Category: Labor & Employment

Court Grants Summary Judgment Against Coca-Cola in Breach of Collective Bargaining Agreement Claim by United Steel Workers

The National Law Review recently published an article by Bryan R. Walters of Varnum LLP regarding Coca-Cola’s Breach of Collective Bargaining Agreement:

Varnum LLP

 

In Local Union 2-2000 United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied-Industrial, Chemical and Service Workers International Union v. Coca-Cola Refreshments U.S.A. Inc. (W.D. Mich. Nov. 21, 2012), the Honorable Janet T. Neff granted summary judgment in favor of the United Steel Workers against Coca-Cola on a breach of contract claim concerning wage increases under the parties’ collective bargaining agreement. The opinion addressed two interesting legal issues.

First, the court rejected Coca-Cola’s statute of limitations argument under 29 U.S.C. § 160(b), which provides that “no complaint shall issue based upon any unfair labor practice occurring more than six months prior to the filing of the charge with the Board and the service of a copy thereof upon a person against whom such charge is made.”  Coca-Cola argued that, because the United Steel Workers had filed an unfair labor practice charge concerning their unpaid wages claim approximately nine months after becoming aware of the issue, Section 160(b) barred the union’s claim.  The court rejected this argument, concluding that it would be “inappropriate” to apply the six-month limitations period to what was a pure breach of contract claim.  Instead, the court held that the applicable statute of limitations was the six-year statute of limitations under Michigan law for breach of contract actions.  Op. at 13–15.

The second significant issue related to interpretation of the collective bargaining agreement.  The collective bargaining agreement included schedules for wage increases in “Year 1, Year 2, and Year 3” without further defining those terms within the primary contract document.  The court held that this contract language was ambiguous, requiring introduction of parol evidence of the parties’ negotiation history. The court found clear and convincing evidence in the negotiating history that the union’s interpretation of the “Years” was correct, in that “Year 1” referred to the first 365 days after the effective date of the contract, etc.  Id. at 19.

The court also concluded that there was clear and convincing evidence of a mutual mistake in the drafting of the final collective bargaining agreement. Coca-Cola listed specific dates for the wage adjustments in an appendix to the collective bargaining agreement. The court found that the dates listed in the appendix were not bargained for and never agreed to by the parties, rejecting as self-serving subsequent statements from Coca-Cola’s negotiators that Coca-Cola did not consider the dates unilaterally added to the appendix by Coca-Cola a “mistake.”  Id. at 20–21.

© 2012 Varnum LLP

After Nearly 25 Years, New Jersey Appellate Court Provides ‘Sobering’ Guidance to Employers Respecting Workplace Alcoholism

GT Law

It has been almost 25 years since a New Jersey appellate court published a decision providing any meaningful analysis of the treatment of alcoholism in the workplace under the State’s Law Against Discrimination (LAD), the last time being the Supreme Court’s 1988 decision in Clowes v. Terminix International, Inc.

That has now changed.

On October 26, 2012, the Appellate Division held in A.D.P. v. ExxonMobil Research & Engineering Co. that a private-sector, non-union employer’s blanket policy requiring any employee returning from an alcohol rehabilitation program to submit to random alcohol testing, applicable only to those identified as being “alcoholic” and divorced from any individualized assessment of the employee’s performance, was facially discriminatory under the LAD — a conclusion that would likely be the same under the federal Americans with Disabilities Act (ADA) as well. Although the Court reversed summary judgment initially entered in favor of the employer, A.D.P. provides valuable guidance to employers as they develop their policies concerning how best to deal with alcohol (and substance) abuse in the workplace. Equally important,  A.D.P. illustrates the utility of so-called “last chance agreements” to address these issues when they arise.

Plaintiff in  A.D.P. had been employed as a research technician, and later Senior Research Associate, for approximately 30 years.  Unlike the plaintiff in the Supreme Court’s 1992 decision in Hennessey v. Coastal Eagle Point Oil Co., hers was not a “safety-sensitive” position. In 2007, plaintiff voluntarily disclosed to her employer that she suffered from alcoholism, and entered a rehabilitation program. At the time, she was not subject to any pending or threatened disciplinary action, and she had built a good performance record over the years. The company’s policy nonetheless required that, upon her return from rehabilitation, plaintiff sign a contract agreeing to participate in a company-approved “aftercare program” obligating her to “maintain total abstinence from alcohol” and submit to “clinical substance testing for a minimum of two (2) years.” A positive test result or refusal to submit to a test would be deemed grounds for discipline, “which is most likely to be termination of employment.” Although plaintiff passed nine breathalyzer tests over a period of just 10 months, she subsequently failed a pair of tests on August 22, 2008, and accordingly was terminated under the company’s policy.

