equipment.Whole Foods adopted the rules as an essential part of its “core values” and “culture” to allow employees to have a voice and feel free to “speak up and speak out” on work- and nonwork-related issues, a Whole Foods executive said in his testimony.

The NLRB did not find this argument persuasive and ruled that Whole Foods’ policies were unlawful because they “would reasonably be construed by employees to prohibit” protected activity.Photography and audio or video recording in the workplace—along with posting those media files on social media—are protected by Section 7 of the National Labor Relations Act, as long as “employees are acting in concern for their mutual aid and protection and no overriding employer interest is present.” 

Examples of protected activity that the NLRB named in its decision included recording images of protected picketing; documenting unsafe workplace equipment or hazardous working conditions; documenting and publicizing discussions about terms and conditions of employment; documenting inconsistent application of employer rules; and recording evidence to preserve it for later use in administrative or judicial forums in employment-related actions.

Whole Foods was ordered to rescind the two rules and to republish its GIG without the recording rules, or supply employees with inserts to the GIG informing them that the rules were rescinded. Or, Whole Foods could supply employees with inserts of new recording rules that “correct or cover the unlawfully broad rules, until it republishes the handbook without the unlawful provisions.” (Whole Foods Market, Inc., and United Food and Commercial Workers, Local 919 and Workers Organizing Committee of Chicago, National Labor Relations Board, No 01-CA-096965, 13-CA-103533, and 13-CA-103615, 2015)

Liability. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) can punish compliance officers and other individuals for their company’s anti-money laundering control failures, a federal district judge ruled.

The decision stems from a civil penalty issued by FinCEN against Thomas Haider, who was chief compliance officer for MoneyGram International Inc. from 2003 to 2008. Haider was responsible for ensuring that MoneyGram complied with the Bank Secrecy Act (BSA), specifically that MoneyGram implemented and maintained an effective anti-money laundering program and filed timely suspicious activity reports, according to court documents.

After Haider left MoneyGram, the federal government began to investigate whether the company violated the BSA after fraudsters convinced victims to use MoneyGram’s financial transfer system to send them taxes, customs duties, or processing fees to claim a loan or cash prize.

In November 2012, MoneyGram entered a deferred prosecution agreement with the U.S. Department of Justice, which admitted that MoneyGram violated the BSA by “willfully failing to implement an effective anti-money laundering program,” court documents said. MoneyGram agreed to forfeit $100 million and to retain an independent compliance monitor approved by the government. 

Two years later, FinCEN issued a $1 million civil penalty against Haider because he allegedly failed to ensure that MoneyGram implemented and maintained an effective anti-money laundering program and to file timely suspicious activity reports. Because Haider did not complete these actions, the government charged, he allowed the fraudsters to continue to use MoneyGram to commit fraud.

The government also filed an action to make the penalty a judgment and to prevent Haider from working for any financial institutions in the future.

Haider moved to have the case dismissed, claiming that the BSA did not allow for individuals to be held responsible. However, Judge David Doty disagreed and explained that the BSA allows penalties against a “partner, director, officer or employee,” according to his opinion. “The plain language of the statute provides that a civil penalty may be imposed on corporate officers and employees like Haider.”

Doty’s decision allows FinCEN’s case against Haider to move forward to determine the final civil penalty amount. (U.S. Department of the Treasury v. Haider, U.S. District Court for the District of Minnesota, No. 15-1518, 2016)


Clearances. The U.S. House of Representatives passed a bill that reforms how the U.S. Department of Homeland Security (DHS) manages its security clearance process.

The bill (H.R. 3505) would require the designation of the sensitivity level of national security positions be conducted in a consistent manner in all DHS components and offices, compliant with federal guidelines. The bill would require that DHS review sensitivity level designations for national security positions by July 6, 2017, and every five years after that.

Rep. Bennie G. Thompson (D-MS) introduced the bill, which has no cosponsors. It now moves to the Senate for consideration.

Screening. The U.S. House of Representatives passed a bill that would require the FBI to ensure that select individuals applying for U.S. refugee admission receive full background investigations before being admitted to the country.

The DHS already conducts such screenings, but H.R. 4038 would require the FBI to perform background investigations on nationals or residents from Iraq or Syria, individuals with no nationality whose last residence was in Iraq or Syria, and individuals present in Iraq and Syria at any time on or after March 1, 2011. 

Additionally, the bill would require the DHS inspector general to conduct annual risk-based reviews of refugees who received certification to enter the United States.

The bill was introduced by House Homeland Security Committee Chairman Rep. Michael McCaul (R-TX) and has 103 Republican cosponsors. It will now be sent to the Senate for consideration. 



Marijuana. Colombian President Juan Manuel Santos signed a decree fully legalizing medical marijuana in the country, clarifying a previously grey area.The decree allows individuals who wish to grow marijuana to apply to the National Narcotics Council for a license. It can then be sold for medical and scientific use. This clarifies previous policy, which allowed for the manufacture, export, trade, and medical and scientific use of marijuana without regulation. Santos said that medical use of marijuana would not go against Colombia’s commitments to drug control. “Allowing the medicinal use of cannabis does not go counter to our international commitments in the field of drug control,” he added.