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Employer Law Report

Employment authorization for H-4 dependent spouses of H-1B employees

Posted in Immigration

On February 24, 2015, the United States Citizenship and Immigration Services (USCIS) of the Department of Homeland Security (DHS) announced that certain H-4 dependent spouses of H-1B nonimmigrant workers pursuing employment-based lawful permanent resident (LPR) status will be eligible for employment authorization beginning May 26, 2015.

This announcement follows the Executive Action announced by President Obama on November 20, 2014. Among the many initiatives included in the Executive Action to modernize, improve and clarify visa programs to grow the U.S. economy and create jobs was to extend eligibility of employment authorization to certain H-4 dependent spouses.

In issuing the final rules to amend the regulations, DHS explains that a primary purpose of the amended regulations is to help U.S. employers retain highly skilled H-1B nonimmigrant employees who are on the path to lawful permanent residency. Currently, many H-1B nonimmigrants and their families are faced with economic burdens and personal stresses as the transition from nonimmigrant to LPR status takes several years in most cases due to visa availability applicable for specific countries, primarily India and China. DHS expects that reducing the burdens and stresses of highly skilled H-1B employees will benefit the U.S. employers by minimizing labor disruptions caused by the departure from the United States of such employees.

Eligible H-4 dependents include spouses of H-1B nonimmigrants who:

  • Are the principal beneficiaries of an approved Form I-140, Immigrant Petition for Alien Worker; or
  • Have been granted H-1B status beyond the initial six-year limit based on PERM applications or immigrant petitions that have been pending for 365 days or more.

To obtain employment authorization, eligible H-4 dependent spouses must file an application for employment authorization along with the required $380 fee and supporting evidence. Once USCIS approves the application and issue an Employment Authorization Document (EAD), the H-4 dependent spouse may accept employment in the United States.

For efficient processing, DHS will permit concurrent filing of the application with the application to extend or change status to H-4. However, DHS noted that the application for employment authorization will be adjudicated only after the determination to grant the H-4 status has been made which means that there may be a possible delay between the grant of the H-4 status and the issuance of the EAD.

DHS also announced that EADs will be issued with validity dates that match the date of authorized period of admission in H-4 status. Accordingly, EAD s may be issued with a validity period of up to three years for most eligible dependent spouses.

USCIS will begin accepting applications for employment authorization from dependent spouses in H-4 status on May 26, 2015.

Is Ohio’s Minimum Wage On the Rise?

Posted in Wage & Hour

Based on a constitutional amendment in 2006, every year Ohio’s minimum wage is increased based on considerations such as cost of living. As of January 1, 2015, Ohio’s minimum wage raised to $8.10. However, this rate increase is not considered sufficient by some State Senators. All 10 members of the Ohio Senate Democratic Caucus co-sponsored Senate Bill 25, titled Ohio Worker’s Rights Act, introduced on February 4, 2015, proposing reform to Ohio’s state wage and hour laws.

Specifically, Senate Bill 25 proposes to raise the minimum wage to $10.10, expand the threshold for overtime compensation for salaried employees to $50,000 in the first year and then to $69,000 for the following years, and to create a uniform definition of “employee” in Ohio laws.

For some perspective, presently, Ohio is one of 28 states in which the state minimum wage is higher than the federal minimum wage rate of $7.25. In addition, Ohio’s minimum wage rate is higher than 35 other states. The surrounding states of Indiana and Pennsylvania have the same rate as the federal rate.

Presently, the definition of “employee” is different for workers’ compensation, unemployment compensation and tax purposes. Obtaining a uniform definition across all laws would certainly be useful, but would involve detangling a myriad of laws.

Due to the fact that the majority of Ohio State Senators belong to the Republican Party, it certainly is questionable whether this bill has a chance of becoming law. We will continue to monitor this Bill and if it obtains traction, we will report back on it. For now, expect that the Ohio minimum wage will raise yearly and the classifications of employees need to be evaluated for each type of law.

Employers are not required to break the law to provide a religious accommodation

Posted in EEO

The Sixth Circuit Court of Appeals provides a common sense decision in Yeager v. FirstEnergy Generation Corporation, reminding employers they are not liable under Title VII when “accommodating an employee’s religious beliefs would require the employer to violate federal. . . law.”