Reversing summary judgment, the Appellate Division held that the employer’s blanket policy was facially discriminatory because it was unrelated to any performance concerns and was based solely on the  fact that an employee was identified (in plaintiff’s case, self-identified) as an alcoholic (i.e., the employer, according to the court, exhibited “hostility toward members of the employee’s class”). Unlike the Supreme Court in  Hennessey, which considered  whether an employer’s termination of an employee who failed a mandatory random drug test violated a clear mandate of “public policy” thereby creating a common law cause of action for wrongful discharge, the A.D.P. Court grounded its analysis of the defendant’s alcohol policy on LAD.

Notably, the A.D.P. Court looked to the EEOC’s 2000 policy guidance under the ADA, even though the EEOC had not yet considered the potential impact of the 2008 ADA Amendments Act upon that guidance. The EEOC explains that, absent a “last chance” agreement, an employer can subject employees returning from alcohol rehabilitation to random alcohol testing, a breathalyzer for example, only if the employer has a reasonable belief, based on objective evidence, that the employee will pose a “direct threat” (for example, to safety or job performance) absent such testing. Any such “reasonable belief” must be based on an individualized assessment of the employee and his/her position, including “safety risks associated with the position,” and not on generalized assumptions. The A.D.P. Court looked to this guidance statement for “assistance in interpreting the LAD” because the ADA’s prohibition against disability discrimination is “similar” to its LAD counterpart, and alcoholism may qualify as a disability under either statute.

In A.D.P., plaintiff did not have a last chance agreement, a fact the court “emphasize[d]” at the outset. The court also stressed that the employer had made no individualized assessment, but rather “defend[ed] its actions as requirements it uniformly imposed as a matter of policy upon any identified alcoholic.” Interestingly, the A.D.P. Court did not mention the Third Circuit’s unpublished 2009 decision inByrd v. Federal Express Corp. Byrd upheld an employer’s termination of a self-reported alcoholic employee for failing a random alcohol test mandated under a “Statement of Understanding” (SOU) — a contract the Third Circuit described as “in effect, a ‘last chance’ agreement” — that the employer required all employees identified as alcoholics to sign.  Byrd did not, however, consider plaintiff’s claim that requiring the SOU was itself a violation of LAD “because it treats employees with alcohol or substance abuse problems differently,” as plaintiff had failed to challenge the SOU within LAD’s statutory limitations period.

Although  A.D.P. invalidated the particular policy before it, in its opinion, the Court nonetheless provides employers with valuable guidance in developing their own policies concerning alcohol and substance abuse in the workplace. It seems clear under A.D.P. that private, non-union employers can require employees returning from rehabilitation programs for alcoholism to submit to random alcohol or drug testing (subject to the limits imposed by the Supreme Court in Hennessey) provided that either (i) they articulate a reasonable belief, based on careful assessment of objective evidence concerning both the employee and the position, that the employee will pose a direct threat absent such testing, or (ii) the employee has entered into a last chance agreement providing for random testing.

Key Takeaways

  • Employers should strongly consider entering into last chance agreements with any employee who points to alcohol or substance dependency as a cause for workplace problems (for example, poor performance or persistent tardiness), and include in the agreement requirements that, as a condition of continued employment, the employee will enter a rehabilitation program and submit to periodic testing.
  • Absent a last chance agreement, employers should not compel an employee to submit to periodic alcohol testing unless the employer can articulate a reasonable belief, based on a careful assessment of objective evidence concerning both the employee and the nature of his/her position, that the subject employee will pose a direct threat without testing.
  • Employers are cautioned against instituting blanket workplace alcohol (or substance) policies that specifically target employees returning from rehabilitation without regard to safety or performance issues.

©2012 Greenberg Traurig, LLP

Businesses Must Determine Whether the Pay-or-Play Provisions in the Affordable Care Act Apply

If you own a business, the following are important items regarding the Affordable Care Act, sometimes referred to as Obamacare, you need to know:

By March 1, 2013, employers must notify employees of the health insurance exchanges, including the employee’s right to purchase health insurance through a state insurance exchange.

