Pennsylvania Labor and Employment Blog

Final FMLA Regulations issued with an Effective Date of January 16, 2009

MMoore@mwn.com (Michael Moore) — Mon, 17 Nov 2008 08:30:57 -0500

The Department of Labor issued 762 pages of regulations covering the FMLA. Check back for analysis of their impact. As expected, 2009 will be a busy year for Human Resources Professionals because of compliance and legislative changes.

E-Verify Final Regulations Issued Requiring Government Contractors and Subcontractors to Verify Employment for New and Existing Employees who Perform Contract Work

MMoore@mwn.com (Michael Moore) — Fri, 14 Nov 2008 14:23:56 -0500

Federal government contractors and subcontractors will be required to begin using the U.S. Citizenship and Immigration Services’ E-Verify system starting Jan. 15, 2009, to verify their employees’ eligibility to legally work in the United States. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council amended the Federal Acquisition Regulation (FAR) to reflect this change. E-Verify must be used to verify all new employees and all employees who work on the covered government contract unless the employees were previously verified or commenced work for the employer before the June 6, 1986 the effective date of the Immigration Reform and Control Act. Contract Officers will insert clauses in new contracts and solicitations. In addition, certain existing government contracts may be amended to include the requirements.

E-verify provisions on covered contracts apply to all government contractors and subcontractors with limited exceptions detailed in the final regulations. Each covered contractor and subcontractor must:

Enroll in the E-Verify Program within 30 days of the award of a contract, if not already enrolled.
Those employers already enrolled in E-Verify for 90 days as of the effective date of the new regulations must verify all new employees with 3 days of hire.
Those employers not enrolled in E-Verify must begin to verify all new employees within 90 calendar days of E-Verify enrollment whether or not such employee performs work on the government contract or subcontract within 3 days of the date of hire.
Verify each existing employee assigned to the contract within the later of 90 calendar days of E-Verify enrollment or 30 calendar days after the employee's assignment to the contract
Employees previously verified through E-Verify are exempt.
Elect to verify all employees hired after June 6, 1986 whether or not assigned to the contract.
The phrase “employee assigned to the contract” refers to individuals who were hired after June 6, 1986 who are “directly performing work under the contract,” and to exclude employees who normally perform support work, or who do not perform any substantial duties applicable to an individual contract.
Subcontracts must include a clause requiring compliance by the subcontractor.
A new Memorandum of Understanding (MOU) will be published shortly.

The Final Regulations are summarized by the Office of Acquisition Policy and appear on the DHS website with a Small Entity Compliance Guide.

Final Regulations in .pdf: FAR Employment Eligibility Verification

DHS Website: Frequently Asked Questions: Federal Contractors and E-Verify

Will Your Employees be some of the 5 million Workers Unions expect to add to their Membership under the Employee Free Choice Act?

MMoore@mwn.com (Michael Moore) — Mon, 10 Nov 2008 11:11:25 -0500

Change is coming to Washington and to America's workplaces. President Elect Obama launched a new website Change.gov where he explains his labor agenda which included passage of the Employee Free Choice Act. The Obama Administration's transition views are summarized at the Connecticut Employment Law Blog.
Unions are on board too. After their push for Obama, Unions seek new rules for organizing workforces through the EFCA, as observed by Steve Greenhouse of the NYTimes:

With union membership sliding to 7.5 percent of the private-sector work force, one-third the rate in 1983, unions see enactment of the bill as the single most important step toward reversing their loss of membership and power. Some labor leaders predict that if the bill is passed, unions, which have 16 million members nationwide, would add at least five million workers to their rolls over the next few years.

The impact of the EFCA will be monumental so we will be dedicating a lot of blog time to this topic. Look for future posts in the following areas:

Nuts and Bolts of EFCA: examines the specifics of the proposed legislation.
Employer's Guide to Authorization Cards: looks in detail at authorization cards, their legal significance and how they are solicited by unions.
Identifying and Training Supervisors to Maintain your Union-Free Status: outlines the role of supervisors in disseminating the employer's message including the impact of the RESPECT Act.
Employee Engagement Surveys as a Tool to Combat Union Organizing: keeping your finger on the pulse of employee.
Becoming Politically Active in Response to EFCA: making your business's voice heard in Washington and particularly by the one Republican Senator, Arlen Specter of Pennsylvania, who has co-sponsored the EFCA.
How to Avoid Unfair Labor Practices when you are an Organizing Target: negotiating the legal landscape of traditional labor law.

Employer's Strategic Planning for an Obama Administration

MMoore@mwn.com (Michael Moore) — Wed, 05 Nov 2008 09:43:02 -0500

President-Elect Obama told his hometown crowd that "Change has come to America." Through his election speeches, website and co-sponsorship of Senate Bills there is a road map of what changes will likely be coming to the American workplace.

Employers would be well served by examining the impact of likely legislation on their business and planning accordingly. The most significant changes will likely come from the Employee Free Choice Act and RESPECT ACT which will reshape union organizing. The building trades, healthcare, and manufacturing will be the first to feel the effects, but so will business that were not traditionally union targets like financial services. The balance of Senator Obama's legislative agenda involves expanding existing areas of employment protection through the Paycheck Fairness Act, Ledbetter Fair Pay Act, Employment Non-Discrimination Act.

Prior posts have summarized the content of these bills and their impact on the workplace. In the coming weeks, we will provide more extensive guidance on planning to meet the changes posed by these and other legislative initiatives.

