Employer Law Report

Congress passes temporary COBRA subsidy extension through March 31, 2010

Jamie LaPlante — Thu, 11 Mar 2010 15:52:52 -0500

Congress recently passed the Temporary Extension Act of 2010, which, in addition to extending unemployment benefits, extends and expands the COBRA premium subsidy originally provided by ARRA (the stimulus bill). The new law extends the end of the eligibility period for the COBRA subsidy from February 28, 2010 to March 31, 2010. This means that individuals involuntarily terminated between September 1, 2008 and March 31, 2010 are eligible for 15 months of subsidized COBRA premiums—with the employee paying only 35% of the actual COBRA premium.

The recent extension also expands the COBRA subsidy to those who lost their health insurance coverage as a result of a reduction in hours sometime between September 1, 2008 and March 31, 2010 and are subsequently involuntarily terminated between March 2, 2010 and March 31, 2010. Persons falling in this category who did not make a COBRA election at the time of the reduction in hours (or who made one but subsequently discontinued coverage) must be issued a new COBRA notice within 60 days of the involuntary termination, as if the involuntary termination was a new qualifying event. This notice must explain the rules regarding their special COBRA election period. Yet, if they elect coverage, their COBRA eligibility of 18 months dates back to the original qualifying event (the reduction in hours). The individual does not need to pay for COBRA premiums back to the date of the reduction in hours and can begin coverage as of the date of the involuntary termination. It appears that the COBRA subsidy, however, will only apply beginning with the period of coverage after the involuntary termination and continue for the remainder of the 18 months of COBRA eligibility. It is likely that Department of Labor guidance and model notices for these individuals will be forthcoming.

Given that this is called a “temporary extension” bill, it is likely that an additional expansion of the COBRA premium will be passed by early April.

Please see our earlier posts explaining ARRA and the prior ARRA COBRA subsidy expansions:

March 2, 2010 – Ohio mini-COBRA expansion

January 14, 2010 - COBRA subsidy expansion

Dec. 23, 2009 – COBRA subsidy expansion

April 17, 2009 – Ohio mini-COBRA expansion

April 6, 2009 – What is an involuntary termination?

Feb. 26, 2009 – ARRA COBRA subsidy

Ohio extends State Mini-COBRA Health Insurance Continuation Coverage From 12 to 15 Months

Jamie LaPlante — Tue, 02 Mar 2010 14:11:01 -0500

Governor Strickland just signed into law a bill (House Bill 300) that would extend Ohio’s state “mini COBRA” coverage for any policies delivered, issued, or renewed on or after February 25, 2010.

The coverage under the Ohio mini-COBRA law will be extended from 12 months to 15 months so long as the employee is eligible for the federal COBRA subsidy. At present, the federal COBRA subsidy does not apply to any employees involuntarily terminated after February 28, 2010. This state extension was passed in anticipation of a federal extension of the COBRA subsidy beyond that date, which is presently under consideration in Congress. We will continue to update you if the federal government passes an additional COBRA subsidy extension or if the Ohio Department of Insurance issues guidance on this new bill.

Second Circuit Addresses Effectiveness of Sexual Harassment Policy

Peg Koesel — Tue, 23 Feb 2010 14:06:49 -0500

On February 19, 2010, the Second Circuit Court of Appeals vacated a district court decision and reversed JetBlue Airways’ favorable summary judgment in a case brought by a former customer service supervisor who complained to her supervisor, who was also the alleged harasser, about a hostile work environment because other avenues of complaint may have appeared to be futile.

The employee alleged that over a seven-month period her supervisor made several remarks about wanting to massage or suck on a woman’s breasts, remarked about going home so that his wife could attend a “sex toy” party and asked a female coworker whether she had “gotten enough loving” over the weekend. Other employees testified that the supervisor grabbed female crewmembers, that he frequently made inappropriate comments and gestures, and that he stared at them as if he was mentally undressing them.

The employee also complained that while she and another crew member were on an aircraft full of passengers, her supervisor gave the final boarding call and remarked over the loudspeaker that one of the crew was a former pin-up girl and that the plaintiff-employee had been a table dancer before joining the airline. Both employees were humiliated and walked off the plane. The plaintiff-employee claimed to the supervisor about these comments. He did not apologize and the airline took no disciplinary action against him. The Court found this evidence sufficient to create an genuine issue of fact as to whether the employee faced a hostile work environment.

Of course, an employee’s objectionable conduct is imputed to the employer where, as here, the alleged harasser is in a supervisory position. But a defending employer may avoid liability by raising the Faragher/Ellereth affirmative defense which requires it to show that it “exercised reasonable care to prevent and correct promptly any discriminatory harassing behavior”; and “the plaintiff employee unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer or to avoid harm otherwise.”

JetBlue argued that it was entitled to the Faragher/Ellereth affirmative defense because the employee failed to pursue alternative options listed in the policy for reporting alleged harassment. Even though JetBlue’s sexual harassment policy gave the employee options for reporting harassment to persons other than her supervisor, the Court held that JetBlue was not entitled to the Faragher/Ellereth affirmative defense as a matter of law.

