Category: Labor & Employment

A Tip For Dealing with Automatic Gratuities in 2014

McBrayer NEW logo 1-10-13

A new Internal Revenue Service (“IRS“) rule, set to take effect in January 1, 2014, may eliminate a common practice in the restaurant industry. Often, an automatic gratuity, normally 18%, is added to the bill of large parties. Automatic gratuities were adopted by restaurant employers as a means for ensuring that servers do not get stiffed on expensive bills. Servers heavily rely on tips to supplement a salary that is often times lower than the federal minimum wage.

Traditionally, automatically-added gratuities have been classified as employee tips. As such, it is up to the employees to report the money as income. Starting in January, automatic gratuities will be categorized as “service charges” – making them regular wages and subject to payroll tax withholdings. Employers will have to track and report any automatic tips and will be required to include the “service charge” payments in employees’ W-2 wages. Further, employers will no longer be able to count these tips as a credit to reduce their minimum wage obligation. It is a lose-lose situation because servers will not see their automatic gratuity money until payday; making it more difficult to survive on a small salary.

Many major chains, like Olive Garden and Red Lobster, have eliminated automatic gratuities in response to the approaching deadline. For restaurants that opt to keep the automatic gratuity system, payroll accounting will become much more complicated. Tips from automatic gratuities will have to be factored into hourly pay rates, which means hourly rates could vary based on how many large parties are served in any given hour.

It would be wise for smaller restaurants to follow the chain restaurants’ lead by eliminating automatic gratuities altogether. Doing so will not only to lessen compliance requirements and tax burdens, but will also keep employees happy by ensuring that the tips they earn can immediately be pocketed.

Article By:

 of

Apocalypse Averted Again: Preliminary Thoughts on Welcoming Workers Back From the Government Shutdown

MintzLogo2010_Black

As discussed a few weeks ago, the government shutdown had a broad impact on a number of workers in the public and private sectors. Now that the federal government has reopened, employers welcoming back furloughed employees should stand ready to answer worker questions and assuage employee concerns. Below we offer some preliminary thoughts for private employers managing this delicate process.

  • Back Pay and Unemployment. Employers should be prepared to answer employee questions about their eligibility for back pay and unemployment benefits for their time out of work. If employers provide back pay and employees have already received unemployment benefits, employers should notify employees that they may be required to pay back any unemployment benefits received.  Generally, employees can either collect unemployment from the respective state unemployment agencies for the time missed or they can accept the backpay if offered by the employer, but they cannot double collect.  At least three state unemployment agencies (PA, VA, MD) have explicitly stated that they will expect reimbursement if employers provide back pay.
  • Guard Against Liability. Efforts by employers to return workplaces to pre-shut down normalcy, including by providing back pay and other benefits to workers for the furloughed time, should be implemented in an even-handed, non-discriminatory manner to guard against liability. For example, if employers decide to bring employees back from a furlough on a rolling basis, they must be sure to have neutral business-justified criteria for who is brought back to the workplace and when they are brought back to the workplace.
  • Manage the Message. Hundreds of thousands of workers have been temporarily out of work for up to three weeks because of the government shutdown. Employers should emphasize that these temporary furloughs were the outgrowth of the Congressional stalemate. Accordingly the message to employees should be clear: extraordinary circumstances and not poor job performance, forced employers’ hands and required them to temporarily furlough employees.
  • Ease Their Pain. Employers need to be sensitive to the plight of their returning workers, many of whom have been suffering severe economic hardship during this time period. Economic esprit-de corps measures like jeans days or pizza lunches represent cost-effective ways to remind returning employees that they are highly-valued and welcomed back into the corporate fold.

When in doubt about prospective measures in the wake of the government shutdown, employers should contact employment counsel.

