Category: Labor & Employment

Philadelphia Mandates Paid Sick Leave

Morgan, Lewis & Bockius LLP.

Employers should act to ensure compliance before the law takes effect on May 13.

On February 12, the City of Philadelphia joined the nationwide paid sick leave trend when Mayor Michael Nutter signed the Promoting Healthy Families and Workplaces Ordinance (the Ordinance) into law. The Ordinance requires employers with 10 or more employees in the City of Philadelphia to provide paid and unpaid sick leave to eligible employees and is effective May 13.

Under the Ordinance, full- and part-time employees who work at least 40 hours per year within the City of Philadelphia will accrue paid sick leave at the rate of one hour for every 40 hours worked, up to a maximum of 40 hours per year. Employees who work less than 40 hours per year within the City of Philadelphia will accrue unpaid sick leave at the same rate.[2]Employees may use covered leave (1) for their own illnesses; (2) to address a family member’s mental or physical illness, injury, or health condition; or (3) to obtain medical attention to recover from an injury or disability caused by domestic or sexual violence (including stalking) or for related legal services or remedies.

The Ordinance also includes the following:

  • Employer Coverage: Employers that employ fewer than 10 full-time, part-time, or temporary employees for at least 40 weeks in a calendar year are not required to comply with the Ordinance. However, certain chain establishments, as defined under the Ordinance, are required to provide paid sick leave regardless of the number of employees at the chain’s Philadelphia location.

  • Excluded Employees: Independent contractors, seasonal employees, adjunct professors, employees hired for a term of less than six months, interns, pool employees in the healthcare industry, state and federal employees, and employees covered by a bona fide collective bargaining agreement are not covered by the Ordinance.

  • Accrual of Paid Sick Time: Paid sick time begins to accrue on the effective date of the Ordinance (May 13) for any then-current employee and begins to accrue on the date of hire for any employees hired after the effective date. Recently hired employees can use accrued sick time 90 days after their hire date. Employers must allow employees to carry over accrued sick time to the following calendar year, unless the employer chooses to provide at least 40 hours of sick time at the beginning of the following calendar year. Employers that already provide employees with paid leave (including, for example, vacation days, sick days, floating holidays, parental leave, personal leave, or paid time off) that may be used as sick leave and that meets or exceeds the amount mandated by the Ordinance are not required to provide additional sick leave.

  • Use of Paid Sick Time: Employees are generally required to provide advanced notice of the need for sick leave and may use accrued sick time in hourly increments (or any smaller increment) that the employer uses to account for absences or use of other time. If an employee takes two or more sick days, the employer may require documentation to verify that the sick time is covered by the Ordinance.

  • Notice: Covered employers must distribute individual written notices to all eligible employees regarding their rights under the Ordinance or display a poster regarding the Ordinance in a conspicuous and accessible location in the workplace. If an employer has employees who do not speak English as a first language, the employer must post or provide individual notice of the Ordinance and its requirements in any other language that is the first language spoken by at least 5% of its workforce.

  • Anti-Discrimination and Anti-Retaliation Provisions: The Ordinance prohibits discrimination and retaliation against any employees who exercise their rights under the Ordinance or who inform other employees about the right to paid sick time under the Ordinance. The Ordinance also creates a rebuttable presumption of retaliation against any employer that takes an adverse action against an employee within 90 days of the employee engaging in protected activity under the Ordinance.

  • Enforcement: Mayor Nutter will designate an agency responsible for implementing, administering, and enforcing the Ordinance, and the agency will have the authority to issue guidelines and regulations to carry out and enforce the Ordinance. Employees may pursue claims against an employer for violations of the Ordinance by filing a complaint with the agency or in court (after first filing a complaint with the agency). The agency or the city solicitor may also pursue claims in court against employers to enforce the Ordinance.

  • Record Keeping: Employers must keep records that document the hours worked by employees and sick time accrued by and taken by the employees. Employers must retain the required records for a two-year period and allow the agency reasonable access to such records with appropriate notice.

Recommendations

To ensure compliance, employers should take the following actions on or before May 13:

  • Supply each employee with an individual written notice that contains the information required by the Ordinance or display a poster with the same information where employees can easily read it. The Ordinance mandates that this same information should also be included in any employee handbook distributed to employees. (The city has yet to issue a model poster. Employers should continue to visit the city’s website because the agency responsible for enforcing the Ordinance is required to create and make available a poster that contains the mandated paid sick leave information.)

