Friday, May 7, 2010

The CCH WorkDay Blog has moved!

The CCH WorkDay Blog can now be accessed at In addition to the blog, you'll find employment law news content and information about our new Employment Law Daily product. For more information on Employment Law Daily, and to follow the CCH labor and employment law editors as they provide regular insights into legislative activity, cases of note, and other breaking news, go to

Thursday, April 29, 2010

Wage-Hour Division webchat focuses on rulemaking initiative to beef up recordkeeping requirements, revise companionship services regs

The Wage and Hour Division held a webchat this morning on its recently published spring 2010 regulatory agenda. Nancy Leppink, Wage and Hour deputy administrator, fielded questions from webchat participants on the DOL’s coming plan to beef up FLSA recordkeeping requirements and on pending rulemaking on the companionship services exemption.

Recordkeeping rules. DOL is considering a proposed rule that would revamp current FLSA recordkeeping regulations to require employers to notify workers of their rights under the FLSA, and to provide information regarding hours worked and wage computation. Employers that seek to exclude workers from the FLSA’s coverage will be required to perform a classification analysis, disclose that analysis to the worker, and retain the analysis to give to WHD enforcement personnel who might request it. The current recordkeeping regulations require covered employers to keep specified payroll records and other information, the agency noted, but they do not require that such information be disclosed to the worker. The proposal will also address burdens of proof when employers fail to comply with records and notice requirements.

The likely content of the recordkeeping proposals sparked the greatest interest. The questions offered a telling glimpse of the issues the DOL will be grappling with as it formulates a rule, as well as the input it will no doubt receive during the comment period. Among the questions posed:

  • Do you intend to exempt any industries from the FLSA classification analysis and enhanced recordkeeping requirements?
  • Classification analysis is generally conducted on a position-by-position basis, so when an incumbent leaves a position and a new hire occurs, what will the obligation be to re-analyze the position when the position is filled with a new hire?
  • What are the proposed retention requirements for classification analysis in light of the Lilly Ledbetter Act?
  • Will employers be required under the new recordkeeping requirements to inform employees of their exempt status?
  • Would the notice requirements entail a new posting or some type of mandatory training?
  • Would we need to formally notify each employee of [his or her] FLSA status and how it was determined?
  • What information will be required for notices provided to independent contractors? Is the scope of this proposed rule limited to independent contractors or does it include every employee designated as exempt by his/her employer?
  • Can you share what the proposed burdens of proof might be?
In response to a question whether the rulemaking would likely include changes to recordkeeping requirements “associated with employer credits for things like lodging and meals,” Leppink stated, “We are considering what information employers ought to disclose information regarding wage computations.”

Leppink otherwise declined to offer substantive responses to the queries, noting that the rule is currently under development and that “we have not yet determined exactly what will be proposed.” However, she did offer, in general terms: “Our regulatory agenda includes updating recordkeeping requirements. We expect this update to promote transparency and encourage greater levels of compliance by employers. We also expect the regulation to enhance awareness among workers of their status as employees or independent contractors, as well as enhance awareness of employee rights, and entitlements to minimum wage and overtime pay.” The agency’s time table is to publish the proposed regulation in August.

Companionship services. DOL also intends to update its companionship services regulations in order to clarify when domestic service employees are exempt from the minimum wage and overtime provisions of the FLSA. At issue is whether the current exemption for companions working for a third-party agency needs revision in light of significant changes in the home care industry. DOL also intends to address the scope of training required to render a worker “trained personnel” excluded from the companionship exemption, and the amount of household work that may be performed by the worker without losing the companionship exemption.

The regulations governing this exemption have remained largely unchanged since they were promulgated in 1975, the agency notes, in its fact sheet on the proposed rulemaking. “We intend to consider whether the scope of the companionship exemption as currently defined in the regulations continues to be appropriate in light of substantial changes in the home care industry over the last 35 years,” Leppink said. The DOL expects the companionship notice of proposed rulemaking to be published in October 2011.

Ambitious agenda? “Is the current agenda typical or is it more ambitious than prior years?” asked one participant. “While we cannot compare this agenda with previous ones, we do intend to vigorously pursue those regulatory changes that can best protect workers,” said Leppink in response. “We believe our regulatory agenda will advance the Secretary's goal of good jobs for everyone. We seek to advance openness and transparency, and help prevent violations before they occur.”

Tuesday, April 27, 2010

Connecticut proposes to increase fines for misclassification of employees

Legislation implementing recommendations of Connecticut’s Joint Enforcement Commission on Worker Misclassification has passed both houses as of April 21. House Bill 5204 proposes to increase civil penalties for violators from $300 per violation to $300 a day per violation. Connecticut law provides that an employer that misrepresents either the number of employees or casts them as independent contractors to defraud or deceive an insurance company to pay lower workers’ compensation insurance is guilty of a class D felony and subject to a stop work order. H.B. 5204 would apply the same penalty if an employer defrauds or deceives the state in the same way. The bill increases the penalty for violations by specifying that each day of the violation constitutes a separate offense. H.B. 5204 also specifies that any employer who is fully insured for workers’ compensation and fails to pay the required state assessments for administration of the Workers’ Compensation Commission and for the administration and payment fund of the Second Injury Fund would be guilty of a class D felony and subject to a stop work order.

The legislation follows a March 17 announcement by Connecticut attorney general Richard Blumenthal in which he proposed measures to crack down on companies that misclassify employees as independent contractors, called for the increased penalty and criminal sanctions, and recommended joint investigations of misclassification complaints with other state agencies. The Joint Enforcement Commission, co-chaired by Blumenthal and acting labor commissioner Linda Agnew, has been investigating employee misclassification for the past year. If enacted, the changes would take effect on October 1.

Thursday, April 22, 2010

Hearing on Work-Life Balance Award Act held

A hearing on legislation that would establish an award for employers that recognize the importance of balancing work with family and personal obligations was held April 22 by the House Committee on Education and Labor. The Work-Life Balance Award Act (H.R. 4855), authored by Reps. Lynn Woolsey (D-CA) and George Miller (D-CA), would create, through the Department of Labor, a bipartisan advisory board to develop the necessary criteria for employers that wish to qualify for the award. “It is unacceptable,” Woolsey said, “that our country, which is the number one economy in the world, can barely compete with developing nations in this arena. Workers should not have to choose between work and family.”

Stating that the introduction of this legislation was a great step, Woolsey added that it can be further improved by adding the minimal requirements for the advisory board to use in establishing its criteria for awardees. “For example,” she said, “the bill should identify certain work-life practices on which employers would be measured. While I do not have an exhaustive list, these policies could include paid sick leave to care of oneself or a sick family member and for the birth or adoption of a child; time off to attend children’s extracurricular activities and school conferences; telecommuting; job sharing, and on site-child care. While the bill requires the board to consider only those employers who are in compliance with all labor and employment laws, we certainly should consider the “whole company” as an example of a good employer, so an employer with wage and hour or OSHA citations may not qualify.”

EEOC Commissioner Victoria Lipnic, who noted that she was not testifying in her official capacity, offered the view that “any initiative that encourages voluntary efforts for employers to offer work-life policies that work best for their employees and meet their operational needs at the same time is worthwhile. I support such initiatives by private entities and as a matter of public policy. The ability of employers to have the creativity to adopt policies that work in their workplaces is critical to their ability to compete in our global economy.”

Testifying on behalf of the Society for Human Resource Management (SHRM), China Miner Gorman called the measure “a common-sense bill to recognize and showcase those public and private organizations delivering benefit plans and policies that truly help their employees better balance their work and personal life obligations.” Gorman also urged Congress to consider other initiatives as H.R. 4855 moves forward, and said more can be done legislatively to encourage or create incentives for organizations to offer flexible work options, including paid leave, rather than imposing government mandates.

Tuesday, April 20, 2010

All records are public, but some are more public than others

This Orwellian sentiment appears to be the governing philosophy of the State of Oklahoma, which, according to recent reports, has made millions of dollars selling information gleaned from motor vehicle records, even while state legislators have sponsored a bill that would exempt government worker birth dates from the state’s Open Records Act.

The Oklahoman has reported that the Sooner State has made approximately $65 million over the past five years by selling millions of motor vehicle records to insurance companies, employment screening services and other entities, records which include birthdates and other personal information.

That’s one creative way to survive the recent economic downturn.

But Oklahoma may very well shut down one potential stream of revenue from this information cash cow: its own employees.

In a somewhat unusual move for the state that bars employers from prohibiting guns in their workplaces, two Oklahoma legislators have sponsored a bill that would shield government employees’ personal information from the gleaming eyes of the aforementioned entities. The reason? Safety, says the Oklahoma Public Employees Association. The OPEA applauded the passage of Senate Bill 1753, saying that the era of identity theft and fraud made the move essential. Others have claimed that the move is necessary to protect public employees from those who would do them harm.

So, essentially, the Oklahoma legislature will protect public employees from the prying eyes of the public, but not from the weapons of their own co-workers.

