Naughty or Nice List?  President Obama’s First Year in Office from an Employment Law Perspective


Bo Loftis

Over the past year, substantial legislation affecting employment law has been passed or introduced. President Obama has signed several pieces of this legislation, as well as issued certain executive orders, which directly affect employers. The following is a list of just a few of those items. It is now time to decide whether these actions land Obama on Santa’s Naughty or Nice List for 2009.

 

 

The Lilly Ledbetter Act substantially expanded an employee's right to file a lawsuit by extending the statute of limitations for aggrieved parties to file charges of pay discrimination under the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Rehabilitation Act, as well as Title VII of the 1964 Civil Rights Act. This Act overturned the 2007 Supreme Court decision which held that Lilly Ledbetter's wage discrimination claim was time barred because she did not file a charge with the EEOC within 180 days of the allegedly discriminatory compensation decisions, even though these decisions continued to affect her current compensation in retirement. The net effect of this legislation is to significantly expand the time during which pay decisions can be challenged and expand the scope of potential employer liability. This means that employers should keep relevant records for a significantly longer period of time than they have in the past.

President Obama signed two Executive Orders restricting the rights of federal contractors to engage in "captive audience speeches" in which employers pay employees to attend company meetings addressing and refuting union sales pitches. The first Executive Order, entitled "Notification of Employee Rights under Federal Labor Laws," requires qualifying federal contractors to post a written notice advising employees of their rights to bargain collectively, to engage in freedom of association, and to designate a bargaining representative. The second Executive Order, entitled "Economy in Government Contracting," disallows costs associated with employer captive audience speeches under federal cost-reimbursement contracts. The Order requires non-union contractors participating in federal cost-reimbursement contracts, who wish to give captive audience speeches, to utilize accounting procedures to segregate these costs.

 

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA), which imposes new obligations on employers with respect to the Consolidated Omnibus Budget Reconciliation Act (COBRA). Among these changes was a shift in who is responsible for paying the premiums for COBRA insurance coverage as a result of employment termination. The ARRA provides that the "assistance eligible individuals" (employees whose employment has been involuntarily terminated between September 1, 2008, and December 31, 2009) need only pay 35% of the applicable COBRA premium for a period of up to 9 months. Employers are required to pay the remaining 65% of the premium. This payment may be reimbursed by the government through a credit against withholding and FICA taxes.

 

ARRA also requires that employers locate "assistance eligible individuals" who lost coverage due to an eligible employment termination between September 1, 2008, and February 17, 2009, and notify them of their right to subsidized COBRA coverage. Finally, ARRA requires that employers refund partial premiums for qualified individuals who pay or have paid more in premiums than they are now required to pay under the Act's subsidy provisions.

 

Senator Mark Pryor made the following statement after voting in support of the ARRA, “[t]his recovery package gets the wheels of our economy turning again. It places a much-needed emphasis on lifting up rural states like Arkansas by funding infrastructure projects involving our transportation, water, energy and broadband needs. Provisions in this bill also provide a lifeboat for individuals struggling in today’s economy. While not perfect, the overall bill offers a balanced mix of tax cuts and investments. I’m optimistic it will provide the jolt to our economy that we need now and for the future.”

 

The Equal Employment Opportunity Commission issued its proposed regulations implementing and interpreting the Genetic Information Nondiscrimination Act of 2008 (“GINA”), which became effective November 21, 2009 and prohibits discrimination by an employer against any individual based on genetic information and prohibits the collection or disclosure of genetic information on any employee. The intent behind GINA is to encourage individuals to take part in genetic testing as part of their medical care without fear that they will be charged a higher premium by their health insurance plan or that employment-related decisions will be based on the genetic predisposition of developing a disease in the future.

 

On March 10, 2009, the Employee Free Choice Act (EFCA) or "card check" legislation was introduced in both houses of Congress. If passed, EFCA would radically change the procedure for union certification elections under the National Labor Relations Act from a majority employee vote in a secret ballot election overseen by the National Labor Relations Board to a majority sign up controlled by the union. President Obama has promised to sign this proposed legislation upon presentation, as he was a co-sponsor of the bill when he was a Senator in 2007.

