Category: Legal

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The ACA: From C-SPAN to Sea Change

I’m a lifelong political junkie, be it by nature or nurture. A native daughter of the nation’s capital, I grew up going on field trips to the Capitol, White House and Supreme Court. You could argue that a love of politics was predestined.

So, I’ll always remember that on March 21, 2010, I felt like a kid on Christmas Eve waiting for Santa Claus — glued to C-SPAN waiting to see if the House would pass the Senate version of the health care reform bill. I was the editor in chief of Employee Benefit News; technically, watching the night’s events was part of my job. Truth be told, I would’ve watched to the end regardless.

When the bill passed that night by seven votes, my husband glanced at the TV over my shoulder and said, “You have to go to work now, don’t you?” I nodded, and went to grab my laptop.

We covered the bill’s passage for EBN the next day — coverage that coincidentally included comments from my current employer, Benz Communications. When President Barack Obama signed the Affordable Care Act into law two days later, I remember thinking, “This changes everything.”

Now, there’s an understatement if there ever was one, right?

It’s hard to believe that five years have since passed, with the ACA surviving charges of death panels, chair-tossing town-hall sessions, more than 40 repeal votes and a major Supreme Court challenge.

It was electric, albeit exhausting, to be in D.C. during those months and years. I recall one of my reporters getting elbowed out of her sight line at the Supreme Court by an ABC cameraman. She’d arrived! I remember editing video interviews from outside the chamber and compiling photo galleries of the various protests around the city. Most clearly, I remember the hot day in June 2012 when the Supreme Court ruling was announced, and getting an email from a staffer that read, “This is the most exciting thing I’ve ever done. Thank you for letting me be part of it.”

What has the benefit of hindsight given me since then? Not much in the way of clarity, perhaps too much in complexity. I know you can more than relate to the complexities that the ACA has brought, as you’ve spent the past five years working to comply with the law and communicate it to your workforce.

In general, though, how I view the ACA now mostly is unchanged from how I viewed it then, which, in excerpt, is this:

“I think ACA is largely a bad law. Certainly, ACA contains some provisions that I like a lot. I’m quite pleased that I’ll no longer be charged higher health care premiums simply for being born a girl … that friends with chronically ill children won’t have to worry about benefit caps … that a friend recently treated for cancer won’t have to worry about being denied coverage down the road due to a pre-existing condition.

“Still, my biggest reservations about the legislation were that it did very little (if anything) to address our nation’s ridiculously high health care costs and even less to improve efficiency and quality.

“We still pay more in health care than any industrialized nation and get less for our money’s worth. Our health care system is overburdened with too much paper, too much testing, and too much obesity. Those things are just as true today as they were before ACA was upheld, before March 2010 when ACA was signed, and they’ll be just as true in 2014, when much of ACA goes into full effect.”

Not to toot my own horn and change my name to Kreskin, but just weeks ago, Steven Brill, author of Time magazine’s famous “America’s Bitter Pill” cover story and a new book also on the topic of health care costs, told talk show host Jon Stewart: “Nothing in the 965 pages of the Affordable Care Act does anything about the exorbitant cost of care. The problem with health care in this country is very simple: The cost is too damn high.”

So, the past five years have been for nothing? No, I don’t think so. In approving and upholding the ACA, we now have our first-ever national health care policy. It’s not a great one, but at least it’s a starting point; somewhere, I think there’s good policy. We just have to do the work to find it.

Kelley M. Butler is the editorial director at Benz Communications, an HR/benefits communication strategy firm. Before joining Benz, Butler spent 11 years at Employee Benefit News, including seven as editor in chief. To comment, email editors@workforce.com.

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Target (Inadvertently) Teaches the Importance of Avoiding Age-Based Stereotypes

I do a lot of speaking. One speech that I’ve been giving over the past couple of years is entitled, “X+Y+Z = A Generational Mess for Your Workplace.” I teach how employers can best manage the diverse needs and abilities of four different generations of employees. I discuss some broad-based generalizations about Traditionalists (age 70+), Baby Boomers (50-69), Gen X (35-49), and Gen Y (under 35). I always finish by discussing the very real risk of age discrimination if you treat these generalizations as gospel, and do not treat each employee, of age any, as an individual, with individual talents and abilities.