The Court explained that it must determine whether it was unreasonable as a matter of law for an employee to complain about harassment only to her harasser, if that person is designated in the employer’s plan as one of several with whom an employee may lodge a complaint. The Court concluded that whether the employee’s complaint to her harasser was a reasonable availment of JetBlue’s harassment policy must be determined by the facts and circumstances of each case.

JetBlue argued that the employee did not reasonably avail herself of its sexual harassment policy because she complained only to her harasser and not to other members of management and the human resource department, which were also referenced in the policy. The Court “rejected such a brittle reading of the Faragher/Ellereth defense,” stating that it did not believe that “the Supreme Court, when it fashioned this affirmative defense, intended that victims of sexual harassment, in order to preserve their rights, must go from manager to manager until they find someone who will address their complaints.”

Significantly, the Court observed that there “is no requirement that a plaintiff exhaust all possible avenues made available where circumstances warrant the belief that some or all of those avenues would be ineffective or antagonistic.” The Court then held that an employer is not entitled to the affirmative defense as a matter of law simply because its policy has multiple avenues for complaint and the plaintiff-employee could have complained to other persons in addition to the alleged harasser and that it would look at the facts and circumstances of each case.

In this case, the employee and other employees had complained to the supervisor’s boss about other issues and his responses to those complaints showed that he was not receptive to receiving complaints. And when another employee complained to JetBlue’s human resource department about the same supervisor, she was suspended within days of that complaint. Given that several of the alternative channels for making complaints appeared to be ineffective or even threatening, the Court found an issue of fact to be resolved by a jury regarding whether it was reasonable for the employee to believe that other avenues for complaining would be futile.

This case emphasizes the importance of providing multiple avenue of complaints and of encouraging employees to take their complaint further if they do not believe it is being heard. It also teaches that employers must train managers and supervisors to be receptive to employee complaints and serves as a caution to employers that, when supervisors and managers appear to retaliate against an employee who complains, the employer may lose the opportunity for summary judgment based on the Faragher/Ellereth defense.

Diane Gorzynski v. JetBlue Airways Corporation, United States Court of Appeals Case No. 07-4618-cv (2d Cir. Feb. 19, 2010)

EEOC Releases Proposed Rule Affecting RFOA Defense

Brian Hall — Mon, 22 Feb 2010 09:25:52 -0500

In response to two U.S. Supreme Court decisions, the U.S. Equal Employment Opportunity Commission (EEOC) has released for public comment a proposed rule construing the “reasonable factor other than age” (RFOA) defense under the Age Discrimination in Employment Act (ADEA).

In Smith v. City of Jackson and Meacham v. Knolls Atomic Power Company, the Supreme Court held that the RFOA defense acts as a complete bar to disparate impact liability where an employer demonstrates that its facially neutral policy or practice, which had a disparate impact on older workers, was based on a reasonable factor other than the plaintiff’s age. Although the RFOA defense operates similarly to Title VII’s business necessity defense, this defense under the ADEA has traditionally been more “employer-friendly” because it preserves an employer’s right to make reasonable business decisions while protecting older workers from facially neutral employment criteria that arbitrarily limit their employment opportunities without requiring a showing of business necessity.

In what it describes as an effort to provide a more objective standard for determining whether an RFOA exists and clarify the scope of the defense, the EEOC seeks to revise paragraph 1625.7(b) of the existing regulations addressing the RFOA defense. Although the standard remains lower than Title VII’s business necessity defense, 1625.7(b)(1) makes it clear that the RFOA is not to be viewed under a “rational-basis” standard. Employers will be required to show that the challenged practice was reasonably designed to further or achieve a legitimate business purpose and was reasonably administered to achieve that purpose.

The EEOC proposes a “prudent employer” standard to determine whether or not an employer relied upon reasonable factors in making the challenged employment decision and included a list of non-exhaustive factors to consider, including:

the commonality of the business practice used by the employer;
the manner in which the practice was administered;
the employer’s awareness of a possible age-adverse impact before making their decision;
steps taken by the employer to “accurately and fairly” assess the impact of their decision upon older persons as well as steps taken to mitigate unnecessary harm to older workers;
the existence of a lesser discriminatory alternative;
the extent to which the employer or supervisors engaged in age-based stereotyping; and
the extent to which employers gave supervisors guidance or training about how to avoid discrimination.

While no single factor would be dispositive of reasonableness under the EEOC’s proposed rule, the EEOC suggests that an employer is more likely to succeed on the RFOA defense if the bulk of these factors weigh in the employer’s favor.

For the RFOA defense to apply, the EEOC makes clear in its proposed rule that the challenged practice in fact must be based on a non-age factor. Recognizing that the courts have held that objectively measurable factors such as salary and seniority are non-age factors even though they sometimes correlate with age, the EEOC’s rule instead focuses on the unchecked use of subjective criteria that can often be based on age-based stereotypes about older workers’ flexibility, willingness to learn or technological skills.

Therefore, the proposed regulations set forth a non-exhaustive list of factors to help employers determine whether an employment practice is based on a non-age factor, including:

the extent to which the employer gave supervisors unchecked discretion to assess employees subjectively;
the extent to which supervisors were asked to evaluate employees based on factors known to be subject to age-based stereotypes; and
the extent to which supervisors were given guidance or training about how to apply the factors and avoid discrimination.