  • Review, create, or modify existing vacation, paid time off, and sick leave policies to ensure compliance with the Ordinance. Employers must ensure that they are not only providing sufficient sick leave to employees but also that employees are permitted to take leave under the Ordinance’s terms.

  • Train human resources and supervisory personnel on the Ordinance’s new sick leave requirements, including, for example, the reasons that employees may use sick time, how much sick time they may use, and the documentation that employers may request when employees use accrued sick time. Employers should also train human resources and supervisory personnel on the anti-discrimination and anti-retaliation provisions under the Ordinance and update related policies accordingly.

  • Ensure that time and payroll records are sufficiently detailed to reflect the hours that employees worked and the amount of sick leave covered employees accrued and used to comply with the Ordinance’s record-keeping provisions.

ARTICLE BY

Cailin Heilig
Sarah E. Bouchard
Michael J. Ossip
Michael J. Puma
OF
Morgan, Lewis & Bockius LLP

Another Court Rejects Notion that Restrictive Covenant Agreements Must be Supported by At Least Two Years of At-Will Employment

Godfrey & Kahn S.C. Law firm

In a recent decision addressing the enforceability of a restrictive covenant agreement under Illinois law, the court in Bankers Life and Casualty Co. v. Miller, 2015 U.S. Dist. LEXIS 14337 (N.D. Ill. 2/6/15), ruled that Illinois law did not require a minimum of two years of employment to support the employee’s restrictive covenant obligations.  The court rejected the employee’s argument that the “bright-line” rule created by the Illinois Appellate Court in Fifield v. Premier Dealer Services, Inc.required at least two years of continued employment to justify enforcement of the non-competition restrictions.

The Bankers court ruled that “the competition restrictions were not invalid for lack of consideration as a matter of law on the basis that the departing employees’ tenure was less than two years[.]”  Instead, the court ruled that each non-competition restriction should be assessed on a case-by-case basis.  The Bankers ruling is in line with a prior Northern District of Illinois decision, Montel Aetnastak, Inc. v. Miessen, in which the court (by a different judge) ruled that 15 months of continued employment was sufficient consideration to support a non-competition restriction.  In Montel, the employee voluntarily resigned his employment.

In Illinois state courts, however, employers have not had such good luck.  The Illinois Appellate Court in Prairie Rheumatology Associates, S.C. v. Francis recently reiterated the two-year rule created in Fifield.

For employers, the difference in the treatment of Illinois restrictive covenant agreements emphasizes the importance of beating the employee to the courthouse.  In other words, if an employee files a declaratory action in state court, the odds are that the court will follow the Fifield rule.  If, on the other hand, the employer files first in federal court, the odds favor the employer.

Yet another case, Instant Technology, LLC v. Defazio, 2014 U.S. Dist. LEXIS 61232 (N.D. Ill. May 2, 2014), is pending in the Seventh Circuit Court of Appeals.  We will monitor this case and follow up once a ruling is issued.

ARTICLE BY

Rufino Gaytán
Deborah Rehorst
OF
Godfrey & Kahn S.C.

Paid Sick Leave: Coming Soon to a City Near You?

Barnes & Thornburg LLP Law Firm

President Obama reincarnated paid sick leave as a possible federal law right in his recent State of the Union address. “Send me a bill that gives every worker in America the opportunity to earn seven days of paid sick leave,” Obama said. “It’s the right thing to do.” Under the Family and Medical Leave Act, employees of covered employers currently have rights to as much as twelve weeks of unpaid medical leave per year. In addition, thousands of employers of every size voluntarily provide some form of paid sick leave in their employee benefits, such as a limited number of sick days or personal days. Three states (California, Connecticut and Massachusetts) presently mandate some form of paid sick leave for employees of private companies.

Although the President’s prospects for achieving a federal form of paid sick leave seem dim in the current Republican majority Congress, paid sick leave benefits are steadily rolling out at the municipal level.

The growing roster of cities with paid sick leave ordinances now includes: New York City; San Francisco; Seattle and Tacoma, Washington; Portland and Eugene, Oregon; and eight municipalities in New Jersey. This is a recent trend. In 2014, two states (Massachusetts and California) and five cities adopted paid sick leave laws for the first time. While more state-level paid sick leave laws do not appear to be on the near horizon, the steady growth of municipal-level paid sick leave requirements for private employers may indicate an important trend.

