Tag: Labor Law

Complying with the Affordable Care Act’s Exchange Notice Requirement

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The Patient Protection and Affordable Care Act (the “Act”) amends the Fair Labor Standards Act (“FLSA”) to require employers of all sizes to provide their employees a notice of the availability of coverage through public health insurance exchanges by March 1, 2013.1 In January of this year, the U.S. Department of Labor, the agency charged with administering the FLSA, announced a delay in the effective date of the notice to the “late summer or fall of 2013.”2 In Technical Release No. 2013-02 (entitled, “Guidance on the Notice to Employees of Coverage Options under Fair Labor Standards Act §18B and Updated Model Election Notice under the Consolidated Omnibus Budget Reconciliation Act of 1985”),3 the Labor Department provided details about the FLSA exchange notice requirement. The effective date of the requirement is now October 1, 2013 for current employees or within 14 days of an employee’s start date for employees hired after that date.

Background

The FLSA exchange notice must include a description of the existence of, and services provided by, public exchanges. That Act further requires that the notice:

  • Explain how the employee may be eligible for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements;
  • Inform employees that if they purchase a qualified health plan through the exchange, then they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of the employer contribution to employer-provided coverage may be excludable for federal income tax purposes;
  • Include contact information for customer service resources within the exchange, and an explanation of appeal rights;
  • Meet certain accessibility and readability requirements; and
  • Be in writing.

The Department has provided two model notices — one for employers who offer a health plan4 to some or all employees and another for employers who do not.5 The model notice for employers who offer a health plan includes two parts. Part A (entitled “General Information”) tracks the requirement of the statute. Part B (entitled, “Information About Health Coverage Offered by Your Employer”) solicits information about the employer’s group health plan coverage that is intended to assist employees who apply for subsidized coverage under a group health plan product offered through the exchange. Part B includes an optional section that asks the employer to disclose whether the health care coverage offered meets the minimum value standard and whether the cost of coverage is intended to be affordable. While not required, employers may decide to complete this part of the notice in order to avoid having to respond to inquiries from exchanges seeking to process an individual’s application.

The notice requirement applies to all employers who are subject to the FLSA. In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies. The FLSA also specifically covers the following entities, regardless of dollar volume of business: hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and federal, state and local government agencies. (For an explanation of the reach of the FLSA, please see http://www.dol.gov/compliance/guide/minwage.htm.)

Timing and Delivery of Notice

Under the heading “Timing and Delivery of Notice,” Technical Release No. 2013-02 provides as follows:

Employers are required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge.

The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.

(Emphasis added).

The reference to “employees” means all employees, full-time and part-time, but there is no need to provide notices to dependents. Nor does the notice have to be provided to former employees or other individuals who are not employees but may be eligible for coverage (e.g., under COBRA).

The question of who, exactly, is an employee is an important one. The Act’s exchange notice requirement amends the FLSA. Thus, while the Internal Revenue Code and ERISA look to the “common law” standard, applicable court precedent interpreting the FLSA’s use of the term “employee” relies on the broader, “economic realities” test. Accordingly, an individual is an “employee” for FLSA purposes if he or she is economically dependent on the business for which he or she performs personal services. Thus, individuals properly classified as independent contractors for tax purposes may nevertheless be employees (to whom notice must be provided) for FLSA purposes.

Delivery can be in hand or by first class mail. Delivery may also be made electronically under the Department of Labor’s “electronic disclosure safe harbor at 29 CFR 2520.104b-1(c).” The regulations at 29 CFR 2520.104b-1 provide a safe harbor under which electronic delivery is permitted to employees who have the ability to effectively access documents furnished in electronic form at any location where the employee is reasonably expected to perform duties as an employee and with respect to whom access to the employer’s or plan sponsor’s electronic information system is an integral part of those duties. Under the safe harbor, other individuals may also opt into electronic delivery.

Enforcement

The Act does not appear to impose any separate penalty for ignoring the exchange notice requirement. The FLSA authorizes administrative actions, civil suits and criminal prosecutions for violations of pre-existing FLSA sections, but not, it seems, for this requirement. This does not mean, of course, that noncompliance is a good idea or even a viable option. The lack of penalties does not translate into a lack of consequences. Plan sponsors still have a fiduciary obligation to be forthcoming with plan participants and beneficiaries. (This situation is similar to the rules governing the distribution of summary plan descriptions — while not technically required, there are many good reasons to comply.)

