Introduction
The last year in employment law can best be described as "the perfect storm". That is, just as the economy went into a serious downturn, and as a result companies reduced production, trimmed payrolls and eliminated positions, Congress and the New Hampshire's legislature as well as federal and state agencies have been very active creating new obligations for employers. At the same time converging with those legal barometric lows was the rise of employee lawsuits and regulatory actions against employers. The last front is the building threat of new workplace laws and obligations for employers. In other words, just as employers are trying to keep their doors open and lights on, or to borrow the imagery from The Perfect Storm, just as employers are trying to bail water and keep their boats afloat, they have been pounded with seemingly relentless waves of laws, regulations, lawsuits, discrimination claims and regulatory enforcement actions. With each of these waves, employers have more legal and financial obligations and with each pounding they seem to slip lower and lower into oncoming waves. How's that for an introduction and display of bias? Well, this has been an interesting and challenging year. There is much to review and yes, more is coming.
New Laws from Congress and the State Legislature.
Busy doesn't begin to describe the legislative sessions during the last year. Both Congress and the State Legislature in Concord have considered many and passed several workplace bills. Here are just a few examples:
In September 2008, Congress adopted sweeping changes to the Americans with Disabilities Act (ADA). Those amendments, effective in January 2009, resulted in a new definition for the term "disability" and with that employers now have to consider reasonable accommodations for a larger number of employees. This means the forms, processes and rules for job interviews, physical exams, job descriptions and leave/accommodation discussions must all change. Congress asked the U.S. equal Employment Opportunity Commission (EEOC) to issue new guidance for employers. To date, no such guidance has been published. This has been compared to sailing into a storm without radar. Another change was the amendments to the Family and Medical Leave Act (FMLA). Effective in January 2009, these amendments increased the leave time (from 12 to 26 weeks in a 12 month period) available to family members who care for injured military personnel returning from service abroad. Employers now have new guidance on the definition of a "serious health condition," updated medical certification forms and the recommended procedures to follow when employees need intermittent medical leave or if the need for leave is because of a chronic or reoccurring condition. This development didn't create additional burden for employers (beyond the need for updated policies and posters) and regulations that followed actually clarified many employer questions and concerns under the FMLA, but it was still another set of laws and regulations for covered employers to understand.
During his first few weeks in office, President Obama signed in to law the Ledbetter Fair Pay Act of 2009. This law was a priority for Congress and the new President. It was in response to a U.S. Supreme Court decision involving a federal discrimination case in which the theory of continuing violations of pay discrimination reaching back several years was blocked because it exceeded the federal law's statute of limitations. The dissent in that case invited Congress to change the law. Congress rose to the challenge and adopted the law that permits discrimination claims to be essentially renewed with each paycheck that carries forward an alleged act of discrimination (e.g. pay disparity). The Ledbetter law also applies to other forms of discrimination under federal law and permits similar claims that had been dismissed since May 2007, on the basis of statute of limitations, to be revived. Employers now must pay special attention to and retain for much longer periods of time the records that relate to pay decisions.
Finally, the most recent wave from Congress involved employer provided COBRA subsidies to terminated employees. That obligation, which was added to the Federal stimulus legislation, passed in late February 2009, (known as the American Recovery and Reinvestment Act of 2009 (ARRA)), requires employers to notify employees who were involuntarily terminated during the period since September 1, 2008 that they may be eligible for the continuation of coverage under the employer's group health plan at a significantly reduced premium. Instead of having to pay up to 102% of the premium for that continued coverage, covered former employees would only have to pay 35% of the premium for up to nine months (but no later than December 31, 2009) with the employer paying the other 65% of the premium. Employers are permitted to deduct those premium contributions from their Medicare and Social Security payroll contributions but in the meantime, the employers must bear the additional costs and the administrative burden related to these notices and subsidies.
New Regulations form State and Federal Agencies.
Just as there are smaller waves that follow in the surf, with the recent changes to state and federal laws, there have been attendant regulations from state and federal agencies that employers need to review and follow. During the last year, in addition to new FMLA regulations requiring new posters and policies, there have been changes to the federal and state minimum wage rates resulting in the need for new workplace posters, there have been new wage and hour regulations which require employers to get employees to acknowledge, in writing, changes to pay and benefit arrangements and new guidelines have been adopted for the determination of who is an employee and who is an independent contractor under state (wage and hour, workers' compensations and Whistleblowers) laws also necessitating a change in posters, policies and practices.
