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5/16/2008
Comp Time In The Private Sector?
A long-time benefit in federal and state employment, comp time may be coming to a private employer near you. A bill introduced in Congress proposes to amend the federal Fair Labor Standards Act (FLSA) to allow private employers to give their employees the option of taking either paid time off or overtime wages. The Family-Friendly Workplace Act was introduced in the House of Representatives on May 14, 2008 by four Republican senators, including Ron Paul, who was previously seeking the Republican nomination for President.
The FLSA currently requires private employers to pay non-exempt workers time and a half for all hours worked over 40 per week. The Family-Friendly Workplace Act would allow the worker to choose to convert the overtime into paid time off. However, both the worker and the employer would be required to enter into a written agreement which makes it clear that the worker is knowingly and voluntarily electing to take paid time off in lieu of overtime pay. Comp time would be limited to 160 hours or 4 weeks per year.
3/20/2008
Not Your Employee? Tell That to the Department of Labor
Employers who misclassify their workers as independent contractors, rather than employees, are likely to face serious scrutiny from the U.S. Department of Labor (“DOL”) in 2008. This year, the DOL announced that it is placing misclassification of workers as one of its top five enforcement priorities.
Although both blue-collar and white-collar workers may be misclassified, the DOL will focus its investigations on the misclassification of lower paid, blue-collar workers, including construction workers, janitors, hotel and motel workers and day laborers. The DOL will target these groups because they are the least likely to complain to their employers or the DOL.
So, who cares whether a worker is classified as an employee or independent contractor? Well, for one, misclassified employees may care. Being classified as an independent contractor, rather than an employee, means missing desirable health and pension benefits, minimum wages, and overtime protections. Employers should care as well. Indeed, employers should be very concerned about the consequence of misclassifying workers because, if discovered, these workers could be entitled to years of lost wages and benefits. When large groups of employees are involved, these kinds of claims can be staggering.
To stay out of hot water, employers should take several steps. Employers need to ensure that workers classified as independent contractors are not doing the same tasks as employees or that business competitors are not using employees to perform the same functions as your so-called independent contractors. Furthermore, if so-called independent contractors cannot choose their own personnel or are restricted in working for other companies, those facts could be problematic and lead the DOL to come knocking on your door.
If you have workers who are not your employees, and you consider them to be independent contractors, you better be ready to explain that to the DOL this year.
3/20/2008
Is Your Supplemental Health Insurance Subject to HIPAA?
On December 7, 2007, the Department of Labor (“DOL”) issued Filed Assistance Bulletin 2007-4 (the “FAB”) regarding supplemental health insurance coverage as excepted benefits under the Health Insurance Portability and Accountability Act (“HIPAA”).
Under HIPAA, group health plans and health insurance issuers in the group or individual market are subject to rules regarding preexisting condition exclusions, issuance of certificates of creditable coverage, special enrollment rights, and discrimination on the basis of any health factor.
These rules do not apply to certain excepted benefits, including supplemental excepted benefits. Benefits are supplemental excepted benefits only if they are provided under a separate policy, certificate, or contract of insurance and are either Medicare supplemental health insurance, TRICARE supplemental programs, or similar supplemental coverage provided to coverage under a group health plan. Similar supplemental coverage is coverage that fills in the gaps of primary coverage.
In the FAB, the DOL establishes an enforcement safe harbor under which supplemental health insurance will be considered excepted benefits and not subject to the HIPAA rules. For supplemental health insurance to be exempt, the following criteria must be met:
- The policy, certificate, or contract of insurance must be issued by an entity that does not provide the primary coverage under the group health plan.
- The supplemental policy, certificate or contract must be specifically designed to fill gaps in primary coverage.
- The value of the supplemental coverage may not exceed 15% of the cost of the plan’s primary coverage. Cost of supplemental coverages will be determined in the same manner as COBRA premiums are determined.