 

Besides card check, EFCA would require binding interest arbitration to resolve any impasse in negotiations for a first collective bargaining agreement. If an agreement is not reached within 90 days of commencement of negotiations, the Act requires parties to first seek mediation and then submit to arbitration the terms of employment such as wages, benefits, hours, work rules and other terms of employment. The arbitrator would dictate the terms of a collective bargaining agreement. The newly unionized employer would then be subject to this imposed agreement for at least two years. Finally, the legislation would provide triple back pay to employees who are discharged or the subject of discrimination in violation of the National Labor Relations Act.

 

Because EFCA was widely criticized in the media, several compromise proposals to the legislation have been discussed. Senator Lincoln announced this year that she did not support EFCA in its current form. Some of the compromises include a faster representation election and union access to employees on employers’ premises.

 

Apr. 3 - Revised I-9 Form

 

As of April 3, 2009, employers are required to begin using the U.S. Citizenship and Immigration Services’ (USCIS) new Form I-9. The most significant change in the revised I-9 form is that expired documents are no longer acceptable forms of identification for employment authorization. Additionally, USCIS published its new Handbook for Employers (M-274), which discusses the new I-9 form requirements. Documents without an expiration date, such as a social security card, are considered unexpired. Additionally, changes were made to “List A” documents—documents that establish both a workers’ identity and employment authorization. Specifically, the following documents have been added as acceptable documents under List A: (1) foreign passports containing the I-551 permanent residence notation printed on a machine-readable immigrant visa; (2) the new U.S. Passport Card; and (3) passports and certain other documents for citizens of the Federated States of Micronesia and the Republic of the Marshall Islands. Furthermore, several now-expired employment authorization documents were eliminated from List A as acceptable documents, including Forms I-688, I-688A, and I-688B.

 

 

On July 10, 2009, Senator Ron Wyden introduced legislation entitled the “Military Family Leave Act of 2009,” which would provide families of deploying military personnel two weeks of unpaid leave. The bill would allow employees whose family members have received notification of impending active military duty to spend time with and support those family members prior to their deployment. The Act is similar to recent amendments to the Family and Medical Leave Act (FMLA) that provide for 12 weeks of leave for deploying family members. This bill, however, would include family members that work part-time or are employed by companies with less than 50 employees, which are currently excluded by the FMLA. Though the proposed bill does not provide a full 12 weeks of leave, it does cover all workers. Additionally, the Act guarantees returning employees be restored to the same or equivalent position with the same level of benefits.

 

Conclusion
 

The items discussed above represent a few of the laws and regulations that have been passed, proposed, or taken effect during President Obama’s first year in office. Obama promised widespread change in his recent presidential campaign. If his first year in office is indicative of his presidency, change will be delivered. Besides the laws already mentioned, employers should anticipate continued pro-labor efforts, which may include the narrowing of the definition of exempt supervisors under the NLRA to exclude front line supervisors in union organization campaigns under the RESPECT Act, broader employee coverage and benefits (i.e., paid leave, flexible schedules, telecommuting, etc.) under the Family and Medical Leave Act, more accommodation requirements under the Americans with Disabilities Act, new protection against discrimination based on sexual orientation under Title VII, the elimination of certain defenses and addition of punitive damages and class action litigation under the Paycheck Fairness Act, and a narrower definition of an independent contractor for purposes of wage and hour laws under the Independent Contactor Proper Classification Act.

 

 

 

On September 23, 2009, the Equal Employment Opportunity Commission (EEOC) published its proposed regulations implementing and interpreting the Americans with Disabilities Act Amendments Act of 2008 (ADAAA). The effective date of the ADAAA was January 1, 2009, so it applies to any adverse action which occurred on or after that date. The ADAAA’s stated purpose is to reinstate a broad scope of protection by expanding the definition of the term “disability,” and the proposed regulations do so by changing the way in which certain terms used in the definition should be interpreted. The notice and comment period for the proposed regulations ended on November 23, 2009, and the EEOC is now evaluating the comments to determine whether revisions should be made. Subject to any revisions, the following is a brief summary of the proposed regulations. By way of a starting point, the definition of disability with respect to an individual is:

Change #1: “Major Life” Activities

 

The proposed regulations expand the definition of major life activities (activities that most people in the population can perform with little or no difficulty) in two non-exhaustive lists. The first list includes activities such as caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, sitting, reaching, lifting, bending, speaking, breathing, learning, reading, thinking, concentrating, communicating, and interacting with others. The second list includes operation of major bodily functions such as immune system, special sense organs, skin, normal cell growth, digestive, genitourinary, bowel, bladder, neurological, brain, respiratory, circulatory, cardiovascular, endocrine, hemic, lymphatic, musculoskeletal, and reproductive functions. For example, kidney disease affects bladder function, cancer affects normal cell growth, and diabetes affects functions of the endocrine system. 29 C.F.R. § 1630.2(i).

