Employers who have made severance payments to laid off employees may be entitled to refunds of Federal Insurance Contributions Act (“FICA”) taxes remitted in connection with such payments. According to a ruling from the United States Court of Appeals for the Sixth Circuit, finalized just last month, severance payments qualifying as supplemental unemployment compensation benefit (“SUB”) payments are not taxable as wages, and accordingly, are not subject to FICA taxes. The Internal Revenue Code defines SUB payments as (1) payments made to an employee, (2) pursuant to an employer’s plan, (3) because of an employee’s involuntary separation from employment, whether temporary or permanent, (4) resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar conditions, and (5) included in the employee’s gross income.
If your company’s severance payments satisfy this definition, consult your tax advisor promptly to explore preserving potential refund claims. A company can file a protective tax refund claim for any taxable year that remains open. Typically, a taxable year remains open until three years after the date the return was due or two years after the payment date, whichever is later. As a result, an employer’s 2009 income tax return (assuming such employer reports on a calendar year) will typically remain open until April 14, 2013.
To obtain refunds of SUB payments, employers must secure each terminated employee’s written consent to file the refund claim for FICA taxes withheld on the employee’s behalf. Additionally, employers must pay employees their share of any refunded FICA taxes.
For employers with operations within the Sixth Circuit’s geographic area (Michigan, Ohio, Kentucky, and Tennessee), their refund claims for SUB payments may be processed now. All others, including employers operating in Pennsylvania, will have to wait and see how the issues resolve. The Government has until April 4, 2013 to appeal the issue to the United States Supreme Court, and Congress could amend the Internal Revenue Code to clarify the definition of SUB payments. But if the Sixth Circuit’s decision is not overturned or amended, it could be extended throughout the country.
Despite the uncertainty, this is an area with potentially significant financial implications for employers who have been forced to lay off employees over the last several years. Such employers should decide soon whether to file refund claims to avoid missing out on the potential financial benefit if the Sixth Circuit’s decision stands or is extended to other areas of the country.
Employers who have made severance payments to laid off employees may be entitled to refunds of Federal Insurance Contributions Act (“FICA”) taxes remitted in connection with such payments. According to a ruling from the United States Court of Appeals for the Sixth Circuit, finalized just last month, severance payments qualifying as supplemental unemployment compensation benefit (“SUB”) payments are not taxable as wages, and accordingly, are not subject to FICA taxes. The Internal Revenue Code defines SUB payments as (1) payments made to an employee, (2) pursuant to an employer’s plan, (3) because of an employee’s involuntary separation from employment, whether temporary or permanent, (4) resulting directly from a reduction in force, the discontinuance of a plant or operation, or other similar conditions, and (5) included in the employee’s gross income.
When Retirement Isn't Really Retirement: Pennsylvania Supreme Court Finds Early Retirees Eligible for Unemployment Compensation Benefits
In Diehl v. Unemployment Compensation Board of Review, the Pennsylvania Supreme Court recently ruled that early retirees are eligible for unemployment compensation benefits, reversing over 30 years of case law on the subject. In this case, Howard Diehl, a 63 year-old shipping clerk, accepted an early retirement package his employer offered as part of a program to avoid layoffs. The package included continuation of health insurance benefits and payment of unused vacation leave. Subsequently, Diehl filed for unemployment compensation benefits, but his claim was denied because Diehl voluntarily resigned without a necessitous and compelling reason. The Unemployment Compensation Board of Review and the Commonwealth Court upheld the denial.
On appeal, the Pennsylvania Supreme Court reversed, holding that the Unemployment Compensation Law’s definition of “layoff” could be interpreted to include the voluntary acceptance of an early retirement package. Consequently, employers considering early retirement programs should now factor in the costs of unemployment compensation claims. Employers can no longer defend claims by early retirees on the basis that they voluntarily left employment.
Barley Snyder’s Employment Law Group frequently counsels employers on early retirement programs and incentives. Please contact a member of our Employment Law Group if you would like assistance in structuring legally compliant retirement programs and incentives.
U.S. Department of Labor Issues Final Regulations Regarding FMLA's Qualifying Exigency and Military Caregiver Provisions
On February 5, 2013, the United States Department of Labor issued final regulations implementing amendments to the Family Medical Leave Act (“FMLA”). These amendments, passed by Congress in 2008 and 2010, created—and then expanded—two classes of military-related FMLA leave: “Qualifying Exigency Leave,” and “Military Caregiver Leave.” Below is a list of the new regulations’ highlights:
“Qualifying Exigency Leave”
- The definition of a “qualifying exigency” now includes service in the regular armed forces, as well as service in the National Guard or Reserves. To trigger Qualifying Exigency Leave, however, service must involve deployment to a foreign country.
- The regulations add a new leave-triggering “qualifying exigency” for employees who must care for the parent of a military member on overseas deployment.
- The regulations also expand, from five to 15 days, the amount of time an employee may take to spend with a covered military member who is on rest-and-recuperation leave. Employers, however, may require that employees provide a copy of the military service member’s leave orders, or other similar documentation, to certify the leave.
“Military Caregiver Leave”
- Employees are now permitted to take FMLA leave to care for a veteran discharged from service (other than dishonorably) during the five-year period prior to the leave. The period between October 28, 2009 and March 8, 2013 must not be counted toward the five-year limit, which means that, currently, leave may be taken to care for veterans discharged since approximately October 2003.
- Leave may be taken to care for a covered service member/veteran whose serious health condition arose either before or after military service, if (1) military service aggravated the injury or illness, (2) the service member/veteran has received a 50% or greater VA Service Related Disability Rating, (3) the physical or mental condition impairs the service member/veteran’s ability to secure or maintain employment, or (4) the service member/veteran has been enrolled in the Department of Veterans Affairs Program of Comprehensive Assistance for Family Caregivers.
- Previously, only certain health care providers associated with the U.S. Department of Defense and the U.S. Department of Veterans Affairs (“VA”) could certify the need for service member caregiver leave. Now, any FMLA-qualified health care provider can fill out the certification form.
- In lieu of providing the FMLA certification form, an employee may now provide documentation establishing his/her enrollment in the VA’s Program of Comprehensive Assistance for Family Caregivers. Such documentation is sufficient even if the employee is not the caregiver named in the document, although the employer may require confirmation of the employee’s relationship to the covered service member or documentation of the veteran’s discharge date and status.
The final regulations become effective March 8, 2013. Employers should update their FMLA policies now to reflect these regulatory changes, and start using the new FMLA certification forms found at http://www.dol.gov/whd/fmla/index.htm#Forms. Should you have questions about FMLA compliance, please feel free to contact any of Barley Snyder’s Employment Law Group attorneys.
The United States Department of Education (DOE), after years of inactivity, has made it a priority to increase enforcement efforts under the CLERY Act. As a result, the DOE is conducting audits of CLERY Act compliance on a regular basis. This is a good time to revisit CLERY Act compliance and assure that your college has proper procedures in place and documents available to bring an audit to a successful outcome.
There are essentially three requirements of the CLERY Act. First, that a college notify the campus community of its current policies regarding reporting criminal actions or emergencies on campus, security of and access to campus facilities, and campus law enforcement. Second, colleges are required to have certain records and reports. Crimes must be reported to campus security authorities, reports from other law enforcement agencies must be obtained, and for colleges with campus police or security, a daily crime log must be maintained which must include non-CLERY Act crimes. Third, information must be provided to the campus. This includes timely warning of a crime that may threaten students or employees, access to the crime log, an annual security report regarding designated CLERY Act crimes, and information about obtaining data on registered sex offenders.
A college must also designate “Campus Security Authorities” (“CSA”), who are officials of an institution who have significant responsibility for student and campus activities, including, but not limited to, student housing, student discipline, and campus judicial proceedings. Each CSA is a mandated reporter of crimes and should be trained on CLERY Act compliance.
In order to be prepared for an audit, the College should have a list of all CSAs for CLERY Act purposes. Other relevant documents will include handbooks which contain institutional policies, any publications relating to the CLERY Act and information on how they are distributed, public safety operating procedures, all records of recorded crimes, both CLERY and non-CLERY, maps and lists of buildings and land for which reporting is required, and the most recent campus security reports.
It is imperative that a college enter an audit understanding the geographic area for which it must report crimes, and the crime statistics it must collect, including statistics from other law enforcement agencies. Emergency response and evacuation procedures must be in place. The daily crime logs and annual security reports must be accurate and up to date and must address procedures to report crimes or emergencies and policies and procedures for issuing timely warnings to the campus population. Any audit will also include an examination of drug or alcohol abuse education programs and programs offered by the college regarding sexual assaults and prevention of sexual offenses, including procedures to follow when a sex offense occurs.
