This post was contributed by Lee Tankle, a new associate in McNees Wallace & Nurick LLC’s Labor and Employment Law Group. 

An Alabama insurance company is being sued by the U.S. Equal Employment Opportunity Commission (EEOC) for allegedly discriminating against black job applicants. The EEOC alleges that the insurance company’s grooming policy prohibiting dreadlocks is discriminatory toward African Americans. 

In May 2010, Chastity Jones applied for a position and participated in a group interview with a Mobile, Alabama insurance claims company. Ms. Jones, an African-American, wore her blond hair in neat curls called "curllocks." Ms. Jones was offered a position as a customer service representative but later that day when she met with Human Resources to discuss her training schedule, the HR representative informed Ms. Jones that the company banned dreadlocks and she would need to cut them off in order to obtain employment. When Ms. Jones refused to cut her hair, her job offer was rescinded.

The EEOC argues that the insurance company’s policies discriminate against African Americans based on physical and cultural characteristics in violation of Title VII of the Civil Rights Act of 1964. According to an EEOC attorney, the "litigation is not about policies that require employees to maintain their hair in a professional, neat, clean or conservative manner" but "focuses on the racial bias that may occur when specific hair constructs and styles are singled out for different treatment because they do not conform to normative standards for other races."

According to the District Director for the EEOC’s Birmingham Office, "[h]air grooming decisions and policies (and their implementation) have to take into consideration differing racial traits, and cannot penalize blacks for grooming their hair in a manner that does not meet normative standards for other races." Some courts have suggested that employer policies banning "afro" hairstyles could be a race-based distinction in violation of Title VII.

This is not the first time the EEOC has brought suit over dreadlocks. In 2011, a Virginia-based transportation company paid $30,000 to settle an EEOC religious discrimination suit. The EEOC claimed the company violated Title VII when it refused to hire a Rastafarian because he wore his hair in dreadlocks. According to the EEOC, the applicant held the sincere religious belief that as a Rastafarian he could not and should not cut his hair in honor of Jah, the name given to the highest power in the Rastafarian faith.

Employers should remember that unless it would be an undue hardship for the employer’s operation of a business, an employer must reasonably accommodate an employee’s religious practices and beliefs. This could include allowing the wearing of certain head coverings like the Jewish yarmulke or Muslim headscarf or certain hairstyles or facial hair like Rastafarian dreadlocks or Sikh uncut hair and beard.

It is unclear what, if any, impact the federal government shut down will have on this matter. Please contact any of the McNees Labor & Employment attorneys if you have concerns that your grooming policies may be the target of a future discrimination allegations.
 

This post was contributed by Jennifer E. Will, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Law Group.

While you are busy with the required Hazard Classification Training that we told you about last week, you might want to make time to review any safety incentive programs that you have in place.

Last March, OSHA issued a controversial internal Memo on Employer Safety Incentive and Disincentive Policies. In a nutshell, OSHA’s Deputy Assistant Secretary gave Regional Administrators and Whistleblower Program Managers another target – employers who reward employees for safety!

OSHA’s Section 11(c) prohibits employers from retaliating against employees who report an injury or illness. Reporting an injury is protected activity under the statute and employers are required, by regulation, to establish a way for employees to report injuries.

Much of the Memo is devoted to employers who discipline employees for reporting injuries (which we are sure you do not do), but a portion of the Memo addresses employer programs that, intentionally or unintentionally, provide employees with an incentive not to report injuries. Some examples:

  • All employees who are injury-free will be entered into a prize drawing;
  • Team members will be awarded a bonus if the team stays injury-free.

Although the employer’s intentions may be pure, such programs and policies may encourage employees to not report their injuries.

Instead of rewarding employees for staying injury-free, the OSHA-recommended approach is to reward employees for their safe practices, such as:

  • identifying safety hazards;
  • joining a safety committee;
  • suggesting ways to strengthen existing safety policies; or
  • completing company-wide safety and health training.

Bottom line, if an incentive is big enough that the risk of not earning it would dissuade an employee from reporting an injury or illness, you may have a Section 11(c) violation according to OSHA. To the extent that injuries are not reported, you could also wind up with a record keeping violation.

This Memo is getting traction. The DOL recently entered into a formal settlement agreement with an employer over its safety program, which correlated employee incentive payments to OSHA recordables.

