Employers have it tough right now. They must deal with the economic downturn, preserve resources, strengthen the company’s financial position, and at the same time try to keep employees happy. High morale is essential to retaining a talented workforce and to maintaining high productivity. Raising employee morale has always been a challenge; but let’s face it, American workers are not happy right now. They are worried. Unemployment is high and the federal court system  reports  that employment litigation is rising. Moreover, the public is responding positively to the Occupy Wall Street movement, which expanded from protesting corporate greed in the financial sector to also protesting economic inequality between the wealthy and the rest of the population. It is unclear what ultimate impact the Occupy movement will have; but it has already exceeded expectations. Protests have reportedly been held in over 600 U.S. communities and 900 cities worldwide.  An October  Time Magazine survey  found that 54% of Americans have a favorable impression of the protests, while 23% have a negative impression. An October CBS News poll had similar results. With this momentum, the Occupy movement will likely impact employee opinions, and employers should consider what steps can be taken to maintain high employee morale.

One way to reduce employees’ anxiety and uncertainty is simply to communicate with them, emphasizing the steps that the company is taking to remain strong. Avoid dwelling on the negative effects of the steps taken and emphasize the benefits of ensuring the strength of the company and thus job security.  It is important to maintain a strong image with employees in order to keep morale (and thus productivity) high. Employers should also be aware of external, individual influences on employee morale due to poor economic conditions. For example, if an employee’s spouse loses his or her job, the employee may be facing a personal financial crisis. Employers should consider providing such employees with information on resources that might be available to them, such as temporary loan deferrals or early hardship withdrawals from 401(k) plans. In addition, employers may want to educate employees about any employee assistance program offered by the employer. By providing general information on resources available to employees facing economic hardships, employers are helping to increase morale and improve productivity.

If the company is in fact considering taking drastic steps in order to cut costs, then consider alternatives to layoffs, such as using a work-sharing or short-time compensation (STC) program. As explained in a 2011 report by the Congressional Research Service, STC is a program within the federal-state unemployment compensation system. In the 20 states that operate STC programs, workers whose hours are reduced under a work sharing plan may be compensated with STC, which is an unemployment benefit that has been pro-rated for the partial work reduction. Basically, a company faced with the need to downsize chooses to reduce work hours across the board for all workers instead of laying workers off. According to the CRS report, employers use STC and work-sharing to reduce labor costs, sustain morale compared to layoffs, and retain highly skilled workers. Work sharing can also reduce recruitment and training costs by eliminating the need to recruit new employees when business improves. Other alternatives to layoffs include job transfers within a corporation; salary reductions; retraining employees to work in other jobs requiring a similar skill set; hiring freezes and attrition; mandatory time off or furloughs; and telecommuting to reduce overhead.

Whatever steps an employer takes to ensure the health of the company, the employer is well advised to always consider the impact on employee morale. Not only will higher morale mean higher productivity, but high employee morale translates into a strong positive image with customers, suppliers, and the community.

It is fairly evident in the context of suits under the False Claims Act, that the possibility of significant remuneration to the plaintiff is often a significant motivator for individuals to report that their employer is engaged in wrongdoing. Congress had no difficulty with that circumstance when it devised the statutory scheme. But, does the same logic apply in other instances of whistleblowing by employees? A Maryland Court of Appeals answered that question in the affirmative in Lawson v Bowie State Univ, when it reversed a lower court ruling that affirmed the decision of an administrative law judge, and extended whistleblower protections extended to an employee whose decision to disclose possible violations was personally motivated by a desire to make changes in the university police department in which he worked.

The employee was a 17-year veteran of a university police department when he was terminated for violating the department’s chain of command policy. Specifically, the employee drafted a letter disclosing potential abuses by fellow officers and, feeling unable to report these violations to the chief of police, he sent the letter to the university’s vice president of student affairs. The contents of the employee’s letter were forwarded to the police chief, leading to discharge for insubordination. Following his termination, the employee sought relief through administrative channels, arguing that he was entitled to whistleblower protection because the letter constituted a “protected disclosure” under Sec. 5-305 of the Maryland State Personnel Code.

Maryland’s Whistleblower Act prohibits reprisals against state employees for making a protected disclosure. Here, an ALJ dismissed the employee’s appeal on grounds that his letter was not a protected disclosure. Specifically, the ALJ concluded that the employee did not have a “reasonable belief that evidenced abuse of authority, mismanagement, waste of money, a danger to public safety or a violation of law.” The ALJ found that the employee did not have a reasonable belief after concluding that the letter was motivated by a crusade to make changes to the police department himself, rather than for the purpose of notifying higher authority to a pattern of wrongdoing.

However, the court of appeals determined that the ALJ erred in concluding that the employee did not satisfy the “reasonable belief” requirement of the Whistleblower Act. Maryland’s whistleblower protection statute requires only that the employee have a reasonable belief that he is reporting a violation, not that the employee possess a purely altruistic motive for the disclosure, concluded the appeals court.

The Maryland appeals court agreed with the Federal Circuit’s ruling in Horton v Dept of the Navy, that a motivation to make changes in the department is not a ground for denying whistleblower protections. In this instance, the ALJ improperly conflated the employee’s personal motivation for disclosure with the statutory requirement that an employee have a reasonable belief that the information disclosed evidences a violation, held the appeals court.

While we might like to think that whistleblowers are motivated by an employer’s unlawful or unethical activity that prompts a fit of moral outrage, in the final analysis, the motivation of the employee does not weigh heavily in an analysis of whether or not he or she enjoys protection as a whistleblower.