In 2014, pursuant to an Internal Revenue Code provision, employers with 50 or more full-time equivalent employees will be subject to the “employer shared responsibility” standards. Employers who anticipate having 50 or more full-time equivalent employees in 2014 need to understand the pay-or-play requirements so they can decide if they want to offer health insurance and, if so, what the insurance covers.

For employers with 50 or more full-time equivalent employees in 2014, penalties apply if no health insurance is offered, or health insurance is offered but it does not have minimum essential health benefit coverage, and an employee obtains subsidized health insurance coverage from the state insurance exchanges that are supposed to be in place by 2014.

Interestingly, in 2014, penalties can apply even if an employer with 50 or more full-time equivalent employees offers health insurance which has minimum essential health benefit coverage. This occurs if such minimal essential health benefit coverage is not affordable or does not offer minimum value, and one or more employees obtains subsidized health insurance coverage from the state insurance exchanges that are supposed to be in place by 2014. Coverage is considered affordable if it costs an employee less than 9.5 percent of the employee’s annual household income. Generally, an employer’s group health plan will be considered to provide minimum value if the employer pays on average at least 60 percent of health care expenses while the employee pays on average 40 percent of health care expenses (through deductibles and copayments).

In addition to the potential penalties under the pay or play provisions, the IRS Code includes a tax on any failure of a group plan to meet the code’s requirements for group health plans. For example, if an employer has a group health plan that fails to provide preventive health care services when a plan requires it, then the amount of the tax is $100 per employee for each day in the non-compliance period. This can be a very large tax.

©2002-2012 Fowler White Boggs P.A.

Overpaying Our Way Over The Edge of The Fiscal Cliff

The National Law Review recently published an article regarding The Fiscal Cliff written by Scott J. Witlin of Barnes & Thornburg LLP:

 

While the debate about the fiscal cliff has been about what services to eliminate and how much to raise taxes, ignored almost entirely is the fact that the government grossly overpays for the services it buys.

According to the most recent data from the Bureau of Labor Statistics, the median salary for a federal government employee (including the Post Office) was $70,100 per year. For all private sector workers, that number was $43,980. That is, federal government employees are paid 59.4 percent more in salary than their private sector counterparts.

This differential does not include the higher costs of benefits to federal employees that one Congressional Budget Office study recently pegged as being 44.7 percent greater. That same CBO study which attempted to control for factors including educational attainment and regional variations concluded that the wage differential (excluding benefits) between federal employees and private sector workers was 14.7 percent.

Given that the federal government currently spends approximately $200 billion on its civilian employees, eliminating this wage gap would result in significant cost savings to the American taxpayer. Even without adjusting benefit costs (which itself could provide significant cost savings), simply eliminating the wage disparity could provide $300 billion in deficit reduction over the next ten years – all without eliminating a single federal program.

Later this month, we will look at cost savings from eliminating so-called prevailing wage programs that amount to transfer payments to unionized construction workers.

© 2012 BARNES & THORNBURG LLP

 

 

First Hockey and Now Twinkies Too?

The National Law Review recently featured an article, First Hockey and Now Twinkies Too?, written by Gerald F. Lutkus of Barnes & Thornburg LLP:

 

Labor disputes are messing with two of America’s favorites: Hockey and Twinkies.

Today is Day 62 of the NHL lockout. The Winter Classic and 326 regular season games have already been cancelled. And yesterday NHL Commissioner Gary Bettman proposed a two-week moratorium on further talks. The NHL and NHLPA worked at it over the last two weeks and even met for six consecutive days in New York. Experienced labor negotiators were hopeful not only because the parties were at the table but because neither side was running to the media or holding press conferences. (If you’re not there to announce a tentative agreement, a press conference during negotiations is usually a bad sign.) But last Friday’s session reportedly ended with a heated exchange, and talks on Sunday were adjourned after an hour.

Eklund, the blogger at Hockeybuzz.com who is usually writing about trades and free agents rumors, has an interesting take on Bettman’s moratorium proposal.  Despite being questioned in the national hockey press, Eklund suggests that Bettman might be tossing the ball back to Donald Fehr and basically saying your turn.  The lock-out and negotiations are obviously at a critical point and the season is definitely now at risk.

