Category: Labor & Employment

Michigan’s New Right to Work Law: What It Means for Employers, Workers and the Upper Midwest

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On December 11, 2012, Governor Rick Snyder signed into law two bills collectively enacting “Right to Work” legislation in the State of Michigan. Michigan becomes the 24th state to enact some form of a right to work law, and joins Indiana as the second state in the Upper Midwest to do so in 2012. Wisconsin passed a similar law in 2010, though that highly publicized legislation applied only to public sector employers and unions. The most significant aspect of right to work laws is that they prevent unions and employers from requiring workers to join a union or to pay union dues as a condition of employment. The law will take effect gradually (it takes effect on or around April 1, 2013), as it allows all current collective bargaining agreements between unions and employers to remain in place.

So what does the new law actually say? Michigan’s Right to Work Law was passed as two separate Public Acts. Public Act 348 addresses private sector unions and amended 1939 PA 176, which governs many union activities and the relationship between unions and private employers in Michigan. Public Act 349 is a nearly identical Act that relates to public sector employers and unions. The following is a summary of significant changes to private sector relationships between unions and employers as a result of Public Act 348:

  • Outlaws Closed Shops. Private sector employees may now choose whether or not to join a union or pay any dues or charitable contributions in relation to union membership. Individuals can no longer be required, as a condition of new or continued employment, to join or pay dues to a union, or to pay any charitable organization or third party an amount in lieu of union dues. Employees in Michigan can now decide, individually, whether they want to join a union and pay dues (“open shop”). Under prior Michigan law, an employee, by a labor agreement, could be compelled to join a union and pay dues (referred to as “closed shop” or “union security” clause). That is now banned.
  • Individuals Still Must Be Allowed to Join Unions. Consistent with prior Michigan law, individuals shall not be required to refrain or resign from membership in or to avoid financially supporting a union as a condition of employment.
  • Invalidates Closed Shop Agreements. Any agreement, contract, understanding, or practice between an employer and a labor organization that violates the Act is invalid.
  • Current Collective Bargaining Agreements Unaffected. The Act contains a “Grandfather Clause.” The prohibition against closed shop agreements applies only to an agreement, contract, understanding, or practice that takes effect or is extended or renewed after the effective date of the Act.
  • Violation Subject to Civil Fine. Any individual, employer, or labor organization that violates Section 1 of the Act by requiring an individual to join or resign from a union, or pay or refrain from paying dues, may be fined up to $500.
  • Private Right of Action for Injured Persons. Any person injured by a violation of the Act (i.e. forced or threatened to be forced to join or quit a union as a condition of employment) may file a civil action for injunction and damages. The provision contains a “fee shifter,” meaning a prevailing plaintiff gets costs and reasonable attorney fees associated with the civil action.
  • Employees Subject to Civil Fines for Intimidation. Any employee who attempts to compel by force, intimidation, or unlawful threats any person into joining a union or paying dues may be liable for a civil penalty of up to $500.
  • Responsibilities of the Michigan Department of Licensing and Regulatory Affairs (LARA). The Act allocates $1 million to LARA to do the following: (1) respond to public inquiries regarding the Act; (2) provide sufficient staff and resources to implement the Act; and (3) inform employers, employees, and labor organizations concerning their rights and responsibilities under the Act. An informational hotline, website, and/or informational pamphlets are likely to become available as a result of this section.

Public Act 349 contains nearly identical provisions pertaining to public sector employers and unions in Michigan. The only significant difference in Public Act 349 is it contains an exception for public police, fire departments, and state police unions. These unions may continue to collectively bargain for an agreement that all members of their organization shall pay union dues or fees to their union or exclusive bargaining representative.

There are likely to be challenges, both legal and political, to the new legislation. Labor unions, including the Michigan-based UAW, have already pledged to challenge the Acts in court. The Acts grant exclusive jurisdiction to the Michigan Court of Appeals, and indicate that the Court of Appeals will hear the action in an expedited manner. From a political standpoint, the monetary allocation to LARA in each Act prevents a referendum on the Acts because of language in Michigan’s Constitution. Instead, the UAW has indicated it will attempt to recall state legislators who supported the Act, and potentially Governor Snyder. A recall effort as to Governor Snyder may be less likely because he is up for re-election in 2014, but one might expect a scene similar to what played out in Wisconsin throughout 2011.

The significance of this legislation will also be felt throughout the Upper Midwest. Like Wisconsin, Michigan may be viewed as a bellwether for union opposition to right to work legislation. State and local governments, as well as private employers operating in closed shop states will need to remain aware of regional trends and shifting business climates as the right to work legislation in their neighboring states begins to take effect. As Michigan’s neighbor to the south, Ohio is now potentially under more pressure to pass a right to work measure given that its surrounding neighbors, Indiana, Kentucky, and now Michigan, are right to work states.