New legislation intended to ensure workers with disabilities earn a fair wage has been proposed by two members of Congress. The Fair Wages for Workers with Disabilities Act of 2011 (H.R. 3086) was introduced by Congressman Cliff Stearns (R-FL) and Congressman Tim Bishop (D-NY). The legislation would phase out Section 14(c) of the Fair Labor Standards Act (FLSA), which allows employers holding special wage certificates to pay their workers with disabilities less than the federal minimum wage. 

“Although the disabled have made significant progress in achieving the American dream, they still face unfairness in the workplace under a provision that allows employers to pay workers with disabilities less than the federal minimum wage,” said Representative Stearns. ”Protections for disabled workers were excluded in the Fair Labor Standards Act in the mistaken belief that they were not as productive as other workers. Workers with disabilities contribute to our economy and to our society, and they deserve equal pay for equal work.”

Dr. Marc Maurer, President of the National Federation of the Blind, expressed strong support for the legislation. “The Fair Wages for Workers with Disabilities Act is a long-overdue effort to correct an injustice written into a law meant to protect all American workers from abuse and exploitation. Workers with disabilities were excluded from the protections of the Fair Labor Standards Act because of the false belief that we cannot be as productive as Americans without disabilities. Courage and creativity are required to replace the misguided benevolence that has historically shaped policies toward people with disabilities with real opportunity for our equal employment and full participation in the workplace. We applaud Representatives Stearns and Bishop and we hope that a significant majority of their colleagues possess the courage and creativity to end over seventy years of exploitation of people with disabilities.”

“Ensuring that Americans with disabilities receive equal pay for equal work is more than a matter of basic fairness, it’s a long-overdue acknowledgement of the value disabled Americans contribute to our workplaces every day,” said Congressman Bishop. ”I hope all of my colleagues will support this bipartisan effort to correct over seventy years of injustice.” 

The legislation has also found strong support from New York Governor David A. Paterson, a member of and consultant to the NFB, who urged immediate passage of the Act. “It is long past time for the anachronistic provision of the Fair Labor Standards Act that allows workers with disabilities to be paid less than the federal minimum wage to be phased out. As Samuel R. Bagenstos, former principal deputy assistant attorney general for civil rights, has reported, Section 14(c) of the Fair Labor Standards Act does not encourage mainstream employers to hire disabled workers; does not result in the training of workers with disabilities to participate in competitive employment; and does not even produce wages tied to the alleged lower productivity of disabled workers, which is a myth in any event.  This anachronism must be stricken from America’s statute books, and workers with disabilities must receive equal pay for equal work and an equal opportunity to succeed.”

Cosponsors of the legislation are Lou Barletta (R-PA), Gregg Harper (R-MS), Peter T. King (R-NY), Glenn Thompson (R-PA), and Edolphus Towns (D-NY). The bill has been referred to the House Committee on Education and the Workforce.

The OFCCP has revised its proposed changes that would allow the agency to seek more, and more detailed information from federal contractors during the desk audit phase of compliance evaluations, including information on FMLA, pregnancy leave and religious accommodation policies, more specific demographic information on employment decisions, more precise data for compensation analysis (aggregate data rather than the disaggregate data) and VETS-100/VETS-100A forms. Notice of the revised proposal was published in the September 28, 2011 edition of the Federal Register (76 FR 60083-60084). The revised proposal addresses comments received regarding the OFCCP’s initial proposal issued in May of this year and, in response to those comments, contains several changes to the original proposal.

Federal Register notices. As reported in Employment Law Daily on May 12, 2011, a notice in that day’s edition of the Federal Register (76 FR 27670-27671), indicated that the OFCCP was seeking comments on a proposal to revise its current recordkeeping, reporting and third-party disclosure requirements for federal supply and service (i.e.nonconstruction) contractors, but the Federal Register notice itself does not indicate the content of the proposed revisions. Rather, the content of these revisions is revealed in supporting documentation for the notice provided to the Office of Management and Budget (OMB) by the OFCCP. The proposed revisions to the OFCCP’s scheduling letter, itemized listing and the OFCCP’s supporting statement submitted to the OMB explaining the changes were posted on the Regulations.gov website. Written comments on the May 12 proposal were due on July 11, 2011.

The September 28 Federal Register notice indicates that the earlier proposal has been revised. As with the May 12 notice, the September 28  Federal Register notice itself does not indicate the content of the revised proposal. Rather, the content of these revisions is revealed in supporting documentation for the notice provided to the Office of Management and Budget (OMB) by the OFCCP. A copy of this supporting documentation — including revisions to the proposed scheduling letter, itemized listing, and compliance check letter and the OFCCP’s supporting statement submitted to the OMB explaining the changes — may be obtained by contacting Michel Smyth by telephone at 202-693-4129 or sending an email to DOL_PRA_PUBLIC@dol.gov. They are also posted on the website at http://www.reginfo.gov/public/do/PRAMain.

Public comments. In the supporting documentation for the September 28 revised proposal, the OFCCP stated that it analyzed each of the 20 public comment submissions it received from various contractors, industry organizations and associations, consultants, advocacy and non-profit groups and others in response to the May 12 proposal. In general, six of the commenters supported the OFCCP’s proposed revisions to the scheduling letter and itemized listing and 14 were opposed or critical of the revisions. The majority of the comments focused on the request in the itemized listing for compensation data. The agency reports that it also received generally supportive comments on the proposed revisions to its compliance check letter.  Most of the other comments concerned requests for information related to contractor employment activity, leave policies, and anticipated adjustments that contractors may need to make to their human resources information systems (HRIS). The agency also received comments on the calculation of burden, the collection of documents elaborating on collective bargaining agreements, and the request for supporting documents related to compliance with Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA).