The logic, or lack thereof, is all a bit confusing, and it becomes even more so when one considers the allegation made by the Oklahoma that the OPEA has, during the last year, received access to confidential public employee information. According to the paper, since House Bill 2245 became effective in June, 2009, two spreadsheets containing the names and addresses of all state employees were mailed to direct mail companies hired by the OPEA as part of the union’s organizing efforts.

The connective tissue between the two, seemingly incompatible, bills, is Representative Randy Terrill, a Republican whom the union named its 2009 Legislator of the Year. Representative Terrill not only pushed the bill that gave the union its access, he is also the house sponsor of Senate Bill 1753.

It’s a curious exception that Representative Terrill has carved out for the OPEA and it’s one that citizens of Oklahoma, who might like to know more about the people that run their state, have every right to question.

Monday, April 19, 2010

SEIU's Stern announces retirement

Andy Stern, the influential but controversial president of the Service Employees International Union, officially announced his retirement last week after 14 years at the helm of the 2.2-million member union.

"With the strength and power of SEIU members' voices we have accomplished what once seemed unimaginable,” Stern said, in announcing his departure. “And, I can imagine no greater honor than these hard-working Americans entrusting me to represent them and their voice.” Stern, who ushered in a web-savvy era for organized labor, fittingly announced his retirement to SEIU members in a videotaped announcement posted on YouTube.

It was originally speculated, after unconfirmed reports of his retirement began to surface, that Stern would leave when his term ended in 2012. However, his immediate retirement puts SEIU Secretary-Treasurer Anna Burger in the role of interim president until the union’s International Executive Board votes on Stern’s successor. The SEIU constitution stipulates that the IEB must schedule an election within 30 days.

Since assuming the union’s presidency in 1996, Stern built the SEIU into the nation’s fastest-growing union, adding 850,000 new members during a period in which union rolls dropped precipitously. Stern's SEIU elevated the union corporate campaign, demonstrating how a lawful work-around to a traditional NLRB-sponsored representation election could be the most effective mechanism for bringing new members into the fold. His relentless focus on organizing new members stemmed in part from the belief that more organizing would cultivate the political clout necessary for organized labor to press its agenda and build the movement. The recent passage of health care reform and President Obama's recess appointment of former SEIU lawyer Craig Becker to the NLRB would seem to support that theory.

But Stern’s successes have earned him enemies, both on the right and the left--within organized labor in particular. Stern angered many in the AFL-CIO when, in 2005, he led the SEIU and five other unions to break away from the labor federation, claiming it was too wedded to unsuccessful strategies of the past and that more organizing was needed, and forming the competing Change to Win federation. His most recent battle came in a high-profile dispute with leaders of the SEIU-UHW, the union’s giant local of California health care workers, who left to form the rival National Union of Healthcare Workers. In a statement issued last week, former SEIU-UHW chief and interim NUHW president Sal Rosselli said: “Stern’s legacy is that he took control of an organization built by more than a million hardworking janitors, healthcare workers, and public servants, and used their resources primarily to secure his own political power.”

Stern’s ties with Congressional Democrats and the Obama administration have also rankled conservatives. Of Stern’s departure, The Wall Street Journal wrote: “In future histories of America's metamorphosis into a European-style entitlement state, Mr. Stern will deserve prominent mention.”

“I have been privileged and could not be more proud of the role I was permitted to play in helping make SEIU the preeminent voice and organization for people who work hard and take responsibility for their families,” Stern said. “It's been an extraordinary run, and I leave my union on solid ground financially and with a deep bench of talent that will advance SEIU's legacy of working for justice for all workers.”

Monday, April 12, 2010

Requiring military employees provide written notification to return to work not likely under USERRA

An Oklahoma municipal employer most likely cannot, under state law and USERRA, require written notice by an employee in order for that employee to return to work after serving on active duty in the National Guard, Oklahoma Attorney General W. A. Drew Edmondson advised in a March 17, 2010 opinion letter issued at the behest of a state representative. In addition, a municipality must pay its employees called to military service the full regular pay they would have received during the 30-day calendar period they are on leave.

The Attorney General first noted that the state has adopted USERRA as law for members of the Oklahoma National Guard. After explaining that municipalities are covered under the USERRA rules, the attorney general then explained that a requirement that an officer or employee provide written notification in order to return to work would establish an extra “prerequisite to the exercise of the right to reemployment beyond that required by USERRA,” which is prohibited. Such a notice requirement adopted by a municipality would, in the attorney general’s opinion, be unenforceable, because a municipality cannot require written notice by an employee to invoke rights already granted by USERRA.

The attorney general then answered whether a municipality had to pay its employees and officers called to military service the full regular pay they would have received during the 30-day calendar period they are on leave. First, the attorney general found that a previous attorney general’s opinion (71-396) was incorrect, in that it applied the definition of “employee” from the Minimum Wage Act to the statute governing military leave. This opinion was overruled by the attorney general, as it was determined that this definition did not belong incorporated into the military leave rules.

The attorney general then pointed out that, pursuant to 44 O.S.Supp.2009 §209, full and regular pay must be paid for the first 30 calendar days, and this applies to both hourly and salaried employees. As such, an employee called to military service is entitled to be paid an amount equal to his/her yearly salary, converted to a daily rate, and multiplied by 30, and this included hourly workers.

So, while this is the Oklahoma Attorney General's opinion based on his reading of the law, it most likely will hold true. However, while there is little doubt that people will have much of a problem with further protecting our military personnel upon returning to their jobs, employers may argue that a letter stating one's intent to return, and a time to return, would merely aid it in better preparing for a worker's return from duty. The problem with that line of thinking is that a written notification of return creates just one more obstacle for returning military personnel, and that seems to run counterpoint to the very protections afforded by USERRA.

Thursday, April 8, 2010

Employers now required to give reasonable break time to nursing mothers

Working women will be pleased to know that the Patient Protection and Affordable Care Act (Affordable Care Act), signed into law by the President on March 23, requires employers to provide a reasonable break time and a private place – other than a bathroom – for an employee to express breast milk for her nursing child for a period of one year after the child’s birth. Employers should note that this new requirement became effective on the date of enactment.

Under Section 4207, which amended the Fair Labor Standards Act to include this new rule, employers with fewer than 50 employees may be exempt if the requirement would impose an undue hardship.

State breast-feeding laws. Prior to the Affordable Care Act, many states enacted laws protecting nursing mothers, but many are very general, requiring only that a mother be allowed to breast-feed her baby in any location in which she is authorized to be (presumably including the workplace). A few states required employers to provide unpaid breaks for employees who need to express milk, unless the breaks would disrupt operations. Some employers were asked to make a reasonable effort to provide a private location for an employee that is close to her work station (other than a toilet stall).

Why is breast-feeding so important? The American Academy of Pediatrics, in a Policy Statement on Breast-feeding, recommends that women without any health problems exclusively breastfeed their infants for at least the first six months. According to the National Institutes of Health, breast-fed infants have fewer illnesses during the first year than babies who are not breast-fed. Breast milk can also help to protect infants against some common childhood illnesses and infections such as diarrhea, middle ear infections, and certain lung infections.

The Office on Women’s Health in the US Department of Health and Human Services notes that breast-fed babies visit the doctor less frequently, spend less time in the hospital and require less prescription medication than babies who are not breast-fed. In addition, because breast-fed babies are healthier, nursing mothers miss less work than mothers who do not breast-feed their babies. This translates into reduced health care costs for breastfed infants and lower medical insurance claims for employers.

What exactly are employers required to do? Under the new law, an employer must provide a reasonable break time for an employee to express breast milk for her nursing child each time the employee needs to express milk for a period of one year after the child’s birth (Fair Labor Standards Act (FLSA) Sec. 7(r)(1)(A), as added by Affordable Care Act Sec. 4207).

The employer must also provide a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public for an employee to use when expressing breast milk (FLSA Sec. 7(r)(1)(B), as added by Affordable Care Act Sec. 4207).

Compensation not required. An employer does not have to compensate an employee receiving reasonable break time to express breast milk for any work time spent expressing breast milk during the break (FLSA Sec. 7(r)(2), as added by Act Sec. 4207 of the Affordable Care Act).

Undue hardship. An employer that employs fewer than 50 employees is not required to provide reasonable break time or a shielded place for nursing mothers to express breast milk if these requirements would impose an undue hardship by causing the employer significant difficulty or expense when considered in relation to the:

  • size,
  • financial resources,
  • nature, or
  • structure

of the employer’s business (FLSA Sec. 7(r)(3), as added by Affordable Care Act Sec. 4207).

Relationship with state laws. A state law that provides greater protections to employees is not preempted by these new federal requirements (FLSA Sec. 7(r)(4), as added by Affordable Care Act Sec. 4207).

Effective date. Because no specific effective date is provided by the Affordable Care Act, the new break time law for nursing mothers is considered effective on the date of enactment – March 23, 2010.

