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Pending Paycheck Fairness Act would resurrect controversial EO Survey

August 5th, 2009  |  Cynthia L. Hackerott


The Paycheck Fairness Act (H.R. 12, S. 182), currently pending in Congress, would require specific changes to OFCCP and EEOC enforcement activities related to gender discrimination in compensation. One proposed change of particular concern to the federal contractor community is the proposed legislation’s requirement that the OFCCP reinstate the controversial Equal Opportunity (EO) Survey. The Act would require that “not less than half of all nonconstruction contractor establishments” prepare and file the EO Survey each year and require the OFCCP to “review and utilize the responses to the survey to identify contractor establishments for further evaluation.” 

The regulatory requirement for federal contractors to file the EO Survey, put into place by the Clinton Administration, was eliminated on September 8, 2006 (71 FR 53032-53042) by the Bush Administration. The decision to eliminate the EO Survey was based in part on two studies commissioned by the OFCCP to access the validity of the EO Survey as a selection tool for compliance reviews. One of the studies failed to find a correlation between the predictive variables generated from the EO Survey and determinations of noncompliance. The second study showed that the EO Survey did not provide sufficiently useful data for enforcement targeting purposes. On October 5, 2006, at the National Employment Law Institute’s Twenty-Fourth Annual Affirmative Action Briefing in Chicago, then OFCCP Director Charles E. James, Sr. said the EO Survey “was a noble effort, but with a faulty design.”

The EO Survey was not popular among the federal contractor community, who generally found it to be unduly burdensome. The survey required contractors to report information about personnel activities, compensation and tenure data, and certain information about the contractor’s affirmative action program. Although the OFCCP’s recordkeeping regulations require contractors to maintain information that was necessary to complete the EO Survey, contractors were not required to maintain that information in the format called for by the survey instrument. Critics asserted that the data request in the EO Survey was too generalized to provide useful compliance or enforcement information. Another concern was that the EO Survey required companies to report personnel data by individual business location. Companies that monitored their employment practices on a broader basis (for example, by functions or geographic regions) complained that requiring reports to be prepared by single business location was unduly restrictive. This was particularly problematic for contractors that utilized functional affirmative action programs, rather than the traditional establishment-based affirmative action programs.

Nevertheless, civil rights groups, such as Women Employed, the National Women’s Law Center and the National Partnership for Women & Families have maintained that the EO Survey could have been a vital tool to enable the OFCCP to detect discrimination based on race and gender and target investigations or other enforcement action. “They want to eliminate this enforcement tool without ever having used it,” said Jocelyn Frye, General Counsel at the National Partnership for Women & Families in a statement issued at the time the OFCCP first proposed elimination of the EO Survey. “OFCCP has not suggested changes to improve it or offered any alternative. Instead, it is discarding an important tool that would have provided hard data on pay and job practices.”

The House passed the Paycheck Fairness Act on July 31, 2008, but the bill has not yet come to a vote in the Senate. If the Act does become law with the EO Survey resurrection provision intact, the OFCCP would be faced with the choice of using the previous, much criticized format, or developing a revised, and hopefully more utilitarian, format. Given the agency’s difficulties with its previous attempts in utilizing the EO Survey, this looks to be a monumental task.

Over Governor’s veto, Hawaii passes controversial “mini-EFCA” law

August 3rd, 2009  |  David Stephanides

>The Hawaii State Legislature has enacted legislation to certify unions as exclusive bargaining representatives without an election, or secret ballot, for employers with an annual gross revenue of $5 million or more. House Bill 952 also requires arbitration in the event a first contract is not reached within a specified period of time, and imposes civil penalties of up to $10,000 per violation for unfair labor practices. The State Legislature overrode the governor’s July 14 veto by a two-thirds vote in a Special Session held July 15.

While Hawaii has moved forward with its “mini-EFCA,” six Democratic U.S. senators friendly to labor reportedly have decided to drop the card-check provision of the Employee Free Choice Act, according to the New York Times. Card-check is a central element in the legislation, but it has proven to be a stumbling block in securing full support for the bill among Democrats. Provisions for a sharply reduced union election cycle, required union access to employer property, and a ban on captive audience meetings are some of the revisions said to be in the works; the bill’s original mandatory arbitration and heightened damages provisions remain.

Effective July 1, Hawaii employees covered by H.B. 952 will be able to skip a secret ballot election if the state’s Labor Board determines that a majority of employees have signed valid authorization cards. After a union is certified and issues a request to collectively bargain, the employer must commence bargaining within 10 days. If after 90 days the parties remain at an impasse, either may request conciliation. If after an additional 20 days the parties still cannot reach an agreement, the matter will be referred to an arbitrator whose decision is binding for two years.

Whether Hawaii will be the first of many states to move forward with EFCA-type laws remains to be seen. From a statistical standpoint, Hawaii’s move may seem unexpected since the state has the second-highest percentage of union workers in the country and nearly twice the national percentage.