After considering these comments, the OFCCP determined that the benefits associated with receiving improved data from contractors and the net reduction of 1.34 hours in the total burden hours spent by contractors in supplying OFCCP with that data were the “best most innovative” and “least burdensome tasks” for achieving the agency’s regulatory goals. In addition, the OFCCP asserts that its assessment found “societal benefits” would result from finalizing the proposed changes to the scheduling letter and itemized listing.  Among them are the:

•  inclusion of more qualified workers in the nation’s workforce,
•  ability to provide America’s returning veterans and wounded warriors meaningful employment opportunities as they transition from the military,
•  opportunity to develop a workforce that reflects the diversity of the nation, and
•  strengthening of our ability to compete effectively in a global economy based on the diversity and skill of America’s workforce.

The OFCCP did identify a few alternatives to its initial proposal that it believes would be as effective in assessing contractor compliance with their nondiscrimination and affirmative action obligations that are less burdensome. Therefore, the agency made several changes to the original proposal in response to the comments it received. A detailed analysis of the public comments, and the agency’s corresponding responses, is contained in the supporting statement for the September 28 revised proposal.

Revisions to scheduling letter and itemized listing. Once a federal contractor has been selected for an OFCCP audit, the agency sends its standard scheduling letter and corresponding itemized listing requesting the contractor to provide the OFCCP with its affirmative action programs and specified supporting documents and records. The scheduling letter and the contractor’s response to it are known collectively as the “desk audit” phase of a compliance review. If the results of the desk audit reveal “indicators” of potential discrimination or other compliance issues, the OFCCP may dispatch a compliance officer to conduct an on-site review of the contractor.

The itemized listing that accompanies the current OFCCP scheduling letter contains 11 items, and the proposed changes would increase this number to 13 items. The proposed changes to the current version of the itemized listing are the following:

(1) A new item 8: submission of employment policies covering the FMLA, pregnancy leave, and accommodations for religious observances and practices. In the absence of these policies, the OFCCP would accept a contractor’s employee handbook or manual. The OFCCP asserts that receipt of these policies would assist it in better determining the existence of sex or religious discrimination indicators within contractor organizations. Additionally, the policy requirements would enhance the OFCCP’s broad authority under Executive Order 11246 (EO 11246) to prohibit sex and religious discrimination in employment and its share enforcement responsibilities with the EEOC under Title VII. 

The revised proposal provides the option of submitting the manual or handbook, or submitting only relevant pages (including the front cover of the manual or handbook, the table of contents, and those pages with the leave policies). In the supporting statement for the revised proposal, the OFCCP notes that it is not charged with FMLA enforcement. However, the OFCCP maintains that under its existing authority, it can review leave and other personnel policies to determine whether they, as they are applied or by virtue of their absence, have a discriminatory impact on women, minority groups, and others protected by the laws OFCCP enforces.

(2) Changes to new item 9 (current item 8) — the OFCCP proposes to further define “other information” in contractor collective bargaining agreements to clarify for contractors the specific information requested during compliance evaluations. 

(3) Changes to new item 10 (current item 9) — the Affirmative Action Plan (AAP) reporting requirements would be changed from preceding year to immediate preceding year to clarify specific AAP reporting timelines for contractors. 

(4) Changes to new item 11 (current item 10) — the OFCCP proposed to included in this item more specific demographic information related to applicants, hires, promotions, and terminations to eliminate ambiguous minority and non-minority terminology.  In addition, contractors would now be required to submit data by job group and job title, instead of job group or job title in the current scheduling letter. The OFCCP maintains that this change would result in the OFCCP obtaining more accurate reporting data for its analyses related to identifying sex and race discrimination indicators.

In the supporting statement for the revised proposal, the OFCCP states that “obtaining data by job group and job title will decrease a contractor’s ability to mask discrimination by manipulating the data within either job groups or job titles. Moreover, contractors are already required to collect data on applicants, hires, promotions and terminations for each job title by gender, race, and ethnicity.”

“The provision of the data by job group and job title creates a fuller picture of the employment practices of contractors,” the agency also maintains.  “Even where a job title has insufficient data to test for statistical significance, there may be enough data to suggest potential discrimination.  Improved data collection and analysis should reduce the number of requests for additional and more detailed information by OFCCP thus saving time and reducing contractor burden.”

Moreover, to the extent that contractors may be required to adjust HR systems to provide data by job group for separate race or ethnic groups, the OFCCP revised its burden estimates to reflect these start-up costs.

(5) Changes to new item 12 (current item 11) — The changes would require a contractor to submit more precise data for the OFCCP’s compensation analysis. The more precise data is aggregate data rather than the disaggregate data requested in the current scheduling letter.  A submission of aggregated data would allow the OFCCP to perform more specific analyses, and pinpoint possible discrimination based on race or sex. The OFCCP states it will no longer ask for disaggregate compensation data, which required contractors to aggregate the data themselves, thereby increasing their burden. In addition, the disaggregate data was less effective in allowing the OFCCP to analyze compensation, according to the agency.

The supporting statement for the revised proposal notes that among the many concerns regarding this item, are concerns about confidentiality surrounding the production of compensation data. In response, the OFCCP notes that disclosure of information obtained from a contractor will be evaluated pursuant to the public inspection and disclosure provisions of the Freedom of Information Act (FOIA), 5 U.S.C. Section 552, and the Department of Labor’s implementing regulations at 29 CFR Part 70. The OFCCP will also adhere to the requirements of the Privacy Act, as applicable. The agency also noted that it requires that contractors be notified in writing when a FOIA request is made for contractor data. The OFCCP will make no decision to disclose such documents until the contractor has an opportunity to submit objections to the release of the record or data.  Moreover, the OFCCP pointed out that it does not release data obtained during the course of a compliance evaluation until the investigation is complete. Furthermore, if the contractor is concerned with the confidentiality of such information as lists of employee names, reasons for termination, or pay data, then the OFCCP will accept (for purposes of the compliance evaluation) alphabetic or numeric coding or the use of an index of pay and pay ranges, consistent with the ranges assigned to each job group. Finally, in light of privacy concerns raised by commenters, the OFCCP revised this item to include a disclosure/confidentiality statement.