MBF client-employers will want to continue to monitor legislative developments, especially those clients making site selection decisions either to expand existing facilities or open new locations. Also, for those clients with operations in Michigan, there are issues to consider now including employee communications and other impacts the new Michigan law will have on existing operations.

© MICHAEL BEST & FRIEDRICH LLP

Right to Work Passes, Signed by Michigan Governor

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As expected, the Michigan House voted today to enact the pending Right to Work bills. Michigan Governor Rick Snyder signed the bills this evening, making Michigan the 24th Right to Work state in the nation. The changes to the law become effective 90 days following the end of the 2012 legislative session, making the effective date likely to be on or about April 1, 2013.

The full text of the final bills is available on the Legislature’s website and can be accessed by clicking on the links below:

SB 116(private employees)
HB 4003(public employees)

© 2012 BARNES & THORNBURG LLP

“Employee” Status Not Necessarily Dependent on Compensation

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While Title VII discrimination claims apply only to “employees” and “employers,” the statute’s definitions of those terms are spectacularly unhelpful. An employee is someone who is employed by an employer. 42 U.S.C. § 2000e(b) & (f). Thanks, Congress! In light of this thoroughly circular definition, courts use agency principles to determine employment status when such is not clear.

An illustrative opinion was recently issued by the Northern District of Illinois in Volling v. Antioch Rescue Squad. In Volling, one of the main questions was whether the members of ARS’s volunteer ambulance squad should be considered employees for purposes of Title VII. The opinion can be found here.

Several factors are considered in making this employment determination, including: the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party. No single factor is dispositive, but courts will often give great weight to the amount of control the putative employer has over the putative employee.

Defendant ARS argued that the volunteer ambulance squad could not be employees because they received no payment. This view seems to be supported by the Second and Fourth Circuits, which require significant economic remuneration for a worker to be considered an employee for Title VII purposes. The Seventh Circuit has yet to rule on the issue, but the district court noted that the Seventh Circuit has rejected labels such as “volunteer” and endorsed the consideration of the common law factors listed above.  Accordingly, the district court agreed with the Sixth Circuit’s view that compensation is just one factor to be considered in the employment analysis. Perhaps significantly, the Volling court stated that compensation may well be less important with regard to not-for-profit organizations such as ARS than to commercial employers.

Thus, the court took into consideration the facts alleged by the plaintiffs, which included, among other things, that plaintiffs: are assigned to work specific shifts and defendants control who works those shifts with them; performed their work in the station and ambulances operated and used by ARS; are required to wear uniforms; received training; had to go through probationary periods; and had supervisory subordinate relationships with team leaders and board members of ARS.

Based on the degree of control exercised by ARS and the mandate to construe Title VII broadly to prevent discrimination, the court refused to dismiss the case for a lack of an employment relationship. “A workplace is not necessarily any different for a non-compensated volunteer than it is for a compensated ‘employee,’ and while both are generally free to quit if they don’t like the conditions (at-will employment being the norm), neither should have to quit to avoid sexual, racial, or other unlawful discrimination and harassment.”

This case serves as a good reminder that – similar to problems that can arise from using independent contractors – just because a worker is considered to be and labeled an unpaid volunteer, trainee, or intern doesn’t mean the employer is necessarily shielded from Title VII (or other federal statutory) liability. What counts is how those workers are treated, not how they are labeled.

© 2012 BARNES & THORNBURG LLP

Holiday Warning: Cut Sexual Harassment From Your Holiday Party Invitation List

The National Law Review recently published an article by Matthew J. Kreutzer of Armstrong Teasdale, Holiday Warning: Cut Sexual Harassment From Your Holiday Party Invitation List:

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A recent federal judge’s decision allowing a sexual harassment case to proceed against an employer is a sobering reminder that the lighthearted, and sometimes drunken, atmosphere at office holiday parties does not equate to a free pass for your employees to engage in unwanted touching, lewd comments and other types of inappropriate behavior that otherwise would not be tolerated. Indeed, employers who fail to protect themselves can be held liable for workers’ conduct that might easily get out of hand at festive events particularly when there is drinking.

Just in time for the 2012 holiday party season, the U.S. District Court for the Western District of New York refused to dismiss a sexual harassment lawsuit filed against the State University of New York growing out of just such a party. (Shiner v. State University of New York, University at Buffalo, No. 11-CV-01024.)

