Employer Law Report

Court Enjoins BWC Group Rating Program

bhall@porterwright.com (Brian Hall) — Mon, 01 Dec 2008 14:30:00 -0500

On November 18th, the Cuyahoga County Common Pleas Court in San Allen v. Ohio BWC issued an injunction prohibiting the Ohio Bureau of Workers' Compensation from enacting its current group rating plan and requiring it to enact a retrospective rating plan for the policy year starting July 1, 2009. At its core, the decision requires the BWC to set premiums retrospectively, as requested by the plaintiffs, who were a collection of employers that had seen their premiums increase as a result of having been excluded from a group based on claim experience. Historically, the rates have been set prospectively by the BWC despite statutory language that the court said requires the retrospective rating. In reaching its conclusion, the court noted its expectation that its decision would result in lowering base rates for state-funded employers at the expense of the significant discounts that group-rated employers have been receiving.

Often citing its belief that the discounts given to group-rated employers are excessive and actuarially unsound, the BWC has been working to reduce the level of discounts provided to group-rated employers for more than a year. It is therefore unclear at this time whether the BWC will appeal this decision. In addition, it is important to note that the BWC argued that, despite the statutory language indicating that the group rating program should be retrospective in nature, the legislature, in fact, intended a prospective rating plan. If that is the case (and recognizing, of course, the changes to the legislature since enactment of the group rating program), the Bureau conceivably could seek a legislative fix. As of now, however, state funded employers should anticipate no changes in their December 2008 or July 2009 premium bills.

Employees In the Headlines for Violating Privacy of both President-Elect Obama and "Joe the Plumber"

bhall@porterwright.com (Brian Hall) — Mon, 01 Dec 2008 10:44:13 -0500

This past week's national and local news have both included accounts of employees being disciplined for allowing their curiosity to get the best of them. According to CNN.com, Verizon Wireless has fired an undisclosed number of its employees for accessing cell phone records of President-Elect Obama without authorization. In addition, on November 22nd, the Columbus Dispatch reported that four senior managers at the Ohio Department of Job and Family Services have been disciplined for improperly mining state computers for confidential information on "Joe the Plumber." Previously, Governor Strickland had suspended the OJFS director for her role in the incident.

These incidents demonstrate the privacy and confidentiality risks posed by a company’s own employees. Coincidentally, this week Cisco Systems, Inc. released the third in a series of white papers arising out of its global study of data leakage. Cisco's findings suggest that data losses caused by employee behavior -- whether malicious or inadvertent -- have the potential to cause greater financial losses than attacks that originate outside the company. Employee behaviors not only put customer (e.g. Obama) and general public ("Joe the Plumber") data at risk but also corporate trade secret information. The Cisco data suggests that, although it remains important to plug any holes in computer systems to protect against outside intrusions, employers should be spending more time addressing employee behaviors that are putting data at risk. For those who are interested, the Cisco papers can be found at http://cisco.com/en/US/netsol/ns895/index.html.

Court Stays DOT's Mandatory Direct Observation for Return-to-Duty and Follow-up Testing

kgriffith@porterwright.com (Kevin Griffith) — Fri, 21 Nov 2008 15:39:41 -0500

The U.S. Department of Transportation’s (DOT’s) previously announced mandatory direct observation of specimen collection for return-to-duty and follow-up controlled substances test (see my October 28th post) has been stayed. The United States Court of Appeals for the District of Columbia Circuit has issued an administrative stay, which temporarily delays implementation of DOT’s direct observation requirement. As a result of the court-ordered stay, DOT has announced that direct observation by DOT-regulated employers for these two types of tests will remain optional and at the employer’s discretion. We will keep you posted on further developments.

Porter Wright To Hold Briefing Sessions on the Workforce Impact of the 2008 Presidential and Congressional Elections

ehawk@porterwright.com (Erin Hawk) — Thu, 20 Nov 2008 08:30:00 -0500

Dramatic Changes Ahead

President-elect Barack Obama has promised support for various employment law initiatives that could cause sweeping changes for employers. Support for these initiatives is also strong in both Houses of Congress.

Porter Wright will be hosting a series of briefing sessions in December to ensure that our clients and friends are informed and able to plan for the changes ahead.

Topics include:

Employee Free Choice Act (EFCA)
This new law will make dramatic changes in the rules for union organizing. Unions are likely to target employers in all industries with “blitz-style” campaigns to get cards signed by employees so that the union can demand recognition and bargaining. We will discuss steps that you should put in place now to best position yourself to fight back.

Other Expected Changes
The Obama administration and the new Congress are likely to support federally mandated paid sick time and expansion of coverage under the Family Medical Leave Act. Legislation that would expand discrimination law protections, increase possible damages, and reverse certain pro-employer NLRB decisions are also expected.

Workplace Issues in an Economic Crisis
With the economic strain on employers likely to continue in 2009, some companies will find it necessary to reduce their workforce. Such difficult decisions become even more critical as you face the possibility of EFCA passage and additional workforce challenges. We will discuss how to effectively manage a reduction-in-force in these difficult economic times.

Location and Date Options:

Tuesday, December 9, 2008 - The Capital Club
7:45 a.m. - 8:30 a.m. - Registration and Breakfast
8:30 a.m. - 9:30 a.m. - Program

Thursday, December 11, 2008 - The Hilton Columbus at Easton Town Center
11:30 a.m. - 12:30 p.m. - Registration and Lunch
12:30 p.m. - 1:30 p.m. - Program

Webinar Option:

Tuesday, December 16, 2008
2:00 p.m. - 3:00 p.m.

Register now

In addition, we will be offering a bi-lingual briefing session for our Japanese-speaking clients. If you are interested in this option, please contact Erin Hawk.

2008 Final Regulations for the FMLA: A Summary

mfleischauer@porterwright.com (Marc Fleischauer) — Wed, 19 Nov 2008 09:25:53 -0500

As we noted Monday, the Department of Labor (DOL) published its long-awaited final regulations implementing the Family and Medical Leave Act (FMLA) last Friday. The new rules will become effective January 16, 2009.