See other reports at CBS Sports and The Huffington Post.

The other labor news of the day is that Hostess Brands has just announced this morning that it plans to liquidate the company. The New York Times is reporting that Hostess, which is already in a Chapter 11 bankruptcy proceeding, announced the liquidation after members of the Bakery and Confectionery Workers Union rejected a Company ultimatum to return to work by 5 p.m. Thursday. The strike started on Nov. 9 after a bankruptcy judge approved a contract with concessions for the workers. The Union responded by blaming the closing on “nearly a decade of financial and operational mismanagement” by Hostess. Bloomberg.com reports that the Union also asserted that Hostess has stopped payments to the workers’ pension plan, and sought up to 32 percent cuts in wages and benefits.

© 2012 BARNES & THORNBURG LLP

Section 409A Transition Relief Deadline Quickly Approaching

The National Law Review recently published an article by Daniel B. Lange and Christopher K. Buch of Katten Muchin Rosenman LLP regarding Section 409A Transistion Relief Deadlines:

As the end of the year approaches, important transition relief from penalties and excise taxes imposed by Section 409A of the Internal Revenue Code (the Code) is about to expire. If an employer has an employment agreement or other nonqualified deferred compensation plan that provides for severance payments to an employee only if such employee executes a release, there may be a technical violation of Code Section 409A. The Internal Revenue Service allows for correction of such technical violations without penalty, but the correction must occur before December 31, 2012.

In 2010, the IRS issued two notices (IRS Notice 2010-6 and 2010-80) addressing how to fix an employment agreement that was not in compliance with Code Section 409A. In these notices, the IRS stated that by allowing an employee to receive his or her severance payment following the execution of a release, the employee would be able to control the year of such payment by timing when he or she delivered such release to his or her employer. The IRS stated that, to the extent the severance payment is subject to Code Section 409A, the ability to control payment timing is a violation regardless of whether the execution and delivery of the release actually crosses two taxable years.

The IRS provided transitional relief from this technical violation by allowing employers to amend any noncompliant employment agreement or other nonqualified deferred compensation plan in effect as of December 31, 2010. Under the transitional relief, such agreement or plan must comply with the Code Section 409A release requirements by December 31, 2012.

In order to take advantage of the transitional relief, an employer must correct the noncompliant agreement or plan in one of two approved manners and include the names of the employees affected and the correction method used by the employer.

Briefly, if the agreement or plan provides for a defined payment period, the correction must be made to provide for either: (a) payment only on the last day of such defined period or (b) if the defined payment period begins in one taxable year and ends in another taxable year, payment must be made in the later taxable year. If the agreement or plan does not provide for a defined payment period, the correction must be made to provide for either: (x) payment only on a specified date either 60 or 90 days following the employee’s separation from service, or (y) payment during a defined period not longer than 90 days following the employee’s separation from service, except that the payment must be made in the later taxable year if that period could span two taxable years.

If the agreement or plan is not corrected by the December 31, 2012 deadline, payments made pursuant to such agreement or plan may be immediately included in an affected employee’s income, a 20 percent penalty tax will be imposed, and additional interest taxes may apply. Please note that in the case of a bilateral agreement or plan, the affected employee’s consent is required to make any change, so employers should allow plenty of time to make these corrections.

A copy of IRS Notice 2010-6 can be found here and a copy of IRS Notice 2010-80 can be found here.

©2012 Katten Muchin Rosenman LLP

Posting By Employer Regarding Pending Legal Action Can Violate CEPA

The National Law Review recently published an article by Ari G. Burd of Giordano, Halleran & Ciesla, P.C., Posting By Employer Regarding Pending Legal Action Can Violate CEPA:

 

In Flecker v Statue Cruises, LLC, the plaintiff filed an action against his employer alleging violations of the New Jersey Wage and Hour Law.  In response, the employer posted a memorandum directed to all employees informing them of the suit.  The memo specifically identified plaintiff as the party responsible for filing the suit and advised employees that as a result, no employees would be scheduled for overtime.  Immediately thereafter, plaintiff was confronted, threatened and harassed by coworkers.  Eventually the harassment became so great that plaintiff resigned.  Plaintiff then filed a claim of retaliation under the Conscientious Employee Protection Act (CEPA), New Jersey’s whistle-blower statute.