In short, OSHA would like employers to incentivize employees to: report injuries; participate in safety initiatives; and make improvements to safety and health in the workplace, without seeming to create an incentive to not report.

Please contact any of the McNees Labor & Employment attorneys for assistance with reviewing your safety incentive programs for compliance.
 

This post was contributed by Adam R. Long, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Law Group. 

In a recent blog post, we discussed the legal issues associated with employer use of payroll debit cards in lieu of printed paychecks.  We concluded that because of the lack of federal and state regulatory guidance on the issue, it was unclear whether employers could elect to pay wages exclusively through payroll debit cards.

Recently, the federal Consumer Financial Protection Bureau (CFPB) issued Bulletin 2013-10 (pdf) on the subject of payroll card accounts. The Bulletin broadly defined payroll card accounts as "accounts that are established directly or indirectly through an employer, and to which transfers of the consumer’s salary, wage, or other employee compensation are made on a recurring basis." The Bulletin stated that the Electronic Fund Transfer Act (EFTA) and its implementing Regulation E apply to payroll card accounts and described numerous consumer protections under Regulation E that apply to payroll cards, including certain mandatory disclosures, access to account history, and error resolution rights.

In the Bulletin, the CFPB stated its position that "Regulation E prohibits employers from mandating that employees receive wages only on a payroll card of the employer’s choosing." Instead, the CFPB believes that an employer may "offer employees the choice of receiving their wages on a payroll card or receiving it by some other means," including paper check or direct deposit. The Bulletin concluded by noting that the CFPB has the authority to enforce the EFTA and Regulation E against both financial institutions and employers.

With Bulletin 2013-10, the CFPB has made clear that it believes that the EFTA and Regulation E prohibit an employer from mandating that employees receive wage payments exclusively through payroll cards. Whether this position could survive a legal challenge remains unclear. Unless and until such legal challenge occurs, employers should be aware that at least one federal agency has publicly taken the position that mandatory use of payroll cards is unlawful and stated its intention to enforce its position on the issue.
 

This post was contributed by Eric N. Athey, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group.

As previously reported on this blog, employers are required to provide a notice to employees regarding coverage options under the new Health Insurance Marketplaces created by the Affordable Care Act that are scheduled to be up and running on October 1. The notice must be provided by October 1 to all employees, part-time and full-time, regardless of whether they have health coverage through their employer. New hires must receive the notice within 14 days of hire. 

Employers were understandably confused when, on September 11, the DOL posted an FAQ on its website advising that employers would not be fined under the Fair Labor Standards Act for failing to distribute the notice, yet some DOL officials were quick to point out that penalties and other adverse consequences for non-compliance could follow under ERISA and other statutes. In light of this uncertainty, employers are wise to comply and provide the notice by October 1.

The U.S. Department of Labor ("DOL") has published sample notices at http://www.dol.gov/ebsa/healthreform/. The specific language in the DOL notices need not be used, however, so long as certain key points are included. Given the complexity of the topic, the DOL sample notices are likely to raise more questions than they answer. Many employers are tailoring the notice in a manner that they feel will be more understandable to their employees. Other employers are preparing supplemental handouts and scheduling employee group meetings to address the many questions that will likely arise. Much is uncertain about how the roll out of the Health Insurance Marketplaces will go on October 1; however, one thing is for certain: employees are likely to have many questions and misunderstandings regarding their options under the Affordable Care Act. 

Based on questions and feedback we’ve been hearing from clients, here is our list of the "top five" questions you may hear from employees once the required notices are distributed (and suggested responses):

  1. "Why am I receiving this notice?" You have probably heard news reports about "Obamacare" (aka "Healthcare Reform" or the "Affordable Care Act"). Under the law, employers must notify all employees of their ability to purchase their own coverage under new "Health Insurance Marketplaces" that will be open on October 1, 2013. The new Marketplaces do not impact your eligibility for coverage under the Company’s health plan.
     
  2. "Can I get coverage on the Health Insurance Marketplace if I find a plan there that’s cheaper than my employer’s plan?" Nearly anyone will be able to purchase coverage on the Marketplace; however, employees who are likely to find this advantageous are those who either do not have employer-provided coverage available to them or who pay a lot (more than 9.5% of income) for their coverage.
     