Target saw the need to offer the same type of training to its managers, but it left off the part about age discrimination. Gawker (h/t Business Management Daily) published Target’s training materials, entitled, Managing Generational Differences,” which, among other things, describe its oldest workers as “slow to adapt to change,” “rarely question[ing] authority” and see[ing] technology as “complex and challenging.”

When you are sued for discrimination, your training materials are fair game in litigation. While you write them to aid your employees, you must do so with (at least) one eye on the jury that will read them during trial. You do not want to have your manager explain to a jury, in an age discrimination case, if he thought the plaintiff was “slow to adapt to change” when he made the termination decision.

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‘Open Door’ Policies Must Still Comply With EEO Laws

There exists an inherent tension between open-door and other self-reporting policies and the Equal Employment Opportunity laws.

Consider, for example, a recent more than $100,000 jury verdict against a trucking company for disability discrimination. The company maintained a written “Open Door” policy, and an unwritten policy that prohibited any driver who self-reported alcohol abuse from ever returning to driving. The Equal Employment Opportunity Commission sued after an employee who availed himself of the Open Door policy to self-report an alcohol addiction was banned from any future driving for the company.

Even though the company offered the driver a part-time dock position as an accommodation, the EEOC successfully argued that the employer failed to “make an individualized determination as to whether the driver could return to driving and provide a reasonable accommodation of leave to its drivers for them to obtain treatment,” and that “to maintain a blanket policy that any driver who self-reports alcohol abuse could never return to driving — with no individualized assessment to determine if the driver could safely be returned to driving — violates the [Americans with Disabilities Act].”

Employees need to be able to engage in protected activity without any retribution or other negative consequences. In this case, the employer learned of a disability and failed to engage in the interactive process for a reasonable accommodation. In others, employers might retaliate against an employee who uses an open-door policy to complaint about discrimination or harassment.

Open-door policies are laudable. They foster the communication that is necessary between employees and management necessary for a healthy (and hopefully union free) work environment. With that openness, however, comes responsibility — the responsibility to learn information without retaliating. Employers need to train management so that they know what to do with protected information once they learn it, and how to act without violating any of our EEO laws. Without this training, employers are setting up their open-door policies and programs for a litigation fail.

The full press release about this jury verdict is available here.

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The Importance of Being Accommodating

Yesterday, I wrote about the need for employers to be more accommodating for their employees’ protected needs. Today, I bring you two real-world illustrations.

In both instances, the EEOC made the same point — the Americans with Disabilities Act imposes on employers an absolute duty to determine whether or not they can accommodate an employee’s disability. Absent that consideration, the law has been violated. Moreover, after engaging in that interactive process, the employer can only deny the request: 1) if it poses an undue hardship, or 2) if the employee cannot perform the essential functions of the job with or without the accommodation. Otherwise, you may find yourself on the receiving end of an EEOC press release, which is not the position you want to be in.
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Honeywell Lawsuit Takes Aim at Biometric Screenings

The U.S. Equal Employment Opportunity Commission recently filed a lawsuit charging Honeywell International Inc.’s wellness program with violations of both the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. 

According to the lawsuit, which was filed in federal district court in Minnesota, beginning in 2015 Honeywell’s employees and their spouses may participate in a wellness program, which includes a biometric screening. Such screening will include checks for blood pressure, high-density lipoprotein, commonly referred to as HDL, and total cholesterol, nonfasting glucose levels, body mass index and waist circumference. Blood will also be screened to determine whether the employee or spouse smokes tobacco.

The EEOC initially sought a temporary restraining order to keep Honeywell from imposing any penalty or cost upon an employee under the program. Judge Ann Montgomery denied the EEOC’s request, finding that Honeywell could refund any improper penalties if she ultimately ruled in the EEOC’s favor. The lawsuit will proceed without the restraining order.

Employees will be penalized (or lose incentives) if they or their spouses do not take the biometric tests, as follows:

  • A $500 surcharge applied to the employee’s premium cost for the medical plan.
  • Loss of health savings account contributions from Honeywell of up to $1,500.
  • A $1,000 tobacco surcharge even if the employee does not participate in biometric testing for reasons other than smoking.
  • Another $1,000 tobacco surcharge if the employee’s spouse does not take part in the testing, even if the spouse does not participate for reasons other than smoking.