- Medigap policies may not differentiate among individuals in eligibility, benefits, or premiums based upon any health factor of the individual.
What does the FAB means for employers? Employers should review their supplemental health insurance coverages and determine whether they can take advantage of the safe harbor. If they cannot take advantage of the safe harbor, employers should verify that their supplemental health insurance coverages are in compliance with HIPAA.
2/26/2008
Department of Labor Issues Proposed Changes to FMLA Regulations
On Monday, February 11, 2008, the U.S. Department of Labor (“DOL”) published long-anticipated proposed revised rules governing the Family and Medical Leave Act (“FMLA”) of 1993.
The proposed regulations contain many improvements over the existing regulations. For example, the current regulations are organized in a question-and-answer format, and often, answers to a particular question or issue can only be determined by looking at more than one section. The proposed revisions have eliminated the question-and-answer format and deleted much of the repetitive material, keeping all of the information regarding a given topic (such as leave for the birth or adoption of a child) in one section, as opposed to spreading that information out over several different sections or questions. The result is that the regulations are organized more intuitively and are much more user-friendly.
The DOL failed to clarify the most troublesome aspects of the existing regulations (for example, “serious health condition” and “intermittent leave” remain nearly unchanged), but there are some improvements worth noting:
- The current regulations prohibit employers from talking directly with its employees’ health care providers, and require employers to hire their own health care practitioners to ask questions about medical certifications. The proposed revisions allow employers to directly contact employees’ health care providers for the purposes of authenticating and clarifying medical certifications.
- In response to and, in essence, overruling the Fourth Circuit’s decision in Taylor v. Progress Energy, 493 F.3d 454 (4th Cir. 2007), which invalidated the FMLA waiver in an employment severance agreement, the DOL’s proposed revisions clarify that employers and employees may voluntarily agree to the settlement of past FMLA claims without the permission or approval of the DOL or a court. The prohibition on waivers of prospective FMLA claims remains a part of the regulatory scheme.
- The proposed revisions improve the definition of what constitutes “sufficient information” for employers to be on notice that employees need FMLA leave. Specifically, the proposed revision clarifies that calling in with the simple statement that the employee or the employee’s family member is “sick” without providing more information will not be considered sufficient notice to trigger the FMLA.
The proposed revisions are open for public comment through April 11, 2008, and then the DOL will consider those comments before issuing the final rule, probably sometime late this year. In the meantime, be aware that your FMLA policies may need updating to reflect the changes and ensure that your human resources personnel and management employees are prepared to embrace the new requirements when the time comes.
2/21/2008
Day Pitney Alert: Deadline For Many Employers To File Their Form LM-10 Is Approaching
A Form LM-10 is a reporting and disclosure form issued by the United States Department of Labor (“DOL”) pursuant to the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”). Employers must file LM-10 annual reports to disclose certain financial dealings with a union or union officials. Virtually all private sector employers who make expenditures to a union or union officials -- regardless of whether their workforce is unionized or not -- must file LM-10 reports.
An employer must file its LM-10 report within 90 days after the end of its fiscal year. For employers whose fiscal year ended on December 31, 2007, the deadline to file their Form LM-10 is March 31, 2008. If an employer does not submit its Form LM-10 in a timely manner, the LMRDA authorizes the DOL to bring a civil action in order to compel the filing of the report. The LMRDA provides for criminal penalties if an employer willfully fails to file a report or submits a false report.
2/7/2008
Day Pitney Alert: Expansion of FMLA for Military Families
On January 28, 2008, President Bush amended the Family and Medical Leave Act (“FMLA”) to provide expanded coverage for military family members. This is the first expansion of the FMLA since its enactment in 1993.
The amendment creates two new forms of leave for families of service members: (1) leave to care for a service member who has experienced a “qualifying exigency” arising out of active duty; and (2) leave to care for a service member who has suffered a serious illness or injury. These new forms of military family leave may be taken intermittently.