  3. "Will I qualify for a tax subsidy if I purchase coverage on the Health Insurance Marketplace?" Employees who have affordable, minimum value coverage available to them through their employer will not qualify for a tax subsidy. If you are not eligible for coverage from an employer (or you pay more than 9.5% of your income to purchase coverage through your employer) you may qualify for a subsidy and you should explore your coverage options on the Marketplace.
     
  4. "Is the health coverage I have through my employer ‘affordable’ and of ‘minimum value’?" There are no short answers to these questions. However, as a rule of thumb, coverage through an employer is "affordable" if an employee does not pay more than 9.5% of his or her income for self-only coverage, and the coverage is "minimum value" if the plan’s share of the total allowed benefit costs covered by the plan is no less than 60% of those costs.
     
  5. "Haven’t the individual mandate penalties been delayed until 2015?" No. Certain "shared responsibility" penalties that apply to large employers have been delayed until 2015; however, the individual mandate is scheduled to take effect on January 1, 2014. Individuals who do not obtain coverage may be subject to an annual penalty equivalent to the greater of $95 or 1% of their household income. The penalty amount will increase in subsequent years.

Employers are likely to receive more questions from employees regarding health coverage than ever before in the months following October 1, 2013. Of course, employees can always be referred to the feds for additional information (www.HealthCare.gov or 1-800-318-2596).  If we can assist you with any questions you may have regarding compliance with the Affordable Care Act, please contact any member of our Labor and Employment Practice Group.

This post was contributed by Joseph S. Sileo, Esq. an attorney in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group in Scranton, Pennsylvania.

The Occupational Safety and Health Administration (OSHA) has issued a new Hazard Communication Standard (HCS) that is designed to enhance employee health and safety by aligning the classification and labeling of chemicals in the United States with international standards (as established by the United Nations’ Globally Harmonized System of Classification and Labeling of Chemicals (GHS)). As explained in more detail below, the first phase of compliance requires employers to provide training to employees, by December 1, 2013, with respect to the new HCS label elements and Safety Data Sheet formats. The new HCS and related training requirement apply to all private sector employers, regardless of size or industry, with any hazardous chemicals in their workplaces.

The new HCS requirements address the following issues:

  • Hazard Classification- Under the new standard, chemical manufacturers and importers must follow a unified standard procedure, and use specific established criteria, for classifying health and physical hazards of chemicals.
  • Chemical Labels- The new standard requires more detailed labels, and specifically sets forth what information must be included for each identified hazard class and category. In addition, labels must convey the required information in an employee-friendly manner, by use of pictograms, signal words, hazard statements, and precautionary statements.
  • Safety Data Sheets- Under the new standard, the current Material Safety Data Sheet (MSDS) will be replaced by the new Safety Data Sheet (SDS), which must be issued and maintained in a specific 16-section format.
  • Information and Training- To ensure that employee understand the new label elements and SDS format, employers must train workers with respect to those issues.

The new HCS requirements will be phased in over a period of time, as follows:

  1. December 1, 2013- Employers must, by this date, train employees on the new label elements and SDS format.
  2. June 1, 2015- full compliance with the new HCS (including use of the new labels and SDS format) is required, except that chemical distributors have until December 1, 2015 before they must stop shipping containers with non-GHS labels.
  3. June 1, 2016- Employers must update workplace labeling and hazard communication programs as necessary, and provide employee training with respect to any new physical or health hazards identified by a hazard classification.

Between now and the June 1, 2015 full compliance deadline (the "transition period"), employers have the option to comply with either the new or old HCS, or both. As a practical matter, this means that an employer can continue to use the outgoing MSDS form, elect to use the new SDS form, or do both, during the transition period.

As an aside, some have questioned the wisdom of requiring employers to provide employee training as referenced above by December 1 of this year when actual use of the new labels and SDS format is not required until 2015. OSHA has explained its rationale by noting that providing such training now will benefit employees, and is necessary, because GHS-compliant labels and SDSs are already present to a certain extent in the U.S. workplace (due to voluntary use by some manufacturers), and such trend is expected to continue and increase during the transition period.

Our Labor & Employment Practice Group can assist you with preparing for and conducting the training required by the new HCS. Please feel free to contact any member of our Group for assistance and any questions you may have.

This post was contributed by Tony D. Dick, Esq., an attorney in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group in Columbus, Ohio.