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U.S. Department of Labor (DOL) Clarifies Family and Medical Leave Act (FMLA) Leave Entitlement for Same-Sex Spouses

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In the wake of the Supreme Court’s Windsor decision, employers should review and, if necessary, revise their FMLA policies and procedures to ensure compliance.

The U.S. Department of Labor (DOL) recently clarified that same-sex spouses are now covered by the Family and Medical Leave Act (FMLA) to the extent that an employee’s marriage is recognized in the state in which the employee resides. This clarification, which follows the U.S. Supreme Court’s decision in United States v. Windsor,[1] is consistent with the existing FMLA regulatory language defining a “spouse” for purposes of FMLA coverage.

The DOL did not issue any new formal, stand-alone guidance but instead revised several existing FMLA guidance documents to remove references to the Defense of Marriage Act (DOMA). It also affirmatively stated in a newly released Field Operations Handbook section on the FMLA that “[s]pouse means a husband or wife as defined or recognized under state law for purposes of marriage in the State where the employee resides, including common law marriage and same sex marriage.”

Moving forward, FMLA spousal leave will only be available to employees who reside in a state that recognizes same-sex marriage, given that the existing FMLA regulatory language tied spousal coverage to the place of residence prior to the Windsor decision. However, the U.S. Office of Personnel Management (OPM), which has jurisdiction over FMLA rights for federal employees, recently issued post-Windsor guidance that extends FMLA leave rights to the spouses of federal employees without regard to states of residence.[2] OPM’s approach could eventually be followed by DOL for private sector employees and those employees otherwise covered by DOL rules but likely would require regulatory changes that would involve a notice and comment period.

It is worth noting that, while DOL’s clarification reflects a general increase in federal FMLA leave rights available to same-sex couples, in some circumstances, the availability of FMLA leave rights could mean a decrease in a given employee’s overall leave entitlement. For example, same-sex spouses residing in states recognizing same-sex marriage will now be subject to the FMLA’s restrictions on the combined amount of leave that spouses working for the same employer can use in certain circumstances. Similarly, an employee might have been entitled pre-Windsor to leave pursuant to state (but not federal) law to care for a same-sex spouse, which meant that the employee’s state and federal leave entitlements could not be exhausted concurrently.

Conclusion

In light of DOL’s updated guidance, employers should make sure that their FMLA policies allow spousal leave for employees in a same-sex marriage that is lawful in the state in which the employee resides. Employers, however, will need to think carefully about how they will administer such policies to avoid both employee relations issues and sexual orientation discrimination claims. For example, if an employer does not request documentation from an employee in an opposite-sex marriage as to whether the employee’s marriage is recognized in the state in which he or she resides, issues may arise if this information was requested of an employee in a same-sex marriage. While some employers may choose simply to grant FMLA leave to all employees regardless of domicile, employers need to be aware that such time may not be recognized as statutory FMLA leave. Employers should also pay close attention to future developments in this area as more states consider recognizing same-sex marriages.

[1]. United States v. Windsor, 133 S. Ct. 2675 (2013).

[2]. See U.S. Office of Personnel Admin., Benefits Administration Letter No. 13-203, Coverage of Same-Sex Spouses (July 17, 2013).

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First Post-Supreme Court Defense of Marriage Act (DOMA) Case Rules in Favor of Same-Sex Spouse

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In one of the first post-Supreme Court DOMA cases, the Eastern District of Pennsylvania, applying Illinois state law, held that the surviving same-sex spouse of a deceased participant in an employer sponsored pension plan was entitled to the spousal death benefit offered under the plan. See Cozen O’Connor, P.C. v. Tobits, Civil Action No. 11-0045; 2013 WL 3878688 (E.D. Pa., July 29, 2013).

This case is significant because it is the first case after the Supreme Court’s June 26, 2013 decision in United States v. Windsor, 133 S. Ct. 2675 (2013) to grapple with choice of law in determining whether a marriage is valid for purposes of obtaining spousal benefits under an ERISA-covered plan. While Windsor ruled that Section 3 of DOMA defining marriage only as between persons of the opposite sex unconstitutional for purposes of applying federal law, it did not address or invalidate Section 2, which permits states to decline to recognize same-sex marriages performed in other states.

