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Union leaders shout displeasure over Affordable Care Act

February 13th, 2014  |  David Stephanides  |  Add a Comment

In a story that has somewhat fallen off the radar, union leaders have once again made it known that they are not pleased with the Affordable Care’s Act treatment of multi-employer health plans. The reality, they stress, is that if federal subsidies are available only for plans purchased through state exchanges, employers contributing to multiemployer plans will face tremendous economic pressure to stop contributing to these plans. Many employers will feel the need to drop coverage and access the subsidies to remain competitive.

Updating the contentious issue, the Washington Post reported Jan. 31 that Obama Administration officials said “if the unions got their way, people enrolled in their plans would be indirectly getting two tax benefits while most Americans get only one.” 

“The unions here are asking to double dip,” said Robert Laszewski, a health policy consultant in Washington quoted in the Post article. “It is an unfair request. The Obama plan is very simple: If your employer pays for your health plan, you are not eligible for a government subsidy. What the unions are asking for is government and employers to fund their benefits.”

While union officials acknowledge that their plans are unique, they stress that the ACA didn’t take that into account. As a result, commercial insurers can cover anyone through the individual or group markets, while the multi-employer plans can’t. This creates unstoppable incentives for employers to reduce weekly hours for workers currently on these plans and push them onto the exchanges where many will pay higher costs for poorer insurance with a more limited network of providers.

“We thought that if we made the case to the agencies dealing with regulations to correct problems that hurt [our plans], really destroy, self-funded nonprofit health plans, it would be resolved,” said Donald Taylor, President of Unite Here, in the Post article. “That clearly was naive or stupid.”

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Mistakes by HR reps can be particularly costly for employers

February 11th, 2014  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

Employers rely on human resources professionals to administer workplace policies and ensure the company’s compliance with applicable laws, but who makes sure that HR reps themselves comply? A Master’s degree and HR certifications will only go so far, and wise employers (and in-house counsel) will see to it that their HR reps fully appreciate the potential impact of their day-to-day interactions if an employer is later accused of improprieties. In many cases, avoiding a costly trial could be a simple matter of an HR professional carefully thinking through the consequences of an action before taking it. Below are some real-life examples of such missed opportunities and suggestions for improvement.

Hazarding a guess can be a hazard. When asked why a company decided a long-time employee could no longer perform her cleaning duties, an HR specialist said: “I don’t know why. I think she’s probably older now.” A court found this to be direct evidence of the employer’s age bias (Dupont v Allina Health System). Suggestions:

  • Plan ahead. Try to anticipate what might be asked before a meeting and think about the answers you might give. Imagine what your answers would sound like to a jury.
  • Don’t guess. If someone asks why a company is taking an action and you do not know, it is okay – even preferable – to simply say you will look into it.

Don’t stray from an interview plan. A nurse who did not complete her application process claimed that an HR rep spent much of a job interview discussing her pregnancy and deterred her from completing the process by saying she would not be hired while she was pregnant. This was enough to avoid summary judgment (Di Gioia v Independence Plus, Inc). Suggestions:

  • Prepare questions in advance. Tailor questions to job requirements and do not stray into areas prohibited by discrimination and other laws. For example, you can ask if an applicant can meet scheduling requirements, but avoid asking how much sick leave was taken at prior jobs or whether religious observances preclude weekend hours.
  • Avoid making promises. In some cases, comments made by HR reps in interviews about the prospect for long-term employment have been held by courts to give rise to implied contracts altering the at-will employment relationship.

Emails can come back to haunt you. On the same day a restaurant server was terminated, a senior benefits specialist sent an email to a third-party provider asking how to exhaust the server’s short-term disability leave, stating “we are wanting to exhaust her STD so that we can terminate her according to the terms of our policy. Help!” Based on that and the allegation that another HR rep told the server she had returned to work prematurely, a court found evidence of retaliation against the employee for exercising her STD rights (Spahic v Gaylord Entertainment Co). Suggestions:

  • Before hitting “send,” recognize that the intended recipient may not be the only one who ends up reading your email, and reread it to see how it might appear to a third party. Recognize that while memories of the context fade, emails can last forever and could be interpreted differently once the context is lost. Also note that personal email accounts may also be subject to disclosure in discovery.