The EEOC is accepting public comment until April 19, 2010. The agency will consider the public comments received and will make appropriate changes based on those comments. A proposed final rule covering this and the March 2008 proposed rules will then be coordinated with other federal agencies and reviewed by the Office of Management and Budget before becoming effective.

Sixth Circuit Reverses Third Party Retaliation Decision

Jamie LaPlante — Mon, 15 Feb 2010 10:17:40 -0500

In Thompson v. North American Stainless LP, in a rehearing by the Sixth Circuit en banc, the full Sixth Circuit held that, in order for a third-party to claim retaliation based on the protected activity of another, the third party must have actually engaged in protected activity of his own. In doing so, the Sixth Circuit joined the Third, Fifth, and Eighth Circuits in so ruling.

In Thompson, a woman filed a sex discrimination charge with the EEOC. Three weeks later, the employer terminated the woman’s fiancé, who also was employed by the company. The fiancé filed his own EEOC charge and, eventually, a lawsuit, and alleged that his termination amounted to retaliation for his fiancé’s EEOC charge. In response, the employer argued, among other things, that there is no cause of action under Title VII for retaliation against associated third-parties. The trial court agreed and dismissed the case. The plaintiff appealed, and the EEOC filed an amicus (“friend of the court”) brief in support of associational retaliation claims.

In a 2-1 decision, a three-judge panel of the Sixth Circuit reversed, holding that “Title VII prohibit[s] employers from taking retaliatory action against employees not directly involved in protected activity but who are so closely related to or associated with those who are directly involved, that it is clear that the protected activity motivated the employer’s action.” The Court included the fiancé of an employee filing an EEOC charge in the newly-expanded protected class. In reaching its decision, the Sixth Circuit acknowledged that the plain language of Title VII does not support associational retaliation claims. The Court nonetheless ignored the text and looked to the “plain purpose of the statute,” reasoning, based on language in U.S. Supreme Court decisions, that the statute is intended to protect against any retaliatory action that might “dissuade[] a reasonable worker from making or supporting a charge of discrimination.” (Quoting the U.S. Supreme Court’s decision in Burlington Northern and Santa Fe Railway Co. v. White, 126 S.Ct. 2405 (2006).)

The full Sixth Circuit agreed to re-hear the case and vacated the decision of the three-judge panel. The Court reasoned that, because Thompson did not engage in any protected activity of his own (by making a complaint of Title VII discrimination or harassment or by testifying, participating in, or assisting in an investigation of another’s complaint), he could not state a claim for retaliation under Title VII. The en banc Sixth Circuit relied on the plain language of Title VII in finding that actual protected activity is required for a retaliation claim—in contrast to the three-judge panel’s decision that ignored the plain language of the statute. The Court found that not recognizing associational retaliation claims was consistent with the purpose of the statute because the retaliation is still actionable if the retaliated-against person actually engages in protective activity. In addition, the Court distinguished the recent Supreme Court decision in Crawford v. Metro Government of Nashville and Davidson County, which reversed the Sixth Circuit and held that the opposition clause did not require active, consistent behavior, by stating that Crawford involved involuntary testimony while Thompson did not engage in any protected activity at all.

This case should be seen as a victory for all employers. Retaliation is certainly one of the most dangerous and difficult employment law claims to avoid, especially when the complaining employee remains employed after the protected activity. This decision limits the scope of employees who could make a retaliation claim to the employee who actually engaged in protected activity—rather than the employee and the complaining employee’s sibling, parent, spouse, or fiancé. It should be noted that a petition for certiorari has been filed with the Supreme Court.

Lessons Learned for Performance Appraisals and RIFs from the Sixth Circuit in Cutcher v. Kmart

Nicole J. Quathamer — Wed, 10 Feb 2010 14:28:51 -0500

Even in the face of an undisputed national workforce reduction, in a recent decision (Cutcher v. Kmart), the Sixth Circuit found an issue of disputed fact existed as to whether Kmart’s termination of an hourly associate as part of a reduction in force interfered with and was in retaliation for that associate’s recent exercise of her FMLA rights.

Cutcher had been employed by Kmart for about 20 years. In the four years she had been evaluated by her then current supervisor, Cutcher had received either the highest or second-highest rating in Kmart’s appraisal system. While her supervisor did comment in certain appraisals that Cutcher had some challenges in the area of teamwork, the supervisor never documented Cutcher for any such episode and still rated her as a high performer.

Within weeks after her last appraisal, Cutcher began a six-week FMLA-approved leave for which she was paid under Kmart’s short-term disability leave policy. Then, just weeks later, Kmart announced a nationwide RIF which included the termination of six associates at the store where Cutcher worked. As part of the nationwide RIF process, the store was instructed to evaluate each associate’s performance based on the same core areas that were evaluated in the annual performance appraisals. The store then averaged the employee’s RIF appraisal score with their most recent performance appraisal score to arrive at the overall score that determined those associates to be terminated. One caveat in the scoring form was that the store had to comment on a significant change in the RIF appraisal score from that in the associate’s most recent performance appraisal.