Change #2: “Substantially Limits”

 

The proposed regulations redefine “substantially limits” to be consistent with the ADAAA. Under the current regulations, an impairment may be substantially limiting if it “significantly” or “severely” restricts the condition, manner, or duration under which an individual can perform a particular major life activity compared to the condition, manner, or duration in which the average person performs the activity. Congress found this standard too demanding, and therefore the proposed regulations state that in determining whether an individual’s impairment is “substantially limiting,” a common sense approach of comparing an individual’s limitation to the ability of most people in the general population may be used without resorting to scientific or medical evidence. The reference to “condition, manner, or duration” has been deleted.

Change #3: “Mitigating Measures”

 

Mitigating measures are measures that reduce or eliminate the effects of the impairment, such as medicine, medical equipment, prosthetic limbs, low vision devices, reasonable accommodations, and behavioral modifications. The proposed regulations expand current ADA coverage because they mandate that the ameliorative/corrective effects of mitigating measures have to be ignored when determining whether an individual’s impairment substantially limits a major life activity. The only exception is ordinary eyeglasses or contact lenses that are intended to fully correct one’s vision, which may still be considered when determining if one has a disability. Furthermore, the negative effects of mitigating measures may be taken into account when determining if a disability exists. For example, side effects from the use of a hypertension medication maybe considered when determining if one is substantially limited in a major life activity. 29 C.F.R. § 1630.2(j)(3).

Change #4: Episodic or Remission

 

Additionally, an impairment that is episodic or is in remission will be considered a disability under the proposed regulations if the impairment would substantially limit a major life activity when active. For example, if an individual’s cancer is in remission, but there is a possibility of reoccurrence, then under the proposed regulations it would meet the definition of a disability. Examples of episodic impairments include epilepsy, hypertension, multiple sclerosis, asthma, diabetes, major depression, bipolar disorder and schizophrenia. 29 C.F.R. § 1630.2(j)(4).

Change #5: Impairments that Consistently Meet Disability Definition

 

The proposed regulations also contain a non-exhaustive list of impairments that will consistently meet the definition of disability. These listed impairments are deafness, blindness, intellectual disability (formally known as mental retardation), partially or completely missing limbs, mobility impairments requiring the use of a wheelchair, autism, cancer, cerebral palsy, diabetes, HIV/AIDS, multiple sclerosis, muscular dystrophy, major depression, bipolar disorder, post-traumatic stress disorder, obsessive-compulsive disorder, and schizophrenia. The proposed regulations further identify other impairments that might be substantially limiting for some individuals, but not others. When determining if impairments such as asthma, back and leg impairments, and learning disabilities would substantially limit an individual, the proposed regulation states that level of analysis should not be extensive. 29 C.F.R. at 1630.2(i)(5)&(6).

 

Previously, an impairment was substantially limiting if it significantly restricted the individual’s ability to perform a “class” or “broad range” of jobs. The proposed regulations have replaced the terms “class” or “broad range” of jobs with “type of work,” a term which the EEOC declared to be “more straightforward” and “easier to understand.” A type of work may be identified by the nature of the work, such as commercial truck driving or law enforcement, or by reference to job-related requirements, such as heavy lifting or repetitive bending and reaching.

Change #7: Temporary Impairments

 

The proposed regulations have defined impairments that are temporary, non-chronic, and of short duration as impairments that would usually not be considered as disabilities. Examples of these include the common cold or influenza, sprained joints, minor and non-chronic gastrointestinal disorders, or a broken bone that is expected to heal. Even if the impairment is permanent or chronic in nature, it would not automatically be a disability if it did not substantially limit a major life activity. 29 C.F.R. § 1630.2(l)(3).

