As a public employer, your actions are considered the actions of the government or the “state.” This dual persona brings with it additional obligations and challenges that private employers do not face. Some of these obligations include the requirement to provide due process rights to employees, and the challenges include a seemingly endless variety of lawsuits that your employees may bring against you. Lawsuits unique to public sector employers include unreasonable search and seizure challenges, including e-mail and text message based challenges, free speech challenges, and alleged violations of the Establishment Clause of the First Amendment.

The Establishment Clause prohibits the government from endorsing any particular religion and, in fact, endorsing religion at all. In a recent case involving the Establishment Clause, Milwaukee Deputy Sheriffs’ Association v. Clarke, the 7th Circuit Court of Appeals found that a county sheriff violated the Establishment Clause by having a Christian organization deliver a faith-based presentation to employees at mandatory meetings. The court concluded that the Sheriff, by introducing the Christian group and allowing them to speak at mandatory employee meetings, either endorsed the group or at the very least, gave the appearance of endorsing the group. This endorsement constituted a violation of the Establishment Clause, and the Sheriff’s Department was ordered to cease and desist from further violations and was also required to pay over $38,000 in fees and costs.

While it may seem like an easy decision for most savvy Human Resource practitioners to avoid supporting one religion over another in the workplace, this is something that still occurs outside of the watchful eye of HR. It is true that Milwaukee Deputy Sheriffs’ Association is an extreme case, but it is still a good reminder that as a public employer, you must avoid showing preference toward one religion over another. Because this message does not always trickle down to all supervisors and managers, the facts of this case serve as a good reminder to briefly discuss at your next executive staff meeting or supervisor and manager training session.
 

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA), which expanded health care insurance benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The ARRA granted individuals involuntarily terminated from employment between September 1, 2008 and December 31, 2009, a subsidy to cover 65 percent of their monthly COBRA premiums for up to nine months. The subsidy is available for individuals with an annual income of less than $125,000 (single) or $250,000 (joint filers). Individuals earning between $125,000 ($250,000 joint) and $145,000 ($290,000 joint) are eligible for "phased-in" assistance.

Under the ARRA, plan administrators are not only responsible for providing notice of the subsidy to eligible individuals, they must also pay the cost of the subsidy up front. The plan administrator may then file IRS Form 941 to claim a payroll tax credit in the amount of subsidies paid. In other words, employers must front 65 percent of eligible individuals’ COBRA premiums in exchange for a credit against their payroll taxes.

UPDATE! On December 19, 2009, President Obama signed the 2010 Department of Defense Appropriations Act (Act), which extends the COBRA premium subsidy provisions and places additional notification requirements on plan administrators. The Act provides eligible individuals with an additional six months of subsidized coverage, extending the availability of the COBRA premium subsidy from nine to 15 months. The Act also allows individuals involuntarily terminated on or before February 28, 2010 to receive the subsidy, extending the original eligibility deadline of December 31, 2009, by two months. Employees involuntarily terminated in January and February 2010 will now be eligible for the subsidy.

Furthermore, if an individual was eligible for the COBRA premium assistance under the original ARRA, and that eligibility already expired, then that individual may receive the continued premium subsidy retroactively. In order to take advantage of the retroactive coverage, the individual must pay 35 percent of the premium by February 17, 2010, or within 30 days of receipt of the extension notice described below, whichever is later. If eligible individuals already have paid the full COBRA premium, then the plan administrator must either refund the over payments or credit future premium payments.

The Act also contains additional notification requirements that require plan administrators to provide eligible individuals with information regarding the extended subsidy.

Continue Reading COBRA SUBSIDY EXTENDED AND NEW COBRA NOTICES REQUIRED

Recently, the District Court for the Western District of Pennsylvania delivered some potentially bad news to Pennsylvania employers. In Truman v. DeWolff, Boberg & Associates, Inc., the Court held that an employee may be entitled to overtime payments for time worked in foreign countries under the Pennsylvania Minimum Wage Act and the Pennsylvania Wage Payment and Collection Law. The plaintiff, Michael Truman, worked for D.B.A., Inc. for a little over a year, and during that time worked in both England and in Canada. Truman sought overtime pay for overtime hours he worked in excess of 40 hours per week in both England and Canada.