Cutcher’s RIF appraisal score was much lower than her most recent performance appraisal, made just one month earlier. As required, the store explained the difference by stating only poor customer and associate relations and “LOA.” Kmart denied that the leave notation formed the basis for Cutcher’s decreased RIF appraisal, but that LOA signified only that her termination had to be delayed until her return from leave, as mandated by Kmart’s national guidelines. Had Cutcher’s rating during the RIF been identical to her appraisal just weeks earlier, she would not have been selected for termination.

In reversing the district court’s summary judgment ruling in favor of Kmart, The Sixth Circuit held that a disputed issue of material fact remained as to whether Kmart interfered with Cutcher’s FMLA rights and retaliated against her because she took the leave. That is, the Court explained that a reasonable fact finder could conclude that the termination was based on her leave because of the brief time between her annual appraisal and the lower RIF appraisal. Also significant was that Kmart had not documented any of the performance issues that it claimed supported the lower RIF appraisal. In fact, Cutcher had never been disciplined and her evaluators admitted they knew of no change in her performance during the minimal period between the annual and RIF appraisals. Moreover, the Court found that a jury could reject Kmart’s explanation that the change between appraisal resulted from the fact that Cutcher’s supervisor tended to rate associates higher than deserved to avoid confrontation. Lastly, the Court pointed to Kmart’s LOA notation on the RIF form as evidence that could support a finding in Cutcher’s favor.

So, what lessons can we take from Cutcher v. Kmart? Whether in times of a RIF or simply standard business operations, attention must be paid to how managers evaluate their employees. It will always be the case that certain managers rate high or low as a practice, so if you can’t train the manager to rate in a more realistic manner, then at least document that particular manager’s practice. This will avoid the post-hoc allegation Kmart confronted and also lay the groundwork for later explaining potential differences in appraisals made by others. Furthermore, a termination analysis must be meticulously conducted and documented. Standing alone, a LOA notation on the section of a RIF form identifying the reason for a termination decision begs a court to deny summary judgment.

Thus, as with any termination decision, attention to important details and careful documentation can protect the employer from an adverse decision like that in Cutcher v. Kmart.

Ohio WARN Legislation Proposed

Franck Wobst — Mon, 08 Feb 2010 09:41:31 -0500

Ohio employers will want to pay close attention to H.B. 434, which was proposed by House Representative Kenny Yuko, D-Richmond Heights, last week. The Bill is similar in nature to the Worker Adjustment and Retraining Notification Act ( “WARN”), but goes further than the federal law in several respects. For example, the Bill would require an employer in Ohio laying off 25 or more employees in any 30-day period to give at least 90-days’ advance written notice of the layoff to affected employees, local workforce policy boards, and certain state departments and local elected officials. The notice period would be expanded to 120 days for employers planning to lay off 250 or more employees. Also, the penalties for violations include double back pay for all affected employees, as well as the full value of their employee benefits.

The Bill does contain exceptions similar to those found in WARN, including exceptions for temporary facilities, layoffs arising from “circumstances that were not reasonably foreseeable,” caused by “physical calamity, natural disaster, or act of war,” or where the employer can show that "notice would have blocked incoming capital which might have prevented the layoff.”

H.B. 434 is still in the very early stages of the legislative process. However, because it would expand employer advance notice obligations in several respects beyond WARN’s requirements, it bears watching – and perhaps warrants a call to your State representative. We will continue to keep you updated.

Recently Released DOL Budget Makes Worker Misclassification and State Paid Leave Priorities for the Next Fiscal Year

Michael A. Jackson — Wed, 03 Feb 2010 10:39:59 -0500

On Monday, February 1, 2010, the U.S. Department of Labor (DOL) released its budget for the 2011 fiscal year. In a 95-page summary of the new budget, the DOL elaborated upon its plans for the approximately $14 billion it seeks in discretionary budget authority. According to the summary, the DOL will focus its efforts in 2011 on supporting reform of the Workforce Investment Act, rebuilding Worker Protection Programs, initiating a multi-agency legislative proposal to establish automatic workplace pensions, and boosting funds for unemployment insurance integrity efforts. From our perspective, however, the two most notable aspects of the 2011 budget are its provisions concerning employer misclassification of workers and paid family leave.

The DOL proposes to devote $25 million to a joint Labor-Treasury Misclassification Initiative that will enable the agency to better detect, investigate, and prosecute employers who misclassify their workers, and to offer competitive grants to boost states’ incentives to address the problem. In addition, the DOL proposes to further limit the possibility of employer misclassification by:

requiring employers to demonstrate that their employees are classified correctly,
closing the safe harbor created by Section 530 of the Revenue Act of 1978, and
making misclassification of employees an explicit violation of the FLSA.

As the Labor and Treasury Department coordination suggests, this Initiative has a dual focus of adding to state and federal government revenues by ensuring that businesses pay appropriate payroll taxes on behalf of individuals would be more properly classified as employees and ensuring that those persons who should be classified as employees receive the overtime and benefits to which they would be entitled. As we previously have reported, Ohio Attorney General Richard Cordray announced an initiative approximately one year ago to target independent misclassification. Assuming that the DOL’s budget is approved, employers will need to pay even more attention ensure their intended independent contractor relationships will pass muster. Errors in classification undoubtedly will prove to be very expensive.

