confidential © 2011 barnes & thornburg llp. all rights reserved. this page, and all information...

CONFIDENTIAL

© 2011 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is confidential, proprietary and the property of Barnes & Thornburg LLP, which may not be disseminated or disclosed to anyone other than an employee or partner of Barnes & Thornburg LLP who is authorized to receive it. This page and all information on it may not be reproduced, in any form, by anyone without the express written consent of the author or presenter.

2011 Labor & Employment Hot Issues

Tina Syring-PetrocchiBarnes & Thornburg LLP

225 South Sixth Street, Suite 2800Minneapolis, MN 55402

(612) 333-2111www.btlaw.com

CONFIDENTIAL


Hot Issue #1: So Many Changes

CONFIDENTIAL


Hot Issue #1: So Many Changes

• Changes to the Laws:– Americans with Disabilities Act

Amendments of 2008 (ADA)– Genetic Information Non-

discrimination Act (GINA)– Family and Medical Leave Act (FMLA)– American Recovery and Reinvestment Act

of 2009– Lilly Ledbetter Fair Pay Act of 2007

CONFIDENTIAL


Hot Issue #1: So Many Changes. . .

• Changes in Regulations: – ADA Regulations released this week– FMLA Regulations– GINA Regulations– Workers with Caregiver

Responsibilities– E-Verification– Proposed regulations

• Age Discrimination in Employment Act (“ADEA”)

CONFIDENTIAL



• Expansion of Whistleblower Protections:– OSHA– Food Safety Modernization Act– Healthcare Reform

CONFIDENTIAL



• Expansion of Government Agencies– More investigators and attorneys

• EEOC• DOL• DOJ

– Defending a charge involves more time and money

– More on-site inspections and interviews– OFCCP audits increasing

CONFIDENTIAL


Hot Issue #2: The U.S. Supreme Court

CONFIDENTIAL


Hot Issue #2: U.S. Supreme Court

• Changes in the Court:– Appointment of Sonia Sotomayar

• Considered to be judicially active• Wrote majority opinion in controversial white firefighters’

racial discrimination case• Supporter of Unions

– Appointment of Elena Kagan• No prior judicial experience• Considered liberal• Refused to allow military recruiters on Harvard’s campus

because of “Don’t Ask, Don’t Tell” policy

CONFIDENTIAL


Hot Issue #2: U.S. Supreme Court

• 2011 Decisions and Cases:– FLSA Retaliation Expansion

• Kasten v. Saint-Gobin Performance Plastics

– 3rd Party Retaliation• Thompson v. Northern American Stainless

– Class Action• Dukes v. Wal-Mart Stores

– 500,000 female employees in the proposed class– Gender discrimination

CONFIDENTIAL


Hot Issue #3: Unions and

National Labor Relations Board

CONFIDENTIAL


Hot Issue #3: Unions & NLRB

• Employee Free Choice Act is not gone– Through the NLRB decisions, most of the provisions of

EFCA are being implemented.

• Radical changes to Railway Labor Act– Elections now based on the majority who actually vote.

• Previously had been based on the majority of employees eligible to vote.

• Change makes it easier to organize.

CONFIDENTIAL



• Technology is seen as a tool for unions– Facebook– Blogs– “Cyber organizing” – Emails– Text messages

• Challenging for employers on the extent they can monitor employer-issued computers.

CONFIDENTIAL



• Focusing on non-union employers– Currently only 7.2% of private sector employers

are unionized.– But . . . changes to public sector unions are

forcing unions to look to the private sector.

• Challenging independent contractor classifications

• “Salting”• Filing charges on behalf of non-union

employees

CONFIDENTIAL



• NLRB Activism:– Current make-up of the Board

• 3 of the 4 members are strongly connected to unions

– Facebook Case– Mandatory language in

settlement agreements

CONFIDENTIAL



• Recommendations:– Adopt and enforce electronic-media use and social

networking policies to limit unions’ increased reliance on technology

– Conduct union-avoidance training• Managers• Employees

– Conduct “labor audit” to determine vulnerability

– Create a code of conduct– Evaluate independent contractor relationships

CONFIDENTIAL


Hot Issue #4: Independent Contractors

CONFIDENTIAL



• Issues for . . . .– Unions (as a mechanism for organizing)– Department of Labor (as an overtime

issue)– Internal Revenue Service (as a tax and

benefits issue)

CONFIDENTIAL



• Comprehensive Report Done In August 2009• Found Misclassification of Workers To Be A

Significant and Increasing Problem.– 1984: IRS estimated 3.4 million workers were

misclassified as independent contractors (IC).– 2000: DOL found up to 30% of the companies

audited in 9 states had misclassified workers.– 2007: IRS estimated 15% of U.S. workers were

misclassified as IC.