Tuesday, April 6, 2010

States’ actions in barring credit checks on job seekers not all employers need to consider

In a down economy, workers are struggling not only to find and keep jobs, but also to keep current with their bill payments. In light of these circumstances, the state of Oregon has recently enacted a law that will make it an unlawful employment practice, beginning July 1, 2010, to obtain or use for employment purposes information contained in the credit history of an applicant for employment or an employee, or to refuse to hire, discharge, demote, suspend, retaliate or otherwise discriminate against an applicant or an employee with regard to promotion, compensation, or the terms, conditions or privileges of employment based on information in the job applicant or employee's credit history. Senate Bill 1045, signed by Governor Ted Kulongosky on March 29, has limited exceptions for financial institutions, public safety offices, and other employment if credit history is job-related and such use is disclosed to the applicant or employee. Aggrieved employees and job applicants may file a complaint with the Commissioner of the Bureau of Labor of file a civil action for relief. Hawaii and Washington state have similar laws in place, and several other states are considering such laws.

But state laws are not the only thing employers need to worry about when it comes to checking the credit history of job seekers and employees, as a recent EEOC informal advisory letter points out. Although none of the laws enforced by the EEOC directly prohibit discrimination based on credit information, such federal laws may be implicated in some circumstances, explains Assistant Legal Counsel Dianna B. Johnston in the letter. For example, if an employer's use of credit information disproportionately excludes African-American and Hispanic candidates, the practice would violate Title VII unless the employer could establish that the practice is needed for it to operate safely or efficiently.
In the March 9, 2010, letter, Johnston cited the testimony of attorney Adam Klein at an EEOC Commission meeting in May 2007 on employment testing and screening, that credit checks have not been shown to be a valid measure of job performance. However, Johnston noted that some courts have determined that credit checks are appropriate for certain positions, such as where an employee handles large amounts of cash.

A 2008 EEOC fact sheet on employment tests and selection procedures offers additional guidance. It lists credit checks among the common types of tests and selection procedures used by employers. Other tests and selection procedures on the list include cognitive tests, personality tests, medical examinations, and criminal background checks. The document also focuses on "best practices" for employers to follow when using employment tests and other screening devices.

Friday, April 2, 2010

President makes recess appointments to NLRB, EEOC

Buoyed by his health care reform victory and citing “months of Republican obstruction to administration nominees,” President Obama made 15 recess appointments on Saturday, filling two vacancies on the NLRB, including controversial union lawyer Craig Becker, and appointing four nominees to the EEOC. “The United States Senate has the responsibility to approve or disapprove of my nominees. But if, in the interest of scoring political points, Republicans in the Senate refuse to exercise that responsibility, I must act in the interest of the American people and exercise my authority to fill these positions on an interim basis,” Obama said.

Craig Becker, the most contentious nominee, has served as associate general counsel to both the SEIU and the AFL-CIO; his appointment has faced intense Republican and business opposition. Becker earned his JD from Yale Law School and has practiced and taught labor law for the past 27 years, with stints at UCLA, University of Chicago, and Georgetown. His numerous articles in scholarly journals have provoked much consternation. The US Chamber of Commerce, other business groups, and Republican senators claim Becker’s writings suggest a radical interpretation of labor law—in particular, a belief that employers should play no role in employees’ decisions over whether to join a union. They claim Becker’s rulings as a Board member will essentially result in de facto enactment of the Employee Free Choice Act.

All 41 Republican senators signed on to a letter warning Obama not to appoint Becker, noting “the Administration would be wise to not circumvent the will of the Senate by recess appointing him to the NLRB.” (Democrats responded in kind with a letter urging the President to act.) The Senate had rejected Becker in December, sending the nomination back to Obama for reconsideration. Obama sent the nomination to the Senate once again in January. The Senate HELP Committee approved Becker’s nomination on February 4, voting along party lines to send the nomination to the full Senate following a rare hearing on the nominee earlier in the week held at the behest of business groups and Republicans. A February vote to end debate on Becker’s nomination failed 52-43.

Not surprisingly, reaction from both sides was emphatic. The Republican National Committee decried the move in stark terms: “Recess Appointment of Becker Payback from Obama to His Union Paymasters.” US Chamber of Commerce senior vice president Randel K. Johnson called Becker’s appointment a “special interest payback” and warned, “[t]he business community should be on red alert for radical changes that could significantly impair the ability of America’s job creators to compete.” (Johnson noted Becker’s nomination was the first time since 1993 that the Chamber has opposed a Board nominee.) Meanwhile, Kimberly Freeman Brown, executive director of American Rights at Work, released a statement on March 27 applauding the appointments. “America's workers need a fully functioning NLRB to mediate their claims for better wages, benefits and other rights now more than ever—and after two long years they have one. While there is much more that the Obama Administration can do to advance the cause of labor law reform, today's appointments were a very good start.” Labor federation Change to Win also noted its support. “Change to Win joins with all of labor and responsible business and policy leaders in agreement that the recess appointment of Craig Becker and Mark Peace is the right thing for all working Americans.”

Mark Pearce, another union-side lawyer, was appointed on Saturday as well. Pearce was a founding partner of the Buffalo, New York, law firm of Creighton, Pearce, Johnsen & Giroux, where he practiced union side labor and employment law before state and federal courts and agencies. Earlier in his career, he worked as a Board attorney. Pearce has taught at Cornell University’s School of Industrial Labor Relations Extension and is a Fellow in the College of Labor and Employment Lawyers. Pearce received his JD from State University of New York.

The NLRB nomination process has taken on additional weight with the Supreme Court recently hearing oral arguments on whether the Board’s current two-member panel has the authority to issue decisions or, in Justice Scalia’s words, to function at all. Three of the NLRB’s five seats have been vacant since January 2008. The two remaining members—Chair Wilma Liebman and Member Peter Schaumber— have issued decisions in nearly 600 cases in which they have been able to agree. In a statement welcoming the new members, Board Chair Wilma Liebman said, “I look forward to beginning work with them, and especially to addressing cases that have been pending for a long time.”

EEOC appointments. Also on the list of recess appointments are the president’s four EEOC nominees: Jacqueline A. Berrien to serve as chair, Victoria A. Lipnic and Chai R. Feldblum to serve as commissioners, and P. David Lopez to serve as general counsel.

While the Senate HELP Committee approved the EEOC nominees on December 10, 2009, the full Senate failed to vote on them before leaving for recess on December 24, which left the EEOC lacking a quorum for the first time in 30 years. Since then, a hold has been placed on the nominees’ Senate confirmation vote, according to multiple media reports. The hitch: Georgetown Law Professor Feldblum, whose nomination has been opposed by numerous conservative organizations, including the American Family Association, Focus on the Family, the Liberty Counsel and the Traditional Values Coalition.

Feldblum played a leading role in drafting the ADA and later, as a law professor, in the passage of the ADA Amendments Act. She has also worked on advancing lesbian, gay, bisexual and transgender rights. As for the other nominees, Berrien currently serves as Associate Director-Counsel of the NAACP Legal Defense and Educational Fund. Lipnic, a Republican, is employed as of counsel in the Washington, DC office of Seyfarth Shaw LLP; she previously served as assistant secretary of labor for employment standards from 2002 to 2009, and before that, counsel to Republican members of the House Education and Labor Committee. Lopez, a supervisory trial attorney with EEOC’s Phoenix office, has served at EEOC for 13 years in both field and headquarters positions. Prior to joining EEOC, he worked in the DOJ’s Civil Rights Division.

Anticipating the possibility that the Senate might not vote on Obama’s nominees for EEOC Chair and the two commission seats before adjourning, outgoing Acting Vice Chair Christine Griffin, Acting Chair Stuart J. Ishimaru and Commissioner Constance Barker on December 18 signed a document that temporarily delegated to Ishimaru and Barker the authority to act on matters usually reserved for the five-member commission, according to EEOC spokesperson Charles Robbins. The delegation of authority will end once the quorum is restored, allowing the agency to effectively reduce its backlog of discrimination charges and implement its final rules on the ADAAA and the Genetic Information Nondiscrimination Act.

A recess appointment occurs when the President fills a vacant high-level policymaking position in a federal department, agency, board or commission while the Senate is in recess. Obama Administration appointees have faced an unprecedented level of obstruction in the Senate, the White House said. The 15 nominees named on Saturday have been pending for an average of seven months. President Bush had made 15 recess appointments by this point in his presidency, but he was not facing the same level of obstruction. “Following their appointment, these nominees will remain in the Senate for confirmation,” according to the White House. Recess appointees’ terms expire at the end of the Senate’s next session or when the individual is confirmed and permanently appointed to the position, whichever occurs first.

Tuesday, March 30, 2010

New Mexico to delete question about convictions from state application

In what is hailed as leveling the playing field for individuals with criminal convictions, New Mexico has passed legislation that prevents public employers from asking job applicants about their criminal background on the initial application for employment. SB-254, sponsored by state Senator Clint Harden, amends the New Mexico Criminal Offender Act and removes the question about felony convictions from the State Personnel Office application. Public employers will have to wait until the interview phase before raising the issue.

