Employer Law Report : Employment and Labor Relations Lawyer & Attorney : Porter Wright's Employer Law Report : Employment Litigation, Non-Compete, Trade Secrets

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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