CONFIDENTIAL



• Independent Contractor (“IC”):– Not an employee.– Company is not responsible for the IC’s SSI,

Workers’ Compensation, retirement benefits, ADA, FMLA, Title VII, Whistleblower, FLSA

– Cannot sue Company as an employee for wrongful act or injury on jobsite

– The best candidates for IC status are workers who:

• Have special skills• Can work without close supervision

CONFIDENTIAL



• Potential Legal Issues:– A contract does not necessarily make an individual

an IC.• Courts look to the “reality” of the relationship• If there is a discrepancy between contract and

actual relationship, look to relationship

– Law varies as to the “test” to determine if an individual is an IC.

• “Right to Control” test• The IRS 20 Factor Test• DOL “Economic Realities Test”

CONFIDENTIAL



• Each Test Focuses On:– Behavioral Controls

• How do the parties act?

– Financial Controls • Risk

• How are services paid?

– Type of Relationship • What can each do?

CONFIDENTIAL



• Consequences If You Get It Wrong . . . – Payment of payroll taxes

• Employers incorrectly classifying workers may be held liable by the IRS for all or part of the uncollected payroll and income taxes, even if the contractor has already been paid.

– Lost management time– Legal fees– Back “taxes” of many kinds– Minimum wage and overtime pay– Interest and penalties– Jail time

CONFIDENTIAL


Hot Issue #5: Social Media And Privacy

CONFIDENTIAL


Hot Issue #5: Social Media and Privacy

• Email (not so new)• “Blogs”• Social networking sites

– Facebook (Feb. 2004)– MySpace (Aug. 2003)

– Twitter (Mar. 2006)

• Professional networking sites– Linkedin (May 2003)

• Text Messages

CONFIDENTIAL



• 83% of employers are likely to use social networking sites for hiring.

• Potential Discrimination Issues:– US Working Population:

• 13% African-American, 15% Hispanic• Linkedin Users: 5% African-American, 4% Hispanic

» Fortune (Mar. 2, 2011)

– Pictures on Facebook– Involvement in groups related to protected categories– Disclosure of family and medical issues

CONFIDENTIAL



• Lawful Conduct Outside of Work: 33 States Provide Protection– Political activity (All states but AL, AR, GA, HI, IA, ID, IL, KS,

ME, MT, NC, ND, NH, OK, VT, WI)

– Consumption of lawful products (IL, MN, MT, NC, NV, NY, WI)

– Smoking/tobacco use (CT, DC, IN, KY, LA, ME, MS, NH, NJ, NM, OK, OR, RI, SC,SD, TN, WV, WY)

– Lawful off-duty conduct (CA, CO, ND, NY)

– First amendment (CT)

CONFIDENTIAL



• Monitoring Issues:– Accessing Protected Sites

• Invasion of privacy

• Violation of website terms and conditions

• Violation of Stored Communications Act (Hacking)

• Violation of Electronic Communications Privacy Act

• Violation of Fair Credit Reporting Act

CONFIDENTIAL



• Recommendations:– “No expectation of privacy” language in handbook

• Written consent

• Ordinary course of business

• Access is by the entity providing the communication service

– Internet monitoring policy • Provide specifics

• Apply uniformly

CONFIDENTIAL



• Recommendations (cont.):– Social Media Policy

• Written policy, disseminated,

acknowledged

• Disclaimer: my views, not my employer’s

• No confidential or trade secret information

• Don’t defame or disparage (with Section 7

disclaimer language)

• Offensive behavior policy applies on-line

– Caution in issuing discipline• Treat everyone the same

• Beware of protected activity

CONFIDENTIAL


Hot Issue #6:Who Hired This Person?

CONFIDENTIAL


Hot Issue #6: Who Hired This Person?

• Hiring the Wrong Person:– Right skills, wrong personality– Right personality, wrong skills (if any)– Wrong skills, wrong personality

• How does this happen?– Rush to hire

• No assessment of needs

– No pre-screening– Bad interview questions/bad interviewers

CONFIDENTIAL



• “Need to hire right now!” BUT for what?– New or Existing Position?