Most of the changes in the new regulations were foreshadowed when the DOL first released a set of proposed amendments in February 2008. Although the final regulations differ in significant ways from the original regulations drafted in 1995 by the previous presidential administration, they have stayed pretty consistent with the amendments proposed earlier this year. There are a few new beneficial tools for employers, but there are some new obligations as well.

The most important changes for employers are summarized below, listed in roughly the order they appear in the final regulations.

Joint Employer Definition –

The final regulations contain new language clarifying that a joint employer relationship generally does not arise from “Professional Employer Organizations” in instances where the PEO “merely performs … administrative functions.” However, in circumstances where a PEO or vendor actually has the right to hire, fire, and assign work, a joint employer relationship is still likely to exist, “based on all the facts and circumstances.” 29 CFR § 825.106(b)(2).

Employee Eligibility –

To be eligible for FMLA protection, an employee must have worked with an employer for at least 12 months and for at least 1,250 hours in the last 12 months. According to the final regulations, when measuring the 12-month requirement, employers are no longer required to count work performed before a break in service lasting seven years or more (a change from the proposed regulations, which had originally indicated that a five-year gap would be sufficient to disrupt eligibility). The final regulation provides that time for military service is not to be included in any gap determination. 29 CFR § 825.110(b).

Similarly, the hourly requirement has been rewritten, in keeping with USERRA, so that if an employee would have met the 1,250 hours to qualify but for intervening military service, he or she remains eligible for FMLA. 29 CFR § 825.110(c)(2).

The final regulations retain the proposed change clarifying that employees who become eligible for FMLA protection while in the middle of non-FMLA leave may automatically acquire FMLA protection. Leave that begins before FMLA eligibility may start out as “non-FMLA” qualifying leave, but if an employee becomes eligible for FMLA leave in the midst of the absence, FMLA protections are triggered from that point forward. 29 CFR § 825.110(d).

Serious Health Condition –

The final regulation retains the six familiar definitions for “serious health condition” contained in the 1995 original, though it adds a couple of clarifications.

One form of serious health condition involves an incapacity of more than three days and either (a) two visits with a health care provider (e.g., doctor) or (b) one such visit with a regimen of continuing treatment. The final regulations clarify that the first option only protects absences involving two or more doctor visits “within a 30-day period” and that both options require an “in-person” doctor visit within seven days of the onset of leave. 29 CFR § 825.115(a)(3).

The definition for “chronic condition,” another form of serious health condition, now requires that employees continue to visit a health care provider at least twice per year to qualify. 29 CFR § 825.115(c)(1).

Placement of Adopted Child –

FMLA leave is available for the placement of adopted children. The final regulations retain the proposed clarification that FMLA leave may include time to “travel to another country to complete an adoption.” FMLA eligibility is not affected by the “source of the adopted child.” 29 CFR § 825.121(a)(1).

Health Care Provider –

The long list of health care providers already eligible to prepare FMLA medical certifications and treat employees has been expanded by the final regulations to include “physician’s assistants.” 29 CFR § 825.125(b)(2).

Intermittent Leave –

Unfortunately, the final regulations still provide no useful guidance or changes regarding intermittent leave, despite widespread confusion and requests for clarification from employers. Whereas the 1995 regulations included a statement that employees must “attempt” to schedule their intermittent leave so as not to “disrupt” the employer’s operations, the final regulations clarify that an employee “must make a reasonable effort” to schedule treatments so as not to “disrupt unduly” the employer’s operations. 29 CFR § 825.203. This appears to be a distinction without a difference.

Holidays –

Under the final regulations, where an employee takes a full week of FMLA leave, the fact that a holiday may occur within the week does not affect how much of an employee’s 12-week FMLA allowance has been used – the week is still counted as a full week of FMLA leave. However, if an employee is using FMLA leave in increments of less than one week, the intervening holiday will not count against the employee’s 12-week entitlement unless the employee was otherwise scheduled and expected to work during the holiday. 29 CFR § 825.200(h).

Attendance Bonus –

The 1995 regulations specifically required that employee bonuses based solely on attendance not be denied employees based solely on their absences related to FMLA leave. The final regulations now state that bonus awards can be properly based on the “achievement of a specified goal such as hours worked, products sold or perfect attendance” and therefore can be denied employees who have taken FMLA leave. However, FMLA leave and similar non-FMLA leaves must be treated the same for purposes of such bonuses. 29 CFR § 825.215(c)(2).

Light Duty –

The FMLA permits an employer and employee to agree to a “light duty” schedule that allows the employee to continue working rather than take unpaid FMLA leave. Under the 1995 regulations, such light duty time could be counted against the employee’s 12-week FMLA allowance, even though it technically was “working time” for the employee. This provision has been entirely deleted from the final regulations so that now employees who accept light duty work need not exhaust any FMLA leave to do so. Employees may not be required to work light duty jobs in lieu of taking leave, and those who do so voluntarily are not on FMLA leave. 29 CFR § 825.207(e).

Waiver of Rights –

The 1995 regulations indicated that “[e]mployees cannot waive, nor may employers induce employees to waive, their rights under FMLA.” Some courts had construed this language as prohibiting settlement agreements and other retroactive waivers without DOL or court approval. The final regulations insert the word “prospective” before the word “rights,” and include an express provision permitting “the settlement or release of FMLA claims by employees based on past employer conduct without the approval of the Department of Labor or a court.” 29 CFR § 825.220(d).

Employer Notices –

And you thought your FMLA administration was already a bureaucratic nightmare. The final regulations now provide for four separate types of FMLA notice that must be provided by employers to employees: (1) “general notice” of employee FMLA rights, (2) “eligibility notice” to employees requesting FMLA leave, (3) “rights and responsibilities notice” to employees, and (4) “designation notice” indicating whether a given absence qualifies for FMLA leave.

“General notice” includes the conspicuous placement of the familiar poster listing employees’ FMLA rights, but the final regulations also include a requirement that new employees be separately apprised of their FMLA rights in writing, in an employee handbook or otherwise “upon hiring.” 29 CFR § 825.300(a).