Doing half the job is like not doing it at all. Although a sales rep complained to HR about a supervisor’s sexual harassment, and workers interviewed by HR confirmed his remarks on her breasts, the employer found the allegations unsubstantiated. A court found its investigation lacking because it did not interview all witnesses and further found it conclusions questionable (Miles v Wyndham Vacation Ownership). Similarly, an HR rep in another case concluded a male worker likely engaged in misconduct against a female coworker who reported severe sexual harassment but the remedy — a two-day suspension — may not have been adequate, a court observed, particularly since they continued to work together (Ortega v The Neil Jones Food Co).

  • Fully investigate complaints. Be responsive to employees who complain of discrimination, retaliation, or other misconduct and take them seriously. Adequately investigate allegations and draw objectively reasonable conclusions.
  • Properly enforce policies. Having a policy prohibiting sexual harassment and telling employees how to report it (as these employers did) will not help in court if the policy is not enforced properly. Draw reasonable conclusions from the investigation and impose an appropriate level of discipline for misconduct.

Suggestions for improving HR performance

There are many other examples of when an HR representative’s action or failure to act increased an employer’s exposure to liability, including: pressuring employees to sign agreements or questionable waivers (such as a statement that sex was consensual); failing to translate important information for non-English speakers; providing negative references; failing to maintain documents while litigation is ongoing; making statements to an applicant that imply he or she has a job before they actually do (possibly leading an applicant to turn down other jobs); and failing to enlist an independent investigator when a personal friend is accused of wrongdoing.

The list could go on, but the point remains the same: even the best HR departments will likely have room for improvement, and there is a lot of value in taking measures to ensure that HR is doing what it needs to do. These could include:

  • Auditing for compliance in key areas like, including: salary administration; recruiting and hiring; orientation; terminations; training; employee relations; and files/record maintenance.
  • Requiring HR reps to attend seminars or otherwise reinforce their knowledge of applicable regulations, key issues, and emerging legal trends.
  • Knowing the rules is not the same as understanding what compliance looks and feels like. Much like lawyers might observe other litigators in action or practice arguments before associates or mock juries to gauge reactions, HR reps should be required to take steps to get a real-world feel for the consequences of their actions. For example:
    • Practice, practice, practice. Have HR reps practice routine functions where stray remarks or small missteps could lead to big liability. Among other activities, have them interview an obviously pregnant applicant for a job requiring physical labor; give them faux personnel files with poor work histories and have them practice giving references to other employers that push for too much information; and have them practice their response to sexual harassment or discrimination complaints.
    • Seek feedback. Ask employees to provide anonymous feedback (e.g., through a questionnaire) about how they think the HR department is doing.

Taking these and similar measures will not only reduce an employer’s risk of liability but will also likely instill in employees a sense of confidence in management and improve the company’s reputation in the community and among shareholders.

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Breastfeeding mother jumps over first hurdle on FLSA retaliation claim

February 8th, 2014  |  Sheryl Allenson  |  Add a Comment

Although new mothers seeking to pump breast milk at work have had protection under federal law for several years, employers generally were not held to the letter of the law. That is, not until recently. In May 2013, an appeals court overturned a ruling against an employee who claimed she was terminated for asking to pump milk at work. The appeals court rejected the lower court’s decision that ‘[l]actation is not pregnancy, childbirth or a related medical condition.” An adverse employment action motivated because an employee was lactating or expressing breast milk is clearly based on factors “that male employees need not — indeed, could not — suffer,” wrote the appeals court, finding the employee could have stated an actionable sex discrimination claim.

Recently, the ACLU has entered the arena, representing a Pennsylvania glass maker in her civil complaint. According to the complaint and an EEOC charge, the employee continuously asked her employer for a suitable place to express milk, but instead, the employer provided her only with space that was either unsanitary or not sufficiently private. Just days ago, the employee learned that her complaint could advance after it survived the employer’s motion to dismiss the action.

Single mother knows the law. In this case, the employee knew the law. She knew that the 2010 Patient Protection and Affordable Care Act amended the Fair Labor Standards Act to add a provision known as the “Reasonable Break Time for Nursing Mothers.” That provision requires employers to provide non-exempt employees a reasonable break to pump milk for a nursing child for one year after birth and a place, other than a bathroom, that is shielded from view and is free from intrusion from coworkers and others.

