Tag: employers

The Supreme Court Rules in Favor of Same-Sex Marriage: Employer Next Steps

What should employers be thinking about in the benefits arena now that the US Supreme Court has ruled in Obergefell v. Hodges that all states must issue marriage licenses to same-sex couples and fully recognize same-sex marriages lawfully performed out of state?

We suggest that employers consider whether the following plan design changes, health plan amendments, and/or administrative modifications are necessary:

  • Review employee benefit plans’ definition of “spouse” and consider whether the Court’s decision will affect the application of the definition (e.g., if the plan refers to “spouse” by reference to state laws affected or superseded by the Obergefell decision). Qualified pension and 401(k) plans generally conformed their definitions of spouse to include same-sex spouses post-Windsor to comply with Internal Revenue Code provisions that protect spousal rights in such plans, but health and welfare plans may not have been so conformed.

  • Communicate any changes in the definition of spouse or eligibility for benefits to employees and beneficiaries, as applicable.

  • Update plan administration and tax reporting to ensure that employees are not treated as receiving imputed income under state tax law for any same-sex spouses who are covered by their employer-sponsored health and welfare plans (to the extent that coverage for opposite-sex spouses would otherwise be excluded from income).

  • If an employer currently covers unmarried domestic partners under its benefit plans, it may want to consider whether to eliminate coverage for such domestic partners on a prospective basis (and therefore only allow legally recognized spouses to have coverage). Employers that make that type of change also will need to determine the timing and communication of such a change.

  • Employers with benefit plans that treat same-sex spouses differently than opposite-sex spouses should consider whether to maintain that distinction. Even though nothing in Obergefell expressly compels employers to provide the same benefits to same-sex and opposite-sex spouses, and self-insured Employee Retirement Income Security Act (ERISA) health and welfare plans are not subject to state and municipal sexual orientation discrimination prohibitions, we believe these types of plan designs are likely to be challenged.

ARTICLE BY Andy R. Anderson & Lindsay M. Goodman of Morgan, Lewis & Bockius LLP

Copyright © 2015 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

Employer Next Steps Post-Affordable Care Act Ruling

What should employers be thinking about now that the US Supreme Court has upheld the Affordable Care Act’s (ACA’s) premium assistance structure in King v. Burwell? Because the ACA, as we know it today, will remain in place for the foreseeable future, employers should continue to plan for and react to the numerous and detailed ACA requirements, including the following:

  • Determining their ACA full-time employee population—including whether contingent workers or independent contractors may be deemed to be common-law employees for ACA purposes.

  • Analyzing whether all ACA full-time employees and their dependents are being offered affordable ACA-compliant coverage at the right time.

  • Preparing for the exceedingly complicated 2015 ACA employer Shared Responsibility and individual mandate reporting due in early 2016 on Forms 1095-B and 1095-C and the associated transmittal forms.

  • Capturing ACA health plan design changes in plan documents, summary plan descriptions, open enrollment material, and required notices to respond to participant needs, lawsuits, and growing federal agency audits.

  • Paying the Patient-Centered Outcomes Research Institute fee in July.

  • Conducting the necessary plan design analysis and preparing for any changes necessary to avoid the Cadillac Tax in 2018.

ARTICLE BY Andy R. Anderson & Kimberly J. Boggs of Morgan, Lewis & Bockius LLP

Copyright © 2015 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

EEOC Sues Wal-Mart for Disability Discrimination And Harassment: Agency Says Retailer Denied Accommodations to Disabled Cancer Survivor

Agency Says Retailer Denied Accommodations to and Harassed a Disabled Cancer Survivor

CHICAGO – Wal-Mart Stores, Inc. violated federal law by failing to provide reasonable accommodations to an employee at its Hodgkins, Ill., store who was disabled by bone cancer and failing to stop harassment of the employee, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit it filed yesterday.

