About Us  |  About Cheetah®  |  Contact Us

WK WorkDay Blog

Subscribe to the Employment Law Daily RSS Subscribe

Hospitals were subcontractors subject to OFCCP jurisdiction

June 22nd, 2009  |  Cynthia L. Hackerott

>The Department of Labor’s Administrative Review Board (ARB) has recently held that three hospitals were federal subcontractors subject to the equal employment opportunity and affirmative action obligations enforced by the Office of Federal Contract Compliance Programs (OFCCP), rejecting the hospitals’ assertion that the ARB’s 2003 decision in OFCCP v Bridgeport Hospital (ARB Case No 00-034; CCH OFCCP FEDERAL CONTRACT COMPLIANCE MANUAL ¶21,603) required a contrary ruling. In OFCCP v UPMC Braddock (DOL ARB, No 08-048, May 29, 2009), the US Office of Personnel Management (OPM) had a contract with UPMC Health Plan to provide medical coverage to US government employees. In turn, each of the three hospitals had an agreement with UPMC Health Plan to provide medical products and services covered by UPMC Health Plan. 

In Bridgeport Hospital, the Blue Cross/Blue Shield Association (Blue Cross) entered into a contract with OPM to provide health insurance to federal employees; Blue Cross then entered into a contract with Blue Cross of Connecticut to provide health insurance for federal employees in Connecticut, thus making Blue Cross of Connecticut a federal subcontractor. Subsequently, Bridgeport Hospital entered into a contract with Blue Cross of Connecticut to provide medical services and supplies to members of Blue Cross of Connecticut for a one-year period. The ARB found that Bridgeport Hospital was not a subcontractor because Blue Cross’ contract with OPM did not require Blue Cross to provide its policy holders with medical care. 

Following Bridgeport Hospital, many experts thought that hospitals would not generally qualify as subcontractors subject to OFCCP jurisdiction (see e.g. “NELI experts Fox, Biermann discuss recent OFCCP developments” in CCH OFCCP FEDERAL CONTRACT COMPLIANCE MANUAL Newsletter, December 5, 2003). But, in UPMC Braddock, the ARB distinguished Bridgeport Hospital:

“Unlike Blue Cross, the UPMC [Health Plan] is more than an insurer,” the ARB stated, noting that the UPMC Health Plan is an HMO that contracts with individual physicians, medical groups, and hospitals to provide benefits including medical services and supplies and surgical and anesthesia services, emergency services, mental health and substance abuse services, prescription drug benefits, and dental benefits. “Unlike Bridgeport Hospital, [the hospitals in the present case] contracted to provide ‘a portion of the [the UPMC Health Plan's] obligation’ to provide medical services and supplies under its contract with OPM,” the ARB wrote. 

Another Circuit Court rules on validity of two-member NLRB decisions

June 19th, 2009  |  David Stephanides

>This week, the Second Circuit ruled in support of well over 100 two-member NLRB decisions. The tally now stands at 3-1. The issue: whether a quorum of the Board can be constituted with just two of five members under Section 3(b) of the NLRA.

Joining the First and Seventh Circuits, the court, in Snell Island SNF v NLRB, believed the Board’s view “is a reasonable interpretation of the statute. Indeed, we commend the NLRB for its conscientious efforts to stay ‘open for business’ in the face of vacancies that it did not create and for which it lacked the authority to fill.”

As noted in Workplace Prof Blog, a decision from the Eighth Circuit will be forthcoming, making the issue even more destined for the Supreme Court. A Petition of Certiorari has already been filed in New Process Steel by the law firm Greenberg Traurig, P.A. “The D.C. Circuit [in Laurel Baye Healthcare v NLRB] correctly held that the NLRA does not permit the board to function with only two members. We believe that the Seventh Circuit’s decision is an incorrect interpretation of the act,” said Joseph W. Ambash, one of the attorneys representing New Process.

Here is a rundown of the cases on the matter to date.

For the Board:

And against:

Is federal anti-discrimination protection for breastfeeding women in workplace on the horizon?

June 17th, 2009  |  Deborah Hammonds

>Numerous states have provided women who breastfeed in the workplace with protection from discrimination while federal anti-discrimination protections have been absent. That may change, thanks to legislation recently introduced by New York Representative Carolyn Maloney (D). The Breastfeeding Promotion Act of 2009 (H.R. 2819) would amend the 1964 Civil Rights Act to provide anti-discrimination protections for women who breastfeed in the workplace. The Act would also require employers to provide a private space, other than a bathroom, where a woman can express breast milk and amends the Internal Revenue Code to provide employers up to $10,000 credit for expenses incurred.

“‘The Breastfeeding Promotion Act’ recognizes both scientific fact and the way Americans live now; human milk is the best nutrient for new babies—and most mothers have to go back to work during a child’s first year, when breastfeeding is most important,” Rep. Maloney said on June 11th during the announcement of the bill’s introduction.

“This bill will bring breastfeeding mothers under the protection of the 1964 Civil Rights Act, require employers with over 50 employees to provide a private space and unpaid time off during the workday for mothers to express milk, and sets standards for breast pump manufacture. It also provides for tax incentives for employers that establish private lactation areas in the workplace and tax credits for nursing mothers,” she said.

A similar bill (S. 1244) was introduced in the Senate by Oregon Senator Jeff Merkley (D).