“Eligibility notice” is largely a new concept in the final regulations. When an employee requests (or the employer identifies) a potential FMLA-qualifying leave for the first time during the applicable 12-month period, the employer must notify the employee of their FMLA eligibility status within 5 business days. If the employee is not eligible for FMLA leave, the notice must state “at least one reason” why the employee is ineligible. If the employee’s eligibility does not change by the next time FMLA leave is requested, no new eligibility notice needs to be provided. 29 CFR § 825.300(b). While eligibility notice may be provided by the employer orally or in writing, an approved form for this eligibility notice is provided by the DOL in an appendix to the final regulations.

“Rights and responsibilities notice” must be provided to employees in writing, detailing the employer’s expectations and any consequences of the employee’s failure to meet these expectations under the FMLA. Such notice must be provided with the “eligibility notice” described above and must include: (1) an explanation that if FMLA leave is granted it will be deducted from the employee’s 12-week allowance, (2) requirements for employees to submit medical certifications and the consequences for failing to do so, (3) any employer requirements regarding the substitution of paid leave such as sick time or vacation, (4) requirements for employee to maintain health benefits during FMLA leave, including payment of premiums, (5) key employee status, if applicable, (6) employee rights to maintain benefits and to job restoration following leave, and (7) the employee’s potential liability for unpaid health insurance premiums if the employee fails to return to work following leave. 29 CFR § 825.300(c). An approved prototype “rights and responsibilities notice” is provided by the DOL in an appendix.

“Designation notice” must be provided by employers in writing within five days (the analogous requirement in the 1995 regulations had required such notice within two days) after obtaining sufficient information to know whether a given absence is FMLA-qualifying or not. If leave is granted, the designation notice must include any “fitness-for-duty” certification that may be required by the employer before returning the employee to work. It also must specifically inform the employee of the amount of leave – “hours, days or weeks” – that will be deducted from the 12-week FMLA allowance. If this breakdown is unknown at the time the leave is granted (e.g., where the amount of leave is unforeseeable or sporadic), the employer must provide such information upon an employee’s request, but the employer need not provide such breakdowns more often than every 30 days. 29 CFR § 825.300(d). Again, an approved prototype “designation notice” is provided by the DOL in an appendix.

Employee Notice of FMLA-Qualifying Absence –

In a new development, the final regulations note the general rule that an employee need not mention the FMLA by name, but limit this freedom to circumstances “[w]hen an employee seeks leave for the first time for an FMLA qualifying reason.” However, once FMLA leave has been granted for an employee’s health condition, the employee must thereafter “specifically reference either the qualifying reason or the need for FMLA leave.” 29 CFR § 825.303(b).

The final regulations expressly clarify that an employee cannot merely call in “sick” and thereby trigger an affirmative duty for the employer to inquire further about whether the absence might be FMLA-qualifying. 29 CFR § 825.303(b).

The final regulations specify that even for unforeseeable leaves, it should be “practicable” for employees to request leave “either the same day or the next business day.” 29 CFR § 825.302(b).

Employer’s Usual and Customary Procedures –

Under the final regulations, when the need for leave is not foreseeable, an employee must comply with the employer’s usual and customary notice and procedural requirements for requesting leave, absent unusual circumstances. Specifically, the new regulations generally permit employers to require employees to follow established call-in procedures (except ones that impose more stringent timing requirements than the regulations provide), and they provide that failure to properly notify employers of absences may cause a delay or denial of FMLA protections. 29 CFR § 825.302(d). Employers may require employees seeking FMLA leave to call a “designated number or a specific individual to request leave.” 29 CFR § 825.303(c). Under the 1995 regulations, an employer could not delay or deny FMLA leave if an employee failed to follow such procedures.

Medical Certification –

The final regulations include new approved medical certification forms, including separate forms for the serious health conditions of employees and those of family members. To streamline the processing of certifications, the final regulations allow health care providers to include medical facts about diagnoses, symptoms, hospitalization, doctors’ visits, prescription medication, referrals for evaluation or treatment (physical therapy, for example), or any other regimen of continuing treatment.

Employer Contacts with Health Care Providers –

The 1995 regulations prohibited direct contact between employers and health care providers in most instances. The new final regulations carve out an exception, allowing employers to contact physicians directly “[i]f an employee’s serious health condition may also be a disability within the meaning of the Americans with Disabilities Act,” so long as the more liberal restrictions of the ADA are observed. 29 CFR § 825.306(d). (Under the old and new regulations, employers may also contact employees in accordance with state workers’ compensation laws.)

The final regulations also permit an employer to make direct contact with the employee’s physician to seek “clarification and authentication” of medical certifications. Previously, only another physician hired by the employer could make such inquiries. However, in a change from the proposed amendments, the final regulations require that employers initiate such contacts only through “a health care provider, a human resources professional, a leave administrator, or a management official.” Importantly, “[u]nder no circumstances … may the employee’s direct supervisor contact the employee’s health care provider.” 29 CFR § 825.307(a).

While the employee is not required to permit his or her doctor to communicate with the employer, the employer may deny the designation of FMLA leave for failure to consent. 29 CFR § 825.307(a).

Recertification –

The final regulations change and clarify an employer’s right to obtain recertification for a serious health condition. As with the 1995 regulations, an employer may require recertification no more than every 30 days, unless the circumstances of the leave change or the employer receives information that casts doubt on the legitimacy of the original certification. Under the final regulations, if the medical certification indicates that the underlying condition will last more than 30 days, the employer may not request recertification until that minimum duration has passed. In all cases, however, even where a medical certification indicates that the underlying condition is a “lifetime condition,” employers may always require recertification every 6 months in connection with an absence. 29 CFR § 825.308. These changes significantly clarify the old rule.

Fitness-for-Duty Certification –

The final regulations permit an employer to require that an employee obtain a certification from his or her health care provider that the employee is fit to resume work following FMLA leave. The employer may provide the employee with a list of the employee’s essential job duties together with the designation notice, described above, in which the employer originally advises the employee of the necessity for a fitness-for-duty certification. If the employer provides such a list of essential functions, it may require the employee’s health care provider to certify that the employee can perform them. When completing a fitness-for-duty certification, the health care provider therefore must assess the employee’s ability to return to work against the identified essential functions. 29 CFR § 825.312(b).