Injunction "No-Match" for DHS Rulemaking

retter@mwn.com ( Rick L. Etter) — Mon, 03 Nov 2008 06:44:10 -0500

On October 23, 2008, the Department of Homeland Security (DHS) released an advance copy of its supplemental final no-match safe harbor regulation initially issued in August 2007. The original regulation was set to take effect in September 2007 but was enjoined by the U.S. District Court for the Northern District of California. The revised regulation is expected to be published in the Federal Register any day, and will take effect immediately. Of course, it is possible (even likely) that another lawsuit may be filed seeking to block this final regulation.

While the substance of the regulation has not changed, DHS did address the two main concerns that lead the court to enjoin the original regulation. First, the preamble of the new regulation clarifies that employers will be considered to have constructive knowledge only if they receive a no-match letter from the Social Security Administration (SSA). That is, DHS will not impute constructive knowledge based on any other communication from the SSA. Second, DHS explained that it would not take action based on no-match letters involving employees hired before November 6, 1986 (the date the Immigration Reform and Control Act was enacted).

The revised regulation outlines the steps an employer must take in order to benefit from a “safe harbor” if the employee named in a no-match letter turns out to be an unauthorized worker. Upon receipt of a no-match letter, the employer should check internal records and either make appropriate corrections or ask the employee to correct the discrepancy within 90 days. Once the discrepancy is resolved, the employer should update the relevant I-9 paperwork and notify agencies of the correction. If the discrepancy cannot be resolved within 90 days, the employer must complete a new I-9 form for the employee by the 93rd day. In completing this new I-9, the employer may not accept any document with the social security number contained in the no-match letter. In addition, the new verification document must include a photo. If the employer is still unable to verify the identity and employment authorization of the employee, the safest course of action is to terminate the employee, or risk facing charges.

Employers should develop and implement a policy to ensure compliance with the process described in our August 2007 Employer Alert. Employers should note, however, that no-match letters were not issued in 2007 and will most likely not be issued in 2008.

ADA Amendments may Open the Door for Nicotine Addiction Claims

MMoore@mwn.com (Michael Moore) — Wed, 29 Oct 2008 13:04:56 -0500

Today’s smokers [are] more addicted to nicotine according to a new study, which notes that 73% of those trying to quit are “highly dependent”. The Center for Disease Control and Prevention estimates that 20.2% of Americans are smokers. Pennsylvania has a slightly higher rate of smoking at 21.5 % with 51.9% attempting to quit. Many of these smokers are also employees.

Smokers are feeling the heat in the workplace through smoke-free workplace policies. Jon Hyman at the Ohio Employer’s Law Blog has a post asking Are there legal risks with smoking bans? He notes that pushing back on these employer initiatives are 29 states which have enacted laws protecting employees who smoke from discrimination.

Pennsylvania has no law protecting smokers from discrimination. To the contrary, Pennsylvania’s new Clean Indoor Air Act mandates smoke-free workplaces and precludes employees from smoking indoors. However, the law allows employers to prohibit smoking anywhere on company property; it does not prevent the continuation of outdoor smoking areas. Employers are left with the sometimes delicate task of crafting a policy concerning outdoor smoking and monitoring the break schedules of employees who wish to smoke. In addition, many wellness programs have targeted smoking with cessation programs coupled with both financial incentives and penalties.

The Americans with Disabilities Act was recently amended to expand the definition of “disability” to the point that it may encompass nicotine addiction. The few ADA cases on “smoking” as a disability have not recognized a claim based on the pre-amendment definition of disability. However, the rationale for denying disability status to “smoking” or “nicotine addiction” is squarely predicated on the remedial nature of the condition exempting it from coverage of the ADA as expounded in Sutton v. United Airlines, Inc. The ADA Amendments expressly abrogated Sutton. In the only published case of which I am aware, the court in Brashear v. Simms set forth the following rationale in dismissing a smoker’s ADA claim:

…[E]ven assuming that the ADA fully applies in this case, common sense compels the conclusion that smoking, whether denominated as “nicotine addiction” or not, is not a “disability” within the meaning of the ADA. Congress could not possibly have intended the absurd result of including smoking within the definition of “disability,” which would render somewhere between 25% and 30% of the American public disabled under federal law because they smoke. In any event, both smoking and “nicotine addiction” are readily remediable, either by quitting smoking outright through an act of willpower (albeit easier for some than others), or by the use of such items as nicotine patches or nicotine chewing gum. If the smokers' nicotine addiction is thus remediable, neither such addiction nor smoking itself qualifies as a disability within the coverage of the ADA, under well-settled Supreme Court precedent.

Pennsylvania employers can and must adopt policies prohibiting smoking in the workplace. However, employers may well be required to reasonably accommodate nicotine-addicted employees much as they would need to do so with other addictions, like drugs and alcohol. The scope of such accommodations must be explored. Section G of the EEOC’s Guidance on Applying Performance Standards to Employees with Disabilities may prove helpful.

Obama Victory may give rise to Unprecedented Unionization of the American Workplace

MMoore@mwn.com (Michael Moore) — Tue, 28 Oct 2008 10:30:51 -0500

Union membership and the public perception of the role of labor unions are relatively unchanged in recent years. Union membership was up only slightly in 2007 based on a report by the Bureau of Labor Statistics of the Department of Labor, which published the following statistics on union membership:

     Percentage of unionized workforce
     Total - 12.5%
     Public sector - 36.5%
     Private sector - 7.8%

Public perceptions of unions is also remained constant. An annually conducted Gallop Poll shows a relatively constant union approval rating hovering around 60%, with only 22% of those polled feeling that unions would be “stronger” in the future.