Honeywell claims that its wellness incentives are permissible because they fall within the guidelines established under the Health Insurance Portability and Accountability Act as amended by the Affordable Care Act. 

Under HIPAA, the total financial reward that may be given to an individual for participating in a wellness programs is limited. Beginning in 2014 the total reward cannot exceed 30 percent of the total premium cost of the employee’s coverage under the employer’s medical plan. The total reward can be increased to a total of 50 percent of such premium cost for a program that includes a tobacco cessation program. 

The limits on awards apply only to programs (or portions of programs) that require outcomes based on a health factor, such as being tobacco free for a certain period of time or maintaining a certain BMI. There is no limit for programs that merely require participation in a program without regard to the outcome, such as incentives to undergo a biometric test without regard to the results of such test.

Regardless, the EEOC claims that Honeywell’s incentives violate the ADA. Under the ADA, an employer may require employees to undergo medical examinations or respond to disability-related inquiries only if they are “job-related and consistent with business necessity.” There are two possible exceptions: the “voluntary” exception and the “safe harbor” exception.

Under the voluntary exception, a program does not violate the ADA if participation by the employee is voluntary. Under the “safe harbor” exception, the rules regarding medical examinations and disability-related inquiries do not prohibit an employer from establishing, sponsoring, observing, or administering the terms of a bona fide benefit plan that are based on underwriting, classifying or administering risks.

The EEOC’s lawsuit claims that the Honeywell program does not comply because employees are penalized for not participating in medical examinations that are not job-related or consistent with business necessity. Although recognizing that there is an exception for “voluntary” medical examinations, the EEOC claims that these exams are not voluntary because of the financial penalties.

The EEOC does not specify whether lesser financial incentives would be permissible. However, an EEOC attorney stated: “employers have to respect employees’ and their spouses’ rights to the privacy of their medical information, and cannot seek to compel it by imposing prohibitively high penalties.” The EEOC’s lawsuit does not address the application of the “safe-harbor” exception.

The EEOC also claims that Honeywell’s wellness program violates GINA because employees are penalized if their spouses do not complete the biometric testing. According to the EEOC, “Honeywell is offering an inducement within the meaning of GINA to obtain medical information of its employees’ spouses” and “medical information relating to manifested conditions of spouses is family medical history — or genetic information — under GINA.”

The EEOC’s lawsuit is the third time in 2014 that the agency has challenged an employer’s wellness program. This challenge is noteworthy in that it involves a program that does not shift the entire premium cost to the employee, cancel coverage or subject an employee to other disciplinary action. Honeywell’s program was seemingly designed to fall squarely within the HIPAA guidelines. 

Employers have been seeking guidance from the EEOC for years regarding its position on when a wellness program will be considered “voluntary” for purposes of the ADA. However, the EEOC has not provided guidance or indicated an intention to do so. With this lawsuit, the EEOC has demonstrated that the ADA should not be overlooked by employers when structuring these programs.

Sandra R. Mihok, chair of the Employee Benefits Group of Eckert Seamans Cherin & Mellott in Pittsburgh. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.

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No Easy Fix for Overtime-Pay Problems

Jon Hyman The Practical Employer

Those of you who are long time readers know I’ve long rallied for changes to the Fair Labor Standards Act.

The law is overly complex, anachronistic, and nearly impossible for compliance by employers.

Last week, I read an article on politico.com arguing that the FLSA’s exemptions need to be rewritten to make it easier for employees to qualify for overtime pay. This is not the right solution to this country’s wage-hour problems.

You don’t fix one problem by creating another, i.e., punishing small and midsize employers by requiring them to start paying groups of employees overtime en masse. What will be their solution to this newly created problem? Reverse engineering. They will look at each employee’s W-2 wages for the past years, and calculate the appropriate lower hourly wage (or salary) to play each newly overtimed employee that will result in the same annual W-2 figure with the time-and-a-half rolled in.

This is not a solution. It’s an administrative burden that will not put more money in workers’ pockets. The solution is to make FLSA compliance easier for employers by simplifying decades-old regulations.