Although the employee tried to educate her employer about the law, her efforts apparently failed. First she was directed to a bathroom, then, when she pointed out that that did not comport with the law, she was provided other unsanitary or insufficiently private spaces. Finally, she agreed to use a filthy locker room, because “at least it had a lock on the door – and they said they’d clean it up,” Although her employer had promised to clean up the space, it had dirt and dead bugs on the floor, and there was no air conditioning — problematic because temperatures in the factory could exceed 100 degrees. The company did not take any action to improve the space until after she took legal action.

Harassment starts. Meanwhile, the employee’s coworkers harassed her while she was pumping milk. Among other things, male coworkers pounded on the door and yelled, and one brought her a bucket, comparing her to a cow being milked. On two occasions, coworkers greased the handle of the door where she would pump milk and placed metal shards there. According to the employee, a supervisor told her that the coworkers’ conduct did not rise to the level of harassment because individuals, and not the company, engaged in the conduct.  No action was taken against any of the perpetrators.

Instead of accommodating the employee’s request for a suitable place to pump breast milk, the employer turned to retaliation, she claimed. Although when she returned to work after her pregnancy she initially worked a day shift, after she complained, the employee was placed on a rotating shift, where she was required to work an overnight shift every third week. Pleading that the shift changes were medically detrimental to her ability to pump milk, the employee provided medical notes to her employer to support her request for a reversal of its decision—however, the employer remained steadfast.

Negative impact on mother and child. According to the employee, this shift change caused a reduction in her ability to produce breast milk. Since she was reassigned to the rotating shift, her milk supply decreased by 50 percent. Although she pumped as frequently as before, she produced far less milk each shift. This was a direct result, she said, of her inconsistent work hours, interrupted sleep schedule, stress, and the discomfort she experienced while trying to express milk in the unsuitable and unsanitary facilities provided by the employer.

She also claimed that once her shift was changed, she was assigned to tasks typically given only to employees with very low seniority, far below her own seniority level. She alleged that she was treated differently than other male coworkers who had requested the same accommodations – a day shift – for other medical reasons. She was also denied overtime, which she claimed was in further retaliation for her request for accommodations so she could pump breast milk.

Legal options. Although the employee brought a retaliation claim under the FLSA, this case, coupled with the federal appeals court decision mentioned earlier, further bolsters the growing wave of support for the position that stifling a woman’s right to breastfeed amounts to sex discrimination. Employers beware—employees now have several legal paths to choose to ensure that, if they need to, they can pump breast milk at work.

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Recap of 2013 and preview of 2014: Federal agencies on the labor scene

February 6th, 2014  |  Pamela Wolf  |  Add a Comment

By Pamela Wolf, J.D.

Those who have been watching developments on the labor front know that it’s been quite an interesting year for some of the federal agencies that impact the world of labor law. Indeed, some of the challenges faced by these agencies in 2013 have landed in the lap of the U.S. Supreme Court. For these and other reasons, 2014 may turn out to be a similarly notable year in the labor law arena.

To understand the most significant developments at the federal labor agencies in 2013, among other things, and learn what may be in store for 2014, Employment Law Daily reached out to a team of experts on its Editorial Advisory Board, including Chris Bourgeacq, General Attorney with AT&T, and Will Anthony, Jackson Lewis Partner and Chair of the Class Action and Complex Litigation Practice Group.


Our experts outlined the most important agency activities on the labor front in 2013. According to Will Anthony, they centered around three key developments:

(1) The President’s recess appointments to the National Labor Relations Board (which are now before the U.S. Supreme Court in NLRB v Noel  Canning);
(2) The NLRB’s “increased expansion” of the concept of “protected concerted activity”; and
(3) The Department of Labor’s consideration of changes to the Labor-Management Reporting and Disclosure Act (LMRDA) “advice” exemption.

Recess appointments. “If, as may be the case based on the recent oral argument in Noel Canning, Dkt No 12-1281, the Supreme Court holds that the President’s recess appointments were invalid, then the NLRB was acting without a quorum for several years,” Anthony explained. “In that case, the Board decisions and rulemaking during the relevant time period are likely to be found invalid.” That means the Board will need to reconsider all of the decisions it made during the relevant period. The issue of NLRB’s legitimacy “has resulted in the finality and import of numerous NLRB decisions being called into question,” he said.

The D.C. Circuit’s Noel Canning decision invalidating President Obama’s NLRB recess appointments was likewise at the top of Chris Bourgeacq’s list as the most notable agency development of 2013. He observed that two other appellate courts (the Third and Fourth Circuits) have reached the same conclusion as the D.C. Circuit reached in Noel Canning. “The decision places in limbo virtually all decisions issued by the Board since January 2012 until it attained its full quorum last August,” Bourgeacq said.

