As the business community continues waiting for practical guidance on the Patient Protection and Affordable Care Act (ACA), the IRS has recently proposed regulations illustrating how it believes companies should qualify as “large employers” falling within the ACA’s mandates and what type of coverage it feels those employers must provide to avoid penalties. Not surprisingly, the IRS approach not only overwhelmingly favors employer coverage, it also makes providing qualifying health benefits a potentially expensive proposition. Continue reading this entry
The Fair Labor Standards Act (FLSA) requires an employer to compensate any employee who is not exempt from its provisions at a rate that is “not less than one and one-half times the regular” wage rate paid to the employee for all work time performed by the employee in excess of 40 hours (“overtime”) during the employee’s “workweek.” The employer retains discretion under the FLSA to set employee workweeks, which can vary depending on an employee’s classification or employer requirements provided the workweek for each employee consists of a consecutive period of 168 hours.Continue reading this entry
A recent decision by the NLRB provides insight and guidance to employers who are struggling to deal with the ever-expanding issues arising from employees’ use of social media. The Karl Knauz Motors case involved a BMW dealer that held an event called the BMW Ultimate Driving Experience, in an attempt to stimulate car sales. One of the dealership’s sales representatives was unhappy that his bosses were only serving hot dogs and chips at the event. Apparently, this sales representative believed that the target audience of potential BMW customers deserved better. In protest, the sales representative posted critical comments about the event on his Facebook page. Continue reading this entry
If an employer adopts a practice that has an adverse effect on a particular race of employees, can those employees sue years later, if the employer uses that practice to make additional employment decisions that negatively affect those employees? According to the Supreme Court, in its recent opinion in Lewis v. City of Chicago (PDF), the answer is “yes.”
The plaintiffs, six African-American firefighter candidates, alleged that the City of Chicago’s practice of selecting only those classified as "well qualified" on a written entrance examination adversely affected them (and the more than 6,000 other African Americans that had taken the exam) more than Caucasians in violation of Title VII of the Civil Rights Act of 1964. The main issue for the court was whether the candidates could assert a claim even though the test had been administered more than 300 days prior to the filing of the complaint. The firefighters asserted they could because the City was still using the test results for further applicant considerations.
As you may know, Title VII prohibits employers from using employment practices that cause a “disparate impact” on the basis of race. It also requires employees (or applicants), before beginning a federal lawsuit, to file a timely charge of discrimination with the EEOC. A timely charge must be filed within 300 days after the claim comes into existence. In Lewis, the City administered its written exam to firefighter applicants in 1995. Depending on an applicant’s score, he or she was ranked as “well qualified,” “qualified,” or “not qualified.” The City maintained the list of those identified as qualified and well qualified, and over the next six years, used the list to select applicants to advance to the next stage of the hiring process in order to fill vacancies.
New regulations recently issued by the Department of Labor (DOL) will soon require that most government contracts contain specific provisions requiring federal contractors and subcontractors to notify employees of their rights to unionize and bargain collectively under federal labor laws. The DOL’s Final Rule (PDF), published May 20, 2010, implements the requirement of Executive Order 13496 (PDF), signed by President Obama on January 30, 2009, that federal contractors post appropriate notices in the workplace. The posting requirement will become a mandatory provision of all qualified government contracts from solicitations issued on or after June 21, 2010.
The DOL’s rule creates specific notice requirements, with employer postings required to meet the following criteria:
- The posting must be in the format that the employer posts other required notices, meaning that an employer that posts its notices in physical form must post the new DOL required poster in physical form, and an employer that provides required notices in electronic form also must provide the new required notice in electronic form.
- Employers posting in physical form must place the posting(s) in conspicuous places around all working areas — including working areas of manufacturing plants and office spaces — so that the notices are prominent and readily seen by employees. Physical posters also must be in the language(s) spoken by a "significant portion" of the workforce.
- Employers that post the notice in electronic format may satisfy the posting requirement by providing a link to the DOL’s Web site containing the full text of the posting. However, the link to the DOL site must read "Important Notice About Employee Rights To Organize And Bargain Collectively With Their Employers."