Finally, another important provision of the DOL’s budget for this next fiscal year is additional funding to establish more state paid leave funds. Currently, three states (California, Washington, and New Jersey) have state paid leave insurance programs which allow workers, who cannot afford to take unpaid leave under FMLA, to take time off to care for an ill child, spouse, parent, or bond with a newborn while still receiving benefits from the state. The 2011 Budget establishes a $50 million fund within the DOL that provides competitive grants to states that choose to launch such paid-leave programs. These funds will be allocated to assist states with planning and start-up activities related to paid-leave programs.

New York Jets Coach Fined for "Off-Duty" Conduct

Brian Hall — Wed, 03 Feb 2010 09:27:34 -0500

While attending a Mixed Martial Arts event in Miami, New York Jets head coach, Rex Ryan, apparently made an obscene gesture at some Miami Dolphin fans who were taunting him. Yesterday, the Jets fined Ryan $50,000. Ryan was attending the event, which was neither team nor NFL-sponsored, on his own time, but the team obviously felt that as head coach, Ryan is their representative even when he is "off duty" and that he must conduct himself accordingly.

In the real world, most employees are not celebrities that the general public will try to egg on until they do or say something stupid. Nevertheless, it is important for all of us to remember that the world is now filled with opportunists with camera phones and easy access to YouTube and other media outlets. Though we should not be expecting to see a rash of employers firing factory workers for flipping off a bunch of bar patrons after work, there are real world lessons to be learned from this episode. First, employees need to recognize when they are out in public that there is a significant risk that anything that they do or say that either embarrasses or otherwise reflects poorly on their employer ultimately may get back to the employer. On the other hand, employers should exercise restraint before taking disciplinary action against employees for their off duty conduct to make sure that the conduct truly does negatively impact the company's business or reputation.

Death Benefits Denied for an Accidental Death Caused by Overdose of OxyContin

Darin Van Vlerah — Mon, 18 Jan 2010 12:46:35 -0500

Ohio’s Third District Court of Appeals recently held that the family of an injured worker whose accidental death was caused by a lethal concentration of OxyContin is not entitled to death benefits under Ohio Workers’ Compensation Act.

In Parker v. Honda of America Mfg., the decedent suffered a severe back injury in 1988. Mr. Parker underwent several surgical procedures in an unsuccessful attempt to alleviate his back pain. Eventually, Mr. Parker was prescribed and began using OxyContin in 1999 and subsequently became addicted. He sought treatment for his addiction in August 2004 and again in March 2005. In March 2006, he was discovered dead with a syringe in his arm, along with a lighter and spoon and 37 OxyContin pills. Cocaine and OxyContin were found on both the syringe and spoon.

The decedent’s surviving spouse filed a claim for death benefits under the workers’ compensation law. After the request for benefits was denied administratively by the Industrial Commission of Ohio, Ms. Parker filed a complaint in common pleas court asserting that the decedent’s death was the result of an OxyContin overdose which was the direct and proximate result of his work injury. Finding that Mr. Parker’s death was “self-inflicted,” the trial court granted Honda’s summary judgment motion. Ms. Parker then appealed to the Third Appellate District.

Ohio Revised Code § 4123.54 precludes the dependents of an injured worker from receiving benefits as a result of his death if the death was “purposely self-inflicted” or where the death was caused by the injured worker being intoxicated or under the influence of a controlled substance not prescribed by a physician. The Supreme Court of Ohio, however, has carved out an exception to §4123.54 in cases where an allowed work-related injury causes the employee to become “dominated by a disturbance of the mind of such severity as to override normal rational judgment;” and the disturbance results in the employee’s suicide.

In Parker, the plaintiff presented expert testimony that Mr. Parker’s OxyContin addiction had caused him to become dominated by a disturbance of the mind as to override normal rational judgment, but the Third Appellate District was unwilling to expand Borbely to include accidental deaths caused by drug abuse. The plaintiff also relied on the Second Appellate District decision in Osborne v. Ohio Bureau of Workers’ Compensation in which that court upheld a benefits award to the dependents of an injured worker who had accidentally taken a fatal dose of prescription medication for his industrial injury, resulting in an accidental death. The Parker court, however, distinguished that case on the ground that Mr. Parker intentionally used the OxyContin in a manner other than as prescribed (in fact by mixing it with cocaine and injecting it in his veins) which then resulted in an accidental death.

Sadly, in light of the seemingly increased incidences of injured workers misusing pain and other medication prescribed for their industrial injuries, the facts depicted in the Parker case are not isolated. To date, the courts in both intentional and accidental drug overdose cases have appropriately evaluated the evidence by looking at the causal connection between the industrial accident and the overdose. In the suicide line of cases, the courts in essence have looked to whether the allowed conditions in the workers’ compensation claim caused a mental disturbance of such severity that it overrode normal rational judgment and that then prompted the employee to commit suicide. Likewise, the accidental overdose line of cases, typified by Osborne, have focused on the cause of the accidental overdose. Therefore, it seems that the Parker court has drawn the correct, albeit narrow, line for plaintiffs to walk in these types of cases. Simply put, by intentionally misusing the prescribed Oxycontin, the decedent in Parker broke the causal connection between his industrial injury and his death and benefits were appropriately denied.