Legislation designed to ensure disability access to telecommunications technology re-introduced

July 31st, 2009  |  Deborah Hammonds

>In an attempt to make sure people with disabilities are not left behind as changes in technology race ahead, U.S. Representative Edward Markey (D-Mass) has re-introduced the Twenty-First Century Communications and Video Accessibility Act (H.R. 3101) (Act). According to a summary posted on the website THOMAS (http://thomas.loc.gov/), the Act’s goal is “to establish new safeguards for disability access to ensure that people with disabilities are not left behind as technology changes and the United States migrates to the next generation of Internet-based and digital communication technologies.”

Such legislation would no doubt impact litigation such as the lawsuit filed against Arizona State University (ASU) regarding a pilot program’s use of Amazon’s Kindle DX electronic reading device as a means of distributing electronic textbooks. Several institutions of higher education are deploying the Kindle DX as part of a pilot project to assess the role of electronic textbooks and reading devices in the classroom. The lawsuit, filed by the National Federation of the Blind (NFB) and the American Council of the Blind (ACB), alleges violations of the Americans with Disabilities Act and the Rehabilitation Act of 1973 because the Kindle DX cannot be used by blind students.

Although the Kindle DX features text-to-speech technology that can read textbooks aloud to blind students, the menus of the device are not accessible to the blind, making it impossible for a blind user to purchase books from Amazon’s Kindle store, select a book to read, activate the text-to-speech feature, and use the advanced reading functions available on the Kindle DX.

In addition to their ASU lawsuit, NFB and ACB also filed complaints with the Office for Civil Rights of the U.S. Department of Education and the Civil Rights Division of the U.S. Department of Justice, asking for investigations of the following five institutions: Case Western Reserve University, the Darden School of Business at the University of Virginia, Pace University, Princeton University and Reed College.

“Given the highly-advanced technology involved, there is no good reason that Amazon’s Kindle DX device should be inaccessible to blind students. Amazon could have used the same text-to-speech technology that reads e-books on the device aloud to make its menus accessible to the blind, but it chose not to do so. Worse yet, six American higher education institutions that are subject to federal laws requiring that they not discriminate against students with disabilities plan to deploy this device, even though they know that it cannot be used by blind students,” said NFB President Dr. Marc Maurer. He also said he hoped the matter could be resolved “in a manner that allows this exciting new reading technology to be made available to blind and sighted students alike.”

The objectives of the Twenty-First Century Communications and Video Accessibility Act include:

  • requiring mobile and other Internet-based telecommunications devices have accessible user interfaces, and offer people with disabilities use of a full range of text messaging and other popular services that are currently largely inaccessible;
  • providing people who are deaf-blind with vital but costly technologies they need to communicate electronically; and
  • ensuring video programming offered via the Internet will be described, and call for all devices that receive and playback video programming to employ accessible user interfaces and allow ready access to description.

The Act, co-sponsored by U.S. Representatives Barbara Lee (Calif) and Linda T. Sanchez (Calif), was re-introduced on June 26, 2009.

It’s 9:00 AM: do you know where your employee records are?

July 29th, 2009  |  Connie Eyer

>Earlier this month, Connecticut Governor M. Jodi Rell signed into law An Act Concerning Consumer Privacy and Identity Theft (P.A. 09-239 (S.B. 838), L. 2009, effective Oct. 1, 2009), which is sure to have repercussions for employers in that state. Broadening the definitions of identity theft and “personal identifying information,” the legislation requires private employers to strengthen the security of job applications. In accordance with Section 10, each employer shall obtain and retain employment applications in a secure manner and shall employ reasonable measures to destroy or make unreadable such employment applications upon disposal. Such measures shall, at a minimum, include the shredding or other means of permanent destruction of such employment applications in a secure setting. Employers violating these provisions will be subject to a civil penalty of at least $500, not to exceed $500,000 for any single violation.

Do you know the record-retention laws that apply to your company? For starters, different state laws or operational requirements may have varying record-retention guidelines. Complicating the issue are questions like: How does an employer define an “applicant?” What exactly constitutes personnel records? Also, do the rules differ for unsolicited resumes or Internet applicants?

Many states have laws that require employers to retain particular records for a specified period of time; however, unsolicited resume retention is not specifically addressed in the laws of each individual state. For example, in Illinois, employers are required to maintain, among other things, resumes for one year from the date of application. Pennsylvania law requires all documents relating to employment including the applications of both successful and unsuccessful applicants must be preserved for 120 days following the filing of the forms. Wisconsin requires even longer retention: five years for all records relating to an applicants employment, including the original application.

Who is considered an “applicant?” The concept of an applicant is that of a person who has indicated an interest in being considered, through submission of a resume or otherwise, for hiring, promotion, or other employment opportunities. In an effort to address the difficulties federal contractors face in dealing with the often overwhelming amount of expressions of interest submitted via the Internet or related electronic data technologies in the context of OFCCP compliance, the OFCCP developed the Internet Applicant Rule, which employs the following criteria: (1) the job seeker has submitted an expression of interest in employment through the Internet or related electronic data technologies; (2) the employer considers the job seeker for employment in a particular position; (3) the job seeker’s expression of interest indicates the individual possesses the basic qualifications for the position; and, (4) the job seeker does not remove himself or herself from further consideration or indicate that he or she is no longer interested in the position (41 C.F.R. §60-1.3). For paper submissions, however, the traditional applicant rule applies.