Local paid sick leave ordinances create serious complications for employers with widespread operations, resulting in a patchwork of employee benefits and medical leave issues on top of current FMLA compliance headaches.

ARTICLE BY

Peter R. Spanos
OF
Barnes & Thornburg LLP

Two More HR Mistakes To Avoid – Human Resources

Michael Best Logo

Having just touched the tip of the HR iceberg in my recent post  “Avoid these 3 Common HR Mistakes,” let’s dive a little deeper. Below are two more common mistakes made by companies and their human resources professionals:

Mistake #4: Failing to preserve key evidence.  Every terminated employee poses the risk of future litigation. Consequently, take steps to preserve crucial evidence. To the extent possible, save all employee voice mails that involve statements of: (1) quitting; (2) insubordination; (3) threats of violence; (4) profanity; and (5) excuses for absences unrelated to any disability (if you terminated the employee for absenteeism). Similarly, print and save screen shots of employees’ texts and social media postings, particularly if the contents reveal employee misconduct. Finally, always keep a signed and dated copy of the termination letter, and save the employee’s personnel file for at least 3 years.

Mistake #5: Failing to keep quiet. When it comes to discussing employment terminations, the less said the better. Never talk with a lawyer representing an employee. Generally, anything you say is evidence that will be used against you. For the same reason, don’t talk to an employee’s family member about their situation – he/she is not the employee. Don’t talk with anyone from a government agency unless your lawyer is present. Don’t tell individuals who do not have a “need to know” why an employee was terminated; if you can’t later prove the reason(s) for the termination you may face a defamation claim. Finally, be careful what you write in emails. Do not: (1) refer to an employee’s protected characteristics (such as race, age, gender, sexual orientation, religion, disability, etc.); (2) refer to an employee’s threat of a lawsuit; or (3) call the employee derogatory names (including “troublemaker”). Emails can and will be discovered in the course of litigation, and can be highly damaging to your case.*

Navigate around these legal icebergs in order to avoid sinking your case.

ARTICLE BY

Mitchell W. Quick
OF
Michael Best & Friedrich LLP

Anti-Bullying Laws in California and Tennessee Could Be the Start of a New Trend

Jackson Lewis Law firm

While there are no current federal laws that prevent workplace bullying in the private sector, “Healthy Workplace” bills have been introduced in 26 states since 2003.  Tennessee recently became the first state to pass the “Healthy Workplace Act,” a law designed to encourage public sector agencies to create an anti-bullying policy that addresses “abusive conduct” by making the agencies immune to bullying-related lawsuits if they adopt a policy that complies with the law.

More recently, California passed a workplace anti-bullying law for private-sector employers that became effective on January 1, 2015.  California’s A.B. 2053 requires employers with 50 or more employees that already provide training on preventing sexual harassment to include new training on preventing “abusive conduct” in the workplace to supervisory employees.  It is likely that other states will follow suit and pass their own “Healthy Workplace” bills in the coming years as anti-bullying continues to trend in the news and become a focus in the workplace.

Statistics show bullying in the workplace may be a real problem, with 65.6 million U.S. workers being affected by it.  According to 2014 National Survey conducted by the Workplace Bullying Institute, 27 percent of U.S. workers reported that they had experienced abusive conduct at work and 21% of U.S. Workers have witnessed abusive conduct of others at work.

The 2014 National Survey uncovered that most employees do not think that their employers do enough to address workplace bullying:

• 25% of employees’ surveyed asserted that employers deny that bullying and harassing conduct takes place and fail to investigate complaints

• 16% asserted that employers discount bullying or describe it as non-serious

•  15% asserted that employers rationalize it by describing the bullying as innocent

• 11% asserted that employers defend abusive conduct when the perpetrators are executives and managers

Only 12% of employees’ surveyed found that their employers took steps to eliminate bullying by creating and enforcing certain policies and procedures.  The perceived failure from employees and state lawmakers that employers are adequately addressing workplace bullying may be one reason for the recent passage of anti-bullying laws in Tennessee and California and the introduction of similar bills in other states.