Donald Yeager, a Fundamentalist Christian, disavowed and disclaimed his social security number when he was 18 years old based on his sincerely held religious beliefs. When Yeager applied for an internship with FirstEnergy he refused to supply the number. FirstEnergy subsequently refused to hire him.

Mr. Yeager filed suit in the federal district court in March of 2014, alleging FirstEnergy discriminated against him on the basis of religion in violation of Title VII and Ohio Rev. Code Chapter 4112, when it refused to hire him or terminated him because he failed to provide his social security number. Mr. Yeager specifically alleged FirstEnergy refused to reasonably accommodate his religious observance and practice even though his request would not cause an undue hardship on its business operations.

To successfully plead a prima facie case of religious discrimination under Title VII, Yeager needed to demonstrate:

  1. that he held a bona fide religious belief in conflict with an employment requirement;
  2. he informed the employer of the belief; and
  3. the employer did not hire him because of his failure to satisfy the requirement.

FirstEnergy filed a Rule 12(b)(6) motion to dismiss, arguing Yeager failed to state a claim upon which relief could be granted. FirstEnergy further argued it did not create an employment requirement in conflict with Yeager’s religious belief, instead it complied with the IRS requirement that all employees have a social security number. FirstEnergy argued it was complying with federal law. The district court agreed with FirstEnergy, and dismissed Yeager’s complaint.

Yeager appealed to the Sixth Circuit, which affirmed the district court’s ruling. The court found Yeager could not establish a prima facie case of religious discrimination. More importantly, the court held, Title VII does not require an employer to reasonably accommodate an employee’s religious beliefs if such accommodation would violate a federal statute.

Handbook and other statements made about the availability of FMLA leave may be binding

Posted in Leave Administration

In a decision issued by the United States Court of Appeals for the Sixth Circuit (the “Court”) on January 26, 2015, an employee who, but for statements made by his employer, would not have been eligible for leave under the FMLA was nevertheless found to be entitled to it. The Court’s opinion in Tilley v. Kalamazoo County Road Commission, et al. should serve as a warning to all employers that statements made to employees about their FMLA eligibility may be binding, even if the employees do not meet the eligibility criteria required by the statute.

The FMLA provides that an employee is eligible for job-protected leave if he meets three criteria: (1) he has been employed by a covered employer for at least 12 months; (2) he has worked at least 1,250 hours in the prior 12-month period; and (3) he works at a location that employs at least 50 employees within a 75-mile radius.

Terry Tilley met the first two criteria, but, because he had fewer than 50 colleagues within a 75-mile radius of his work location, he did not meet the third and should have been ineligible for FMLA leave. However, when he needed time off for a suspected heart attack, his employer, the Kalamazoo County Road Commission (the “Commission”), sent him FMLA paperwork with a cover letter that informed him that he was “eligible for FMLA leave,” provided him with a “Notice of Eligibility and Rights & Responsibilities” form on which the “eligible for FMLA leave” box was checked, and instructed him to have his physician complete a medical certification form to support his request for FMLA leave. In addition, the Commission’s personnel manual stated that employees who “accumulated 1,250 work hours in the previous 12 months” were eligible for FMLA leave. The policy was completely silent about the 50 employee/75-mile radius eligibility requirement.

Tilley’s employment was terminated because he failed to complete specific job assignments on time pursuant to a final written warning he had been given. He maintained that the reason he was unable to complete them by the deadline was because of time he needed off work, which he understood would be protected FMLA leave based on the language of the personnel manual and the letter he was sent by the Commission. Tilley filed suit, claiming, in part, that the Commission interfered with his right to FMLA leave and retaliated against him for his use of FMLA leave.

The Commission defended Tilley’s claims by arguing that, because Tilley did not work at a location that employed at least 50 employees in a 75-mile radius, Tilley was ineligible for FMLA leave, thereby making his FMLA interference and retaliation claims meritless. The lower court agreed with the Commission, granted the Commission’s motion for summary judgment, and dismissed Tilley’s FMLA claims.