Article By:

 of

IRS Guidance on Employment and Income Tax Refunds on Same-Sex Spouse Benefits

McDermottLogo_2c_rgb

Employers extending benefit coverage to employees’ same-sex spouses and partners should review their payroll procedures to ensure that such coverages are properly taxed for federal income and FICA tax purposes.  Employers also should review the options in Notice 2013-61 and consider filing claims for refunds or adjustments of FICA overpayments.

Employers that provided health and other welfare plan benefits to employees’ same-sex spouses prior to the Supreme Court of the United States’ June 2013 ruling in U.S. v. Windsor may be interested in filing claims for refunds or adjustments of overpayments in federal employment taxes on such benefits.  To reduce some of the administrative complexity of filing such claims, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) recently issued Notice 2013-61, which outlines several optional procedures that employers can use for overpayments in 2013 and prior years.

String of pearls and champagne glass with wedding rings

In Windsor, the Supreme Court ruled Section 3 of the Defense of Marriage Act (DOMA) unconstitutional.  Section 3 of DOMA had provided that, for purposes of all federal laws, the word “marriage” means “only a legal union between one man and one woman as husband and wife,” and the word “spouse” refers “only to a person of the opposite-sex who is a husband or wife.”

Federal Taxation of Same-Sex Spouse Benefits

The Windsor ruling thus extends favorable federal tax treatment of spousal benefit coverage to same-sex spouses.  The IRS issued guidance in July clarifying that this tax treatment would extend to all same-sex couples legally married in any jurisdiction with laws authorizing same-sex marriage, regardless of whether the couple resides in a state where same-sex marriage is recognized.  This IRS approach recognizing same-sex marriages based on the “state of celebration” took effect September 16, 2013.

Prior to the ruling, an employer that provided coverage such as medical, dental or vision to an employee’s same-sex spouse was required to impute the fair market value of the coverage as income to the employee that was subject to federal income tax (unless the same-sex spouse qualified as the employee’s “dependent” as defined by the Internal Revenue Code).  The employer was required to withhold federal payroll taxes from the imputed amount, including federal income and the employee’s Social Security and Medicare (collectively FICA) taxes.  In addition, employers paid their own share of FICA taxes on the imputed amount, as well as unemployment (FUTA).

As a result of the ruling, an employee enrolling a same-sex spouse for benefit coverage under an employer-sponsored health plan no longer has imputed income for federal income tax purposes; may pay for the spouse’s coverage using pre-tax contributions under cafeteria plans; and may take tax-free reimbursements from flexible spending accounts (FSAs), health reimbursement accounts (HRAs) and health savings accounts (HSAs) to pay for the same-sex spouse’s qualifying medical expenses.  This same favorable federal tax treatment does not extend to employer-provided benefits for an unmarried same-sex partner, unless the same-sex partner qualifies as the employee’s dependent.

Overpayments of Employment Taxes in 2013

Employers that overpaid both federal income and FICA tax in 2013 as a result of income imputed to employees for benefit coverage for a same-sex spouse may use the following optional administrative procedures for the year:

  • Employers may use the fourth quarter 2013 Form 941 (Employer’s Quarterly Federal Tax Return) to correct overpayments of employment taxes for the first three quarters of 2013.  This option is available only if employees have been repaid or reimbursed for over-collection of FICA and federal income taxes by December 31, 2013.

Alternatively, employers may follow regular IRS procedures to correct an overpayment in FICA taxes by filing a separate Form 941-X for each quarter in 2013.  Notice 2013-61 provides detailed instructions for each of the alternative options, including how to complete the Form 941, as well as Form 941-X, which requires “WINDSOR” in dark, bold letters across the top margin of page one.

Overpayments of FICA Taxes in Prior Years

Employers that overpaid FICA taxes in prior years as a result of imputed income for same-sex spousal benefit coverage may make a claim or adjustment for all four calendar quarters of a calendar year on one Form 941-X filed for the fourth quarter of such year if the period of limitations on such refunds has not expired and, in the case of adjustments, the period of limitations will not expire within 90 days of filing the adjusted return.  Alternatively, employers may use regular procedures to make such claims or adjustments.  The regular procedures require filing a Form 941-X for each calendar quarter for which a refund claim or adjustment is made.  Note that under the alternative procedure provided by Notice 2013-61 or under the regular procedure, filing of a Form 941-X requires either employee consents, or repayment or reimbursements, as well as amended Form W-2s to reflect the correct amount of taxable wages.