While the general restriction on obtaining a new fitness-for-duty certification following each intermittent leave event remains intact, the final regulations carve out an exception: an employer is entitled to a certification of fitness to return to duty for intermittent absences up to once every 30 days if “reasonable safety concerns” exist regarding the employee’s ability to perform his or her duties. 29 CFR § 825.312(f).

FMLA Leave for Military Families –

A substantial portion of the final regulations is dedicated to providing first-time guidance on this year’s amendment to the FMLA to provide leave for employees who need time to fulfill military duties or to care for family members in the military.

The final regulations extend FMLA protection to employees who are needed to care for family members in the military with a serious injury or illness incurred in the line of duty. Likewise, the amendment allows families of National Guard and Reserve personnel on active duty to take FMLA job-protected leave in order to manage activities associated with their service, known as “qualifying exigencies.”

The final regulation defines “qualifying exigencies” as: (1) short-notice deployment, (2) military events and related activities, (3) childcare and school activities, (4) financial and legal arrangements, (5) counseling, (6) rest and recuperation, (7) post-deployment activities, and (8) additional activities to which the employer consents. 29 CFR § 825.126(a).

Employees eligible for leave under both of these new initiatives are permitted to take up to 26 weeks of leave in a 12-month period. This leave may be taken separately from more conventional FMLA (i.e., for serious health conditions), so long as conventional FMLA leave does not exceed 12 weeks and the total leave does not exceed 26 weeks in the 12-month period. The final regulations include definitions for employee coverage and for certification of qualifying events giving rise to the leave.

Unfortunately for the purposes of quick analysis, the new military leave provisions are intertwined throughout the existing regulations dealing with serious health conditions. We will provide a more detailed analysis of these provisions in the near future.

Federal Motor Carrier Safety Administration Adopts Final Rule on Hours of Service for Commercial Vehicle Drivers

bhall@porterwright.com (Brian Hall) — Wed, 19 Nov 2008 09:00:27 -0500

On November 18, 2008, the Federal Motor Carrier Safety Administration (FMCSA ) issued a news release stating its adoption as final the provisions of the Agency’s December 17, 2007, interim final rule concerning hours of service (HOS) for commercial motor vehicle (CMV) drivers. This final rule allows CMV drivers to continue to drive up to 11 hours within a 14-hour, non-extendable window from the start of the workday, following at least 10 consecutive hours off duty (11-hour rule). Drivers also cannot operate a truck if they have worked more than 60 hours in a given week. The rule allows motor carriers and drivers to continue to restart calculations of the weekly on-duty limits after the driver has at least 34 consecutive hours off duty (34-hour restart). This rule is effective January 19, 2009.

In the news release, FMCSA Administrator, John Hill, also noted that in 2006, the Agency proposed a rule that would require drivers and trucking companies with serious or repeat hours-of-service violations to track their hours-of-service using electronic on-board recorders (EOBRs). The final rule for EOBRs is pending.

DOL Issues Final FMLA Regulations

mfleischauer@porterwright.com (Marc Fleischauer) — Mon, 17 Nov 2008 15:47:11 -0500

On November 14, 2008, the Department of Labor (DOL) issued its new final regulations implementing the Family and Medical Leave Act of 1993 ("FMLA"). These regulations represent the first changes and additions to the regulations since they were first issued in 1995.

As previously noted in this space (see "Proposed FMLA Regulations Largely Disappointing for Employers"), the DOL had originally issued a set of proposed amended regulations on February 11, 2008, which had left the employment legal community wondering whether publication of final regulations could be completed before the end of the year. In a 752-page flourish (available in its entirety here: http://www.federalregister.gov/OFRUpload/OFRData/2008-26577_PI.pdf), the DOL kept its promise.

Although the final regulations largely retain the original February proposals related to leave for serious health conditions of employees and their family members, they contain a few employer-friendly clarifications and additions, along with practical forms for employers to use. These approved forms include new medical certifications (including now-separate forms for employees and family members), FMLA eligibility notices, and leave designation notices.

The DOL's final regulations also include the first long-awaited guidance on the January 2008 amendments to the FMLA statute (discussed here: " President Bush Expands Family and Medical Leave for Families of Servicemembers") pertaining to leave for military servicemembers and their families. The triggering definitions for "serious injury or illness of covered servicemembers" and "qualifying exigencies," which largely have been a mystery since the statutory amendments were enacted, have finally begun to reveal themselves.

The Employer Law Report will provide a complete review of the DOL's final regulations for the FMLA and their impact on employers in the near future. Be sure to check back soon for a full update.

National Bank Act May Preempt Certain Bank Officer Employment Claims

kgriffith@porterwright.com (Kevin Griffith) — Wed, 12 Nov 2008 10:19:57 -0500

National banks may be missing out on a defense available to them against certain state-law employment claims brought by terminated bank officers. In particular, the National Bank Act (NBA) allows national banks to dismiss officers “at pleasure, and appoint others to fill their places.” This provision has been interpreted to mean that state-law tort and contract wrongful discharge claims by terminated bank officers are preempted and, thus, subject to dismissal. See, e.g., Boesch v. Champaign National Bank, Case No. 24014 at 6 (9th App. Summit Cty., June 30, 2008); Schweikert v. Bank of America, Case No. 06-2137 (4th Cir. April 1, 2008).

The NBA preemption defense applies, however, only when a bank’s board of directors makes the termination decision or delegates the authority to do so and then ratifies the decision. The board’s ratification need not occur before or on the termination date, but it needs to occur as promptly afterward as possible.

NBA preemption covers state-law tort and wrongful discharge claims such as intentional infliction of emotional distress, breach of contract, and wrongful discharge in violation of public policy, to name a few. The preemption defense does not apply to federal statutory claims, such as claims for race discrimination under Title VII, age discrimination under the Age Discrimination in Employment Act, or disability discrimination under the Americans with Disabilities Act. Whether the NBA’s preemption defense applies to state-law statutory discrimination claims is an open question. For instance, one state appellate court has held that the NBA preempts state-law discrimination claims. Boesch, supra. Another state appellate court has held that NBA preemption does not apply to such claims. White v. Fed. Reserve Bank (8th Ohio App. 1995), 103 Ohio App.3d 534, 539.