According to Julianne Bowman, the EEOC’s district director in Chicago, who managed EEOC’s pre-suit administrative investigation, the Walmart store initially agreed to comply with employee Nancy Stack’s request that the company provide a chair in her work area in the fitting room and limit her scheduled work hours because treatment for bone cancer in her leg limited her ability to walk and stand. After complying with her scheduling accommodation for many months, the store revoked it for no reason. And the store did not ensure that a chair was in Stack’s work area, at one point telling her that she had to haul a chair from the furniture department every day, which was of course hard for her to do given her disability. Finally, the store transferred Stack from the fitting room to a greeter position, which did not comply with her restrictions on standing.

To add insult to injury, Bowman added, a co-worker harassed Stack by calling her names like “cripple” and “chemo brain,” imitated her limp, and removed or hid the chair the employee needed in her work area. Stack complained repeatedly, but the store took no action to stop the co-worker’s harassment.

Such alleged conduct violates the Americans with Disabilities Act (ADA), which prohibits discrimination on the basis of disability, which can include denying reasonable accommodations to disabled employees and subjecting disabled employees to a hostile work environment.

The EEOC filed suit after first attempting to reach a pre-litigation settlement through its conciliation process. The case, EEOC v. Wal-Mart Stores, Inc., Civil Action No. 15-5796, was filed in U.S. District Court for the Northern District of Illinois, Eastern Division, and was assigned to U.S. District Judge Sharon Coleman. The government’s litigation effort will be led by Trial Attorney Ann Henry and supervised by EEOC Supervisory Trial Attorney Diane Smason.

“It’s hard to believe a retailer the size of Wal-Mart could not manage to consistently provide such a simple accommodation as a chair,” said John Hendrickson, the regional attorney for EEOC’s Chicago District Office. “Telling a disabled employee that she needs to drag a chair across the store every day is no accommodation at all. Employers have to provide reasonable accommodations unless doing so would be an undue hardship. EEOC is aware of no hardship that required Wal-Mart to suddenly change Stack’s schedule, deny her the use of a chair, and transfer her out of the fitting room where she had performed her job well for years.”

EEOC Trial Attorney Ann Henry commented, “No employee should have to go to work and face mocking and name calling because she had cancer. Employers who know about such vile harassment in their workplace have an obligation to stop it. Wal-Mart did not do that here, and the EEOC will seek to hold the company liable for that violation.

In July 2014, the EEOC filed a lawsuit against Wal-Mart alleging that it violated the ADA by firing an intellectually disabled employee at a Rockford Walmart store after it rescinded his workplace accommodation.

The EEOC’s Chicago District Office is responsible for processing discrimination charges, administrative enforcement and the conduct of agency litigation in Illinois, Wisconsin, Minnesota, Iowa and North and South Dakota, with Area Offices in Milwaukee and Minneapolis.

The EEOC is responsible for enforcing federal laws prohibiting employment discrimination. Further information about the EEOC is available on its website at www.eeoc.gov.

This press release originally appeared in the EEOC Newsroom. 

ARTICLE BY U.S. Equal Employment Opportunity Commission
© Copyright U.S. Equal Employment Opportunity Commission

Colorado Employers Can Fire Workers for Off-Duty Medical Marijuana Use

The Colorado Supreme Court ruled on June 15, 2015, that an employee can be fired for using medical marijuana even though the drug is legal in Colorado and the employee was not at work at the time. The unanimous decision upholds lower courts’ opinions that an employer has the right to terminate an employee for violating a company’s zero-tolerance policy for controlled substances, despite a Colorado law protecting employees from being punished for legal, off-duty activities.

This decision is significant because it confirms an employer’s right to terminate an employee who violates a company’s drug policy, notwithstanding Colorado’s legalization of marijuana. Colorado is one of only four states to date to legalize marijuana for both medical and recreational use. The Court’s ruling, which is similar to a California decision, provides support and guidance for non-Colorado employers who may have employees travelling to Colorado for work or recreation. Other states are in various stages of considering legalizing medical and/or recreational marijuana.

At issue before the state’s highest court was a suit filed by Brandon Coats, a former employee of Dish Network, LLC, whose employment had been terminated by Dish after a random drug test revealed the presence of THC, the psychoactive chemical in marijuana, in Coats’ system. Coats was a registered medical marijuana patient who consumed medical marijuana at home, and after work, and in accordance with his license and Colorado state law.