Case Background

In 2006, Sarah Farley and Jean Tobits were married in Canada. Shortly after they were married, Ms. Farley was diagnosed with cancer, and she died in 2010. At the time of her death, Ms. Farley was employed by the law firm of Cozen O’Connor and a participant in the firm’s profit sharing plan (the Plan). The Plan provided that a participant’s surviving spouse would receive a death benefit if the participant died before the participant’s retirement date. If the participant was not married or the participant’s spouse waived his or her right to the death benefit, the participant’s designated beneficiary would be entitled to the death benefits. The Plan defined “Spouse” as “the person to whom the Participant has been married throughout the one-year period ending on the earlier of (1) the Participant’s annuity starting date or (2) the date of the Participant’s death.”

Ms. Farley’s parents and Ms. Tobits both claimed a right to the Plan’s death benefits. Ms. Farley’s parents claimed that they had been designated as the beneficiaries, but it was undisputed that Ms. Tobits had not waived her rights to the death benefits. Cozen O’Connor filed an interpleader action in the Eastern District of Pennsylvania asking the court to determine who was entitled to the benefits. Therefore, the case focused on whether Ms. Tobits qualified as a “Spouse” under the Plan and thus was entitled to the death benefits.

The Court’s Ruling

The court noted that Windsor “makes clear that where a state has recognized a marriage as valid, the United States Constitution requires that the federal laws and regulations of this country acknowledge that marriage” irrespective of whether the marriage is between a same-sex couple or a heterosexual couple. With Windsor’s emphasis on states’ rights to define marriage, lower courts are left with the complicated task of deciding which state law applies when determining whether a same-sex spouse is entitled to benefits under federal law in those instances, as in Cozen, where multiple jurisdictions with different laws on same-sex marriage are implicated.

Apparently, because Cozen O’Connor is headquartered in Pennsylvania, the Plan is administered there, and the Plan’s choice of law provision references Pennsylvania law, the Farleys asked the court to apply Pennsylvania state law to determine the validity of the marriage. Pennsylvania’s mini-DOMA statute expressly defines marriage as between a man and a woman. The court concluded that ERISA preempted Pennsylvania law. It reasoned that if courts were required to look at the state in which the plans were drafted, plan administrators might be encouraged to forum shop for states with mini-DOMA laws to avoid paying benefits to same-sex couples. The court thought this kind of forum shopping would upset ERISA’s principle of maintaining national uniformity among benefit plans. Without further analysis, the court concluded Pennsylvania state law was not an option for determining Ms. Tobits’ status as a spouse within the meaning of the Plan.

Instead, the court applied Illinois law, the state where Ms. Farley and Ms. Tobits had jointly resided until Ms. Farley’s death. It was undisputed that Ms. Farley and Ms. Tobits had a valid Canadian marriage certificate. The court concluded that the marriage was valid in Illinois and that Ms. Tobits was Ms. Farley’s spouse within the Plan’s definition. Accordingly, the court held that Ms. Tobits was entitled to the Plan’s death benefit. Although not entirely clear, the court presumably came to this conclusion based on Illinois’ civil union statute (even though it was enacted after Ms. Farley’s death). The statute provides that (i) same-sex marriages and civil unions legally entered into in other jurisdictions will be recognized in Illinois as civil unions and (ii) persons entering into civil unions will be afforded the benefits recognized by Illinois law to spouses. See 750 Ill. Comp. Stat. An. 75/5 and 75/60 (West 2011).

Impact of Cozen on ERISA Benefit Plans

Cozen is the first ruling in the wake of Windsor to address which state law might apply when there are conflicting state laws as to whether a valid marriage is recognized for the purpose of being a “spouse,” and therefore whether the spouse is entitled to benefits under an ERISA-covered plan. In Cozen, Ms. Farley and Ms. Tobits were lawfully married in Canada, and the court ruled that Illinois’s civil union law recognizes lawful marriages performed in other jurisdictions. The court applied the law of the domicile state to support its holding that Ms. Tobits was a surviving spouse entitled to the Plan’s death benefit.