We strongly suggest that each college create checklists of
required documents and procedures to meet complex CLERY Act requirements, and identify and train campus security authorities to meet their obligations. It has become apparent that the days of DOE indifference to CLERY Act compliance are over.
For more Higher Education articles, check out our recent Higher Education Newsletter release.
The Consumer Financial Protection Bureau (CFPB) has promulgated revisions to various forms required by the Fair Credit Reporting Act (FCRA) in the context of background checks. A creation of the Dodd-Frank Act, the CFPB is taking over responsibility for the FCRA from the Federal Trade Commission, and the new forms reflect the agency’s contact and website information. The regulations require the new forms to be used beginning January 1, 2013.
The FCRA is triggered any time a background check is conducted by a third-party agency. Employers conducting background checks in conjunction with the hiring process must ensure that applicants consent to the background check in an acknowledgment form solely dedicated to that purpose. If information in the background check might disqualify the applicant, the applicant must be notified of his or rights to dispute or explain information from the background report. The new form for this is available here at Appendix K. Additional language is required in the unusual event that a credit score would be used in a hiring decision.
Please feel free to contact an attorney in the Employment Law Group for further guidance regarding your obligations when conducting a background check for hiring purposes.
Josh is an associate in the firm's Employment Law Group, where he represents management and employers in all aspects of labor and employment law and in employment litigation matters before federal and state courts and administrative agencies, including the Department of Labor, the Equal Employment Opportunity Commission, and the unemployment and workers' compensation agencies of various states. Josh also counsels employers on issues related to employee discipline and termination, workplace harassment, and compliance with federal and state employment laws.
During its 2011-2012 term, the United States Supreme Court issued momentous decisions regarding health care, immigration, and the death penalty. But the 2011-2012 term featured few significant labor and employment law cases, although those cases with likely long-term impact were all favorable to employers.
Perhaps the most important decision occurred in the case of Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, in which the Supreme Court recognized, for the first time, that a ministerial exception shields religious employers from discrimination lawsuits brought by their ministers. In that case, a teacher at the Hosanna-Tabor Evangelical School alleged that the Church terminated her in violation of the Americans with Disabilities Act. The Church moved to dismiss the lawsuit, arguing the teacher was a member of the Evangelical Lutheran clergy and, therefore, allowing her to sue the Church would violate the First Amendment’s prohibition on government regulation of religious activities. The Supreme Court sided with the Church, dismissed the case, and affirmed that there is a “ministerial exception” to Federal anti-discrimination laws. The Court also rejected the teacher’s argument that she was not really a minister because her duties primarily involved teaching secular subjects. Instead, the Court noted that the Church classified the teacher as “called,” which meant that she had to receive a Lutheran post-secondary education, take a number of courses in theology, and obtain the endorsement of the local Snyod district. Additionally, the teacher taught a religion class, led the students in daily prayer and devotional exercises, and led school-wide chapel service twice a year. Given these obviously religious duties, the Court deferred to the Church’s classification of the teacher as a minister, which marks a major victory for religious institutions. Although the case does not provide a blanket immunity from all Federal anti-discrimination laws, it does provide an immunity for those institutions when they are sued by employees whom the institutions classify as ministers. Moreover, Federal courts will follow a religious institution’s classifications regarding which Church employees are ministers, provided some factual basis supports those classifications.
In the case of Christopher v. SmithKline Beecham Corporation, the Supreme Court addressed the issue of the “outside sales exemption” to the Fair Labor Standards Act (“FLSA”), the Federal law that requires employers to pay an overtime wage premium when employees work more than 40 hours in a week. As most employers know, the FLSA exempts several classes of employees from its requirements, including any employee considered an “outside salesman,” which the FLSA defines as “any employee . . . whose primary duty is . . . making sales. . . .” Christopher worked for SmithKline Beecham as a “pharmaceutical detailer,” providing information to physicians about the company’s products with the goal of getting physicians to sign non-binding agreements to prescribe these products. Christopher regularly worked 60 hours per week, but received no overtime pay because SmithKline Beecham classified him as an “outside salesman.” Christopher sued for unpaid overtime, arguing that the outside sales exemption was inappropriate because his duties did not actually involve making sales, even though his duties were designed to lead to sales. Despite never initiating any enforcement actions regarding pharmaceutical detailers, the United States Department of Labor (“DOL”) sided with Christopher, arguing that his duties were merely promotional and did not involve making sales. The Court, however, rejected the DOL’s argument, holding Christopher was an “outside salesman” based on the FLSA’s broad definition of the term “sales.” Moreover, the Court refused to give deference to the DOL’s narrow interpretation of the exemption since that interpretation was not memorialized in any formal DOL regulation. This suggests that the Court might take a more active role in policing regulatory agencies, which could bode well for employer-sponsored challenges to agency requirements regarding “quickie elections,” obligatory posters describing collective bargaining rights, and revised “persuader” reporting requirements.
Finally, in a case of significant importance to public employers, the Court held in Coleman v. Court of Appeals of Maryland that the Eleventh Amendment to the United States Constitution bars certain claims under the Family Medical Leave Act (“FMLA”). This immunity, though, only applies to suits filed against state-operated or state-affiliated employers and only affects the FMLA’s “self-care” and “family care” provisions. That is, the entire FMLA still applies to non-state affiliated employers who have over 50 employees, and the FMLA’s pregnancy and family care provisions apply to all FMLA employers, even state-operated or affiliated entities.
Although the 2011-2012 term yielded no major labor or employment law decisions, But in 2012-2013, the Supreme Court will have a rather active labor and employment docket in 2012-2013. Vance v. Ball State University will address employer responsibility for harassment by employees who have some supervisory authority but lack the power to hire, discipline, or terminate other employees. Employers who use “leads” or other similar quasi-supervisory employees will want to look out for that decision. In Genesis Healthcare Corp. v. Symczyk, the Court will address whether employers can defeat an FLSA collective action simply by offering full relief to the named plaintiff. And in U.S. Airways v. McCutchen, the Court will decide whether the Employee Retirement Income Security Act permits judges to override specific plan language in the interest of fairness to plan participants. Stay tuned to the Employment Law Newsletter and check your email inbox for Legal Alerts; we will continue to update you as major developments occur.
Employment Litigation Management Services
Barley Snyder’s employment attorneys also work with our clients to manage and oversee litigation that may involve the use of local counsel in various states or nationwide. Our firm currently acts as employment counsel for a number of nationwide businesses covering a variety of industries, including, but not limited to, retail and manufacturing. Barley Snyder’s litigation management services are ideal for companies that operate in a multi-state or national arena but do not have the in-house capability to manage such litigation.
In this litigation management role, Barley Snyder’s employment attorneys operate as a gatekeeper for employment litigation, both at the administrative level and in state and federal court. When a company receives notice that a charge or complaint has been filed, the company forwards the matter to one of our gatekeeper lawyers. The lawyer in turn will review the matter, determine assignment of local counsel, if necessary, and monitor and oversee the handling of the matter by local counsel, or, depending on the jurisdiction where the charge or lawsuit is filed, Barley Snyder itself may be able to handle the matter. Our lawyers will also monitor the costs of the litigation and supply a client with a detailed budget regarding the services to be provided.
Barley Snyder offers its litigation management services at reduced rates. As part of this service, Barley Snyder also will provide a monthly status report for each state in which your company operates. Contact Jennifer Craighead for more information about these services - email@example.com or 717-399-1523.
David Freedman is an experienced labor and employment litigator who represents public and private employers of all types and sizes in litigation before state and federal courts and administrative agencies. David has represented employers in claims brought under Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Combined Omnibus Budget Reconciliation Act (“COBRA”), the Pennsylvania Human Relations Act, the Pennsylvania Wage Payment Collection Law and the Pennsylvania Unemployment Compensation Law, among others.
Appeals Court Rules that Prior Oral Agreement Requires Employer to Recognize Union Through Authorization Cards
On October 16, the United States Third Circuit Court of Appeals issued a decision highlighting the danger of entering into oral agreements with labor unions. In the case of Rite Aid of New Jersey v. United Food and Commercial Workers Union, Local 1360, the court upheld an arbitrator’s award requiring Rite Aid to recognize and bargain with a union at any store where the union obtains majority support through authorization cards. Relying upon an oral agreement made many years earlier, the court rejected Rite Aid’s request for an election conducted by the National Labor Relations Board (“NLRB”).