The trial court entered summary judgment in favor of the employer and the case was dismissed.  However, on November 14, 2012, the Appellate Division reversed this ruling and reinstated the case, noting there was sufficient evidence for a reasonable jury to conclude that the employer knew or should have known its memorandum would incite the plaintiff’s co-workers and that such action could ultimately force the plaintiff to resign.  This is yet another example to show that CEPA is far-reaching, and protects workers from a wide assortment of retaliatory conduct far greater than mere discharge, suspension or demotion.

© 2012 Giordano, Halleran & Ciesla, P.C.

Inclement Weather and Time Off Issues: To Pay or Not to Pay

With winter closing in, the possibility of bad weather brings potential attendance issues to the forefront of our minds. Icy roads and snow storms in Kentucky often cause delays and closings of not only schools but also businesses. Of course safety is the primary concern for everyone in extreme weather conditions, but employers must think beyond the logistics of employees getting to work or staying home. Absences due to bad weather impact the productivity of a business, and raise questions regarding the calculation of pay and how an employee’s time should be tracked. These issues are further complicated when dealing with a mix of exempt and non-exempt employees; however the U.S. Department of Labor (DOL) does offer some guidelines to assist an employer in determining their rights and responsibilities when bad weather impacts employee attendance.

Let’s consider several scenarios:

The business decides to close due to bad weather and sends non-exempt employees home: Employers are required to pay hourly employees only for the hours worked. Under the Fair Labor Standards Act (FLSA), an employer is not obligated to pay for hours not worked. Therefore, non-exempt employees when unable to attend work, or sent home due to weather do not have to be compensated for the time off. This is a fairly straightforward and uncomplicated practice, unlike dealing with the complex nature of exempt employees.

The business is open, but an exempt employee chooses not to come in:  An exempt employee almost always has to be paid, in any circumstance. Under the FLSA an employer is prohibited from docking the pay of an exempt employee who chooses not to come into work for inclement weather. In this position as well, any business that decides to close due to weather is required to pay exempt employees their regular salaries. The only instance in which an employer can deduct pay from a salaried exempt employee is if the facility is closed for more than a week. Another point to note is that the FLSA does not require that an employer provide vacation or leave time. Therefore there is nothing to prevent the employer from deducting the inclement weather days off from the employees’ paid time off or vacation to cover the missed work. This sounds on its surface like a positive solution to the problem. However, complications arise when an employee has not accrued enough time off or when they have already scheduled and been approved to take their remaining time off at a later date. In both cases, an employer is still restricted from deducting the difference from the employees’ salary. The days off can be deducted from future earned leave. However, serious consideration should be given to instituting this practice as it complicates the employee/employer relationship and cause morale issues which can lead to a decline in productivity or a loss of good employees.

Employer’s Plan: An inclement weather policy should be a standard document in all employee handbooks. Now is the time to review that policy and consider whether it covers all of the issues that need to be addressed to protect both the employees and the employer. Several points to consider when reviewing the policy both for its applicability and validity are as follows:

  1. How are closures communicated and who is the decision-maker?
  2. Can employees who are faced with daycare or school closings bring their children to the workplace?
  3. Are employees permitted to work from home? What conditions apply in this instance?
  4. Outline eligibility for pay, how it is determined, and if paid time off will be applied for the absence(s).
  5. Will non-exempt employees be given an opportunity to make up some or all of the time missed? Will this occur within the same pay period?

Whatever the forecast this winter, with proper planning, understanding the legal obligations and a clear and concise policy an employer can reduce the likelihood of confusion created by weather-related absences. So plan now for Jack Frost, and you’ll be able to enjoy the winter wonderland without the stress of the question “to pay or not to pay.”

© 2012 by McBrayer, McGinnis, Leslie & Kirkland, PLLC

IRS Guidance Encourages Leave Donation Programs for Hurricane Sandy Victims

The National Law Review recently featured an article, IRS Guidance Encourages Leave Donation Programs for Hurricane Sandy Victims, written by Alexander L. Reid, Celia Roady, Mary B. “Handy” Hevener, and Matthew R. Elkin of Morgan, Lewis & Bockius LLP:

 

Employers wishing to provide disaster relief assistance have several tax-relief provisions available to them.

In the wake of Hurricane Sandy and the resulting destruction and devastation to the East Coast, many employers have expressed an interest in providing disaster relief assistance to their affected employees. The following describes the different tax-relief provisions that may be applicable should employers provide such assistance.