– Job Description Updated and Accurate?

– Recruitment Sources?

– Employment Application Helpful

or Hurtful?

CONFIDENTIAL



• Getting in the Door Without Any Screening!- Need to pre-screen all candidates!- Telephone interviews- Verify information before in-person interview

• 34% of job applicants lie about educational and work experience.

• 11% of job applicants misrepresent the reason for leaving their prior employer.

• 30% of job applicants exaggerate their accomplishments.

CONFIDENTIAL



• Bad Interviews– Deciding Who Will Conduct The Interview

• Training

– Preparing Interview Questions• Consistency

• Do the questions relate to the position?

• Writing on the application or résumé

– Bad Questions Will Create Problems!• Illegal Questions

• EEOC “Tester” Applicants

CONFIDENTIAL



• Testing of Candidates• Be Careful!• Measures the applicant’s

abilities and skills needed to do the job.

• Measures the applicant’s general knowledge of the subject matter of the job (i.e., accounting, legal, business, etc.)

• Must be required of all applicants for the same position!

CONFIDENTIAL



• Final Steps Before Hiring:– Background Checks:

• Verify employment skills/experience• Verify what you learned in the

interview• Verify right person for your business

culture• Compliance with Fair Credit Reporting

Act– Non-Compete Obligations

• Any restrictions on joining your organization?

• Steps to ensure compliance?• Potential litigation/litigation costly

CONFIDENTIAL


Hot Issue #7: Time Is Money and

Other Wage and Hour Challenges

CONFIDENTIAL


Hot Issue #7: Time Is Money

• Misclassification of Employees: – Salaried Does Not Mean Exempt!

– Title Does Not Mean Exempt!

– Education or Experience Does Not Mean Exempt!

• Exemptions are based on duties – not title, education or “salary”– Executive, administrative and professional exemption

tests must be strictly adhered to.

– If the employee’s duties do not meet each element of the test, he or she must be classified as non-exempt and paid overtime for any hours worked over 40

CONFIDENTIAL



• It’s Okay to Interrupt Lunch . . . WRONG!– Break periods under the FLSA may or may not be

compensable for non-exempt employees, depending on whether the employee is relieved from duty and the amount of time given for such activity

– Meal periods must be counted as hours worked unless:• The meal period is at least 30 minutes

• The employee is completely relieved from all duties during the period

• The employee is free to leave the duty post

CONFIDENTIAL



• “I Didn’t Authorize Overtime So I’m Not Paying It” . . . WRONG!– Employees who work after their shift are engaged

in compensable time and whether they had authority is immaterial.

– As long as the employer “suffers or permits” employees to work on its behalf, proper compensation must be paid.

– Mere promulgation of a rule prohibitingovertime or unauthorized work is not sufficient to avoid compensation for additional hours worked under the DOL regulations—management must make sure that no work is performed!

CONFIDENTIAL



• Docking Exempt Employees:– An exempt employee’s salary cannot be reduced

based on variations in the quality or quantity of the work performed.

– An exempt employee must receive his or her full salary for any week in which he or she performs work, without regard to the number of hours worked.

– The DOL regulations provide that an employer that makes improper deductions may lose the exemption status.

CONFIDENTIAL



• Permissible Deductions for Exempt Employees:– The employee is absent from work for one or more full

days for personal reasons, other than sickness or disability.

– The employee is absent for one or more full days because of sickness or disability and the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for loss of salary.

– The employer imposes penalties in good faith for infractions of safety rules of major significance

CONFIDENTIAL



• Permissible Deductions of Exempt Employees (Cont.):– The employee takes leave under the FMLA

(including deductions for partial day absences occasioned by the FMLA).

– The employee is absent the entire workweek or performs no work during an entire workweek.

– The employer suspends the employee for one or more full days imposed in good faith for infractions of workplace conduct rules.

CONFIDENTIAL


Hot Issue #8: When An Employee Asks To Take “Some Time Off” – What Does This Mean Under the ADAAA and FMLA?

CONFIDENTIAL


Hot Issue #8: ADAAA and FMLA

• ADAAA – Why Did This Happen?– Purpose of ADAAA is to “restore the intent and

protections” of the ADA.– Amendments specifically reject U.S. Supreme

Court decisions limiting the definition of “disability.”