The Cozen decision may have little value outside of cases where a valid same-sex marriage is performed in one state (the “state of celebration”) and the state where the couple is domiciled recognizes same-sex marriages. In other situations, faced with a choice of law where the law of the state of domicile conflicts with the law of the state of celebration, the outcome could be different, because Section 2 of DOMA survives after the Windsor decision. Unless the federal government creates a uniform method of determining the choice of law question, ERISA cases raising benefit entitlement questions in the context of same-sex marriages are likely to continue to complicate plan administration, and ERISA’s goal of maintaining national uniformity in the administration of benefits will remain elusive.

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Resale Price Maintenance in China: Enforcement Authorities Imposing Large Fines for Anti-Monopoly Law Violations

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Recently Shanghai High People’s Court reached a decision in the first lawsuit involving resale price maintenance (RPM) since China’s Anti-Monopoly Law (AML) came into effect five years ago.  Shortly thereafter, a key enforcement agency announced RPM-related fines against six milk powder companies, five of which are non-Chinese.  Both cases clearly show that RPM can be a violation of the AML, and that RPM is currently under much greater scrutiny by enforcement authorities.  It would be prudent for all foreign corporations active in China’s consumer markets to take heed of these changes in China and conduct an immediate review of any potential RPM violations.

On 1 August 2013 the Shanghai High People’s Court reached a decision in the first anti-monopoly lawsuit involving resale price maintenance (RPM) since China’s Anti-Monopoly Law (AML) came into effect in August 2008.  In addition to this judicial decision, on 7 August 2013 one of the key agencies in charge of enforcing the AML, the National Development and Reform Commission (NDRC), announced RPM-related fines of USD 109 million against six milk powder companies, five of which are non-Chinese.  Both the High People’s Court and the NDRC have been striving to clarify how they will treat RPM, and specifically have focused on the issue of whether RPM should be treated as a per se violation or should be evaluated according to a “rule of reason” analysis.

Judicial Decisions in Civil Lawsuits

According to the recent decision by the Shanghai High People’s Court, in order to hold that an RPM provision is a monopoly agreement, the court must find that the RPM provision has restricted or eliminated competition.  Furthermore, the burden of proof will be on the plaintiff to show a restriction or elimination of competition arising out of the RPM.  The High People’s Court explicitly stated that this burden is the opposite from the burden of proof for horizontal monopolies, such as a cartel, in which case the burden of proof falls on the defendant to show that the agreement does not have any effect of eliminating or restricting competition.  This burden for horizontal monopolies has been further examined and confirmed by the “Judicial Interpretation of Anti-Monopoly Disputes” that was issued by China’s Supreme People’s Court on 1 June 2012.

Administrative Decisions in Enforcement Actions—Liquor and Infant Milk Formula

There have been several key RPM enforcement actions in 2013.  In February, the NDRC imposed a fine of USD 80 million on the famous Chinese liquor brands Maotai and Wuliangye for requiring distributors to resell the products above a certain price, which is common in some sectors in China.  On 2 July, according to the Price Supervision and Anti-Monopoly Bureau of the NDRC, six milk powder companies came under investigation for RPM violations of the AML.  According to the NDRC’s statements on the case, “from the evidence obtained, the milk powder companies under investigation instituted price controls over distributors and retailers, which excluded and limited market competition and therefore are alleged to have violated the Anti-Monopoly Law”.  The NDRC later announced record fines in that case of USD 109 million, which were the equivalent of between 3 per cent and 6 per cent of the companies’ revenue in 2012.

According to media reports, in the Maotai and Wuliangye cases, the NDRC provided clear indications about some of the factors that it will consider when determining whether the RPM has “eliminated or restricted competition”.   Specifically, when assessing the relevant market and market power of the two companies, the NDRC analysed the market structure and the role played by the two companies in the liquor industry, as well as the degree to which the products are substitutable with similar products and the loyalty of consumers towards the two liquors.  Based on this analysis, the NDRC concluded that the RPM provisions in the agreements with distributors of the two liquor giants eliminated and restricted competition, and thus were vertical “monopoly agreements”.

According to recent media reports, the NDRC has indicated it will “severely crack down” on and sanction vertical monopoly agreements such as RPM if they are maintained by business operators dominant in the market.  If business operators are not dominant, the NDRC reportedly indicated that it would still investigate all vertical monopoly conduct and determine if there has been any elimination or restriction of competition.