In their first collective bargaining agreement (“CBA”), which ran from 1999 through 2002, Rite Aid and the Union agreed the Union could become a bargaining representative of employees in other stores through an NLRB-conducted election or “other demonstration of union status acceptable to” Rite Aid. Other evidence suggested Rite Aid orally agreed, in connection with the signing of the original CBA, that it would honor card check as the method of showing union majority status, rather than require an NLRB election.
Over several years, Rite Aid recognized the Union via card check on 63 occasions. After executing a later CBA, Rite Aid determined that card check was not an acceptable method of proving union majority status and began insisting on NLRB elections. The Union filed a grievance, and the arbitrator ruled that Rite Aid’s oral agreement from years earlier bound it. On appeal, the court held that, through the oral agreement, Rite Aid waived the right to reject card check status. The court also noted that Rite Aid received a benefit through the oral agreement because the Union’s Health and Welfare Plan agreed to use Rite Aid as a participating pharmacy provider. Additionally, Rite Aid negotiated two contracts with the Union after the oral agreement and could have raised and settled the issue during those negotiations. Having failed to do so, it was bound by its prior actions.
As this case demonstrates, oral agreements (even very old ones) can be binding in labor-management relationships. Management, therefore, should be wary of such oral agreements.
Pennsylvania Supreme Court Expands Scope of Workers Compensation Liability for "Statutory Employers"
In a landmark decision that effectively overrules approximately thirty years of precedent, the Supreme Court of Pennsylvania recently expanded “statutory employer” status to any company that subcontracts for services or work “of a kind which is a regular or recurrent part of the entity’s business.” Under the new caselaw, contractors may be held secondarily liable for injuries incurred by their subcontractors’ employees, even if they have no control or authority over those employees.
It is well-established that, where a subcontractor’s employee is injured on premises generally controlled by a contractor, the contractor is responsible for workers compensation coverage if the subcontractor lacks insurance. This has been the case since the Supreme Court’s 1930 opinion in McDonald v. Levinson Steel Co. The new case, called Six L’s Packing Co. v. Workers’ Compensation Appeal Board (Williamson), extends this liability beyond the worksite.
Six L’s Packing Company harvests, processes, and distributes tomatoes and other produce. The company contracts with other companies for transport of tomatoes between its facilities and various other services. In April 2002, a employee for one of these contractors, F. Garcia & Sons, was injured in a motor vehicle accident while transporting tomatoes between a warehouse in Pennsylvania and processing facility in Maryland. Garcia did not have workers compensation coverage, and Six L’s was deemed the responsible statutory employer.
In awarding benefits, the Court rejected Six L’s arguments that it did not own trucks or employ drivers and that it was not in control of the public highway where the employee was injured, as required under the McDonald test. The Court noted that the “premises” language from McDonald did not appear in the section of the Act imposing statutory employer status on “contractors,” effectively limiting McDonald to circumstances in which employers control the worksite where an injury occurs. Since the Court further held that transport of tomatoes was a “regular or recurrent part of” Six L’s business, it was liable for the subcontractor’s injuries.
This case highlights the importance of ensuring that contractors carry workers compensation coverage for all their workers. Any company using contractors should obtain proof of such coverage and, further, may want to include indemnity clauses in its contracts to insulate itself from workers’ compensation liability.
NLRB Rules that Employer's Request for Confidentiality During Internal Investigation Violated NLRB Section 7
Now, with the passage of this law, health care institutions and nursing homes once again have flexibility in scheduling their employees under the 8/80 method.
In a 5 to 4 decision, the Supreme Court on June 28 upheld the constitutionality of the cornerstone provision of President Obama’s Affordable Care Act, the individual mandate. In the Court’s majority decision, which was written by Chief Justice Roberts and concurred in by Justices Breyer, Ginsburg, Sotomayor and Kagan, the law’s individual mandate was ruled a valid exercise by Congress of its taxing power. Justice Kennedy, who was widely viewed as the likely swing vote, did join with Justices Scalia, Alito and Thomas in a dissenting opinion. A surprise to most was that the controlling swing vote in favor of upholding the law proved to be that of the Chief Justice.
With good reason given the uncertainty about the constitutionality of the health care reform statute that prevailed up until the Court’s decision, many employers with health care plans have delayed focusing much attention or resources on the decisions they have to make to comply with the new law by its 2014 full implementation date. The decision from the Court, upholding the law, means that this “wait and see” approach is difficult to continue to justify. The 18 months remaining between now and January 1, 2014, is a relatively short time frame in which to gear up for full compliance. There are a number of notice, administration and benefit changes health plan sponsors will have to implement.
In our upcoming Employment Law Newsletter, Barley Snyder’s employee benefits attorneys will provide a summary of the significant health care reform compliance requirements that need to be implemented.
Last week, the United States Equal Employment Opportunity Commission (“EEOC”) issued an “enforcement guidance” regarding the use of criminal history information in employment decisions. An “enforcement guidance” is a statement of the EEOC’s views regarding the proper enforcement of anti-discrimination laws. Although an enforcement guidance does not necessarily describe how a court would analyze an issue, it is based on legal precedent and suggests how the EEOC intends to approach an issue.
Yesterday’s enforcement guidance focused extensively on the use of criminal history information with respect to “disparate impact” claims under Title VII of the Civil Rights Act, the federal law that prohibits race and national origin employment discrimination. Title VII prohibits not only intentional discrimination, but also “disparate impact,” that is, facially-neutral employment policies that have a disproportionate negative impact on minorities.
Relying upon nationwide conviction rates for African-Americans and Hispanics, the enforcement guidance makes clear that the EEOC presumes that any employer use of criminal history information during the application process disproportionately excludes racial minority applicants. In essence, the EEOC is taking a “guilty until proven innocent” approach, requiring that employers prove business necessity of their screening procedures. Moreover, to prove business necessity, employers will be required to validate, through statistics, the link between the disqualifying criminal conduct and subsequent work performance. Alternatively, employers can develop a targeted screening process that, at a minimum, takes into account the nature of the applicant’s criminal conviction, the time elapsed since the conviction or punishment, and the nature of the job for which the applicant has applied.
This approach will enable the EEOC to file and investigate more charges of disparate impact, which traditionally have been less common than intentional “disparate treatment” cases, but which present significantly more exposure. To lessen their risk of Title VII disparate impact liability, the EEOC suggests that employers make an individualized assessment of an applicant’s criminal background, but only after deciding to hire the applicant. The EEOC also suggests that employers only request “job related” criminal convictions, instead of a list of all criminal convictions.
The enforcement guidance also echoes the EEOC’s long-held position that mere arrest records are not a proper basis for excluding an applicant and that across-the-board exclusions of applicants with any criminal conviction are not consistent with business necessity. This seems consistent with the Pennsylvania Criminal History Information Act, which prohibits Pennsylvania employers from hiring based solely on an arrest and allows exclusions only for “job related” convictions.
The enforcement guidance’s major ramifications will be discussed at length in a future edition of Barley Snyder’s Employment Law Newsletter. Additionally, Jennifer Craighead, Esq. and David Freedman, Esq. will provide practical guidance for dealing with pre-employment screening issues during their presentation, “Be Careful What You Test For . . . It Might Land You in Court!” at the Barley Snyder Employment Law Seminar, which will be held May 11 at the Eden Resort in Lancaster. Please click on the link below to RSVP for this free event.
For the time being, employers should understand that the EEOC plans to challenge employers’ use of criminal history information aggressively. Employers, therefore, should consider familiarizing themselves with the EEOC’s enforcement guidance and reviewing their policies and procedures for compliance with the EEOC’s stated best practices.
Ultimately, it appears likely that the NLRB will once again postpone the effective date for the posting, although, as of today, no official declaration to that effect has been issued by the NLRB. We will continue to monitor both cases and advise you if the posting requirement is again delayed.
In a settlement likely to have long-lasting implications for employers nationwide, Pepsi Beverages Company has agreed to pay $3.13 million to resolve charges stemming from its policy against hiring applicants who had been arrested and/or convicted of certain minor offenses. The Equal Employment Opportunity Commission (“EEOC”) determined that Pepsi’s policy adversely affected over 300 black applicants, in violation of Title VII of the Civil Rights Act. Pepsi will also provide job offers and training to many of these applicants. The Pepsi investigation is part of a nationwide EEOC crackdown on hiring policies that can hurt black and Hispanic applicants. The “use of arrest and conviction records to deny employment can be illegal,” according to the EEOC, “when it is not relevant for the job,” because it can limit opportunities for minorities with higher arrest and conviction rates. The agency has indicated that it “hope[s] that employers with unnecessarily broad criminal background check policies take note of this agreement and reassess their policies to ensure compliance with Title VII.”