(6) New item 13 — The initial proposed would have required contractors to submit copies of their Veterans’ Employment Reports VETS-100 and/or VETS-100A for the last three years. These documents are required reporting for federal contractors and include information on their hiring on disabled and other protected veterans under VEVRAA. The revised proposal was changed so that it would now require contractors to submit their VETS-100 and/or 100A forms for two years (the current year and the previous year). 

Compliance check letter.  The proposal also includes a revised compliance check scheduling letter, but the specific documents sought in this letter would remain unchanged. A compliance check is a limited purpose evaluation (i.e. perfunctory assessment) of the contractor’s establishment to determine whether the contractor has maintained certain records as required under the OFCCP’s regulations. At the contractor’s option, the documents may be provided either on-site or off-site. In the initial supporting statement, the OFCCP reports that it has not scheduled any compliance checks for fiscal year 2011 and notes that, consequently, the burden hours for compliance checks will be zero.

Increase in burden hours.The supporting statement for the revised proposal details that the OFCCP is requesting OMB approval of 11,949,346 hours in combined recordkeeping, reporting and third party disclosure burden hours for compliance with Executive Order 11246, Section 503 and VEVRAA by non-construction (supply and service) federal contractors (the initial proposal stated 11,174,641 hours for EO 11246 compliance) . This compares with 10,045,984 hours for the last clearance request, an increase of 1,903,362 hours (11 hours per contractor). According to the OFCCP, “[t]his change is primarily due to an increase in the number of supply and service contractor establishments from 99,028 to 171,275 (an addition of 72,247 contractors).  The increase in the number of contractors is the result of OFCCP recalculating data in the Equal Employment Data System, FPDS-NG and Dun & Bradstreet to establish the number of Federal contractor establishments for this Information Collection Request. (The initial proposal reported an increase to 108,288 (an addition of 9,260 contractors) based on data from the Equal Employment Data System.)

In explaining the changes in burden hours listed in the initial supporting statement and in the revised supporting statement, the OFCCP explained that in light of the public comments, the agency worked with its data integrity team to reexamine how the original number of contractors and establishments was developed.  Because of the second data run, the OFCCP states that it initially identified a slightly smaller contractor establishment pool.  After combining the results of the EEO-1 data of 87,013 contractor establishments with 50 or more employees and the FPDS-NG data with 10,518 such establishments, the result was 97,531 establishments. Covered contractors must develop AAPs for all establishments, even those with fewer than 50 employees. By adding those estimated 73,744 establishments to this number, the adjusted total was 171,275 establishments.

Costs. In the revised proposal, the OFCCP also requested approval for $129,663,262 annualized operations and maintenance costs for the revised information collection proposal. This compares with $120,019 for the last clearance request, an increase of $1,793 for each contractor. The increase is due to an increase in one time start-up costs related to the new components of this information collection. Specifically, it accounts for contractors or their human resources service providers/vendors developing additional queries or “views” in their human resource information systems.

In its initial proposal, the OFCCP asserted that there were no capital or start-up costs associated with this collection of information because the information that contractors provide the OFCCP is generally maintained in the normal course of their businesses. The revised cost analysis was made in response to public comments about the possible cost and burden of updating or revising Human Resource Information Systems (HRIS) that cut across several of the proposed changes to the scheduling letter and itemized listing.

The OMB Control Number for this information collection is 1250-0003 and the current requirements expire September 30, 2011. However, existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. New or revised information collection requirements would only take effect after OMB approval.

Written comments on the revised proposal are due on October 28, 2011 and should be submitted to: the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for the Department of Labor, Office of Federal Contract Compliance Programs (OFCCP), Office of Management and Budget, Room 10235, Washington, DC 20503, Telephone: 202-395-6929/Fax: 202-395-6881 (these are not toll-free numbers), email: OIRA_submission@omb.eop.gov).

Now trending on the employment blogs is legislation introduced in Florida that would include violence against a family pet within the definition of domestic violence. Several bloggers have had some fun (and some puns) over the idea that this legislation, which is not expected to pass, would require employers to provide “a leave of absence to care for your pet.” “Doggone-it: Must employers give leave to employees with hurt pets?” is the title of another blog.

We enjoy as much as anyone exposing the amazing antics of state legislatures; at the state level, this year’s legislative adventures have been quite the romp through the dog park. But with respect to this particular piece of introduced legislation, we think bloggers are barking up the wrong tree.

Under Florida’s domestic violence statute, Sec. 741.313, leave can be granted to employees only if they have already exhausted “all annual or vacation leave, personal leave, and sick leave, if applicable, which is available to the employee, unless the employer waives this requirement.” Moreover, leave is available under the law only if the employee takes leave to:

(1) Seek an injunction for protection against domestic violence or an injunction for protection in cases of repeat violence, dating violence, or sexual violence;

(2) Obtain medical care or mental health counseling, or both, for the employee or a family or household member to address physical or psychological injuries resulting from the act of domestic violence or sexual violence;

(3) Obtain services from a victim-services organization, including, but not limited to, a domestic violence shelter or program or a rape crisis center as a result of the act of domestic violence or sexual violence;

(4) Make the employee’s home secure from the perpetrator of the domestic violence or sexual violence or to seek new housing to escape the perpetrator; or

(5) Seek legal assistance in addressing issues arising from the act of domestic violence or sexual violence or to attend and prepare for court-related proceedings arising from the act of domestic violence or sexual violence. 