Conclusions

These civil lawsuits and administrative cases clearly show that RPM can be a violation of the AML and that RPM is currently under much greater scrutiny by enforcement authorities.  If RPM is an issue in civil lawsuits, a plaintiff will have to prove that RPM eliminates or restricts competition.  However, there are some indications that this burden of proof may be easily met.  In administrative cases, the NDRC will have to be satisfied that it has sufficient proof to show there is an elimination or restriction of competition.  However, it is unclear what level of evidence would be required to show such a restriction and it may not be a very high level, especially if the accused business operator is dominant in the market.

RPM has been a common feature of distribution agreements and other contracts in many sectors in China.  However, the recent cases clearly show there is a serious compliance risk if RPM continues to be part of a corporation’s normal practices.  This is particularly true for business operators that have a dominant market position or a group of business operators that are regarded as jointly dominant under the AML (in China, in certain circumstances, dominance is presumed with a market share as low as 10 per cent).  Unless the RPM conduct clearly falls within an exception in Article 15 of the AML, a company using RPM may face serious fines and confiscation of illegal gains.  It would be prudent for all foreign corporations active in China’s consumer markets to take heed of these changes to the enforcement priorities of the competition/antitrust authorities in China and conduct an immediate review of any potential RPM violations.

Alex An and Jared Nelson also contributed to this article.

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Picture This: The National Labor Relations Board’s Division of Advice Wants to Sue Employer for Issuing Social Media Policy with Photo/Video Ban

Michael Best Logohe National Labor Relations Board’s Division of Advice (the Division) recently recommended that the Board issue a complaint against Giant Foods for implementing its social media policy without first bargaining with two unions, and for maintaining a social media policy that included unlawful provisions. Although the Division analyzed several social media policy provisions, its criticism of two provisions in particular—a ban on using photo and video of company premises, and restrictions on employees’ use of company logos and trademarks—makes it very difficult for employers to protect their brands while at the same time complying with federal labor laws.

Giant Foods’ social media policy forbade employees from using company logos, trademarks, or graphics without prior approval from the company. The policy also prohibited employees from using photographs or video of the “Company’s premises, processes, operations, or products” without prior approval as well.

The Division concluded that these provisions were unlawful under the National Labor Relations Act (NLRA) and that the National Labor Relations Board (the Board) should issue a complaint against Giant Foods for implementing them. As employers are becoming keenly aware, the NLRA safeguards employees’ right to engage in protected concerted activity. Such activity includes group discussions and some comments by individual employees that relate to their wages, hours, and other terms conditions of employment.

The Division concluded that banning employees from using company logos or trademarks was unlawful because: (1) employees should be allowed to use logos and trademarks in online communications, including electronic leaflets or pictures of picket signs with the employer’s logo; and (2) those labor-related interests did not raise the concerns that intellectual property laws were passed to protect, such as a business’ interest in guarding its trademarks from being used by competitors selling inferior products.

Additionally the Division concluded that restricting employees from using photo and video of company premises unlawfully prevented them from sharing information about participation in protected concerted activities, such as snapping a picture of a picket line.

Unfortunately, the Board’s expansive view will likely hamper companies’ ability to prevent damage to their brand and reputation.  Not allowing employers to ban the taking of videos and photos on their premises, or restricting the use of company logos/trademarks could lead to public relations nightmares such as the one Subway Foods recently endured after it was revealed that an employee posted a graphic picture on Instagram of his genitalia on a sub, with the tag line “I will be your sandwich artist today.”

Given the prevalence of cell phones with photo and video capabilities, and the ease of uploading photos and videos to the internet, a company that cannot control its employees’ use of those devices on their premises will be one bad employee decision away from public embarrassment.

What else can be gleaned from the Giant Foods Advice Memorandum? That the Board’s General Counsel will continue to prod employers to eliminate blanket bans on certain kinds of employee conduct from their social media policies and replace those bans with provisions that include specific examples of what employee conduct the policy prohibits. The Board and its General Counsel have previously found social media policies that restricted employee use of confidential information and complaints about an employer’s labor practices as unlawful; Giant Foods makes clear that the agency is also scrutinizing other kinds of policy provisions that potentially could infringe on an employee’s right to engage in protected concerted activities.

Accordingly, employers should review their policies with counsel so that they can tailor them to restrict employee conduct that will damage the company and its brand, but not be “reasonably” read to restrict employees’ rights to engage in protected concerted activities.