Pennsylvania employers are already prohibited from having blanket policies regarding criminal background checks. Under Pennsylvania law, Title 18 section 9125, an applicant’s convictions may be considered only to the extent to which they relate to the available position, and employers must notify applicants if their criminal background played a role in the decision not to hire them.
The Pennsylvania Human Relations Commission has opined that employers “must be able to show that inquiry into conviction is substantially related to an applicant’s suitability to perform major job duties” and that the criminal background check is, thus, required by “business necessity.” The EEOC’s statements surrounding the Pepsi settlement potentially takes this constraint nationwide.
Given these developments, employers should ensure that hiring practices conform to some “relevance” standard for criminal background disqualifications. The EEOC has stated, for example, that a recent theft conviction may be relevant to a bank teller position, while a years-old drunk driving conviction is likely not relevant to a clerical position. Employers should take steps to ensure that those in charge of hiring have access only to aspects of an applicant’s criminal background deemed relevant to a given position or that criminal background checks are not performed until late in the hiring process after a conditional offer is made. An individualized analysis should then be undertaken to ensure that the age and circumstances of the conviction, the available position, and any interim conduct suggesting rehabilitation of the applicant are
adequately taken into account.
- The law protects the right of employees to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection;
- This aspect of the law protects the right of employees to improve the terms and conditions of employment through channels outside the immediate employee/employer relationship;
- The right to engage in concerted activities includes the right to join together to pursue workplace grievances, including through litigation.
Because of the argument that the application of the NLRA in this case conflicts with the FAA, there is a likelihood that the courts will address this issue in the future, and employers who wish to maintain arbitration agreements will need to follow the continuing course of this case.
The U.S. Department of Transportation, Federal Motor Carrier Safety Administration has released new rules for CDL drivers that limit the number of hours per week drivers are permitted to work. The new rules are designed to combat driver fatigue and go into effect in July of 2013.
Under the new rules, truck drivers are prohibited from working more than 70 hours in a week. Currently, the restriction is set at 82 hours per week. When a driver reaches the 70 hour maximum, the driver must take at least two nights of rest from 1 a.m. to 5 a.m. Drivers must also take a 30 minute break after working 8 hours and are restricted to no more than 11 hours of daily driving.
Employers should begin to put mechanisms in place in 2012 in preparation for compliance with the new rules. The new rules provide for fines against companies of up to $11,000 per violation. In addition, drivers are subject to penalties of up to $2,750 per offense.
The Department of Labor, Office of Federal Contract Compliance Programs (OFCCP), proposed a new rule on Thursday, December 8, 2011, that would require federal contractors and subcontractors to set a hiring goal of having 7 percent of their workforces made up of disabled people. The rule amends Section 503 of the Rehabilitation Act of 1973 which obligates federal contractors and subcontractors to ensure equal employment opportunities for qualified workers with disabilities.
Under the proposed rule, contractors would be required to do the following:
- For the first time, set a goal of having 7 percent of their employees be workers with disabilities in each job group of the contractors’ workforce.
- Request that applicants voluntarily self identify at the pre-offer stage as an “individual with a disability”. Applicants would also be asked to voluntarily self identify at the post-offer stage, and annually contractors would be required to survey all employees in order to invite them to self identify in an anonymous manner.
- Maintain records of all individuals with disabilities applying for positions and the number of individuals with disabilities hired.
- Engage in a minimum of three specific types of outreach and recruitment efforts to recruit individuals with disabilities.
- List job openings with One-Stop Career Centers and other appropriate employment delivery services.
The proposed rule would apply to contractors with 50 or more employees and contracts worth $50,000 or more. The rule is open for public comment for 60 days after publication.
We will continue to keep our contractor clients apprised of the status of this proposed rule.
On November 21, 2011, President Obama signed into law two tax credits designed to bring unemployed veterans back to work. These new tax credits were part of the American Jobs Act propsed by the President in September.
The Returning Heroes Tax Credit offers a credit scaled to the length of time a veteran has been unemployed. A credit of up to $2,400 (40 percent of the first $6,000 in wages) is available when a newly-hired veteran had been unemployed at least four weeks. A credit of up to $5,600 (40 percent of the first $14,000 in wages) is available when a newly-hired veteran had been unemployed at least six months. This tax credit replaces the now-expired Recovery Act credit, which provided for up to $2,400 for employers hiring certain unemployed veterans.
The Wounded Warrior Tax Credit, meanwhile, provides a new credit of up to $9,600 (40 percent of the first $24,000 in wages) for employers who hire veterans with service-connected disabilities who had been unemployed longer than six months. This credit exists alongside the existing Work Opportunity Tax Credit, which provides up to $4,800 for all employers who hire veterans with service-connected disabilities. The Wounded Warrior credit essentially replaces the Work Opportunity credit for hires of long-term unemployed veterans.
These tax credits are part of a larger jobs initiative targeted at veterans. Among other executive actions, the Administration has created a job-match online resource, a Veterans Job Bank, and an assistance card for veterans seeking job counseling. Employers wishing to participate in the Job Bank may find further information here.
If you have questions about any of these initiatives, please do not hesitate to contact any member of our employment law group.
- the circumstances under which investment instructions can be given;
- any plan limitations on investment instructions, including any restrictions on transfers in and out of an investment alternative;
- plan provisions relating to voting or tender or similar rights appurtenant to any investment alternative;
- an identification of all investment alternatives available under the plan;
- an identification of any investment managers designated under the plan and;
- a description of any plan provisions allowing investment outside of the menu of investments designated as available under the plan (e.g., “brokerage windows” or “separate brokerage accounts”).
Second, before a participant or beneficiary can first direct investments, and at least annually thereafter, he or she must be given an explanation of plan administrative expenses (e.g., accounting, recordkeeping and legal expenses) that may be charged to an individual plan account, and how those expenses are allocated (e.g., pro rata or per capita). At least quarterly, the participant or beneficiary is to receive a specific statement that includes the dollar amount of such administrative fees charged to the individual’s account in the prior quarter and the administrative services to which the charges relate.And third, before a participant or beneficiary can first direct investments, and at least annually thereafter, he or she must be given an explanation of any individual fees and expenses (such as participant loan fees, QDRO processing fees, “brokerage window” fees and individual investment advisor fees) that may be charged against the individual account of a participant or beneficiary who incurs the fee rather than against all accounts. Here again, at least quarterly, the participant or beneficiary is to receive a specific statement that includes the dollar amount of such individual account expenses actually charged in the prior quarter and the types of individual account expenses incurred.In the case of changes in any of the plan-related information summarized above after disclosures are provided, the participants and beneficiaries are to be given an advance description of the changes within the 30- to 90-day period preceding the effective date of the change.What is the required investment-related information?There are two sets of investment-related disclosures, one consisting of information to be distributed to participants automatically each year and the other of information to be provided upon participant request. The automatic disclosure includes historical investment performance data relating to each investment alternative available under the plan, which must be provided in a comparative, essentially side-by-side manner (the regulations include a suggested format for this presentation). The disclosure includes identifying information, such as fund name; its type or category; one, five and ten calendar years of investment performance results; one, five and ten calendar years of performance results for an appropriate benchmark; applicable fee and expense information; and any purchase, transfer or withdrawal restrictions or limitations that may be imposed. The plan administrator must also provide a website address that participants can access for additional details, and a glossary of investment-related terms (or internet access to such a glossary).The investment-related information to be provided upon request includes copies of prospectuses, copies of any other materials relating to an investment alternative that may have been provided by the investment alternative to the plan, a statement of the value of a share or unit of each investment alternative, and a list of assets held in the portfolio of each investment alternative that meets the DOL’s definition of a “plan asset,” including their value.When must these newly-required participant disclosures be made?
This new DOL participant disclosure regulation is effective for plan years that begin on and after November 1, 2011 (therefore, for calendar year plans, they are effective January 1, 2012, subject to the transition relief described below). The general rule regarding the plan-related and investment-related disclosures described above is that they are to be provided to participants on or before the date the participant can first direct his or her investments, and then at least once per year thereafter. The individualized participant statements relating to fees charged to his or her account are required each quarter.What are the transition deadlines for 2012 when the new disclosure requirements first become applicable?The initial disclosures of the annually-required plan-related and investment-related information is required by the 61st day of the first plan year that begins on or after November 1, 2011 or, if later, by May 31, 2012. The initial quarterly disclosures of the fees charged to individual plan accounts are due 45 days after the end of the quarter when the plan first has to provide the annual plan-related and investment-related disclosures. Therefore, the typical calendar year plan will have until May 31, 2012 to make the initial annual disclosures, and the initial quarterly statement deadline for such a plan will be August 14, 2012.What penalties apply if the new disclosure requirements are not met?