In his suit against Dish for wrongful termination, Coats argued that the company violated Colorado’s “lawful activities statute,” which makes it an unfair and discriminatory labor practice to discharge an employee based on the employee’s “lawful” outside-of-work activities. Dish filed a motion to dismiss, arguing that Coats’ medical marijuana use was not lawful for purposes of the statute under either federal or state law. The trial court granted Dish’s motion and dismissed Coats’ claim.

The Colorado Court of Appeals, in a split decision, affirmed the lower court’s dismissal of Coats’ lawsuit, but on a different ground. It found that because the use of marijuana is prohibited under the federal Controlled Substances Act, Coats’ conduct was not a “lawful activity” protected by the Colorado statute. The Colorado Supreme Court agreed with the Court of Appeals that “lawful” for purposes of Colorado’s “lawful activities statute” means activities that comply with applicable law, including state and federal law. Because Coats’ use of medical marijuana was unlawful under federal law, it was not protected under the Colorado statute.

ARTICLE BY Kimberly A. Smiley, Bradley M. Bakker, John P. Hasman, Jeremy M. Brenner, Shelley I. Ericsson & Bradley S. Byars of Armstrong Teasdale
Eric Walters and Calvin Matthews also contributed to this article.
© Copyright 2015 Armstrong Teasdale LLP. All rights reserved

New York City Council Passes Ban-the-Box Legislation

Joining many other jurisdictions, the New York City Council has passed the Fair Chance Act, an ordinance restricting when employer inquiries about applicants’ criminal histories may be made during the application process and imposing significant obligations on employers who intend to take action based on such information.

The Council passed the ordinance on June 10, 2015. The ordinance will become effective 120 days after receiving Mayor Bill de Blasio’s signature, which is expected shortly, as the Mayor has expressed support for the legislation.

Like other ban-the-box laws, the ordinance generally prohibits an employer with at least four employees from making an inquiry about an applicant’s pending arrest or criminal conviction record until after a conditional offer of employment has been extended. Limited exceptions are provided.

Under the ordinance’s definition of inquiry, employers are prohibited not only from asking an applicant prohibited questions — verbally or in writing — but also are prohibited from searching publicly available sources to obtain information about an applicant’s criminal history.

Exceptions

The main exception applies when an employer, under applicable federal, state, or local law, is required to conduct criminal background checks for employment purposes or to bar employment in a particular position based on criminal history.

Other exceptions remove prospective police officers, peace officers, and law enforcement agency and other law-enforcement-related employees from coverage. Therefore, these are unlikely to affect positions and employers in the private sector.

Notification Process

Employers who make inquiries into an applicant’s criminal history after a conditional offer of employment has been extended and determine that the information warrants an adverse employment action must follow a rigorous process. Specifically, employers must:

  1. Provide the applicant with a “written copy of the inquiry” which complies with the City’s Commission on Human Right’s required (but not-yet-issued) format;

  2. Perform the analysis required by Article 23(a) of the New York Correction Law, “Licensure and Employment of Persons Previously Convicted of One or More Criminal Offenses”;

  3. Provide the applicant with a copy of its analysis, also in a manner which complies with the Commission’s required format, which includes supporting documents and an explanation of the employer’s decision to take an adverse employment action; and

  4. Allow the applicant at least three business days to respond to the written analysis by holding the position open during this time.

Of course, for employers who conduct background checks through consumer reporting agencies, if such information is obtained from a background check, the above process must be integrated with the Fair Credit Reporting Act (FCRA) pre-adverse action requirements.

Supporters view the ordinance as ending discrimination against applicants with low-level arrests and providing assurance that applicants will be considered solely based on their qualifications. Critics see the ordinance as adding to the already-onerous mandates imposed on employers in New York City by favoring ideology over practicality, sending a bad message to employers doing business — or desiring to do business — in New York City.

The one undeniable fact is that all covered New York City employers must develop measures to ensure compliance with the ordinance.