There is one wage-hour change I can support. Pending in the Ohio legislature is a bill that would require retail employers to pay triple-time to employees who work on Thanksgiving. Dear readers, please do not shop on Thanksgiving.

Retailers require employees to give up their holiday because we show up for sales like lemmings to the 25 percent-off sticker. I understand why safety forces and medical workers need to give up their holidays. But the cashier at Target? He or she deserves the day off as much as you and I do. So if we need a law to disincentive employment on these days, then so be it.

Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.

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Cybersecurity and the NLRB

A few months ago, I wrote how the National Labor Relations Board was exploring new areas of potential protected concerted activity to regulate. One such area is information and data security.

According to Employment Law 360, the NLRB potentially is looking to expand its reach in the area of cybersecurity, this time investigating whether an employer was required to bargain with its labor union over the impact of a data breach on its employees:

A postal workers union has lodged a charge with the NLRB over the U.S. Postal Service’s handling of a recent data breach, a novel move that adds union negotiations to the already sprawling list of concerns companies must contend with in their race to mitigate cyberattacks.

In a November 10 charge filed with the NLRB, the American Postal Workers Union accused USPS of engaging in unfair labor practices in violation of the National Labor Relations Act, by failing to give the union advance notice “that would enable it to negotiate the impacts and effects” on employees of the cyberattack….

The union specifically took issue with USPS’ offering employees affected by the incident one year of free credit-monitoring, a decision that the postal workers characterized as a unilateral change to wages, hours and working conditions that an employer is generally not permitted to make without first bargaining with the union.

Responding to a cyber-attack is complicated and complex. The Federal Trade Commission, along with a patchwork of divergent state laws, requires quick communication of various levels of detail and complexity to individuals and regulators following a data breach. If employers need to add communications to labor unions to this list of constituents (and this issue remains very much open), it will create additional burdens on employers, which could potentially slow down a company’s other response efforts.

To avoid these issues, employers should consider bargaining these issues into the terms of collective bargaining agreements, so that you have a game plan in place before you have to respond. Otherwise, when faced with a data breach, you could be faced with running your response programs through the filter of your labor unions, which could hamper your other response efforts, and subject your company to potential liability from the cyber breach.

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Legal Briefing: Domino’s Lawsuit Gets Tossed

In June 2009, Taylor Patterson, a former employee at a Domino’s Pizza Inc. franchise store, filed a harassment lawsuit against the Domino’s franchisee Sui Juris LLC, assistant store manager Renee Miranda and Domino’s Pizza. Patterson alleged she was forced to resign from her job at a Southern California Domino’s owned by Sui Juris after being sexually harassed by Miranda.

A California state superior court first dismissed the lawsuit against Domino’s, finding that the franchisor was not Patterson’s “employer.” However, an appellate court reversed, holding that Patterson was entitled to a trial on whether Domino’s Pizza was her “employer.” 

The California Supreme Court later reversed the appellate court, holding that Domino’s was not sufficiently involved in day-to-day hiring, firing and supervision to warrant liability for Patterson’s claims. “The contract-based operational division that otherwise exists between the franchisor and franchisee would be violated by holding the franchisor accountable for misdeeds committed by employees who are under the direct supervision of the franchisee, and over whom the franchisor has no contractual or operational control.” Patterson v. Domino’s Pizza LLC, Cal., No. S204543, (Aug. 28, 2014).

IMPACT: Franchisors may avoid liability for employee claims by sufficiently separating themselves from the recruiting, hiring, firing, training and scheduling of the franchisee employees.

James E. Hall, Mark T. Kobata and Marty Denis are partners in the law firm Barlow, Kobata and Denis, which has offices in Los Angeles and Chicago. To comment, email editors@workforce.com. FollowWorkforce on Twitter at @workforcenews.

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Exempt or Non-Exempt: The Risk of Misclassifying Employees

I once handled a wage-and-hour investigation in which the employer, before retaining my services, hired an HR consultant to help classify its employees as exempt or non-exempt. The Department of Labor, however, disagreed, and reclassified half of the company’s employees (with corresponding back pay awards for unpaid overtime for those employees moved from exempt to non-exempt).