On appeal, the Sixth Circuit took a different view, finding that the Commission was equitably estopped from raising non-eligibility as a defense. To prevail on a theory of equitable estoppel, Tilley needed to prove only: (1) a definite misrepresentation as to a material fact; (2) a reasonable reliance on the misrepresentation; and (3) a resulting detriment to the party reasonably relying on the misrepresentation. The Court found that the personnel manual language alone was a definite misrepresentation of a material fact, his eligibility to apply for FMLA benefits. It also found that a self-serving sworn affidavit, in which Tilley asserted that he would have delayed seeking treatment for his suspected heart attack if he had understood that, contrary to the language of the personnel manual, he was not eligible for job-protected FMLA leave, was sufficient evidence that he reasonably relied on the misrepresentation. The Court acknowledged that “there are obvious reasons to doubt the veracity of Tilley’s assertion,” but held that “the ultimate question of Tilley’s credibility is for the jury.” Because Tilley’s employment was terminated, the Court had no trouble finding that he suffered a detriment as a result of his reliance on the policy. Despite not being eligible for FMLA leave, the Court remanded this case back to the lower court for a trial on Tilley’s FMLA interference and retaliation claims.

Bottom line for employers

Employers should take care to make sure that their FMLA policies list all of the requirements for eligibility. The Court noted in its decision that the Commission’s FMLA policy would not have supported Tilley’s equitable estoppel claim if the Commission had merely qualified the policy’s statement concerning employee eligibility by adding reference to the requirement that the employee work at a location that had at least 50 employees within a 75-mile radius. While the Commission would still have had to deal with the later statements about eligibility made in the cover letter to the FMLA paperwork, Tilley would not have been able to argue that his failure to complete the work assignment, which was due the day of the suspected heart attack, was the result of his reliance on the language of the policy, and the Court’s decision in this case might have been much different.

Managing Inclement Weather

Posted in Workforce Strategies

Looking for more articles on seasonal workplace issues?  Check the Forecast here. Our Employer Law Forecast covers relevant seasonal issues to help you more effectively manage your workforce.

Man scraping ice off car

For some, the first snowflakes of Winter bring thoughts of snowmen and sleigh rides. For others, they signal the beginning of closed business days, employees arriving late to work, and all sorts of other issues all the result of inclement weather! This post takes a look at some of the common headaches that bad weather causes for employers and how to best deal with them.

The National Institute for Occupational Safety and Health Addresses Cold Stress

Extreme cold temperatures have disastrous effects on humans and their ability to work well. The National Institute for Occupational Safety and Health (“NIOSH”) has put together a good summary of cold stress conditions, and the steps employers can take to protect their workers who must work outside in freezing temperatures.

Below are NIOSH’s tips for employers to protect workers from cold stress:

  • Schedule maintenance and repair jobs in cold areas for warmer months.
  • Schedule cold jobs for the warmer part of the day.
  • Reduce the physical demands of workers.
  • Use relief workers or assign extra workers for long, demanding jobs.
  • Provide warm liquids to workers.
  • Provide warm areas for use during break periods.
  • Monitor workers who are at risk of cold stress.
  • Provide cold stress training that includes information about:
    • Worker risk
    • Prevention
    • Symptoms
    • The importance of monitoring yourself and coworkers for symptoms
    • Treatment
    • Personal protective equipment

NIOSH’s recommendations for workers:

Workers should avoid exposure to extremely cold temperatures when possible. When cold environments or temperatures cannot be avoided, workers should follow these recommendations to protect themselves from cold stress:

  • Wear appropriate clothing.
    • Wear several layers of loose clothing. Layering provides better insulation.
    • Tight clothing reduces blood circulation. Warm blood needs to be circulated to the extremities.
    • When choosing clothing, be aware that some clothing may restrict movement resulting in a hazardous situation.
  • Make sure to protect the ears, face, hands and feet in extremely cold weather.
    • Boots should be waterproof and insulated.
    • Wear a hat; it will keep your whole body warmer. (Hats reduce the amount of body heat that escapes from your head.)
  • Move into warm locations during work breaks; limit the amount of time outside on extremely cold days.
  • Carry cold weather gear, such as extra socks, gloves, hats, jacket, blankets, a change of clothes and a thermos of hot liquid.
  • Include a thermometer and chemical hot packs in your first aid kit.
  • Avoid touching cold metal surfaces with bare skin.
  • Monitor your physical condition and that of your coworkers.