We’ll grant that maybe an employee could qualify for leave to take an injured pet to the vet under this provision. But domestic violence and violence against animals appear to be truly connected—According to the American Society for the Prevention of Cruelty to Animals, “the National Coalition Against Domestic Violence conducted its own study in which 85.4 percent of women and 63.0 percent of children reported incidents of pet abuse after arriving at domestic violence shelters. Women who do seek safety at shelters are nearly 11 times more likely to report that their partner has hurt or killed their animals than women who have not experienced domestic abuse.”  By taking a categorically dismissive attitude towards domestic violence leave under circumstances of animal abuse—which we don’t believe is required by any state as yet—we might be unfairly relegating this legislation to the doghouse.

2011 has, to say the least, been a year of great strife for the NLRB and the House Education and Workforce Committee that oversees it. Based on recently introduced legislation, the relationship will get worse before it gets better.

Much worse.

In the last month, two bills have been introduced by members of the Committee that would radically alter the Board’s powers to issues decisions and rules.

Legislation introduced last week would seek to either block, or undo, several recent rules and decisions handed down by the National Labor Relations Board. Introduced by House Committee on Education and the Workforce Chairman John Kline (R-Minn.), the Workforce Democracy and Fairness Act (HR 3094) is intended to thwart what Kline referred to as the NLRB’s “activist agenda.”

The Workforce Democracy and Fairness Act takes direct aim at the Board’s recent Specialty Healthcare decision. Under the bill, the Board would have to consider the similarity of wages and other terms and conditions of employment of the employees in the proposed unit, the similarity of their skills and training, whether a central management and supervisory structure exists for all employees, the extent of interaction among the employees, the integration of the employees’ work flow, the consistency of the unit with the employer’s organizational structure, the bargaining history of the unit and industry, and the similarity of job functions. It would also bar “fragmentation of bargaining units” – a frequent criticism of the Specialty Healthcare decision – unless the interests of the proposed unit are sufficiently separate from other employees.

The measure also targets the Board’s recent proposed rule that would change the Board’s election procedures. Under the law, the Board would be required to hold a hearing into any pre-election disputes no more than 14 days after the employer has received the representation petition. The law would also require employers, within seven days of a final Board determination of the appropriate makeup of a proposed unit, to submit a list of all eligible employees. That list would also provide employee names and one additional form of contact information to be chosen by the employee

On Wednesday, October 12, the House Committee on Education and the Workforce will hold a legislative hearing on the Workforce Democracy and Fairness Act.

There is actually a fair amount to like about this bill. Since the Board announced its proposed election rule change, the most constant complaint from employers has been that it would be virtually impossible to respond to an election petition within seven days. This bill would remedy that. It’s also not a bad idea to allow employees to choose how the union would contact them, but care must be taken to ensure that employer don’t lean on employees to choose the option least likely to put the union in contact.

One aspect of the bill, however, raises red flags. The bill appears to remove the right of employers to waive Board review of representation petitions. If that is indeed the case, this bill would clog the system, virtually guaranteeing that no election would occur on a timely basis. Here’s hoping that the Committee will clear this up before sending the bill to the House of Representatives for a vote.

The possibility, of course, remains, given the animosity of the Committee to the Board, that Kline’s bill is intended only to weaken the Board. If so, Kline might be better off supporting another recent piece of legislation. Last month, legislation was introduced in the U.S. House of Representatives that would eliminate the NLRB and transfer its responsibilities to the Department of Labor (DOL) and the Department of Justice (DOJ).

Introduced by Representative Trey Gowdy (R-S.C.) the National Labor Relations Reorganization Act (HR 2926) would abolish the NLRB 30 days after the enactment of the legislation. The bill would then transfer the functions and responsibilities of the Board relating to representation elections to the Department of Labor; the DOL’s Office of Management-Labor Standards would be responsible for the performance of those duties. In addition, the measure would transfer the NLRB’s enforcement duties to the Department of Justice’s Bureau of Labor Relations Enforcement, a bureau that the measure would create. The new bureau would be headed by a director appointed by the attorney general.

In a statement announcing the bill, Gowdy called the Board “a sycophant for labor unions” that he contends “has lost all pretense of objectivity.” Gowdy, who sits on the House Committee on Education and the Workforce that oversees the Board, claims that “the NLRB has outlived its usefulness and needs to be dissolved.” He expressed the belief that the DOJ could easily handle employer-employee disputes and unfair labor practice charges.

Gowdy has been a fierce and at times, disingenuous, critic of the Board. The recommendation here is that the Gentleman from South Carolina should focus on reforming the Board’s processes, not on scoring political points.

It’s always gratifying to see conscientious employers take prompt corrective action when they uncover discrimination, harassment, or similar misconduct at the hands of rogue managers or employees. Can there be anything more maddening for employers than to be rewarded for their vigilance with a lawsuit?

By all appearances, the employers below did everything right. Given the cost of defending such claims, it may be a bit of stretch to say they evaded punishment for their good deeds. But at least the employers were vindicated in court, fending off claims filed by the wrongdoers they discharged.

A class action waiting to happen. The labor and employment attorneys in the general counsel’s office at Speedway were no doubt apoplectic when they got the call from Human Resources. Wage-hour collective actions are perhaps the greatest liability threat to employers these days, and the company discovers that one of their convenience store managers had been overriding reported work hours and reducing the “punch out” times of her hourly employees.

When questioned by district management, the store manager said that her employees had told her to alter their time cards. Not surprisingly, the employees denied this notion. Next, she claimed that the employees’ time cards reflected hours they were not working, and she merely made the changes in order to reflect their actual hours worked. However, the store videotape, recorded during the time periods for which the manager made the overrides, revealed that the employees were still on the job past the time shown on the revised time cards. Her final contention: she only made time card overrides when she “observed [employees] not working for a period of time” or she “was told by another employee someone else was not working.” According to her termination paperwork, the company had uncovered at least 20 instances in which the manager had shorted employees on time and pay in just the three months prior to her discharge.