Given the likelihood of dismissal of at least some state-claims, is there any downside to asserting NBA preemption as a defense in bank officer employment cases? Yes, several do exist. Since a bank’s board must be “involved” in the termination decision in order for the defense to apply, asserting the defense will subject the board and its members to discovery during the litigation where the bank asserts NBA preemption. That could be inconvenient and time consuming. Also, in some states, board members could be subject to claims of personal liability, such as under anti-discrimination statutes, based on their involvement in the termination and ratification decision. Thus, limiting the board of directors’ involvement to just NBA ratification purposes and/or obtaining liability insurance for board members are important considerations toward alleviating those concerns.

Election Results - Immediate Workplace Issues

munderwood@porterwright.com (Mike Underwood) — Thu, 06 Nov 2008 17:51:24 -0500

Of course, no one can be certain of the exact workplace effects of Tuesday’s Presidential election results. But, at least one major change in employment law is pretty certain – and it is a change that all employers, large and small, in all industries, should be planning for now.

President-Elect Obama has stated clearly his support for the proposed Employee Free Choice Act (EFCA). His election, together with additional Democratic seats picked up in the Senate and Congress, make the passage of EFCA in 2009 a very strong likelihood. That will mean the most dramatic change in labor law in this country in decades.

As a reminder, there are two significant provisions of the EFCA: First, unions will be able to demand bargaining rights based solely on cards that they can pressure employees to sign face-to-face. The protection of a secret-ballot election will be taken away. Second, if labor negotiations between a union and employer for a first contract reach impasse, an outside arbitrator will dictate the terms of that key first contract.

If EFCA passes, you can be certain that unions will launch aggressive card-signing campaigns. It is likely that employers of all sizes and in all industries, including service, retail, manufacturing, and white collar industries, will be targeted. Small- to medium-sized businesses will be especially vulnerable because union organizers may be able to get a majority – or close to a majority – of the cards signed quickly before the employer is able to react.

So what should companies do now? The most effective defense against a union card-signing campaign is cultivating a workforce where people are not inclined to sign a card. That means promoting management behavior and policies that make the arguments for card-signing fall on deaf ears. The prudent employer will not wait and see whether EFCA becomes law. That may be too late. The kinds of management behavior and policies that defeat union organizing cannot be put in place overnight.

A solid preparation plan for this potential sweeping change in labor law includes at least the following steps:

An effective defense starts and ends with appropriate management behavior, so a program to reinforce management training about the sorts of things that support union organizing should be done now. Managers should be instructed about what might make an employee susceptible to a card-signing effort and what manager conduct will make it more likely an employee will “just say no” if asked to sign.
Re-visiting and evaluating wages and benefits to assure that they are competitive is another means of defense.
Prudent employers will also develop sound workplace policies that promote employee involvement and an active voice for employees in workplace matters.
Finally, making certain that managers are aware of the risk of union organizing and understand what can be done legally in response to organizing will also help employers prepare for EFCA.

A commitment to these steps now will be time well spent, regardless of what happens with EFCA. The very same steps that make a company strong against union organizing also promote fundamentally sound management behavior, consistent and fair treatment, and improved employee morale.

Ohio Department of Commerce Issues New Prevailing Wage Guidelines

jlandrum@porterwright.com (Jaime Powell) — Wed, 05 Nov 2008 08:56:12 -0500

The Ohio Department of Commerce recently released new prevailing wage guidelines. These guidelines, which became effective on October 15, 2008 and are available at http://com.ohio.gov/laws/, focus on construction projects supported by both public and private funds. Essentially, whenever a public entity contributes funding or other direct support (such as public land) to a project, even an otherwise privately-financed project, prevailing wage must be paid to the workers on that project. The guidelines also state that, for the most part, projects may not be subdivided into a publicly-supported project and a privately-financed project in order to avoid prevailing wage on certain “phases” of a project.

While the guidelines are intended to clarify the existing law, rather than create new standards, some of the examples listed in the guidelines have resulted in much controversy, particularly in the areas of asbestos removal/brownfield remediation. Nevertheless, the guidelines are considered to be currently in effect and Ohio employers should approach prevailing wage issues conservatively. Please contact your attorney if you have any questions on prevailing wage or whether a construction project is covered by the state law.

Ohio Minimum Wage Changes

jlandrum@porterwright.com (Jaime Powell) — Mon, 03 Nov 2008 10:05:46 -0500

Effective January 1, 2009, Ohio’s minimum wage will increase to $7.30/hour generally and $3.65/hour for tipped employees (plus tips).

The state minimum wage will briefly change to $6.55/hour for employers grossing $267,000 or less per year and employees who are 14 or 15 years of age. On July 24, 2009, pursuant to an increase in the federal minimum wage, the Ohio minimum wage increases to $7.25 per hour those employees whose employers gross $267,000 or less and 14 & 15 year olds.

Employers Subject to the U.S. Department of Transportation's Substance Abuse Testing Requirements Must Now Conduct Direct Observation for Return to Duty and Follow-up Testing

kgriffith@porterwright.com (Kevin Griffith) — Tue, 28 Oct 2008 11:45:57 -0500

Beginning November 1, 2008, employers covered by the United States Department of Transportation’s controlled-substance testing regulations must conduct direct observation collection for “return to duty” and “follow-up” controlled substance tests. These regulations apply to employers governed by the Federal Highway Administration (such as private motor carriers), the Federal Railroad Administration (which regulates railroad operators), the Federal Aviation Administration (which regulates airlines and related industries), the Federal Transit Authority (which regulates companies doing business with mass transit providers), and the Research and Special Programs Administration (which regulates pipeline industries).