NIOSH’s webpage on its recommendations for protecting workers from cold stress can be accessed here.

The Occupational Health & Safety Act Protects Employees Working in Cold Weather

The Occupational Health & Safety Administration (“OSHA”) has its own Cold Stress Guide, which can be accessed here. But, when it comes to cold weather, there are a few other areas where OSHA becomes relevant for employers. Generally, Section 11(c) of the Act provides protection for employees who believe that they have been the subject of an adverse employment action in retaliation for engaging in activities related to workplace safety or health. This protection, of course, means that employees can file a complaint if they are required to work in freezing temperatures without adequate protection.

Commercial Drivers

The Surface Transportation Assistance Act (“STAA”) prohibits an employer from disciplining or firing a commercial driver for refusing to drive a commercial motor vehicle on the highways in violation of Federal safety regulations. The STAA also prohibits an employer from disciplining a driver who refuses to operate a commercial vehicle when he has a “reasonable apprehension” of serious injury to himself or the public because of the vehicle’s unsafe condition. When a driver claims that he has been wrongfully disciplined or fired in violation of the STAA, the driver’s case may be heard by officials of the U.S. Department of Labor (DOL). If an employer illegally fires or disciplines a driver for refusing to drive a commercial vehicle in dangerous weather, the driver can seek relief under the STAA, which is administered by OSHA. FR Doc. No: 2012-17994. OSHA investigates any such complaint filed under the STAA and issues a decision. A successful claimant is entitled to reinstatement, expungement of his or her work record, back pay, other damages, attorney fees and legal costs.

Snow Accumulation

Snow accumulation can also create a safety concern for employers. Workers performing snow removal operations are exposed to many serious hazards, especially when they are required to remove accumulated snow from rooftops.

To address these and other concerns, OSHA has published a Hazard Alert titled, “Falls and Other Hazards to Workers Removing Snow from Rooftops and Other Elevated Surfaces.” The alert provides helpful guidance on how employers should instruct employees to remove snow from rooftops properly and also sets forth OSHA’s standards that require employers to evaluate hazards and protect workers from falls when working at heights of 4 feet or more above a lower level (1910.23) or 6 feet or more for construction work (1926.501). Other potential hazards related to snow accumulation that have been identified by OSHA include:

  • Roof collapses when accumulated snow is not removed.
  • Amputations, eye injuries, and other injuries associated with the use of snowblowers and other mechanized equipment.
  • Collapses or tip-overs when using aerial lifts.
  • Entrapment and suffocation under falling snow drifts or snow piles.
  • Shock/electrocution hazards from contacting power lines or damaged extension cords.
  • Frostbite or hypothermia from cold and windy conditions.
  • Musculoskeletal injuries from overexertion.

The National Labor Relations Act Protects Workers Who Refuse to Work Due to Unsafe Work Conditions in Certain Circumstances

Similar to their rights under OSHA, employees have the right to refuse unsafe work under the National Labor and Employment Act (“NLRA”). Along with this provision, the NLRA prohibits employers from retaliating against workers who refuse to work due to unsafe work conditions if the following three criteria are met: (1) The worker acted in good faith, honestly believing that it would be dangerous to work under current conditions; (2) the refusal involved more than one worker; and (3) the refusal cannot have been part of a work stoppage designed to get around a “no strike” clause in a union contract. If an employer does retaliate, the employee may file an unfair labor practice charge with the NLRB within 180 days of the alleged retaliation. When this issue comes up in the context of employees refusing to drive to work, an employee can be fired for not getting to work in bad weather unless the employer has agreed that the weather is too bad for employees to attempt to drive to work.