Under Tennessee’s Healthy Workplace Act, “abusive conduct” is broadly defined as acts or omissions that would cause a reasonable person, based on the severity, nature, and frequency of the conduct, to believe that an employee was subject to an abusive work environment, such as: (A) Repeated verbal abuse in the workplace, including derogatory remarks, insults, and epithets; (B) Verbal, non-verbal, or physical conduct of a threatening, intimidating, or humiliating nature in the workplace; or (C) The sabotage or undermining of an employee’s work performance in the workplace.

California’s A.B. 2053 similarly defines “abusive conduct” very broadly.  “Abusive conduct” means conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests.  It may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance.  The Act recognizes that a single act shall not constitute abusive conduct, unless especially severe and egregious.

While California and most other states do not provide a private right of action for an employee to sue for workplace bullying, bullying at the workplace – that goes unchecked – can result in negative consequences, such as decreased productivity and efficiency, increased absenteeism, loss of morale, increased resignations or transfer requests, and increased hotline calls and internal complaints.   It may also result in employees suing their employers for harassment or a hostile work environment based on a protected class, such as race and gender under Title VII of the Civil Rights Act of 1964 or for tort liability claims, such as negligent hiring or intentional infliction of emotional distress.

Thus, employers would be well-advised to manage this risk and develop a stronger workplace conduct policy now.  To address the potential for workplace bullying and the possibility that states will follow Tennessee’s and California’s lead in regulating workplace bullying, employers should analyze the workplace culture for incidents or prevalence to bullying and develop a workplace bullying prevention program.

ARTICLE BY

Nickole C. Winnett
OF
Jackson Lewis P.C.

Will Religiously Based Federal Contractors Challenge OFCCP's New LGBT Regulations?

Gonzalez Saggio & Harlan logo

As 2014 headed toward close, the Office of Federal Contract Compliance Programs (“OFCCP”) gave the federal contractor community, already presented with five Executive Orders in 2014, one last compliance gift. On December 9, 2014, without notice or an opportunity for public comment, OFCCP issued its final rule (“Rule”) implementing Executive Order (“EO”) 13672. President Obama signed EO 13672 on July 14, 2014, extending protections against workplace discrimination to members of the lesbian, gay, bisexual, and transgender (“LGBT”) community by amending Executive Order 11246 to add sexual orientation and gender identity as protected characteristics. It also requires contractor employers to take affirmative action to ensure that applicants and employees are treated without regard to their sexual orientation or gender identity during their employment. The Executive Order was effective immediately. The Rule is effective April 8, 2015, and applies to all new or modified federal contracts and subcontracts after that date.

The issuance of EO 13672 and the requirements of its implementing Rule highlight OFCCP’s intention to focus on LGBT protections and might be seen as steps to squarely tee up the issue of enforcement of LGBT protections in the post-Hobby Lobby era. First, and seemingly to leave no doubt of its intention, OFCCP had also issued Directive 2014-02 in August 2014, with its stated purpose, “[t]o clarify that existing agency guidance on discrimination on the basis of sex under Executive Order 11246, as amended, includes discrimination on the bases of gender identity and transgender status.” The directive explicitly piggybacked off of the EEOC’s 2012 decision in Macy v. Holder, where the EEOC concluded that gender identity and transgender status did not need to be specifically addressed in Title VII in order to be protected bases of discrimination, as they are simply part of the protected category of “sex” under Title VII. Anticipating the question of why EO 13672 was then necessary if already protected under Title VII, OFCCP offered a questionable explanation that the directive “does not address gender identity as a stand-alone protected category, which (along with sexual orientation) is the subject of Executive Order 13672.”

Second, as written, the Rule is relatively straightforward. It amends EO 11246’s implementing regulations by replacing the phrase “sex or national origin” with the phrase “sex, sexual orientation, gender identity, or national origin” wherever the former appears in the regulations.  The Rule also places the following obligations on employers:

  1. Ensure that applicants and employees are not discriminated against based on their sexual orientation or gender identity.

  2. Update existing affirmative action plans and all equal opportunity, harassment, and nondiscrimination policies to reflect the additional protected categories.

  3. Make available to applicants and employees a revised version of the “EEO is the Law” poster that includes a notice regarding the protections for LGBT workers.

  4. Include “sexual orientation” and “gender identity” as protected traits in the equal opportunity job solicitation taglines. (OFCCP suggested in the Rule preamble that “equal opportunity employer” may be sufficient to cover all protected categories of EO 11246.)