It’s Official: Top Union Lawyer To Be National Labor Relations Board (NLRB) General Counsel

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And you thought Lafe Solomon was anti-employer? Buckle your seat belts folks because the employer community is in for a rough ride.

The White House has confirmed Board member Richard Griffin has been nominated to be the new General Counsel for the NLRB.  Before joining the Board as a “recess” appointee, Griffin served as General Counsel for the International Union of Operating Engineers. Griffin has served on the board of directors for the AFL-CIO Lawyers Coordinating Committee and has held various legal jobs with the IUOE. Griffin holds a B.A. from Yale University and a J.D. from Northeastern University School of Law. With Griffin’s nomination, the President also withdrew the nomination of Lafe Solomon Jr. to be General Counsel.  Solomon had been named Acting General Counsel on June 21, 2010.  His nomination for that job went to the U.S. Senate on January 5, 2011 and again in May of this year, but the nomination was never voted upon.

As we previously reported here and here, Griffin’s nomination for the GC job comes on the heels of the deal crafted in the Senate to allow the President’s nominations for the Board to come to the floor for an up or down vote.  Republicans insisted that the President withdraw the nomination of Griffin and Sharon Block.  He agreed and replaced their nominations with those of Kent Hirozawa and Nancy Schiffer, both reportedly hand-picked by AFL-CIO President Richard Trumka. With the recent confirmation of all five of the nominations, the Board is at its full five-member complement for the first time in more than a decade.  However, with a solid 3 member pro-Union majority and Griffin in the General Counsel’s slot, it will be full speed ahead on President Obama’s pro-Union agenda.

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Continuing the Conversation Around Working Women

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Anne-Marie Slaughter’s July 2012 Atlantic article, “Why Women Still Cant Have it All” stirred up the coals in the ever-simmering firestorm regarding working women. Further fueled by the March 2013 publication of Sheryl Sandberg’s book Lean In: Women, Work, and the Will to Lead, it seemed everyone had a word of criticism to offer.

The abundant criticism often missed the larger point – the conversation is important, and these two women should be applauded for spurring it.

Lean In contains illustrative stories about what holds women back in career and life, and offers encouragement for overcoming them. Sandberg, a Harvard graduate, mom of two, and wife to David Goldberg, CEO of SurveyMonkey, has had a storied career. The current COO of Facebook, she began her career as a research assistant to Lawrence Summers at the World Bank and later she served as a management consultant at McKinsey. She then became the chief of staff to Summers at the Treasury Department and spent six and a half years at Google, where she rose to the post of vice president of global online sales and operations. She also made it to the top of the notoriously male-dominated world of Silicon Valley, where the paucity of women among engineers, inventors andcomputer scientists is still clearly visible.

There is no doubt that Lean In offers a glimpse into the lives of the rich and famous that Sandberg affords (after all, Forbes lists her as the sixth most powerful woman). But, net worth and fame notwithstanding, there is valuable insight for women in the legal industry, where men still dominate at management and executive levels.

Take a chance

When Sandberg first received a job offer at Google in 2001, she questioned the title: Business Unit General Manager. There were no business units to manage and the company had less than 1000 employees at the time. Google CEO Eric Schmidt said, “If you’re offered a seat on a rocket ship, you don’t ask what seat. You just get on.” Sandberg went on to become Google’s vice president of Global Online Sales and Operations. Today, Google has over 30,000 employees.

Similarly, lawyers, and non-lawyer professionals in the industry, are often advised to decline a job opportunity if it means a step-down in title. These people may miss an opportunity to catapult their career by joining a growth organization simply because of a few words on a business card.

Don’t be afraid to negotiate

In 1970, American women made 59 cents for every dollar men earned. In 2010, women earned just 77 cents for every dollar men made. Sandberg’s solution: negotiate like a man. When she was talking to Mark Zuckerberg about joining Facebook, Sandberg says she was inclined to accept the first offer he made because she really wanted to work for Facebook. Both her husband and brother-in-law encouraged her to make a counter-offer, saying, “Damn it, Sheryl! Why are you going to make less than any man would make to do the same job?” Sandberg counter-offered.

She told Zuckerberg that he was hiring her to run his deal teams and this would be the only time they would ever be on opposite sides of the table. She laid out what she wanted, and got a more lucrative offer the next day.