The Fair Labor Standards Act Dictates When Employees Must be Paid When Businesses Close for Cold Weather

First up, pay practices. Both federal and state law govern how employees must be paid and employers must take care to ensure compliance with the laws, even when cold weather strikes. Let’s start with the easiest class of employee to address—the nonexempt, or hourly, employee. Under the FLSA, employers are only required to pay nonexempt employees for hours spent performing actual work. An employer is not obligated to pay a nonexempt employee for time not worked, not even when the employee was scheduled to work and was precluded from working due to bad weather or when the employee was sent home early because of bad weather. This means, if a business fails to open or shuts down early and sends nonexempt employees home mid-shift, the employer is only required to pay the employee for the time actually spent working.

Keep in mind, however, some states have “report-in laws” that require an employer to pay an employee if a nonexempt employee is scheduled to work and sent home early, like California. These laws provide guaranteed pay for nonexempt employees who show up for work and are then sent home. While these states are limited in number (and Ohio is not one of them) employers in these states and multi-state employers should make sure they are familiar with report-in laws and comply with them.

On the other hand, exempt employees almost always must be paid for days off due to inclement weather. The rule to remember is that exempt employees must be paid for the entire week for any week that they work at all, or the employer risks losing the exemption. The FLSA provides an exclusive list of the instances in which an employer may dock an exempt employee’s pay. See 29 CFR § 541.602. As you can see, business closures are not one of the allowed instances. So, if an employer sends an exempt employee home because of inclement weather or fails to open for the day entirely, the employer must pay the exempt employee for the entire day. The only time an employer is allow to not pay an exempt employee because of inclement weather is when a business closes for an entire week and the exempt employee has not performed any work during that week. If the exempt employee worked even one day that week, the employer will have to pay the employee for the entire week.

Although employers are required to pay exempt employees for most inclement weather closures, they may require exempt employees to use their paid time off, e.g., vacation or personal time, during this time. Consider including a policy in your employee handbook to address this issue. Note, however, that if the exempt employee does not have enough paid time off in his or her leave balance to cover the absence, the employer is not allowed to deduct the difference from the exempt employee’s salary.

The situation changes, however, when the business is open and the exempt employee chooses to stay home. For days where an exempt employee elects not to report to work, an employer may deduct accrued leave for such absences from the employee’s leave bank. If the exempt employee is not yet eligible for accrued leave or has exhausted such leave, an employer may make reductions from pay for whole day absences. This is typically covered under 29 C.F.R. § 541.602(b)(1) exemption, since it is usually deemed “personal time, other than sickness or disability.”

Here are links to two Department of Labor Opinion letters that may also be helpful in navigating this issue: 2005-46 Salary Docking for Weather Related Absences and 2005-41 Leave Taken During Inclement Weather:

So, be safe and bundle up. It’s cold outside!

Employer immigration alert: H1B filing season approaches — are you ready?

Posted in Immigration

A new year brings new challenges and opportunities, especially for U.S. employers, and it is now time to begin considering filing H-1B petitions for prospective new foreign national employees. These petitions can be submitted to U.S. Citizenship and Immigration Services (USCIS) on or after April 1, 2015 for employment beginning no earlier than October 1, 2015, the beginning of the government’s 2016 fiscal year. The H-1B visa category provides for the temporary employment of foreign nationals who will work in “specialty occupations,” or those jobs for which at least a bachelor’s degree in a particular field is required (for example, engineers, teachers, accountants, and many professional information technology positions). The problem is that there are only 85,000 H-1B visas available each year and we again expect, as in years past, for these numbers to be quickly claimed.

There is a limit (or “cap”) of 85,000 H-1B visas available each year: 65,000 for bachelor degree-level candidates and 20,000 for advanced degree graduates of American universities. However, we anticipate that the available H-1B visa numbers will be exhausted within the first week employers are eligible to file new H-1B petitions. When this occurs, USCIS will conduct a computer-generated random selection process, or lottery, for submitted H-1B petitions to select which will be accepted for adjudication. If a petition is accepted and approved, the foreign national employee will be eligible to receive an H-1B visa number and begin, or continue, working for his or her petitioning employer.

The limit of 85,000 H-1B visas is specific for potential employees initially seeking to acquire H-1B visa or status, and does not impact current H-1B employees. Accordingly, cap-subject individuals include those acquiring the H-1B visa or status for the first time, such as foreign (F-1) students changing to H-1B status and individuals abroad who plan to enter the U.S. for the first time using an H-1B visa.