The 2008 Election may dramatically change the landscape of U.S. labor relations with a reinvigoration of organized labor. The following influence could align to compel unprecedented unionization:

Payback to Union Supporters: Democratic candidates received substantial support from organized labor both financially and in getting out the vote. This support will garner political power, which will likely translate into a pro-union legislative agenda.
Uncontested Legislative Agenda: Senator Obama is the cosponsor of the EFCA and RESPECT Act both of which are strongly supported by unions. A Democratic majority in the House and Senate will pave the way for an uncontested legislative agenda that will likely include these laws. Republicans could be unable to slow the process down using a “filibuster” if the Democrats secure a 60-seat majority in the Senate to invoke cloture on floor debates.
Economic Woes: The economy downturn will continue to hurt businesses making necessary reductions in force, smaller paychecks and other cuts in benefits. The promises of job security and better wages are typical union themes. Nervous workers may turn to unions for help. Traditionally, unions were forced to the bargaining table where strikes were their primary weapon to put economic pressure on an employer. The historic economic balance between unions and employers will be upset by passage of the EFCA, which mandates arbitrator-crafted contracts within 120 days after initial union recognition.
Unprepared Employers: Passage or the RESPECT Act and the EFCA would be a one-two punch for which many employers will be grossly unprepared. RESPECT would make many working supervisors eligible to unionize and to assist a union in collecting cards and other organizing activities. Employers would be unable to use these working supervisors as advocates for their union-free message or to collect intelligence on organizing activities. The EFCA would eliminate the secret ballot and mandate first contracts through arbitration.

Prohibition of Excessive Overtime in Health Care Act will Exacerbate Nursing Shortage

jbaker@mwn.com ( John U. Baker) — Thu, 23 Oct 2008 11:41:28 -0500

Clinical staffing problems for Pennsylvania healthcare facilities created by shortages of nursing professionals will be greatly exacerbated by a new law prohibiting mandatory overtime for employees engaged in direct patient care. The Commonwealth is already facing a nursing shortage, which is growing worse. According to the Health Resources and Services Administration (HRSA), an arm of the U.S. Department of Health and Human Services, Pennsylvania health care providers will experience a 41 percent vacancy rate in nursing positions by the year 2020, requiring more than 54,000 nurses to provide adequate patient care. Restrictions on the amount of work time for an already short labor pool will likely increase problems.

The Prohibition on Excessive Overtime in Health Care Act becomes effective on July 1, 2009. Health care facilities covered by the law include hospitals, ASCs, hospices, long-term care facilities and other inpatient facilities, but it excludes private physician offices and group practices. Employees protected by the law include all nonsupervisory employees involved in direct patient care activities or clinical services, including individuals employed through a temporary service or employment agency. Physicians, physician’s assistants, dentists, and job classes with no direct patient care are excluded from the overtime limitations.

A health care facility cannot compel a protected employee to work more than an agreed to, predetermined and regular daily shift exclusive of “on call” time, unless one of the following exceptions applies:

(1) the employee voluntarily agrees;

(2) there is an unforeseen emergent circumstance but as a “last resort”, after exhausting other staffing options and giving the employee one hour arrange for family care alternatives;

(3) the extended work is required to complete a patient care procedure already in progress, but only if the employee’s departure would have an adverse effect on the patient.

Employers are permitted to have agreed upon, predetermined and regular shifts greater than 8 hours; however, an employee who volunteers to work more than 12 consecutive hours shall be entitled to 10 hours off duty but may waive the entitlement. Employers may not retaliate against employees who refuse to accept work in excess of the limits. Employers who violate the law are subject to fines ranging from $100 to $1000 per violation.

The Department of Labor and Industry is to develop regulations within 18 months. The law received modest press as it was signed by the Governor along with 31 other pieces of legislation.

Employer's Guide to the Election

MMoore@mwn.com (Michael Moore) — Mon, 20 Oct 2008 10:33:55 -0500

The election rhetoric has been relatively quiet on employment-related topics, except for the brief mention in the last debate. Candidate Obama has a clear agenda employment legislation based on his co-sponsorship of various bills and other media comments. Candidate McCain’s position is less clear. Detailed below is a summary of the key legislative initiatives considered by Congress in 2008, all of which have passed the House of Representatives except the RESPECT Act.

Employee Free Choice Act (H.R. 800 and S. 1041)

Summary: The EFCA amends the NLRA to change the procedures for union certification and first contract negotiation. The primary components of the act are as follows:

Allows NLRB certification of a relevant bargaining unit upon authorization card showing from 50% plus one of employees bypassing secret ballot election.
Mandates initial collective bargaining contract be negotiated within 120 days or first contract is produced by an arbitrator covering employees for 2 years.
Provides new fines for employer unfair labor practices.

Impact: EFCA is a monumental change to the NLRA. Much has been made of the abrogation of the secret ballot election, but equally dramatic are the limitations placed on collective bargaining and contract determination by an arbitrator if no agreement is reached in 120 days of negotiations. If enacted, EFCA will result in unprecedented organizing activity with employers losing their ability to demand an election and engage in hard bargaining over a first contract.

Candidate Positions: H.R. 800 passed the House but did not receive enough votes for consideration by the Senate. Candidate Obama is a co-sponsor of the Senate Bill and supports its passage. Candidate McCain opposes the Senate Bill.