The manager filed a state-law claim of age discrimination. Although a federal court, in Roshek v Speedway SuperAmerica, found the manager made out a prima facie case, Speedway demonstrated that it had a legitimate, nondiscriminatory reason for her discharge. The company’s Wage and Hour Compliance policy expressly prohibits managers “from overriding employee punches for hours worked without prior express approval from HR,” and provides that they will be terminated for any such unauthorized changes. While she insisted that Speedway did not formally communicate this policy to her, as a store manager, she was expected to know the company’s policies, the court reasoned.

She also pointed to a younger manager who had altered employee work hours but was merely issued a warning. (We’ll leave it for another day to speculate whether the company had been putting undue pressure on store managers to reduce their payrolls.) However, Speedway said it discharged the manager not only because she violated the wage and hour compliance policy but also because she was dishonest about her actions when asked about the violation. Her dishonesty set her conduct apart from her comparator, and justified Speedway’s decision to discipline her differently, the court found. Also justifying the discharge, of course, was the fact that she was ripping off her employees—and inviting a potential FLSA action against the company as well.

The case of the obscene (and technologically inept) caller. The internal investigation in this case must have been relatively easy: just press “play.” In Robeson v U.S. Steel Corp, the company had fired an employee who launched into a racist, sexist, profanity-laced tirade against a manager that, unbeknownst to him, was recorded on her voice mail. After an appeal of his discharge grievance was abandoned, the employee filed a hybrid LMRA action against both the company his union. But with the court concluding that the union did not breach its duty of fair representation, the company was in the clear on the employee’s breach of contract claim as well.

When U.S. Steel took over as a successor employer, it issued several new company policies, including a harassment policy. Two members of management gave a PowerPoint presentation on the policy, which strictly forbade any use of derogatory terms, epithets, or slurs relating to race and gender and cautioned that use of such phrases could be punished by discipline up to and including discharge. The very next day, the employee left a message on the voicemail of one of the presenters. He had called to complain about his foreman, but the presenter was not at her desk. Believing he had hung up the phone, the employee then began to spew derogatory comments about the presenter, purely for the entertainment of the coworkers who were with him in the lunchroom. He referred to her as “big tits” and as “a chick that likes to f*&ck black guys.” Because he failed to disconnect from voice mail before beginning his rant, the manager heard the entire recorded message.

U.S. Steel issued a series of five-day suspensions. During a preliminary hearing, the union told the company that the employee was remorseful, pointing out too that he had 29 years of seniority and a good work record, but U.S. Steel terminated him anyway. Although the union stayed with him through another two rounds of the dispute resolution procedure, it dropped the appeal that would have taken the discharge to arbitration.

A federal court in Michigan found the union did not act arbitrarily in dropping its appeal, noting that the union only did so after learning the full extent of the employer’s harassment policy and its zero-tolerance provision. The union also discovered that the employee made his comments only one day after attending a presentation on the harassment policy. Faced with this information, the union’s decision to drop the appeal was not arbitrary; the union did not breach its duty of fair representation. As a result, the employee also struck out on his suit against the company.

Nor did U.S. Steel err in refusing to keep the employee on the job pending his initial hearing, the court found. The company argued convincingly that the employee’s comments, specifically the race-based comments, could have created a dangerous situation, and that it acted within its rights to terminate the employee in order to defuse it. The employer did a good deed in removing this harasser from its ranks, one which the court declined to punish.

California Governor Jerry Brown recently signed into law a host of employment-related legislation. Here’s a rundown of enacted laws compiled by the editors of CCH’s Employment Law Daily.

Bill prevents California municipalities from exceeding federal E-Verify requirements

On Sunday, October 9, as the California legislative calendar was drawing to a close, California governor Jerry Brown signed into law legislation (A.B. 1236) prohibiting the state, or a city, county, city and county, or special district from requiring an employer, other than one of those government entities, to use an electronic employment verification system, except when required by federal law or as a condition of receiving federal funds.

The federal E-Verify Program enables participating employers to use the program, on a voluntary basis, to verify that the employees they hire are authorized to work in the United States.

Governor signs bill banning open carry of guns in public

On October 10, 2011, California Governor Jerry Brown announced that he has signed A.B. 144, which relates to the carrying of firearms in public. Under prior law, any registered gun owner could openly carry his or her gun in public, as long as it was not concealed and not loaded. The author of A.B. 144, Assembly Member Anthony Portantino (D-Pasadena), said that gun activists took advantage of the loophole in California’s gun law by organizing large “open carry” events in public places. Many members of the public were disturbed by the display of weapons and law enforcement had to respond to make sure the guns were not loaded, according to Portantino.

A.B. 144 makes it a crime to openly carry an unloaded handgun in any public place or street. Violations are a misdemeanor punishable by up to one year in jail and/or a fine of up to $1000. Law enforcement personnel are exempt, as are security guards, hunters and others carrying unloaded weapons under specified licensed circumstances.

Governor signs bill limiting employer use of consumer credit reports

California Governor Jerry Brown signed legislation, on October 10, that will limit the ability of employers and prospective employers to use credit reports in hiring and employment decisions.

The new law (A.B. 22) will prohibit most employers and prospective employers from obtaining a consumer credit report for employment purposes, unless the person for whom the report is being sought is (1) a position in the state Department of Justice; (2) a managerial position (must meet executive exemption of California Wage Order No. 4); (3) that of a sworn peace officer or other law enforcement position; (4) a position for which the information contained in the report is required by law to be disclosed or obtained; (5) a position that involves regular access to specified personal information for any purpose other than the routine solicitation and processing of credit card applications in a retail establishment; (6) a position in which the person is or would be a named signatory on the employer’s bank or credit card account, or authorized to transfer money or enter into financial contracts on the employer’s behalf; (7) a position that involves access to confidential or proprietary information; or (8) a position that involves regular access to $10,000 or more of cash.