Employee Overpayments of Federal Income Taxes

Employers who provided benefits to employees’ same-sex spouses in 2013 may adjust the amount of reported federally taxable income on each employee’s Form W-2 (Wage and Tax Statement) to exclude any income imputed on the fair market value of the coverage and to permit the employee to pay for the coverage on a pre-tax basis.

Employees who overpaid federal income taxes in prior years as a result of same-sex spouse benefit coverage may claim a refund by filing an amended federal tax return for any open tax year.  Refunds are available for overpayments resulting from income imputed on the fair market value of the coverage and from premiums paid on an after-tax basis for the coverage.  An amended tax return generally may be filed from the later of three years from the date the return was filed or two years from the date the tax was paid.

Employers that file Form 941-X are required to file Form W-2c (Corrected Wage and Tax Statement) to show the correct—in this case reduced—wages.  Employers that do not file Form 941-X may want to begin preparing for employee requests for a Form W-2c for each open tax year in which benefit coverage was offered to employees’ same-sex spouses.

Next Steps

Employers extending benefit coverage to employees’ same-sex spouses and partners should carefully review their payroll processes and procedures to ensure that such coverages are now properly taxed for federal income and FICA tax purposes.  In addition, employers should review the options in Notice 2013-61, and consider filing claims for refunds or adjustments of overpayments of FICA taxes for any prior open tax years and issuing Form W-2c to allow employees to claim refunds of federal income tax.  Most importantly, by acting promptly, employers can correct the 2013 over-withholdings for both FICA and federal income tax and overpayment of the employer portion of FICA tax, without the necessity and burden of filing a Form 941-X.

Article By:

of

New Employee Wellness Program Rules for 2014

Poyner Spruill

Employers continue to look for ways to manage the cost of employee health care coverage as they navigate the turbulent waters of healthcare reform, and wellness programs continue to be a popular strategy.  However, adoption and expansion of these programs have been hampered somewhat by questions about their effectiveness, cost, and the risk of noncompliance with the uncoordinated web of laws and regulations governing these programs.  While evidence seems to be emerging that at least some wellness program designs can be an effective means for cost control and long-term savings due to improved health, recently issued final regulations under the Health Insurance Portability and Accountability Act (HIPAA) effective beginning in 2014 only add additional burdens to employers’ compliance efforts.

HIPAA amended ERISA to generally prohibit discrimination against individual participants and beneficiaries in eligibility, benefits or premiums based on “health status-related factors,” including physical and mental illnesses, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability.  However, under the wellness program exception to HIPAA group health plans may offer premium discounts, rebates, reduced co-payments and/or lower deductibles (generally referred to as ‘rewards’) to participants and beneficiaries who take part in “programs of health promotion and disease prevention.”

The final HIPAA nondiscrimination regulations, effective for plan years beginning after 2013, create two categories of programs under the wellness program exception: ‘participatory wellness programs’ and ‘health-contingent wellness programs.’

Participatory wellness programs either provide no reward  or do not condition a reward on the achievement of a health standard.  Examples of participatory wellness programs include:

  • Reimbursing all or part of the cost of a fitness center membership;
  • Reimbursing costs of participation or rewarding participation in a smoking cessation program regardless of whether the individual quits smoking; and
  • Rewarding participation in a no-cost health education seminar, a health risk assessment, or a diagnostic testing program, regardless of outcomes and without requirement for further actions.

A participatory wellness program must be available to all similarly situated individuals regardless of health status, but otherwise is not required to comply with the more strenuous requirements applicable to health-contingent wellness programs.

Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward or require an individual to undertake more than a similarly situated individual based on a health factor in order to receive the same reward.  Health-contingent wellness programs are divided into two subcategories: ‘activity-only wellness programs’ and ‘outcome-based wellness programs.’

Activity-only wellness programs require an individual to perform or complete an activity related to a health factor in order to obtain a reward, but do not require the individual to attain or maintain a specific health outcome.  Examples of activity-only wellness programs include walking, diet, or exercise programs.  If an individual cannot participate in the activity due to a health factor, then a reasonable alternative (or waiver of the otherwise applicable standard) must be provided in order to qualify for the reward.

Outcome-based wellness programs require an individual either to attain a specific health standard or complete an activity or other requirement related to the health factor in order to obtain a reward.  These programs usually have two tiers: a measurement, test or screening, followed by a program that targets individuals who do not meet a pre-specified standard.  Examples of outcome-based wellness programs include:

  • Reward for non-tobacco use, or participate in a tobacco use cessation program; and
  • Reward for cholesterol, blood pressure or body mass index below a specified level, or take additional steps, such as complying with a prescribed plan of care or participating in a exercise program.

An individual who does not meet the specified health standard must be provided a reasonable alternative (or waiver of the otherwise applicable standard) in order to qualify for the reward.

Both activity-only wellness programs and outcome-based wellness programs must satisfy the following five additional requirements:

  • Individuals eligible for the program must be given the opportunity to qualify for the reward at least once per year.
  • The size of the reward(s) under all health-contingent wellness programs is limited to a maximum of 30% (50% for tobacco nonuse/cessation programs) of the total cost of elected coverage.
  • The program has a reasonable chance of improving the health of, or preventing disease in, participating individuals, is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease.
  • The full reward must be available to all similarly situated individuals and, as previously discussed, a reasonable alternative must be provided for obtaining a reward.   The plan is permitted to seek verification from the individual’s physician only that a health factor makes it unreasonably difficult or medically inadvisable for the individual to participate in an activity, and not whether the individual can satisfy a specified health standard.  Alternatives do not have to be determined in advance but must be provided upon request within a reasonable time.
  • Notice of the availability of a reasonable alternative must be provided in all plan materials that describe the terms of the health-contingent wellness program, and include contact information for obtaining the alternative and a statement that recommendations of an individual’s personal physician will be accommodated.

Add to these new rules the alphabet soup of other rules that impact wellness programs, including HIPAA privacy and security, GINA, ADA, ADEA, Title VII, FLSA, and COBRA, and it becomes clear that plan sponsors would be well-served to have even the most seemingly simple program reviewed by legal counsel for compliance.

Article By:

 of

The False Claims Act During Times of War: Is There Any Time Limit For Bringing Suit

tz logo 2

A federal appellate court recently ruled that, at least for the moment, claims under the False Claims Act (“FCA”) are not subject to any statute of limitations. The United States Circuit Court for the Fourth Circuit, in U.S. ex rel. Carter v. Halliburton Co., 710 F.3d 171 (4th Cir. 2013), relied on an obscure federal statute, the Wartime Suspension of Limitations Act (“WSLA”), to hold that the FCA’s general six-year statute of limitations, 31 U.S.C. §3287, was tolled due to the ongoing conflict in Iraq. The Fourth Circuit’s decision is ground-breaking, as it is the first federal appellate court to weigh in on this issue and takes a broad view of the tolling question, effectively removing any limitations bar to FCA violations committed during times of war.