Prior Posts: NOW is the Time for Employers to Gear up for the Employee Free Choice Act (Unions Are)

Employment Non-Discrimination Act (H.R. 3685/ no Senate Bill)

Summary: ENDA adds sexual orientation to the protected classes under Title VII for all employers except religious organizations. It allows reasonable access to adequate facilities that are not inconsistent with the employee’s identified gender, but does not require domestic partner benefits or protect “gender identity”.

Impact: ENDA adds a protected class to employment discrimination protections allowing compensatory and punitive damage claims against employers.

Candidate Positions: H.R. 3685 passed the House but did not receive enough votes for consideration by the Senate. No legislative position by either candidate. Candidate Obama’s website expresses support for the legislation.

Ledbetter Fair Pay Act (H.R. 2831/ S. 1843)

Summary: FPA overturns the Supreme Court’s decision in Ledbetter v. Goodyear Tire and Rubber Co. effectively eliminating the 180 or 300-day statute of limitations for filing a wage-related discrimination claim. The bill allows family members and others affected by discrimination to file claims and reinstitutes the Paycheck Rule for determining when a claim accrues. It also allows claims based on paychecks and annuity payments which would allow retirees to bring claims.

Impact: FPA virtually eliminates the statute of limitations for wage-related claims.

Candidate Positions: H.R. 2831 passed the House but did not receive enough votes for consideration by the Senate. Candidate Obama is a cosponsor of the Bill. Candidate McCain has expressed no opinion on the Bill.

Paycheck Fairness Act (H.R. 1338/ S. 766)

Summary: PFA changes the burden of proof in gender based pay claims requiring the employer to affirmatively demonstrate that any pay differential is not based on sex. Employers who cannot meet this burden face unlimited compensatory and punitive damages. The EEOC would be required to collect employer payroll information based on sex, race, and national origin thereby targeting its enforcement activities. The Bill also changed rules on class actions automatically including employees in such claims unless they specifically opt out.

Impact: PFA subjects employers to wage related class actions with unlimited damages and makes it easier for employees to prove such claims.

Candidate Positions: H.R. 1338 passed the House but did not receive enough votes for consideration by the Senate. Candidate Obama is a cosponsor of the Bill. Candidate McCain has not taken any position on the Bill.

RESPECT ACT (H.R. 1644/ S. 969)

Summary: The so-called Re-Empowerment of Skilled and Professional Employees and Construction Tradesworkers (RESPECT) Act would change the NLRA definition of “supervisor” to exclude “working supervisors” who do not spend a majority of their worktime in strictly managerial duties excluding the tradition duties of assigning work and directing the activities of others.

Impact: Respect would allow many working or front line supervisors to join a union dividing their loyalties to the company, as they would be permitted to assist in the unionization of the company.

Candidate Positions: Candidate Obama is a cosponsor of the bill and Candidate McCain has taken no position on the Bill.

Prior Posts: Bosses do not Deserve RESPECT

If there is a Democratically-controlled House, Senate, and President, it is likely that some or all of the above legislation will be enacted in 2009. Others have commented on the HR landscape following the election:

What The Future of HR Looks Like in 2009

Small business owner’s guide to the election

HR GENERALIST RESOURCES: Payroll Tax Withholding from Severance Pay and Other Supplemental Wage Payments

MMoore@mwn.com (Michael Moore) — Wed, 15 Oct 2008 08:52:22 -0500

Employers offering severance payment to employees are typically uncertain about the payroll taxes that may apply to these additional payments. Severance pay is treated as “supplemental wages” because it is not a payment for services in the current payroll period but a payment made upon or after termination of employment for an employment relationship that has terminated. As supplemental wages, special payroll tax withholding rules apply. The Internal Revenue Service recently clarified its position on withholding for supplemental wages, including severance pay. Employers should also make sure that severance payments offered in conjuntion with a waiver and release comply with the ADEA and WARN requirments.

Revenue Ruling 2008-29 addresses nine different situations where supplemental payments are made to employees that require additional payroll tax withholding as follows:

commissions paid at fixed intervals with no regular wages paid to the employee;
commissions paid at fixed intervals in addition to regular wages paid at different intervals;
draws paid in connection with commissions;
commissions paid to the employee only when the accumulated commission credit of the employee reaches a specific numerical threshold;
a signing bonus paid prior to the commencement of employment;
severance pay paid after the termination of employment;
lump sum payments of accumulated annual leave;
annual payments of vacation and sick leave; and
sick pay paid at a different rate than regular pay.

For the supplemental wage payments identified above that do not exceed $1 millon, the amount of income tax withholding is determined under the rules provided in § 31.3402(g)-1(a)(6) and (7). These paragraphs describe two procedures for withholding on supplemental wages: the aggregate procedure and optional flat rate withholding. The Revenue Ruling explains the application of the two procedures to each of the nine payment types. A Supplemental to Circular E also provides guidance on withholding in Publication 15 and Publication15A.

Bosses do not Deserve RESPECT

MMoore@mwn.com (Michael Moore) — Tue, 14 Oct 2008 09:35:56 -0500

October 16th is the annual celebration of Boss’s Day, which has traditionally been the day for employees to “thank their boss for being kind and fair throughout the year”. In most workplaces, it is clear who is a boss and who is not. The boss is the one who tells you what to do, completes your performance review and hassles you when you do not follow company policy.