“It’s not every day we have the opportunity to enact legislation that is so clearly a win-win for families and our nation. Making it easier for moms to breastfeed means we have healthier babies, stronger families and happier workers,” Sen. Merkley said. “I championed Oregon’s breastfeeding bill two years ago. I’m excited to see Oregon’s contribution to a nationwide movement embraced by Representative Maloney and all those who have long advocated the purely common sense notion that breast milk is best.”

$86 million judgment reversed in Starbucks’ tip-pooling suit

June 15th, 2009  |  Connie Eyer

>Is a Starbucks shift supervisor who works alongside baristas considered as just part of a customer service team when it comes to taking a cut of the pooled tips? Apparently so, a California appeals court ruled (Chau v Starbucks Corp, CalCtApp, June 2, 2009) when it recently reversed an $86 million judgment against Starbucks in a class action suit in which the trial court found the coffee chain violated state law by including the supervisors in tip pools.

The lower court’s ruling, the appellate court reasoned, was improperly based on a line of decisions addressing an employer’s authority to mandate that a tip given to an individual service employee must be shared with other employees. It noted that Starbucks’ shift supervisors are part-time employees who perform all the duties of a barista, along with having responsibility for additional tasks, including supervising and coordinating employees within the store. There is no decisional or statutory authority prohibiting an employer from allowing a service employee to keep a portion of the collective tip, the court said, in proportion to the amount of hours worked, just because the employee also has supervisory duties.

While acknowledging that sec. 351 of the Labor Code, which Starbucks was found to have violated, was enacted to prevent employees from having to give up their earned gratuities as a condition of employment, the court concluded that it was undisputed in this case that the tipping public intended to collectively tip both the baristas and the shift supervisors for their work as a “team.”

Don’t believe the hike, say opponents of minimum wage increase

June 12th, 2009  |  Lisa Milam-Perez

>Hold off on that next minimum wage hike, urged David Neumark, a professor of economics at the University of California, Irvine, in an opinion piece in today’s Wall Street Journal.

The federal minimum wage is scheduled to increase to $7.25 per hour in July, from the current rate of $6.55. It’s the last in a three-step increase in the minimum wage rate enacted under the Fair Minimum Wage Act of 2007, a happier time — economically speaking — when the nation’s unemployment rate stood at a modest 4.5%. The 2007 rate hike, the first in ten years, broke the longest stretch without an increase since the Fair Labor Standards Act (FLSA) was passed in 1938. But now, “with the aggregate unemployment rate at 9.4%, the teen unemployment rate exceeding 22%, and the unemployment rate for black teens nearing 40%, next month’s increase seems like the worst timing possible,” Neumark wrote. He warns that the 11% minimum wage increase will lead to the loss of an additional 300,000 jobs among teens and young adults — “on top of the continuing job losses the recession is likely to throw our way.”

“Minimum wages, like most public policies, confront us with trade-offs,” Neumark notes. “An employed, low-skilled worker who keeps his job earns a slightly higher wage. But a worker who loses his job, or a labor-market entrant or unemployed worker who cannot find a new job, pays a much higher cost.”

It’s a debate that has raged for decades: Does a minimum wage increase boost the wages of our lowest-paid workers, or does it put them out of work? It depends on whom you ask.

Minimum wage hikes increase consumer spending, says the Economic Policy Institute, a nonprofit think tank, citing a study by economists at the Federal Reserve Bank of Chicago. The organization claims the first two increases in July 2007 and July 2008 will have generated an estimated $4.9 billion of spending by July 2009, and that the coming rate hike will bring in another $5.5 billion over the following year. The results demonstrate that an increase in the minimum wage benefits not only low-income workers, but boosts consumer spending and the broader economy as well, the Economic Policy Institute says.

Hogwash, counters the Employment Policies Institute. (The similarly named think tanks have been sparring on the issue for years.) The Employment Policies Institute has long asserted “the time-tested economic consensus” that minimum wage hikes lead to job loss for low-skilled employees. Responding to the most recent study, Kristen Lopez Eastlick, its senior research analyst, said university-conducted economic research “overwhelmingly runs counter” to the Economic Policy Institute’s claims. Various studies continue to affirm that increases in the minimum wage are poorly targeted to benefit low-wage families, as Census Bureau data shows the average family income of minimum wage employees is nearly $45,000 a year.

“In fact, the federal minimum wage hike has priced employees out of the workforce, and based on recent data from the Bureau of Labor Statistics, it’s the low and unskilled workforce — especially minority teens — who are getting hit the hardest.”

On the other hand, the Fiscal Policy Institute and Policy Matters Ohio reported a few years ago that, since 1997, states with higher minimum wages have generally performed as well or better economically than states with lower minimums. The findings were consistent, the groups said, with “a growing body of economic research that has called into question the long-held prediction that a higher minimum wage will reduce the number of jobs or the number of hours worked by low-wage workers.”

To be sure, when enacted in 1938, the FLSA’s purpose was to grow jobs. The overtime provisions of the Act intended to spread the job wealth by making it costlier for employers to work their current employees more than 40 hours in a workweek. But the legislation also sought to eliminate labor conditions that were seen as detrimental “to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” (29 U.S.C. 202(a)). Thus, the minimum wage. There was a floor below which no American worker should be expected to work, Congress reasoned. It is the friction between these two competing goals, perhaps, that has led to the discord we see today.

In the end, Neumark laments: “I do not expect President Obama or congressional Democrats to give up their long-held support for a higher minimum wage.” Indeed, the minimum wage hike is likely a done deal. But the battle over its wisdom will rage on.