ARTICLE BY Richard Greenberg, Daniel J. Jacobs, Susan M. Corcoran, Christopher M. Valentino & Ellen Bandel of Jackson Lewis P.C.
Jackson Lewis P.C. © 2015

Employer’s Use of DNA Test to Catch Employee Engaging in Inappropriate Workplace Behavior Violates Federal Law

If someone continually, yet anonymously, defecated on the floor of your workplace, you’d probably want to use any and all legal means at your disposal to identify and discipline the perpetrator.  Your methods might include surveillance or perhaps some form of forensic or other testing to link the offensive conduct to a specific individual.  You would probably not be overly concerned that your efforts to rid the workplace of this malefactor might give rise to a discrimination claim, but is that really a safe assumption?

Background

In a case exemplifying the gentility of labor-management relations, a Georgia federal court grappled with how far an employer may go in this situation.  In Lowe v. Atlas Logistics Group Retail Services, LLC, (N.D.Ga. May 5, 2015), the employer, Atlas Logistics Group Retail Services (Atlanta), LLC, which provides long-haul transportation and storage services for the grocery industry, discovered in 2012 that one or more employees had been using a common area in one of its warehouses as a lavatory.  As part of its investigation into this matter, the company retained the services of a DNA testing lab and requested cheek swabs from two employees it considered suspects so that it could compare their DNA with that of the mystery defecator.  After Atlas determined that neither employee was responsible for the unwelcome contributions to its workplace, the employees filed a lawsuit alleging that the company violated the Genetic Information Nondiscrimination Act (GINA) by requesting and requiring them to provide genetic information.

GINA prohibits discrimination on the basis of genetic characteristics and makes it unlawful for an employer to request, require or purchase genetic information with respect to an employee.

The Court Finds Atlas Violated GINA

The court held that Atlas’ argument that GINA only prohibited genetic testing that revealed an individual’s propensity for disease – which the test in this case did not do – was inconsistent with the statute’s text and legislative history as well as the applicable EEOC regulation.  In the court’s view, this argument “render[ed] other language in GINA superfluous.”  In particular, the court noted that the statute contained specific exceptions permitting certain testing that did not involve an individual’s propensity for disease, and if testing revealing a propensity for disease were the only prohibited testing, then those exceptions would not have been necessary.  The court further rejected Atlas’ argument that GINA’s legislative history demonstrated an intent to limit violations to testing that revealed a propensity for disease, explaining that although a group of senators favored this interpretation during the legislative debate, all of the evidence indicated that Congress chose to reject this view in favor of a broad construction.  Finally, the court held that an EEOC regulation listing eight examples of “genetic tests” did not support Atlas’ narrow definition of that term because the list included testing that also did not relate to one’s propensity for disease and, therefore, “would go beyond the scope of the statute” if the law were as narrow as Atlas claimed.

Conclusion

This case’s distasteful facts, which will undoubtedly remind many human resource specialists how coarse employee relations challenges often are in practice, should not distract employers that currently perform DNA tests from the fact that GINA may apply more broadly than some initially believed.  Although the decision should not have a significant impact on the narrow range of situations where workplace DNA testing is a legitimate practice, such as those involving health and safety concerns, it should serve as notice to employers investigating misconduct that they should find methods other than DNA testing to identify culpable employees.

ARTICLE BY George M. Patterson of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2015 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Supreme Court Calls Out the EEOC for Arguing It Alone Can Determine Whether It Followed the Law

We suggested last year that if you felt paranoid that the federal agencies seemed out to get employers, perhaps it was not paranoia at all. The Equal Employment Opportunity Commission’s (EEOC) spate of recent lawsuits — or at least its apparent haste to sue employers and make examples out of them over such things as wellness programs (even before issuing proposed guidance on what was permissible relative to such well-intentioned programs) — clearly did not help with this concern. However, a decision by the Supreme Court last week tightened the reins on the EEOC and reminded it that, in seeking to pursue litigation against employers for violations of law, the Commission must follow the law itself and answer to claims that it has failed to do so.