At the summary judgment stage, the Truman admitted that he was not entitled to overtime payments under the Fair Labor Standards Act (FLSA) which specifically exempts work in foreign countries from overtime pay entitlements. However, Truman argued that under the Pennsylvania Minimum Wage Act he was entitled to such overtime payments because the Pennsylvania Minimum Wage Act provided for benefits exceeding those under the FLSA. The Court stated that unlike the FLSA, there was no specific exemption for working in foreign countries under the Pennsylvania Minimum Wage Act. The Court also noted that the Eastern District of Pennsylvania previously held that work in other states by Pennsylvania-based employees was covered by Pennsylvania Law. The Court concluded that there is nothing within the Pennsylvania Minimum Wage Act that restricts the benefits of the Act to work performed within the United States.

The Court also noted that the FLSA allows for state laws to provide greater protection than allowed under the FLSA, and therefore, there was no preemption issue in this case. The Court noted that there was no implied foreign work exemption under the Pennsylvania Minimum Wage Act, and therefore, for Pennsylvania residents working for Pennsylvania-based employers, there is no exemption from overtime pay requirements for work in foreign countries. The Court said that the analysis under the FLSA and the Pennsylvania laws is only identical if the language of the FLSA and state laws is identical. In this case, the analysis was different because the language was not identical, and therefore, the Court allowed the Plaintiff to move forward on his claim that he was entitled to overtime pay for hours worked in a foreign country under Pennsylvania law.

This decision has the potential to be costly for some Pennsylvania employers. How the courts will define who is a Pennsylvania resident and who is a Pennsylvania based employee for purposes of the Pennsylvania Minimum Wage Law and the Pennsylvania Wage Collection Act is unclear. These, and other issues, will need to be defined by the Courts in the future. In the meantime, employers are well advised to review their compensation practices in light of this decision.

In Prowel v. Wise Business Forms, Inc., the Third Circuit reversed a district court’s granting of summary judgment in favor of an employer on a claim of gender stereotyping discrimination. The claim was brought by an admittedly homosexual employee who alleged he was subject to gender discrimination, retaliation and religious discrimination based on his effeminate actions and mannerisms. The Third Circuit acknowledged that Title VII does not protect employees from discrimination based upon their sexual preference, but may allow claims for gender stereotyping. The Third Circuit noted that a “gender stereotyping” claim was first recognized by the Supreme Court as a viable cause of action in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).

In reversing summary judgment, the Third Circuit held that

"…every case of sexual orientation discrimination cannot translate into a triable case of gender stereotyping discrimination, which would contradict Congress’s decision not to make sexual orientation discrimination cognizable under Title VII. Nevertheless, [an employer] cannot persuasively argue that because [an employee] is homosexual, he is precluded from bringing a gender stereotyping claim. There is no basis in the statutory or case law to support the notion that an effeminate heterosexual man can bring a gender stereotyping claim while an effeminate homosexual man may not. As long as the employee — regardless of his or her sexual orientation — marshals sufficient evidence such that a reasonable jury could conclude that harassment or discrimination occurred “because of sex,” the case is not appropriate for summary judgment."

The Court’s decision raises obvious issues for employers in dealing with sexual harassment and sex discrimination claims. Employers cannot automatically assume the sexual orientation claims will be dismissed by a court as unprotected under Title VII. The allegations of discrimination must be evaluated in light of gender stereotypes.

In Prowel, the employee alleged the following facts in support of his claim:

"Prowel identifies himself as an effeminate man and believes that his mannerisms caused him not to “fit in” with the other men at Wise. Prowel described the “genuine stereotypical male” at the plant as follows:

[B]lue jeans, t-shirt, blue collar worker, very rough around the edges. Most of the guys there hunted. Most of the guys there fished. If they drank, they drank beer, they didn’t drink gin and tonic. Just you know, all into football, sports, all that kind of stuff, everything I wasn’t.

In stark contrast to the other men at Wise, Prowel testified that he had a high voice and did not curse; was very well-groomed; wore what others would consider dressy clothes; was neat; filed his nails instead of ripping them off with a utility knife; crossed his legs and had a tendency to shake his foot “the way a woman would sit”; walked and carried himself in an effeminate manner; drove a clean car; had a rainbow decal on the trunk of his car; talked about things like art, music, interior design, and decor; and pushed the buttons on the nale encoder with ‘pizzazz.’"