Disposal of employee records. Before complying with identity theft legislation, many questions should be resolved concerning the destruction of employee records. Can you be certain that data has been rendered unreadable before recycling or disposal? What really happens to your company’s old computer hard drives? If you used a vendor to shred documents, do you know details of their security?

Obviously, these are all complicated issues that cannot be easily addressed, so it is imperative that employers take a thorough look at their compliance with both state and federal laws to adequately define both their record-retention and disposal requirements. In cases where federal and state requirements overlap, the employer is expected to adhere to the stricter requirement.

An employee by any other name…

July 28th, 2009  |  Lisa Milam-Perez

>Many employers utilize independent contractors to meet short-term business needs or to carry out non-core functions. Some employers, however, adopt the independent contractor distinction for more unsavory reasons, such as evading payroll tax obligations, employee benefit costs and union organizing campaigns, or to avoid wage-hour suits or other employment claims. In either case, and regardless of an employer’s intentions, merely calling a worker an independent contractor does not make it so.

This truism is hardly new, nor are the murky and varied criteria that go into determining how to classify individual workers. What has changed, though, is the heightened liability that can befall unwary employers that get it wrong. Employers that improperly classify their workers have been targeted from all angles of late.

Consider FedEx. Perhaps no employer has been more under siege due to its use of independent contractors. In a closely watched case, a California appellate court found the company’s driver-operators were indeed “employees,” notwithstanding the terms of their Delivery Contractor Operating Agreement, and thus were entitled to reimbursement for work-related expenses under the California Labor Code (Estrada v FedEx Ground Package System, CalAppCt 2007, 154 LC ¶60,485). Soon thereafter, a plaintiff’s firm sent out more than 27,000 notices to past and current FedEx Ground/Home Delivery drivers across the country in multi-district litigation challenging the company’s independent contractor model. In all, more than 45 class-action suits have been filed against FedEx in state and federal courts over its classification practices. In addition, the IRS tentatively determined FedEx Ground drivers should be reclassified as employees—and that the company owed more than $319 million in back taxes and penalties for 2002 alone. Most recently, in June, eight state attorneys general announced they were teaming up to ensure the FedEx Ground division adheres to state employee classification laws.

FedEx won one key skirmish, however: earlier this year, a federal appeals court reversed a NLRB finding that FedEx delivery drivers were employees, concluding instead that they were indeed independent contactors and therefore did not fall within the Board’s jurisdiction (FedEx Home Delivery v NLRB, DCCir 2009, 157 LC ¶11,217). The ruling foiled a Teamsters effort to gain recognition as FedEx drivers’ bargaining rep.

Independent contractor misclassification isn’t just an employee rights issue, though. It’s estimated that more than $4.7 billion in federal income is lost due to misclassification. And for every 1 percent of workers misclassified, states lose an average of $198 million each year in unemployment insurance funds.

It’s no surprise, then, that cash-strapped states are pursuing the cause. To cite just two examples from last month alone: Colorado passed a bill allowing any individual to file a state agency complaint alleging an employer is misclassifying an employee as an independent contractor. The statute imposes a fine of up to $5,000 per misclassified employee for the first instance of misclassification made with willful disregard of the law; subsequent violations carry fines of up to $25,000 per misclassified employee. And Maryland enacted the “Workplace Fraud Act of 2009,” specifically targeting construction and landscaping employers that misclassify workers as independent contractors. State governors have also entered the fray, issuing executive orders that create state commissions or task forces expressly geared to addressing worker misclassification, and state agencies are beefing up their audit and enforcement activities in this area.

In some instances, states have created a private right of action for workers improperly deemed independent contractors. Here’s where it gets even pricklier: Some statutes allow any “interested party” to sue. In June, a federal district court in Illinois denied an employer’s motion to strike a union as a party plaintiff in a suit filed under the Illinois Employee Classification Act (Chicago Reg’l Council of Carpenters v Sciamanna, NDIll 2009, 157 LC ¶60,814). The court concluded the union was an “interested party” under the state law, enacted in 2008, which provides a cause of action for the improper classification of construction workers as independent contractors. The statute broadly defines an interested party as “a person with an interest in compliance with the Act.” The union has an economic interest in requiring employers to comply: it represents workers who perform construction work for the defendant employer and in the industry generally, and there is more than a “speculative possibility” that the union itself is entitled to relief under the statute, the court reasoned. The strategic value of such legislation to labor unions is clear.

At the federal level, the “Employee Misclassification Prevention Act” (H.R. 6111) was introduced in the 110th Congress. It would have amended the Fair Labor Standards Act to provide a penalty for employers who misclassify employees as non-employees. The bill has not yet been introduced in the current Congress. Give it time.