Part of the DOT’s rationale for requiring direct observation for these two types of tests is the fact that the individuals subject to these two tests have already tested positive or refused to submit to testing in violation of DOT’s controlled-substance testing requirements. The DOT believes the individuals in these categories have a greater than average likelihood of using illegal drugs in the future and, consequently, higher than average motivation to cheat on a test. In addition, the Department has studied the dramatic increase in available cheating products on the market, which are solely designed to help illegal drug users defeat drug tests. Some of these products that are now sold to help employees avoid detection include prosthetic devices that look like real human anatomy, even color matched.

The DOT is implementing this observation requirement while attempting to strike an appropriate balance between the safety of employees and the public and individual privacy concerns. Thus, for example, the direct observation collection of urine specimens will require the use of a same-gender observer.

Employers subject to the DOT’s new direct observation requirements for return to duty and follow-up testing should consult with their collection facilities regarding these requirements. In addition, employers should consider how best to notify the employees in their work force who potentially will be subject to this requirement. That way, if and when a direct observation test arises down the road, the employee in question will not be shocked or surprised by the requirement.

Recent Sixth Circuit Decision Authorizes Creative Solution to Address Runaway Intermittent Leave

bhall@porterwright.com (Brian Hall) — Fri, 17 Oct 2008 15:35:35 -0500

Many employers have been pulling their hair out attempting to address runaway intermittent leave under the FMLA. The Sixth Circuit’s decision in Davis v. Michigan Bell authorizes one creative solution – change your 12-month FMLA period to a calendar-year basis.

On September 24, 2004, – the first day she became eligible for FMLA leave after having worked for her employer since 1997 – Candice Davis was granted FMLA intermittent leave for chronic depression certified by her health care provider. Between September 24 and December 13, 2004, she took several discrete absences from work due to her depression and each absence was approved for FMLA. Beginning on December 13th, she began a more extended leave due to her depression but, despite her employer’s efforts, did not return her FMLA medical certification form for this period. Her employer did, however, initiate a short-term disability leave for her in accordance with the company’s benefits package. On January 7, 2005, Ms. Davis’s therapist informed her employer that she was no longer disabled and could have returned to work as early as January 3rd. As a result, Ms. Davis’s employer informed her that every absence after January 2nd would be considered an unexcused absence unless she sought and received FMLA leave to cover those days off. It also told her that she would be considered to have resigned if she did not report to work on January 14th. When January 14th passed without a return to work, she was suspended pending her dismissal.

In protesting her dismissal, Ms. Davis requested that her unexcused absences be approved for FMLA leave. Her employer, however, concluded that Ms. Davis really was not eligible for FMLA leave in 2005. Here’s what happened: Michigan Bell measured its 12-month period under the FMLA on a calendar-year basis. As a result, the company measured Ms. Davis’s entitlement to FMLA for calendar year 2005 on the first date of her proposed FMLA leave for 2005. Lo and behold, when the company looked back from that date over the previous year, it concluded that Ms. Davis had not worked the requisite 1,250 hours. Therefore, she was terminated.

Ms. Davis sued Michigan Bell claiming primarily that it had interfered with her FMLA rights by denying her FMLA benefits. In analyzing whether Ms. Davis was entitled to FMLA leave in 2005, the Sixth Circuit noted that the determination of FMLA eligibility "must be made as of the date leave commences" under 29 C.F.R. §825.110(d). If that date was measured as of September 24, 2004, then Ms. Davis was eligible for additional leave. If, however, the date is more properly measured in January 2005 when Ms. Davis sought additional leave for her chronic condition, then she was not eligible.

In concluding that Ms. Davis’s eligibility was properly re-evaluated by Michigan Bell at the beginning of calendar year 2005, the court noted that when an employee has a chronic health condition for which intermittent FMLA leave has been approved, the leave commences upon the occurrence of the first absence caused by the condition and it extends to cover every other absence caused by that condition during the same twelve-month FMLA period. Once a new 12-month FMLA period begins, however, any additional absences caused by that same chronic condition would constitute a new period of intermittent FMLA leave. Therefore, in other words, absences caused by the same chronic condition but occurring in different 12-month FMLA periods, constitute different periods of FMLA leave.

In Davis, Michigan Bell may have benefited from a perfect storm of events that permitted it to raise the eligibility issue. Indeed, the facts suggest that the eligibility argument was an afterthought once the employer realized that Ms. Davis had not actually worked the requisite 1,250 hours in the previous year.

In my experience, most employers have selected a rolling 12-month FMLA period to prevent abuse that could result from an employee stack one twelve-week FMLA leave at the beginning of one year upon the 12-week leave period at the end of that year. Nevertheless, those employers that have more concerns about rampant intermittent leave abuse may want to consider whether to go through the steps necessary under the FMLA to change to a calendar-year model.

CIS's Proposed Regulation to Allow for Three-Year TN Status Adopted on October 16

kknapp@porterwright.com (Kyle Knapp) — Thu, 16 Oct 2008 17:06:54 -0500

On October 16, 2008, the Department of Homeland Security adopted the May 9, 2008 proposed regulation without change. Therefore, effective October 16, 2008, qualifying individuals now may obtain initial periods of TN status or extensions of status for up to three years. As noted in the prior post announcing the proposed regulation, this new development certainly is good news for TN employers and employees alike.

Mental Health Parity Provisions of the Bailout Law

acaresani@porterwright.com (Ann Caresani) — Thu, 16 Oct 2008 12:37:10 -0500

The Emergency Economic Stabilization Act of 2008 (“EESA” or the “bailout law”), which was enacted on October 3, 2008, contains significant amendments to the Mental Health Parity Act of 1996 (“MHPA”) that are pertinent to group health plans. For most plans, these changes will be effective January 1, 2010.

Under the provisions of MHPA prior to this amendment, the annual or lifetime dollar limits on mental health benefits could be no lower than the dollar limits for medical and surgical benefits offered by a group health plan or health insurance issuer offering coverage in connection with a group health plan. The original sunset provision of the MHPA has been extended numerous times, with the current extension running through December 31, 2008. The MHPA, which does not apply to benefits for substance abuse or chemical dependency, provides that employers retain discretion regarding the extent and scope of mental health benefits offered. This includes cost sharing, requirements relating to medical necessity, and limits on numbers of visits or days of coverage. MHPA does not apply to small employers (less than 51 employees), and does not apply to a group health plan or group health insurance coverage if the application of the parity provisions would result in an increase in the cost under the plan or coverage of at least one percent.