In Weaver v. Harpster, the Pennsylvania Supreme Court ruled that small employers (three or fewer employees) may  not liable for acts of employment discrimination. Under the Pennsylvania Human Relations Act (PHRA), employers with four or more employees are prohibited from discriminating against their employees on the basis of sex.  At common law, an employer may terminate an at-will employee for any reason unless that reason violates a clear mandate of public policy emanating from either the Pennsylvania Constitution or statutory pronouncements. In this case, the Court  addressed the intersection of the PHRA and the public policy exception to at-will employment, namely, whether an employer with fewer than four employees, although not subject to the PHRA’s prohibition against sexual discrimination, nevertheless is prohibited from discriminating against an employee on the basis of sex. Because the PHRA reflects the unambiguous policy determination by the legislature that employers with fewer than four employees will not be liable for sex discrimination in Pennsylvania, the Court concluded that a common law claim for wrongful discharge, resulting from sex discrimination, will not lie against those employers.

The Court’s seven justice majority continued its support for the employment at-will presumption by declining to recognize an additional public policy exception based on Pennsylvania’s statutes or Constitutional protections. The  two justice dissent would have found a public policy exception to the at-will employment presumption based on both the PHRA and Pennsylvania Constitution. Small employers should keep in mind that they escape coverage of the PHRA, but may be covered by local ordinances prohibiting employment discrimination.

Pennsylvania’s Mini-COBRA law became effective July 10, 2009. The law provides COBRA-like medical insurance continuation to employees who work for smaller business not covered by the federal law. The Department of Insurance clarified some of the coverage issues and provided a model notice for covered businesses to provide to employees. Employees who elect Mini-COBRA may also be eligible for a 65% premium assistance provided by the federal stimulus legislations. Fortunately, small business will not need to “front” the premium assistance payment because Pennsylvania’s Mini-COBRA law places the obligation on the insurer.

The President and Vice President met with a bipartisan group of Congressional leaders in late June to discuss one of today’s most contentious issues – immigration – and how to go about reforming the broken immigration system. One of the White House’s focal points for immigration reform is enhanced enforcement efforts. The President noted that the Department of Homeland Security and the Department of Labor are working to crack down on employers who are exploiting illegal workers.

U.S. Immigration and Customs Enforcement (ICE) is launching a new audit initiative by issuing Notices of Inspection (NOIs) to 652 businesses nationwide – which is more than ICE issued throughout all of last fiscal year. The notices alert business owners that ICE will be inspecting their hiring records to determine whether or not they are complying with employment eligibility verification laws and regulations. Inspections are one of the most powerful tools the federal government has to enforce employment and immigration laws. This new initiative illustrates ICE’s increased focus on holding employers accountable for their hiring practices and efforts to ensure a legal workforce.

The Department of Homeland Security announced that the Administration will push ahead with full implementation of the rule requiring use of E-Verify by government contractors, which will apply to federal solicitations and contract awards Government-wide starting on September 8, 2009. The federal contractor rule extends use of the E-Verify system to covered federal contractors and subcontractors, including those who receive American Recovery and Reinvestment Act funds. DHS also announced it will scrap the Social Security No-Match Rule, which has never been implemented and has been blocked by court order, in favor of the more modern and effective E-Verify system. On July 8, the U.S. Senate adopted an amendment to the Fiscal Year 2010 Department of Homeland Security appropriations bill that will require federal contractors to use the government’s voluntary electronic employee verification system known as E-Verify. The spending bill also extends E-Verify for three more years.

U.S. Citizenship and Immigration Services (USCIS) also recently announced that the Employment Eligibility Verification form I-9 (Rev. 02/02/09) currently on the USCIS Web site will continue to be valid for use beyond June 30, 2009. USCIS has requested that the Office of Management and Budget (OMB) approve the continued use of the current version of Form I-9. While this request is pending, the Form I-9 (Rev. 02/02/09) will not expire. USCIS will update Form I-9 when the extension is approved.   Employers will be able to use either the Form I-9 with the new revision date or the Form I-9 with the 02/02/09 revision date at the bottom of the form.

The Prohibition on Excessive Overtime in Health Care Act (Act 102) became 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 has posted a FAQ on its website summarizing common compliance questions. There is also a summary of the law.