Each year the H-1B cap typically is reached quickly after the start of the April 1 filing period. Last year, USCIS announced on April 7 that it had reached the statutory H-1B cap within the first week of the filing period. USCIS received 172,500 H-1B petitions for the available 85,000 numbers, leaving nearly 90,000 prospective workers waiting and hoping for another chance to obtain employment, while employers scrambled to fill their needs for skilled workers.

Due to improving employment and economic forecasts, as well as a large number of H-1B candidates who failed to get a visa number last year or who are waiting to apply this year, we advise employers to be proactive and move quickly to ensure their H-1B petitions are prepared and ready to file no later than April 1, 2015.

Once the H-1B cap has been reached, no new petitions may be filed until the next fiscal year (April 1, 2016 for employment beginning October 1, 2016). This can make both hiring and planning an employment start date difficult. For example, although employers can file petitions up to six months in advance of the requested effective date, which makes the April 1 filing date so critical, the approved petition will not be valid until October 1. Thus, even though employers may file petitions on or after April 1 for the next fiscal year, the petition will not be effective until October 1.

The H-1B cap particularly impacts foreign (F-1) students who have post-graduate work authorization (Optional Practical Training, or “OPT”). Generally, OPT is valid for 12 months, and in certain cases can be extended up to 27 months. It also allows former students to remain in the U.S. and work while awaiting the filing or approval of an H-1B petition. Often these individuals’ OPT will expire before an anticipated October 1 start date, leaving them unauthorized to continue working. However, there is a “cap gap” remedy for foreign national employees who have an H-1B petition filed on their behalf. If, for example, an individual’s OPT expires on June 30, 2014, but this person has an H-1B petition filed before the expiry of their OPT and accepted by USCIS, then their work authorization is automatically extended to September 30. This allows the foreign national employee to continue working until the requested start date of the H-1B petition, or until the petition is denied or withdrawn.

Finally, in limited situations, other visa categories may be available in lieu of the H-1B. However, for those cap-subject individuals, such as those currently abroad or who do not have valid OPT or H-1B status, they must wait until October 1 before commencing employment. If you have any questions regarding the H-1B visa category or any of the issues discussed above, please contact one of our immigration attorneys, including Rob Cohen (614/227-2066), Catherine Kang (614/227-2081), or James Jensen (614/227-2070).

 

OFCCP issues proposed updated rules on sex discrimination for federal contractors

Posted in Other Articles

OFCCP issued proposed updated rules on sex discrimination for federal contractors covered by EO 11246. They will be officially published tomorrow. Contractors and interested parties can submit comments until March 31, 2015.

The proposed rules largely align with the obligations already imposed by Title VII of the Civil Rights Act, which applies to most employers, and the Pregnancy Discrimination Act. According to OFCCP, the highlights of the changes are that they will:

  • Clarify that adverse treatment of an employee because of gender-stereotyped assumptions relating to family caretaking responsibilities is discrimination.
  • Clarify that leave for childcare must be available to men on the same terms as it is available to women.
  • Confirm that contractors must provide a variety of workplace accommodations, ranging from extra bathroom breaks to light-duty assignments, to women affected by pregnancy, childbirth, and related medical conditions comparable to the accommodations that contractors provide to other workers similar in their ability or inability to work, such as employees with disabilities or occupational injuries.
  • Clarify that unlawful compensation discrimination can result from job segregation or classification on the basis of gender, not just unequal pay for equal work.
  • Confirm that contractors must provide equal benefits and equal contributions for male and female employees participating in fringe-benefit plans.
  • Address both quid pro quo and hostile-environment sexual harassment, and identify as a best practice that contractors develop and implement procedures to ensure an environment in which all employees feel safe and welcomed, are treated fairly, and are not harassed because of sex.
  • Clarify that adverse treatment of employees because they do not conform to gender norms and expectations about their appearance, attire, or behavior, is unlawful sex discrimination.
  • Clarify that discrimination against an individual because of her or his gender identity is unlawful sex discrimination.