The term “boss” generally means “supervisor”. For us in the legal-compliance world, knowing who is a supervisor and who is not is very important. Supervisors are not paid minimum wage and overtime; cannot be members of a union; and make the company liable for their actions like sexual harassment. Organized Labor has pushed the NLRB to narrowly define supervisor, but the Supreme Court rejected previous definitions as inconsistent with the text of the NLRA. In Oakwood Healthcare Inc, the NLRB modified the definitions of "assign," "responsibly direct," and "independent judgment" (all used to determine a supervisor) to conform to the Supreme Court rulings in NLRB v. Kentucky River Comty. Care, Inc. and NLRB v. HCR.

The RESPECT Act would make three major changes to the current definition. It would eliminate the two most common supervisory duties- the authority "to assign" other employees, and the authority to "responsibly to direct" other employees. In addition, the RESPECT Act would require that the "majority of a supervisor's work time" be spent engaging in the remaining duties outlined in the NLRA definition below.

The new definition of “supervisor” under Section 2(11) of the NLRA would read as follows:

Any individual having authority, in the interest of the employer, and for a majority of the individual’s worktime, to hire, transfer, suspend, lay-off, recall, promote, discharge, ~~assign,~~ reward, or discipline other employees, ~~or responsibly to direct them,~~or to adjust their grievances or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.

Changing the definition of “supervisor” would significantly affect many workplaces by:

Create divided loyalties among front-line supervisors who assign work to employees. Under the RESPECT Act, such supervisors would be covered by the NLRA and could then form, join or assist labor organizations; be eligible to vote in NLRB supervised elections; solicit signatures for union authorization cards from "co-workers;" or picket, go on strike or engage in other work stoppages that would be inconsistent with a supervisor's duty.
Fundamentally tip the balance between the dual functions of the national labor policy: (1) to protect the rights of rank-and-file employees in exercising their rights to form, join or assist a union without managerial or supervisory interference, while at the same time (2) ensuring supervisors act as agents in the interests of their employers in matters of labor-management relations.
To the extent that the NLRA definition is changed, there may also be changes to the FLSA’s definition, triggering litigation involving individuals currently classified, as "supervisors" but who may not meet a new definition.

Organized Labor’s legislative wish list includes the Re-Empowerment of Skilled and Professional Employees and Construction Trades workers ("RESPECT") Act, along with similarly misnamed Employee Free Choice Act. Candidate Obama supports both acts; while Candidate McCain opposes them. The addition of supervisors to the ranks of potential union members and the ease of organizing workforces without a secret ballot election would dramatically change the balance of labor management relations. It would also greatly increase the dues collected by unions from organized employees.

Criminal Background Checks - Act 73's Impact on Pennsylvania Employers

jbaker@mwn.com ( John U. Baker) — Tue, 07 Oct 2008 08:51:59 -0500

Employers engaging in business where employees have “significant likelihood of regular contact with children” should be paying close attention to the amendments to Pennsylvania’s Child Protective Services Act, also know as Act 73. Act 73 became effective on July 1, 2008, and has taken many employers off guard.

Act 73 expands criminal background check requirements under the Child Protective Services Act beyond its traditional scope, which included employees engaging in child care professions, adoptive parents and foster families. Now, “prospective employees applying to engage in occupations with a significant likelihood of regular contact with children, in the form of care, guidance, supervision or training” must also undergo criminal background checks prior to being employed. Examples of such prospective employees identified by Act 73 include, social service workers, hospital personnel, mental health professionals, members of the clergy, counselors, librarians and doctors.

What background checks are required for covered prospective employees? A Pennsylvania criminal background check, a Department of Public Welfare clearance and a report of Federal criminal history record information verified by a fingerprint check. The Federal fingerprint check is new. Applicants with founded reports of child abuse during the five-year period preceding their application are ineligible to be hired. Applicants with any state or Federal convictions related to certain crimes (e.g. homicide, rape, indecent exposure and corruption of minors) are also ineligible to be hired.

Act 73 is creating some headaches for employers in a couple of areas. The Act’s general statement concerning “significant likelihood of regular contact with children” is not further defined and there are no anticipated regulations coming to give further guidance to employers. Employers, such as hospitals, that provide services to children and adults are struggling to define what employees fall within Act 73’s requirements. For example, housekeeping and environmental services employees may have contact with children simply by being present in the hospital, although childcare is not part of their job.

Another area causing difficulty for employers is the new requirement of a Federal background fingerprint check. Employees are initially responsible for obtaining the Federal background check. These checks can take upwards of sixty days and many applicants are simply unaware of the new requirements at the time they apply. The result has been difficulty in filling needed positions quickly. Employers are permitted to hire employees on a provisional basis provided that the employee provides proof of application for a Federal background check. Provisional hiring periods for in-state applicants cannot exceed 30 days. The period is 90 days for out of state applicants.

Employers should approach Act 73 with an abundance of caution, especially in light of its potentially broad reach. Intentional failure of a person to obtain necessary background checks from a covered applicant is a misdemeanor of the third degree.

Paul Newman: A Lesson in Leadership from Butch Cassidy

MMoore@mwn.com (Michael Moore) — Thu, 02 Oct 2008 10:04:54 -0500

Let’s take a moment to honor this cinematic legend while examining the dynamics of leadership that exist in all organizations whether it's corporate America or in this case the Hole in the Wall Gang.

In this classic flick, Butch is an absentee leader with no succession plan. He is challenged by one of his subordinates for leadership of the gang. Butch leads the gang through his dominant intellect and control over the gang’s star member - the Sundance Kid a.k.a. Robert Redford. Here are some of Butch’s leadership shortcomings:

Assuming his Leadership won’t be Challenged

Butch is surprised when his leadership is challenged, but reminded by a gang member that “you always said that any one of us could challenge you Butch.” Butch responds, “That’s cause I figured no one would do it." The challenger responds, ”You figured wrong Butch.”