The plaintiff, a clerk working at the University at Buffalo Dental School, alleged she had not wanted to attend the school’s annual holiday party because the conduct at previous events made her uncomfortable. However, a supervisor encouraged her to attend the party, which was held at a local bar. During the party, an associate dean, with supervisory authority over the plaintiff, allegedly made sexual advances toward her that included fondling her, putting his tongue in her ear and pulling her onto his lap. Another department official with supervisory authority allegedly cheered him on.

The plaintiff filed claims of sexual harassment under state and federal anti-discrimination laws, as well common law claims of assault and battery. The judge is allowing the case to proceed to trial, exposing (no pun intended) the employer to a potentially large monetary liability.

Employers can reduce the threat of misbehavior that gives rise to these kinds of allegations by, for example:

  • Reminding employees prior to the event that the company’s code of conduct remains in effect during the event
  • Establishing procedures in advance to handle any inappropriate behavior that might occur
  • Limiting the amount of drinking

If an employee does come to you with a sexual harassment complaint, please consider it seriously and take prompt action as necessary to investigate and stop the harassment.

© Copyright 2012 Armstrong Teasdale LLP

Federal Courts Clarify Reasonable-Accommodation Standards

The National Law Review recently published an article, Federal Courts Clarify Reasonable-Accommodation Standards, written by Alan M. Koral and Andrea Lewis with Vedder Price:

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The extent of an employer’s duty to reasonably accommodate an employee with a disability under the Americans with Disabilities Act (ADA) is not always clear. Indeed, when the requested accommodation involves a leave of absence or the transfer to a different position, employers are often unsure what the law requires of them. A series of recent decisions from the Seventh and Tenth Circuits, however, have addressed the limitations and obligations facing employers presented with such requests for accommodation.

Leaves of Absence as a Reasonable Accommodation

Few questions vex employers more than what length of time is reasonable when a disabled employee requests a leave of absence. The United States Court of Appeals for the Tenth Circuit (Colorado, Kansas, Oklahoma), in Robert v. Board of County Commissioners of Brown County, 691 F. 3d 1211 (10th Cir. 2012), has shed some light on this issue that should help employers in deciding how to respond to employee leave requests under the ADA. The plaintiff, Ms. Robert, worked for Brown County supervising felony offenders. The essential functions of her job required that she perform many duties outside of her office such as performing drug screenings, ensuring compliance with court orders, testifying in court, and other “considerable fieldwork” including site visits under potentially dangerous circumstances. Robert was diagnosed with sacroiliac joint dysfunction, and because of severe pain in her back and hips eventually she could work only from home. Thus, she was unable to visit offenders, supervise drug and alcohol screenings or testify in court.

Following a surgery to treat her joint dysfunction, Robert exhausted her FMLA and sick and vacation leaves, but she still could not return to work. Neither she nor her doctor informed her employer as to when she could resume her job duties. Since she could not perform her job duties, the County terminated Robert’s employment. Among other claims, Robert alleged that her termination constituted discrimination under the ADA. The court disagreed. The court accepted that site visits and other out-of-office work were essential functions of Robert’s employment, but it stated that she would still be qualified to perform her job if she could have performed those duties with reasonable accommodation. The only possible reasonable accommodation in this case, however, would have been a leave of absence.

The court noted that there are two limits on the bounds of reasonableness for a leave of absence: (1) the employee must provide the employer an estimated date for when she can resume her essential duties, and (2) the leave request must assure the employer that the employee can perform the essential functions of her position in the “near future.” Though the court did not define “near future,” it cited to a case stating that a six-month leave request was too long to constitute reasonable accommodation. Here, Robert never provided any estimate as to when she could resume her fieldwork. Therefore, the only accommodation that would have allowed Robert to perform the essential functions of her position was an improper indefinite reprieve from her fieldwork functions. Thus, since Robert was not qualified to perform her duties, her discrimination claim failed.

Transfers to a Different Position as a Reasonable Accommodation

On September 7, 2012, the Seventh Circuit in EEOC v. United Airlines overruled two of its prior decisions (EEOC v. Humiston-Keeling (2000) and Mays v. Principi (2002) that together stood for the principle that employers could hire the most qualified applicant for a position, even if that meant passing over a disabled employee seeking the position because his disability precluded him from performing the essential functions of his current position. Going forward, employers in the Seventh Circuit will now be required to offer that vacant position to the disabled employee, unless it can show that doing so creates an undue hardship that renders mandatory reassignment unreasonable.

The dispute in United Airlines centered around a set of “reasonable accommodation” guidelines that the company used when evaluating transfer requests involving disabled employees. United’s guidelines provided that the transfer process was a competitive one, and that employees requesting a transfer as an accommodation would not automatically be placed into qualifying vacant positions. Instead, the disabled employee would receive preferential treatment, which included a “guaranteed” interview for the position and priority over similarly qualified applicants. Under these guidelines, however, a non-disabled applicant would receive the job if he or she was more qualified than a disabled employee seeking the accommodation.