(1) Active Duty Leave: An eligible employee who is the parent, spouse, son, or daughter of a service member who has experienced a “qualifying exigency” arising out of the service member’s active duty is entitled to take up to 12 work weeks of leave during any 12-month period for the care of the service member. Qualifying exigency has not yet been defined. As a result, this part of the amendment will not become effective until the Department of Labor issues regulations specifying what is a “qualifying exigency”.
(2) Caregiver Leave: An eligible employee who is the parent, spouse, son, daughter, or next of kin (nearest blood relative) of a service member who has suffered a serious illness or injury in the line of duty and while on active status is now entitled to a total of 26 work weeks of leave during a single 12-month period to provide care for the service member.
The FMLA amendments do not specify an effective date, which means the new legislation has immediate implications for employers (except for the “qualifying exigency” aspect). We encourage employers to inform their employees of the new leave entitlements and to update their FMLA policies to comply with the new law.
2/5/2008
EEOC Race Cases On the Rise, Nooses Make an Ugly Comeback
The EEOC recently released statistics indicating a 24% increase in race-based discrimination charges filed with the agency. In 2007, 6,977 race-based harassment charges were filed with the EEOC, up from 5,646 in 2006. That’s a 20% increase in one year and a doubling of the number of race-based charges since 1991.
A particularly alarming trend is the number of cases involving hangman’s nooses. Long viewed as symbols of racial intimidation and hatred, nooses have allegedly been re-appearing in workplaces across the country, according to the EEOC.
The EEOC has promised to deal swiftly and severely with employers it feels have permitted, or neglected to detect, nooses in the workplace. In 2007 and early 2008, the EEOC reached several six-figure settlements on behalf of employees who were purportedly subjected to hanging nooses at work. A complete run down of the settlements can be viewed by clicking the link and scrolling to the “Hostile Work Environment” section:
http://eeoc.gov/initiatives/e-race/caselist.html
http://eeoc.gov/press/1-24-08.html
2/5/2008
Day Pitney Alert: Employers Must Accommodate the Religious Beliefs of Their Employees and Applicants
The New Jersey Law Against Discrimination (“LAD”) already prohibits employers from discriminating against employees on the basis of their religion. The LAD regulations also require that employers make reasonable accommodations for employees with disabilities. These same prohibitions and requirements exist under federal law. Unlike these legislative mandates, however, the concept of religious accommodation, i.e., requiring employers to provide accommodations in response to religious objections, has grown out of case law, not legislation. That is, until now. New Jersey has added this requirement to the LAD.
The LAD was amended, effective January 13, 2008, to prohibit employers from engaging in any practice that would require an employee or applicant to compromise a “sincerely held religious belief.” This new provision codifies what the courts have told us; employers are responsible for accommodating the religious beliefs of their employees and applicants. So, while this amendment should not be changing the way you do business, it should be a reminder that you must accommodate employees with disabilities, as well as those with religious objections, and be sure you’re not forgetting job applicants.
The new LAD provision states that an employer may not “impose upon any person as a condition of obtaining or retaining employment, including opportunities for promotion, advancement or transfers, any terms or conditions that would require a person to violate or forego a sincerely held religious practice or religious observance.” The statute expressly requires an employer to accommodate requests for scheduling changes and days off to observe a Sabbath or other holy day, as well as the “reasonable time prior and subsequent thereto for travel between [a] place of employment and [] home”. An employer must also permit a leave of absence based on religious observance or practice.
Accommodated employees, however, are obligated to make up the missed time at another “mutually convenient time” or use paid leave (other than sick leave) to cover their absences under this amendment. If the work cannot be made up or charged against unused paid leave, employers can elect to treat the employee’s time off as unpaid leave.
An employer is not required to provide a reasonable accommodation if doing so would inflict an “undue hardship” on the business. Before coming to this conclusion, however, the LAD requires employers to evaluate possible accommodations and determine that all reasonable accommodations would impose an undue hardship.