What was the impetus for the Noel Canning decision? It may have been many instances of overreaching by the Board in its rulemaking activities, which were also struck down by the courts, as well as the NLRB’s administrative decisions that have overturned decades of precedent, according to Bourgeacq. He said the D.C. Circuit issued more than one decision against the NLRB last year in addition to Noel Canning, suggesting the circuit’s frustration with the manner in which the Board has conducted its regulatory activities.

On the political front, Noel Canning probably also contributed in large part to the Senate’s finally consenting to President Obama’s subsequent Board nominees, Bourgeacq suggested — a move that resulted in the first fully-constituted Board since George W. Bush was President.

Expansion of protected activity. With regard to the NLRB’s increased expansion of “protected concerted activity,” Anthony points out that there has been “a significant increase in Board unfair labor practice charges relating to policies on social media, confidentiality, at-will disclaimers, class action waivers, and many areas where employers and employees did not realize that the National Labor Relations Act might apply.”

The impetus for the expansion of “protected concerted activity,” according to Anthony, is “the NLRB’s efforts to make the NLRA more relevant to both unionized and union-free workplaces.” He said that the LMRDA changes appear to help unions since, among other things, employers may decide they want to forego their right to obtain competent confidential legal advice in dealing with union issues.

The NLRB’s “protected concerted activity” initiative, Anthony said, has provided additional opportunities for employees and unions to file charges against employers based on a perception that the Board is more receptive. “All employers — whether unionized, union-free, or somewhere in between — are impacted by the Board’s decisions and related advice memoranda applying the provisions of the NLRA in terms of protected concerted activity in a new and broader fashion,” he said. “In fact, from a broader perspective, all employers are at risk of running afoul of the NLRA under new NLRB interpretations on issues ranging from individual social media postings to newly organized bargaining units to dues collection after union contract expiration.”

DOL’s persuader rules. The DOL’s proposed changes to the “advice” exemption — the so-called persuader rules — are a significant development because they would change the interpretation of the LMRDA exemption such that employers seeking confidential legal advice on labor relations matters would be subject to a reporting requirement, according to Anthony, who noted that employers’ legal counsel would also have a reporting requirement for providing legal advice.

Currently, employers and labor consultants are required under LMRDA Sec. 203 to report agreements or arrangements that they enter into with the intention of persuading employees concerning their rights to organize and bargain collectively, or for purposes of supplying the employer with information about the activities of employees or a union in connection with a labor dispute involving the employer.

Those who oppose the rule change note that almost continuously since 1963, in the absence of some deceptive arrangement between the employer and the consultant, employer and labor consultant reporting has been exempted through the “advice” exception where the consultant has no direct contact with employees and the employer is free to accept or reject the consultant’s advice or materials.

Under the DOL proposal, there would be a significant change to the definition of “advice” that would limit the exception to oral or written recommendations. Opponents are concerned that as a result of the change, if an employer were to distribute to employees a document created by a consultant that describes employee rights, both the employer and the consultant would be required to file a report with DOL’s Office of Labor-Management Standards.

Anthony suggested that the proposed LMRDA changes would have “a tremendous impact” on employers, employees, and their attorneys. “Application of the proposed DOL rule to employers and attorneys will undermine both the confidential attorney-client relationship and employers’ fundamental right to counsel.”

Best practices in light of these developments? Anthony shared these best practice suggestions related to the three important developments he identified:

• Work with clients to ensure that they have reserved their legal rights in any proceedings involving the NLRB in light of the recess appointment issue.
• In 2014, now that the Board is at full strength, given anticipated additional decisions expanding and/or explaining the bounds of “protected concerted activity,” employers should, among other things,
o review their policies and procedures with legal counsel to ensure compliance, and
o conduct executive/management/supervisory training so their management team applies the policies correctly under current law.
• Legal counsel should be aware that the attorney-client privilege would be impacted by the new DOL regulations, if finalized in their proposed form, thereby raising a potential conflict between state bar and federal LMRDA requirements, among other things.

Bourgeacq offered this tip: “With a full Board still decidedly pro-union, practitioners representing employers should seriously consider appealing egregious decisions to the D.C. Circuit, where at least for now, its welcome mat for the Board resembles a post-it note.”