A majority of states and the federal employees' health benefit program further require insurance companies to cover certain mental and physical illnesses equally. Ohio law, for example, provides for coverage of “biologically-based mental illness,” but does not provide for coverage of substance abuse disorders. These state laws are not applicable to many programs, such as employer-sponsored self-insured medical plans, which are exempt from state parity laws pursuant to the Employee Retirement Income Security Act.

EESA eliminated the sunset provision of the MHPA, so that it is no longer set to expire. EESA requires equality in coverage of mental health and “substance use disorder” benefits, but does not mandate that these benefits be provided. As the EESA is amending the existing law, its provisions generally apply to a group health plan that is subject to the existing MHPA requirements. If such a group health plan provides mental health and substance use disorder benefits:

Financial requirements cannot be more restrictive than the “predominant” financial requirements applied to medical and surgical benefits covered under the plan. Financial requirements include deductibles, copayments, coinsurance, and out-of-pocket expenses, but do not include annual limits and aggregate lifetime limits (which are addressed under existing law).
Treatment limitations for mental health and substance use disorder benefits cannot be more restrictive than the “predominant” treatment limitations applied to medical and surgical benefits covered under the plan. Treatment limitations include frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.
Out-of-network coverage, if available for medical or surgical benefits, must also be available for mental health or substance use disorder in a manner that is consistent with the coverage for medical or surgical benefits. There can be no separate cost-sharing requirements or treatment limitations applicable to mental health or substance use disorder benefits, unless those requirements and limitations also apply to medical and surgical benefits.
Disclosure of criteria for medical necessity decisions with respect to mental health or substance use disorder must be made by the plan administrator (or claims administrator as applicable) upon request, and the reason for any claim denial or reimbursement request denial for such coverage must be available upon request or as otherwise required.
Voluntary opt-out is available for a group health plan (or health insurance offered in connection with such plan) if as a result of offering this coverage, the cost of coverage with respect to medical and surgical benefits and mental health and substance abuse disorder benefits rises more than 2 percent in the first year and 1 percent annually thereafter. However, a determination of this cost increase must be made by an actuary in a written report, and a filing for exemption must be made with the Department of Labor. The determination may be made after the first year at issue, or within six months of that year. Records must be maintained for six years from the date of the filing, and the Department of Labor may audit during this period.

Bottom line? If your group health plan is subject to the Mental Health Parity Act requirements, provides coverage for mental health or substance use disorder benefits, and imposes financial requirements or treatment restrictions greater than those now permitted, it will need to be revised before the first plan year beginning on or after October 3, 2009 (or a later date as permitted for certain collectively bargained plans). Unless mental health and substance use disorder benefits are eliminated, the cost of coverage can be expected to increase.

President Bush Signs the ADA Amendments Act

cpate@porterwright.com (Christy Pate) — Mon, 29 Sep 2008 12:13:19 -0500

President Bush signed the ADA Amendments Act (S. 3406) into law Thursday, September 25. The new provisions, intended to clarify and strengthen protections Congress intended to guarantee in the original ADA, go into effect on January 1, 2009. For more information on the provisions of the new law and what the law means for employers, please read our previous postings where these issues are discussed in more detail.

New Consumer Product Safety Whistleblower Law Enacted

bhall@porterwright.com (Brian Hall) — Fri, 26 Sep 2008 10:43:53 -0500

On August 14, 2008, President Bush signed into law the Consumer Product Safety Improvement Act of 2008 (CPSIA), which includes, among many extensive changes to consumer safety laws, a whistle-blower provision.

This provision applies to all manufacturers, distributors, retailers and private labelers of children's toys, children’s products and child care articles, regardless of the number of employees. Under the Act, children's toys and children's products are generally defined as being "designed or intended primarily for children 12 years of age or younger." "Child care articles" are defined as "a consumer product designed or intended by the manufacturer to facilitate sleep or the feeding of children age 3 and younger, or to help such children with sucking or teething."

The Act, which became effective immediately upon President Bush's signature, protects covered employees from retaliation resulting from:

(a) providing or "being about to" provide to the employer, the federal government or state attorney general information relating to any act or omission that the employee reasonably believes to be a violation of the law.

(b) testifying or "being about to" testify in a proceeding concerning such a violation;

(d) objecting to, or refusing to participate in, any activity, policy, practice or assigned task that they (or other such persons) reasonably believed to be a violation of any provision of the Act or any other law enforced by the Consumer Product Safety Commission, or any order, rule, regulation, standard, or ban under such laws.

Consistent with a variety of other federal whistleblower statutes, OSHA is responsible for accepting complaints, conducting investigations and hearings and otherwise enforcing the CPSIA whistleblower provision.

The CPSIA, which was enacted in response to last year's overwhelming number of recalls of children's products and toys, contains numerous revisions to the consumer safety laws relating to all aspects of the manufacture and sale of children's toys, children's products and child care articles. All affected employers should re-evaluate their policies and procedures not only to ensure compliance with these amendments, but also to ensure that appropriate procedures are in place to address employee concerns about covered product safety and to ensure legitimate non-retaliatory bases for any discipline imposed on any covered employee.

Transsexuality-Based Decisions May Cause Problems Under Federal Sex Discrimination Laws

munderwood@porterwright.com (Mike Underwood) — Thu, 25 Sep 2008 09:40:40 -0500

The decision in a recent federal court case against the United States Library of Congress shows clearly the risk an employer takes when making employment decisions based on a person’s gender identity. In Schroer v. Billington, D.D.C., Case No. 05-1090, September 19, 2008, the Library of Congress was found guilty of sex discrimination under Title VII when it withdrew a job offer just after the Library became aware that the person being hired – Diane Schroer – was undergoing medical treatments to change her sex from male to female. Ms. Schroer is a decorated military veteran and had been hired for a terrorism research analyst position at the Library. Shortly after being hired, she disclosed the fact that she was undergoing sex change treatments, and the Library of Congress told her the next day that she would not be a “good fit” for the job.