An “undue hardship” is defined as any accommodation that would require the employer to undergo an unreasonable expense, interfere with the safety or efficiency of the company’s operations, or disturb a bona fide seniority system or collective bargaining agreement. The statute lists the following factors that courts must consider in evaluating an employer’s proofs of undue hardship:
- The cost of the accommodation including any potential loss in productivity and retention or hiring of employees;
- The number of employees or applicants who require the particular accommodation; and
- If the employer has multiple locations, courts must consider the degree to which geographic separation of administrative functions will make the accommodation more or less difficult.
The statute also exempts an employer from accommodating an employee if doing so will affect the employee’s ability to perform the essential functions of his or her job, or “where the uniform application of terms and conditions of attendance to employees is essential to prevent undue hardship to the employer.”
http://www.njleg.state.nj.us/2006/Bills/A3500/3451_R2.PDF
1/7/2008
Day Pitney Alert: NLRB Rules That Employers Can Restrict Union Solicitation By E-mail
On December 16, 2007, the National Labor Relations Board (“NLRB”) held that employers may prohibit employees from using company e-mail systems to distribute union-related information. The NLRB found that employees do not have a statutory right to use company equipment or media for union solicitation purposes. The holding provided clarification that employers may draft and enforce a policy prohibiting the use of the company’s e-mail system for “non-job-related solicitations.”
In a 3-2 ruling, in The Guard Publishing Company, d/b/a The Register Guard, the NLRB held that “An employer has a basic property right to regulate and restrict employee use of company property.” In Guard Publishing, the employer implemented a written policy stating that employees could not use communication systems for the purpose of “commercial ventures, religious or political causes, outside organizations, or other non-job related solicitations.” An employee, who also served as the union’s president, sent union-related e-mails, using the employer’s e-mail system, to the work e-mail addresses of 50 employees. The employer issued two written warnings to the employee for her unapproved use of the e-mail system. The union claimed that this was a violation of the National Labor Relations Act. The NLRB disagreed and held that the employer’s policy was non-discriminatory in both language and enforcement.
Under the new decision, employers can allow employees to use company e-mail systems for personal communications, like for-sale notices and wedding announcements, while prohibiting e-mail communications related to outside organizations and solicitations, such as the distribution of Avon literature or union correspondence. The Guard Publishing Company decision also allows employers to carve out an exception for communication pertaining to charities, such as the United Way, when they draft a policy prohibiting e-mail related to other organizational activities.
Employers are encouraged to review their existing electronic communication policies and consider drafting language in accordance with the holding in Guard Publishing.
12/28/2007
Day Pitney Alert: The State of New Jersey Enacts a State WARN Act Counterpart
On December 20, 2007, Governor John Corzine signed a new law imposing stringent requirements on certain employers shutting down or downsizing New Jersey worksites. This Act requires employers with 100 or more employees to provide 60 days notice prior to any “mass layoff,” “transfer of operations,” or “termination of operations.” The Act went into effect with the Governor’s signature.
By enacting this legislation New Jersey joins with several other states that have adopted state laws that are modeled after the federal Worker Adjustment Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq. Like New Jersey’s new law, the federal WARN act requires employers to give 60 days notice prior to any “plant closing” or “mass layoff.”
There are, however, important differences between New Jersey’s new legislation and the federal WARN Act. First, unlike the federal WARN Act, New Jersey’s new law does not have exemptions for faltering or bankrupt businesses. Second, New Jersey’s new law severely penalizes employers who fail to comply with the notice provisions. An employer who fails to provide an employee with 60 days notice is required to pay the employee a week’s worth of wages for each year the employee worked for the employer. This payment is in addition to any other severance pay that the employer is obligated to provide the employee.
Employers who plan a reduction in force or a termination of operations should be mindful of this new legislation and note its differences from the federal WARN act.
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