Change #8: “Regarded As”

 

Previously, an employee was “regarded as” disabled if he or she 1) had had no impairment at all, but was treated as having a substantially limiting impairment or 2) had an impairment, but one that was not substantially limiting, if the employer incorrectly believed the impairment was substantially limiting. The proposed regulations redefine coverage for “regarded as” individuals and place the focus on the employer’s motivation for adverse action towards an employee who is “regarded” as disabled, regardless of the severity of the impairment. Under the proposed regulations, if an employer “regards” an individual as having a disability and takes discriminatory action, the employer is in violation of the ADA even if the employer does not believe the impairment substantially limits a major life activity. The individual, however, still must be qualified for the job before the employer’s action will be considered discriminatory. For example, an employer that refuses to hire a qualified individual with a facial tic regards the individual as having a disability, even if the employer does not know that the tic is caused by Tourette’s Syndrome. However, employers have no obligation to provide reasonable accommodations to individuals who met only the “regarded as” definition of disabled. Furthermore, an individual is not covered under the Act’s definition of “regarded as” if the impairment is both transitory and minor. 29 C.F.R. § 1630.2(l).

Change #9: Uncorrected Vision Standards

Finally, the proposed regulations mandate any qualification standards, employment tests, or other employment criteria which are based on an employee’s uncorrected vision must be job-related and consistent with business necessity, regardless of whether the employee has a disability.

Conclusion

 

The proposed regulations state that “[t]o the extent cases predating the 2008 Amendments Act reasoned otherwise, they are contrary to the law as amended.” In other words, the Act has erased the slate of existing case law and how it applies to the ADA. This means that entities covered by the Act will have to address and interpret new issues where no relevant case law will exists to give them guidance. This will likely lead to more cost and difficulty for entities defending claims. For more information on the proposed ADAAA regulations, please contact our firm for assistance.


Independent Contractor or Employee? That is the Question

  

 

According to a new report from Congress, the U.S. Department of Labor has only taken “limited” steps to address the misclassification of employees as independent contractors. An employer may be held responsible for paying back wages, taxes, workers compensation premiums and unemployment insurance if the employees do not qualify as true independent contractors. For an employer to avoid possible liability it is important to correctly identify its workers.

 

There is no bright line distinguishing employees from independent contractors. An employer having a contractual agreement or labeling a worker as an independent contractor will not be determinative of whether the worker is an independent contractor. In contrast, labeling a worker as an employee will be highly probative evidence that an employer-employee relationship exists. When an employer asserts that a worker is an independent contractor, courts use a totality of the circumstances approach in determining the relationship. In other words, courts apply a multi-factor test to each individual case to determine what type of relationship exists between the employer and the employee. The factors most commonly used by courts to determine a worker’s status are degree of control, opportunity for profit or loss, investment in facilities, permanency of the relationship, and the required skill to perform the task.

Control: When evaluating control, courts have stressed that it is the right to control, not whether the right is exercised, that is key to this inquiry. Set working hours and reporting to a supervisor are indicia of an employee-employer relationship. Sporadic hours and limited supervision indicate that the worker may not be an employee. Moreover, if a worker is free to provide services to other entities, the greater the likelihood that the worker will be found to be an independent contractor.

 

Opportunity for profit or loss: Courts generally find an employee relationship exists when the employer unilaterally establishes profit and loss through advertising, location and prices. Even if the employer makes the workers responsible for minor losses such as bad checks or theft, that alone is not enough to establish a non-employee status.

Investment in the facilities: The relative investment of the worker is weighed in comparison to the investment of the employer. If the employer has provided a significant amount of risk capital and the employee has provided little or no investment, an employer-employee relationship is likely to be found.

 

Permanency of the relationship: Permanency depends on the circumstances of each case; however, where written contracts are regularly renewed, an employee status is likely to exist. Moreover, if transiency is due to the nature of the industry, gaps in employment will not preclude a finding of an employee relationship.

Required skills to perform the task: When determining required skills, courts often look at whether the worker possesses specialized skills, certification or training in a specific task. Possession of skills or previous experience when hired is more probative of a non-employee status than the development of the skills due to on-the-job training. A worker that performs general labor or tasks that required little training will generally be regarded as an employee.

 

Other factors courts sometimes consider is whether the worker performs a task that is an integral part of the employer’s operation, whether there is an expectation of compensation, tax treatment of the worker and industry practice.
 