There is no defined and automatic monetary penalty payable to participants or the DOL if the new required disclosures are not timely or fully provided. However this disclosure obligation is a fiduciary duty imposed by the regulation on the plan administrator. A failure by the plan administrator to satisfy this obligation will open the door to legal claims by participants who suffer investment losses on grounds that the non-disclosure of the required information was a breach of a clearly-defined fiduciary duty which resulted in those losses.What steps should retirement plan administrators take now to prepare for these new disclosure obligations?Confirm whether the plan is a participant-directed individual account plan and therefore subject to these new disclosure rules. Meet with the relevant plan vendors (trustees, record keepers and third party administrators) to establish who will bear responsibility for compiling and providing the new required disclosures, and to coordinate between the plan administrator and vendors the compilation of data that will go into the required disclosures. This may require renegotiation of service provider contracts, with one or more vendors taking on this disclosure responsibility.Since employees who are eligible to participate must receive the disclosures, even if they have not as yet elected to participate, plan administrators must identify these eligible non-participants and ensure that any vendor sending disclosures has their information.Consider and settle upon a distribution method or methods that will be used for disseminating disclosures, including such alternatives as hard-copy versus electronic distribution, mail versus workplace delivery, and coordination of delivery with other already-required disclosures such as annual or quarterly account statements or summary annual reports.If the plan has any unique or plan-specific investment alternatives, such as an employer stock fund or a guaranteed investment contract, the plan administrator must pay particular attention to who will take the lead in compiling the data and preparing the disclosures related to that plan-specific investment alternative.For more information, or if you have questions or require any assistance in connection with the new self-directed plan disclosure requirements, please contact a member of the Employee Benefits Group.
NLRB Issues Final Rule Requiring Employers to Post Notice to Inform Employees of Union Related Rights
- Organize a union to negotiate with the employer concerning wages, hours and other terms and conditions of employment
- Form, join, or assist a union.
- Discuss wages, benefits and terms and conditions of employment or union organizing with coworkers or union.
- Take action with one or more coworkers to improve working conditions by raising work related compalints directly with the employer or with a government agency and seek help from a union.
- Strike and picket.
- Choose not to do any of these activities.
1. The individual must have a written contract to perform construction services;
The Act also sets forth the six specific criteria that will determine whether an individual meets the third part of the test of being "customarily engaged in an independently established trade, occupation, profession or business."
1. The individual must possess the essential tools, equipment and other assets necessary to perform the services, independent of the employer.
the criteria 1 through 4 above, and while free from direction or control over the
performance of the services; or
b. Hold him or herself out to others as available and able
to perform the same or similar services meeting the criteria of 1 through 4 above, and
while free from direction or control over the performance of the services.
Last week, in the case of Saint-Gobain Performance Plastics Corp., the United States Supreme Court issued a ruling which will impact how an employer responds to complaints from employees regarding wage and hour issues. Specifically, the Court ruled that the Fair Labor Standards Act (FLSA) may, under certain circumstances, shield workers from retaliation for verbal as well as written complaints. Previously, some courts have interpreted to the FLSA’s retaliation provisions to apply only to written complaints to the Department of Labor, or in some cases, written complaints to an employer. However, under this ruling, cautious employers now need to be aware that, if an employee raises a concern, in whatever form, about payment of overtime, calculation of time or any other payroll practice, the employer should be prepared to immediately address such complaints. Furthermore, the complaining employee now enjoys a “super protected” status in that an adverse action taken against the employee such as termination will open the employer up to claims of retaliation; consequently, employers will need to ensure that their employment decisions can be well defended against claims of retaliation.
Court Holds that Employees Cannot Immediately Sue for Alleged Wrongful Denial of Stimulus Package's COBRA Premium Subsidy
If you work in the field of human resources or employee benefits, you are doubtlessly familiar with the COBRA premium subsidy provisions of the American Recovery and Reinvestment Act of 2009 (ARRA), which provides a 65% reduction in COBRA premiums for employees involuntarily terminated from their jobs, or who have had their working hours substantially reduced, during the period from September 1, 2008 through May 31, 2010. Employers are required to notify “assistance eligible employees” of their ARRA rights and, if they submit the required paperwork, reduce their COBRA premium by 65%, the cost of which the employer can recover through a tax credit. The law also sets up an expedited process for employees to challenge denials of the premium subsidy by filing an appeal with the United States Secretary of Labor, who must issue a decision within 15 business days after receiving the appeal. The employee can challenge the Secretary of Labor’s decision in court, but the Secretary’s decision is entitled to deference from the court.
On April 27, 2010, in a case of first impression, the United States District Court for the District of Columbia held that employees cannot short-circuit the appeal process by suing in court for denial of the COBRA premium subsidy. In Dorsey v. Jacobson Holman, PLLC, Ms. Dorsey’s employment ended on September 16, 2007, at which time she elected to continue her health insurance coverage through COBRA. On April 10, 2009, Ms. Dorsey requested that Jacobson Holman provide the premium subsidy, claiming that she had been terminated. Jacobson Holman refused, arguing that Ms. Dorsey she had voluntarily resigned. Ms. Dorsey followed up informally with a Department of Labor benefits advisor, but never filed an official appeal with the Secretary of Labor challenging the denial of her request for the COBRA premium subsidy. Instead, she filed an action against Jacobson Holman in federal district court alleging violation of the ARRA’s COBRA subsidy provisions.
The court, however, dismissed the case, holding that Ms. Dorsey failed to properly exhaust her administrative remedies by filing an appeal with the Secretary of Labor. The court described the ARRA as emergency legislation designed to get benefits into the hands of assistance eligible individuals quickly and noted that the required 15-day deadline for processing appeals furthered that goal. On the other hand, “[i]t blunts that purpose to require – or allow – individuals to turn in the first instance to the courts.”
For employers, this is good news. They need not face the specter of frequent, and expensive, court challenges to decisions regarding whether separated employees are – or are not – eligible for the ARRA’s COBRA subsidy. Rather, challenges to those decisions will usually get resolved through the Secretary of Labor’s relatively quick and cheap appeals process.
In Seybert v. International Group, Inc., Jane Seybert filed suit in the United States District Court for the Eastern District of Pennsylvania claiming that her supervisor, Brett Marchand, subjected her to gender-based harassment. Seybert testified that during a work-sponsored dinner, attended by co-workers and other supervisors, Marchand stated loudly in reference to a chocolate fountain dessert, “I heard it’s really good if you go down deep, into the chocolate, with your berry,” which Seybert contended was a sexual metaphor.
As the matter proceeded to trial, International Group produced several emails that Seybert exchanged using her work email account during working hours. Many of these emails featured stories, jokes, cartoons and photographs employing sexual words, metaphors and double entendres. Seybert’s attorneys filed a motion to prevent International Group from using the emails at trial, citing a federal rule of evidence that limits the use of “sexual disposition” evidence.
The judge, however, rejected the argument, stating that “[b]y exchanging these emails with others during her . . . work hours, and using IGI computers, Mrs. Seybert may have been sanctioning the humor that the emails contained – a humor that may be found similar to the supposed humor underlying Mr. Marchand’s comment at the . . . dinner.” The court also noted that the emails did not comment directly on Seybert’s own sexual history or conduct, but mostly contained jokes and stories about generic topics or made-up characters, like Santa Claus.
The jury apparently found this evidence persuasive. On November 6, it entered judgment in favor of International Group.
Just like for plaintiffs, email evidence can sometimes provide important information for an employer defending an employment discrimination lawsuit. Employers can take advantage of some of these benefits—and limit some of the costs associated with E-Discovery in employment litigation—by adopting policies that require the long term retention of departing employees’ email accounts. Who knows? It might just be your “smoking gun” in the end.
Unlike the previous administration’s willingness to work with employers to resolve Occupational Safety and Health Administration (OSHA) complaints, under the Obama administration, OSHA intends to become more active in regulation promulgation and enforcement. Specifically, a pronouncement by President Obama’s new Secretary of Labor, Hilda Solis, encapsulates the new focus: “As I have said since my first day on the job, ... the U.S. Department of Labor is back in the enforcement business,” Solis said. “There will be no excuses for negligence.... And so long as I am the Secretary of Labor, the Department will go after anyone who negligently puts workers at risk.”Continue Reading...