Explosion of FLSA Litigation Should Prompt Employers to Review Their Practices

Rob Stalter — Thu, 14 Jan 2010 14:15:31 -0500

Recent reports have indicated that the number of FLSA collective actions rose sharply in 2009. Many believe this trend will continue in 2010 as employees gain increased awareness of their rights under wage and hour laws and the plaintiffs' bar recognizes the potential value of FLSA collective actions.

Indeed, there has been a recent flurry of activity across the country in the area of wage and hour class actions. Assistant managers at Foot Locker Retail Inc. filed a nationwide collective action in the Southern District of California, alleging that the company misclassified them as exempt and failed to pay them overtime wages. Similarly, Vermont state employees have brought a putative class action under the FLSA, claiming that the state has failed to pay overtime to employees in higher pay grades.

A federal judge in Florida has denied conditional class certification in a putative class action brought against H&R Block by its tax agents because the lead plaintiffs could not show that the company's failure to pay overtime was a companywide practice. In Missouri, however, a group of AT&T call center workers won conditional certification in their collective action, in which they seek overtime compensation for the amount of time it takes them to log onto their systems prior to shifts.

Recent settlements have also been reached. A judge in the Middle District of Florida signed off on a settlement between Cemex Inc. and a group of former truck drivers who had accused the company of withholding overtime wages. Finally, the plaintiffs in an FLSA case against First Residential Mortgage Network Inc. settled their claims following the decertification by the court of a class of loan advisors.

Given the increase in FLSA collective action activity, it is important that all employers be mindful of their classifications of employees and pay practices. These cases can be very expensive for employers to defend and sometimes even more expensive to settle.

If employers have any questions about whether they have properly classified their employees as being exempt, they would be wise to spend a little money up front to conduct a self-audit. Among the steps employers can take are (a) confirming that job descriptions truly describe exempt executive, administrative, professional, computer professional or outside sales positions; (b) confirm that employees are actually doing what their job descriptions say they are supposed to do; and (c) ensure that exempt employees are being paid at least the minimum qualifying salary. In addition, to avoid other potential wage and hour litigation, employers should confirm that non-exempt employees are recording all hours worked, that minors are not forced to work outside state law requirements, and that individuals that are treated as independent contractors are not really employees.

Department of Labor Announces that Sample Notices for Extended COBRA Subsidy Will Be Forthcoming

Jamie LaPlante — Thu, 14 Jan 2010 13:16:59 -0500

As you will recall from my earlier post, Congress and the President extended the COBRA subsidy, originally a part of the American Recovery and Reinvestment Act of 2009 (ARRA) (the stimulus bill), to individuals involuntary terminated through February 28, 2010 (from December 31, 2009) and the length of the subsidy to 15 months (from 9 months).

This COBRA subsidy extension will require new notices be sent to individuals involuntarily terminated (and otherwise qualifying under ARRA as an “assistance eligible individual” (AEI)). These model notices were released yesterday, and, in many cases, AEIs must be notified by February 17, 2010. The Department of Labor revised its General Notice to reflect the COBRA subsidy extension. This notice is to be used for all AEIs who have not already received a general COBRA notice. The Department of Labor also issued a model Premium Assistance Extension Notice to be provided to:

Individuals qualifying as AEIs as of October 31, 2009 and individuals who experienced a termination of employment on or after October 31, 2009 and lost health insurance coverage (unless they were already provided a timely, updated General Notice). This notice must be provided by February 17, 2010.
a) Individuals whose original 9 months of COBRA subsidy ended prior to December 19, 2009 and who are still eligible for some portion of the extended 15 months of COBRA subsidy and (b) individuals whose 9 months of COBRA subsidy ends or ended after December 19, 2009. These individuals must be notified within 60 days of the termination of the 9 month COBRA subsidy period or, for individuals whose COBRA subsidy ended prior to December 19, 2009, prior to February 17, 2010.

Both model notices are available at: http://www.dol.gov/ebsa/COBRAmodelnotice.html. In addition, the Department of Labor has updated its fact sheets, posters, and frequently asked questions available at: www.dol.gov/COBRA.

EEOC Report On Charge Statistics Provides Lessons For Employers

Brian Hall — Thu, 07 Jan 2010 09:46:21 -0500

Yesterday, the EEOC released its charge statistics report for its 2009 fiscal year, which ended on September 30, 2009. Not surprisingly, during an economically difficult period, the statistics show a near record number of charges filed -- 93,277 -- which is second only to the 2008 fiscal year when 95,402 charges were filed.

As usual, sex and race discrimination charges led the pack, but they also showed a slight decline from the previous fiscal year. Somewhat surprisingly, during a period that saw extensive reductions-in-force, age discrimination charges were significantly down. On the other hand, disability discrimination and retaliation charges showed the sharpest increase, both numerically and statistically.