Losing Touch with his Team and then making Excuses

There is support for the challenge when one gang member says “ Well at least [the leadership challenger] is with us… you have been spending a lot of time gone.” Butch makes his excuse in that “everything is different now… it’s harder now…you have to plan more....”

No Succession Plan

Butch has no succession plan creating a leadership vacuum where the rules are unclear. The ensuing battle is won only by Butch’s quick thinking and fancy footwork. Ultimately, he must profess to the gang that there are no rules.

Retailating against those who Oppose him

Butch tells Sundance Kid that he doen't mean to be a sore loser, but it the fight is done, and he's dead, kill his successor.

Here is the full scene. Your comments on leadership are welcome.

Transcript below:

[Harvey has challenged Butch to fight for control of the Hole-in-the-Wall gang]

Harvey Logan: Guns or Knives?

Butch Cassidy: Neither?

Harvey Logan: Pick.

Butch Cassidy: I don't want to shoot with you Harvey.

Harvey Logan: [Draws a big knife] Anything you say, Butch.

'[Butch walks over to his horse, by Sundance]

Butch Cassidy: [in a low voice] Maybe there's a way to make a profit in this. Bet on Logan.

Sundance Kid: I would, but who'd bet on you?

Harvey Logan: Sundance, this doesn't concern you. When we're done, and he's dead, you're welcome to stay.

Butch Cassidy: [low voice, to Sundance] Listen, I don't mean to be a sore loser, but when it's done, if I'm dead, kill him.

Sundance Kid: [low voice to Butch] Love to.

[Waves to Harvey and smiles]

Butch Cassidy: [Walks back, and Harvey tenses to begin the fight] No, no, not yet. Not until me and Harvey get the rules straightened out.

Harvey Logan: Rules? In a knife fight? No rules.

[Butch throws dirt in Harvey's eyes and kicks him in the groin, who falls to his knees]

Butch Cassidy: Well, if there aint' going to be any rules, let's get the fight started. Someone count. 1,2,3 go.

Sundance Kid: [quickly] 1,2,3, go.

[Butch knocks Harvey out]

Flat Nose Curry: I was rooting for you all along, Butch

Butch Cassidy: Well, thank you, Flatnose. That's what sustained me in my time of trouble.

Employer Dress Code Standards: "Neat, Clean and Professional" may not be Enough

MMoore@mwn.com (Michael Moore) — Wed, 01 Oct 2008 13:25:04 -0500

The New York Times article Tattoos Gain Even More Visibility discusses the rising popularity of body art and challenges facing employers in regulating employee dress. The article focuses on tattoos but raises the larger issue of employer dress code standards and their challenges in terms of both employee retention and legal compliance.

Jon Hyman at the Ohio Employers Law Blog notes that Employment decisions based on tattoos are not discriminatory and I would add “per se”. In fact, most courts defer to an employer’s evaluation of dress standards focusing on whether the policy is discriminatory or fails to reasonably accommodate religious practices. For example, in Coulter v. Costco Wholesale Corp., a court determined that “Costco has made a determination that facial piercings, aside from earrings, detract from the "neat, clean and professional image" that it aims to cultivate. Such a business determination is within its discretion. As another court has explained, ‘Even assuming that the defendants' justification for the grooming standards amounted to nothing more than an appeal to customer preference, . . . it is not the law that customer preference is an insufficient justification as a matter of law.’"

Courts may not question the business reason for the dress code standard, but the application of the standard across the pool of applicants and employees is clearly, where discrimination can occur. Discrimination is more likely to occur where managers are called upon to subjectively evaluate compliance. As noted in the NYTimes article, “Defining what the courts in the Cloutier case called a “neat, clean and professional” workplace image becomes more challenging when you consider that in 2006, a Pew Research Center survey found that 36 percent of people age 18 to 25, and 40 percent of those age 26 to 40, have at least one tattoo.” The difficulty arises from both the prevalence of tattoos and the excessive subjectivity of the standard.

Human Resource Professionals and managers loathe their role as fashion policy, but the subjectivity of some dress code standards invites claims of discrimination. For example, an employer requires all applicants to have a “neat, clean and professional appearance”. If hiring managers are called upon to describe this qualification standard, it is likely that all will have different measures. If the subjective dress standard disproportionately disqualifies applicants in a protected class, it may be challenged as discriminatory.

Kris Dunn at the HR Capitalist gives a great perspective on customer preference in his post Your Employee's Tattoo Is Causing a Consumer Confidence Issue....John Phillips at The Word on Employment Law also comments on the subject in his post Coming to Your Workplace: Visible Tattoos.

Managing Layoffs and Reductions in Force

MMoore@mwn.com (Michael Moore) — Tue, 30 Sep 2008 10:27:37 -0500

As the economic meltdown cascades through the financial, banking and related sectors, many employers are planning staff cuts. Selecting employees for lay off must be collaboration between managers and human resources. HR must be able to influence the process to reduce legal risks and assuage the anxiety of remaining employees:

Establishing Business Justification and Layoff Selection Criteria:

The business justification for the reduction in force or layoff must be established. The justification for layoff typically gives rise to the selection criteria. For example, if a large contract was lost, the production and support functions related to the lost contract will be the focus or the layoff.