  5. Incorporate the new categories into new or modified subcontracts and purchase orders.

  6. Report to OFCCP and the Department of State any suspicion that it cannot obtain a visa for an employee, from another country with which it does business, due to the employee’s sexual orientation.

  7. Ensure that facilities (e.g., restrooms, locker rooms, and dressing areas) provided for employees are not segregated on the basis of sexual orientation and gender identity.

The Rule does not burden contractor employers with the same data collection and analysis obligations that are required with respect to females and minorities and does not require contractor employers to set placement goals on the bases of sexual orientation or gender identity, nor does it require them to collect or analyze any data with respect to the sexual orientation or gender identity of their applicants or employees. Contractor employers are also not required to, or prohibited from, soliciting applicants or employees to self-identify regarding their sexual orientation or gender identity.

Finally, it is notable that EO 13672 and its implementing Rule were issued despite the growing number of states (currently 20 states plus the District of Columbia) that have implemented protections against sexual orientation and/or gender identity discrimination. And further, that they are set within the larger context of the legalization of same sex marriage by, as of this article, 37 states, as well as the US Supreme Court’s consideration of the status of same sex marriage this year. Thus, the issue brought to focus by these OFCCP actions and the Executive Order may be more pointed than an identification of sexual orientation and gender identity as protected traits and may go towards whether a religious contractor employer may base employment decisions on the LGBT status of an applicant or employee.

EO 13672 contains no exemption for religiously affiliated federal contractors. Section 204(c) of EO 11246, which allows a religious corporation, association, educational institution or society, to base employment decisions on the religious membership of a particular individual (rather than on the beliefs of the organization), was specifically not amended by EO 13672. Possibly by design, this may result in a test of the reach of the Supreme Court’s 2014 decision in Burwell v. Hobby Lobby Stores, Inc., which, broadly speaking, allowed a closely-held, for-profit corporation to be exempt from the Affordable Care Act’s birth control mandate based upon its owners’ religious objection because it found that there was a less restrictive means of furthering the law’s interest.

A similar legal challenge may play out in the arena of employee benefits governed by EO 13672. OFCCP enforcement of the new Rule’s nondiscrimination prohibitions would bring within OFCCP’s purview the provision of benefits to an employee’s same sex spouse. Title VII and Supreme Court precedent require employers to make available the same benefits for spouses regardless of the gender of the employee. Closely-held contractor employers who oppose same sex marriage as a violation of religious belief may object to this requirement’s enforcement as a burden on their religious beliefs, similar to the arguments made by Hobby Lobby. While the Hobby Lobby majority attempted to dismiss the idea that its decision might allow an employer to “cloak as religious practice” prohibited acts, such as racial discrimination in hiring, the reach of the Hobby Lobby decision is far from settled, and the next batch of cases may seek to extend that decision to regulations requiring equal benefits based upon sexual orientation or gender identity.

And, lest employers think that the OFCCP was done, just today it announced that on January 30, 2015, it will publish a Notice of Proposed Rulemaking to update contractors’ obligations to not discriminate on the basis of sex under EO 11246 to “reflect present-day workplace realities and align OFCCP’s rules with current law under Title VII.” The new rules will touch on “compensation discrimination, sexual harassment, failure to provide workplace accommodations for pregnancy, and gender identity and family caregiver discrimination, among other topics.” The regulatory landscape for federal contractors saw many changes in 2014, and it seems 2015 is shaping up to be no different.

ARTICLE BY

Jill Pedigo Hall
Gonzalez Saggio & Harlan LLP

U.S. Union Numbers Continue Their Decline – Reach 100 Year Low

Barnes & Thornburg LLP Law Firm

The U.S. Bureau of Labor Statistics has released its annual report on unionization data in the United States, and the numbers continue to be on the decline for unions as a whole. Membership in unions nationally dropped from 11.3 percent in 2013 to 11.1 percent in 2014. Other interesting data points in the report include:

  • Public-sector workers had a union membership rate of 35.7 percent, more than five times higher than that of private-sector workers (6.6 percent).

  • Workers in education, training, and library occupations and in protective service occupations had the highest unionization rate at 35.3 percent for each occupation group.

  • Men had a higher union membership rate (11.7 percent) than women (10.5 percent) in 2014.

  • Among states, New York continued to have the highest union membership rate (24.6 percent), and North Carolina again had the lowest rate (1.9 percent).

A link to the full report can be found here.

Additionally, one news outlet is reporting that these numbers show a “100 year low” in U.S. Union Membership, and that article can be found here.