– Congress believed Supreme Court eliminated protection under ADA for individuals that Congress intended to protect.

CONFIDENTIAL



• What Do The Amendments Mean?– Congress specifically disavowed a narrow

interpretation of the ADA and directs that ADA should provide “a broad scope of protection.”

– Requires broader interpretation of the term “disability” and may expand employers’ obligations to more employees.

– Still applies to employers with 15 or more employees.

CONFIDENTIAL



• Things To Be Mindful Under The ADAA:– EEOC Regulations: Directed to revise

definition of “substantially limits.”– Major Life Activity: New language that

specifically states that operation of “major bodily functions” is a major life activity

• Term includes functions of immune system, normal cell growth, digestive, bowel, bladder, brain, respiratory, circulatory, endocrine, etc.

• Most significant change in the statute for extending scope of ADA

CONFIDENTIAL



• Things To Be Mindful Under The ADAA (Cont.):– Inactive Impairments: Impairments or conditions that

are episodic or in remission still constitute disability if would substantially limit a major life activity when active.

– Mitigating Measures: Reversed Supreme Court’s finding that determination of whether an impairment is “substantially limiting” to major life activity must consider mitigating measures.

– Perceived Disabilities: Person qualifies as being “regarded” as disabled if person establishes that he or she was subjected to a prohibited action because of an actual or perceived mental or physical impairment; individual does not have to show that employer perceived the condition to limit a major life activity.

CONFIDENTIAL



• The ADAAA’s Impact On Requests For Accommodations, Including Time Off?– Must consider how they currently analyze requests for

accommodation of employees with medical conditions. • But probably will not change your day to day life that

dramatically!!

– Some conditions that were outside ADA are now considered disabilities under the ADAAA (including multiple sclerosis and diabetes).

– Increased litigation likely with increased risk because of the unavailability of key legal arguments.

– Increased scrutiny of HR decisions affecting employees with medical conditions.

CONFIDENTIAL



• What About The FMLA?– Still applies to employers with 50 or more

employees.– Eligibility for FMLA Leave remains the same:

• Employed at least 12 months• Worked at least 1250 hours over previous 12

months (USERRA exception).

CONFIDENTIAL



• But, There Are Changes To The FMLA . . . – National Defense Authorization Act

• Qualifying Exigency Leave – Eligible employees are entitled to 12 weeks of leave

because of any qualifying “exigency” arising out of the fact that a covered military member is on active duty or called to active duty status in support of a contingency operation.

– A military operation qualifies as a “contingency operation” if it:

» Is designated by the Secretary of Defense as an operation in which members of the Armed Forces are or may become involved in military actions, operations or hostilities, or

» Results in a call or order to active duty during a war or national emergency declared by the President or Congress.

CONFIDENTIAL



• But, There Are Changes To The FMLA . . . – Qualifying “exigency” includes the following

categories:• Short-notice deployment• Military events and related activities• Child care and school activities• Financial and legal arrangements• Counseling• Rest and recuperation• Post-deployment activities• Additional activities agreed to

between the employer and employee

CONFIDENTIAL



• But, There Are Changes To The FMLA . . . – Military Caregiver Leave

• Eligible employees are entitled to 26 workweeks of leave in a single 12-month period to care for a covered service member with a serious injury or illness incurred in the line of active duty.

• Extends FMLA protection to:– Spouse

– Son or daughter

– Parent

– “Next of kin” of the service member (new category)

CONFIDENTIAL



• But, There Are Changes To The FMLA . . . – New Regulations:

• 12 months of employment for eligibility need not be consecutive.

• Breaks in service of 7 years or more need not be counted.

• A general notice must be:– Posted where it can be readily seen by

employees and applicants;– Included in employee handbooks or other

materials distributed at time of hiring.

CONFIDENTIAL



• But, There Are Changes To The FMLA . . . – New Regulations (Cont.)

• Time to notify employee whether he or she is eligible to take FMLA leave is now 5 business days (absent extenuating circumstances).

• Notice Designating Leave:– Must notify the employee whether the leave will

be designated and counted as FMLA leave within 5 business days when the employer has sufficient information.