The increase in disability discrimination charges likely can be tied directly to the enactment of the Americans with Disabilities Act Amendments Act (ADAAA) which makes it significantly easier for applicants and employees to establish that they have a protected disability. Employers can reduce the likelihood of being targeted for a disability discrimination charge by recognizing this new reality and engaging in good faith in the interactive process to determine whether a reasonable accommodation exists for applicants or employees with alleged disabilities. Frequently, the give and take of the interactive process if conducted in good faith will either result in finding an accommodation that both sides can live with or demonstrating to the applicant or employee's satisfaction that no reasonable accommodations actually exist. Remember, the ADA, even as amended by the ADAAA, still does not require the employer to provide applicants or employees with the accommodation they want -- only a reasonable one.

With respect to retaliation charges, as we have preached in previous posts both here and here, employers must be careful to treat employees who have filed discrimination charges or lawsuits as they would treat any other employee -- no better, no worse. In fact, the U.S. Supreme Court's decision in Crawford v. Metro. Gov’t of Nashville and Davidson County early in the 2009 term held that the retaliation protection provided by Title VII extend to employees who speak out about discrimination during the employer’s investigation into another employee’s internal complaint of discrimination. The Crawford decision, therefore, underscores employers' need to protect themselves from potential retaliation cases in this context as well by following up on any employees who claim "me too" in the course of internal discrimination investigations.

Missed Our Recent Wage-and-Hour Webinar? Listen To The Recording

Erin Hawk — Thu, 07 Jan 2010 09:31:43 -0500

Wage and Hour Audits 101:
Preparing for Audits and Preventing Them in the First Place

Presented on Thursday, December 3, 2009
Our December wage and hour webinar focused on how you should prepare for a wage and hour audit and, perhaps more importantly, how to prevent an audit in the first place.

If you missed this session, you can listen to the recorded webinar here.

Congress Extends COBRA Premium Subsidy

Jamie LaPlante — Wed, 23 Dec 2009 15:32:41 -0500

The much-publicized COBRA subsidy contained in the American Recovery and Reinvestment Act (ARRA), commonly known as the “stimulus bill,” has been extended and expanded by Congress through House Resolution 3326. Under ARRA, individuals who were involuntarily terminated and became eligible for COBRA benefits between September 1, 2008 and December 31, 2009 were eligible for 9 months of subsidized COBRA premiums. The government, through a payroll tax rebate to employers, paid 65% of an eligible employee’s COBRA premiums for 9 months. This meant that employees could pay just 35% of what they would ordinarily pay for COBRA benefits. (Please see our earlier blog posting relating to the original passage of ARRA.)

HR 3326 expands the eligibility period to include individuals involuntarily terminated before February 28, 2010. In addition, it extends the length of the subsidy period to 15 months (from 9 months).

Individuals who were on COBRA coverage for the 9-month subsidy, may re-enroll in COBRA and receive benefits without any gap in coverage for the newly extended 15 months, less the 9 months they already received. The amendment gives employees a period of 60 days to re-enroll or, if later, 30 days after they receive notice of the extended subsidy. Employers are required to notify employees of the 15-month extended COBRA subsidy who were on COBRA on or after October 31, 2009 or who have a qualifying event on or after October 31, 2009. It is unclear how long of a COBRA coverage lapse can exist before an individual is no longer eligible to make up the premiums and re-enroll. We will be watching for further guidance form the DOL on this point and reporting further on the blog. Any employees who paid full COBRA premiums after expiration of their 9-month subsidy period who are now eligible for the new 15-month premium subsidy, will be given a refund of 65% of their premiums for any periods now covered by the extended subsidy.

In addition, this amendment to ARRA conditions the eligibility for the subsidy on only the involuntary termination date. Thus, if the COBRA start date is deferred until after February 28, 2010 but the involuntary termination date was pre-February 28, the employee will still be eligible for the subsidy. All of the remaining rules for the COBRA subsidy set forth by the Department of Labor presumably remain in effect for this extension and expansion.

We will update you as more details become available on this COBRA subsidy extension from the Department of Labor. In the meantime, here are some action items to be thinking about:

Identify all individuals who were on COBRA coverage on or after October 31, 2009 or had a COBRA qualifying event on or after October 31, 2009 and would be eligible for notice of the 15-month subsidy.
Identify any individuals who allowed COBRA coverage to lapse after the termination of the 9-month COBRA subsidy.
Identify any individuals who paid their full COBRA premiums because of the expiration of the subsidy and will now be eligible for a refund or credit on future premiums.
Watch for new sample notices from the Department of Labor reflecting these changes. We will post a link to these notices when they are available.
Informally notify employees who are involuntarily terminated between now and when the COBRA notices are distributed about the existence of the extended COBRA subsidy to avoid confusion in the interim.

H-1B Cap Reached

Kyle Knapp — Tue, 22 Dec 2009 14:46:04 -0500

U.S. Citizenship and Immigration Services (CIS) announced today that the H-1B cap was reached on December 21, 2009. CIS will conduct a random lottery among the petitions it received on December 21 to allocate the remaining visa numbers. The cap does not apply to H-1B employees changing employers or to individuals who will work at an institution of higher education or related nonprofit entity, a nonprofit research organization or a governmental research organization. Cap-subject employers now must wait until April 1, 2010 to file petitions for the next fiscal year (October 1, 2010 – September 30, 2011).