What’s on the horizon for 2014 at federal labor agencies? Bourgeacq pointed to the long-awaited final release of the DOL’s persuader rules. The DOL expects to finalize its persuader rules in March 2014. Bourgeacq characterized the proposed rule change as a “not-so-subtle effort to support union organization.” He said that the proposed rule’s “assault on attorney-client privilege” will draw challenges from various groups, and predicts that the rule will almost certainly be stayed and likely struck down by the courts.

The NLRB will also revisit its so-called “quickie election” rules in 2014 with a full quorum, according to Bourgeacq, and will probably adopt a more onerous rule, making it easier for unions to organize and win elections. The Board “has thrown in the towel” on the union rights poster — the notice posting rule that required employers to inform employees of their rights under the NLRA — and probably will not waste its regulatory capital on that pursuit again, he predicted.

Anthony also pointed to the likelihood that the NLRB will renew its rulemaking efforts on accelerated elections, which he, too, thought would go beyond the rules that stalled in the courts because of a quorum-related issue. He likewise noted that the DOL is likely to finalize its proposed LMRDA rules.

In addition, Anthony anticipates that the NLRB will be more active in seeking court-ordered 10(j) relief, which reinstates terminated employees pending an NLRB trial and final determination by an NLRB Administrative Law Judge as to whether the employees were terminated in violation of the NLRA.

Bourgeacq said that we can expect court challenges to any rulemaking, and employers will likely challenge adverse decisions — going to the D.C. Circuit, unless its bench gets “packed” by Obama nominees — in response, for example, to the Board’s likely reversal of its decision in Register Guard (holding no employer duty to provide union access to email network) and expansion of its Specialty Healthcare ruling (interpreted to result in micro bargaining units).

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NELI webinar provides transactional approach to compliance with OFCCP’s revised disability and veterans rules

February 5th, 2014  |  Cynthia L. Hackerott  |  Add a Comment

Federal contractors are still in the process of absorbing all of the basic information regarding the new requirements of the OFCCP’s revised regulations on protected veterans and workers with disabilities, noted OFCCP expert John C. Fox during the first part of a two-part webinar presented by the National Employment Law Institute (NELI). Therefore, many contractors have not yet focused on the nuts and bolts of the all the new transactions that will be required. To that end, the webinar was designed to provide a transactional approach.

The revised regulations were published in the Federal Register on September 24, 2013 (78 FR 58614–58679 and 78 FR 58682-58752). The VEVRAA rule revises the OFCCP’s regulations at 41 CFR Part 60-300 (and rescinds the outdated regulations at 41 CFR Part 60-250); the Section 503 rule revises the agency’s regulations in 41 CFR Part 60-741. The revised regulations will require federal contractors to establish a 7 percent utilization goal for workers with disabilities and a variable hiring benchmark for protected veterans as well as impose new data collection and recordkeeping requirements.

Understanding the architecture. Fox, a former OFCCP official and current president of Fox, Wang & Morgan P.C. in San Jose, California, offered some practice tips for understanding the architecture of the revised regulations. First, he advised that contractors should work only from the Federal Register version of each of the regulations (cited above) because there have been some subtle changes between what was posted on the OFCCP website when the final rules were first announced on August 27, 2013 and the version of these rules published in the Federal Register on the following month. Second, he suggested that contractors should read the regulations themselves first, the preamble second, and the economic analyses last.

The revised regulations are divided into the following five subparts:

Subpart A: “Preliminary Matters, Equal Opportunity Clause”

Subpart B: “Discrimination Prohibition”

Subpart C: “Affirmative Action Program”

Subpart D: “General Enforcement and Complaint Procedures”

Subpart E: “Recordkeeping”

Subpart C contains “the guts” of the new rules, Fox said. Under the current regulations, there are ten “ingredients” required for AAPs (at 41 CFR 60-300.44(a)-(j) and 41 CFR 60-741.44(a)-(j)). The revised regulations add some new obligations to the majority of the existing AAP ingredients, and add a new ingredient (at .44(k)), “data collection analysis,” Fox noted.