As expected, new U.S. Department of Labor Secretary Thomas Perez has wasted little time implementing a number of agenda items in the few short weeks since his Senate confirmation. Most recently, Secretary Perez announced two new rules that amend longstanding regulations under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act, which deal with federal contractors’ and subcontractor’s affirmative action and nondiscrimination obligations toward protected veterans and individuals with disabilities. Among other things, these new rules establish specific hiring metrics, data collection practices, and record keeping requirements that federal contractors must implement for veterans and disabled individuals seeking employment.

Below are some highlights of the final rules:

  • Utilization Goal for Individuals with Disabilities – The final rule under the Rehabilitation Act establishes, with some exceptions, a 7% hiring goal for qualified individuals with disabilities. While the goal is aspirational, contractors will be required to conduct an annual utilization analysis of individuals with disabilities within the organization, assess problem areas, and establish specific programs to address any identified problems.
  • Hiring Benchmarks for Protected Veterans – Under the final rule amending VEVRAA, federal contractors must establish annual hiring benchmarks for protected veterans utilizing one of two methods. Contractors can either choose to set a benchmark that mirrors the national percentage of veterans in the civilian labor force or they may establish their own benchmarks using certain data from the Bureau of Labor Statistics and Veterans’ Employment and Training Service/Employment and Training Administration.
  • Job Listings Requirements for Protected Veterans – The final rule under VEVRAA also clarifies that when listing job openings, contractors must provide the information in a manner and format permitted by the appropriate state or local job services, so that it can be easily disseminated to veterans seeking jobs.
  • Data Collection – Under both rules, contractors must now document and annually update several quantitative comparisons concerning the number of veterans and individuals with disabilities who apply for jobs and the number of veterans and individuals with disabilities who are actually hired. Such data must be maintained for three years.
  • Invitation to Self-Identify – Both rules also require contractors to invite applicants to self-identify as a veteran and/or an individual with a disability at both the pre-offer and post-offer phases of the application process.
  • Records Access – The new rules also clarify that contractors must permit officials from the Office of Federal Contract Compliance Programs to review documents to establish compliance with the rules.

The regulations are expected to be published in the Federal Register early next month and will go into effect 180 days later. Contractors with affirmative action plans already in place on the effective date of the new rules may keep those plans until the end of their plan year. Thus, federal contractors and subcontractors that submit affirmative action plans at the beginning of each calendar year will not be required to submit affirmative action plan documents based on these new rules until the beginning of 2015. However, contractors must begin following the data collection, record keeping, and other requirements of the new rules immediately after the rules take effect. Accordingly, if you are a federal contractor or subcontractor, now is the time to begin to revising your policies, procedures and relevant forms to conform with the Department of Labor’s new rules so that you are not caught flat-footed when the rules go into effect.

This post was contributed by Tony D. Dick, Esq., an attorney in McNees Wallace & Nurick LLC’s Labor and Employment Practice Group in Columbus, Ohio.

In light of the Supreme Court’s recent decision in United States v. Windsor, the U.S. Department of Labor (DOL) has just issued updated guidance for employers concerning the rights of same-sex spouses under the Family and Medical Leave Act (FMLA). As you may recall from our earlier blog post on the legal implications of the Windsor case, in a 5-4 ruling, the Supreme Court struck down a key provision of the Defense of Marriage Act, which defined marriage under federal law as “a legal union only between one man and one woman as husband and wife.” 

The updated Fact Sheet #28F issued by the DOL Wage and Hour Division entitled “Qualifying Reasons for Leave under the Family and Medical Leave Act” now defines a “spouse” under the FMLA as “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.” As a result, an eligible employee in a same-sex marriage who was married and resides in a state that recognizes same-sex marriages is entitled to up to 12 weeks of leave in a 12-month period to care for a seriously ill spouse or for activities associated with a military spouse’s deployment, and up to 26 weeks of caregiver leave for military spouse who is seriously injured or ill. 

Conversely, there is no obligation to make FMLA spousal leave available to a same-sex spouse who resides in any state that has banned or otherwise does not recognize same-sex marriage, including both Pennsylvania and Ohio. Of course, private employers in states that do not recognize same-sex marriage are free to extend equivalent FMLA spousal leave benefits to same-sex spouses on their own if they wish.

DOL Secretary Thomas Perez has suggested further guidance in this area will be released in the coming months. We will certainly keep you updated on any new developments. In the meantime, if you are a covered employer operating in one of the 13 states that permits same-sex marriage, or the District of Columbia where same-sex marriage is recognized, now is the time to revise your policies, procedures and forms to conform with the DOL’s updated guidance.