As previously stated, there is no distinct line at which to differentiate an employee from an independent contractor, but rather a balancing test of several factors that are unique to the circumstances of each individual. If an employer, for example, has workers who regularly and consistently perform low skilled tasks that contribute to an integral part of the employer’s operation, and if the workers are required to report to a company supervisor, chances are that those workers would be considered employees. If the worker, however, is highly skilled, sets his own hours, provides his own tools and capital investments, risks loss, and works for other companies as well, he is likely to be classified as an independent contractor.

News Around the Firm

 

Cross, Gunter, Witherspoon & Galchus, P.C. is proud to announce that a total of ten attorneys have been honored by Mid-South Super Lawyers 2009. J. Bruce Cross, Russell Gunter, Carolyn Witherspoon, Donna Galchus, Benjamin Shipley, Rick Roderick and Scotty Shively were named to the list of Super Lawyers. Super Lawyers recognizes outstanding attorneys in more than 70 areas of practice using a rigorous, multiphase selection process that considers 15 separate indicators of peer recognition, professional achievement and high ethical standards. In addition, lawyers are asked to nominate the best attorneys who are 40 or under, or who have been practicing for 10 years or less to be included in the Rising Stars listing. CGWG attorneys named to the Mid-South Rising Star 2009 list include Missy McJunkins Duke, Brian A. Vandiver and Amber Wilson Bagley.

Best Lawyers, the oldest and most respected peer-review publication in the legal profession, has named Russell A. Gunter as the “Little Rock Best Lawyers Labor and Employment Lawyer of the Year” for 2010. Only a single lawyer in each specialty in each community is being honored as the “Lawyer of the Year.” The lawyers being honored as “Lawyers of the Year” have received particularly high ratings in its surveys and have achieved a high level of respect among their peers for their abilities, professionalism, and integrity.

Russell Gunter gave a speech on Social Networking & Legislative Updates to the North Arkansas Human Resources Association (NOARK) on November 4.

 

Carolyn Witherspoon has been nominated as a new member of the American Counsel Association. Additionally, she co-authored an article, “Employee Must Prove ‘But –For’ Causation in ADEA Cases” for the October, 2009 issue of The Transportation Lawyer.

 

As part of their anniversary celebrations, on October 22, Heifer hosted a small gathering of country directors, staff and supporters from around the world as they gather for their biennial meeting at the Murphy Keller Education Center at the Heifer Village. CGWG attorneys Elizabeth Cummings, Carolyn Witherspoon and Kristen Albertson (pictured below) attended the event celebrating the accomplishments of Heifer.

Ben Shipley spoke at the Western Arkansas Human Resources Association (WAHRA) on October 28 discussing ADA and the new military FMLA regulations. At an October 15 luncheon in honor of Judge Isaac Parker’s birthday hosted by Fort Smith Mayor Ray Baker, Mr. Shipley was honored as one of the city’s Outstanding Attorneys as selected by AY Magazine.

Rick Roderick has spoken at a number of meetings and seminars including the October 1 Employment Law & Legislative Affairs (ELLA) Conference in Little Rock on union organizing and the Employee Free Choice Act and three firm Basic Supervisor Trainings on Discipline, Termination and Documentation and Sexual Harassment. Mr. Roderick also spoke on November 11 at a seminar for Professional Development Institute of Arkansas Tech University in Russellville on Guidelines on Sexual Harassment Claims and Discipline, Termination and Documentation.

Brian Vandiver is teaching Disability Law at the UALR Law School this fall and serving again as the attorney coach for the Little Rock Central High School Mock Trial team and the UALR School of Law Labor and Employment Law Moot Court team. He is also serving a 2-year term as Vice Chair for the Special Olympics of Arkansas Board of Directors. On November 18, Mr. Vandiver spoke to the Arkansas Compensation Association on fiduciary duties of employers under ERISA. He will speak at the Arkansas Bar Association Labor and Employment Conference on February 18 and 19 on the EEOC’s new ADA regulations.

Jess Sweere made a presentation about dealing with problem employees on November 3 and 5 in Little Rock and Fort Smith at the Annual Arkansas Trucking Association Worker’s Compensation Loss Prevention Seminars.

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