As discussed previously on the BT Labor Relations Blog, however, union election rule changes recently issued by the NLRB will make it significantly easier for unions to organize employers in the coming years, so we could see an upswing in these numbers, at least in the private sector, in future editions of this report.

ARTICLE BY

David J. Pryzbylski
OF
Barnes & Thornburg LLP

The New Illinois Secure Choice Savings Program: Considerations for Employers

On January 4, 2015, the governor of Illinois signed into law the Illinois Secure Choice Savings Program Act (S.B. 2758). This law—first of its kind in the nation—requires certain employers to provide an automatic payroll deduction for savings in a Roth IRA for employees who are over age 18 and who do not opt out. Employers who are subject to this mandate are those who have 25 or more employees in Illinois, have been in business for at least two years, and have not offered their employees tax-favored retirement benefits in the preceding two years. “Small employers” not otherwise subject to the Act may participate in the Program on an elective basis. The Program will not be activated before 2017, and affected employers must establish a payroll deposit arrangement “at most nine months” after the Program opens for enrollment.

Several interest groups promoted this legislation, and several opposed this ambitious law.

Scope of Program

The Secure Choice Savings Program will require affected employers to automatically enroll eligible employees who do not opt out and to facilitate payroll deductions for those employees. The statute provides that employers will not be treated as fiduciaries “over the Program” or liable for Program investments, design, or benefits. No employer contributions are required.

Open enrollment will occur at least once a year. Affected employers will forward the payroll deductions to a system administered by a seven-member state board that will supervise the investment of the assets, engage investment managers, and perform similar supervisory functions. Employers’ activities will also include distributing materials provided by the state board. Penalties for an employer’s violation will be $250 per employee per year, with the amount increasing to $500 for violations with respect to employees who continue to be treated as unenrolled in years after the initial assessment.

Enrollees may contribute up to the IRA maximum, with a default level of 3% of wages for those who do not elect a different percentage or amount. Enrollees will have the investment options provided by the state board.

Employers must consider various federal tax obligations. For example, the Program’s treatment of contributions to a Roth IRA as a payroll deduction implicates federal income and payroll tax obligations with respect to those funds. Contributions to Program accounts, when combined with an employee’s IRA contributions outside of the Program, may not exceed the Tax Code’s annual limit. The extent of an employer’s responsibility, if any, in connection with an employee’s compliance in this context, remains to be developed.

In addition, when disputes arise with respect to an employer’s obligations under the Act—for example, Program penalty assessments—contested matters are ultimately appealed under the Illinois Administrative Review Law (ARL) in a 35-day window (like a statute of limitations, only stricter) for challenges to agency decisions (here, the Department of Revenue). As many practitioners know, the ARL process is one that is laden with procedural landmines for parties who challenge agency decisions in state court.

From a different perspective, the Act attempts to restrict the scope of fiduciary obligations—potentially good news for employers and others involved in the Program. However, drawing lessons from the ERISA experience, contributions to 401(k) plans have sometimes resulted in the delay or failure of contributions from financially distressed employers who must forward money deducted from employee paychecks. For ERISA plans, this can result in United States Department of Labor (USDOL) enforcement in court. However, from practical perspective, the Illinois Secure Choice Savings Program raises questions as to how such non-ERISA violations will be treated.

The law specifically requires the state board to request an opinion from the USDOL regarding ERISA’s applicability to the Program. Also, the state board may not implement the Program if the Program’s IRAs fail to qualify for favorable federal tax treatment normally accorded to IRAs, or if it is determined that the Program is an employee benefit plan, or if any “employer liability is established” under ERISA. In addition, the Program may not be implemented unless there is adequate funding for its operation. Delay in satisfying these various conditions could push the start date to a later time.

Although the Act strives to create a “non-ERISA environment” in which no Program activity will constitute an ERISA plan, the fact that 50 different states may create various programs with rules different from the Illinois rules suggests that the USDOL may scrutinize not only the definition of a “plan” but also theAct itself for adequate avoidance of the patchwork of rules from which ERISA was enacted to spare multi-state employers.