The intent is to prevent employers from immediately disqualifying a person with a conviction, even if the person is qualified. Harden said the bill does not prevent employers from asking about conviction status, nor does the bill prevent criminal background checks. “By delaying the inquiry on conviction history until the interview process, previously incarcerated persons will be on a level playing field with other candidates with similar qualifications.” Harden noted that the question on job applications can intimidate and discourage individuals who have been incarcerated from applying for jobs, even if they are qualified for the position.

Even though public employers have to wait beyond the initial application before inquiring about an applicant’s criminal background, SB-254 does not paint them into a corner. Under the state’s Criminal Offender Act, employers can deny anyone a position based on “moral turpitude,” which could include everything from drug dealing, to sex offenses, to other violent crimes. The Act is very clear about preventing people with child abuse or child-related sex offenses from working in any public childcare facility. There is also a special exemption for law enforcement agencies.

Will SB-254 have a positive impact on the employment of individuals with criminal backgrounds? Will the rejection of a job applicant with a criminal background be blatant, occurring during the face-to-face interview? Will private employers see this as something to emulate and delete the box asking about felony convictions from their applications?

SB-254 was signed by Governor Bill Richardson on March 8 and becomes effective on May 19, 2010.

Tuesday, March 23, 2010

With health care reform bill signed, the legal challenges begin

Thirteen states have filed suit alleging that the Patient Protection and Affordable Care Act (H.R. 3590) signed into law by President Obama today is unconstitutional. The Attorneys General from South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Colorado, Michigan, Pennsylvania, Washington, Idaho, and South Dakota joined a lawsuit filed by the state of Florida in the US District Court for the Northern District of Florida, alleging the federal government has violated the states’ rights as “sovereigns and protectors of the freedom, health, and welfare of their citizens and residents.” In addition, the suit claims the health care law infringes upon the constitutional rights of residents of the states by mandating that all citizens and legal residents have qualifying health care coverage or pay a tax penalty. By imposing such a mandate, the law exceeds the powers of the federal government under Article I of the Constitution and violates the Tenth Amendment. Additionally, the tax penalty required under the law constitutes an unlawful direct tax in violation of Article I, sections 2 and 9, the AGs allege. The lawsuit further asserts that the law infringes on the sovereignty of the states by imposing onerous new operating rules that the states must follow and by requiring states to spend billions of additional dollars without providing funds or resources to the state to help subsidize the cost of implementation. Virginia’s attorney general Ken Cuccinelli filed a separate lawsuit on behalf of his state.

Meanwhile, moments after President Obama signed the bill, the Thomas More Law Center, a Christian legal advocacy group, filed its own complaint challenging the constitutionality of the legislation in a federal district court in Michigan, seeking to permanently enjoin its enforcement. “Let’s face it,” said Richard Thompson, president and chief counsel of the Law Center in a press release announcing the lawsuit, “if Congress has the power to force individuals to purchase health insurance coverage or pay a federal penalty merely because they live in America, then it has the unconstrained power to mandate that every American family buy a General Motors vehicle to help the economy or pay a federal penalty.”

Monday, March 22, 2010

Employer responsibilities under the new health care bill

The House of Representatives passed health care reform legislation on March 21st, in a 219-212 vote on H.R. 3590, the Patient Protection and Affordable Care Act. The Senate is expected to take up the Health Care Reconciliation Act, with the goal of sending a final package to the White House, before the next scheduled Congressional recess on March 29.

Among its many provisions, the bill affects employers in a variety of ways. Starting in 2014, certain employers will be assessed a $2,000 per full-time employee, although the first 30 employees will be excluded from the assessment. This affects employers with more than 50 employees, hat do not offer coverage and have at least one full-time employee receiving a premium tax credit.

Employers with more than 50 employees, that offer coverage, but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit, or $750 for each fulltime employee.

Employers with 50 or fewer employees are exempt from penalties.

Also beginning in 2014, employers that offer coverage will be required to provide a free choice voucher to employees with incomes less than 400% of the Federal Poverty Line, whose share of the premium is greater than 8% but less than 9.8% of their income, and who choose to enroll in a plan in the Exchange. The voucher amount is equal to what the employer would have paid to provide coverage to the employee under the employer’s plan and will be used to offset the premium costs for the plan in which the employee is enrolled. Employers providing free choice vouchers will not be subject to penalties for employees that receive premium credits in the Exchange.

Employers with more than 200 employees must automatically enroll employees coverage offered by the employer. Employees may opt out of coverage.

Monday, March 15, 2010

Job-related credit checks: Good for the gander? Depends on who the goose is

Here is a scenario that has played out all over the country:

You have exhausted your savings, cashed out your 401(k), your bills have not been getting paid, your mortgage is past due, and this all stems from losing your job in one of the worst economic climates since the Great Depression. Alas, you finally secure a job interview and, in fact, they are about to offer you a job. However, that employer just ran a credit check on you, and so back to the unemployment trenches you go.

Does that sound familiar? It should, as it is a problem facing applicants and employers across the country. There is certainly nothing completely new about an employer running job-related credit checks on employees—it has been going on for years. What is new is the large number of unemployed (national rate is 9.7%), and the growing list of individuals that are up to their ears in debt due to loss of employment. Businesses continue to hire at a slow pace, and so the unemployed continue to dig deeper into debt, and when they actually get an interview, they are faced with their potential employer showing them the door because the debt they incurred from losing their old job is now preventing them from getting a new job.

This is a vicious cycle, indeed. In a research report conducted by the Society for Human Resource Management in January of 2010 on conducting credit background checks, 433 randomly selected HR professionals from SHRM’s membership were polled and some of the questions and results were as follows:

  • Does your organization, or an agency hired by your organization, conduct credit background checks for any job candidates by reviewing the candidates’ consumer reports? 13% for All Job Applicants; 47% for Selected Job Applicants.
  • If a credit background check revealed information that presented the job candidate’s financial situation negatively, what types of information are MOST likely to affect your decision to NOT extend a job offer? Current outstanding judgments, 64%; Accounts in debt, 49%.
  • What is the primary reason that your organization conducts credit background checks on job candidates? To reduce/prevent theft, 54%; To reduce legal liability for negligent hiring, 27%.

When taken as a whole, these are pretty stark numbers, especially when 60 percent perform some type of credit background check on its applicants. Some states have attempted to curb this practice. The Oregon House, for example, passed SB 1045, the Job Applicant Fairness Act, which will restrict job-related credit checks and is designed to make it easier for applicants to get back to work. According to Representative Tina Kotek (D-N/NE Portland), "Oregonians are out of work, and some have fallen behind on mortgage or car payments. This makes finding employment even more important," said the bill's chief sponsor in the House. "It simply makes no sense to essentially punish a job seeker for not having a job."

Many states, as well as Congress, in fact, are looking into stopping this process. Yet, for some, mainly businesses, the question is “Why?” Is it wrong for employers to not want to hire an individual who has outstanding judgments, or because the employer feels that someone in heavy debt may potentially be more apt to engage in theft? In all factuality, businesses are in the business of making money, first and foremost. Potential threats from theft/embezzlement, as well as any legal liability from negligent hires, will certainly put a dent in any businesses’ bottom line, right? And no one would begrudge a business for not wanting to actually make, not lose, money.

So which side is right? It depends on which side of the fence you are on. And it is not just employers verses employees. Many employees working at these businesses have a stake in making sure that their company makes money, too, so they may also favor keeping these credit checks alive. The simple truth is, however, that those out of work need work, and legislation like that passed by Oregon is an attempt at making it easier for these individuals to climb out of debt. Employers, however, certainly have a right to worry that an attempt to help these unemployed individuals by banning credit checks won’t present troubling consequences for their business in the future.

Friday, March 12, 2010

EEOC Chair’s testimony in favor of Paycheck Fairness Act underscores enhanced detection and enforcement

Stuart J. Ishimaru, Acting Chair of the EEOC, testified before the Senate Health, Education, Labor and Pensions (HELP) Committee in support of the Paycheck Fairness Act (S 182/HR 12), and his remarks underscore the ways in which this legislation, if enacted, would enhance the federal agency’s ability to detect and prosecute wage discrimination. The HELP Committee’s hearing, held March 11, was dubbed “A Fair Share for All: Pay Equity in the New American Workplace.”

What would the new law do? The Paycheck Fairness Act, which has already passed the House, would allow prevailing plaintiffs to recover compensatory and punitive damages under the Equal Pay Act (EPA), which currently provides only for liquidated damages (fixed and limited) and back pay awards. In addition, the bill would allow EPA lawsuits to proceed as class actions, as governed by the Federal Rules of Civil Procedure. The bill also would modify the EPA’s requirement that men and women receive equal pay for equal work in the “same establishment.” Its language clarifies that employees would be deemed to work in the “same establishment” if they work for the same employer at workplaces located in the “same county or similar political subdivision of a state.”