(Taken directly from OFCCP’s FAQs on the proposed rules)

Most employers already comply with most of these obligations already. But the proposal to require that pregnant employees be afforded all the same accommodations a contractor would afford to disabled persons or persons injured at work remains controversial. Last year, the EEOC included such a provision in its updated pregnancy discrimination regulations, which generated dissents from two Commissioners. The extent to which employers must provide reasonable accommodations for routine pregnancies is also a question currently pending before the U.S. Supreme Court. It will be interesting to see how the Court rules on the issue and whether the decision has any impact on the OFCCP proposal.

If you are a federal contractor, we are having a complimentary webinar – Tips for Preparing your 2015 Affirmative Action Plans – on February 10. At this program, Mike Underwood and I will discuss the most important changes and best tips contractors should consider as they prepare AAPs in 2015. We will be addressing these new proposed rules and providing additional clarification for employers.  Click here for more details and to register for this program.

The Supreme Court unanimously says changes to retiree medical coverage a matter of contract analysis—but with a mild twist

Posted in Employee Benefits/ERISA

In what perhaps can be best described as a win for traditional contract analysis, the United States Supreme Court (the “Court”) issued an opinion on January 25, 2015 in M&G Polymers USA, LLC, et al. v. Tackett et al, that may permit M&G Polymers USA, a chemical company, to force its retirees to help pay for the cost of retiree medical coverage. While technically a unanimous decision, the Court’s opinion , which was authored by Justice Clarence Thomas, seems to prefer a stricter standard for this sort of contract analysis than what is set forth in a concurring opinion authored by Justice Ruth Bader Ginsburg (and joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, the other three members of the so-called liberal wing of the Court).

This case relates to the Point Pleasant Polyester Plant in Apple Grove, West Virginia, which was purchased by M&G Polymers in 2000. At the time of that purchase, M&G Polymers entered into a collective bargaining agreement and a related pension and insurance agreement that extended retiree health care coverage to retirees at the plant, many of whom retired before M&G Polymers had bought the plant. Certain retirees who were eligible to receive a benefit under an applicable pension plan (while not clear in the Court’s opinion, the pension plan may have been a multiemployer pension plan) and whose accumulated number of years of age and service equaled or exceeded a specified number were entitled to retiree health care coverage completely paid for by the company. While the collective bargaining agreements were silent as to whether changes in the retiree health care coverage were permissible (silence on that question is not that unusual), the collective bargaining agreements themselves were subject to renegotiation every three years. In December, 2006, M&G Polymers announced that going forward it would begin to charge retirees for a portion of the cost of retiree health care coverage. The retirees responded by filing a court challenge to this decision—alleging that the decision to charge for retiree medical coverage constituted a violation of the applicable collective bargaining agreements. In essence, the retirees, supported by the United Steelworkers union, alleged that they had a vested right for life to no-cost retiree medical coverage.

The challenge by retirees was rejected by the United States District Court for the Southern District of Ohio for failure to state a clam. However, the United States Court of Appeals for the Sixth Circuit later reversed the lower court’s decision based on that appeal court’s previous decision in International Union, United Auto, Aerospace, & Agricultural Implement Workers of America v. Yard-Man, Inc. As applied to ambiguous contract provisions, the approach in Yard-Man looks to the “context” of labor negotiations in general to resolve any ambiguity—and in this case the Court felt that the context of the case established a plausible claim by the retirees. The case was remanded back to the District Court for trial consistent with Yard-Man principles, and that lower court ultimately rendered a decision in favor of the retirees. The Court of Appeals subsequently affirmed the District Court’s decision. The Supreme Court accepted the case on certiorari, and thus this matter landed in the laps of the justices.

The Court took what can only be described as a very dim view of the contextual analysis favored in Yard-Man and its progeny. The Court, both in the opinion of the Court and in the concurrence, rejected the inappropriate tilt that this sort of contextual analysis can create in favor of the retirees. The Court’s opinion goes to considerable length to eviscerate the contextual approach favored in Yard-Man, with Justice Thomas concluding that approach violates ordinary contract interpretation principles by “placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements.” The Court takes a fairly hard line on these issues by concluding that courts generally should not construe ambiguous contract language to create lifetime promises.