Pursuant to Title VII, the EEOC must attempt to eliminate unlawful employment practices through “informal methods of conference, conciliation, and persuasion” before suing an employer for employment discrimination. Employers may feel this does not always happen because the EEOC has lately seemed more intent on filing suit (and getting press attention for its agenda…) than working things out. Consequently, employers assert they receive insufficient information from the EEOC and are forced to make a decision on a take-it-or-leave-it basis which, if wrong, can have costly consequences. The Commission has stood firm on its use of federal muscle by asserting the courts cannot review whether it has fulfilled its pre-suit conciliation obligation; only the EEOC can review whether the EEOC can do what the EEOC is supposed to do (which seems imminently fair, right?). The Supreme Court has just said otherwise.

The case arose from litigation filed by the EEOC in 2011 on behalf of a class of female applicants not hired by the employer as miners. The employer raised as a defense the argument that the EEOC had failed to conciliate in good faith prior to filing suit, based on two letters sent by the Commission. The first informed the employer that a finding of reasonable cause had been made and “[a] representative of this office will be in contact with each party in the near future to begin the conciliation process.” The second letter declared that conciliation had “occurred” and failed, though it appears that the EEOC’s actual conciliation efforts were thin at best.

The EEOC argued that its conciliation efforts were immune from court review and that, if the courts had the power to review such efforts, it could only review its actions based on the two letters. In response, the court noted the obvious point that without court review, “the Commission’s compliance with the law would rest in the Commission’s hands alone.” Justice Elena Kagan, writing for the court, also rejected the EEOC’s second argument, stating that “[c]ontrary to its intimation, those letters do not themselves fulfill the conciliation condition: The first declares only that the process will start soon, and the second only that it has concluded. . . . to treat the letters as sufficient — to take them at face value, as the Government wants — is simply to accept the EEOC’s say-so that it complied with the law.”

The court then instructed the EEOC on what it must do to follow Title VII: 1) give the employer notice of the “specific allegation,” including “what the employer has done and which employees (or class of employees) have suffered as a result”; and 2) “try to engage the employer in some form of discussion (written or oral), to give the employer an opportunity to remedy the allegedly discriminatory practice.” Justice Kagan then asserted that while judicial review is limited exclusively to whether or not the EEOC has fulfilled these requirements, if the employer provides credible evidence that the EEOC did not fulfill the requirements then a court must conduct the fact finding necessary to decide that limited dispute. If the evidence shows a failure to properly conciliate, the appropriate remedy is to order the EEOC to undertake the mandated efforts to obtain voluntary compliance. Accordingly, while stays of cases may be entered until the EEOC is given the opportunity to do what it was supposed to have done, it is unlikely that any case will be dismissed for failure to meet the pre-suit requirements.

This decision is absolutely a win for employers, as it calls the EEOC out for its improper use of federal muscle through litigation and make an example of an employer without first giving it a legitimate opportunity to assess its options. While the decision will not put employers in control, or even on equal standing, with the EEOC prior to suit, it does create leverage to insist the EEOC meet the minimum requirements. As a practical matter, this may cause the EEOC to be more forthcoming, and cooperative, at least when pressed. And employers should do exactly that if necessary and carefully document circumstances when it feels the EEOC has not done what it must.

Authored by: Gregory D Snell of Foley & Lardner LLP

© 2015 Foley & Lardner LLP

The New Illinois Secure Choice Savings Program: Considerations for Employers

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

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

Scope of Program

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

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

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

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

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

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

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

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

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

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

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

What Should Employers in Illinois Do Now?

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

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

Effect on Employers Based in Other States

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

The Year in Social Media: Four Big Developments from 2014

Barnes Thornburg

As social networking has become entrenched as a tool for doing business and not just a pastime of our social lives, employers, government agencies, and even academia have taken big steps in 2014 to define how social media can and cannot, or should and should not, be used. Below is a summary of some of the big developments in social media in the workplace this year.

The EEOC Turns Its Attention to Social Media

The Equal Employment Opportunity Commission has turned its attention toward social networking, meeting in March to gather information about social media use in the workplace. To no surprise, the EEOC recognized that although using social media sites such as LinkedIn could be a “valuable tool” for identifying employment candidates, relying on personal information found on social networks, such as age, race, gender, or ethnicity, to make employment decisions is prohibited.