Layoff decisions may be challenged under discrimination laws, so it is advisable to develop selection criteria that support the business reasons for selecting one employee over another. Unless dictated by union contract, employers have discretion in developing the selection criteria which can include factors like, seniority, relative skills, performance, and/or disciplinary record. More than one factor may be used.

Forced Ranking Systems are sometimes utilized to rank employees against one another from the top down based on performance criteria. The subjectivity in forced ranking can be challenged as discriminatory unless uniformly and rationally applied.

Evaluating Impact of Selection Criteria including Bumping, Transfer and Recall Rights:

Once employees are identified for layoff, the results of the section criteria must be assessed in terms of disparate impact and other special circumstances. A disparate impact analysis should be conducted to assess whether the selection criteria have resulted in the disproportionate layoff of members of a protected class. Likewise, special circumstances should be evaluated such as employees with recent employment complaints, union activity, FMLA leaves, etc. Consider documenting the final layoff decisions, but not the deliberations leading up to them.

Thought must be given to collateral job rights employees may have under employment policies and practices. Typical areas involve shift or department transfers, supervisor demotion in lieu of layoff, and voluntary layoffs. Likewise, the parameters of recall, if any, should be described.

WARNA Obligations:

Federal and state plant closing/mass layoff laws must be considered. Although Pennsylvania has no state law equivalent to WARNA, employers with multi-state operations must assess the application of such laws. Coverage under WARNA can be complex as it has look back rules which aggregate layoffs for determining triggering events. WARNA coverage will trigger the sixty-day notice period which has a tremendous impact on layoff planning raising issues of pay in lieu of notice, retention, and publicity.

Severance Benefits and Releases:

Careful consideration must be given to describing the benefit package, if any, offered to employees. If an employer is offering benefits that exceed those already provided by policy or mandated by law, it should consider obtaining a release. The federal Age Discrimination in Employment Act (ADEA) contains special rules for waivers of rights of claims of age discrimination including a 45-day consideration and seven-day revocation period for such releases. Furthermore, the ADEA contains informational requirements that mandate publication of summary of employee demographic information in connection with the release.

Communications Plan:

Effective communication is paramount in reducing employee legal claims and assuaging the anxiety of remaining employees. Everything that is said about the reasons for the layoff will be scrutinized in litigation. Consider scripting communications for group meetings and avoid individual discussions of the reason for selection. Large layoffs may generate news media interest for which a press release is a helpful way to influence the message.

UPDATE:

Jerry Kalish at the Retirement Plan Blog made a great observation about layoffs in his post Does a reduction in force or layoff beget a partial termination of a retirement plan?. He refers to the IRS rules on partial termination of a retirement plan based on the significant reduction in plan participation resulting from the layoff. IRS Guidance entitled 401(k) Resource Guide - Plan Participants - Plan Termination includes the following summary:

Although a 401(k) plan must be established with the intention of being continued indefinitely, an employer may (fully) terminate its 401(k) plan at its discretion. In certain cases, a partial plan termination is deemed to occur. Whether a partial termination occurs depends on the individual facts and circumstances of a given case. In general, a partial termination is deemed to occur when an employer-initiated action results in a significant decrease in plan participation. As an example, a partial termination may be deemed to occur when an employer reduces its workforce (and plan participation) by 20%.

"Excessive Subjectivity" and Discrimination - A New EEOC Sex Discrimination Lawsuit

Sun, 28 Sep 2008 07:11:58 -0500

On September 23, 2008, the EEOC filed a lawsuit in the United States District Court for the Western District of New York against Sterling Jewelers Inc., the largest specialty retail jeweler in the United States. The EEOC's Complaint alleges that Sterling "pays its female retail sales employees less than male employees performing substantially equal work and denies female employees promotional opportunities for which they are qualified." The lawsuit seeks relief on behalf of a class of potentially thousands of current and former female employees of Sterling throughout the U.S. Sterling owns and operates the Kay Jewelers and Jared The Galleria of Jewelry stores and various regional retail jewelry establishments.

In both the Complaint and press release issued by the EEOC on September 24, 2008 to announce the lawsuit, the EEOC claims that Sterling's system for making promotion and compensation decisions is "excessively subjective" and has resulted in both disparate treatment and disparate impact sex discrimination. The "excessive subjectivity" claim is the primary allegation of unlawful discrimination in the complaint.

The use of subjective criteria in employment decisions often is unavoidable. Simply put, purely objective criteria is not always available or appropriate for hiring, compensation, promotion, and discharge decisions. "Excessive" subjectivity, however, can give rise to allegations of discriminatory treatment and systematic bias. Employers and their counsel often struggle to balance the desire to use all appropriate criteria when making employment decisions, including both objective and subjective criteria, with the knowledge that "excessive subjectivity" in the decision-making can create perceptions of bias and increase the potential for discrimination claims.

Of course, determining what is "excessive subjectivity," as opposed to typical subjectivity common in many employment decisions, can be difficult. This problem is more significant for larger employers that lack a centralized structure for employment decision-making. An employer with more independent decision-makers has a greater chance for "excessive subjectivity," especially if the employer has not promulgated clear guidelines or requirements for the decision-making process.

The EEOC has made clear that it views "excessive subjectivity" in compensation and promotion systems as a high priority enforcement issue for the agency. The Sterling case, with its nationwide scope and focus on this issue, emphasizes the EEOC's commitment. Employers and their counsel should be aware of this issue and review their hiring, compensation, and promotion procedures to determine whether changes could produce a better structured, less subjective system.