The WSLA, originally enacted in 1942 and amended as recently as 2008, generally suspends statutes of limitations in actions related to fraud against the United States until 5 years after the termination of a war. 18 U.S.C. §3287. In Carter, the qui tam whistleblower alleged that his employer, well-known government contractor Kellogg Brown Root Services, Inc. (“KBR”), was defrauding the government by inflating its employees’ work hours on a water purification contract as well as misrepresenting to the United States that it was actually purifying water for servicemen and servicewomen deployed in Iraq. The trial court dismissed Carter’s complaint on the grounds that, among other things, Carter’s case was not tolled by the WSLA because the government did not intervene in the action. Carter, 710 F.3d at 176. The Fourth Circuit reversed, holding that the armed conflict in Iraq suspended the statute of limitations in Carter’s case, regardless of whether the case was being prosecuted by Carter, as the FCA relator, or by the United States. According to the court, “whether the suit is brought by the United States or a relator is irrelevant . . . because the suspension of limitations in the WSLA depends on whether the country is at war and not who brings the case.” Id. at 180.

In addition to explicitly extending the scope of the WSLA to non-intervened cases, the Fourth Circuit made two other important WSLA-related holdings. First, the court ruled that the phrase “at war” in the WSLA is not limited to formally declared wars but, instead, applies to modern military engagements such as the United States’ involvement in Vietnam, Korea, Afghanistan and Iraq. Id. at 179. Although none of these conflicts were formally declared wars, they occupied much of the government’s attention and resources such that the purpose of the WSLA-allowing the government more time to act during the fog of war-would not be served if an unnecessarily formalistic approach were required.

Second, the Fourth Circuit-consistent with several district courts before it-ruled that the WSLA applies to both criminal and civil cases. Id. at 179-180. The question of WSLA’s application to civil matters arose out of the use of the word “offense” in the statute. The original version of the WSLA applied to “offenses involving the defrauding or attempts to defraud the United States . . . and now indictable under any existing statutes.” In 1944, however, the Act was amended, deleting the “now indictable” language. With that change, the court concluded, the “WSLA was then applicable to all actions involving fraud against the United States,” including civil actions. Id.

In light of the Fourth Circuit’s decision in Carter, the limitations period for FCA actions may be indefinitely extended. Indeed, in Carter, the court indicated that it is not clear that the war in Iraq is over for purposes of the WSLA. Tolling under the WSLA ends 5 years after the termination of hostilities “as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress.” Wartime Enforcement of Fraud Act, Pub. L. No. 110-417 §855, codified at 18 U.S.C. §3287. According to the Fourth Circuit, because “it is not clear” that President Obama has proclaimed the war in Iraq as over and provided notice of the same to Congress, as required by the WSLA, the limitations period may still be tolled.

Some commentators have argued that the FCA statute of repose, which sets the outside deadline for bringing claims at either “3 years after the date when facts material to the right of action are known or reasonably should have been known” by the government, “but in no event more than 10 years after the date on which the violation is committed, whichever occurs last.” This mandates that the statute of limitations for FCA cases cannot be tolled for more than 10 years. Although Carter did not reach that specific issue, it seems unlikely-based on the Fourth Circuit’s language and analysis-that it would endorse such a position. Indeed, the Fourth Circuit noted, in a footnote, that “tolling will indeed extend indefinitely” absent a formal Presidential proclamation with notice to Congress. Carter, 710 F.3d at n.5.

If the Fourth Circuit’s analysis is adopted by its sister circuits, there will be profound benefits for whistleblowers seeking to expose fraud against the Government. For instance, defendants may be discouraged from proffering hyper-technical, confused or convoluted statute of limitations defenses in order to avoid responsibility for their fraud. It would also open up the possibility of bringing qui tam claims under the FCA for conduct dating farther back in the past.

Department of Justice (DOJ) Intervenes in Qui Tam Action Against Lance Armstrong

tz logo 2

The Department of Justice announced in February that it would intervene in a False Claims Act suit filed against former Tour de France winner Lance Armstrong and others by former teammate Floyd Landis. Reports indicate that in 2010, Landis filed a lawsuit, captioned United States ex rel. Landis v. Tailwind Sports Corporation, et al., in the U.S. District Court for the District of Columbia. The lawsuit alleges that Armstrong and his teammates violated the terms of a $30 million sponsorship contract he and his cycling team had with the U.S. Postal Service (USPS) by taking drugs to enhance their performances.