Effective date and compliance deadlines. Although federal contractors and subcontractors will be required to comply with Subparts A, B, D, and E of both new rules by March 24, 2014, the obligations in Subpart C of the new rules will be phased in. The timing of when certain Subpart C provisions will be phased in has been “on a roller coaster” since the regulations were published, Fox observed.  Nevertheless, the most recent information from the OFCCP is that contractors with existing affirmative action programs (AAPs) on the effective date may wait to comply with the new requirements of Subpart C of both rules as part of their standard AAP review and updating cycle. In other words, contractors with AAPs in operation (mid-cycle) on March 24 do not have to create a new AAP on that date to comply with the new requirements, but rather can continue under the current rules until the conclusion of the annual AAP cycle. However, contractors must still comply with all existing obligations under the current regulations while they are waiting for their new annual AAP cycle (and thus, the new requirements) to begin.

While contractors may choose to take advantage of the OFCCP’s phased-in implementation allowances, they do not have to do so, Fox said. Thus, contractors who chose to do so may began to implement all the requirements of the new rules on March 24, 2014, Fox said.

Transitional AAPs. The OFCCP refers to the first AAP that a contractor will develop after March 24, 2014 as a “transitional AAP.”  Fox noted that the OFCCP has announced it will not find contractors out of compliance as to their “transitional AAP” if the contractor documents in the AAP:

(1) what compliance obligation(s) it has not accomplished, and

(2) what efforts the contractor is undertaking to bring itself into compliance.

Invitations to self-identify (41 CFR §60-300.42 and 41 CFR §60-741.42). The final VEVRAA rule requires that contractors invite applicants to self-identify as protected veterans at both the pre-offer and post-offer phases of the application process. At the pre-offer stage, contractors must extend an invitation to self-identify generally as a “protected veteran.”  At the post-offer stage, contractors must extend an invitation to self-identify as to the specific veteran category(ies) that contractors are required to report on in the VETS-100A form.

Appendix B of the VEVRAA final rule includes sample invitations to self-identify (for both the pre-offer and post-offer stages) that contractors may use. Unlike the requirements of the Section 503 final rule, contractors are not required to use any specific form for the VEVRAA invitations. Nevertheless, contractors that do not use the sample forms provided in Appendix B must still ensure that the format they use meets the criteria provided in the VEVRAA rule.

The final Section 503 rule requires contractors to invite applicants to self-identify as individuals with disabilities (IWDs) at both the pre-offer and post-offer phases of the application process. The final Section 503 rule — unlike the VEVRAA rule — also requires “post-employment” invitations, Fox said, noting that there are three post-employment invitations:

(1) in the first year that a contractor is subject to the new rule;

(2) every five-year interval thereafter; and

(3) at least once during the intervening years between these invitations, contractors must remind employees that they may voluntarily update their disability status.

All invitations under the Section 503 rule must use the standardized form prescribed by the OFCCP, which is now posted on the OFCCP website.

The obligation to solicit pre-offer self-identification information will not arise until the occurrence of the contractor’s first opening after March 24, 2014, Fox pointed out.

Confidentiality requirements (41 CFR §60-300.42(d-e); 41 CFR §60-741.42(e)). Under both rules, contractors will be required to keep all self-identification forms confidential. At the same time, the section of the regulations dealing with medical examinations and inquiries (41 CFR §300.23 (d) and §741.23(d)) requires that any information regarding the medical condition or history of any applicant or employee must be maintained in a separate medical file and treated as a confidential medical record (subject to specified exceptions). The Section 503 rule, unlike the VEVRAA rule, will require contractors to keep all Section 503 self-identification forms in a “data analysis file” and not in the employee’s medical file.

Therefore, a “multiple-file” or confidential access system will be necessary for employee files, Fox advised. For Section 503 compliance, contractors will need the following three files/access systems: (1) personnel file; (2) ADA/Section 503 medical file; and (3) data analysis file. Under the VEVRAA rule, contractors will need: (1) personnel file; (2) ADA/Section 503 medical file (if medical information is included in the post-offer self-id form); and (3) confidential pre-offer self-id forms file. What this means is that different groups of people will have access to each file depending on function.

Assessment of outreach and positive recruitment (41 CFR §60-300.44(f)(3) and 41 CFR §60-741.44(f)(3)). The current regulations require contractors to engage in outreach and recruitment of IWDs and protected veterans. Under the revised outreach and recruitment provisions, contractors will have the additional obligation to document their outreach and recruitment efforts and undergo an annual written assessment of their effectiveness.