On April 22, 2009, in Diehl v. WCAB (IA Constr. & Liberty Mut. Ins.) , 972 A.2d 100, the Commonwealth Court determined that even though an employer’s request for an Impairment Rating Evaluation (IRE) was beyond the 60-day window following the expiration of 104 weeks of total disability benefits, it was still entitled to pursue a petition to modify the claimant’s benefit status from total to partial without having to prove either job availability or earning power. This decision represents a reversal of the Court’s previous ruling in this case.
In Diehl, the IRE evaluation determined that the Claimant had an impairment rating of 28% (i.e., well below the 50% impairment threshold for change of status to “partial” disability). However, the employer requested the IRE well beyond the 60-day window. Upon receipt of the IRE determination, the employer then sought to unilaterally modify the claimant’s disability status from one of total disability to partial disability. The Claimant argued that the employer could not prevail by merely proving an impairment of less than 50%, but was also required to show evidence of job availability and/or earning power.
In its April 2008 decision, the Commonwealth Court agreed with the Claimant and indicated that employers who seek to show that a claimant is no longer temporarily totally disabled must prove their case by not only establishing an impairment rating of less than 50%, but also through vocational rehabilitation proof. Specifically, an employer cannot unilaterally shift a claimant’s benefits from TTD to PPD upon a showing of an impairment rating below 50%, but must also demonstrate job availability or restored earning power. However, in its revised decision, the Court held that “under the Act, an employer seeking to change a claimant’s benefit status using results of an IRE requested outside the 60-day window must obtain an agreement from the claimant or an adjudication that the claimant’s condition improved to an impairment rating less than 50 percent. Proof of earning power and job availability is not required.”
According to a decision by the Third Circuit, the simple fact that an employee receives FMLA leave does not necessarily mean that the employee is disabled for purposes of the Rehabilitation Act. Further, an employee does not automatically have a “record of disability” if the FMLA leave was approved.
In an October 21, 2008 unpublished opinion, the Third Circuit held that a nurse with post-traumatic stress disorder, depression, and alcoholism failed to demonstrate that she had a disability under the Rehabilitation Act. In Nicholson v. West Penn Allegheny Health System, 3d Cir., No. 07-4354 (2008 WL 4636353), the Third Circuit upheld the U.S. District Court for the Western District of Pennsylvania’s grant of summary judgment in favor of the West Penn Allegheny Health System.Continue Reading...
In a recent holding, the Third Circuit reiterated Pennsylvania’s “at-will” presumption in employment by declining to expand the recognized exceptions to that principle. In Pennsylvania, an at-will employee can generally be discharged at any time, with or without a reason. However, Pennsylvania courts have in the past recognized an exception where an employee’s termination violates a “clear mandate of public policy,” but such situations have been limited to circumstances in which an employer: (1) requires an employee to commit a crime; (2) prevents an employee from complying with a statutorily imposed duty; or (3) discharges an employee when specifically prohibited from doing so by statute.Continue Reading...
Unfortunately, the current economic climate has employers looking at the reality of layoffs and downsizing to weather this financial storm. When companies consider trimming their workforce to a significant degree, or plant closings to deal with tough economic realities, they often-times must also forewarn employees of these decisions. Aptly named the WARN Act, the federal Worker Adjustment Retraining and Notification Act, in effect since 1989, requires certain employers to provide sixty-days’ advance notice of such a “mass layoff” or “plant closing.” The purpose of the WARN Act is to give affected employees sufficient advance notice to adjust to and hopefully emerge from the impending job loss.Continue Reading...
After the U.S. Supreme Court ruled in 2007 that home health aides employed by third parties are exempt from overtime requirements under the federal “domestic services” exemption, the question of whether these same home health aides were also exempt from Pennsylvania’s minimum wage and overtime requirements under its “domestic services” exemption still remained. On September 4, 2008, the Pennsylvania Commonwealth Court answered that question in the negative in a case brought by Bayada Nurses, Inc. against the Pennsylvania Department of Labor & Industry (“L&I”).
As background, Pennsylvania’s Minimum Wage Act (“MWA”) exempts from minimum wage and overtime requirements “[d]omestic services in or about the private home of the employer.” Unlike the federal regulations, however, Pennsylvania’s regulation defines “domestic services” more narrowly as “work in or about a private dwelling for an employer in his capacity as a householder, as distinguished from work in or about a private dwelling for such employer in the employer’s pursuit of a trade, occupation, profession, enterprise or vocation.” And unlike the federal regulations, Pennsylvania does not have a “companionship services” provision that would cover employees employed by third parties, such as Bayada’s and many other agencies’ home health aides.Continue Reading...
In Secretary of Labor v. Beverly Healthcare-Hillview, No. 06-4810, 2008 WL 4107489 (3rd Cir. September 4, 2008) the Court found that a nursing home operator was required to compensate employees for travel expenses and non-work time spent receiving treatment under the Bloodborne Pathogens Standard of the Occupational Safety and Health Act (OSHA). The Bloodborne Pathogens Standard requires that employers make the hepatitis B vaccine and other medical evaluations and treatments available to all exposed employees at no cost to the employee.
The Company at issue operated a nursing home in Pennsylvania, and two nurses who worked at the facility, received a “needlestick” while at work. Both nurses subsequently sought treatment for their wounds at an off-site medical facility. Their subsequent and ongoing treatment required them to return to that facility for periodic follow-up during non-work hours.
The Company paid for the cost of the medical evaluations and procedures, but failed to compensate the nurses for the non-work hours they spent receiving their follow-up treatments. Moreover, the Company did not compensate the employees for their travel expenses to and from the facility.
The Occupational Safety and Health Administration issued citations to the Company for failure to compensate the nurses for travel expenses and non-work time spent receiving treatment. The Company disputed the citations, and argued that the no-cost provision of the Act should not be read so broadly.
Subsequently, an administrative law judge upheld the citations, but the Occupational Safety and Health Review Commission reversed, finding that the Company did not have “fair notice” of the broad interpretation of the no-cost provision.
Ultimately, the Third Circuit disagreed, and found that the Company had “fair notice” of the no-cost provision as a result of OSHA’s opinion letters, directives and prior caselaw. Specifically, the Court found instructive a 1999 opinion letter which stated that transportation under the Bloodborne Pathogens Standard may not need to be provided by the employer, but the employer must cover the cost of transportation. The same opinion letter also provided that when receiving a vaccine or commuting to have it administered, employees must be considered on-duty and compensated. Accordingly, the Court agreed with the Secretary of Labor’s position that a “reasonable interpretation” of the no-cost provision required the Company to pay for travel expenses and non-work time.
On July 23, 2008, the U.S. District Court for the Eastern District of Pennsylvania ruled that a Rastafarian police officer who refused to cut his hair may take to trial some of his claims of religious discrimination and retaliation. In Dodd v. SEPTA, 2008 WL 29202618 (E.D. Pa. July 2008) the Court partially denied the summary judgment motion of the Southeastern Pennsylvania Transportation Authority (SEPTA), holding that SEPTA’s proffered reasons for disciplining and discharging the plaintiff, Niles Dodd, may be pretextual for bias against Dodd’s religion and its requirement that he maintain uncut hair.
During the course of his seven year employment with SEPTA, Dodd became a Rastafarian. However, SEPTA’s appearance policy required male officers to keep their hair under their hats. Dodd was formally disciplined on several occasions for violating the policy. Subsequently, in late 2004 and early 2005, Dodd wrote and distributed memoranda criticizing SEPTA. As a result of these memos, SEPTA conducted an investigation to determine whether Dodd violated SEPTA’s procedures for making internal complaints when he filed his memos. The investigation ultimately led to Dodd’s discharge. Dodd sued SEPTA, claiming that he was subjected to religious bias, disparate treatment, a failure to accommodate his religion, hostile work environment harassment, and retaliation in violation of Title VII and the Pennsylvania Human Relations Act.
The Court found that Dodd was a member of a protected religious class, was a qualified police officer, and sustained several adverse employment actions, including an involuntary psychological test, several suspensions, and termination. In addition, the Court also found that SEPTA was aware of Dodd’s religion prior to the adverse actions and that its alleged nondiscriminatory reasons for firing Dodd, i.e., his repeated violations of the appearance policy and his violation of internal complaint procedures, may have been pretextual. The Court noted that Dodd was the only SEPTA officer ever to be disciplined for a violation of the department’s appearance standards, despite the fact that at least two other officers wore their hair below the uniform hat.