USPS sponsored Armstrong’s Tailwind cycling team from 1996 through 2004. During that time, Armstrong and his team took more than $30 million in sponsorship fees. The USPS claims Armstrong violated a contractual promise by regularly employing banned substances and methods to enhance their performance, in violation of the USPS sponsorship agreements. Those sponsorship agreements gave USPS the right to place its logo prominently on the cycling team’s uniform, among other promotional opportunities. However, the agreement also required the cycling team to comply with all rules of cycling’s governing bodies. Those rules prohibited the use of performance enhancing substances and methods.

For years Armstrong and others denied that the team used performance enhancing drugs, but in October, 2012, the U.S. Anti-Doping Agency (USADA) issued a report concluding that Armstrong used banned performance enhancing substances, starting in at least 1998 and continuing throughout his career. The time Armstrong and teammates were alleged to have been “doping” overlaps significantly with the term of Armstrong’s USPS sponsorship.

After the USADA report, Armstrong admitted in an interview with Oprah Winfrey that he used banned substances and methods throughout his career, starting in the mid-1990s. He admitted having used banned substances during each of his seven Tour de France victories, including the six he won while sponsored by USPS.

The U.S. Government’s intervention complaint alleges that riders on the USPS-sponsored team “knowingly caused violations of the sponsorship agreements by regularly and systematically employing substances and methods to enhance their performance” and, as a result, “submitted to the United States false or fraudulent invoices for payment.” In addition, the complaint alleges that the Defendants “made false statements, both publicly and to the USPS, that were intended to hide the team’s misconduct so that those invoices would be paid.” All in all, according to the government, “[b]ecause the Defendants’ misconduct undermined the value of the sponsorship to the USPS, the United States suffered damage in that it did not receive the value of the services for which it bargained.” In support of its allegations, the government details the prohibited substances used by the Armstrong team, including erythropoietin, human growth hormone, anabolic steroids, and corticosteroids. It also details delivery methods used, including blood re-injections and “the oil,” a mixture of testosterone and olive oil. In addition, the government complaint contains a litany of Armstrong’s denials of banned substances use over a ten-year period.

While the Government notified the court that it was joining the lawsuit’s allegations as to Armstrong, the Tailwind cycling team, and the team’s manager, it advised the court that it was not intervening in the case as to several other defendants named in Landis’s complaint.

Article By:

 of

Michigan Right to Work – What’s the Effect: A Data Point

barnes

How Michigan’s Right to Work law would ultimately impact union dues payer rolls has been a topic of some debate. Now we have a data point, but it may not tell the whole story.

Michigan’s Right to Work law became effective March 28, 2013. The law gives employees the right to choose to join and/or financially support a union. In other words, it allows employees to retain the representational benefits of their union representation without paying dues. If an employee elects not to pay dues, the employee’s union still must represent the employee with respect to grievances and arbitration. Unions refer to this as “freeloading.”

There has been much speculation about what impact the passage of Michigan’s law would have on the number of dues paying members. Today, an article in the Detroit News reported that, according to the Michigan Education Association, Michigan’s 150,000 member teachers union, only 1 percent of its members have elected to exercise their rights under the Right to Work law and stop paying dues.

Michigan

This, however, likely only tells part of the story because the law does not impact union security provisions in contracts that have not yet expired and some contracts were “rush-renewed” to ensure that they would not be impacted by Right to Work for several more years.

In addition, the Right to Work law did not impact union “check off” provisions which are often tied to a card that is signed by a union member and authorizes the employer to deduct dues from the member’s paycheck and send them to the union. Such cards can serve as an impediment to a member desiring to stop paying dues because they can be irrevocable for a period of time, even if the employee revokes his or her union membership. These agreements, which can be irrevocable for up to a year under federal law, are a hurdle that trip up many employees trying to end dues payments immediately. However, while certain restrictions on dues check off authorizations have been approved under federal law, it is unclear whether the Michigan Employment Relations Commission (MERC) will find such restrictions lawful or violative of Michigan’s Right to Work law.