The new provision requiring such posting does not need to be included (but may be included at the government’s option) in direct contracts with a value less than $100,000 and does not need to be included in subcontracts with a total value of $10,000 or less. The language also need not be included in direct contracts or subcontracts for work performed exclusively outside the United States.
While this rule does not create any new posting requirements under current federal contracts, employers who do business with the U.S. government should be aware that such changes are on the near horizon and be prepared to make the required postings under all new federal contracts.
Among the least-publicized changes in the recently enacted health care reform bill (Patient Protection and Affordable Care Act, or Act) is an amendment to the Fair Labor Standards Act (FLSA) that will significantly impact the workplace. The new law requires employers subject to the FLSA to provide rest breaks so nursing mothers can express milk. The amendment requires that a break be provided “each time such employee has the need to express the milk” for one year after the child’s birth. It also mandates that the employer provide a place other than a bathroom, shielded from view, and free from intrusion from co-workers or the public where the milk can be expressed.
Departing from DOL regulations, which provide that rest periods of a short duration should be paid as hours worked, the new Act specifically states that these breaks can be unpaid. The Act applies to all employees covered by the FLSA, but those with less than 50 employees are exempt if the requirements “would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the size, financial resources, or structure of the employer’s business.” Given the application of similar language in other employment-related legislation, the burden will be placed on the employer and will not easily be satisfied.
The Act raises several practical concerns and questions. For example, the frequency of the need to express milk as well as the length of time needed to do it will vary. It also could be open to abuse and could impact productivity. Providing a suitable place also could be problematic for some businesses. The DOL is expected to issue regulations that might address some of these issues.
It is unclear when this Act will become effective and what the penalty will be for a violation. However, especially in light of the fact that some states already provide protections for nursing mothers, and may even require the breaks to be paid, employers should change their policies to reflect this obligation and train managers accordingly.
It Depends on Where You Are Doing Business
A recent decision by the U. S. Court of Appeals for the Third Circuit highlights the differences in the evidence that courts will permit a plaintiff to use to prove that he or she had a serious health condition in suits claiming a violation of the FMLA. In Shaar v. Lehigh Valley Health Services, Inc., the issue before the Court of Appeals was whether the trial court properly granted the defendant/employer summary judgment on the basis that the plaintiff had not proven that she had a serious health condition for which the employer should have granted leave.
The plaintiff had experienced symptoms for which she visited a physician. The physician diagnosed her illness as a urinary tract infection with fever and lower-back pain, and prescribed a certain diet and medications, including an antibiotic to be taken for three days. The physician wrote a note advising the employer that the plaintiff’s illness prevented her from being able to work for the next two days — Wednesday and Thursday. This was her only visit to the physician in connection with this illness. In deposition, the physician testified that it was possible, although very unlikely, that the plaintiff would not be able to return to work after three days. The plaintiff taped the note to her supervisor’s door and left.
As coincidence would have it, the plaintiff was scheduled for vacation that Friday and the following Monday. She returned on Tuesday and informed the supervisor that she had been sick all weekend, but never requested FMLA leave, nor did she request that the paid vacation be converted to sick leave. She was subsequently terminated for a variety of reasons including not calling off from work for the two days she was ill, as stated in the physician’s note.
Recently, a New Jersey court allowed a mechanic to pursue his claim that he was fired because his employer wanted to avoid paying health benefits related to his wife’s cancer treatment.
The employee, Christian Pailleret, began working at Jersey Construction, Inc. in 2005. He had no record of discipline and got a merit-based raise in mid-2006. Four months later, Pailleret submitted reimbursement claims for “tens of thousands of dollars” to the Jersey Construction Inc. Employee Health and Wellness Benefits Plan for his wife’s cancer treatment. Pailleret alleged after submitting the reimbursement claims, he was given “degrading” work beneath his skill level and was eventually terminated without explanation or notice.