Before any employer makes a request, however, the law requires employers to provide written notice of the request to the person for whom the report is sought.

The Governor’s signature follows a 21-17 vote in the state senate and a 48-48 vote in the General Assembly.

Governor signs bill making it easier for farmworkers to unionize

On October 9, California Governor Jerry Brown signed into law legislation easing obstacles to the unionization of farm workers. The bill was a piece of compromise legislation shepherded by the governor himself, after Brown vetoed an earlier version of the bill.

Previously, state law made it unlawful for employers to engage in unfair labor practices, including interfering in unionization elections. The prior law stated that, within 5 days after the above-described election, any individual could file with the Agricultural Labor Relations Board a signed petition objecting to the conduct of the election or conduct affecting the results of the election; the Board would then have to hold a hearing to decide whether or not to certify the election. The law also allowed for the decertification of unions representing agricultural workers.

Senate Bill 126 amends the current laws. This bill would specify time limits relating to certification or decertification hearings. Within 21 days of the filing of any objections to ballots, the Labor Board must issue a decision stating which issues shall be dealt with at a hearing. Any hearing must then take place within 28 days of the Board’s decision to hold such hearing.

This bill would also amend current law to specify what courts may consider when determining whether temporary relief or a restraining order for alleged unfair labor practices is appropriate. Under the bill, if the alleged unfair labor practice would tend to interfere with the free choice of employees, regarding their choice in a representation election, the labor board must issue appropriate temporary relief or a restraining order, if a party shows that reasonable cause exists to believe that an unfair labor practice has occurred. Any injunctive order would remain in place for either 30 days or until an election has been held, whichever occurs first. This bill would provide that the temporary relief or restraining order shall not be stayed pending appeal.

Further, the bill alters the manner in which mandatory mediation may be triggered. Under existing law, the employers or unions have 90 days, following a renewed demand to bargain – if the parties have failed to reach agreement for at least one year – in which to file a declaration stating that the parties have failed to reach a collective bargaining agreement, thus triggering mandatory mediation; if the parties do not have an existing contract, the relevant date is 180 days after an initial request to bargain.

The new law, however, states the declaration may be filed 90 days after a renewed demand to bargain, 90 days after an initial request to bargain, 60 days after the board has certified the labor organization because of employer misconduct and a finding that would render slight the chances of a new election reflecting the free and fair choice of employees, or 60 days after the board has dismissed a decertification petition upon a finding that the employer has unlawfully initiated, supported, sponsored, or assisted in the filing of a decertification petition.

One of the state’s largest agricultural unions praised the Governor’s decision to sign the bill. The United Farm Workers, which had strongly opposed the Governor’s previous veto, said the new law will “remove some obstacles for farm workers who want to join a union.

Governor signs bills barring discrimination on basis of gender and sexual identity

On October 9, California Governor Jerry Brown signed into law two bills barring discrimination on the basis of gender and sexual identity.

Assembly Bill 887 clarifies gender identity provisions in existing state law to define gender expression as meaning a person’s gender-related appearance and behavior, even if that behavior and appearance is not stereotypically associated with the person’s assigned sex at birth. The definition also includes gender-related appearance and behavior.

Currently, California law requires equal rights and opportunities in various aspects, including education, housing, and employment, regardless of gender, and prohibits discrimination based on specified characteristics, including sex and gender; A.B. 887 amends the law to include gender, gender identity, and gender expression among the equal rights protections. This legislation additionally requires an employer to allow an employee to either appear, or dress, consistently with their gender expression. In addition, such characteristics of gender, gender identity, or gender expression could not be used as the sole bases of determining whether to grant or deny a workers’ compensation claim.

Senate Bill 757 prohibits a group health care service plan or health insurance policy from discriminating in coverage between spouses or domestic partners of a different sex and spouses or domestic partners of the same sex. Current law requires such plans to provide group coverage to the registered domestic partner of an employee, subscriber, insured, or policyholder that is equal to the coverage provided to the spouse of those persons.

Every group health care service plan contract and every group health insurance policy that is marketed, issued, or delivered to a California resident will be subject to the requirements to provide equal coverage to domestic partners as is provided to spouses, notwithstanding any other provision of law. With the exception for a policy issued outside of California to an employer whose principal place of business and majority of employees are located outside of California, no policy or certificate of health insurance marketed, issued, or delivered to a resident of the state may discriminate in coverage between spouses or domestic partners of a different sex and spouses or domestic partners of the same sex.

Governor signs employee misclassification bill

California Governor Jerry Brown signed legislation, on October 9, prohibiting employers from engaging in willful employee misclassification. Senate Bill 459 would also prohibit charging individuals who have been mischaracterized as independent contractors a fee or making deductions from compensation where those acts would have violated the law, if the individuals had not been mischaracterized.

The Labor and Workforce Development Agency will now have authority to assess civil penalties and take other disciplinary actions against violators. Additionally, the Department must inform the Contractors’ State License Board when a licensed contractor violates the law and shall require the board to initiate an action against the licensee. A person or employer violating the law would be subject to a civil penalty of $5,000 to $15,000, for each violation, in addition to any other penalties or fines permitted by law. If it is determined the violations and the person or employer is or has been engaged in a pattern or practice of these violations, the person or employer would be subject to a civil penalty of $10,000 to $25,000, for each violation.

Anyone who knowingly advises an employer to improperly treat an individual as an independent contractor to avoid employee status could be found jointly and severally liable with the employer. However, a person who provides advice to his or her employer, or an attorney who provides legal advice in the course of practicing law, would be exempt from this liability.