The recently inaugurated federal MyRA (my retirement account) program bears some analogy to the Illinois Program; for example, its reliance on Roth IRAs. However, there are several important differences in the two models. Although the USDOL recently gave assurance that MyRAs would not constitute ERISA plans, the specter of numerous state programs could well give federal regulators pause. ERISA preemption does not extend to federal laws, but many non-federal programs promoting retirement benefits could be viewed as requiring close and time-consuming review. Assuming federal authorities conclude that ERISA is not implicated by the Illinois Program, that conclusion may be slow in coming if DOL regulators see a need to deal comprehensively with future programs of other states. On the other hand, Illinois authorities may have already coordinated informally with the USDOL, and the Program’s clearance might be fast-tracked in Washington.

Start-up of the Program will also entail definitional clarifications of certain terms used in the Act, particularly those used to define the scope of the Program.

Much commentary on this law is possible—from regulatory, fiscal, procedural, and other perspectives. But given the two-year wait, the required clearances from federal agencies, the possibility that some changes in the law may occur, and the potential challenges in Illinois for funding the Program’s operations, we will defer detailed commentary to a later date.

What Should Employers in Illinois Do Now?

Given the long period of at least two years before the Act’s implementation, and given that the law directs Illinois regulators to deal with federal agencies and secure adequate funding for Program operations, employers should monitor developments relating to the Program.

Employers who clearly or arguably employ 25 or more employees should determine whether any Illinois employees are not covered by a tax-favored retirement plan. Close questions will have to be reviewed in light of interpretations of the statute. A single eligible employee who does not opt out may require the employer’s compliance.

Effect on Employers Based in Other States

If the new law takes effect in Illinois as presently contemplated—and even if it doesn’t—other states may soon be seen enacting similar laws intended to mandate the enrollment of employees not covered by an employer’s retirement plan. Those jurisdictions should also be monitored for legislative moves like the Illinois Secure Choice Savings Program Act because the Illinois Act could be a harbinger of similar laws in other states.

Business Immigration: 2016 H-1B Cap, You’ve Been Warned, Now Here Are This Year’s Key Dates

Greenberg Traurig Law firm

Fiscal Year 2016 H-1B Cap

U.S. Citizenship and Immigration Services (USCIS) will start accepting new H-1B petitionsfor fiscal year 2016 on Wednesday, April 1, 2015. Employers must immediately start identifying current and future employees who will need to be sponsored for new H-1B petitions.

This chart identifies the absolute latest cut-off dates to file Labor Condition Applications (LCAs) and H-1B petitions for this year’s H-1B quota (H-1B cap).

It is extremely likely that this year’s H-1B quota (H-1B cap) will be met within five business days of it opening and USCIS will then stop accepting new petitions until next year’s H-1B cap, which will open on April 1, 2016. If USCIS receives more petitions than are available in the quota, then a lottery will be conducted to select the petitions that will be processed under the H-1B cap.

Please note that only new H-1B petitions are affected by the H-1B cap; H-1B petitions involving someone who has already been counted against the H-1B cap or who has previously held H-1B status are not affected by the H-1B cap.

H1-B Key Dates

By way of background, U.S. businesses use the H-1B program to employ foreign workers in specialty occupation positions that require theoretical or technical expertise in specialized fields, such as scientists, engineers or computer programmers. The number of initial H-1B visas available to U.S. employers (the H-1B cap) is 65,000, with an additional 20,000 numbers set aside for individuals who have obtained a U.S. master’s degree or higher.

The usage of the H-1B program is strongly connected to the health of the U.S. economy. The rate at which USCIS has received cap-subject H-1B petitions in the past few years has dramatically increased as the economy has improved. For example, last year USCIS received 172,500 H-1B petitions within the first week of filing, requiring a lottery in order to select the petitions needed to meet the regular cap of 65,000 and master’s cap of 20,000. Business immigration practitioners are predicting that this year’s H-1B demand will be even greater than last year (perhaps 200,000 or more filings during the first week of the filing season, April 1, 2015, through April 7, 2015) and as a result more than half of all H-1B petitions filed by employers may be rejected by USCIS due to the randomized lottery system.

Petitions not selected in the H-1B lottery will be rejected. Should such a rejection occur, an affected foreign national seeking immigration and employment authorization sponsorship with an employer will be unable to obtain an H-1B visa until at least Oct. 1, 2016, (with the filing season beginning April 1, 2016). Affected foreign nationals may also be required to forego employment with employers and possibly leave the United States. In such cases employers will need to look at alternative visa options for employees unable to secure an H-1B visa.