The bill would also prohibit employers from retaliating against employees who have “inquired about, discussed or disclosed the wages of the employee or another employee.” But the retaliation provision does not apply to instances where an employee who has “access to the wage information of other employees as a part of that employee’s essential job functions” discloses those wages to individuals who do not otherwise have access to such information (i.e., human resource professionals). Disclosures can be made in response to a complaint or charge or in furtherance of an investigation.

Additionally, the Paycheck Fairness Act would clarify when employers may assert as an affirmative defense that a pay differential (unequal pay for equal work) is based on “factors other than sex.” Employers asserting the affirmative defense must prove those factors are “job-related” and “consistent with business necessity.”

Ledbetter Fair Pay Act meant progress to the EEOC. In his prepared remarks, Chair Ishimaru noted that the Lilly Ledbetter Fair Pay Act of 2009, which supersedes the Supreme Court’s decision in Ledbetter v Goodyear Tire & Rubber Co, Inc, was signed into law on January 29, 2009. Under Ledbetter, a compensation discrimination charge was required to be filed within 180 days of a discriminatory pay-setting decision (or 300 days in jurisdictions that have a local or state law prohibiting the same form of compensation bias), which Ishimaru called “an unrealistic expectation given the secrecy that usually surrounds pay decisions.”

The Ledbetter Act restores the EEOC’s pre-Ledbetter position that each paycheck delivering discriminatory compensation is an actionable wrong under federal equal employment opportunity statutes, regardless of when the discrimination began, Ishimaru pointed out. As noted in the Act, the statute recognizes the “reality of wage discrimination” and restores “bedrock principles of American law,” he said.

Increase in sex-based pay bias charges. Chair Ishimaru advised committee members that over the past thirteen years – from fiscal year (FY) 1997 through FY 2009 – the EEOC has received a total of 30,312 charges alleging sex-based pay bias in violation of the EPA and/or Title VII of the Civil Rights Act of 1964. This works out to an average of 2,332 charges per fiscal year (out of an average of 82,022 total charges per fiscal year over the same period), he noted.

Over the last three fiscal years, according to its Chair, the EEOC has experienced a 30-percent increase in gender-based wage bias charges. In FY 2009, the EEOC received 2,252 sex-based pay discrimination charges out of a total of 93,277 charges. Of those, 944 charges specifically alleged EPA violations – roughly one percent of total receipts. Through its administrative enforcement process alone in 2009, the EEOC obtained nearly $19 million in monetary benefits for wage discrimination victims, Ishimaru said.

Overcoming the problem of secrecy. “A number of reasons may account for the relatively small number of wage claims the EEOC receives, but the single biggest challenge the EEOC faces in identifying wage discrimination is the secrecy that surrounds pay information in the workplace,” the EEOC Chair said.

Easier to establish EPA violations. “The Paycheck Fairness Act provides essential tools toward realizing the promise of equal pay, and I look forward to working with the Senate to strengthen and move forward on this important legislation soon,” Ishimaru said in his statement to the HELP Committee. “Passage of this legislation would make it easier to establish violations of the Equal Pay Act, by clarifying the affirmative defense for ‘factors other than sex,’ and refining the ‘establishment’ requirement to comply with commonsense notions of how employers set wages.

Enhanced data collection = enhanced detection. The EEOC Chair said that the Paycheck Fairness Act would enhance his agency’s data collection capabilities, allowing the EEOC “to detect violations of the law and more readily engage in targeted enforcement of equal pay laws.”

Bigger and better remedies. He also noted that the bill “would enhance remedies to allow for compensatory and punitive damages, putting gender-based pay discrimination on a more equal footing with pay discrimination on other bases such as race.” Moreover, the bill would allow class action claims to proceed under the Equal Pay Act and under the Federal Rules of Civil Procedure, he advised.

Employers, you see where this is going . . .

Utah backers of affirmative action ban abandon effort - for now

There is a new development to note as a follow-up to the March 10, 2010, post on this blog (“Another election year, another round of state ballot initiatives to ban affirmative action”). On March 11, The Salt Lake Tribune reported that supporters of the proposed ballot initiative to amend Utah’s constitution to ban affirmative action have abandoned their efforts, at least for this election year. A two-thirds majority vote in both state houses and the governor’s signature is required to put a constitutional amendment on the ballot in Utah. According to The Salt Lake Tribune, Jeff Hartley, a lobbyist for Ward Connerly’s American Civil Rights Institute, said their side decided to stand down due to a lack of necessary votes in the Utah House where the measure was pending.

Wednesday, March 10, 2010

Another election year, another round of state ballot initiatives to ban affirmative action

A measure that would ban state affirmative action programs in Arizona will be on the state's ballot in November 2010. On June 22, 2009, the Arizona Senate, in a 17-11 vote, approved the measure (H. Con. Res. 2019), which had been approved by the House on June 18 in a 32-18 vote. The proposal does not require the governor's signature to be on the ballot. While five other states have launched similar ballot initiatives through signature-gathering campaigns, Arizona is the first state to put such a measure on the ballot via legislative action.

California businessman Ward Connerly, founder and president of the American Civil Rights Institute, testified on June 10, 2009, before an Arizona House committee in favor of the putting the initiative on the ballot. A similar anti-affirmative action measure, also spearheaded by Connerly, was proposed but did not qualify to be on the ballot in Arizona for the November 2008 election because supporters of the measure failed to gather the minimum number of signatures required.

The measure would amend Arizona’s constitution to prohibit state universities, the state, and all other state entities (including cities, towns and counties) from discriminating against or granting preferential treatment based on race, sex, color, ethnicity or national origin "in the operation of public employment, public education, or public contracting." The measure allows exceptions to the prohibition when "bona fide qualifications based on sex" are "reasonably necessary" or when necessary to establish or maintain eligibility for any federal funding. In addition, it exempts court orders or consent decrees in force when the measure becomes effective.

Utah may not be far behind. Currently, a similar ballot measure is pending in the Utah House (H.J.R. 24). If passed in both houses and signed by Governor Gary Herbert, it could appear on the ballot as soon as November 2010. According to a February 12, 2010, article in the Desert News, Connerly helped the bill’s sponsor, Rep. Curtis Oda (R-Clearfield) present the proposal.

The 2010 Arizona ballot initiative is similar to initiatives that have been passed in California (1996), Washington state (1998), Michigan (2006) and Nebraska (2008). However, Colorado became the first state to reject, by an extremely narrow margin (50.7% to 49.2%), an anti-affirmative action ballot measure in the November 2008 election.

Similar anti-affirmative action measures were proposed, but did not qualify, to be on the November 4, 2008, ballot in Oklahoma, Missouri and Arizona because supporters of those measures failed to get enough valid signatures by the respective deadlines. In April 2008, supporters of the measure in Oklahoma filed a motion to withdraw their proposal from consideration due to their failure to get the required 138,970 valid signatures. The Oklahoma secretary of state's office counted 141,184 signatures on the petition but found a large number of duplicates. Supporters of the Missouri ballot initiative failed to turn in signatures to the Missouri Secretary of State by the required May 4, 2008, deadline. (Last month, a group affiliated with Connerly in Missouri filed to withdraw a similar proposed initiative for the 2010 ballot rather than face an ACLU lawsuit challenging the language of the initiative as unconstitutional and unfair and misleading in violation of Missouri law). In 2008, proponents of the measure in Arizona failed to gather the 230,047 minimum number of signatures required. According to an August 21, 2008, statement issued by then Arizona Secretary of State Jan Brewer, supporters "initially turned in 334,735 petition signatures of which 9,148 were deemed invalid after the verification and processing of petitions by the Secretary of State's office and county recorders. A random sample of five percent of signatures was then processed by the county recorders to verify voter registration and petition signatures. That process ultimately removed another 6,532 signatures as being invalid."

All of these ballots measures were spearheaded by Connerly, who knows from experience that once such measures get on state ballots, their chances of succeeding are high. It seems Connerly and his allies have found going directly to state legislatures is a more effective way, compared to signature gathering, to get these measures before voters.

Monday, March 8, 2010

The new normal: an army of freelance workers?

As reported by Jim Axelrod of the CBS Evening News on March 6, the number of freelance workers has exploded since the start of the “Great Recession” in 2008. One-third, or 40 million workers, now call themselves freelancers. College graduates are lamenting the near total lack of job opportunities, so they’re taking on freelance work under the laudable goal not to remain idle or join the ranks of the unemployed.

“We are headed for a lower wage economy. We’ve had the best benefits, health care, retirement, that anybody on the globe had access to. But we’re no longer in that bubble, that special position, we were 20 years ago,” said CEO John Challenger of Challenger, Gray, & Christmas, an outplacement services company.

While full-time workers won’t necessarily go away, what will change is the way companies will get specific tasks accomplished; by deploying an army of freelancers who will get the job done and then leave, said Sarah Horowitz, founder of the Freelancers Union, a national membership organization offering insurance and retirement benefit to its members. Its rolls swelled by 50,000 since the start of the recession, and membership is expected to double again by 2012. Bringing in freelancers, contract workers, independent contractors, whatever the name may be, holds down the number of full-time workers and all the costs associated with their full-time status.