A recently released EEOC informal discussion letter reminds employers that the regulatory exemption from the ADEA, which permits coordination of retiree health benefits with Medicare eligibility, does not apply to current employees. The question of whether the age-based action may be justified by spending more on another benefit for older workers turns on the employer’s ability to satisfy the ADEA’s “equal benefit or equal cost” defense. However, notwithstanding the ADEA, such actions may be precluded by Medicare rules, according to the letter.

The EEOC letter, dated August 2, 2011, notes that the EEOC’s ADEA exemption for coordination with Medicare applies only to retiree benefits, not to the benefits of current employees.

The question of whether the ADEA would otherwise permit an employer to terminate a current employee’s eligibility for group health insurance based on Medicare eligibility depends on the circumstances, the letter advises. “Since workers typically become eligible for Medicare at age 65, eliminating group health eligibility for current employees when they become Medicare-eligible is an age-based action. As such, it would violate the ADEA unless it satisfies the statute’s ‘equal benefit or equal cost’ defense,” the letter states.

Equal benefits. The defense, outlined in the Commission’s regulation at 29 CFR Sec. 1625.10, is set forth in the EEOC’s letter with respect to the equal benefits prong:

(e) Benefits provided by the Government. An employer does not violate the Act by permitting certain benefits to be provided by the Government, even though the availability of such benefits may be based on age. For example, it is not necessary for an employer to provide health benefits which are otherwise provided to certain employees by Medicare. However, the availability of benefits from the government will not justify a reduction in employer-provided benefits if the result is that, taking the employer-provided and Government-provided benefits together, an older employee is entitled to a lesser benefit of any type (including coverage for family and/or dependents) than a similarly situated younger employee. For example, the availability of certain benefits to an older employee under Medicare will not justify denying an older employee a benefit which is provided to younger employees and is not provided to the older employee by Medicare. (EEOC’s emphasis)

Equal cost. However, the letter points out, an employer that cannot satisfy the equal benefits prong may still avoid ADEA liability by satisfying the equal cost prong of the defense. “Equal cost” is usually calculated in one of two ways – on a “benefit-by-benefit” basis or a “benefit package” basis.

Under the benefit-by-benefit approach, according to the letter, an employer “most likely cannot prove that it expends an equal amount on health insurance for both younger and Medicare-covered workers where it eliminates the health benefits available to Medicare-eligible employees.”

As for the benefit package approach, the letter explains that Section 1625.10(f)(2)(iii) precludes justifying the elimination of a health benefit by spending more on “another benefit” for older workers as an alternative to the benefit-by-benefit analysis for purposes of eliminating health benefits based on age:

(iii) A benefit package approach shall not be used to justify reductions in health benefits greater than would be justified under a benefit-by-benefit approach. Such benefits appear to be of particular importance to older workers in meeting “problems arising from the impact of age” and were of particular concern to Congress. Therefore, the “benefit package” approach may not be used to reduce health insurance benefits by more than is warranted by the increase in the cost to the employer of those benefits alone. Any greater reduction would be a subterfuge to evade the purpose of the [ADEA].

Medicare rules. The Commission’s letter also questions whether terminating the benefits of Medicare-eligible current employees “would comport with Medicare rules.” The EEOC understands the Medicare program to require that employers “offer current employees who are at or over the age of Medicare eligibility the same health benefits, under the same conditions, as offered to younger current employees.” If this continues to be true, Medicare laws may prohibit employers from eliminating health coverage for Medicare-eligible current employees, irrespective of the ADEA, the letter observes.

The EEOC letter is merely informal advice pursuant to 29 CFR Sec. 1626.20(c) and may not be relied upon by an employer within the meaning of section 10 of the Portal to Portal Act of 1947, incorporated into the ADEA.

Deciding whether to classify a worker as either an employee or an independent contractor can cause an employer many headaches; particular considering that proper classification is necessary to avoid significant liability. To further complicate things, applicable laws do not always classify workers the same way. Employers have to be aware of the definitions in the Internal Revenue Code for income tax and social security; unemployment compensation laws; workers’ compensation laws; wage and hour laws; and discrimination laws.

In an effort to provide some relief, the IRS has announced a program that enables certain employers to avoid a portion of tax liability stemming from employee misclassification by voluntarily reclassifying workers as employees and paying a fee covering part of their past payroll obligations. In return, the employers must enter a closing agreement with the IRS which extends the limitations period applicable to the assessment of employment taxes from three to six years. Employers can apply to the program by filing Form 8952, Voluntary Classification Settlement Program. Applications must be received at least 60 days before the employer wishes to treat the workers as employees.

This announcement comes on the heels of a DOL announcement that the DOL, IRS, and several states are stepping up efforts to prevent misclassification by entering agreements to coordinate enforcement. A Memorandum of Undertanding between all the parties is located here. The DOL anticipates that the new partnerships will better allow it to work with the IRS and participating states on law enforcement and information sharing in order to “level the playing field for law-abiding employers and ensure that employees receive the protections to which they are entitled under federal and state law.”

Employers having difficulties classifying a worker can request that the IRS determine the worker’s status for federal tax purposes by filing a Form SS-8. The form, and additional resources to help employers classify workers, can be found on the IRS website. Keep in mind, however, that other laws may apply different tests for classifying workers. For example, the same worker could be an “employee” under workers’ compensation laws and an “independent contractor” for unemployment tax purposes.

The employer’s right to control a worker is the most common factor considered by agencies and courts, but other factors may be considered. For example, a worker is probably an employee if required to work at the employer’s office for a certain period of time, regularly reports on work performed, and uses the employer’s equipment. By contrast, the same person is likely an independent contractor if he or she controls the hours worked, provides the equipment, reports only on major developments, and performs similar services for other businesses. Because this area of law is complex and the consequences of misclassification can be severe, employers with classification questions would be well-advised to consult a local employment lawyer or tax expert.