Fair Labor Standards Act exemptions are highly fact specific and highly subjective. One person’s exempt manager is another’s non-exempt clerk. Case in point? Little v. Belle Tire Distributors (6th Cir. 10/23/14) [pdf].

Little concerns a first assistant manager at a tire store. As a “manager,” the employer had the employee classified as exempt under both the executive and administrative exemptions. The employer’s written job description defined the first assistant manager position as requiring proficiency in “Professional Selling Skills,” “inventory control and pricing,” and “knowledge of location payroll control.” The job description further states that the employee have “necessary supervisory skills” and “managerial skills,” and be “fully knowledgeable” of “hiring and termination procedures.”

The court of appeals concluded that the employer’s determination that this employee was exempt was not dispositive, and sent the case back to the district court for trial on the issues of whether the employee qualified as exempt under either the executive or administrative exemption:

Belle Tire seeks to paint Little as influential in hiring and as actively leading employee training and other management tasks. Little, on the other hand, seeks to characterize himself as a salesman who provides clerical-type assistance to his store manager….

Though it is clear Little played some role in interviewing job candidates, preparing work schedules, and conducting training, questions remain concerning the exact nature of the work Little performed and the level of discretion that Little exercised. Such questions are suitable for a factfinder’s determination….

Although Little engages in office and non-manual tasks such as typing up the schedule and preparing purchase orders, Little testified that he spends eighty to ninety percent of his time engaged in sales duties. Time spent on a task is not the sole determinant of a primary duty, but the fact that Little spent the vast majority of his time on tasks he could not do concurrently with administrative tasks creates a genuine dispute as to whether his administrative responsibilities were his “primary duty.” Additionally, Little’s deposition—the most detailed account of his day-to-day activities—suggests that Little’s discretion was highly constrained.

The lesson here is not a happy one. No matter how reasonable or rational you think you are being in classifying employees, a court may second-guess you down the road. In close cases, err on the side of caution and classify as non-exempt. You will end up paying more overtime as you go, but will avoid the windfall (and related legal fees) if a court later re-classifies an employee or group or employees.

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‘Honest belief’ Isn’t a Defense to an FMLA Claim, Says Federal Court

The honest-belief rule is one of most effective shields available to employers in discrimination cases:

As long as an employer has an honest belief in its proffered nondiscriminatory reason for discharging an employee, the employee cannot establish that the reason was pretextual simply because it is ultimately shown to be incorrect. An employer has an honest belief in its reason for discharging an employee where the employer reasonably relied on the particularized facts that were before it at the time the decision was made.

What happens in a Family and Medical Leave Act claim, however? Can an employer use the honest-belief rule to fend off an employee’s claim that an employer interfered with FMLA rights? Yontz v. Dole Fresh Vegetables (S.D. Ohio 10/10/14) says “no.”

The case involved an employee whose newborn daughter had Down syndrome. He got stuck on vacation in Florida because of medical complications with the daughter, which delayed his post-vacation return-to-work date. The employer, based on pattern of similar prior non-medical issues with extended vacations, believed he was malingering and fired him.

The employer claimed as its defense to Yontz’s FMLA claim that it had an “honest belief” that Yontz “misused his pre-approved, intermittent FMLA leave.” The court disagreed, and rejected the application of the honest-belief defense in FMLA interference cases:

Dole may not use an honest mistaken belief that Yontz misused FMLA leave as a legitimate non-discriminatory reason for his termination. That Yontz received attendance points for using what may have been legitimate intermittent FMLA leave is the problem, not a legitimate, non-discriminatory excuse for the problem. The Sixth Circuit has not decided whether the rule applies to FMLA interference claims. To so rule would be to reward and encourage ignorance of a law our democratic process has seen fit to enshrine in law.

Per this case, the FMLA requires more than an honest belief to deny an employee FMLA leave. Thankfully, the FMLA provides employers myriad tools to check and double-check the legitimacy of an employee’s claim for leave. Employers have medical certifications, re-certifications, checks for authenticity and clarification, and second and third opinions. As this case shows, an “honest belief” will not save an employer who denies an employee’s FMLA request without first exhausting all available avenues of communication and clarification with the employee.