The report concluded with this rather chilling question: What if this way of doing business becomes the rule for the long run?

The report, as televised, is available here:

Watch CBS News Videos Online

Friday, March 5, 2010

Is age discrimination the "hot topic" we’re not talking about?

There are always numerous issues swirling throughout employment law, fighting to be the “hot topic” of discussion, be it health care, immigration or any other issue that sits daily on an employer’s plate. When the subject of discrimination comes up, most people probably think of race or sex. Not age. But think about the number of employees who would fall into the “baby boomer” category. Those individuals – born between 1946 and 1964 – have spent a significant number of years in the workforce. It becomes easy to see why age discrimination would have such a significant impact on the workplace but is it a hot topic?

According to EEOC statistics on workplace discrimination, the number of age-based charges filed in 2009 was the second highest ever. Out of the total number of charges filed (93,277), 24.4% or 22,778 were age discrimination charges. And according to a new survey by CareerBuilder, a significant number of mature workers are putting off retirement plans because of our less-than-stellar economy. The survey found that more than seven in ten workers over the age of 60 who said they were putting off their retirement were doing so because they can’t financially afford to retire. Survey respondents gave other reasons for delaying retirement, including not wanting to leave their job or workplace because they enjoy it and the need for health insurance and other benefits, but it’s important to consider what impact mature workers who remain employed will have on the workforce.

The EEOC found the issue of age discrimination compelling enough to have held a public hearing highlighting the “devastating impact” of age discrimination. The hearing included discussion on recent developments under the Age Discrimination in Employment Act (ADEA), including the effect on older workers of widespread layoffs, threats to employee benefits, and recent US Supreme Court decisions including Kentucky Retirement Sys v EEOC, 14 Penn Plaza LLC v Pyett, and Gross v FBL Fin Servs Inc.

“Whether trying to retain or obtain a job, older workers may find themselves susceptible to unlawful age-based stereotypes and discrimination,” said Acting EEOC Chairman Stuart Ishimaru. “Employers’ conscious or unconscious stereotypes about older workers may cause them to underestimate the contributions of these workers to their organizations. As a result, older workers may be disproportionately selected for layoffs during reductions-in-force. To then make matters worse, evidence suggests that older workers who lose their jobs may have more difficulty finding another job than their younger counterparts, due to age discrimination.”

The EEOC is now seeking comments for a proposed rule addressing the meaning of “reasonable factors other than age” (RFOA) under the ADEA. This follows a Notice of Proposed Rulemaking (NPRM) on disparate impact under the ADEA. In addition to requesting comments on its substance, the prior NPRM asked whether the Commission should provide more information on the meaning of the RFOA defense. Most commenters supported addressing the issue and the EEOC is publishing a new NPRM on RFOA.

These are significant developments but have they made age discrimination the hot topic of discussion?

Wednesday, March 3, 2010

Scary healthcare scenario: companies drop insurance, don’t tell employees

In an environment in which small business owners are struggling not only to meet payroll, but also to pay for employees’ increasingly expensive healthcare premiums, a disturbing practice has been reported as being on the rise: companies that drop employees’ healthcare coverage, but don‘t bother to tell them.

In a article, Kristin Milam of the North Carolina Department of Insurance noted that NC state law requires that companies give their workers 45 days’ notice if they're going to drop coverage. According to Milam, employees of businesses that don't follow the law often find out their coverage has lapsed until they go to the doctor's office.

One high-profile case mentioned in the article was that of the CEO of Pace Airlines, Charles Rodgers, who was charged with terminating health insurance premiums for his 337 employees without warning. In North Carolina, Milam said, when the insurance department gets such a complaint, investigators give the employer a chance to reinstate the insurance and cover the back premiums so there's no gap in coverage. If they don't, the state pursues a case against the business.

If employees find themselves victims of such a scenario, they can check with the insurance department of their own state, which will often work with employees, walking them through their options or, as an alternative, contact the Employee Benefits Security Administration in the US Department of Labor.

This trend should serve as yet another example that--while the health care bill on the table isn’t perfect--employers and employees simply can’t afford to maintain the status quo.

Monday, March 1, 2010

Labor wonders where all its friends went

These days, organized labor might be forgiven for thinking of Ernie Ford whenever they think of their Democratic allies in Congress.

Or should that be “allies?” Probably, at least from the perspective of organized labor, who shelled out over $400 million in the last election cycle, helping Democrats to roll to a huge majority in both houses of Congress and, of course, to elect Barack Obama to the Presidency.

And what did all those dollars get? So far, it appears to have gotten labor a whole lot of nothing. Congress and the Obama administration didn’t make the Employee Free Choice Act – one of labor’s biggest wants – a priority and now, with the loss of the supermajority, that ship appears to have sailed. The President has failed to push through the nomination of long-time labor attorney Craig Becker to the NLRB. And, while muddling their way through the health care debate, the Democrats found time to consider an excise tax that unions feared would disproportionately affect union members.

All of which brings to mind Ford’s lyric, “You load sixteen tons, what do you get? Another day older and deeper in debt.”

But, as the AFL-CIO begins its annual meeting on Monday, March 1st, it’s not all gloom. The Administration has offered hints of a more pro-labor agenda.

In the Obama Administration’s Middle Class Task Force report, issued on February 26, the White House declared its commitment to passing EFCA, calling it a crucial component of providing good, quality jobs. The Administration has relented on its plan for the excise tax, pushing consideration of the tax until 2018. And the Administration has made it more-or-less official policy to encourage executive agencies to enter into Project Labor Agreements, which allow unions to set the terms and conditions of employment on construction sites.

So, with the midterm elections in sight and given the inconsistent support from their Congressional allies, where does Labor go from here?

Some have suggested that Labor needs to have its own agenda and that relying on the Democrats to advance their goals has been fruitless at best. Others suggest that its time for Labor to direct their muscle at faltering Dems, like Arkansas Senator Blanche Lincoln, who opposed Becker’s nomination and EFCA.
The meetings will likely shed some light on Labor’s direction. But with AFL-CIO president Richard Trumka stating that “enough is enough,” and demanding that the Democrats stand up to Republicans, no one should be surprised if Labor decides to bite back at their political "allies."

Friday, February 26, 2010

Why we need health insurance reform

On February 25, an extraordinary event took place in Washington D.C. Prompted by President Barack Obama, leaders from both political parties appeared at a lengthy discussion of prospective elements and flaws of a health insurance reform bill. The so-called “summit” was extraordinary for its publicly televised nature and for the mere fact that the two parties managed to agree on certain aspects.

At the heart of the health insurance reform debate is a stark, almost-apocalyptic vision of America’s economic future. Eighteen percent of every dollar earned now goes to medical care. Over the last decade, the average annual premium for employer-sponsored family insurance coverage rose from $5,800 to $13,400, and the average cost per Medicare beneficiary went from $5,500 to $11,900. The current system has helped capsize the American auto industry, emptied state and federal coffers, and the ramifications only threaten to deepen. If the rate of increase is not slowed, the cost of family insurance is projected to reach at least $27,000 in a decade; such an increase will absorb one-fifth of every dollar earned.

And the money earned may well decrease as insurance costs increase. Businesses are predicted to see a rise in health-coverage expenses from 10 percent of their total labor costs to 17 percent. If left unchecked, healthcare spending will eviscerate future wage increases and stop economic growth.

How do we know this? Because it already has. From 2000 to 2006, health insurance premiums in Ohio grew 8.4 times faster than wages. WellPoint, Inc just announced a 39-percent rate increase in California. The company argued that the increases, set to take effect March 1, reflect soaring medical costs and an exodus of healthy consumers from its ranks.

And don’t look for these soaring rate increases to suddenly fall. In April, 2009, WellPoint’s CEO, Angela Braly, told investors, "We will not sacrifice profitability for membership." Essentially, the nation’s largest health insurance company argues that because healthy people are leaving its ranks, it has to raise rates, but it won’t lower rates to bring in healthier customers.

All of this argues for action, immediate action. If the projections prove correct, in ten years, a family currently making $100,000 will actually earn $73,000, post-insurance payments. That’s a family car, nine months of a mortgage, a year of college. Some have said that we can’t afford to change the current system, that our current economic situation won’t allow it.

Well, if the number discussed above are accurate, we can’t afford not to try. The alternative is a sinking American economy dragging employers, employees and the world economy behind it.

As the President said during the summit, in reference to a suggestion that anyone can get medical care at an emergency room, “When that happens, who pays for it? We do. We’re already ready putting the money in, it’s just in an inefficient way.”

It’s time to get efficient.

Wednesday, February 24, 2010

Employers, text this message to your employees: ST&D (stop texting and drive)

Doing other things while driving an automobile is nothing new. From putting on make-up, to using an electric shaver to get rid of that five o’clock shadow, we have all witnessed the dangerous acts that others do while trying to drive at the same time. Yet, these days, a more common picture is of someone driving with one hand on the steering wheel and the other hand holding a mobile device, not to talk, but to text. This has become a real danger, not only for the driver-texter, but for others on the roads, sidewalks, etc.