Employee Donations of Vacation and Sick Pay

One way that employers can assist affected employees is by enabling employees to donate vacation, sick, or personal leave in exchange for employer contributions to charitable organizations for the relief of disaster victims. Without guidance from the Internal Revenue Service (IRS), these leave-sharing programs would have required the employees receiving any donated leave days to pay income andFederal Insurance Contributions Act (FICA) taxes on the leave-day income. Morgan Lewis, however, assisted the American Payroll Association (APA) in obtaining payroll reduction donation relief from the IRS for Hurricane Sandy, which the IRS released on November 6, 2012, in Notice 2012-69.[1] The APA has been successful in obtaining such guidance twice previously, after both the September 11 attacks and Hurricane Katrina. When the IRS adopted these special relief provisions for 15-month periods after 9/11 and after Hurricane Katrina, some companies estimated that the provisions facilitated millions of dollars of additional donations.

The new IRS guidance permits employers to adopt leave-based donation programs under which the donating employee is not subject to income or FICA taxes on the donated leave, and the payments from charitable organizations to the recipients are also exempt from income and FICA taxes.

The APA’s request also asked the IRS to eliminate the requirement that employees designate recipient charitable organizations and allow employees to assign their leave days to disaster relief programs that employers can set up on their own (using the rules in the Internal Revenue Code discussed below, which permit employers to provide certain tax-exempt disaster relief payments to employees affected by major disasters.) The APA also proposed that the IRS might allow employees simply to assign designated amounts of their wages, rather than leave days, for Hurricane Sandy relief. We understand that the IRS may rule on these additional requests in subsequent guidance.

Qualified Disaster Relief Payments to Employees

In addition to encouraging employee donations of vacation and sick pay, employers wishing to provide assistance may utilize Section 139 of the Internal Revenue Code, which establishes a federal income and payroll tax exclusion for payments received by an individual as a qualified disaster relief payment. A “qualified disaster” includes any federally declared disaster, as well as any disaster that is determined by the Secretary of the U.S. Department of the Treasury to be catastrophic in nature. The Federal Emergency Management Agency (FEMA)has declared counties in the states of New York, New Jersey, Rhode Island, and Connecticut to be qualified disaster areas. In addition, the IRS has issued guidance confirming that Hurricane Sandy is designated as a qualified disaster for federal tax purposes, regardless of whether those affected are located in a federally declared disaster area.[2]

Employers who wish to provide payments to their affected employees should take steps to ensure that such payments meet the limitations of Section 139 and therefore will be treated as qualified disaster relief payments. Those steps include the following:

  • Make payments to employees only for reasonable and necessary personal, family, living, or funeral expenses or reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents.
  • Do not make payments for any expenses compensated for by insurance or otherwise.
  • Confirm that any expenses are attributable to the qualified disaster.
  • While the employer does not have to require employees to account for actual expenses, the employer must reasonably expect the payments to be commensurate with expenses incurred. Consider having a written policy explaining how payments are intended to approximate actual losses.

Employers should also do the following:

  • Review 401(k) and retirement plan terms to determine if the payments must be treated as compensation under the plan documents.
  • Consider any state law implications.

Payments under Section 139 are an immediate and direct way employers can provide assistance to employees affected by Hurricane Sandy with little administrative cost. There are advantages, however, to providing such assistance through an employer-sponsored public charity.

Helping Through a Charitable Organization

Employer-sponsored public charities can provide a broader range of assistance to employees because payments from these organizations are not subject to the limits of Section 139 discussed above. Further, a charitable organization can respond to any type of disaster or employee hardship situation, not just “qualified disasters,” as long as the related employer does not exercise excessive control over the charitable organization.

There are three principal requirements for providing employee assistance through an employer-sponsored public charity:

  1. The class of beneficiaries must be indefinite. The relief program generally must be available to employees affected by current and future disasters and hardships.
  2. The recipients must be selected based on an objective determination of need or distress. The program must have some guidelines for determining when to provide assistance and must undertake some due diligence to ensure that the recipients are “needy or distressed.” Financial assistance cannot be provided to employees simply because they are victims of a disaster. Typically, public charities providing employee disaster or hardship relief adopt guidelines for awarding assistance and require an application form to be completed by the individual seeking assistance. The application form can then be used to make a determination that the applicant meets the “needy or distressed” requirement.
  3. The recipients must be selected by an independent selection committee. This is a critical requirement and will be met if a majority of the selection committee consists of members who are “not in a position to exercise substantial influence over the affairs of the employer.” As a practical matter, this means that the majority of the selection committee cannot consist of members of the employer’s senior management. Many organizations have retired employees or persons from the human resources department serve on the selection committee.