A governmental employer cannot throw out a employment promotion test because it thinks that the test results have a disparate impact against a minority group unless there is a "strong basis in evidence" to believe it will be liable for discrimination unless it rejects the test results. Fear of litigation alone cannot justify an employer’s decision that is based on race even if the employer will be sued regardless of which group it favors.

In Ricci v. DeStefano, the City of New Haven, Connecticut used a validated test to select firefighters for promotion. However, the results the promotion examination to fill vacant lieutenant and captain positions showed that white candidates had scored higher than other minority candidates. Strong public opposition to use of the test followed. Confronted with arguments both for and against certifying the test results—and threats of a lawsuit either way—the City threw out the results based on the statistical racial disparity.

White and Hispanic firefighters who scored well on the exams but were denied a chance at promotions by the City’s refusal to certify the test results, sued the City, alleging that discarding the test results discriminated against them based on their race in violation of Title VII. The City responded that had it certified the test results, it could have faced Title VII liability for adopting a practice having a disparate impact on minority firefighters.

The District Court granted summary judgment for the City, and the Second Circuit affirmed. The Supreme Court reversed holding that City discriminated against the White and Hispanic firefighters who passed the test because there was not a strong basis in evidence to throw out the test scores in response to their disparate impact. The City conducted hearings on the test results and determined that there was a statistical adverse impact on minority employees. This showed that there was at least a prima facie case of disparate impact. However, this fear of litigation alone cannot justify the City’s reliance on race to the detriment of individuals who passed the examinations and qualified for promotions. To reject the test, the City needed to go further and show that the exams at issue were not job related and consistent with business necessity, or if there existed an equally valid, less discriminatory alternative that served the City’s needs. Based on the record the parties developed through discovery, there was no substantial basis in evidence that the test was deficient in either respect.

Under Title VII, before an employer can engage in intentional discrimination for the asserted purpose of avoiding or remedying an unintentional, disparate impact, the employer must have a strong basis in evidence to believe it will be subject to disparate-impact liability if it fails to take the race-conscious, discriminatory action. The Court’s analysis held that the City’s actions would violate Title VII’s disparate-treatment prohibition absent some valid defense. All the evidence demonstrates that the City rejected the test results because the higher scoring candidates were white. Without some other justification, this express, race-based decision-making is prohibited. The question, therefore, is whether the purpose to avoid disparate-impact liability excuses what otherwise would be prohibited disparate-treatment discrimination.

The Court held that certain government actions to remedy past racial discrimination—actions that are themselves based on race—are constitutional only where there is a “strong basis in evidence” that the remedial actions were necessary. The same interests are at work in the interplay between Title VII’s disparate-treatment and disparate-impact provisions. However, the Court gave little other guidance on how employers may use tests in the hiring and promotion processes.

Effective July 10, 2009, medical insurers covering small employers in Pennsylvania will be required to offer COBRA-like continuation coverage to qualified employees and their eligible dependents. The new law covers small employers who have between two and 19 employees on a typical business day during the preceding calendar year. 

The so-called mini-COBRA coverage expands on the federal COBRA law that covers employers with at least 20 employees and allows employees who are involuntarily terminated to qualify under a federal economic stimulus law for a 65% federal subsidy of both COBRA and mini-COBRA premiums.

Like the federal law, qualifying events for coverage under the new Pennsylvania mini-COBRA are loss of group coverage due to termination of employment, death, divorce or marital separation. However, there are some key differences between the federal COBRA  and Pennsylvania’s mini-COBRA law, some of which are as follows:

  • Under the Pennsylvania law, an employee or dependent must have been continuously covered by medical insurance for three months prior to termination of coverage and may not be covered or eligible for coverage under another medical plan or Medicare.
  • Under the Pennsylvania law, continuation coverage must be extended for nine months; under federal COBRA law, coverage is available up to 18 months when employment is terminated and 36 months in situations involving death, divorce or legal separation.
  • Under the Pennsylvania mini-COBRA law, beneficiaries can be charged a premium up to 105% of the group rate; federal COBRA beneficiaries can be charged a premium of up to 102% of the group rate.
  • Pennsylvania mini-COBRA obligations apply to insurers; federal COBRA applies to employers that provide medical coverage through self-insurance or insurance products.

Employers and insurers will need to provide notices to employees and dependents of the provisions of the new law as well as their rights to elect continuation coverage upon the occurrence of a qualifying event.