The Court also concluded that: (1) SEPTA’s appearance policy unlawfully interfered with Dodd’s religious beliefs, due to the fact that one of the tenets of Rastafarianism prohibited him from cutting his hair; (2) SEPTA failed to make good faith efforts to accommodate Dodd’s religious beliefs (e.g., letting Dodd wear a ponytail would not have caused SEPTA undue hardship); (3) Dodd’s ongoing encounters with his supervisors regarding his hair and religion were sufficiently pervasive to constitute a hostile work environment that had a detrimental effect on him; and (4) Dodd’s memoranda and his EEOC complaint implicated SEPTA’s nondiscrimination policy, and constituted protected activity for Title VII purposes; thereby, raising an inference of retaliation.
A Corrections Officer Who Turned a Blind Eye on an Assault Against an Inmate Is Not Entitled to Unemployment Compensation Benefits
A corrections officer has a duty to protect inmates. If he/she turns a blind eye on threatened or actual physical assaults of inmates for fear of retaliation by coworkers, the officer is not entitled to collect unemployment-compensation benefits after being fired for doing so. See Department of Corrections v. Unemployment Compensation Board of Review, -- A.2d --, No. 1205 D.C. 2006 (Commw. Ct. March 6, 2008).
The Lancaster Service Center and the Commonwealth Court of Pennsylvania agree on that. The Unemployment Compensation Board of Review disagreed, though, and awarded benefits.
On the employer’s appeal, the Commonwealth Court held that the corrections officer was not entitled to benefits because the officer’s fear of retaliation was not good cause for willful misconduct. The misconduct was violating his duty to protect inmates and therefore acting contrary to the employer’s best interests and intentionally disregarding the behavior standards that the employer could expect. (If an employee proves that he/she had good cause for willful misconduct, benefits can be awarded.) As the appellate court put it:
[I]t shocks the conscience of this Court that the Board concluded that a corrections officer who refused to report a threat of violence against an inmate and refuses to render aid to an inmate being beaten could use fear for his own personal safety as good cause justification for his refusal to render aid.
The corrections officer argued that he had good cause for the violations because he feared for his own future safety if his coworkers retaliated against him for thwarting the attack engineered by a fellow corrections officer. No doubt, this is not a position anyone would want to find themselves in. However, the officer’s fear was held not to justify his disregard of what he was hired to do.
The prudent thing for the officer to do would have been to act to protect the inmate, then enlist the employer’s assistance with dealing with any retaliation by coworkers. While that option might not have been appealing to the officer from a practical perspective, his employer had to be able to rely on the officer to discharge his duty of protecting inmates. An employer entity can only act through its representatives.
This decision can apply to other workplaces as well, standing for the general proposition that an employee who willfully violates a job duty because of fear of coworkers’ retaliation must not be awarded unemployment-compensation benefits.
The U.S. Department of Labor Proposes Revisions to the Family Medical Leave Act Regulations That Permit Settlement of FMLA Claims Without Department or Court Oversight
On February 11, 2008, the United States Department of Labor (DOL) proposed new regulations regarding the Family and Medical Leave Act (FMLA). One topic of the DOL’s many proposals is the waiver of FMLA claims.
The FMLA contains a provision that makes it unlawful for an employer to interfere with or restrain the exercise of any right protected under the FMLA. The DOL's current regulations regarding this provision state that an employer cannot “induce employees to waive their rights under the FMLA.” As we have reported previously, this language led to a debate among the courts whether employers wishing to resolve FMLA disputes could do so at all, or only with supervision from the DOL or with court approval. The federal court in the Eastern District of Pennsylvania recently held that employers could resolve FMLA disputes already in existence through private separation or settlement agreements, but that the employer could not require employees to waive their future FMLA rights through such a settlement. Dougherty v. Teva Pharmaceuticals USA, No. Civ. A. 05-2336 (E.D. Pa. August 2006). In a contrary ruling, however, the United States Court of Appeals for the Fourth Circuit (embracing federal courts located in Maryland, Virginia, West Virginia, North Carolina and South Carolina) held that the DOL’s waiver regulations prohibited all FMLA settlements without supervision from the DOL or without court approval. Taylor v. Progress Energy, Inc., 493 F.3d 454 (4th Cir. 2007).
The DOL’s proposed regulations, citing efficiency concerns and the public policy of promoting prompt settlements, make it clear that although employers may not enter into agreements that waive an employee’s “prospective rights under FMLA,” they can settle retrospective or existing claims in private agreements without oversight or approval from either the DOL or from a court.
You may submit comments about the proposed regulatory changes electronically at www.regulations.gov until midnight April 11, 2008.
Pursuant to a recent decision by the Third Circuit, an employee's oral notification to his supervisor of his potential need for surgery served as sufficient notice for leave to his employer to warrant protection under the Family and Medical Leave Act. In a holding that broadens the type of conduct sufficient to put an employer on notice of an employee's need for FMLA leave, the Third Circuit Court of Appeals vacated the District Court of New Jersey’s grant of summary judgment for the employer on the plaintiff/employee's FMLA claim. Sarnowski v. Air Brook Limousine, No. 06-2144 (3d Cir. Dec. 12, 2007). (The Third Circuit has jurisdiction over Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands.)
To exercise the right to FMLA leave, an eligible employee must provide his or her employer with reasonably adequate information under the circumstances to give the employer notice that the employee seeks leave under the FMLA. Generally speaking, the employee does not have to expressly assert rights under the FMLA or even mention the FMLA. The decisive question is the manner in which the information conveyed to the employer is understood.
In Sarnowski v. Air Brooke Limousine, Inc., the Third Circuit vacated and remanded the award of summary judgment to the employer dismissing the employee’s FMLA interference claim. In that case, Sarnowski was terminated eight days after informing his supervisor that his doctor had advised him of the need to monitor his heart and the potential need for additional surgery and 6 weeks of leave. At the time, Sarnowski had only recently returned to work after missing 6 weeks of work due to coronary bypass surgery. The plaintiff/employee argued that the defendant/employer interfered with his rights by terminating him after he notified his supervisor of the medical monitoring and the possibility of additional heart surgery.
In analyzing what constitutes sufficient legal notice under the FMLA, the Third Circuit emphasized that the regulations do not require an employee to submit formal written requests for leave. Furthermore, the Court found that verbal notification which raises an employer's awareness of a potential FMLA covered leave, without an employee expressly asserting its rights or making mention of the FMLA, is appropriate notice pursuant to FMLA regulations. The Third Circuit interpreted the regulations to imply that providing precise dates and duration of the leave are not necessary.
The Court’s decision in Sarnowski certainly invites employee abuse of the FMLA. Permitting employees to request leave even though they don't know if or when it may start burdens significantly an employer. In light of this decision, it is important for employers to train their human resources employees to recognize and respond to ambiguous employee statements about the potential need for leave.
U.S. Supreme Court Likely to Weigh In On the Question "Whether Employees Can Agree to Settle Employment Claims Under the Family Medical Leave Act"
For the past two years, the answer to this question has been in a state of flux in Pennsylvania. In August 2006, the federal court in the Eastern District of Pennsylvania answered this question in the negative, and allowed an employee’s Family Medical Leave Act (FMLA) claim against her employer to go to trial, despite a severance agreement and release waiving any claim arising from or relating in any way to her employment. Dougherty v. Teva Pharmaceuticals USA, No. Civ. A. 05-2336 (E.D. Pa. August 2006).
Then, eight months later in April 2007, that court reconsidered its decision and reversed itself, ruling that, yes, employers can settle FMLA claims brought by employees. Specifically, the court concluded that the FMLA regulations do not prevent an employee from waiving and/or settling any claims for past violations of the FMLA as part of a severance or settlement agreement. This ruling was supported by the United States Department of Labor (DOL), which has historically encouraged the settlement of such claims.
Three months later, a divided Fourth Circuit Court of Appeals answered the question in the negative for employers in Virginia, West Virginia, North and South Carolina, and Maryland: absent prior court or DOL approval, the FMLA regulations bar all waivers or releases of employees’ FMLA rights, including the right to bring a claim for a past violation of the FMLA. Taylor v. Progress Energy, Inc., 493 F.3d 454 (4th Cir. 2007) . This decision would open the floodgates for employers to submit separation and severance agreements for DOL review, and settlement agreements to the court for approval, unnecessarily injecting the DOL and courts into what had heretofore been private negotiations between employers and employees.
To possibly settle this unsettled issue, the Supreme Court on January 14, 2008 asked the Solicitor General to weigh-in on whether the Taylor v. Progress Energy, Inc. decision was correct. Given the DOL’s position permitting the waiver of FMLA claims, the Solicitor General may recommend that the Supreme Court take on the issue and grant certiorari. Keep in mind that the Solicitor General serves as an advocate for government agencies, and the Supreme Court usually follows the Solicitor General’s recommendation.