In abandoning the standard it had followed since 2000, the Seventh Circuit concluded that the “ADA does indeed mandate that an employer appoint employees with disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to that employer.” While the existence of a seniority rule mandated by a collective bargaining agreement will likely satisfy the undue-hardship requirement, not all such provisions are created equal, and their language should be parsed before rejecting a transfer request out of hand in such a setting. In the future, employers in the Seventh (and Tenth or Washington, DC) Circuits may no longer rely on a “best applicant” policy when making decisions about transferring disabled employees to vacant positions.

The Employee’s Role in Requesting a Reasonable Accommodation

In yet another noteworthy decision, the Seventh Circuit held that a university was not liable for failing to accommodate a professor’s mental disorder, where the university reasonably tried to fulfill a request for office reassignment but the employee did not cooperate. In Hoppe v. Lewis University, 692 F.3d 833 (7th Cir. 2012), Elizabeth Hoppe requested that her office be relocated to accommodate her adjustment disorder. Both the initial letter that Hoppe presented from her doctor and a follow-up letter failed to specify a suitable campus location for Hoppe or the particular stressors that necessitated Hoppe’s relocation. Nevertheless, the university offered Hoppe four different office options, one of which she accepted but never used; she refused the remaining offices because they were in the same building as individuals whom she alleged heightened her anxiety, but her physician never specified a change of buildings or any location information at all. The court emphasized:

An employer can take no solace in its failure to engage in this process in good faith if what results is an unreasonable or inappropriate accommodation offer. And an employee who fails to uphold her end of the bargain – for example, by not “clarifying the extent of her medical restrictions” – cannot impose liability on the employer for its failure to provide a reasonable accommodation.[1]

In finding in favor of the university, the Seventh Circuit noted that the university offered Hoppe several options to change offices, despite having no specific details from her doctor about what steps were necessary to reasonably accommodate her disability. Further, the university had asked Hoppe’s doctor for specific information several times, to no avail. Therefore, the university did its part to participate in good faith in the ADA-required interactive process, and there was no evidence it did not offer Hoppe a reasonable accommodation.

Lessons for Employers

First, these cases emphasize that an employer need not shoulder the entire burden when trying to reasonably accommodate an employee with a disability; the employee has responsibilities as well. As noted in Hoppe, an employer need not offer an employee the precise accommodation he or she requests, if the employee does not clarify the extent of his or her medical restrictions. The employer must participate in good faith in an interactive process under the ADA to find a reasonable accommodation, but the employer’s obligation runs only so far. If an employee’s physician does not specify the employee’s restrictions or what type of accommodation is necessary, following up with the physician and working with the employee to find alternative options should protect an employer from liability if the employee later argues that the offered accommodations were unreasonable.

Second, an employer is not required to provide an open-ended leave of absence if an employee requests such an absence as an accommodation. Under Robert’sanalysis, an indefinite absence, especially when there is no assurance that the employee will be able to perform the essential functions of his or her position, is unreasonable as a matter of law. Under these circumstances, once an employee has exhausted other types of leave, if she cannot provide an estimate of when she can resume the essential duties of her position, a court is likely to uphold an employer’s decision to terminate her. The employee does not need to return to work at full capacity, but the employee must be able to perform the duties of her position with reasonable accommodation under the ADA.

Third, employers in the Seventh Circuit must now reassign qualified disabled employees who can no longer perform their original jobs to vacant positions, unless the employer can establish the existence of special circumstances that demonstrate undue hardship. While the seniority provisions of a collective bargaining agreement should satisfy this requirement, it remains to be seen what other special circumstances will suffice going forward. Employers should vigorously explore the possibility of reassignment with disabled employees and be sure that any positions discussed with and/or offered to the employee are documented.

Finally, these cases further emphasize the importance of detailed job descriptions. With or without accommodation, an employee must be able to perform the essential functions of his or her job. If the employer can pinpoint the essential functions of a job, both the employer and the employee will have an easier time engaging in the required interactive process for establishing reasonable accommodations. Further, in the event an employee cannot perform the essential functions of a job, an employer is further protected in a lawsuit if it has articulated the essential functions of a position ahead of time.If you have any questions about this article or the ADA in general, please contact Alan Koral at +1 (212) 407 7750, Andrea Lewis at +1 (312) 609 7739, or any other Vedder Price attorney with whom you have worked.

[1]   Id. at 840 (citations omitted)

© 2012 Vedder Price

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:

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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

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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