U.S. Supreme Court to Weigh In On Workplace Electronic Monitoring

Brian Hall — Mon, 21 Dec 2009 13:29:14 -0500

On Monday, December 14, 2009, the United States Supreme Court agreed to hear a case that will permit it to provide guidance to employers about their right to monitor its employees' electronic communications. Specifically, the Court has accepted for review the City of Ontario's appeal of the Ninth Circuit's decision in Quon v. Arch Wireless Operating Co. finding that a city police officer had a reasonable expectation of privacy in personal text messages that were sent from his city-issued pager.

Like most employers, the City of Ontario had a written electronics communications policy that expressly prohibited personal use of its computers and notified employees that they had no expectation of privacy with respect to any communications using the city's computer systems. The City's policy, however, did not make clear that this policy applied to its police officers' pagers or to text messaging. Instead, because the city's pager service contract with Arch Wireless charged the city additionally for each pager that exceeded 25,000 characters per month, the city informally permitted employees who exceed their monthly character limit to simply pay the overage charge. Despite this informal practice, the city contacted Arch Wireless to determine whether the pagers were being used primarily for personal reasons and Arch Wireless provided transcripts to enable the city to do so. After receiving these transcripts, the city learned that many of Sergeant Quon's texts were personal and even sexually explicit in nature. Upon learning that their texts had been reviewed, Sergeant Quon and others sued the city and the police department under the Fourth Amendment for an illegal search and seizure and the Stored Communications Act "SCA" and Arch Wireless for violating the SCA by turning the transcripts over to the city.

It is somewhat surprising that the Supreme Court accepted this case for further decision. Many initially were concerned when the Ninth Circuit's Quon decision was announced because it seemed contrary to the general trend permitting employers to monitor and review employee's emails on employer computers once they put employees on such notice. To me, Quon does not present a radical departure at all. First, the City's electronics communications policy did not explicitly address text messages. Then, the City complicated matters by permitting an informal practice to develop that strongly suggested to employees that their text messages would not be reviewed so long as they paid the overage charges from Arch Wireless. Simply put, by not updating its electronics communications policy and by permitting informal practices to develop, the City created a problem for itself that did not need to exist. As a result, the Supreme Court easily can decide Quon based on current judicial philosophy without breaking new ground.

Facebook Announces New Privacy Controls

Brian Hall — Wed, 09 Dec 2009 14:37:52 -0500

Facebook has announced that it is implementing new privacy controls beginning today that will give its more than 350 million users more control over the privacy of what they post to their Facebook pages. As reported, Facebook will now give its users the ability to set up lists that, for instance, can place their "friends" into separate groups such as family, high school buddies, and work friends and to choose who to share content with each time they post something. As a result, people easily should be able to choose to share family photos with only family and close friends and other less wholesome postings with whomever they choose. Of course, Facebook also will give users the option of choosing to share a post with "Everyone."

From an employment standpoint, these privacy control changes could make it more difficult for those employers who like to use Facebook as a surveillance tool. For instance, the employee who requested bereavement leave while he actually was on a hunting trip should be able to choose to post comments or photos without sharing them with the boss or co-workers who happen to be Facebook "friends." On the other hand, someone who posts a comment that is disparaging of or detrimental to his employer will have a hard time arguing that the comment was not intended to be widely distributed if he chose to share it with "Everyone" when he posted it.

As with all things social media, only time will tell what impact these changes will have on what we post and what is available for us to see on Facebook.

Time is running out to file H-1B petitions for current fiscal year

Kyle Knapp — Thu, 03 Dec 2009 10:06:25 -0500

At a December 1, 2009 seminar in New York, representatives of U.S. Citizenship and Immigration Services (USCIS) provided an update on the H-1B cap numbers for the October 2009 – September 2010 fiscal year (please see my earlier post for more on this topic -- The H-1B "Cap" - 2010 Fiscal Year Is The Canary In The Mine) .

While a recent report indicated that 58,900 petitions had been filed against the 65,000 cap, USCIS explained that the low number of filings for nationals of Chile and Singapore (who benefit from a set aside of 6,800 visas) means that there still are visas available. USCIS also confirmed that there were approximately 2,000 petitions filed in late November. This makes it difficult to predict how much longer visas will be able for the current fiscal year. Once the cap has been reached, employers will need to wait until April 1, 2010 to file a petitions requesting an October 1, 2010 effective date. Given this recent announcement, employers that still want to file H-1B petitions for the current fiscal year likely will need to do so soon. Experience has shown that there is a rush of petitions as the filings approach the 65,000 cap. The USCIS announcement concerning recent filings suggests that this rush already has begun.

H-1B Site Visits to Increase

Kyle Knapp — Tue, 01 Dec 2009 13:43:08 -0500

In response to Senator Charles Grassley's September 29, 2009 inquiry into the H-1B visa program and fraud detection efforts, Mr. Alejandro Mayorkas, Director of Citizenship and Immigration Services, indicated that the H-1B fraud detection site visits would increase five-fold. For the most recent federal fiscal year, October 1, 2008 – September 30, 2009, there were approximately 5,000 site visits. The goal for fiscal year 2009 – 2010 is to complete 25,000 such visits. Therefore, as outlined in the previous posting on this topic, employers can continue to expect site visits as part of the H-1B petition process.