This growing problem was realized by President Obama, who issued an Executive Order on October 1, 2009, which directed federal employees not to engage in text-messaging while driving government-owned vehicles, when using electronic equipment supplied by the government or while driving privately owned vehicles when they are on official government business. The order also encourages federal contractors and others doing business with the government to adopt and enforce their own policies banning texting while driving on the job. Federal employees were required to comply with the ban starting December 30, 2009.

More recently, and in an effort to curb this practice on a state wide level, the National Highway Traffic Safety Administration, along with some safety and industry organization, prepared a sample state law, which is to be used as an aid by state legislators in putting together laws to ban texting while operating an automobile. "Our top priority is safety and we are determined to help the states eradicate the dangerous practice of texting while driving," said David Strickland, Administrator for the National Highway Traffic Safety Administration.

While these laws will serve to ban texting by all drivers, employers and employees need to take immediate notice of these changes. Today’s employees are “wired into” their jobs at all times, and are often expected to answer text messages, and even e-mails, at a moment’s notice. The fact is, employers are not spending millions of dollars a year on corporate Blackberry and iPhone accounts so their employees can download the newest “app” that lets them use their phones like “light sabers,” right? Of course not, employers get these phones so employees are accessible anytime and anywhere. And the employee, especially in this economy, can ill-afford to wait to get into the office to respond to that urgent text, right?

Therein lies the problem, and it is one that employers and employees both face. And it’s not just those employees wearing suits either. These devices are used by drivers of delivery trucks, school personnel, laborers, etc. They are utilized by every type of business, and in every type of work setting, and so the changing landscape of laws regarding texting while driving needs to be taken seriously, especially by employers. The fact is, many lawyers can probably see a whole new area of legal troubles stemming from driving and texting, or driving and e-mailing.

It isn’t just the state fines that employers need to pay close attention to; employers need to be mindful of the old Latin legal term, respondeat superior, which essentially can make an employer liable for the actions of an employee when those actions take place within the scope of employment. If litigation has already started from accidents by employees while driving and texting, it is not a stretch to think they are not right around the corner. The simple truth is, an employee who, in responding to an urgent text from his or her employer in the middle of rush hour, then slams into another vehicle, may subject his or her employer to a lot more than a state fine.

Which is why employers need to revisit their policies with regard to the use of these devices by employees, and explain not only the proper use of the devices, but also the corporate policy forbidding its use while operating a motorized vehicle. Otherwise, a failure to do so may subject employers and employees to costs that far outweigh any improper overages incurred on an employee’s mobile device bill.

---Currently, nineteen states (Alaska, Arkansas, California, Colorado, Connecticut, Illinois, Louisiana, Maryland, Minnesota, New Hampshire, New Jersey, New York, North Carolina, Oregon, Rhode Island, Tennessee, Utah, Virginia and Washington) and the District of Columbia have texting laws covering all drivers. A ban on the use of hand-held devices while driving has been enacted in California, Connecticut, District of Columbia, New Jersey, New York, Oregon, Washington and the Virgin Islands. In 2009, more than 200 distracted driving bills were considered by state legislatures and legislative activity is expected to remain strong in 2010.

Watch Secretary LaHood answer questions about the Distracted Driving Summit, Sept. 30 and October 1, 2009.

Tuesday, February 23, 2010

US Supreme Court: “Nerve center” is corporation’s principal place of business

A corporation’s principal place of business is the place where its officers direct, control, and coordinate its activities, a unanimous US Supreme Court ruled on Tuesday, adopting a “nerve center” test for determining corporate citizenship and rejecting a “plurality of business activities” approach for analyzing whether diversity jurisdiction exists (Hertz Corp v Friend, USSCt, Dkt No. 08-1107, February 23, 2010).

In the underlying case, two Hertz Corp employees in California filed a putative class action against the employer for violations of the state’s wage and hour laws. Hertz sought to remove the case to federal court, claiming diversity jurisdiction existed since the plaintiffs were citizens of California while Hertz, headquartered in Park Ridge, New Jersey, was a citizen of that state. The district court found the amount of Hertz’ business activity is “significantly larger” in California than in other states and, as such, the “plurality of each of the relevant business activities” took place there, making California the company’s principal place of business. Concluding it lacked jurisdiction, the district court remanded. The Ninth Circuit affirmed.

In an opinion written by Justice Breyer, the Supreme Court rejected the “plurality of business activities” approach, finding it invites greater litigation and can lead to “strange results.” For example, citing the Ninth Circuit’s own reasoning in a 2009 case, the High Court noted that if a company’s principal place of business were determined based on amount of sales, then by virtue of California’s size and population alone, “`nearly every national retailer—no matter how far flung its operations,’” would be deemed a citizen of California. (Talk about a wave of wage-hour litigation!)

The simpler method—one that does not require courts to weigh corporate functions, assets or revenues—was to follow a “nerve center” approach, the Court held, finding “principal place of business” makes the most sense when read as the place where “a corporation’s high-level officers direct, control, and coordinate the corporation’s activities.” In practice, the nerve center will normally be corporate headquarters, provided that the headquarters is the company's actual center of direction and control “and not simply an office where the corporation holds its board meetings.” The Court rejected an overly simplistic approach, however, dismissing the notion that merely identifying a corporation’s “principal executive offices” on an SEC Form 10–K filing should be enough to establish a corporation’s nerve center. Such a standard “would readily permit jurisdictional manipulation,” it cautioned.

“The metaphor of a corporate `brain,’ while not precise, suggests a single location,” Breyer wrote. “By contrast, a corporation’s general business activities more often lack a single principal place where they take place.” As such, the language of 28 USC 1332(c)(1) supports the nerve center approach as well, since the statute’s word “place” is singular, not plural, and “principal” requires that the main, or most important place be chosen.

There may be no perfect test, the Court conceded, noting there will be “hard cases” under the method adopted today—particularly in an era of telecommuting, where corporate officers may be working at several different locations and communicating over the Internet. “That said, our approach provides a sensible test that is relatively easier to apply, not a test that will, in all instances, automatically generate a result.”

Friday, February 19, 2010

EEOC’s proposed RFOA regulations provide age bias risk-avoidance checklist

The US Equal Employment Opportunity Commission’s (EEOC) proposed regulations defining “reasonable factors other than age” (RFOA) under the Age Discrimination in Employment Act (ADEA) provide a checklist for employers contemplating an employment action that has the potential to adversely impact older workers.

The proposed regulations were published in the Federal Register on February 18, 2010. The EEOC initially published proposed ADEA disparate impact regulations back in March 2008. Based on comments received about the proposed rulemaking, and the Supreme Court’s decisions in Smith v City of Jackson, 544 U.S. 228, 86 EPD ¶41,882 (2005), and Meacham v Knolls Atomic Power Lab, 554 U.S. ___, 128 S. Ct. 239, 91 EPD ¶43,231 (2008), the federal agency decided to issue additional regulations addressing the scope of the RFOA defense.

The 2008 proposed regulations state that an employment practice that has an adverse impact on individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a “reasonable factor other than age.” When the RFOA exception is raised, the employer has the burden of showing that a reasonable factor other than age exists factually.

What, exactly, constitutes “a reasonable factor other than age,” is the million-dollar question for employers – especially given the prevalence of reductions in force in a still-struggling economy. According to the EEOC, the question is determined based on all the particular facts and circumstances of the situation.

What is reasonable? That the non-age fact is reasonable is a key element of the RFOA defense, the EEOC says. The test is an objective one based on what a reasonable employer, one that is prudent and mindful of its responsibilities under the ADEA, would do in like circumstances. And a prudent employer knows, or should know, that the ADEA was designed to avoid application of neutral employment standards that disproportionately affect employment opportunities of older individuals. Thus, “a reasonable factor is one that an employer exercising reasonable care to avoid limiting the employment opportunities of older persons would use,” the EEOC explains in its notice of proposed rulemaking.

An employer seeking to establish the RFOA defense must show that the employment practice under scrutiny was: (1) reasonably designed to further or achieve a legitimate business purpose; and (2) administered in a manner that reasonably achieves that purpose in light of the particular facts and circumstances known, or that should have been known, to the employer.