Recommended Action

Based upon the above, Greenberg Traurig’s Business Immigration & Compliance group strongly urges employers to file H-1B cap-subject petitions with USCIS on the earliest possible date in fiscal year 2016: mailing of H-1B cap-subject petitions to USCIS on March 31, 2015, for delivery to USCIS on Wednesday, April 1, 2015, the very first day of filing. This will provide the best possible chance for acceptance of the H-1B petition.

It also is recommended that H-1B cases should be initiated immediately. It can take two to four weeks or more to gather all of the necessary information and documentation, and prepare the requisite forms and supporting documentation for filing of an H-1B petition. Required information from the employer will include: (1) job title; (2) job description; (3) job location; (4) minimum education and experience required for the position; and (5) offered wage/salary. Required information from the employee will include: (1) resume; (2) educational documents (diplomas and transcripts); and (3) any documents related to prior or current U.S. immigration status.

ARTICLE BY

Scott T. Decker
Ian R. Macdonald
OF
Greenberg Traurig, LLP

Mergers and Acquisitions and the Affordable Care Act

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As most employers already know, the Affordable Care Act (a/k/a ObamaCare or the ACA) now imposes health care insurance coverage requirements upon certain employers which have a certain number of full time and full time equivalent employees (“FTEs”).  Therefore, it is imperative that consideration be given to whether parties involved in any merger or other acquisition transaction are currently subject to the requirements of the ACA (and if so, whether they are in compliance with such requirements), or will otherwise be subject to the requirements of the ACA following the consummation of the transaction.

If the buyer or seller company is a “small business,” meaning the company has less than 50 FTEs, it should not be subject to the ACA.   However, a determination has to be made as to whether or not individuals who are treated as independent contractors are, for the purposes of the ACA, truly independent contractors, or rather are deemed to be employees.  While the ACA makes reference to certain federal statutes with respect to this determination, it is clear that the Obama administration has uniquely and aggressively interpreted the ACA to accomplish its objectives.  In those circumstances where the seller or buyer company is below 100 FTEs for the year 2015, the company will be exempt from the requirements of the ACA for the year 2015, but subject to the ACA thereafter.  Even in those circumstances where companies clearly are subject to the ACA, the question then becomes whether or not all of the individuals who provide services to that company are classified appropriately (employees v. independent contractors), and whether the requirements of the ACA have been complied with regarding those individuals.

A new level of complexity has been added in this area by a relatively recent interpretation of the National Labor Relations Board (NLRB) in a franchise case dealing with the classification issue, in which the NLRB found that the various employees of the franchisees were also employees of the franchisor.  This could automatically create, for any national franchise, a situation where the local franchisee meets the large employer threshold of the ACA, and therefore would be liable to comply with the requirements of the ACA.  Obviously, the position taken by the NLRB will be contested and is a long way off from being established as binding law upon all employers.  Notably, this very issue has already been addressed in various state courts.  For instance, in contrast to the NLRB decision, the California State Supreme Court recently determined in a 4 to 3 decision that the employees of a franchisee are also not employees of the franchisor.

While the ACA references certain federal statutes for determining whether or not an individual is an employee, in the recent case of Sam Hargrove, et al. v. Sleepy’s, LLC , the New Jersey Supreme Court has advised the Third Circuit that for the purposes of the wage and hour laws, the interpretation should follow New Jersey case law, which provides a much stricter definition for independent contractors than the federal law.  Only time and litigation will tell what interpretation will be made under the ACA for the purposes of determining whether an individual is an employee or an independent contractor with respect to the determination as to whether the employer is a small business subject to the ACA and whether or not an individual is entitled to health care coverage.

In summary, careful consideration must be made in any merger or acquisition transaction as to whether the seller company in an asset purchase or equity purchase is, or the combined company in any merger, consolidation or similar combination will be, subject to the onerous requirements of the ACA based on the number of FTEs of the company.   In order to make such a determination, further consideration will need to be made into applicable case law as to whether or not individuals who are designated as independent contractors of the company are truly independent contractors, or rather should be deemed to be employees of the company for purposes of the ACA.  However, because the law in this area is not entirely settled and continues to evolve, companies involved in merger or acquisition transactions and companies contemplating merger or acquisition transactions will need to stay informed on these issues.

ARTICLE BY

Ari G. Burd
Patrick S. Convery
OF
Giordano, Halleran & Ciesla, P.C.