The point is, MEA’s 1 percent report is only one data point; it will take a lot longer to tell the impact on the number of dues paying members in the MEA and other unions.

See all our previous Right to Work coverage here.

Article By:

 of

Shutdown Closes National Labor Relations Board (NLRB) Operations

Barnes & Thornburg

As a result of the federal government shutdown, yesterday NLRB operations ground to a halt. Many practitioners and employers during the a.m. hours received contact from Board Agents and Board Lawyers indicating that pending investigations, petition processing and the like were on hold until after the shutdown ends.

The Board’s “Shutdown Plan” indicates that 1,600 of the Board’s 1,611 staff have been furloughed. All regional offices are closed and the only remaining staff are located in the Board’s main office in D.C. Even the Board’s website was shutdown and the resources posted online, including all Board cases, memos, and other guidance, became unavailable. Instead, visitors to the Board’s website were redirected to a landing page explaining “The National Labor Relations Board is currently closed due to a lapse in appropriated funds.”

government shutdown NLRB national labor relations board

The full effect of the shutdown on new and on-going NLRB cases is not completely clear.  The Federal Register Notice on the effect of the closure states that an extension of time to file any documents is granted sua sponte for all affected parties through the end of the shutdown.  However, the Board cannot grant extensions of time to the six-month statute of limitations in Section 10(b) of the National Labor Relations Act that applies to unfair labor practice charges.  The Federal Register Notice states that “the operation of Section 10(b) during an interruption in the Board’s normal operations is uncertain” and encourages effected parties to file their charges via fax, although they will presumably not be processed until after the shutdown concludes.  The Board’s website does provide that actions necessary “to prevent an imminent threat to the safety of human life or the protection of property may be undertaken” during the shutdown, although it is not clear what NLRB actions, if any, would fall into this category.

All ALJ hearings scheduled for this week have been postponed indefinitely, as well as all elections and election hearings scheduled through October 11. The Federal Register Notice provides that if the shutdown continues, additional hearings and elections will be postponed as well. Like the rest of the country affected by the shutdown, all practitioners and employers with business in front of the Board can do now is wait it out.

Article By:

 of

Recent Americans with Disabilities Act (ADA) Decision Might Signal Broadening of the ADA’s Accommodation Provisions

Poyner Spruill

The United States Court of Appeals for the Fifth Circuit recently held that accommodations under the Americans with Disabilities Act (ADA) are not limited to job modifications that enable an employee to perform essential job functions.  In Feist v. Louisiana, a former assistant attorney general for the Louisiana Department of Justice (LDOJ) sued the LDOJ claiming that it discriminated against her in violation of the ADA by declining to provide her with a free on-site parking space to accommodate her disability (osteoarthritis of the knee).  Siding with the employer, the trial court dismissed the case holding that the plaintiff failed to explain how the denial of on-site parking limited her ability to perform “the essential functions” of her job.

The Court of Appeals reversed the trial court’s decision, holding that the text of the ADA does not indicate that an accommodation must facilitate the essential functions of an employee’s position.  The court also relied on federal regulations (which the LDOJ argued were not entitled to deference) which provide that reasonable accommodations may include modifications or adjustments that enable a covered entity’s employee with a disability to enjoy equal benefits and privileges of employment as are enjoyed by its other employees without disabilities.  The court did not express an opinion on whether the employee’s request for a free on-site parking space was “reasonable” under the ADA, but left that determination to the trial court on remand.

This case may indicate a willingness of courts in future cases to broaden the scope of accommodations beyond what employers currently believe are required by the ADA.  Until more courts weigh in on the question, employers should tread carefully and seek legal counsel when responding to requests for accommodations that seem unrelated to an employee’s ability to perform his or her job functions.

 of

U.S. Government Shutdown Will Disrupt Many Immigration Processes

Morgan Lewis logo

Programs at the Departments of State and Labor are likely to be affected more than others if partial government shutdown occurs on October 1.