CONFIDENTIAL


Hot Issue #9: Implementing Layoffs

Without Triggering Lawsuits

CONFIDENTIAL


Hot Issue #9: Layoffs

• Reductions In Force Require Advance Planning:– Consideration of potential

discriminatory impact– Legitimate business rationale– Consideration of alternatives– Consideration of severance

plans– Development of

communication strategy

CONFIDENTIAL



Before Each Termination Decision is Final,

Must Be Able To:

JUSTIFY

EXPLAIN

DEFEND

CONFIDENTIAL



• Factors To Consider When Implementing A Layoff:– Make sure the RIF does not have a disparate impact on protected

classes.• If a protected class is disproportionately affected, consider alternatives

to reaching business goals.

– Objective Methods for Selecting Employees:• Length of service

• Absenteeism (But Beware of FMLA, ADAAA, and Worker’s Compensation)

• Quality and quantity of work

• Education and experience

• Ability, skills, versatility, know-how

• Promotability

CONFIDENTIAL



• Be Mindful of the Worker Adjustment and Retraining Notification Act (“WARN”)– Coverage Requirements:

• 100 or more employees, excluding part-time; or

• 100 or more employees, including part-time, who in the aggregate work at least 4,000 hours per week (exclusive of OT)

• This includes employees on layoff with a reasonable expectation of recall

CONFIDENTIAL



• Notice Requirements Under WARN:– 60-days’ advance notice of “mass

layoffs” and “plant closings”• To affected workers,

• To their representatives (i.e., a union),

• To the state dislocated worker unit, and

• To the appropriate local government

– Specific Contents

CONFIDENTIAL



• “Mass Layoffs”– Layoff of 6 months or longer affects –

• 500 or more workers, or• At least 50 workers, provided that the total number of

workers affected accounts for 33% or more of the workforce

– Occurs within a 30- or 90-day period may be aggregated to meet these requirements.

• “Plant Closings”– A covered plant closing occurs when a facility or “operating

unit” is shut down for more than 6 months, and 50 or more workers lose their jobs as a result during a 30-day period

CONFIDENTIAL



• Penalties Under WARN (Currently):– Back pay and benefits for the

period of the violation, up to 60 days

• May be reduced by period for which notice was given, and by any voluntary payments to the employee

– Civil penalty not to exceed $500 for each day of the violation

– Employees, their representatives, and units of local government may bring individual or class actions to enforce WARN

CONFIDENTIAL



• What About Furloughs?- Instead of implementing layoffs, a common approach has been

reducing salaries by 20% and then reducing the workweek by one day per week.

- Issues to be mindful of:• Approach may threaten the salary-basis test for exempt employees

(since FLSA does not allow salary to be reduced because of variations in quantity of work performed or available).

• DOL has recently weighed-in on the question and opined that reducing exempt employees' work schedules with a corresponding reduction in salary because of lack of work violated the salary basis test.

CONFIDENTIAL



• Furloughs (Cont.):- Whether a pay reduction plan based on lack of work violates

salary basis test depends on permanence of reduction.

- DOL permits permanent changes to compensation based on reduced workweek schedule, so long as not an attempt to evade requirements of FLSA.

- Better approach is to either furlough employees in full-week increments or simply reduce pay without a corresponding reduction in the workweek.

- Permissible under WARN

CONFIDENTIAL


Hot Issue #10: Prescription Drugs And Employee

Usage

CONFIDENTIAL


Hot Issue #10: Prescription Drugs . . . .

• The Problem:– According to the Drug Enforcement Administration,

the abuse of prescription drugs ranks second only to cocaine usage.

– Almost 30% of drug abusers rely on prescription drugs to satisfy their habits.

– The abuse and misuse of prescription drugs in the workplace is commonplace, and often overlooked as a source of problems on the job.

CONFIDENTIAL



• The Problem:– 14 millions employed drug and alcohol abusers– 10% of adult workers

• Impact:– Take more sick days

– Send health costs skyrocketing

CONFIDENTIAL



• Drug Testing in the Workplace: Minnesota employers beware!– Written policy – separate from employee

handbook– Types of Testing:

• Random (46% for FY 2009) • Reasonable suspicion (80% for FY 2009)• Post-accident (69% for FY 2009)

– Confirmatory test required– Counseling

CONFIDENTIAL


Questions?

CONFIDENTIAL


Thank You!

confidential © 2011 barnes & thornburg llp. all rights reserved. this page, and all information...

Documents