Although the answer to the question may be far from certain, the import of these decisions for employers is clear. Employers need to exercise caution when drafting separation, severance, and settlement agreements that contain broadly-worded releases. The agreement should specify the statutes for which a waiver or release of claims is sought, and should include a severability clause that would save the otherwise enforceable provisions of the agreement. If the location of the employment relationship, or the law governing the agreement, lies in the Fourth Circuit, however, any waiver or release of FMLA claims is not valid without court or DOL approval, at least until the Supreme Court weighs in on this issue.
We haven’t heard the latest on this question, and I will keep you updated as the issue develops
A school board expelled a tenth-grade student for the remainder of the semester after he admitted helping another student hack into the school’s computer system. In M.T. for A.T. v. Central York School District, the decision was upheld by a York County judge and, on November 5, 2007, by the Commonwealth Court of Pennsylvania.
This was not the first time the student violated the school’s computer use policy. He previously was suspended for making fake student ID cards. This time, he admittedly decoded encrypted information, obtained passwords that he was not supposed to have, used an administrative password to install software that enabled access from the Internet, and had access to several teachers’ accounts. Given the escalating nature of the offense, the appellate court found that the punishment was appropriate and, indeed, needed to get the student’s attention.
To justify the expulsion, the school board relied on its Student Code, including the Computer Use Policy, which parents and students receive through a Student Planner. The student had signed a copy of the Policy. At the hearing, the student did not testify, but his mother did, and she admitted that her son probably knew he should not have done what he did. The student argued on appeal, though, that he should only have been suspended, per the policy. The courts agreed with the school board that the policy had only a suggestion of suspension as a penalty, while the appendix to the Code stated that such a penalty was merely a guide. Therefore, the school board acted within its discretion, and consistent with its policy, when it expelled the student for what it considered to be a serious breach. The principal testified that security of its computer system is more important than ever because the school had moved to a paperless system.
This case has implications for employers as well as for schools. The legal analysis of the Code was consistent with how courts analyze employee handbooks with respect to employee misconduct and ramifications. Essentially, a contract analysis was applied to interpret the Code. Also, it indicates that schools (and employers) will be given latitude to protect themselves from hackers.
Yet another reason why employers shouldn’t stereotype . . .
Employees who balance the demands of caring for a family with the pressures of paid work have always had a difficult time. Now, those employees may be receiving a little help from the Equal Employment Opportunity Commission. On May 23, 2007, the EEOC issued new and extensive enforcement guidelines regarding employers’ treatment of their “caregiving” employees. Specifically, the guidelines address the growing problem of employees who have family responsibilities, and/or who must care for a family member, being subjected to disparate treatment. As a preamble, the guidelines state:
Although the federal EEO laws do not prohibit discrimination against caregivers per se, there are circumstances in which discrimination against caregivers might constitute unlawful disparate treatment. The purpose of this document is to assist investigators, employees, and employers in assessing whether a particular employment decision affecting a caregiver might unlawfully discriminate on the basis of prohibited characteristics under Title VII of the Civil Rights Act of 1964 or the Americans with Disabilities Act of 1990.
At its most relevant, the guidelines state that employers who perceive an employee with caregiving responsibilities as unable to perform the same amount of work, or the same caliber of work, as its other employees may violate federal anti-discrimination laws. This perception, or stereotype, on the part of the employer means family caregivers are provided with less career options and less chances for career advancement than other employees. The guidelines state:
Individuals with caregiving responsibilities also may encounter the maternal wall through employer stereotyping. Writing for the Supreme Court in 2003, Chief Justice Rehnquist noted that “the faultline between work and family [is] precisely where sex-based overgeneralization has been and remains strongest.” Sex-based stereotyping about caregiving responsibilities is not limited to childcare and includes other forms of caregiving, such as care of a sick parent or spouse. Thus, women with caregiving responsibilities may be perceived as more committed to caregiving than to their jobs and as less competent than other workers, regardless of how their caregiving responsibilities actually impact their work. Male caregivers may face the mirror image stereotype: that men are poorly suited to caregiving. As a result, men may be denied parental leave or other benefits routinely afforded their female counterparts. . . Employment decisions based on such stereotypes violate the federal antidiscrimination statutes, even when an employer acts upon such stereotypes unconsciously or reflexively. As the Supreme Court has explained, “[W]e are beyond the day when an employer could evaluate employees by assuming or insisting that they match the stereotype associated with their group.” Thus, for example, employment decisions based on stereotypes about working mothers are unlawful because “the antidiscrimination laws entitle individuals to be evaluated as individuals rather than as members of groups having certain average characteristics.”
Given these guidelines, employers must be all the more vigilant and refrain from making employment decisions based upon stereotypes of the employee’s family responsibilities.
The U.S. Court of Appeals for the Third Circuit recently issued a decision that draws a line in the sand for purposes of the First Amendment. Montanye v. Wissahickon School District, 2007 WL 541710 (3d Cir. Feb. 22, 2007). The court makes clear that the First Amendment does not cloak all conduct with protection. Not every action is constitutionally protected just because someone intends to express an idea. An effort to convey a particular message must be proven and the likelihood that others would understand the message must be great.
Montanye was a ninth-grade teacher who was concerned about the mental health of one of her students. When the student expressed suicidal thoughts, Montanye shared her concern with the student's mother and even attended some therapist sessions with the student (with the permission of the student and her mother because the student would only go if her teacher accompanied her).
The school district, upon learning about this, was worried about the propriety of the Montanye's interactions with the student. After a hearing, it issued a letter, which the teacher said was a "constructive discharge letter." Among other things, it instructed Montanye that, if she "engages in any conduct outside the school or outside her status of a teacher with any student or parent, she is to notify the school and advise the parent that she is doing so strictly in her personal capacity."
Montanye filed a lawsuit, claiming that her right to expressive conduct under the First Amendment was violated and that the federal Rehabilitation Act was violated. She alleged that what she did amounted to protected speech and that the school wanted to chill her speech and punish her for assisting special education students.
The federal trial court dismissed her claims, and the appellate federal court affirmed. Both claims were dismissed for the same reason. That is, while Montanye's actions might have involved a "kernel of expression", her actions in assisting the student were not "expressive or communicative." Montanye argued that her speech and conduct was constitutionally protected because it concerned a matter of great public importance in that she was helping the student achieve a healthy life and giving her educational and emotional support. But the court rejected the argument, explaining that it was insufficient to convey a particularized message or to be understood as conveying such a message.
This case is a victory for schools (and employers, generally), which might have some trepidation about taking action they believe to be best for fear of treading upon First Amendment rights. However, practically speaking, how it will play out in the halls of our schools remains to be seen.
Because the extra hour of pay is awarded with no reference to the actual amount of meal/break time an employee lost, one might think the award was intended to penalize employers for failure to comply with the statutory meal/break times. One would be wrong. The statute, according to the California Supreme Court, is all about compensating employees. Claims for the extra hour's pay therefore survive for three years. California employers are not amused:
Robert Tollen, who represented the defendant, Kenneth Cole Productions Inc., said the ruling could "easily" cost companies millions of dollars. Especially, he said, because of an ever-increasing number of wage-and-hour class actions in California.
"It's going to cost a lot of money," he said, "in a situation where there's not a significant degree of wrongdoing."
Although the case is thousands of miles from Pennsylvania, the moral of the story hits home: businesses need to be mindful of compliance issues in all aspects of their operations. As Kenneth Cole demonstrates, the cost of non-compliance with even the most trivial of regulations can be substantial.
Naturally, litigation ensued. Continue Reading...
The presentation discusses two recent Pennsylvania laws that bear on identity theft as well as the federal "shredder law," all of which place obligations on businesses that maintain confidential/personal information, whether for customers or employees. In addition, the presentation considers a relatively recent negligence case (pdf warning) out of Michigan as a cautionary tale for Pennsylvania businesses that don't take sufficient precautions to guard employees' confidential/personal information. Although the law elucidated in the Michigan case is not yet the law of Pennsylvania, I suspect it may be if and when such a case percolates through the courts. The very bottom line? Businesses should stop using employee social security numbers for any purpose not strictly necessary. If you can accomplish that, you've halfway cracked the nut.
Over at their joint blog, Becker and Posner bring a law-and-economics approach to bear on the issue of deterring ID Theft Although the discussion is from last September, it remains interesting stuff. Really, though, how could it not?