The Court remanded the case back to the lower courts for a decision consistent with the opinion written by Justice Thomas. Towards the end of his opinion, Justice Thomas offered a strong hint as to how he thinks the case should be resolved by the lower courts with the admonition “…when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life.” The concurring opinion, while also dismissive of the notion of a thumb on the scale, is less dismissive of the claims of the retirees and suggests that there might be arguments that could support those claims even under a stricter contractual analysis favored by the Court (Justice Ginsburg suggests the fact that no-cost retiree medical coverage is tied to eligibility for a vested pension benefit could indicate the retiree medical coverage also is vested). It now is up to the lower courts to sort all of this out, and it should be interesting to see how that decision unfolds.

The Supreme Court’s decision in M&G Polymers certainly seems to invalidate the contextual analysis favored by the Sixth Circuit in Yard-Man and its progeny, and that development likely will be cheered by many employers. Having said that, the results of a contractual analysis of ambiguous contract provisions even under the Supreme Court’s stricter approach can be unpredictable, and thus employers may be well served to ensure whenever possible that explicit language providing for the ability to amend (or even terminate) employee benefits coverage be inserted in all contractual arrangements, including collective bargaining agreements, to avoid unpleasant surprises.

Join our webinar – Tips for Preparing your 2015 Affirmative Action Plans – on February 10

Posted in Events

Tips for Preparing Your 2015 Affirmative Action Plans

Implementing the New Veterans and Disability Requirements, Incorporating Sexual Orientation and Gender Identity in your AAPs, Tips for Best Practices

 

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Date:
Tuesday, February 10

Time:
2:30 – 4:00 ET

Topics to be covered:

  • Preparing AAPs for compliance with new expanded regulations regarding affirmative action for protected veterans and individuals with disabilities
  • A review of regulatory changes from 2014, including the obligation to incorporate sexual orientation and gender identity in AAPs
  • Best practices for developing and revising AAPs

In a 90-minute webinar on February 10, Mike Underwood and Jamie LaPlante will discuss the most important changes and best tips contractors should consider as they prepare AAPs in 2015. Among the topics will be the AAP obligations for protected veterans and individuals with disabilities. Many contractors will be incorporating these in their AAPs for the first time in 2015. Mike and Jamie will discuss the new regulations and tips for how best to come into compliance, including the necessary revisions to written AAPs; new required analysis, reporting, and documentation; and other new obligations.

Mike and Jamie will also discuss best practices for Executive Order 11246 AAPs covering minorities and females. The webinar will offer effective, practical, and defensible steps for 2015 AAPs. They will share best practices for writing meaningful plans of action and narrative portions of AAPs and for the new requirement to incorporate sexual orientation and gender identity in AAPs.

The webinar will also cover numerous new regulatory developments, including: the OFCCP’s new scheduling letter format, the new form to replace the VETS-100A, minimum wage requirements, a new veterans benchmark figure, and various proposed regulations covering employee rights to discuss wages and working conditions, disclosure of labor violations in the procurement process, and compensation data submission.

Secure your spot by registering today!

Employment Law Proposals Highlight State of the Union Address

Posted in EEO, Leave Administration, Wage & Hour

In last night’s State of the Union Address, President Obama reemphasized that employment and labor reform are at the forefront of his current agenda. He urged lawmakers to pass laws regarding the following:

  • Equal pay law for women;
  • Higher federal minimum wage;
  • Government-mandated 7 days of paid sick leave per year.

As we have previously reported, many states, including Ohio, and municipalities have raised minimum wages at the state or local level. As of January 1, 2015, Ohio’s minimum wage is $8.10 per hour for employers with annual gross receipts of $297,000 or more, which is higher than the current federal minimum wage of $7.25.

Many states and municipalities have also passed paid sick leave laws. Proponents of such a law in Ohio initiated a ballot referendum in 2008, but withdrew the referendum prior to the November election that year. Had it been enacted, it would have required employers with 25 or more employees to guarantee full-time employees at least seven days of paid sick leave each year (and part-time employees a pro-rated amount of leave) to care for themselves and their families’ medical needs.

We will continue to update you if any of these proposals become law at the federal level.