Stop trying to please everyone

Herein lies an important female personality issue in the workplace. Most of us place significant value on being liked. During her first performance review, Sandberg notes Zuckerberg told her, “Your biggest problem is you worry way too much about everyone liking you all the time.” He said she would never make an impact unless she said something that at least one person disagreed with. “It’s going to hold you back,” he warned her.

Employees who concentrate on results and impact are more valuable than those who focus on fitting in and pleasing everyone.

View child care costs as an investment

Sandberg notes that over the past decade, child care costs have risen twice as fast as the median income of families with children. The cost for two children (an infant and a four-year-old) to go to a day care center is greater than the annual median rent payment in every state in the country. Rigid work schedules, lack of paid family leave, and expensive or undependable child care derail women’s best work efforts. Sandberg encourages women to compare child care costs to their future salary instead of their current one. Initial child care costs are an investment in a working mother’s career.

Include men in the conversation

Sandberg believes that the single most important career decision a woman makes is whether she will have a life partner and who that partner will be. A partner’s lack of participation in child care and domestic tasks are significant factors in some women’s decisions to leave the workforce or reduce their hours.

Because there are still significantly more men at the top of every industry, the proverbial good-old-boy network continues to flourish. And because there are already a reduced number of women in leadership roles, it is not possible for junior women to get enough support unless senior men mentor them.

The simple conclusion Sandberg strove for, clearly communicated and ultimately obtained, is that by turning the focus of the feminist movement toward personal choices, society has failed to encourage women to aspire to leadership. Thus the conversation needs to continue.

 

Kathryn Whitaker is Business Development Specialist at K&L Gates in Charleston, SC.

 

Ioana Good manages communications at Lowndes, Drosdick, Doster, Kantor & Reed, P.A. in Orlando, FL.

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Complete Your Non-Compete Agreement: Helpful Drafting Tips

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Perhaps you consider your non-compete agreement just one form in a stack of many? When it is time to use it there is not much to the process: you retrieve it from the HR office, briefly discuss it with the employee, and he willingly signs it. But such a practice is a perilous one because non-compete agreements are not meant to be “one-size-fits-all.” Rather, they should be thoughtfully tweaked to each specific employee and situation. By relying on boilerplate language and fill-in-the-blank forms, you are risking the chance that a court will find your agreement unenforceable.

Unfortunately, there are no bright-line rules that employers can abide by to ensure the legality of agreements, but there are some factors that you should consider when drafting these agreements that should assist employers in enforcing their agreements when the time comes to do so, including:

1) The nature of the industry

The higher the competition in the industry, the more likely a non-compete will be upheld. If the industry is such where an individual may gain sensitive or secretive data, strategies, or business models, then a strict non-compete makes much more sense. On the other hand, if succeeding in the industry primarily results from people relying on their own strengths (good service, knowledge, etc.), then there is less of a reason to restrict them from competing against their former employer because they will not be relying on what was gained at their previous employment. Compare the industry of a Silicon Valley technology start-up versus that of a general family physician; a non-compete agreement makes much more sense in the former rather than the latter. Lesson – explain clearly the reason why the agreement is necessary. 

2) The relevant characteristics of the employer

Is the business local or global? Are there a handful of employees or thousands? Does the employer dominate the industry or is competition fierce? As a general rule, the larger the employer’s geographical reach, the larger the geographical restriction can be. Yet, the geographic reach of the employer is just one of many considerations and must be viewed in light of the entire non-compete. For example, a court may uphold a one-year restriction of competing nationally, if the business is global. On the other hand, if the business is unique to one state (say, breeding racing thoroughbreds) then a five-year, state-wide restriction could be held unenforceable. Take time to understand your business and catalogue its characteristics. Lesson –limit the geographic and durational scope of the restriction as much as is reasonable – and explain the reasons for each.

There are some additional tips worth sharing; check back on Wednesday and I’ll discuss what else you can do to improve your non-compete agreements.

Unpaid Internships – Opportunity or Liability for Businesses?

DrinkerBiddle

Unpaid internships have long been viewed by students, recent graduates and industry newcomers as a chance to gain experience that might help them select or launch a career, and to some, a chance to eventually land a paying job.  Employers can capitalize on this to teach their trade or profession and find new talent; but, they should not use interns just to cut labor costs.