Why Union Organizers come Knocking on an Employee's Door and Why the Employee Free Choice Act will increase those "House Calls"

MMoore@mwn.com (Michael Moore) — Thu, 25 Sep 2008 07:03:30 -0500

One big frustration for union organizers is access to employees for the purpose of soliciting union authorization cards and peddling the union message. Sophisticated employers have no solicitation policies, which force union organizers out of the workplace and into the parking lots and homes of employees.

The primary barrier to union home visits is determining where employees live. Until a union files a petition for election, an employer isn’t obligated to hand over employee names and address. To file a petition for election under the current law, a union must obtain signed authorization cards from 30% of the employees in an appropriate unit. Home visits are a very effective way of putting pressure on employees to sign cards, because most people view the visit as an intrusion and just want the “visitor” to leave. Therefore, they sign the card without much thought to its significance.

Unions use a variety of methods to get employee addresses such as company directories and just asking employees. Unions will go to great lengths to obtain employee addresses even employing a controversial method called “tagging.” Tagging involves Union members writing down the license plate number of employee vehicles in an employer’s parking lot and running the license plates to obtain the name and address of the person who owns the vehicle. Addresses are then used for home visits. The practice of tagging was recently struck down, in Pichler, et al. v. UNITE, decided by the United States Court of Appeals for the Third Circuit.

The Employee Free Choice Act will fundamentally alter the role of authorization cards and increase the importance of house calls. Under the EFCA, a union can be recognized as the bargaining representative for a company’s employees if it obtains signed authorization cards from more than 50% of the employees in an appropriate unit. Pressuring employees at home will likely become even more frequently employed tactic.

One Less Tactic In Organized Labor's Arsenal: Third Circuit says No To "Tagging"

bbagley@mwn.com ( Bruce D. Bagley) — Wed, 24 Sep 2008 13:56:02 -0500

In Pichler, et al. v. UNITE, the United States Court of Appeals for the Third Circuit has weighed in on the controversial union organizing tactic known as "tagging." In its effort to organize employees of Cintas Corporation, the largest domestic employer in the industrial laundry industry, UNITE (Union of Needletrades, Industrial & Textile Employees) engaged in "house calls," i.e., knocking on doors at the homes of Cintas' employees in an effort to convince them to support the Union. In order to locate the home addresses of these employees, the Union would record the license plate numbers of cars found in Cintas' parking lots to access information contained in state motor vehicle records relating to those license plates. This process was known as "tagging."

Unfortunately for the Union, a group of Cintas employees, objecting to what they perceived to be a violation of their privacy rights, sued the Union under the Driver's Privacy Protection Act. That federal statute provides that a "person who knowingly obtains, discloses or uses personal information, from a motor vehicle record, for a purpose not permitted under this chapter shall be liable to the individual to whom the information pertains, who may bring a civil action …" While the statute enumerates 14 exceptions to the general prohibition, the Court of Appeals affirmed the District Court's conclusion that union organizing was not listed among the 14 "permissible uses."

The Court's majority rejected the Union's assertion that there were two exceptions which made its tagging permissible: the "litigation" exception and the "acting on behalf of the government" exception. The Court's majority reasoned that it did not matter whether the Union may have used the confidential information for either of these permissible purposes because it clearly admitted using the information for an impermissible purpose, union organizing. It was on this point that Judge Sloviter dissented. She asserted that summary judgment should not have been granted, so that a jury could determine whether the Union's "primary purpose" in obtaining and using the confidential information was to monitor potential legal violations by Cintas, a permissible use under the statute.

The Court also reversed the lower court's finding on punitive damages, holding that the plaintiff employees were entitled to a jury trial on their punitive damages claim. However, the most substantial impact of the Third Circuit's decision may be in its clear message to union organizers: tag at your own risk. And employers may be heartened to know that if, as many expect, the Employee Free Choice Act is soon enacted, unions will be far less likely to use tagging in their quest to obtain those valuable authorization cards.

ADA Amendments expand Disability Coverage

MMoore@mwn.com (Michael Moore) — Tue, 23 Sep 2008 12:01:32 -0500

President Bush will sign legislation amending the Americans with Disabilities Act, which overwhelmingly passed through Congress. The ADA Amendments Act is designed to convey Congressional intent that “the primary object of attention in cases brought under the ADA should be whether entities covered under the ADA have complied with their obligations, and to convey that the question of whether an individual’s impairment is a disability under the ADA should not demand extensive analysis.”

The goal of expanding the coverage of the ADA is achieved by changing the definition of “disability” to:

Prohibit the consideration of measures that reduce or mitigate the impact of impairment—such as medication, prosthetics and assistive technology—in determining whether an individual has a disability under the law.
Cover workers whose employers discriminate against them based on a perception that the worker is impaired, regardless of whether the worker has a disability.
Clarify that the law provides broad coverage to protect anyone who faces discrimination on the basis of a disability.

Congress expressly reversed several Supreme Court decisions that restricted the scope of the ADA. Congress rejected the standard that ameliorative effects of mitigating measures must be considered in determining whether a person is disabled found in Sutton v. United Air Lines, Inc. Congress also rebuked the Court in its restrictive interpretation of “disability” by rejecting the terms “substantially limits ” and “significantly restricted” because the terms as outlined in Toyota Motor Mfg, Kentucky, Inc. v. Williams are too narrow.

The ADA amendments will refocus disability discrimination lawsuits downplaying the examination of whether an employee meets the definition of disability. Daniel Schwartz of the Connecticut Employment Law Blog discusses the practical impacts.