The potential U.S. government shutdown on October 1 could have immigration-related consequences, especially for those immigration functions performed by the U.S. Department of State (State) and the U.S. Department of Labor (DOL). These possible implications are set out below.

State Department

Although no official announcements have been made concerning which services would be affected by a shutdown, it is likely that State, which issues visas to foreign nationals at U.S. consular posts abroad, would operate on a severely limited basis. State’s current policy is for consular operations in the United States and abroad to remain 100% operational as long as there are sufficient fees to support operations. Many visa application processes are fee based, so it is possible that some visa issuance could continue based on this separate funding stream. However, a loss of federal funding will likely impact visa processing as fees cover only a portion of the costs associated with visa processing.

In 2011, when there was a similar prospect of a government shutdown, State issued the following advice:

In the consular area, American citizens’ services, emergency visa services (e.g., those for life/death or medical emergencies, humanitarian cases involving minor children, and diplomatic travel) would continue. Basic visa issuance would be severely curtailed.

State also provided the following information:

The Bureau of Consular Affairs, as well as other areas in [State], undertake a combination of excepted and non-excepted activities related to consular services. For the most part, visa and passport functions are not excepted activities, nor do fees entirely cover them. Instead, [State] relies on a mix of fee-funded and appropriation-funded employees and is dependent on support services that would be scaled back or eliminated during a shutdown. Therefore, [State] will not operate these non-excepted functions in the absence of appropriated funding.

In addition, the shutdown of ancillary consular operations, including building support and the employment of local personnel, may impact the delivery of visa services, resulting in cancellation of visa appointments or delays in the processing of visa applications. Accordingly, foreign nationals should be prepared for delays in consular visa processing and, where feasible, may want to consider postponing travel outside the United States if a new visa would be required to reenter the United States.

Processing of immigration visa applications at the National Visa Center will likely continue, as those functions are funded by contract and not a direct federal appropriation. Issuance of the November 2013 Visa Bulletin, which is expected in mid-October, is uncertain and would likely be impacted by a shutdown.

Department of Labor

On September 30, DOL made the following announcement:

Office of Foreign Labor Certification [(OFLC)] functions are not “excepted” from a shutdown and its employees would be placed in furlough status should a lapse in appropriated funds occur. Consequently, in the event of a government shutdown, OFLC will neither accept nor process any applications or related materials (such as audit responses) it receives, including Labor Condition Applications, Applications for Prevailing Wage Determination, Applications for Temporary Employment Certification, or Applications for Permanent Employment Certification. OFLC’s website, including the iCERT Visa Portal System, would become static and unable to process any requests or allow authorized users to access their online accounts.

PERM applications that need to be filed due to expiring recruitment or the need to preserve H-1B AC21 eligibility could presumably be filed by mail if necessary.

U.S. Citizenship and Immigration Services

U.S. Citizenship and Immigration Services (USCIS) is funded through fee-based petitions and applications and would not likely be affected by the shutdown. In addition, most Customs and Border Protection operations are considered to be essential functions and would not be disrupted. However, if there are staffing cuts, it is possible that there would be some delays in processing applications presented at the U.S. border and at border crossings. There may also be delays in waiver adjudication. We will continue to monitor the situation and will provide updates with any new information.

The E-Verify Program, which is run by USCIS, is not expected to be operational if there is a government shutdown. Employers are advised that a shutdown will not relieve them of their responsibilities; however, as stated in the governing Memorandum of Understanding, “[i]f the automated system to be queried is temporarily unavailable, the 3-day time period is extended until it is again operational in order to accommodate the Employer’s attempting, in good faith, to make inquiries during the period of unavailability.” Should a shutdown occur, the E-Verify public website and the E-Verify log-in page are expected to contain additional guidance for employers.

Article By:

of