The United States Department of Labor and many states use six criteria to determine whether internships in for-profit company operations can lawfully be unpaid: 1) the internship must be similar to training given in an educational institution; 2) regular paid workers are not displaced; 3) the intern works under close observation; 4) the employer derives no immediate advantage from intern activities; 5) there is no guaranty of employment upon internship completion; and 6) it is clear up front that there is no expectation of payment.  The overarching theme is that unpaid internships must be educational and predominantly for the benefit of the intern, not the employer.

Some employers have no idea the criteria exist and unwittingly expose themselves to expensive single-plaintiff, class action and regulator’s claims to reclassify interns as employees and to recover unpaid minimum wages, overtime pay, interest, multiple penalties and attorneys fees.  [For more on this see our post on Unpaid Interns Deemed Employees Under the FLSA].  Add to that, there are potential employer and decision maker risks for failure to withhold income and employment taxes.

“Warning bell” examples of internship programs that may be subject to reclassification include, use of unpaid internships to simply minimize labor costs or merely as an extended job interview to see if interns can make the cut later for a paid job; no real, supervised education and training, beyond what the intern might happen to observe; and a predominance of work assigned to interns that paid employees would normally do to generate or support the business.  Likewise, interns whose work is primarily running errands, answering phones, filing, organizing documents, data entry, scanning or coping images, or cleaning – even though they arguably have good exposure to work going on around them – tend to look like they are merely doing what paid support staff employees ought to be doing.

By contrast, if the intern is closely supervised and taught learning objectives that can be applied to multiple different employers, with occasional support staff type work incidental to the learning, with no guaranty of employment, and a writing that specifies a limited duration of an internship without pay, odds are better that intern can lawfully be unpaid.  As a practical matter, if a school or college will give the intern course credit, the odds of legal compliance increase.

A safe path to avoid classification risks is to pay interns at least minimum wage and for any overtime worked, afford meal and rest breaks, and manage their work assignments to reduce overtime needed.   Depending on employer policies and applicable laws, an intern who is part-time or a short-term temporary employee may not be eligible for certain employee benefits.

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Centers for Medicare and Medicaid Services (CMS) Spells Out Requirements in New Rule for Consumer Helpers in Insurance Exchanges

Barnes & Thornburg

Amid ongoing political debate about implementation of the Affordable Care Act and the ability of average Americans to understand the complexities of the health reform law, the Centers for Medicare and Medicaid Services on July 12, 2013 released a final rule that sets forth requirements for different types of entities and individuals who will aide consumers in learning about and enrolling in health coverage plans on insurance marketplaces created by the law, called exchanges.

The rule distinguishes between three categories of consumer helpers: “navigators,” “non-navigator assistance personnel,” and “certified application counselors.” All three types, which may include community nonprofit organizations and their staffs, and other entities and individuals, will perform similar functions, such as helping consumers establish their eligibility for coverage on an exchange and enrolling them where eligible. The primary differences lie in how they are funded and in the exchanges in which they will provide assistance. Navigators will provide assistance in all exchanges—federal exchanges, state exchanges, and federal-state partnership exchanges—and will be funded by federal and state grants. Non-navigator assistance personnel will provide assistance in federal-state partnership exchanges and optionally in state exchanges, and will be funded through separate state-administered grants or contracts. Certified application counselors will provide assistance in all exchanges and will not receive exchange-related funds (although they may receive funds from other federal programs).

The rule lays out standards with which navigators and non-navigator assistance personnel must comply. These standards include conflict-of-interest standards that limit affiliations with insurance companies and standards governing certification, recertification, and training in particular subjects. The rule establishes additional standards to ensure that the services of navigators and non-navigator assistance personnel are culturally and linguistically appropriate and also accessible to the disabled.

As to certified application counselors, the rule authorizes exchanges to designate an organization to certify its staff members or volunteers as application counselors, or to directly certify these individuals, who in both cases must comply with certification standards similar to those applicable to navigators and non-navigator assistance personnel. Correspondingly, the rule requires withdrawal of an organization’s designation or a counselor’s certification in the event of noncompliance with the rule. Finally, the rule requires that certain information about certified application counselors be available to health coverage applicants, and it prohibits the imposition of any charge on applicants for application or other exchange-related assistance.

The rule takes effect on August 12, 2013.

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