Pailleret claimed Jersey Construction violated § 510 of the Employee Retirement Income Security Act of 1974 (ERISA). ERISA prohibits an employer from discriminating against an employee for exercising any right under an employee benefit plan. That means an employer cannot harass or terminate an employee in order to keep that employee from obtaining an ERISA-protected benefit. In this case, it was “plausible” that Jersey Construction fired Pailleret with the intent of violating ERISA by “interfering” with Pailleret’s right to claim health benefits.
Jersey Construction argued that the employee’s only evidence of illegal discrimination was timing – that he was fired shortly after he claimed a protected benefit. The court disagreed. While Pailleret had no “smoking gun” evidence, the timing, combined with the fact that Pailleret had no documented performance problems, was assigned to tasks beneath his skill level and was fired without notice, made it plausible that he was terminated so the company could avoid paying benefits. Therefore the court let the case advance.
This case underscores the importance of having good documentation about your legitimate reasons for terminating an employee. If Jersey Construction had presented a legitimate reason for the termination, this case might have been dismissed. This case also serves as a reminder that discrimination cases are not just related to race, gender or age; they can also arise under ERISA, which protects an employee’s right to claim benefits.
It has become increasingly common for employers to require employees to agree to mandatory arbitration of any employment-related disputes. Among some of the advantages, arbitration can be less costly than litigation and avoids the potential risk of exceedingly large jury damages awards. A recently signed bill, however, gives some employers who rely on arbitration clauses reason to pause.
On December 19, 2009, President Obama signed the 2010 Defense Appropriation Bill into law. This bill does more than dole out funds to the Department of Defense. The measure includes an amendment submitted by Senator Al Franken that prohibits Department of Defense contractors with qualifying contracts from requiring their employees to arbitrate Title VII claims and torts "related to or arising out of sexual assault or harassment."
Specifically, the “Franken Amendment” provides that any employer with a defense contract worth more than $1,000,000 must agree not to:
- require any employee to agree to mandatory arbitration of any claim under Title VII or any tort related to or arising out of sexual assault or harassment as a condition of employment; or
- take any action to enforce any provision of an existing agreement with an employee or independent contractor that requires mandatory arbitration of Title VII claims or torts related to sexual assault or harassment.
The new legislation does not appear to prohibit an employee from voluntarily agreeing to arbitrate a claim, nor does it appear to apply to mandatory arbitration of certain types of claims, such as wage and hour or contract disputes. Nonetheless, the bill’s language makes it clear that the prohibition on arbitration is broad. For one thing, this prohibition applies to all of a contractor’s employees, not just those who work on defense projects. Additionally, another section of the Franken Amendment requires contractors to certify that as of June 10, 2010, their subcontractors have agreed to the arbitration restrictions with respect to work related to the covered subcontract, thus ensuring that the effects of this bill will be felt beyond only those employers who directly contract with the Department of Defense.
All Defense contractors and companies that do business with Defense contractors should immediately review their policies and arbitration agreements, if any, to ensure compliance with the Franken Amendment.
It is very common for human resources to encourage management to write honest performance reviews, and/or to utilize a performance plan, before terminating a long-term employee based on poor performance. We encourage management to utilize these tools primarily because it is the right thing to do from a values perspective – an employee should be given adequate notice of deficiencies and an opportunity to correct the deficiencies before termination becomes necessary.
It is also helpful to tell management, however, that there are good economic reasons to utilize performance reviews and performance plans. In a wrongful termination case, if a judge or jury finds there was unlawful discrimination, an employer’s liability can often reach $1 million. An employer’s chances of winning a wrongful termination case – and avoiding the $1 million liability – go up dramatically if it can show the employee was "warned" about poor performance on a performance review, or through a performance plan. Under that circumstance, a jury will be far more likely to think the employer was "fair," and therefore, that it did not wrongfully terminate the employee.
So, if you are encouraging a manager to write an honest review, or to consider a performance plan, and the manager argues that the business simply cannot afford to keep the employee on the payroll while it undertakes those actions, ask the manager which cost is higher – the cost of keeping the employee on the payroll while you go through performance counseling, or the cost of losing a lawsuit because you were not "fair" to the employee.