These employer-sponsored public charities also provide a concrete way for company employees to assist other company employees by donating to the organization. Donations from both the employer and other employees are generally tax-deductible charitable contributions, and assistance payments received by employees are excludable from gross income. Providing assistance through these charitable organizations can therefore offer increased flexibility and tax benefits.

Unlike employer-sponsored public charities, which can provide assistance under any type of disaster or employee hardship situation, employer-sponsored private foundations may only provide assistance to employees or family members affected by a qualified disaster as defined in Section 139. Employer-sponsored private foundations also must be sure to meet the safeguards listed above to ensure that such assistance is serving charitable purposes rather than the business purposes of the employer.

[1]. Read the IRS notice here.

[2]. Read the IRS announcement here.

Copyright © 2012 by Morgan, Lewis & Bockius LLP

Hurricane Sandy: Board of Education Discretion in Issuing Alternative Work Schedules on Snow Days

With the Hurricane Sandy knocking at our front doors, now seems like a good time to update Boards of Education on alternative work schedules for professional and service personnel. As we all know, in West Virginia a school system is always faced with a number of school cancellations and delays as a result of inclement weather. A common question from school administrators is: What discretion does a Board of Education have in issuing alternative work schedules on snow days?

West Virginia Code 18A-5-2 provides that “any school or schools may be closed by proper authorities on account of . . . conditions of weather or any other calamitous cause over which the board has no control. . . [and] the time lost by the closing of schools is counted as days of employment and as meeting a part of the requirements of the minimum term of one hundred eighty days of instruction. On such day or days, county boards of education may provide appropriate alternate work schedules for professional and service personnel affected by the closing of any school or schools under any or all of the above provisions. Professional and service personnel shall receive pay the same as if school were in session.”

Of course when a Board of Education provides alternative work schedules, it must do so without discrimination and/or favoritism. West Virginia Code 6C-2-2 defines discrimination as “any differences in the treatment of similarly situated employees, unless the differences are related to the actual job responsibilities of the employees or are agreed to in writing by the employees”. And, favoritism is defined as “unfair treatment of an employee as demonstrated by preferential, exceptional or advantageous treatment of a similarly situated employee unless the treatment is related to the actual job responsibilities of the employee or is agreed to in writing by the employee.” In sum, a Board of Education should be uniform among similarly situated employees.

For example, in Denny Sullivan v. Jackson County Bd. of Educ., Docket No. 96-18-087 (Aug. 30, 1996), the board of education on a state of emergency day called only maintenance and custodial employees to work, as they were considered essential to maintain the premises and remove snow. If any employee in either of these classifications was unable to report to work they were required to take some form of leave time. The Grievants, all in the classifications required to report, initiated a grievance alleging favoritism and discrimination because other employees did not have to report to work. However, the Grievance Board ruled that the Grievants failed to show any violation, and ruled that “a county board of education may establish ‘alternative work schedules’ for employees during a time of emergency.”

Also, it is important to note that “differences in work sites can justify differences in the treatment of employees assigned to those sites despite that the employees are in the same classification.” Bryan Rogers v. Jackson County Bd. of Educ., Docket No. 96-18-104 (Aug. 30, 1996).

Another example is found in Sandra Shetler and Deborah Weatherholtz v. Berkeley County Bd. of Educ., Docket No. 00-02-119 (June 9, 2000) in which the Board of Education directed all central office personnel to report to work on a one hour delay on a day in which school was closed for snow. School based staff was not to report to work. The Grievants were both Special Education Coordinators. The Grievance Board ruled that the “Grievants were not similarly situated to the employees who were not required to report to work. The other 210-day employees that did not have to work were school-based employees, were not in Grievants’ classification, and their schools, or places where they worked, were not open for business.” Again, the most important factor is to treat similarly situated employees equally, but, differences in work sites can justify differences in the treatment of employees assigned to those sites despite that fact that the employees are in the same classification.

© 2012 Dinsmore & Shohl LLP