More controversially, the EEOC expressed concern that employers’ efforts to access so-called “private” social media communications in the discovery phase of discrimination lawsuits might have a “chilling effect” on employees filing discrimination cases. However, it is unclear how the EEOC might prevent employers from getting this information if it is relevant to a plaintiff’s claims. It remains to be seen what steps the EEOC might take to address this “chilling effect.”

 The NLRB Continues to Refine Its Position on Social Media Policies

The National Labor Relations Board has spent the past few years attacking social media policies as overbroad, but perhaps a shift in that policy is at hand. This summer, an NLRB administrative law judge upheld a social media policy that discouraged employees from posting information on social networks about the company or their jobs that might create morale problems. The ALJ held that the policy did not prohibit job-related posts, but merely called on employees to be civil in their social media posts to avoid morale problems. The ALJ’s finding is at odds with recent NLRB decisions, which have gone much further to limit any policies that might affect employees’ rights under the National Labor Relations Act. While it is unclear whether this holding is an outlier or a shift in the NLRB’s approach, it brings with it some hope that the NLRB may be moving toward a more pro-employer stance.

States Continue to Limit Employers’ Access to Employees’ Social Media Accounts

State governments also are getting involved with social media regulation. In April, Wisconsin became the newest state to pass legislation aimed at protecting employees’ social media accounts, passing the Social Media Protection Act. The Act bars employers, schools, and landlords from requiring their employees, students, and tenants to produce their social media passwords. Significantly, the Act does not ban them from viewing social media posts that are publicly accessible.

Wisconsin was not alone in enacting legislation to protect social media passwords this year, as Louisiana, Maine, New Hampshire, Oklahoma, Rhode Island and Tennessee enacted similar laws during 2014 and 12 other states did so in previous years. While not every state has passed such legislation, it is clear that state governments increasingly will not tolerate employers asking employees or applicants for access to their private social networking accounts. Employers should be mindful of their state laws before seeking social media information that might be protected.

Academia is Drawing Its Own Conclusions Regarding Social Media in the Workplace

Federal and state governments are not the only institutions weighing the implications of social media in the workplace. University researchers also are studying employers’ stances on social media – a North Carolina State University study concluded that applicants tend to have a lower opinion of employers that looked at their social media profiles before making a hiring decision, and a Carnegie Mellon University study concluded that employers risked claims of discrimination by reviewing applicants’ social media profiles, based on employers being more likely to screen out candidates based on their personal information such as ethnicity.

While these studies weigh against employers searching applicants’ social media before making hiring decisions, there is certainly logic to the contrary, as employers are entitled to view publicly-accessible information about their applicants, and thorough employers will want to learn as much as they can to do their due diligence in making important hiring decisions.

Laws, best practices, and public opinion regarding social media in the workplace will continue to evolve in 2015. Employers would be wise to look at the most recent developments before making any major decisions affecting their social media policies and practices.

ARTICLE BY

Douglas M. Oldham
OF
Barnes & Thornburg LLP

The Affordable Care Act—Countdown to Compliance for Employers, Week 1: Going Live with the Affordable Care Act’s Employer Shared Responsibility Rules on January 1, 2015

Mintz Levin Law Firm

Regulations implementing the Affordable Care Act’s (ACA) employer shared responsibility rules including the substantive “pay-or-play” rules and the accompanying reporting rules were adopted in February.  Regulations implementing the reporting rules in newly added Internal Revenue Code Sections 6055 and 6056 came along in March. And draft reporting forms (IRS Forms 1094-B, 1094-C, 1095-B and 1095-C) and accompanying instructions followed in August.

With these regulations and forms, and a handful of other, related guidance items (e.g., a final rule governing waiting periods), the government has assembled a basic—but by no means complete—compliance infrastructure for employer shared responsibility. But challenges nevertheless remain. Set out below is a partial list of items that are unresolved, would benefit from additional guidance, or simply invite trouble.

1.  Variable Hour Status

The ability to determine an employee’s status as full-time is a key regulatory innovation. It represents a frank recognition that the statute’s month-by-month determination of full-time employee status does not work well in instances where an employee’s work schedule is by its nature erratic or unpredictable. We examined issues relating to variable hour status in previous posts dated April 14, July 20, and August 10.