Rise of Discrimination Claims, Lawsuits and Enforcement Actions.
In recent years studies have confirmed a correlation between the economy and the number of workplace lawsuits and claims. These disputes increase when unemployment rates rise and decrease when jobs are more plentiful. The statistics from the EEOC and the New Hampshire Commission for Human Rights show a significant increase in discrimination charges filed in the last year: the most significant increase in those claims in many years. With the changes to the ADA and other discrimination laws with Ledbetter, these cases are likely to be more involved, more difficult to defend and as a result more costly for employers. Enforcement actions by federal agencies like OSHA, EEOC and the U.S. Department of Labor have also increased. Likewise in New Hampshire, the Department of Labor and the Department of Employment Security have been actively auditing and citing employers citing many with violations of state laws. These enforcement actions are not only disruptive but expensive with potential hefty civil fines and wage adjustments.
Pending Bills in Congress and the State Legislature. (Had enough yet?)
Just when you started to get up to speed on Ledbetter, the changes to the minimum wage the amendments to the ADA, the changes to the FMLA and the complexities of the COBRA subsidies program, and work on compliance issues with state laws, yet another wave of bills from Congress and Concord are building. How much can this little boat take?
Some of the workplace bills pending in Congress include the Paycheck Fairness Act, several Healthcare reform bills, and the Employee Free Choice Act. The most active of these threatening swells is the Employee Free Choice Act. Often referred to as Card Check bill, this legislation, if adopted as proposed, would radically change the face of federal labor relations laws. The bill would certify new unions based on a simple majority of workers signing cards of interest in a union. The current requirement is that once 30% of the employees in an organization sign cards expressing interest in a union the matter would be submitted to an election under the supervision of the National Labor Relations Board where workers could vote on the matter by a secret ballot. Other changes would include mandatory mediation and arbitration if a union contract is not finalized within a short period for time. The potential penalties for unfair labor practice charges would also increase significantly. While there has been resistance to this bill and compromise bills have been proposed, employers need to be aware that if this wave hits, it would represent a significant change in the law and with that a change in how employers handle union changes and labor relations.
At the state level, there are several workplace bills pending in Concord. The most noteworthy bills is SB40, referred to as the New Hampshire Mini-WARN Act. This bill is patterned after the federal WARN act and establishes reporting guidelines for companies that are closing their doors or engaged in mass layoffs.
The federal WARN (worker adjustment and retraining notification) Act;requires employers to give 60 days advance notice when there is going to be a plant closure or mass layoff (involving more that 1/3 of the workforce but at least 50 employees). The most noteworthy bills is SB40, the threshold for notice would be lower: a single site employment loss for at least 250 employees (excluding seasonal and part time employees) OR at least 25 employees (excluding part time or seasonal employees) if they constitute 33% of the employer's full time employees. Employers who fail to give the required notice would be responsible to provide wages and benefits to those employees. The Federal WARN Act has several exceptions and exemptions built in to the law. SB40 has many of those same carve outs. The problem is that SB40 has two troubling provisions. First, SB40 lowers the employee threshold triggering notices from 100 employees to 75. The threshold for notice to workers is a minimum of 25 instead of 50 under WARN. These lower thresholds would cover at least 300 more employers in New Hampshire than would have been covered under WARN. Second, SB40 includes a first of its kind corporate liability piece that provides the NH Department of Labor the ability to "pierce the corporate veil" and penalize corporate decision makers responsible for violating the state WARN act. This provision has caused some concern in the business community.
Conclusion
A review of weather patterns over a period of years usually shows trends for significant weather events such as hurricanes, flooding and greater than average snow and rainfall. In employment law there are seasons like this too where there are more workplace bills introduced and when those bills have a greater chance to become law. We were in a season like this in the early 1990's. What makes this season more difficult is that the stakes are higher, compliance is more difficult, and the resources available to businesses are scarcer. Suggestions? Turn your bow into the wind, batten down the hatches, be sure life vests are available and the radio is working. On a more serious note, employers, now more than ever, need to be sure to understand and comply with all applicable legal obligations, voice their concerns to local, state and national representatives and join local business and industry advocacy groups to make known your concerns, interests and yes, in some instances, their opposition to this legislative weather pattern.
Jim Reidy, a management lawyer, is the Chair of the Labor and Employment group at the law firm of Sheehan Phinney Bass + Green, PA.
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