Determinative factors. The EEOC’s proposed regulations provide a nonexclusive list of factors relevant to determining whether an employment practice is reasonable:
  • Whether the employment practice and the manner of its implementation are common business practices;
  • The extent to which the factor is related to the employer’s stated business goal;
  • The extent to which the employer took steps to define the factor accurately and to apply the factor fairly and accurately (e.g., training, guidance, instruction of managers);
  • The extent to which the employer took steps to assess the adverse impact of its employment practice on older workers;
  • The severity of the harm to individuals within the protected age group, in terms of both the degree of injury and the numbers of persons adversely affected, and the extent to which the employer took preventive or corrective steps to minimize the severity of the harm, in light of the burden of undertaking such steps; and
  • Whether other options were available and the reasons the employer selected the option it did.
Employer checklist. In light of these factors, and the EEOC’s stated reasons for the proposed revisions to its regulations, prudent employers should consider the following questions before implementing a business practice that has the potential to adversely impact older applicants or employees:
  1. Is the contemplated business practice, and the manner of implementation, common among businesses in like circumstances? Use of a common business practice weighs in an employer’s favor.
  2. Is the non-age factor that justifies the contemplated business practice closely related to the stated business goal(s)? Granting larger raises to lower-echelon employees in order to bring compensation in line with that of surrounding police forces responded to the legitimate goal of retaining police officers in the Smith case.
  3. What steps have been taken to define the non-age factor accurately and apply it fairly and accurately? Consider training managers to avoid age-based stereotyping, and if relevant, how to identify the specific knowledge or skills sets implicated by the contemplated business practice. Decisionmakers should also be trained or given guidance on how to implement the contemplated business practice.
  4. Has the potential for an adverse impact on older applicants or employees been assessed? A reasonable employer implementing a business practice that harms a large number of employees would perform an assessment of whether the practice would have a disproportionate impact based on age. An employer’s failure to measure the impact of a practice that has a substantial age-based adverse impact will not protect it from a determination that it should have known of the impact.
  5. How many older workers would be adversely impacted and how severely would they be harmed by the contemplated business practice? The more severe the harm, the greater the care the employer should exercise. While a reasonable employer may not be required to entirely eliminate the impact, it would nonetheless investigate the reason for the impact and try to reduce it to the extent appropriate given the facts.
  6. If the harm that would result from implementing the contemplated business practice is more than negligible, what steps have been taken, or could be taken, to prevent or minimize the severity of the harm, and what are the burdens associated with taking those steps? Where the harm is severe, the reasonableness determination will include whether the employer knew, or should have known, of measures that would eliminate or reduce the harm, and the extent to which the employer would be burdened by the implementation of such measures.
  7. Are there alternative options available and, if so, why is the contemplated business practice the option of choice? While employers are not required to use the least discriminatory alternative, the employer’s knowledge of, and failure to use, equally effective but less-biased alternatives is relevant to whether the chosen practice is reasonable – especially when there is a significant adverse impact on older workers with only a marginal advancement of a minor goal. Conversely, the fewer the alternatives, the more reasonable the business practice appears.
Factors other than age. Employers should be aware that the RFOA defense is available only when the challenged practice is not based on age. As the EEOC’s proposed regulations state, when the challenged employment practice is based on an objective non-age factor, only the reasonableness of the practice is at issue. But, when disparate impact results from giving supervisors unchecked discretion to engage in subjective decision making, an adverse impact may, in fact, be based on age because decisionmaking supervisors may have acted on the basis of conscious or unconscious age-based stereotypes. The proposed regulations set forth three nonexclusive factors relevant to determining whether the factor on which the practice is based is “other than age”:
  • The extent to which the employer gave supervisors unchecked discretion to assess employees subjectively;
  • The extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and
  • The extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.
The EEOC is seeking comments on its proposed RFOA regulations, and it remains to be seen whether further revision will follow. In the meantime, employers should consider them a valuable risk-avoidance tool.

Wednesday, February 17, 2010

Shiu’s direction for OFCCP already showing distinctions from recent administrations

Since Patricia Shiu took the helm of the OFCCP last fall, the current administration has taken actions that distinguish it from the previous two administrations. Among those actions are town hall meetings on its Fall 2009 regulatory agenda, a bold commitment to affirmative action, and a highly unusual press release to publicize an administrative law judge’s decision in a high profile and protracted case.

Town hall meetings. On January 12, 14 and 20, 2010 the OFCCP held, via webinars, national town hall “listening sessions” regarding its Fall 2009 regulatory agenda, which was issued on December 7, 2009. The agency followed those up with live sessions in Chicago on February 4 and 5, and additional listening sessions were held in San Francisco yesterday and today (February 16-17) and scheduled for New Orleans on March 17-18.

At the session held the afternoon of February 4 in Chicago, Shiu explained that the agency wanted to reach out to those stakeholders who do not usually submit written comments on proposed regulations. "We want you to participate as we listen," she said. And the indications were that the agency was serious about listening. In addition to Shiu and OFCCP Chicago Regional Director Sandra Ziegler, an attorney from the DOL solicitor’s office and two of the individuals who will be drafting the upcoming regulations, including Terry Hankerson, the OFCCP’s Branch Chief for Regulation Development and Evaluation, were present at the Chicago sessions. A court reporter was also there to transcribe the sessions. In contrast, the previous two administrations would rarely entertain questions from stakeholders during public forums (such as the Industry Liaison Group national conferences), much less hold such sessions specifically for the purpose of seeking public comments.

Affirmative action. The OFCCP has the unique authority to enforce affirmative action requirements that apply only to those employers who have covered federal contracts and subcontracts. Although President Clinton expressed support for affirmative action (the famous quote being “mend it, don’t end it”) both the Clinton (especially in the later years) and George W. Bush Administrations de-emphasized affirmative action in favor of addressing systemic discrimination. Indeed, the Bush Administration rarely mentioned affirmative action in regard to OFCCP enforcement.

Recent statements by Director Shiu indicate that the current administration will not be shying away from this often-controversial subject. “Even though [affirmative action] hasn't been a focal point in the past 10 years, it is a focal point now," Shiu said at one of the town hall meetings in Chicago on February 5, adding that affirmative action means "a level playing field," and not quotas. According to Shiu, "[v]iable and effective affirmative action programs are a critical component of the federal contractor workplace." A document on the OFCCP’s fiscal year 2011 budget justification to Congress posted online also includes details about the OFCCP’s shift in enforcement strategy and its intention to “implement full scale, aggressive enforcement efforts” including strengthening affirmative action.

Press release regarding administrative ruling in Bank of America case. Earlier this month, the OFCCP issued a press release to publicize a January 21, 2010 ruling issued by a Department of Labor Administrative Law Judge (ALJ) in one of the agency’s most notable cases. In the most recent decision issued in the case, the ALJ issued a recommended ruling that Bank of America (then NationsBank) discriminated against African-American job applicants for entry level positions in Charlotte, North Carolina in 1993 and from 2002 to 2005. The case began in 1993 when the OFCCP requested information from NationsBank as part of a compliance review. After the OFCCP advised the bank in 1995 of its findings of discrimination, the bank brought a federal court challenge to the agency’s authority to conduct the review, arguing that the OFCCP’s action violated the bank's Fourth Amendment rights (NationsBank Corp v Herman, 4thCir, 75 EPD ¶45,814 (1999)). After the court challenge failed and Labor Department attorneys filed an administrative complaint, the bank pursued the case in the administrative forum.

Such press releases, while ubiquitous from the EEOC, have been pretty much unheard of for the OFCCP. During the last two administrations, OFCCP press releases (never common, especially compared with the numerous press releases issued by the EEOC) have been limited to settlements following compliance reviews, and, to a lesser extent, new directives or regulatory developments. It’s hard to tell whether this press release is the result of the case’s high profile (it is probably the first or second most discussed case at OFCCP-related conferences) or is the result of the new OFCCP leadership. If the OFCCP, under Director Shiu, continues to issue press releases regarding case decisions, it will be further evidence that the Obama Administration intends to allow for a higher profile OFCCP than previous administrations.

Friday, February 12, 2010

Bill would deploy E-verify to mortgage application process

On February 5, Congressman Kenny Marchant (R-TX) introduced his new bill, H.R. 4586, the Mortgage E-Verify Act. The bill would require, as a condition for modification of a home mortgage loan held by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration, that the mortgagor be verified under the E-verify program. Marchant believes his bill will potentially save millions by cutting down on fraudulent claims from illegal immigrants and protect taxpayers from subsidizing the restructuring or renegotiation of mortgages.

Marchant cites a major Nevada case where a mortgage company branch manager conspired to manufacture and submit false employment and income documentation for borrowers, most of whom were illegal immigrants. Fifty-eight of the 233 fraudulent FHA loans totaling $6.2 million have, not surprisingly, gone into default, costing HUD nearly $2 million. The branch manager was found guilty on 32 counts of submitting false information to HUD, and one count of conspiracy.

“E-verify is a fantastic program which I have supported making permanent for employers. Mandating its use as a condition for home mortgage loan modifications would help eliminate waste, fraud, and abuse in the system and bring integrity to the process. In fact, the Treasury Department’s Financial Crimes Enforcement division estimates that mortgage fraud increased 1,411 percent from 1997 to 2005. Furthermore, two-thirds of fraud reports in the last decade are due to falsified statements on loan documents. My bill would curb these abuses and protect the taxpayers,” said Marchant.

This proposed extention of E-verify comes on the heals of the Obama administration's mandate that federal contractors use the system for screening workers' legal status. Troubling to many is the system's penchant, real or perceived, to return inaccurate results. Though the program has been heavily criticized, the error rate, currently around 8 percent, is decreasing, as many of the errors come from changing last names after marriage, or not informing the government of citizenship status. We shall see what other crafty applications of the system our legislators can devise in the months ahead.