As readers of this blog are surely aware, the Patient Protection and Affordable Care Act (PPACA) imposes a number of new obligations on employers and private health insurance plans. Effective January 1, 2013, most private employers with 50 or more employees must provide health insurance coverage for women’s preventative services, including reproductive health screenings and contraception, without charging a co-pay, deductible, or co-insurance. Failure to provide such coverage can lead to financial penalties of up to one hundred dollars per day per employee who is not provided with the required coverage. A limited exception is available for religious institutions, giving such employers the option of whether to cover contraception services. Over 60 lawsuits are pending around the country by for-profit companies and non-profits alike, challenging the constitutionality of the contraception requirement on religious grounds and seeking to block its enforcement.

Late last week, the Third Circuit Court of Appeals issued a ruling on one such challenge brought by a private family-owned business in Pennsylvania. The court, ruling in the case of Conestoga Wood Specialties Corp. v. Health and Human Services (pdf), held that a private employer cannot challenge on religious grounds PPACA’s contraception mandate, even if the business is owned and operated by a religiously devout individual. Specifically, the court rejected the business’s claim that the contraception rule violated its rights to the free exercise of religion under the First Amendment. In doing so, the Third Circuit concluded that the free exercise right is a “personal rights” that exists only for the benefit of human beings and not secular, profit-making business entities. Moreover, the court held that, because a corporation is legally recognized as having its own independent identity, the owners of a corporation cannot use the corporation as a vehicle for imposing their own personal religious beliefs on others.

The Third Circuit’s decision is in direct conflict with a recent ruling by the Tenth Circuit Court of Appeals on the same issue. The conflicting decisions among the circuit courts increase the likelihood that the U.S. Supreme Court will consider the constitutionality of the contraception mandate. We will keep you apprised of developments on this issue through this blog. In the interim, employers subject to PPACA should continue to provide insurance coverage for contraception without cost-sharing.

 

This post was contributed by Adam R. Long, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Law Group, and Esch McCombie, a Summer Associate with McNees. Mr. McCombie will begin his third year of law school at the Penn State University Dickinson School of Law in the fall, and he expects to earn his J.D. in May 2014.

Recently, the practice of paying employees via payroll debit cards came under fire when an employee filed a class action lawsuit against her employer, a McDonalds’ franchisee, alleging that payment of wages via a Chase Payroll Card violated the Pennsylvania Wage Payment and Collection Law ("PWPCL"). The employee claimed that the card’s fees cut into her wages, potentially bringing her pay below minimum wage, and that she and other class members were not being "paid in lawful money" as required by the PWPCL. The case currently is pending in Luzerne County.

Pennsylvania employers, large and small, increasingly use payroll debit cards in lieu of printed paychecks. The Federal Deposit Insurance Corporation ("FDIC") recently estimated that employers will disperse $60 billion in wages via payroll debit cards in 2014. The cards save employers money and often make fund retrieval more convenient for the employee. As demonstrated by the lawsuit recently filed in Luzerne County, it remains unclear whether the use of such cards complies with Pennsylvania law.
 

Continue Reading Taking the Check Out of Paycheck: The Legality of Payroll Debit Cards

This post was contributed by Andrew L. Levy, Esq., a Member in McNees Wallace & Nurick LLC’s Labor and Employment Group.

A recent decision by a Pennsylvania district court lends support for a growing trend of filing claims under the Federal False Claims Act based on allegations that contractors on federally funded construction projects submitted "false claims" to the U.S. government due to prevailing wage violations.  In United States ex rel. International Brotherhood of Electrical Workers, Local Union No. 98 v. The Farfield Co. (available here), the electrical workers union filed a complaint in federal court alleging that the contractor had violated the False Claims Act by submitting false certified payrolls that misclassified certain workers on public works projects in the Philadelphia area.  Although this type of complaint would normally fall within the exclusive jurisdiction of the U.S. Department of Labor, the judge nonetheless allowed the union’s case to proceed in court on a False Claims Act theory. With judicial recognition of this type of legal claim, not only does the DOL have the ability to investigate contractors for prevailing wage violations under the Davis-Bacon Act, but private citizens can also attack alleged violations under the False Claims Act.  

Continue Reading Contractors Beware: Raising the Stakes in Davis-Bacon Compliance