Author: Site Staff

Home shopping retailer QVC has suspended more than 200 employees at its Rocky Mount, North Carolina, distribution plant as it investigates whether the workers committed fraud in their 401(k) hardship withdrawal applications.

In an August 4 letter to suspended employees, Nick Brecker, vice president total rewards at QVC, said that his team had reviewed hardship withdrawal applications that came in from the center along with the company’s 401(k) administrator, Fidelity Investments, and determined that some applications “may not contain complete or valid supporting documentation, or we may have other questions about it.”

In the letter, Brecker advised those employees that they have two days to schedule an employment with a QVC Rocky Mount loss prevention specialist or an HR representative. “If you fail to schedule such appointment, we will accept your inaction as your decision to voluntarily resign your employment,” the letter states.

The letter goes on to explain that if the West Chester, Pennsylvania-based company determines that an employee committed fraud, they could be subject to “corrective action, up to and including possible termination of employment.”

Despite the investigation, the Rocky Mount plant is working at full capacity, said Tara Hunter, a QVC spokeswoman, in an e-mail.

“Every employee involved in the investigation will have an opportunity to meet with us to discuss the allegations, and all employees who are returned to work after the investigation will be made whole for any loss of scheduled hours,” Hunter said in the e-mail. “No determination has been made with respect to any employee at this time. Out of respect for the interests of all of our employees, we cannot provide any specific details of the investigation.”

Michael Shamrell, a Fidelity spokesman, referred calls to QVC.

Fraud in 401(k) hardship withdrawals is not uncommon, and companies would be wise to make sure they are really combing through these applications given the economic climate, says Rick Menson, an Atlanta-based partner at law firm McGuireWoods.

According to Watson Wyatt Worldwide, the percentage of companies that have seen 401(k) hardship withdrawals increase has jumped from 15 percent in October to 44 percent in April.

Companies need to audit 401(k) hardship withdrawals just as they do audits of health care plan beneficiaries, Menson said.

And if firms see a lot of these applications come from a specific region, that should prompt further investigation, he said.

“With the advent of electronic processing, people might think they can get things through,” he said. “Companies need to do audits.”

—Jessica Marquez

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Sonia Sotomayor became the first Hispanic to ascend to the Supreme Court when she was confirmed by the Senate, 68-31, on Thursday, August 6.

Most recently a judge on the 2nd Circuit Court of Appeals, she will replace Justice David Souter, who retired this summer.

Souter was often part of the court minority on controversial employment law decisions such as the Lilly Ledbetter pay discrimination case two years ago and a suit this term involving white firefighters who were denied promotions in New Haven, Connecticut.

Sotomayor, 55, carefully navigated through her confirmation hearings in July, revealing little about how she might rule in any area. But she is likely to pick up where Souter left off on workplace cases, according to Kevin Shaughnessy, a partner at Baker Hostetler in Orlando, Florida.

“She’s going to take a more liberal viewpoint on employment issues,” Shaughnessy said. “I don’t see a sea change in the court’s employment law decision-making process. She’s essentially taking the place of a justice who would vote with the liberal bloc.”

In the firefighter case, Sotomayor participated in the three-judge panel that held that the city of New Haven could throw out the results of promotion tests because they would have elevated only white and Hispanic firefighters to the level of captain or lieutenant.

New Haven declined to certify the exams because of concerns that they were unfair to African-American candidates and could leave the city vulnerable to a lawsuit.

The Supreme Court ruled, 5-4, that New Haven could not discriminate against one group of workers—the white firefighters—to avoid discriminating against another: African-Americans.

The court held that the tests could be vitiated only if the city showed “a strong basis in evidence” that the exams were not job related or that another, less discriminatory test existed.

The case became a touchstone for critics of Sotomayor, who said during her hearings that she was following precedent. They said it was an example of the misguided emphasis that President Barack Obama put on the ability of judges to be empathetic to the plight of the disadvantaged.

“[E]mpathy is a fine quality,” Senate Minority Leader Mitch McConnell said in a floor speech before the Sotomayor vote. “But in the courtroom, it’s only good if the judge has it for you. What if you’re the other guy?”

But Sotomayor advocates said that her background was a strength and would give her a unique perspective on the high court.

“These core American ideals—justice, equality and opportunity—are the very ideals that have made Judge Sotomayor’s own uniquely American journey possible,” Obama said after the Senate vote. “They’re ideals she’s fought for throughout her career, and the ideals the Senate has upheld today in breaking yet another barrier and moving us yet another step closer to a more perfect union.”

The daughter of parents who came to the United States from Puerto Rico during World War II, Sotomayor grew up in a housing project in the Bronx in New York City.

Sotomayor, whose father died when she was 9, credits her mother with motivating her to succeed through education. She earned an undergraduate degree from Princeton and a law degree from Yale.

Over the course of her legal career, she served as prosecutor, a corporate litigator, and a trial and appellate judge. She presided over the case involving the Major League Baseball strike in 1995.

Senate Majority Leader Harry Reid, D-Nevada, said that Sotomayor’s cultural and professional background will benefit the Supreme Court.

“She’ll share the depth and breadth of that experience with her colleagues,” Reid said in a floor speech. “A more diverse Supreme Court is a better Supreme Court.”

But until one of the five justices who tend to vote in the majority leaves the bench, controversial employment cases are likely to be decided 5-4. The swing vote often belongs to Justice Anthony Kennedy, who wrote the firefighter decision this year.

“Kennedy seems to relish that role,” said Peter Mina, an associate at Tully Rinckey in Washington.

—Mark Schoeff Jr.

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An employer did not violate employee privacy rights by installing a hidden camera aimed at catching a person viewing online pornography after business hours, California’s Supreme Court ruled.

The ruling in Abigail Hernandez et al. v. Hillsides Inc. et al. overturned a state appellate court’s finding that two employee plaintiffs in the case “suffered an intrusion into a protected zone of privacy that was so unjustified and offensive as to constitute a privacy violation.”

Hillsides operated a Pasadena, California, facility for neglected and abused children where the plaintiffs worked and shared an office, court records state.

In 2002, the facility’s director learned that at night, after the two plaintiffs left the premises, someone repeatedly used a computer in their shared office to view pornography. The director installed a hidden camera that was operated only at night after the plaintiffs left.

Nonetheless, the workers filed a tort claim after discovering the camera.

The employer argued it neither viewed nor recorded the employees, so it did not intrude on their privacy.

The California Supreme Court agreed.

While finding that the employees had a reasonable expectation that their employer would not record their activities on video, “any actual surveillance was drastically limited in nature and scope, exempting plaintiffs from its reach,” according to the court’s unanimous opinion.

The court also found that the company had a responsibility to protect the children for whom it was caring.

Filed by Roberto Ceniceros of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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