If the contractor concludes that the totality of its efforts was not effective, it must “implement alternative efforts” listed at .44 (f)(1) or (f)(2) of both rules. Notably, (f)(1) incorporates all the efforts listed in (f)(2), so contractors would, in reality, have to do (f)(2) even if they chose the (f)(1) option, Fox observed.  Realistically, what contractor would “point the gun at themselves” by deeming themselves, their recruiters, or their hiring managers as “not effective?” Fox queried.

EEO clauses (41 CFR §60-300.5(d) and 41 CFR §60-741.5(d)). Under the revised regulations, contractors may incorporate the required Section 503/VEVRAA equal opportunity clause into covered subcontracts by reference to the regulations, only if they use the language specified in both regulations at part .5 (d). However, a covered contractor does not have to automatically go back and universally embed new EEO clauses into its existing (i.e. “original”) subcontracts on or before March 24, 2014, Fox clarified. Rather, if a contractor “modifies”, “renews” or “extends” an existing covered federal subcontract on or after March 24, 2014, then and only then is the contractor required to put the mandated language of the EEO clauses in its covered federal subcontracts.

Is starting early advisable? He advised that contractors may choose to exercise their management discretion to implement early (i.e. before March 24, 2014) all of the VEVRAA compliance obligations and most of the Section 503 obligations with the exception of the following:

(1) The pre-offer invitation to self-identify disability; and

(2) The post-employment invitation to self-identify disability.

Under the Section 503 regulations currently in force, pre-offer inquiries about disability are prohibited and post-employment inquiries about disability are illegal unless they are “job related and consistent with business necessity.” Thus, the pre-offer and post-employment invitations to self-identify disability will only be permissible once the revised regulations become effective on March 24, 2014, Fox explained. In contrast, there is no law or regulation currently in force that prohibits any of the actions the VEVRAA final rule will require. Still, contractors must be careful to avoid inquiries about disability when extending pre-offer invitations to self-identify as to veterans status prior to March 24, he cautioned.

Although contractors will need to make preparations (such as getting systems and draft language ready) to implement the new requirements prior to the effective date, contractors should think about whether it is practical to roll out any portions of their plans to comply with the new rules prior to March 24, he advised.

Budget and staffing. Implementing all these new requirements “is not something you will fold in causally on a Friday afternoon,” Fox told the listeners, noting that there will be two types of costs over time. The first type is the initial, one-time conversion costs, including: (a) outside consultant costs (if any); and (b) the time it will take managers and other employees responsible for implementation to study the rules’ changes and to design and draft new notices, clauses, forms, AAPs, analyses (“effectiveness” and “internal audits”), surveys, training materials, and HRIS requirements. The second type is the annual “maintenance” or “recurring” costs, such as: (a) data collection; (b) outreach; (c) analyses (“effectiveness” & “internal audits”); (d) surveys; and (e) training.

In terms of staffing, a “tremendous” amount of the workload will be going to document clerks as opposed to HR managers and generalists, he said. Clerks will be needed to count heads and take care of recordkeeping, while managers will be handling tasks such as outreach/recruiting, analyses, surveys, self-evaluations, and training.

For the first year of compliance, the OFCCP estimates the costs will be about $3,000 – $4,400 per establishment. In contrast, some industry analysts say a more realistic estimate is $20,000 – $24,000 per establishment, Fox reported. Following the first year, the OFCCP estimates $440 of recurring (maintenance) costs per AAP establishment/per year. Industry analysts appear to suggest that recurring costs of at least $2,200 per establishment/per year is a more realistic estimate.

Likelihood of court injunction. On November 19, 2013, the Associated Builders and Contractors (ABC) filed a federal court complaint seeking declaratory and injunctive relief to stop the Section 503 final rule (Associated Builders & Contractors v Shiu, DDC, No 1:13-cv-01806-EGS). However, Fox said that he does not foresee the court granting ABC’s injunction request to stop the Section 503 rule from taking effect as scheduled.

Fox represents companies and tries cases in state and federal courts that involve primarily individual trade secret claims, employment contract disputes, wage-hour and employment discrimination class actions, wrongful termination, corporate investigations, and the use of statistics in employment matters. He previously served as Executive Assistant to the Director of the OFCCP, where he was responsible for all enforcement and policy matters.

The webinar, presented on January 23, 2014, was the first segment of a two part program, entitled, “What You Need to do to Implement OFCCP’s Final Section 503/VEVRAA regulations: A Transactional Approach.” The second segment of the webinar was presented on January 30, 2014. Re-broadcasts of both segments may be ordered by going to NELI’s website at www.neli.org.

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