An employee is a “variable hour employee” if—

Based on the facts and circumstances at the employee’s start date, the employer cannot determine whether the employee is reasonably expected to be employed on average at least 30 hours of service per week during the initial measurement period because the employee’s hours are variable or otherwise uncertain.

The final regulations prescribe a series of factors to be applied in making this call. But employers are having a good deal of difficulty applying these factors, particularly to short-tenure, high turnover positions. While there are no safe, general rules that can be applied in these cases, it is pretty easy to identify what will not work: classification based on employee-type (as opposed to position) does not satisfy the rule. Thus, it is unlikely that a restaurant that classifies all of its hourly employees, or a staffing firm that classifies all of its contract and temporary workers, as variable hour without any further analysis would be deemed to comply. But if a business applies the factors to, and applies the factors by, positions,  it stands a far greater chance of getting it right.

2.  Common Law Employees

We addressed this issue in our post of September 3, and since then, the confusion seems to have gotten worse. Clients of staffing firms have generally sought to take advantage of a special rule governing offers of group health plan coverage by unrelated employers without first analyzing whether the rule is required.

While staffing firms and clients have generally been able to reach accommodation on contractual language, there have been a series of instances where clients have sought to hire only contract and temporary workers who decline coverage in an effort to contain costs. One suspects that, should this gel into a trend, it will take the plaintiff’s class action bar little time to respond, most likely attempting to base their claims in ERISA.

3.  Penalties for “legacy” HRA and health FSA violations

A handful of promoters have, since the ACA’s enactment, offered arrangements under which employers simply provided lump sum amounts to employees for the purpose of enabling the purchase of individual market coverage. These schemes ranged from the odd to the truly bizarre. (For example, one variant claimed that the employer could offer pre-tax amounts to employees to enroll in subsidized public exchange coverage.) In a 2013 notice, the IRS made clear that these arrangements, which it referred to as “employer payment plans,” ran afoul of certain ACA insurance market requirements. (The issues and penalties are explained in our June 2 post.) Despite what seemed to us as a clear, unambiguous message, many of these schemes continued into 2014.

Employers that offered non-compliant employer-payment arrangements in 2014 are subject to penalties, which must be self-reported. For an explanation of how penalties might be abated, see our post of April 21.

4.  Mergers & Acquisitions

While the final employer shared responsibility regulations are comprehensive, they fail to address mergers, acquisitions, and other corporate transactions. There are some questions, such as the determination of an employer’s status as an applicable large employer, that don’t require separate rules. Here, one simply looks at the previous calendar year. But there are other questions, the answers to which are more difficult to discern. For example, in an asset deal where both the buyer and seller elect the look-back measurement method, are employees hired by the buyer “new” employees or must their prior service be tacked? The IRS invited comments on the issue in its Notice 2014-49.

Taking a page from the COBRA rules, the IRS could require employers to treat sales of substantial assets in a manner similar to stock sales, in which case buyers would need to carry over or reconstruct prior service. While such a result might be defensible, it would also impose costly administrative burdens. Currently, this question is being handled deal-by-deal, with the “answers” varying in direct proportion to the buyer’s appetite for risk.

5.  Reporting

That the ACA employer reporting rules are in place, and that the final forms and instructions are imminent should give employers little comfort. These rules are ghastly in their complexity. They require the collection, processing and integration of data from multiple sources—payroll, benefits admiration, and H.R., among others. What is needed are expert systems to track compliance with the ACA employer shared responsibility rules, populate and deliver employee reports, and ensure proper and timely delivery of employee notices and compliance with the employer’s transmittal obligations. These systems are under development from three principal sources: commercial payroll providers, national and regional consulting firms, and venture-based and other start-ups that see a business opportunity. Despite the credentials of the product sponsors, however—many of which are truly impressive—it is not yet clear in the absence of actual experience that any of their products will work. It is not too early for employers to contact their vendors and seek assurances about product delivery, reliability, and performance.