In recent years, a growing number of state and local laws have been adopted prohibiting discrimination based on transsexuality, transgender status, and other gender identity traits. But, federal employment discrimination law does not identify gender identity or similar traits as a protected class. Despite the absence of specific protection under the statute, some federal courts have found discrimination based on gender identity illegal under Title VII on a theory of sexual stereotyping. The theory is that taking action against a man, for instance, going through or contemplating a sex change punishes that man for not adhering to stereotypical male attributes and amounts to sex discrimination. The Court of Appeals for the Sixth Circuit reached that conclusion concerning transgender status in Smith v. Salem, 378 F.3d 566 (6^th Cir. 2004).

The judge in the Schroer case went even further, though. That judge concluded not only that the Library of Congress was guilty of sexual stereotyping in violation of Title VII but also that the Library’s decision was sex discrimination on its face. Specifically, the judge concluded that the Library was willing to hire Ms. Schroer when it understood her to be a man but later withdrew the offer after it learned that she would be, at some point in the future, a woman. The judge concluded that such decisionmaking was pure and simple sex discrimination. He likened it to discrimination against a person who converts from one religion to another and concluded that discrimination based on a sex change is sex discrimination under Title VII.

The Schroer case is a reminder to all of the importance of keeping the focus in employment-related decisions on those things that are clearly job-related. Any decision that is influenced by sexual stereotyping or presumptions about persons who do not conform to majority attitudes or “labels” are very likely to run afoul of employment discrimination law.

Los Angeles Commuter Train Tragedy Suggests Employers Should Review Electronic Device Policies

bhall@porterwright.com (Brian Hall) — Fri, 19 Sep 2008 13:49:33 -0500

News confirming that the engineer of the Los Angeles commuter train that crashed last week, killing more than 20 people, engaged in text messaging while on the job underscores the need for employers to consider policies banning employee use of cell phones while driving on company business. Though it remains to be seen whether the engineer was texting at the time of the crash, the proliferation of electronic devices, such as Blackberries, and their potentially addictive use is helping to make "distracted driving" an increasing problem on the road. Simply put, distracted drivers are becoming more dangerous to themselves, their passengers and other motorists. Although distracted driving is a public problem that is not unique to employers, employers must recognize that they likely will be the "deep pockets" should a distracted employee cause a car accident. In fact, if the distracted employee also is injured in the accident, a workers’ compensation claim is also a strong possibility.

Some states have enacted laws restricting cell phone use while driving. Ohio is not one of them. As a result, Ohio law enforcement presumably is not obliged to police distracted driving (except in obvious cases of erratic driving). Therefore, to help manage their potential liability from distracted driving, Ohio employers should strongly consider banning the use of cell phones, Blackberries and similar devices while driving on company business as well as from conducting company business on such devices at anytime while driving. Otherwise, whether as a result of employees texting friends while driving on company business or responding to an urgent e-mail from the boss while driving, employers risk potentially significant liability.

For such policies to work, however, employers and employees will need to work together to ensure that the electronic device policy is enforced in a way that respects the fact that the employee may not be able to instantaneously respond to work issues while they are driving.

ADA Amendments Act Passed by House and Senate; President Expected to Sign Bill

cpate@porterwright.com (Christy Pate) — Fri, 19 Sep 2008 12:02:43 -0500

On Wednesday, September 17, by voice vote, the House of Representatives approved the Senate version of the ADA Amendments Act (ADAAA) (S.3406), which the Senate had unanimously approved last week. The White House immediately issued a statement that President Bush looks forward to signing the bill into law. Once signed, the ADAAA will take effect on January 1, 2009.

The Senate bill differed slightly from the previously passed House version. For employers, the most significant difference between the two bills is the decision to eliminate a definition for “substantially limits,” which was included in the House bill. Instead, the new bill directs the EEOC to abandon its current regulation – a regulation that the bill specifically finds too restrictive – and to create a new rule that provides broader coverage.

As previously reported, other key provisions of the ADAAA include:

"Substantially limits" loosened:
- Congress rejected several U.S. Supreme Court cases that have narrowly interpreted the ADA, including the court-fashioned requirement that an individual must have an impairment that prevents or severely restricts the individual from doing activities that are of central importance to daily life in order to be considered substantially limited.

- In addition, an impairment that substantially limits one major life activity does not have to limit any other major life activities.
Major life activities” expanded: “Major life activity” is broadly defined, includes specific examples of major life activities, and extends the phrase to include “major bodily functions.”
Consideration of mitigating measures largely eliminated: Employers cannot consider the ameliorative effects of mitigating measures in determining whether an individual has a disability. The only exception is that glasses and contact lenses can still be considered.
Remission or episodic impairments counted: Impairments that are episodic or in remission are disabilities if they would substantially limit a major life activity when active.
Limit to life activity not applied to “regarded as” provision: An individual does not have to establish that the impairment limits or is perceived to limit a major life activity under “regarded as” disabled provisions.
Minor or transitory conditions excluded: Minor or transitory conditions lasting six months or less are excluded from “regarded as” claims.
No accommodation required under “regarded as” provision: Employers are not required to provide reasonable accommodations to employees who are “regarded as” disabled.

Congress’s clear intent is to provide ADA coverage to more people and to require courts to apply a less demanding standard in determining whether a person is covered by the ADA. Instead, Congress wants courts to focus on whether discrimination based on disability actually occurred. This likely means an increase in the number of employees and applicants who are considered disabled and places greater importance on employer efforts to reasonably accommodate those individuals. Indeed, the legislation strongly suggests that employers will need to reasonably accommodate individuals even if they are fully able to perform their job duties while taking medication or using prescribed medical devices.

Though some believe that the ADAAA will not cause an increase in litigation, we believe that there will be a rise in the number of cases filed because the bill will make it easier to state a claim and because people initially will seek to test the new provisions. Additionally, under the current ADA and standards, many cases were dismissed before trial because plaintiffs could not meet the high standard of proving that they are disabled. The ADAAA makes this outcome much less likely. As a result, we expect a rise in jury trials as it becomes more difficult for employers to win at the summary judgment stage.